El Salvador’s President Nayib Bukele delivers a speech to the country to mark his second year in office in San Salvador, El Salvador, June 1, 2021. (Jose Cabezas/Reuters) How the president of El Salvador is using cryptocurrency to usurp power.
El Salvador’s President Nayib Bukele gained notoriety when he announced in June that he would force the country’s population to use Bitcoin as legal tender. On September 7, El Salvador’s Bitcoin Law went into effect, making it the first country to adopt a cryptocurrency as legal tender. The law is unnecessary, fanciful, and highly unpopular. Indeed, over 95 percent of Salvadorans don’t want to be forced to use Bitcoin.
El Salvador has been dollarized since 2001. It was then that the colón was mothballed, the U.S. dollar became legal tender, and all other currencies were legalized. The dollarized, competitive currency regime has worked like a charm. Since 2001, El Salvador’s average annual inflation rate of 2.03 percent has been the lowest in Latin America. Furthermore, 25-year mortgages are available at an interest rate of around 7 percent. GDP per capita growth and export growth have both outpaced those of most Latin American countries.
Why introduce an untested idea into a monetary system that is working well? It’s just one piece in Bukele’s broader scheme to obtain absolute power. The path Bukele is marking with his words and deeds passes through all the stages used by populist leaders on their way to the establishment of totalitarian regimes.
Just consider the Bitcoin Law itself. Contrary to the libertarian vision put forth by some cryptocurrency proponents, Article 7 of El Salvador’s new law renders Bitcoin not only legal tender, but “forced tender.” If an El Salvadoran offers a merchant or financial institution Bitcoin, it must be accepted. Forced-tender laws like Article 175 of the Soviet Union’s civil code are a communist staple and are also common during military occupations.
In little more than two and a half years since he was first elected, Bukele has crushed the two powerful political parties that could oppose him. He has used illegal
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