The Golden Rule of Money

DRIGGS, IDAHO – This week, the UK’s main financial services watchdog – the Financial Conduct Authority (FCA) – set the bitcoin and cryptocurrency movement in the UK back a step…

The FCA outlawed the sale of products that track bitcoin and other cryptocurrency prices, under the guise of consumer protection.

Is this a big deal in the great battle for control of money?

Probably not.

But it reveals a fundamental truth about bitcoin… and why it’ll never succeed.

More below…

Home Life in Our New Mountain Bolthole

Greetings from our new mountain bolthole in Idaho…

My family and I are a travelling family. Two-and-a-half years ago, we sold everything, abandoned our jobs, the kids’ schools, and our community, and hit the road with a suitcase, some cash, and five passports.

We’ve been living in hotels, Airbnbs, campgrounds, and on the sofas of friends and relatives ever since, homeschooling, relaxing, and seeing the world.

We’re currently in Driggs, Idaho, a small town in the Rocky Mountains. We’ve rented an Airbnb apartment and we’re hunkering down for the winter here…

While Kate and the kids learn the fundamentals of language, science, history, personal achievement, and art… I use my free time to study economics, finance, and money.

My Fascination With Money

I’ve been fascinated with money ever since I was a kid. I’ve been saving money for as long as I can remember. I probably started when I was six or seven years old.

I bought my first stocks when I was eleven (which was when I started checking stock prices in the newspaper every day, a habit I still keep.)

I focused my “formal” education and my working life around the study and understanding of money, too…

Out here on the road, I don’t have a “job” or any chores to do around the house. I don’t hang out with any “guys.” And I don’t have any solo pastimes, like golf, that I pursue.

So, for the most part, I have a lot of time to indulge my fascination with money…

Bitcoin’s Fatal Flaw

Back to bitcoin…

I understand why bitcoin captures people’s imaginations… especially among those of us who recognize that the Federal Reserve system (the financial system we currently use) is bloated, antiquated, and destined for collapse…

(I was among the early “followers” of bitcoin. I first learned of it in 2012, I think, and I’ve been tracking it closely ever since.)

Bitcoin seems like the perfect solution: hard as gold… convenient as email…

It’s a very seductive idea…. one that many smart people have gotten behind intellectually…

But bitcoin is fatally flawed. And, in my opinion, history will show bitcoin was an interesting thought experiment, and the basis of a delightful speculative mania, but ultimately worth nothing.

Where’s the flaw everyone’s overlooking?

To see it, we need to go back to basics… right back to the very roots of economics…

Golden Rule of Economics

Imagine you lived by yourself on your own small island.

You’d have no need for money because there’d be no one to trade with. You’d produce only what you could use immediately or what you could store for use in the future.

That’d be all there was to your economy.

Money is only useful where exchange is taking place. But money isn’t necessary for exchange to take place…

Let’s imagine there’s a person living on an island next to yours. Perhaps you produce more of something than you can use. Perhaps they do, too.

Before long, you’d probably start trading with each other. Coconuts for pineapples, rope for lumber, etc. No need for money yet in this economy.

(This type of direct exchanging is called “bartering.”)

What does this have to do with the fatal flaw in bitcoin?

It’s going to take me a little while to unpack this, but for today, I just want to leave you with one important takeaway that I’ll be coming back to over and over again in future Postcards…

People never trade their hard work for something they don’t want. If they did, they’d be wasting their effort and time. Let’s call this a “golden” rule of money and economics:

You’re only going to produce or trade when doing so will lead you to get something you want.

To be continued…

– Tom Dyson

P.S. Here’s what Kate and the kids look like doing their homework this morning…

P.P.S. We know people who have friends in Driggs. Also, quite a few readers of these Postcards know the area or know people who live in the area, or – in a handful of cases – live in the area themselves. They’ve all been writing to us, offering us help, making introductions for us and inviting us out.

