How does bitcoin thrive if the fiat banking system is illiquid?
There's no possibility of bitcoin loans. And the only way someone who needs capital can get it in bitcoin is buy using fiat to acquire it, which as you stated is hard to get your hands on in Europe right now.
Bitcoin can work as currency when legacy system is running out of fiat money. Before, without fiat money merchants can't do trades, that will be a total stop for all commercial activities, but now they can use bitcoin, and forget about fiat money during the process Actually I don't think there will be any liquidity problem for fiat money system, since central banks can always create as much fiat money as they wish. There is a danger though, once they ran out of purchasable debt, they can not print any more, so if everyone refuse to borrow more money (include government), then central banks will not be able to print any more money(to buy debt) |
|
|
|
|
Small adjustment like interest rate is irrelevant now, the base money supply has increased by 500% since 2008. If GDP increase 5% per year, it will take about 30 years to reach that amount of money supply, and they have done it in 6 years, so they will not need to print money for the next 24 years, is that possible?
Since all of those money is already in the hands of commercial banks, we could imagine that there would be huge inflation due to 5x more money out there, but there was no inflation. This indicated that no matter how much money they print, money just can't get into the economy in any meaningful way. In fact banks have raised the criteria to get a loan, and the real income of the whole society is going down due to less loan and less consumption
Now people's mindset have changed to saving, that will last for decades, and any tightening of money supply will trigger a recession for sure
|
|
|
|
That's not how it works. When a bank creates a mortgage holding the lien on deed as collateral. IF in the event the borrower defaults, the bank can sell the house.
It is not your house until the mortage is paid.
If they want to own the house they would but it in the first place. Take off your tinfoil hat.
If a corporation sells a bond the bondholders lay claim to the assets. They don't own the company. If Apple went bankrupt, the bondholders don't own Apple.
Same as Treasury bonds that back money creation.
You are confusing asset and property. If you buy 1 share of AAPL stock. Thats what you own. Doesn't mean you can walk into their HQ and remove some desks and chair and claim your portion of ownership
The MBS the FED holds on its balance sheets are securities. They don't have any claims to the houses that are under those MBS
If Apple went bankrupt, the bond holder have the right to sell everything valuable in Apple and divide the return, bond holders have higher priority than stock holders in that case, even the stock holders are the owners of the company Of course FED would not buy house directly, that will expose the scheme directly under sun light, so they usually use complex terms like securities/lending etc... to mask the truth, if you failed to see the truth behind those masks, then it works. Banks don't even need that house, they need your debt. Debt is a much better form of asset than tangible assets, since it generates continuous return year over year, without maintenance Again these are technical details, the main problem is: If I could issue money backed by securities, I would buy out all the securities in this country by repeating the process, it is the same double spending behavior, which is strictly forbidden in bitcoin monetary system, but widely practiced by the central banks around the world |
|
|
|
At least we're past "it must be worth something if I paid money to get it." Good.
>It is demand created competition, and competition in turn increased the cost.
Sorta. There are different types of demand. The demand here is speculative, meaning "I bet someone will pay me more for this thing later."
That's how all artificial scarcity schemes (see: BTCeanie BTCabies) work.
True, there are also speculative demand, but basically all the investment works similarly: "I buy some paint/wine/real estate/domain and bet someone will pay me more for this thing later" Bitcoin is the digital asset on internet, since it is scarce, the demand will drive up its price And there are real demands like sending money oversea instantly, save for the long term, hedging against fiat money inflation etc... |
|
|
|
No, it is not a scam. Interest and fractional reserve banking is a scam.
This If people continuously dig out more gold than trade-able goods, then inflation is also possible |
|
|
|
...
Bitcoin is like gold, you must pay real resources to get it. ...
