The Great Reflation Is Underway

[BobK71]

Money, debt, and finance can get as complicated as you want.  But they can also be stunningly simple when looked at the right way.  And I like simple.
 
Basically, you have real wealth and financial wealth.  Real wealth is made up of goods, services, infrastructure, knowledge, etc.  Financial wealth is the various tickets that are claims on real wealth: money, bonds, stocks, derivatives, etc.
 
Over the modern centuries, top politicians and bankers have tended to issue too much financial wealth for the real wealth available.  To prevent a collapse of savers' confidence in the financial wealth, power and deception are used to prop up its value.  One of the favorites is somehow to keep the price of goods and services low by concentrating financial wealth.  As long as not all the dollars chase goods at the same time, all the saved dollars can appear to be still valuable.
 
At this point, the elites can play all kinds of tricks to keep this game afloat, for a while, but ultimately, the only way to true stability is to let prices rise.  When prices go up, the values of the financial wealth and real wealth will be more equal.  Real faith will return to the financial wealth, and the elites can go back to issuing more of it without worry.
 
The only problem with inflation, though, is that the public will lose faith in state-issued money.  This is the reason why the elites have tried not to resort to inflation until the last possible minute.  Helicopter money hasn't come, yet.

Enter cryptocurrencies.  If the elites can get the public to believe in crypto as a decentralized, limited-quantity money, then they can feel free to create inflation by issuing more money and debt: the normally embarrassing depreciation of state-issued money against non-state-issued money as a result of the inflation will be described by central banks and the media as free-market demand for a new type of money.  Crypto will help limit the demand for gold and silver, whose appreciation will be embarrassing.  And the state-issued money will be stable at the new 'exchange rate,' since the elites are likely buying up many bitcoins now to prepare for future suppression of Bitcoin's rise.

Imagine late 19th century central banks suddenly receiving a lot of gold from heaven, and you have almost the right picture.  Just that they have to first convince the public that this is gold.

This being a perfect play for the elites, plus the many observations in support of this story in recent months and years, we really have to consider the good chance that the Great Reflation is underway as we speak.

[Hydrogen]

There's a very human tendency to define conceptual abstracts in terms of polar inverse opposites.

Light and dark. Good and evil. Black and white. Love and hate. Moral and immoral.

Its not for me to say if your depiction of "real wealth" versus "financial wealth" fits into a dualistic abstract framework.

Many have said the united states has not had real economic growth in at least a decade. The rationalize circumstances such that the financial and real estate sectors growing do not represent true economic growth. Others view derivatives and overprinting of money as not representing real wealth or value. I think you might be on to something with "fake wealth" being redefined to represent "true wealth". There may be some misinformation campaigns in place to leverage a publics collective lack of knowledge and education.

The publicity campaign against bitcoin and crypto could represent one of said campaigns.

[BobK71]

There's a very human tendency to define conceptual abstracts in terms of polar inverse opposites.

Light and dark. Good and evil. Black and white. Love and hate. Moral and immoral.

Its not for me to say if your depiction of "real wealth" versus "financial wealth" fits into a dualistic abstract framework.

Thank you for being a lone reply!  I'm not sure how I come across, but certainly my thinking is more nuanced than my writing in most cases, as you can only fit so much into something people will read.

Certainly financial wealth is not worthless.  At the beginning of the state-driven financial inflation cycle, it is, objectively speaking, usually quite conducive to growth and prosperity.  It's only gradually, as time goes on, that the distortions really kick in, requiring deception to keep the system afloat, and where these efforts become destructive.

Many have said the united states has not had real economic growth in at least a decade. The rationalize circumstances such that the financial and real estate sectors growing do not represent true economic growth. Others view derivatives and overprinting of money as not representing real wealth or value. I think you might be on to something with "fake wealth" being redefined to represent "true wealth".

It could be a version of that 'comparative advantage' thing...  The US does a good and cheap job at 'manufacturing' money and financial assets.  The emerging markets do so with real goods.  So they take our money and we take their goods.  This is classic 'free trade' and works as long as no one thinks about how much more financial wealth exists than real wealth, at current prices.

