2013-05-07 Bitcoin: The Tyranny Test

[matonis]

By Paul Rosenberg

"Bitcoin has now put governments and banks in the position of judging themselves. They will write their own verdicts."

http://lewrockwell.com/rosenberg/rosenberg-p17.1.html

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[cypherdoc]

Now that was good

[marcus_of_augustus]

Finally some sanity is introduced.

Sometimes, I really feel like now that the mainstream is showing up in the bitcoinosphere the level of intelligent, rational debate is being diluted to worthlessness and we are descending back into the screeching madness of the mob associated with fiat monies ... 

[Severian]

the screeching madness of the mob associated with fiat monies ... 

The Eternal September of Bitcoin is here.

[marcus_of_augustus]

the screeching madness of the mob associated with fiat monies ... 

The Eternal September of Bitcoin is here.

Quite ... maybe a market opportunity for a more discerning forum exists ... like say anyone with a bitcointalk.org post pre-first reward halving?

[GenTarkin]

man, this was an exceptionally brilliant article. I havent even thought of this side bitcoins...
very well done!

[Severian]

maybe a market opportunity for a more discerning forum exists ... like say anyone with a bitcointalk.org post pre-first reward halving?

An ethics test would be nice too.

[StarfishPrime]

the screeching madness of the mob associated with fiat monies ...  

The Eternal September of Bitcoin is here.

Quite ... maybe a market opportunity for a more discerning forum exists ... like say anyone with a bitcointalk.org post pre-first reward halving?

Arrrrrr.. best be careful what we're discerning . . many of us remember the pre-halving 'bad old days' of bitcoin when miners were gullible and pirates and their 'pass-through' accomplices lurked everywhere.

"The Tyranny Test" is brilliant. Begs the question why state-controlled media in China is running largely positive bitcoin stories, while the ECB identified bitcoin as a "potential threat" as early as last fall.

[Severian]

Begs the question why state-controlled media in China is running largely positive bitcoin stories, while the ECB identified bitcoin as a "potential threat" as early as last fall.

I think the Chinese govt. just woke up to Bitcoin precisely because it's a threat to the reputations of the ECB and the Federal Reserve.

[BitshireHashaway]

Finally some sanity is introduced.

Sometimes, I really feel like now that the mainstream is showing up in the bitcoinosphere the level of intelligent, rational debate is being diluted to worthlessness and we are descending back into the screeching madness of the mob associated with fiat monies ... 

+1

I agree that sometimes the bitcoinosphere's level of intelligence can drop but I mainly think that is due to all the newcomers who don't really know what's going on. Though, with that being said, it is always a great thing when some sanity is introduced.

[cypherdoc]

Begs the question why state-controlled media in China is running largely positive bitcoin stories, while the ECB identified bitcoin as a "potential threat" as early as last fall.

I think the Chinese govt. just woke up to Bitcoin precisely because it's a threat to the reputations of the ECB and the Federal Reserve.

if true, this could be an extraordinary event.

[Severian]

if true, this could be an extraordinary event.

I sometimes wonder if Bitcoin's creator was Chinese. It makes as much sense as anything as this unfolds.

[Dusty]

if true, this could be an extraordinary event.

I sometimes wonder if Bitcoin's creator was Chinese. It makes as much sense as anything as this unfolds.

Taken from here:

In total, China owns about 8 percent of publicly held U.S. debt. Of all the holders of U.S. debt China is the third-largest, behind only the Social Security Trust Fund's holdings of nearly $3 trillion and the Federal Reserve's nearly $2 trillion holdings in Treasury investments, purchased as part of its quantitative easing program to boost the economy.

So, if really China wants to hurt USA and it has just to dump his trillions, and that could trash the dollar overnight.

[cypherdoc]

if true, this could be an extraordinary event.

I sometimes wonder if Bitcoin's creator was Chinese. It makes as much sense as anything as this unfolds.

Taken from here:

In total, China owns about 8 percent of publicly held U.S. debt. Of all the holders of U.S. debt China is the third-largest, behind only the Social Security Trust Fund's holdings of nearly $3 trillion and the Federal Reserve's nearly $2 trillion holdings in Treasury investments, purchased as part of its quantitative easing program to boost the economy.

