Let's use a simple example.
Fed loans US gov 1bil + 1% interest.
The US gov now has 1bil. Where does it get the 1% interest portion from to repay the debt? It has to be created first via someone else borrowing it into existence.
Assuming the U.S. tax base is productive enough, the 1% interest can be paid from production. It does not have to be paid though additional borrowing. Now the US gov repays the fed, but what about the new borrower? Where do they get the funds from to repay their debt + interest.
I assume you are referring to the problem that if all U.S. debt is paid back, there would be no more dollars. That is only a problem if the new borrower's debt and interest must be paid with dollars, and that problem exists with any currency -- even a gold-backed dollars, since no dollars would exist that could be bought with gold. Every new loan must be collateralized by something, hence if the economy does not expand fast enough to create new assets as collateral we get credit inflation. Existing assets must be artificially revalued higher in order to support new debt. Think of home prices, the underlying value of the home never changed. If you read the original Fed Reserve act, holding US government bonds was illegal. The fed could only lend against SHORT TERM self liquidating bills from the private sector. Ie The fisherman's IOU's would be the collateral for new fed credit. This was changed when they ammended the fed reserve act in the 1930's. Banks got in bed with the government and slowly Tier 1 capital assets became government bonds.
Gold's role was to extinguish debt. I bring a bank note(LIABILITY) and exchange it for Gold(Asset). Do you see the difference with your example? I am not extinguishing 1 form of debt(liability) with someone elses. Money is anything that extinguishes debt. It does not have to be gold, however ONLY production can repay debt. Everything else is merely a form of credit. We do not have "money" present in our system, it was removed in 1971.
A healthy bank backed its deposits by 2 things. Gold and real bills(self liquidating credit which matured into gold). This required trust, now trust requires prudence which is a virtue. You had to be sure the fisherman would make good. The economy could be expanded to the extent of your prudence. This is a functioning free market system. Money is backed by the productive capacity of your economy. We have nothing of the sort today, hence the boom(counterfeit credit) and bust nature of our system.
The reasoning behind gold was simple. Gold was and is the most saleabile ie liquid asset. You could get rid of large volumes of it without depressing the bid side. Real bills were the second most liquid credit instruments, since they matured in gold and were backed by real production.
I agree with you about the value of a gold-backed currency, but you lost me here. How does this relate to the belief that the principle plus interest exceeds the money supply and therefore can't be paid off? All these borrowing and IOU things have a common paradox: One can not lend out something that does not belong to him (That would be crime). So before the FED lend out money to the government, it must have the ownership of those money at the first place. This means that every dollar belongs to FED at the moment they were created. It also means that FED are exempt from the interest burden since they never need to pay it to anyone |
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How to prove that claim 2 is true? Unless all the customers report their balance in a public poll and no fake reporting
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Most of the video (except the FRB part) is correct
The ultimate question is: Who get the ownership of originally created base money, and what have they done for gaining this ownership?
Under a gold standard, money is created by gold mining, which is no different than any other type of work in society, that gives money fair value. But after US removed gold standard, money is created and owned by FED who is doing nothing. So, in principle the fiat money should worth nothing because there is no production cost, but they are still used to purchase things because other people are accepting them. This lead to the result that those who are creating money out of nothing can legally claim other people's work without doing anything
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Buffet don't even know where are all the money he made come from. From time to time we see entrepreneurs who don't understand monetary system make false claims about bitcoin ...
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Although he believes in company's true value, his company crashed 50% in 2008 crisis and he thanked government for bailout and QE. So he is only a player very dependent on the traditional monetary system and he doesn't understand how money works. Without FED, no Warren
This is so false and ridiculous, I'm actually going to take a second to correct you. Warren Buffett bailed out major companies during the crisis with cash injections, being rewarded handsomely for doing so. Goldman Sachs and General Electric come to mind... He thanked the government for the bailout for other reasons I won't begin to discuss since they are so off topic. Please study the facts: He injected 3 Billion to GE and 5 Billion to Goldman Sachs after the 08 crash, so his ability of injecting cash is neglectable comparing with what FED did: Printing Trillions of dollars to save those banks Or to say, he knows that the FED is going to inject trillions of dollars to pump up those companies, then why wouldn't he spend some dollars to enjoy the ride? |
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Most likely a login session on the phone was not terminated, so hacker simply re-enter bitstamp and at the same time email account is usually auto-login, no 2FA is required There is a weakness from bitstamp's side: You don't need 2FA code for withdraw. Since usually your email session is always logged in, once a malware took control of the device, he only need to wait until you logged into bitstamp I just checked my computer, my email session is always automatically logged in, so it is also possible a malware can withdraw all my coins when I logged into bitstamp. Scary but true  |
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...he doesn't understand how money works...