There may be some misinformation campaigns in place to leverage a publics collective lack of knowledge and education.

This has been the case throughout modern history.  Plus, the modern state-bank alliance is good at dividing the world public into groups and giving each an appropriate share of the loot, to keep them quiet.  The British and American populations were big beneficiaries at the early stages of their respective empires.  (And so are Bitcoin holders today!)

But, trust me, all of this 'benefit' will come back to bite the 'beneficiaries.'  Including members of the elites themselves.  There's got to be an immutable law somewhere, that says we lose happiness, the more we live apart from reality and from fairness with each other.  Of this, I can't spell out a proof, but I have a strong feeling this is the case.

The publicity campaign against bitcoin and crypto could represent one of said campaigns.

Jamie Dimon may just be trying to cool the Bitcoin market a bit.  He said the same thing when Bitcoin was in the low hundreds.

The major signs I see of elite promotion of cryptos are:

- The price rise.  This speaks volumes when the elites could have killed it with laws.

- The unknown buyer of cryptos shelling out $60 million at a time, over months.  What private entity would put that kind of funds at risk?

- The BIS ('central bank of central banks') recent release of the 'new taxonomy of money' where state money is no longer solely legitimate as today's economists like to say.  Instead, a plethora of monetary forms are recognized, including precious metals and cryptos.  Most significantly, it states that state-issued cryptos won't compete with non-state cryptos by trying to be limited-supply.

- In the political sphere, the disappearance of talk about Bitcoin being a crime-enabler and the need to tighten control over it.  The appearance (in a small way) of proposals to help cryptos.

- The SEC's quick response to the need to control the proliferation of ICOs.

- Between an essay by an ex-central-banker from South Africa and the ECB's recent announcement, it's pretty clear that the Western elites are going to adopt the narrative that cryptos' rise is simply due to market demand, and that authorities won't and shouldn't interfere.  This sounds morally impeccable, but is highly misleading as a description of reality.  Of course, it will benefit cryptos.

[BobK71]

So what will be the consequences of reflation?

We'll see high inflation for a while, but probably lower in the US than in Europe and Japan.  We'll also see good job and economic growth, and lots of stimulus and redistribution to the poor from governments and central banks to keep social tension low.

So, young and working people will do well.  Savers and retirees will lose a lot of their savings' value.  This should be expected from what is, essentially, a partial default on past debt via inflation.

The world should enjoy more peace, as the Western elites won't have much need to use conflicts and wars to make countries support their financial assets.

In a word, it will be the great reset.

[BobK71]

Which assets will do well *after* everyone knows about the reflation?

Obviously, bonds and cash will do poorly, unless you buy bonds when people are over-dumping them, and you hope for an end to the inflation soon.  Bank interest will go up.

Stocks and real estate should do well, as these represent a piece of limited-supply real wealth in a growing economy.

Bitcoin and gold will stagnate after reaching a very high value (very high at least in the case of Bitcoin.)  This is a major part of the final goal of the entire exercise, and this is probably what the elites will get.

[DuaLipa]

Which assets will do well *after* everyone knows about the reflation?

Obviously, bonds and cash will do poorly, unless you buy bonds when people are over-dumping them, and you hope for an end to the inflation soon.  Bank interest will go up.

Stocks and real estate should do well, as these represent a piece of limited-supply real wealth in a growing economy.

Bitcoin and gold will stagnate after reaching a very high value (very high at least in the case of Bitcoin.)  This is a major part of the final goal of the entire exercise, and this is probably what the elites will get.

Reflation is hard to exist in the economy. If it happens, as you mentioned, bonds and cash will be very very weak after all and people will be seeking another options. This is the BTC!

[pginvest]

There is a certain amount to be said for owning revenue generating property in whatever guise it comes. If that is in the form of fiat money that inflates away over time in a predictabe way that works, the tricky part is when confidence is lost - see Zimbabwe for example. BTC is not immune from crisis in confidence either, but the benefit it does have is transparent operation and supply. Nobody can suddenly introduce another 21,000,000 out of a hat.

Real land, goods producing companies and factories, and service companies are also good bets.

