21 Million Is Not Enough

In this chapter we will address two versions of this criticism. The first focuses on the claim that 21 million coins is far too small an amount to accommodate the entire world economy, while the second argues that a fixed total supply, regardless of how large it may be, cannot serve a growing economy.

Total Supply Too Small

This part is very easy to refute, since in reality any amount of money can meet an economy’s needs as long as the monetary unit is sufficiently divisible. Even taken to the extreme, a single monetary unit would suffice, if it could be divided finely enough.

Let us imagine that in a certain country they take this approach and declare the single as legal tender. The single is the only coin in the economy --- that is, the total money supply is 1 single. But the single can be divided down to the eighteenth decimal place. That means there are 1000000000000000000 of the so-called trills. We would have a quintillion¹ of these sub-units, which is even more than the current number of cents in existence. This demonstrates that the total number of units does not matter, as long as they are sufficiently divisible.

In the bitcoin network we do not even need to divide bitcoin down to the eighth decimal place. The amounts tracked by bitcoin’s software are not bitcoin. Bitcoin’s software does not use decimal numbers for monetary amounts but integers. What is known as one bitcoin is a quantity of 100 million of those integers. The unit of those integers is called a satoshi (lowercase), or very commonly by its abbreviation sat. So in reality we have 21000000 × 100000000 satoshis, that is, 2.1 quadrillion satoshis. I do not think we will ever need a larger amount, since this is very similar to the current number of cents in existence, and the cent does not appear to be too large a unit for any economic transaction. However, if a satoshi were ever to be too large a unit for low-value transactions, nothing prevents the use of fractions of a satoshi. The Lightning Network is proof of this, and even today thousandths of a satoshi are already in use.

There is no problem with the total supply. The idea that there are not enough for everyone is completely wrong and therefore an imaginary problem.

Fixed Total Supply

According to this criticism: a fixed money supply cannot support a growing economy. There would come a point at which we would stagnate.

This point warrants a reflection on what we mean by “economic growth”, and why it is considered so necessary.

Mr. Stable is the owner of a company whose size and profitability allow him to live the life he wants. He focuses on running his business efficiently without too much stress and on keeping his employees happy. His goal is not to grow the business, since he believes that would bring new problems he does not want to face. His goal is to carry on with his business exactly as it is, generating the same profit every year. At first glance this seems perfectly reasonable, since he is living the life he wants to live and his employees are also content. But the reality is that nobody like Mr. Stable exists --- his case is unique in the world. In the media or in the companies we work for, we constantly hear that you have to grow. Every company aims to grow. Even a country’s total economy has to grow. But where does this imperative need to grow continuously come from? Why is there nobody like Mr. Stable, happy with his current “height”, who does not want to grow?

Let us imagine for a moment that instead of talking about economic growth (of a company or a country) we talk about Alice’s growth --- not economic growth, but her physical growth, that is, her height. If Alice is an adult, this will seem absurd to you, since one stops growing after a certain age. Of course, for this to be the case, the centimetre we use to measure must be the same length every year. If the centimetre we use in 2025 is a little shorter than the one we used in 2024, which was in turn a little shorter than the one in 2023, and so on, Alice can keep “growing” for her entire life.

Although this example may seem absurd at first, it allows us to understand where the permanent need for growth in the fiat system comes from. Unfortunately, the “monetary centimetre” --- that is, the unit in which we measure economic activity, whether the euro, the dollar, or any other fiat currency --- does change in size every year. It changes continuously and always gets smaller. That is why permanent growth is necessary: because if a company maintains the same nominal earnings in euros, its business is actually shrinking in real terms --- it is not holding steady --- and if the trend continues, it will eventually disappear.

There are ever more euros, ever more dollars, and ever more of any fiat currency. Each unit at any given point in time is worth less than it was at an earlier point. How do we measure the fact that each unit of fiat currency is getting smaller? What do we measure it in? The value of each unit of fiat currency is its purchasing power, and due to inflation its purchasing power is lower. Price inflation is the obvious symptom of each monetary unit getting progressively smaller (because more money has been created). As we saw in the first part of the book, it is difficult for us to measure this shrinkage because we have no other unit of measurement in which to measure the monetary unit. Measuring the dollar in euros or vice versa is of no use, since both are getting smaller over time. All we would be seeing is which one is shrinking faster than the other --- but both are shrinking, continuously. All fiat currencies get smaller, always.

In summary, the economic growth we are led to believe is necessary for a healthy economy is tremendously misleading. The need to grow is a product of the fact that we are always measuring with a shrinking unit. It in fact distorts the underlying reality, to the point where we cannot clearly tell how much is real growth and how much is due to the shrinking unit of measurement. With a fixed unit of measurement, we would eliminate this problem. In bitcoin the unit is always the same: the twenty-one-millionth part of the total.

