Gordian Knot of Fiat And Bitcoin – Bitcoin Magazine
This is an opinion editorial by Andrew Axelrod, a Bitcoin educator and writer whose LinkedIn posts have orange pilled thousands.
“We truly are a species with amnesia. We have forgotten a very important part of our story.” — Graham Hancock
“You have forgotten who you are and so have forgotten me. Look inside yourself Simba. You are more than what you have become. You must take your place in the Circle of life.” — Mufasa
Most of human experience is relegated to the dustbin of history and forgotten. And maybe rightfully so. After all, life is largely mundane, punctuated by inanities.
But those scarce few stories that survive, survive for good reason. They speak to us on a deeper level. They tap into a fundamental and enduring truth about the human condition. These aren’t stories from a far gone past, these are stories about the here and now. The names and faces may change, but the stories stay the same. We can’t help but play them out over and over again, generation by generation. They are as relevant to us now as ever.
By contrast, bitcoin may seem like the bleeding edge of technology and without historical parallel. But the truth is, bitcoin fits into a far richer and meaningful story about our very nature. Let us now delve into one such story and explore how bitcoin will come to play a key part in its latest rendition.
Alexander the Great, who forged a vast empire with the tip of his spear and whose exploits have become the stuff of legend, is without the shadow of a doubt one of those scarce few figures that have stood the test of time.
One of his legends stands out in particular. The ancient Greek myth tells of how Alexander the Great’s ambitious campaign in Western Asia brought him to the Phrygian capital city of Gordium, in modern-day Turkey.
As the story goes, Phrygia was a kingdom without a king. Its inhabitants believed that the rightful heir to the throne was yet to be ordained. The true king would reveal himself by solving an intractable problem — the Gordian knot.
This knot was a nightmarish tangle of wrist-thick cornel bark that was twisted around an ox cart’s yoke and impossible to unfasten.
The ox cart had belonged to the ancient king Gordias, who, himself a humble peasant, had been placed on the throne through providence a thousand years earlier.
A prophecy foretold that whoever could untie the knot would not only rule over Phrygia as the dead king’s successor, but would go on to conquer all of Asia.
This of course appealed to Alexander the Great who readily accepted the challenge.
But when he failed to untangle the knot, just as everyone before him had, he did something that shocked the Phrygians.
He unsheathed his shortsword and unceremoniously chopped through the ropes, saying:
“It makes no difference how they are loosed.”
Now comes the interesting part of the story.
Alexander the Great had clearly violated the oracle’s prophecy by cutting through the knot instead of disentangling it and had in the process desecrated a holy relic on the steps of their temple. So how did the Phrygians react?
They crowned him as king on the spot.
How can this be?
Although the Gordian knot mythology is widely known, it is also deeply misunderstood.
Many historians and philosophers draw some of the following conclusions from it:
- That sometimes the best answer to a complex problem is the simplest one.
- That some problems are solvable only through bold action and with great ambition.
- That Alexander the Great had lawyered his way around the prophecy’s words. After all, exceptionally clever people see solutions where others do not. “Thinking outside the box,” we would call this.
All of these interpretations however miss the mark and fail to recognize a basic truth the story elegantly reveals. The essence of the legend is simply this:
Alexander the Great was perhaps the greatest conquering war lord of all time. He’s certainly right up there with the likes of Attila the Hun, Sun Tzu, Saladin, Julius Caesar and Hannibal Barca. He was undefeated in battle and had brought most of the civilized world to its knees. What’s more, he had at his back an army of fiercely loyal Macedonian soldiers who stood waiting at the gates of Gordium, ready to rape and pillage the city at a moment’s notice.
Who among the Phrygians would dare challenge Alexander the Great’s methods?
If he wanted to play fast and loose with the rules, who was to say otherwise.
And so, the Gordian knot is at its core the story of how might makes right.
It’s no coincidence Alexander the Great used his Sword to “solve” the problem.1
But the Gordian knot has an even deeper lesson to teach us. To understand its meaning, we must first appreciate the story’s message for what it truly is.
In the story, the knot was roped around an ox cart — a technology for transport and trade, and a symbol of civilization and order. As the prophecy foretold, the rightful king would unshackle the ox cart and become ruler over the known world. This would be done through the use of brute strength — by the sword.
As if to drive this point home, many historic paintings and artistic renderings have since depicted a chariot instead of an ox cart. The chariot of course being a striking symbol of war and triumph.
“Alexander the Great Cutting the Gordian Knot” (1767) by Jean-François Godefroy
The message is clear: When a situation becomes so gnarly and entangled as to become untenable, a proverbial Gordian knot, it demands a forceful actor to throw out the old ruleset and in so doing create a new order.
But what if there is no wise and powerful leader to grasp a sword in hand and do what is necessary?
After all, the Alexander the Greats of this world are few and far in between the long arcs of history. They are the exceptions, not the rule. Knowing this, Alexander the Great himself never chose an heir to his empire — what would be the point? When asked on his deathbed to whom his immeasurable wealth and expansive kingdom would fall, he simply responded: “To the strongest.”