[BobK71]

Reflation is hard to exist in the economy.

I totally understand, 9 long years after the global financial crisis, the elites just can't seem to get inflation going.  Every time there's any sign of it, the hope is quickly crushed.

Or so they say...  The truth is that the elites can *always* get inflation if they want it.  All they have to do is print money and issue public debt until they get the inflation.  So it's a matter of 'won't' rather than 'can't.'

So why such a low inflation?  The elites understand trust in their money is low after the financial crisis.  So they keep their stimulus as low as possible, so long as the economic pain doesn't threaten their power.  It has been this way since the dawn of the modern age.  When assets inflate, everyone benefits, and the elites most of all.  When assets crash, ordinary people suffer most.

The only way to have inflation but keep their monetary power is to have a one-time devaluation against gold (or whatever today's flexible, derivative-trading-based equivalent is.)  Their state money will be stable at the new price of gold, if they devalue big enough.  But the problem would be, of course, people will start thinking, if there is 'one-time', there might be a 'next-time' whether the elites want to or not.  So they won't want to devalue against gold except as a last resort.

But here come cryptocurrencies.  A 'devaluation' against cryptos can be sold as simply the emergence of a widely popular new money.  Then the elites can have their cake and eat it too.  As I said, it's a perfect plan.

[Hydrogen]

Thank you for being a lone reply!  I'm not sure how I come across, but certainly my thinking is more nuanced than my writing in most cases, as you can only fit so much into something people will read.

Your post was very quickly buried by spammers inhabiting this section. They appear to bury attempts at intelligent discussion here almost as if they receive a lifetime achievement award for it. I try to reply only to posts with less than 100 responses on pages 2, 3, 4, etc. That seems to help.

Certainly financial wealth is not worthless.  At the beginning of the state-driven financial inflation cycle, it is, objectively speaking, usually quite conducive to growth and prosperity.  It's only gradually, as time goes on, that the distortions really kick in, requiring deception to keep the system afloat, and where these efforts become destructive.

I think at the beginning of the state-driven financial inflation cycle in the united states around 1913 when income taxes were passed...  All americans were taxed @ 1% of income. The wealthy were taxed @ 6% of income.

That could explain why the beginning of inflation cycles are prosperous. As time passes and taxes are hiked 50% to 70% of income it has a strangling effect upon an economy and everyday life. There are massive diminishing returns for every $1 taxed.

Trump's initial proposal, reducing income taxes and the corporate tax may be the only opportunity we have to escape the state's insistence on attempting to tax its way into prosperity.

It could be a version of that 'comparative advantage' thing...  The US does a good and cheap job at 'manufacturing' money and financial assets.  The emerging markets do so with real goods.  So they take our money and we take their goods.  This is classic 'free trade' and works as long as no one thinks about how much more financial wealth exists than real wealth, at current prices.

This has been the case throughout modern history.  Plus, the modern state-bank alliance is good at dividing the world public into groups and giving each an appropriate share of the loot, to keep them quiet.  The British and American populations were big beneficiaries at the early stages of their respective empires.  (And so are Bitcoin holders today!)

But, trust me, all of this 'benefit' will come back to bite the 'beneficiaries.'  Including members of the elites themselves.  There's got to be an immutable law somewhere, that says we lose happiness, the more we live apart from reality and from fairness with each other.  Of this, I can't spell out a proof, but I have a strong feeling this is the case.

Here is an interesting piece done on that very topic, if you ever feel like reading. 

How Economic Inequality Is (Literally) Making Us Sick

Imagine there was one changeable factor that affected virtually every measure of a country’s health— including life expectancy, crime rates, addiction, obesity, infant mortality, stroke, academic achievement, happiness and even overall prosperity. Indeed, this factor actually exists.

It’s called economic inequality. A growing body of research suggests that such inequality — more so than income or absolute wealth alone — has a profound influence on a population’s health, in every socioeconomic group from rich to middle class to poor.

As the protests against increasing inequities between rich and poor spread from Wall Street, it’s clear that the issue is crucial — not least for the understanding of human health. On Wednesday in Rio, in fact, a World Health Organization conference focused on related issues is being attended by high-level health officials from at least 60 nations around the world.

