On PayPal, Toby Young, Bitcoin, Culture Wars and the Separation of Money and State

The Flying Frisby - money, markets and more

Bitcoin was built in reaction to all the money printing that went on in the wake of the financial crisis.

The Times’ headline “Chancellor on Brink of Second Bailout for Banks” was even embedded into the very first block in the blockchain – the genesis block.

Here was a money system that nobody, whether government or hacker, could print or debase. The rules were set in code. The inflation rate was clearly laid out. And the system, rather than rely on trust – whether in banks, central banks, payment providers or governments – was based on mathematical proof and computer power.

So here is an apolitical, censorship-resistant, trust-less, hard money.

And we saw a very good use case for it this week.

PayPal plays the cancel game

Journalist Toby Young, who is associate editor of The Spectator, has, for as long as I’ve known him, been setting up organisations to try and improve people’s lives.

Disappointed with the lowering of standards in schools, he was one of the founders of the first Free School in West London. In 2020 he set up the Free Speech Union to help defend people threatened with cancellation. And his news and commentary website the Daily Sceptic was born in reaction to all the misinformation and censorship, especially by big tech, that emerged during Covid.

Young’s views are actually pretty moderate. He’s a centre right, old school Conservative. But his ideological enemies do not like him at all and they work tirelessly to bring him down. He has lost something like five jobs because of what he calls the “offence archaeologists” digging up things he said decades ago, quoting them out of context and then being offended.

Last week, PayPal, out of the blue, closed down his personal account for “breaching its Acceptable Use Policy”. Then, barely a few minutes later, it shut down the account for his news and commentary website the Daily Sceptic. Then a few minutes after that it closed down the accounts for the Free Speech Union.

This is no small disruption, and it undoes the many hours, days, months and years of hard work his team have put in building up their subscriber bases. About a quarter of the Daily Sceptic’s donor revenue arrives via PayPal and a third of the Free Speech Union’s 9,500 members pay their dues via PayPal, Young says.

Young says, “I did some Googling and discovered that numerous organisations and individuals with dissident political views have had their accounts closed by PayPal recently, particularly on the three issues you’re not allowed to be sceptical about: the lockdown policy and other Covid restrictions, the mRNA vaccines, and the ‘climate emergency.

The Daily Sceptic frequently publishes articles on those subjects and the Free Speech Union may have fallen foul of another taboo – defending people who’ve got into trouble with HR departments for expressing their gender critical views.”

How is PayPal able to do this without warning? Because it can.

Young is by no means the first. It did the same thing to Wikileaks in 2010, probably under pressure from the US government about whom Wikileaks was disclosing unwanted information. (Unfortunately, this backfired as donors began using bitcoin and the bitcoin Wikileaks received rocketed in value to make Wikileaks a potentially very rich organisation (assuming it managed to hold on to some of them).

It did the same to Alex Jones. Earlier in the year it cancelled academic and biologist Colin Wright for articulating his criticisms of the view that sex is a social construct. Just yesterday Us For Them, the parent group which campaigned to keep schools open during Covid lost their account, and so did another group Gays Against Groomers.

PayPal founder Peter Thiel is an outspoken libertarian and probably on the same philosophical side of the argument as Young, but he is also a businessman.

Paypal will do whatever is asked of it in order to survive. You can be sure that, in order to survive as a business and effectively become a challenger bank, especially early in its evolution, it will have had to demonstrate that it could not be used as a vehicle for any kind of illicit activity, especially money-laundering, and this is why it can be so stringent. It will toe the line wherever necessary.

But Thiel is no longer Paypal’s CEO and, like so much of big tech, what started out one way is now not on board with the free speech ideals of its founders, as evidenced by all the censorship that goes on. Indeed more and more evidence is growing that big tech, especially Twitter, is censoring content according to the instructions of the US government.

A number of prominent individuals have spoken up in favour of Young - from Lord Frost to Joanna Clery to Luke Johnson - and a number of others have closed their PayPal accounts, so it may be that the Young accounts get re-instated under pressure.

But the moral of the tale remains. You are using trusted third parties that can no longer be trusted.

If you use non-government money - ie bitcoin - the taps cannot be turned off quite so easily.

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Separating money and state

More than anything else, in every book or every column I’ve ever written , I have argued for one thing: the separation of money and state.

When one body in a society has the ability to create money at little or no cost to itself, it is inevitable that body will have disproportionate power and influence within that society.