Just because something costs money to obtain doesn't make it valuable. If I charge you $4000 for a $2000 computer I've spent a week beating to a pulp with a sledgehammer, you didn't get a great deal. Even though a week of my time is worth $2000, and the computer did cost me $2000. I didn't create value, I have *destroyed it*. Just like you spending $2000 on thumb-twiddling machines & burning $2000 of electricity doesn't create $4000 of value, it merely *destroys* it.  You mixed the cause and the result: It is demand created competition, and competition in turn increased the cost. In 2009 it cost almost nothing to get bitcoin since there was no serious demand Fiat money on the other hand is a monopole system, no matter how high the demand is, there is no open competition to produce fiat money, thus the production cost will always be zero |
|
|
|
...When they buy gov. bonds with this newly created currency they are swapping something that they can simply print out of thin air and then collecting interest on it... And BTC is not created "out of thin air"? And please don't start again with the old saw that BTC represents wasted electricity & digital thumb-twiddling. Not in the same sense that fiat is created, that's correct. If Bitcoin didn't have a limit of 21 million and was always inflating at some rate determined by a privileged elite, then it would be the same as fiat. You seem to have missed my point, that being: both fiat and Bitcoin are created "out of thin air." Caveat: fiat has an existent economy behind it, "stuff" backing it--armies, cows, cars, etc., etc. Bitcoin, OTOH, does not. It merely dilutes the currencies of existent economies, much like counterfeit money. The 21mil BTC limit is neither here nor there, that can easily be changed with a hardfork. Bitcoin is like gold, you must pay real resources to get it. Fiat money is a trick, central banks pay nothing to get it. Fiat's backing is based on a consensus, so does bitcoin, bitcoin can be backed by armies, cows, cars, etc... as long as that consensus is reached |
|
|
|
I just created 100 pennies and I loaned them out to you + interest… How is it possible for you to pay me the 101 pennies you now legally owe me if only 100 pennies are in circulation?
Because that's not how it works. There are far more "pennies" in circulation. It's true that debts exceed the money supply but that's not neccissarily a problem since each "penny" can be spent more than once. In fact, if I remember correctly, the velocity of money in the US (how often each unit of currency is spent in a year) is around 4. Change the 100 pennies to 100 trillion pennies, same principle applies Velocity of money has nothing to do with money creation. You move a dollar one million times between your left pocket and your right pocket, and voila you are now a millionaire  |
|
|
|
|
Back to the topic of RBD. As this thread explained, if you can issue money backed by assets, then you could eventually buy out the whole country by repeating the money issuing process again and again
This bring some questions:
1. If this power is so huge, why government gave it to FED, which is a privately owned organization? Is it because this power just realized since the removal of gold standard and the power was not there under a gold standard?
2. Why there is no large scale of political/military fight over this power, or a supervisor regulating this power? Is it because not one in a million understand it, like Keynes said?
|
|
|
|
Ok, you loose your (worthless) house, but you've been living and consuming like a prince, and nobody can do anything about it.