Economic inequality is measured by looking at the distribution of wealth and income in a society, not the general wealth of a country. At a basic level, a country’s overall economic success does predict its people’s well-being, but the healthiest and happiest countries in the world are not the richest. Rather, they are countries where wealth is shared widely and more equally.

One obvious way in which economic equality may improve health is by reducing barriers to health care among the poor. But it turns out that the health gap exists even in countries with national health services, so the roots of the problem appear to reach deeper than that. Indeed, they may go back to the dominance hierarchies of our primate ancestors.

As studies of wild baboons in Africa have shown, there are certain key side effects of inequality — namely, stress. Baboons have a rigidly enforced social hierarchy in which fights to win alpha status are common and higher-ranking males constantly abuse and bully those below them. Not surprisingly, this results in chronically elevated levels of stress hormones in the lower ranks.

Chronically high stress hormone levels are bad news, for both humans and baboons. While these hormones can be helpful in short-term fight-or-flight situations, if they are elevated over long periods of time, they increase the risk of virtually all major mental and physical illnesses, including stroke, heart disease, diabetes, depression, infectious disease, many cancers and, of course, all types of addictions.

In humans, in fact, differences in health linked to social status — which tracks closely with economic status — have often been attributed only to addictions and to the generally bad health habits of the poor, such as eating a lousy diet. But baboons don’t have these “lifestyle factors” and yet increased mortality in the lower ranks is still seen.

Human studies bear out the association between low socioeconomic status and ill health. Sir Michael Marmot, professor of epidemiology at University College London, has spent decades looking at the effects of status differences in a population very different from baboons: British civil servants working in the government bureaucracy based in Whitehall Street in London.

Marmot found large health differences across the social scale. “There are two striking findings. The first was that there was about a threefold difference between the top and bottom in mortality. That’s absolutely enormous,” he says. “The second was that it wasn’t just a difference between the top and bottom; it was what I called a social gradient. There was a stepwise relationship between your socioeconomic position and your health.”

He adds, “Your readers who are not at the bottom [may want to know] that the second from the top had worse health and higher mortality than the top and the third was worse than the second.”

The effect is much more profound than that seen in baboon societies. As Stanford biologist Robert Sapolsky, who led much of the research in stress in African baboons, once told me: “When humans invented inequality and socioeconomic status, they came up with a dominance hierarchy that subordinates like nothing the primate world has ever seen before.”

Moreover, Marmot points out, the people who were on the “bottom” in his research were not poor or unemployed. “In Whitehall, we’re not dealing with poverty. We’re dealing with people in stable white collar employment and [still we see] this graded relationship between where they are in the hierarchy and health,” he says.

When Marmot and his colleagues controlled for lifestyle factors like smoking and lack of exercise in the lower socioeconomic groups, the gradient remained. “Those things accounted for about a third of the gradient,” he says, noting that you have to look for the “causes of the causes” — the reasons that the lower classes might be driven to smoke, drink, take drugs or indulge in sweet, fatty foods. “It’s now been described the world over,” Marmot says.

Indeed, in country-to-country comparisons, researchers find that the greater the difference between the richest and the poorest in a society, the worse off everyone in that society seems to be. “It looks as if what inequality does is amplifies the effect of social status differences,” says Richard Wilkinson, an epidemiologist and co-author of the British bestseller The Spirit Level: Why Greater Equality Makes Societies Stronger.

In countries such as Japan and those in Scandinavia, which have the lowest levels of socioeconomic inequality in the developed world, the populations also enjoy overall greater life expectancy, lower infant mortality, reduced obesity, heart disease and mental illnesses, and lower rates of murder and addictions, compared with nations with high inequality like the U.K., and even more so, the U.S. Countries with wider equality also have higher levels of academic achievement and happiness.