What followed was fifty years of warfare … This is a number with significance that we will revisit. The point is though, that the Gordian knot is not always loosened with a clean cut, but is sometimes butchered and frayed.
To this end, the Romans, for example, had devised their own way of cutting a Gordian knot whenever it reared its ugly head. Working class citizens would abandon entire cities in defiance, called “Succession of the Plebeians,” leaving the rulers to squabble amongst themselves, and force a system change.
“The Secession of the People to the Mons Sacer” (1849) by B Barlocinni
This is nothing new. Such transitions occur with stunning regularity — about every fifty years, in fact. History tells us that social orders typically take about three generations to deteriorate into a Gordian knot and require an Alexander the Great to slice through them. As the saying goes: The first generation sows it, the second grows it, and the third blows it.
It’s a story as old as time.
This process of civilizational decay and rebirth is such an ingrained and human phenomenon that it’s even found its way into scripture.
The book of Leviticus prescribes a so-called Year of Jubilee as a remedy for these purges. The Year of Jubilee comes around once every fifty years and is a special time during which all debt is forgiven and all slates wiped clean — a great reset:
“You shall thus consecrate the fiftieth year and proclaim a release through the land to all its inhabitants. It shall be a jubilee for you (Leviticus 25:1–4, 8–10, NASB).”
Yes, the names and faces might change, but the story doesn’t. And we again find ourselves at such an inflection point.
The current financial world order has existed for just over fifty years, and now it’s coming apart at the seams (how’s that for coincidence). This most recent cycle kicked off with the abolishment of the gold standard on August 15, 1971. After abandoning the gold standard, the world has been running purely on paper money, credit and borrowed time. We have been living through a global fiat experiment ever since.
But this chapter is now quickly drawing to a close. After all, our current financial system is the Gordian knot of them all and we are undoubtedly on the cusp of a reset.
The 2008 financial crisis proffered just a tiny glimpse of what’s to come. When the house of cards began collapsing in April of that year, a horrifying realization began to finally dawn on our ruling class …
The tangle of debt, mortgage backed securities and other credit based derivatives, had mutated into a monstrosity that was constricting and suffocating everything. Even worse, the financial crisis revealed how trillions of dollars of debt based derivatives were causing contagion effects that no one really understood — the system’s chain of ownership was no longer comprehensible.
A case-study by EJ Schoen explains how:
“…no one knew who owed money to whom or how much was owed, causing banks to cease trusting and lending to other banks.”
And when trust in the system finally reached its terminal moment on September 29, 2008, the Dow fell seven percent, marking the largest single-day point drop in history. This was the plebeians’ attempt at severing the knot. Instead of the Roman citizenry fleeing their capital, these were investors trying to abandon ship by selling out of all positions.
But of course, the plebeians ultimately failed to stave off the inevitable collapse of Rome and were forced to helplessly watch as corrupt central planners debased the currency and bankrupted and ransacked a once-great empire. Over the course of a few painful decades, the capital city was practically emptied out, collapsing from a height of more than a million inhabitants to a paltry population of just a few thousand. The plebeians could not prevent the civilized world from plunging into centuries of darkness.
And just as the plebeians had failed, so too had we. Absent an Alexander the Great, the knot was not cut. In fact, quite the opposite. The knot was further tightened as bureaucrats poured billions of printed money into the void. The supposed remedy to the Global Financial Crisis was to layer additional debt on top of the system. Central banks have ever since continued to backstop the market by inflating the money supply and further debasing currency.
And now, the knot has become so twisted that even something as simple as equities, a supposedly straightforward expression of financial ownership, has become an unmanageable tangle of debt:
The DTCC, the world’s main trade matching service, attracts 99 percent of U.S. deal flow and is supposed to keep track of who owns what.
Only, they can’t.
As we now know, dozens of lawsuits have since revealed that the shares in circulation exceed the actual and authorized float for thousands of companies.
That’s how GME had a short interest of 149% (which is impossible) and how shareholders owned 33% more of Dole Foods than there were Dole Food shares.
The knot has become tangled beyond belief.
Back to the story of Alexander the Great:
The plot never changes — only the names and faces do. And so, the Gordian knot becomes undone, one way or another. Whether it be at the hands of a powerful leader who can restore order to the world, or under the strain of its own suffocating weight, plunging everything into chaos.
But here’s what has changed: For the first time, we need not wait for an Alexander the Great. Instead, we can wield the sword ourselves. Because of bitcoin’s unique property of self-custody, we can choose to cut the Gordian knot at any time by simply taking possession of our own money.
Gone are the endless and nebulous chains of credit-based ownership. The simple act of taking self-custody banishes all middle men, sets fire to the endlessly multiplying paper money and clarifies true ownership. The plebeians now finally have a tool to cut the knot. And while bitcoiners may call themselves “plebs,” it’s high time we also understood that bitcoin is the sword.
Endnotes
- An alternate and far lesser known version of the myth tells how Alexander the Great loosened the knot by pulling the linchpin out of the yoke. However, this version hasn’t stood the test of time and, instead, the expression “cutting the Gordian knot” has permeated our vocabulary.”
This is a guest post by Andrew Axelrod. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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