If you are looking to understand how it is the state in western societies has grown to be so enormous - something like 50% of GDP compared to the 10% area it occupied at the turn of the 20th century - then look no further than our system of fiat money.

If you want to understand the inequality gap, why young people can’t afford a house, all that - look no further than our system of money

If you are looking to understand why western families so small, look no further than our system of money, in which government now owns more than 50% of your labour. The primary reason given when asked why people have small families is that they can’t afford bigger ones. Both parents are having to work. The government - at over 50% - is their biggest cost.

Only the very bottom on large welfare and the very rich can afford big families The 90% in the middle can’t. So we import our youth from abroad instead and then wonder why British culture is being eroded away. It’s the same across the west.

Of course some states are more benign than others and our 21st century social democracies, for all their woeful waste, are preferable to many of the governing systems found in other, more tyrannical corners of the earth, but the damage has still been enormous and now we seem to be careering towards a far more nefarious destination.

Money should just be money - a means of exchange, a store of value and a unit of account. Instead it has become a tool of government. A weapon of government.

Whether it is suppressing interest rates to boost the housing market, printing money to bail out banks or the entire economy during Covid or freezing the accounts of political enemies (the truckers in Canada, or the entire country that is Russia), finance is being weaponised.

Governments weaponise money because it is an easy tool for them to get the results they want quickly. It’s a lot easier to sanction Russia and freeze it out of the banking system than it is to go to war. It’s easier to cut off the truckers’ funding than it is to confront them. It’s a lot easier - and quicker - to print the money you need to bail out the banking system than it is to collect it in taxes – which is what rulers from another age would have had to do. It’s a lot easier to suppress interest rates and collect the inflation tax than it is to impose direct taxes or rein in spending.

But the net result of all of this is that money gets debased, the state grows and is empowered, the inequality gap gets bigger, freedom is eroded, families get smaller, nobody can afford a house and yet more government becomes the answer to everything. We get top down diktats instead of bottom up growth. One decision up top counts for way more than the aggregation of millions of individual decisions from the bottom. And so on.

The weaponisation have money has already begun.

The irony of such actions is that, as with Wikileaks, they will accelerate the adoption of censor-free, non-state alternatives, of which bitcoin is the most prominent example. The US, by confiscating Russian dollars and freezing it of the banking system, will accelerate the creation of a non-US international system of money to be used by nations, especially Russia and China, that do not want to be beholden to the dollar.

In the long term it may backfire, but in the short term it works: it shuts off the funding taps and creates considerable hardship and inconvenience.

What to do? I use Paypal all the time, as buyer and seller. It’s convenient. But I really should switch to another payment processor. The others may not be as censorious as PayPal, but they will be if pressured, you can be sure of that. Do not leave large amounts of money with these companies.

As we head into a cashless society we are even more vulnerable. This is why the prospect of central bank digital currencies, which, by the way, are almost inevitable - technology is destiny - fills me with such dread. Programmable money will give the state even more control and influence.

Your every transaction can be monitored, putting us in the world of Orwellian surveillance states. Certain transactions could simply be outlawed. You might not, for example, be able to buy from or sell to bodies that are not government approved. Taxes and fines can be deducted without your approval.

Central bank digital currencies give huge scope to behavioural economists and the ministries of nudges. You can be goaded into all sorts of decisions you might not otherwise have made. Social credits systems can be imposed. Are you a good citizen? Then you get the favourable rate of interest, good loan deals and other incentives. Do you articulate wrong-thought on the internet? Did you not have the vaccine, like we asked you to? Are you suggesting the climate emergency is not real? Then you will be given less favourable rates. If you are a really naughty boy, your account might be frozen altogether.

I gather that the European Central Bank and perhaps even the Bank of England already have the tech ready to go for CBDCs. They are just waiting for the crisis to implement them.

In such a world, and that does seem to be where we are heading, there is a very strong use case for bitcoin. I urge you to own some.

If you are in London or nearby on September 28 or 29, please come to my lecture with funny bits, How Heavy?, about the history of weights and measures. It’s in the West End at the Museum of Comedy and it’s a 7-8pm show so you can come along and go out for dinner after. You can buy tickets here. This is a very interesting subject - effectively how you perceive the world. Hope to see you there.

If you want to buy physical gold silver, my recommended bullion dealer is the Pure Gold Company with whom I have an affiliation deal.

If you want to buy bitcoin, my guide is here:

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A shorter version of this article first appeared at Moneyweek.

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