The Louisiana territory is about four times the size of France or Spain, and the port at the mouth of the Mississippi naturally controlled trade in the western territories, since shipping access to the Atlantic is key. One might call this valuable.

Two things happened in quick succession:

Spain gave the land, relatively cheaply and quietly, back to France, as long as they promised not to give it to anybody else.

France sold the whole thing, quite on a bargain, to the United States.

Like Great Britain, Spain at the time had trouble paying the rent. And what’s worse, George had made a hobby of attacking trans-Atlantic Spanish convoys. Probably for rent money.

Napoleon, a strapping lad with ambitions of a global empire, hoped to regain the Louisiana territory to re-establish an Atlantic empire. But wouldn’t you know it, kings are just so bad at paying rent. Must be their hobbies. He decided to sell it in 1800 to shore up some funds for an all-new war with England.

In the end the Louisiana territory was sold for $261 million. This is cheap. This is half as much as Mel Gibson’s divorce. Rupert Murdoch’s divorce could have paid for ten Louisiana territories. I wonder what the lawyers bought.

Why?

Why sell something for so cheap? Why didn’t they value something that seemed so worthwhile? Land is one of the most valuable things out there. They aren’t making any more of it, goes the boomer adage.

Well, none of that matters if there’s nothing to defend it.

President Jefferson didn’t want to negotiate a sale because it implied that France had a right to be there at all, and was prepared to go to war to prevent a strong french influence. He sent Monroe to Paris to negotiate a settlement with back-up plans to negotiate a truce with England if they didn’t reach a deal to round out his pre-war checklist.

Spain, even though they asked for it to not fall into non-French hands, were too powerless to resist.

“The sale of Louisiana to the United States was trebly invalid; if it were French property, Bonaparte could not constitutionally alienate it without the consent of the French Chambers; if it were Spanish property, he could not alienate it at all; if Spain had a right of reclamation, his sale was worthless.” — Henry Adams

Of course the sale wasn’t worthless, it happened and the check cleared. The sale price was really just enough to stop a tiny global incident (or half a Hollywood divorce). Control was ceded from Spain to France and then one month later from France to the USA. Ferdinand VII, sniffling, declared that this was totally what he wanted anyway.

Meanwhile Napoleon made plans to go to war with Britain, but Britain decided to go to war first, and Spain said “why not” and joined Britain’s side. In the middle of that the US goes to war with Britain (again) and the British marched all the way to Washington D.C. to burn down the white house just to prove a point that maybe you are getting the poignancy of, here.

“Neener neener” — British troops

Would you please get to the end of this allegory?

Okay fine. Bitcoin: It’s like cross-fit but you don’t even have to work out.

Two quotes:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America. — Preamble to the Constitution

Think hard about these words, they are not there by accident. If it helps, remember that the framers were not paid by the click.

“Defense is superior to opulence.” — Adam Smith

Land and some other hard assets have value, on and off. Money? It’s all make believe. Promissory notes. IOUs. What its backed by doesn’t matter, what matters is the discipline of the body that manages its supply and the utility it has to pay off debts and taxes within the spheres of government control.

American dollars have value because the US Government taxes things, like land, and if you do not pay those taxes they will send you mean letters (trust me) before resorting to other means (trust Al Capone). You pay these taxes in US dollars. You just having dollars does not make them valuable. And dollars are not valuable because they are backed by gold or silver or sea shells. What makes dollars valuable is that the government wants them back.

In exchange, the American government apparatus exerts all the influence it can to ensure that Americans, their possessions, and the reputation of the dollar (as a stable store of value) are upheld. This is what the preamble to the Constitution is about. The result is that everyone wants some dollars because they need them to pay the government so it can protect us from existential risks. As a nice bonus, the US dollar is respected well enough that even foreigners trust when the US says “we’re good for it.” Remember, Zimbabweans use the U.S. dollar.

Bitcoin value is make-believe just like money. But even though there is bitcoin-sphere governance, there are no bitcoin-sphere assets. Taxes are not paid in bitcoin. There is no FDIC, only hackers that lift a million here and there. And when nation-states decide its a nuisance, what are the guns of bitcoin? It’s anonymity? From the same government that created PRISM and then used mind-magic* to make everyone forget about PRISM? Please. You may think crypto-currencies that require more power than a small country to run can fly under the radar, but somehow I think not indefinitely. After all, becoming the next big thing would mean its a threat to the American dollar, do you really think the US Gov will shrug and say “shucks bitcoin went from a ponzi-novelty to something that will totally usurp this hegemony we worked so hard to make. Guess we’ll have to call it a day.” (If you think this, sell your Bitcoin and buy an imagination.)

The day you can pay tax bills to a government in Bitcoin is probably the day you can rest easy. Until then dear Bitcoin holders, you do have something of value, just like the Louisiana territory has value. But in this 1800’s metaphor, what makes you so sure you’re America?

Monopoly money is good to have, while the game is still running.