Print Page - 2013-11-03 Forbes: What Is Beijing's Rationale For Promoting Bitcoin?

(Note this is a repost of a quora answer, as published by Forbes. However it is apropos to the discussions on here re: China)

http://www.forbes.com/sites/quora/2013/12/03/what-is-beijings-rationale-for-promoting-bitcoin/

The Author: http://www.quora.com/Paul-Denlinger

Quote

Here are some of the reasons:

China’s economy is too slanted to investment instead of relying on consumer-spending generated tax revenue. This means that there is too much untaxed cash sloshing around in the system;
Real estate prices are continuing to rise in the cities in spite of government efforts to dampen the price rise. Bitcoin offers a chance to take some excess cash out of the system, and thus dampen price inflation.
The party is going after corruption among Chinese officials. Even though the party needs to clean up, it needs to give its own members an exit plan, as too much prosecution would make the people think that the party is completely corrupt.
Since November 2008, the US Fed has been injecting liquidity into US banks at the rate of US$80B a month as part of the quantitative easing plan. This means that 4.8T has been injected into the global economy in the past five years. US banks have tightened their lending requirements, which means a lot of this hot money has made its way to China, where it is fueling inflation. This is in addition to US1-2T of cash in Hong Kong banks which has nowhere to go except China investments. Too much liquidity fuels inflation.

I heard that (http://www.gfintegrity.org/content/view/634/72) $3.79 trillion in "dirty money" originating from China is stashed in tax havens like the Cayman Islands and the Emirates. The Chinese government may be hoping that some of that money can be brought back to the country in the form of Bitcoins.

Bitcoin Forum

Bitcoin => Press => Topic started by: hacknoid on December 04, 2013, 03:09:19 AM