The metre was defined in 1791 by the French Academy of Sciences as one ten-millionth of the Earth’s meridian quadrant passing through Paris. Today we have a more precise definition, but in essence it means that the metre is today what it will be tomorrow and next year --- it is a constant length. And it seems like a very good idea to have a constant unit of measurement for lengths. Similarly, the gram was defined in 1795 as the amount of mass in one cubic centimetre of liquid water at 4°C. Since the centimetre does not change and neither does water, this measurement also does not change --- it is always the same. And we consider it a good idea to measure the mass of an object in units that do not change. Don’t we?

Now let us imagine that a central bank of mass is created, whose goal is “weight stability”. Since the world population is generally getting heavier², and with the aim of preventing us from feeling bad about it, the central bank of mass manipulates the kilogram each year, making it 2% heavier. That way, if we gain 2% in weight, the scale will still show the same number and we will not feel bad. The goal of the central bank of mass is weight stability, to protect our mental health. Even if the central bank of mass were doing it for our own good --- would that not seem like a ridiculous idea?

If it does seem ridiculous to you, if you believe the kilogram should always weigh the same so we can work better on engineering problems and in our daily lives, if you believe it is a good idea for the metre to always have the same length because that is good for measuring distances, then we might ask ourselves: which quantities should have a constant unit, and which should have a changing one? Does it seem like a good idea to measure time in a unit that changes every year? If the second gets shorter and shorter, we would live “longer” --- more seconds, more years. We would have greater nominal longevity. Does that seem like a good idea? You would probably find it just as absurd as the central bank of mass.

Recapping so far: for length, a constant unit; for mass, also a constant unit; for time, constant as well. And what about force, electric charge, energy, current intensity, voltage? Any rational person will quickly reach the conclusion that whatever we are measuring, it is highly desirable to use a constant unit of measurement --- always the same one — not one that varies over time. At this point, let us return to economics: how have we come to accept that economic activity must be measured in a unit that keeps shrinking? It is complete nonsense --- and, as we saw in the first part of the book, outright mass theft. To make matters worse, the decision of how much to shrink the unit is made by a small group of people according to their own political agenda. What could go wrong?

The growth narrative is entirely artificial, and we have been conditioned to believe in it in order to conceal the true reality: the implicit theft committed by printing money. The money supply does not need to increase for any reason. It produces no benefit for society --- quite the contrary.

In the book Economic Controversies^↗ Rothbard explains this with his characteristic clarity:

Money is fundamentally different from consumer goods and producer goods in at least one vital respect. Other things being equal, an increase in the supply of consumer goods benefits society, since one or more consumers will be better off. The same may be said of an increase in the supply of producer goods, which will eventually be transmuted into a greater supply of consumer goods, since production itself is the process of transforming natural resources into new forms and locations desired by consumers for their direct use. But money is very different: money is not used directly in consumption or production, but is exchanged for such directly usable goods. Yet once any commodity or object becomes established as money, it performs the maximum amount of exchange work of which it is capable. An increase in the supply of money does not cause any increase in the exchange service of money; all that happens is that the purchasing power of each unit of money is diluted by the increase in the supply of units. Therefore, there is never a social need to increase the supply of money, whether because of an increase in the supply of goods or because of an increase in population.

A fixed money supply, far from being a problem, is in fact the solution for correctly measuring economic activity. Economic price signals would be pure and undistorted, infinitely improving the efficiency of the free market. We would then have genuine growth, not the current cosmetic illusion produced by a shrinking unit of account. Such a world would enjoy greater and growing prosperity.

Saying that the money supply must increase indefinitely for a growing economy is as sensible as saying that the kilogram must keep getting heavier so that we become less obese. The indefinite and permanent expansion of the money supply is nonsense, and if we do not see it that way, it is because we are constantly fumigated with large doses of Keynesianism --- the dominant economic doctrine since the end of the Second World War --- which provides the theoretical framework for the State to permanently increase the money supply.

Slavery was a common institution in many civilizations throughout history. Taking different forms depending on place and era, the dependence on enslaved people for agricultural, domestic, and military labor was a constant until the nineteenth and twentieth centuries, when it was abolished in virtually all countries where it still existed. From the perspective of the twenty-first century, the concept of slavery seems to us the horror it always was. We even find it very difficult to imagine how it was possible for humans to have normalized it at any point. Similarly, perhaps in a hundred years our descendants will look back at this fiat system era we live in today as the economic and moral aberration it truly is. And our descendants will also find it difficult to imagine that we lived for more than fifty years so conditioned that we normalized a system based on theft --- one that gives rise to a new Slavery 2.0, in which the new masters, the owners of the money printer and their associates, keep us working permanently with no real possibility of saving enough to escape the plantation.