One reader sent us a list of super-secret hiking spots, for example. Another reader forwarded one of our Postcards to someone they know who lives in the valley. They are taking us out to dinner tomorrow night! And then, this weekend, we’ve got an hors d’oeuvres date with friends-of-a-friend who live here…

We’re hoping to integrate into this community and experience a little of the small-town “good” life…

We LOVE getting these messages, and we’ll shamelessly accept any and all invitations that we can. Thank you so much, and please keep ‘em coming at [email protected]!

Like what you’re reading? Send your thoughts to [email protected].

Readers talk gold… making the best of life’s adventures… and Tom and Kate’s eventual re-marriage…

Reader comment: If you’re ever in the Olympic mountain areas of the state of Washington, stop by for dinner with your family and enjoy the wonderful scenery that we have here.

Being new to the gold world, my wife and I have a few questions. Is it your feeling that buying gold and keeping it in your possession in your vault – as opposed to having a store someplace else – is a better decision? Our thinking is since this is emergency money, being able to take a coin to the dealer and get cash would be easier.

I know you can’t give a specific advice but just a comment would be a great help to us. Your Postcards and comments about your family trip are very heartwarming. Would love to hear from you if that’s possible.

Tom’s response: Yes. Holding the gold yourself in a home safe or vault is the ideal solution. If we had a home, that’s what we’d do.

Reader comment: You have a gift to write about your family and life in a deeply personal and warm way. We hope you will not have many gaps as you winter and move on with life. While I don’t wish to profane Postcards, I must say, I am sure it is the best marketing tool you have.

Reader comment: You once again mentioned your wedding. A few weeks ago, you mentioned asking Kate about going to Vegas to get married, and you’ve been talking about it off and on for many months. (I’ve been enjoying your Postcards since India.) So, when are you going to stop talking about it and just do it? I’m asking only a little tongue-in-cheek. Love is not an emotion; it’s a choice, as is commitment.

Reader comment: So great to see you guys embarking on another adventure, one close to my heart. Snow skiing/boarding is a great way to get outside in the winter and experience the freedom one can only find in the mountains. Having two young children (11 and 9), it is a perfect sport the whole family can enjoy, and the lift rides always create a great time to talk to your kids.

I admire the adventures/travel you have taken and feel that they will always provide great memories for your family, as well as a wonderful learning experience. I think it will be great for the entire family to be in one spot for six months and will allow everyone the chance to see what it might feel like to belong to a community.

I think most of us look back upon vacations as some of the best times in our lives; your family seems to have been on an extended one! I do encourage you to fully immerse yourself in the community and for all of you to experience a daily routine. You just might fall in love with it and the folks you meet! Enjoy the snow.

Reader comment: We really enjoy the Postcards and hope you continue writing them, even if you’re temporarily settled. They’re “from the fringe,” not “from the road,” and Driggs is probably as much “fringe” as anywhere. (No offense to Driggsters!) Thanks for your writing, your insights, and your openness. Blessings to all of you.

Reader comment: I have tremendously enjoyed your trips. I had always hoped my wife and I could do that, but it seems like our bodies aged faster than I had planned! I chased the oilfield around up into Canada and Alaska some and wanted to show my wife, but not going to happen. Enjoy it while you’re young and healthy, especially with the kids! Take care!!

You could say your journal has been about the trip. That certainly wouldn’t be wrong. But it’s been as much about life. As such, don’t worry about what you’re going to write about. Life still happens. It still unfolds, often unannounced with surprising twists and turns that add flavor to the journey.

You don’t have to circumnavigate the globe to relate those experiences. You just need the perspective to see the magic of a kid building some permanent connection halfway down the Intermediate ski slope. You’ve already got that perspective, so don’t fret over what’s next to write about.

Reader comment: What an adventure, Dyson family, as you pause your trekking for winter fun! Please keep writing, posting photos (love them!), and sharing your economic insights, Tom. It’s been really a joy following the beautiful Dyson family. Thank you. My best wishes to all of you from Connecticut!

Tom’s note: Thanks again for all the kind messages! Please keep sending us your questions and comments at [email protected].