THREAD 5/10 - Fiat, Banking, and the Rise of Central Banks (This will be a 10 part series inspired by @HardhatChad posting his ORE vision on 11/28)

1/13 To understand fiat, you have to understand the moment history pivoted. Not in 1971. Not during Bretton Woods. But in 1694, when a private corporation struck a bargain with the English crown. A compromise that looked harmless. But ended up rewriting global monetary power.

2/13 England was bankrupt after expensive wars with France. The monarchy needed money fast. A group of wealthy subscribers offered a solution: “We’ll lend the state funds… if you let us issue banknotes backed by that debt.” This was the birth of the world’s first central bank in all but name.

3/13 This was the original compromise: • The crown got immediate financing. • The bank got monopoly privileges. • The public got “paper backed by gold.” Everyone won. Except the idea of sovereign money itself.

4/13 From day one, the system faced a fatal contradiction: The bank issued more paper claims than it had metal reserves. Fractional reserve wasn’t a later invention; it was baked in from inception. This made the metallic peg a promise, not a guarantee.

5/13 Runs on convertibility came early and often. Every time wars strained finances, the peg buckled. In 1797, faced with the threat of invasion and financial collapse, England suspended gold convertibility for 24 years. The state decided when rules applied.

6/13 By the 19th century, the gold standard looked stable. But only because global politics, empire, and naval dominance allowed Britain to enforce it. It was geopolitical power wearing a monetary costume.

7/13 Fast forward to 1913. The United States creates a lender of last resort modeled loosely on Britain’s system. But the new institution, the Federal Reserve, was built with a deeper flaw: It centralized reserves across a banking cartel, while promising gold redemption it could never truly honor during crises.

8/13 World War I proved the point. Once again, gold convertibility was suspended across major powers. States printed, borrowed, and inflated to survive. After the war, everyone pretended they could “return to gold”. But the math no longer worked.

9/13 By 1933, the United States abandoned domestic convertibility entirely. By 1944, the system was held together by American hegemony at Bretton Woods. By 1971, the mismatch between global claims and U.S. gold reserves forced the final severing of convertibility.

10/13 Here’s the real lesson: The metallic peg didn’t die in 1971. It died in 1694, when settlement was outsourced to issuers. It died when paper claims multiplied faster than metal. It died every time a government suspended convertibility “temporarily.” The peg wasn’t a standard. It was a tradition.

11/13 Fiat wasn’t a break from history. Fiat was the endgame of the banking compromises that began centuries earlier. Once the issuer controls the money, the issuer becomes sovereign. And that sovereignty always consolidates. Through debt, through war finance, through political necessity.

12/13 If you don’t solve custody, issuance, and settlement at the base layer, you will always end with: A system where money is created by decree, maintained by force, and justified by narratives about “stability.”

13/13 Break from the cycle. Choose monetary systems where issuance is earned, settlement is permissionless, and sovereignty is not a privilege granted by institutions. But a property guaranteed by computation. Buy ORE. Mine ORE. Covet ORE.