With only $58.2 Billion, he has a little wiggle room to learn.  (he could personally buy and sell the ENTIRE bitcoin market several times over) FED is printing $75 Billion per month right now, that is more than all he had during his lifetime. I think Warren is very aware of this, I remember that somewhere he said that his generation's success is largely coming from this huge monetary inflation scheme since 70's. But he selected to follow the game rule and benefit from it instead of changing the rules |
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Although he believes in company's true value, his company crashed 50% in 2008 crisis and he thanked government for bailout and QE. So he is only a player very dependent on the traditional monetary system and he doesn't understand how money works. Without FED, no Warren
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Someone tried to back-trace the payment from MTGOX to dig out their hot wallet address and find out that at least 6000 coins are in their possession http://c.blog.sina.com.cn/profile.php?blogid=56bced57890014kd----------------------------------------------------------------------- google translation: How to confirm the currency is MT.Gox ( I have found 6000 , we find together ) I did not expect before a microblogging 75,000 times viewed . It seems that everyone interested in this topic , I had begun to write about. Find all were carried out on blockchain.info. First, use your own MT payment address ( mine is 1KvHt6zjQVihCYwWc1R4iq1XD5XHFf8DE) query from the MT withdrawal transactions. It is clear that all of my payment address to fight currency addresses belong MT. Naturally, found a lot . Study it individually . One found a clue : 1GTzSqZnriRDQhYCuCogJWBdsLohbiQDjm. The address of coins from 1H8o8rMeKqTmzAYPzTJ9dsQS74gFhbo9Cb calling. The 1H8 this address , it is very special working mode , periodically collected from one address a lot of money, and then distributed to a number of addresses. Multiple addresses sent to two addresses are the conventional mode ( a receivable , a change- of ) , but an address to multiple addresses , non-conventional mode, normal users certainly do not, this should be a trading center kind of account management. So, I determined that this address is definitely the MT . So , you will find this address to 1H8 15djbnRFum3JNUdtC2kziifUMbfKxHeVq7 currency hit every 1 or 2 weeks . 15d and the number of coins that address treatment are very large , 1,000 or more. Its behavior is much like using a semi- cold wallet timed transfer mode . Continue to follow it . This address is often given 1KDaP3YfKPUZQ45dTYeRjaSCyVJYLQQpQQ 15d fight currency. 1KD often fight to 1Gi1jz9FahtMtCPTyUZnmp3Rwc97uVyoBj currency . 1Gi this address which now has 1,200 coins, yearning to play the last paragraph is February 15 , which indicates to February 15 , the address or control in the hands of the MT . 1Gi often fight to 1Drt3c8pSdrkyjuBiwVcSSixZwQtMZ3Tew currency . Behavior patterns 1Dr this address and 1H8 very much like , after receiving a large sum of Bitcoin , a decentralized call N addresses. Which is equal to the judgment strengthened 1H8 , which is a method of managing currency MT , which is more determining which two addresses belong MT. 1EFFTDrZYZy6s7qP2gCfeEWbnb9ViqdaxG often fight to 1Dr currency , the throughput of this address is also very large . 1EF now have 5000 coins, which played out on a currency is February 25 . That description as of February 25, MT have control over it . These are just fiddling results from a collection of addresses . If we work together to investigate , should be able to find more of the currency of MT . |
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RIPPLE tries to introduce the IOU concept from the very beginning, and this is a typical trick to scam customers by traditional financial institutions, so I never looked at it again
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yes you do make really valid points there, but again who though that bitcoin could go to $1000 in one year when buying at $10 ....
It took $6.8 billion to get from $10 to $500. It would take $63 billion to get to $5000/Bitcoin. A lot of people are counting on Wall St. and institutional investors to make that happen, but $63 billion is A LOT of money, even for Wall St. How likely is it that investors will come up with $63 billion to put into a speculative currency? FED is still printing $75 billion per month and it will take only one month to reach that goal, there are already trillions of dollars printed since 2008 and they are all waiting to be invested I just don't see any reason to change a money with limited supply for a money with unlimited supply. Do you urgently need those dollars to buy a yacht? 8000 coin is almost 1/2625 of the bitcoin money supply, but 6 million us dollar is almost nothing in USD monetary base, and it will continuously shrink due to exponentially increasing money supply of USD As for alt-coins, none of them have the infrastructure (hash power) to withstand an attack or hard fork |
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It is called localbitcoins
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Not easy at all, in fact there are still no way to secure the coin for noobs. All these require certain kind of IT competence and from time to time they still lose their coin/password
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An increase in money supply does not translate into inflation, because the government is using CPI to track the inflation, and most of the new products produced by increased money supply are not included in CPI, and typically only a small fraction of increased money supply will reach the society, majority of those money stay with bankers
There are many other aspects like cantillon effect, debt based money issuing, FRB to make the whole picture even more complicated, so a simple solution is to not believe anything those books/professors tell you and start a deflative currency and see which one works better
BTW, FRB uses 2 dimensional check book money supply to compare with 1 dimensional base money supply, it is also a trick to prevent people from seeing the truth
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Some experience from using localbitcoins
1. Reversable payment
Alice paid Bob and get the bitcoin, then she reverse the SEPA bank transfer
2. Stolen account
Alice using a stolen account to pay the Bob and get the bitcoin and then Bob's account is frozen by the banks after he released the bitcoin
3. Delayed payment
Alice paid Bob but Bob does not receive the payment in a week (Bank doubt that it is a bitcoin related transaction and intentionally delay the payment)
4. Future trading
Alice started the trade request but only do the bank transfer after the price rose
My experience is that person to person trading involves lots of fraud attempt from fraudulent buyers and sellers, even a well established trader can be fooled into some new type of scam
And as usual, liquidity and pricing is also a concern, you eventually need some large traders act as market maker to provide liquidity
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That is the beauty of bitcoin: No bail out, no too big to fail
And also a lesson to be very careful about centralized exchanges, users should never have large exposure on those platforms
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He lost a fortune in MTGOX and became furious |
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I still think that there is something much bigger going on, and they made up this story to cover what is really happening
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