So, if really China wants to hurt USA and it has just to dump his trillions, and that could trash the dollar overnight.

Yes, but that would be a severe form of self immolation.

They've actually stopped buying us treasuries which might be considered step one.

Step two  would be to slowly sell them off as might be starting to occur now according to Bill Gross, while at the same time pursuing the dual strategy of gold and Bitcoin accumulation.

[BitshireHashaway]

Definitely one of the better articles that I have seen about bitcoins. I actually believe that this is what bitcoins are doing and I find this to be a good thing.

[Dusty]

So, if really China wants to hurt USA and it has just to dump his trillions, and that could trash the dollar overnight.

Yes, but that would be a severe form of self immolation.

Step two  would be to slowly sell them off as might be starting to occur now according to Bill Gross, while at the same time pursuing the dual strategy of gold and Bitcoin accumulation.

I'm not sure I understand this logic, can you please elaborate?

This is my reasoning, please point me the flaws:

case 1) China is holding trillions of dollars: if it sells them they become less valuable and conversely the Yen appreciates. When they have sold all of them they have a reserve of strong currency and no reserve of unuseful dollars

case 2) China buys bitcoins and/or gold so that the game of (gold) price suppression come to an end. PM and Bitcoin values soars, the dollar crashes. China is left with trillion of worthless dollars.

Why case #2 should be better than #1?

[zakalwe]

Nice One, I would like to read this kind of writing more largely on the press

[MoonShadow]

case 2) China buys bitcoins and/or gold so that the game of (gold) price suppression come to an end. PM and Bitcoin values soars, the dollar crashes. China is left with trillion of worthless dollars.

Why case #2 should be better than #1?

Several reasons, actually.

1) Dumping shows China's hand completely.  There is value to keeping the opposition in the dark for as long as possible.  In politics, he who is most upfront about his stragedy usually fails.

2) Dumping also would cause price shocks in both the gold markets and bitcoin markets, and thus China is unlikely to get as much for their dollars in the long run.

3) A controlled release also grants the opprotunity to reverse course, if conditions change dramaticly.

[cypherdoc]

So, if really China wants to hurt USA and it has just to dump his trillions, and that could trash the dollar overnight.

Yes, but that would be a severe form of self immolation.

Step two  would be to slowly sell them off as might be starting to occur now according to Bill Gross, while at the same time pursuing the dual strategy of gold and Bitcoin accumulation.

I'm not sure I understand this logic, can you please elaborate?

This is my reasoning, please point me the flaws:

case 1) China is holding trillions of dollars: if it sells them they become less valuable and conversely the Yen appreciates. When they have sold all of them they have a reserve of strong currency and no reserve of unuseful dollars

case 2) China buys bitcoins and/or gold so that the game of (gold) price suppression come to an end. PM and Bitcoin values soars, the dollar crashes. China is left with trillion of worthless dollars.

Why case #2 should be better than #1?

most of china's usd have been recycled back to the usa and converted into ust's:  http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

any hint of a selloff on their part would cause interest rates to spike and they could suffer severe losses on their remaining portfolio.  we know they've already stopped buying to a significant degree. 

if they want to decrease their exposure and undermine the USD world reserve currency status, as it seems they would very much like to do, the 2 pronged attack i outlined above would make sense. 

1.  sell ust's slowly.
2.  accumulate gold and Bitcoin.

we have hints that this is exactly what they are doing.

[MoonShadow]

There is also the internal economic problems that China must contend with.  The US is a large part of their manufacturing demands, and thus drives a large part of the employment prospects of their rising middle class.  Dumping their accumulations of US dollars would be almost as bad for their own economy as declaring war upon the US or a protectorate/trade ally (think Japan, South Korea or Singapore).  Their orders from the US would end almost immediately, and many current orders would be cancelled.  Their manufacturing economy would crash, layoffs would insue, followed by civil unrest in a culture not known for giving their leadership a pass when their quality of life suffers.