Exactly, MBS are just securitised houses, just like monetized assets, different way to make things trad-able, they are essentially some kind of certificate of value. Since the house value crashed due to large amount of default, FED came out to support the price, the only one benefited is the one borrowed heavily and stayed in the same boat as banks |
|
|
|
|
Not for everyone, their wallet will be hacked/lost/forgotten ... In today's fiat system they simply turn to banks for help under such situation, but no one would help them in bitcoin world
|
|
|
|
|
In fact, fiat money is on the verge of collapse, they need bitcoin to save them
Keynes said that not one in a million could discover the fiat money scam, but with internet there will soon be millions understand this scam, what will happen by then is totally unknown
|
|
|
|
I remember an old movie "In time" where every one carrying their money(time) with them privately, and they have to hire bodyguards against theft and robbery  |
|
|
|
But let's put it aside and start with basics without involving lending. What RBD theory indicated has nothing to do with FRB, it is this part I am most interested in this thread
You are right, these are two different subjects. I think the RBD is a system that is slightly better than "just printing money", for two reasons. The first reason is that "just printing money" is too openly evident. People wouldn't trust the ministery of finance that prints *directly* dollar bills. It wouldn't seem fair. The seigniorage is too evident and visible. Yes, with the world "backed by assets xxx", people will not question the credibility of those fiat money I think all of these strange problem is rooted from this "issuing money" action. There is only one way to stop any kind of seigniorage, e.g. no one is allowed to issue money backed by anything, money must be produced just like any other commodities and goods/services Comparing two cases: 1. you use gold coin to buy a beer, and after you drink it, you have nothing left 2. you use gold coin as collateral and issue a paper note, and use that paper note to buy a beer, after your drink it, you still have the gold coin, especially when economy is expanding and there is a lack of paper note, you might never receive a redeem request and you can even issue another paper note to spend again So, when you issue paper notes backed by gold, you can issue much more money to spend due to not all of the people will redeem the gold with paper note (In fact, in today's system, only FED have the right to take back paper notes and sell assets). Now this is back to the practice of fractional reserve banking, so FRB and RBD infact are closely related practices, once you follow the RBD theory to issue money, the next step will be FRB |
|
|
|
Great insight to infer mbs program to a tend towards owning all land.. However as all suuply is dried up and becomes unaffordable the whole country will default.. Why would the govt have incentive to do this? Or is it judt s byproduct of a malfunctioning system nearing its end? Its like askmg miners to collude so they can double spend.. Theres no incentive to break the network?
Is buying the mbs somehow a way to foot the bill for the interest on the outstanding loans via printing paper through selling treasury notes?
I think this inevitably leads to more and more assets get defaulted and bought up by the banks, and they might rent those house to you later and become the land lord of the whole country Treasury note is just another name of debt, banks only buy debts nowadays (with money out of thin air), and eventually the whole country will be the debt slave of banks |
|
|
|
Exactly, this put everything purchasable in the current society under the radar of FED, they could buy all the most valuable assets in the whole country. And this is especially effective during a crisis, where everyone want money
That is true, but it is not linked to any RBD specifically. It is related to any fiat issuing system. The one issuing fiat can issue in principle so much that he can buy up anything, as long as that fiat is imposed as legal tender. And then we come to the second part: the state potentially owns anything anyways, if the state has no limits on taxation. Even without fiat, even with gold as money, the state can confiscate anything. Directly, or through taxation. I think you overestimated the power of state. State is not an abstracted super power, it consists of different actors who run vital part of it, and the relation between these people usually are quite complex, it is all politics, violence is seldom involved John Law's failure is not due to those poor farmers on the street that wish to become millionaire with his Mississippi stocks, but those nobles against his plan. Those nobles organized large scale of redeem at the beginning of his plan to test if his bank indeed has enough gold backing his paper money. And when the Mississippi stocks reached the top, they bought lots of lands and other assets with his paper money, and that crashed the value of his paper money Back to today, it seems that governments around the world have lots of power against their citizen, but they don't have much power against banks, in fact they all owe banks money |
|
|
|
|
Start an exchange -> get lots of customer deposit -> claim to be hacked -> profit
Bitcoin lost is not in any protection of law, only fiat money, if they could just return the fiat money to users, they will get away leagally
|
|
|
|
Sure, time travel could kill. Imagine I could go back to the time when your mom was a teenager, and drive over her with a truck. You'd be no more.
time travel paradox solution: multiverse answer: in a multiverse basically everything would be possible, the different timeline you went back too could/would develop completely differently then your original timeline. so might be possible you went back in time and btc will be worthless after you bought alot  This If you travel back in time, you will change the randomness of the network and cause the blockchain to be totally different than the blockchain that we know today The world will just fork into another reality that is unrelated to the reality you know today Actually I don't believe the multiverse theory since it creates energy out of nothing when the world splits into two reality, and we all know that energy will just go down and entropy is getting higher and higher over time. So time travel is impossible at least in our universe |
|
|
|
|
Exactly when people think that they have learned the pattern, the market will change its behavior
|
|
|
|
|
Show Posts