One study in Finland found that mortality rates were twice as high in the poorest people as in the richest, a much less stark difference than that seen in Whitehall, where bottom-of-the-ladder folks had a threefold higher mortality risk than those at the top. Marmot cautions that such comparisons are hard to make accurately and that even in relatively equal countries, some status differences still exist. Still, he says, “Fairly detailed comparisons done across Europe suggest that the magnitude of the gradient is less in Nordic countries.”

So how exactly does inequality lead to so much stress? By degrading our relationships with one another. “The most important pathway is the effect of inequality on the quality of social relationships in a society,” says Wilkinson. “I think the more unequal you get, the more competitive social relationships become, because there’s more status competition.”

And because good relationships are crucial for protecting people from stress, socioeconomic inequality creates an environment in which people with the most stress can’t counter its negative health effects. This social competition degrades relationships and erodes trust across the socioeconomic spectrum — and not just among those on the bottom. (More equal societies also have higher levels of trust.)

Although researchers like Marmot haven’t been able to study the top 1%, at least one recent finding in baboons should give pause even to the very well-off.

The study found that alpha males — those at the very peak of the hierarchy — were actually just as stressed as their lowest-ranked followers. The least stressed among the baboon troops were the beta males, the No. 2’s in the hierarchy. Unlike the alphas, they could chill out and reap the perks of power without constantly having to fight off challengers.

Even when you’re at the top, then, inequality affects you and a gradient always remains for those who are successively lower down.  But it’s not inevitable: in one baboon troop Sapolsky studied, rank appeared not to affect stress and health. What happened there was that the meanest top-ranked animals had died off due to eating tainted meat, leaving the mellower ones in charge, which reduced rank-related bullying.

In the U.S., inequality has been rising since the 1980s. Between WWII and Ronald Reagan’s election to the presidency, average income grew by $19,000. The bottom 90% of the country received 65% of that increase.

Between 1981 and 2008, however, average income grew by around $12,000. About 96% of that went to the top 10% richest people in the country. The ratio of pay between CEOs and average workers also became much more extreme over the same time period: in 1980, it was around 35 to 1. Today it is about 185 to 1.

If we want to be healthier and happier, we can’t ignore inequality.

http://healthland.time.com/2011/10/19/how-economic-inequality-is-literally-making-us-sick/

Jamie Dimon may just be trying to cool the Bitcoin market a bit.  He said the same thing when Bitcoin was in the low hundreds.

The major signs I see of elite promotion of cryptos are:

- The price rise.  This speaks volumes when the elites could have killed it with laws.

- The unknown buyer of cryptos shelling out $60 million at a time, over months.  What private entity would put that kind of funds at risk?

- The BIS ('central bank of central banks') recent release of the 'new taxonomy of money' where state money is no longer solely legitimate as today's economists like to say.  Instead, a plethora of monetary forms are recognized, including precious metals and cryptos.  Most significantly, it states that state-issued cryptos won't compete with non-state cryptos by trying to be limited-supply.

- In the political sphere, the disappearance of talk about Bitcoin being a crime-enabler and the need to tighten control over it.  The appearance (in a small way) of proposals to help cryptos.

- The SEC's quick response to the need to control the proliferation of ICOs.

- Between an essay by an ex-central-banker from South Africa and the ECB's recent announcement, it's pretty clear that the Western elites are going to adopt the narrative that cryptos' rise is simply due to market demand, and that authorities won't and shouldn't interfere.  This sounds morally impeccable, but is highly misleading as a description of reality.  Of course, it will benefit cryptos.

Good overview.

I don't understand why the wealthy bother monetizing their already impressive holdings. Many of them don't do seem to do much with the wealth they have other than buy overpriced junk.  

[Agamemnus]

Interesting that you would call it that lol. I hear that it's a deflationary currency and will be balancing out the debt that is currently circulating in US dollars.

[manselr]

If the so called elites are buying bitcoin instead of banning it, it just makes already rich bitcoin whales (which have pro-crypto agendas) richer. The amount of BTC they would need to buy is simply too high.

They can't do that much beyond causing price crashes with bans, and we already saw how that played out for China. We are about to hit an all time high after China basically banned all exchanges, think about that again.

All they can do with bans is temporal price crashes which will get bought up again, restoring confidence since the more times bitcoin resurges after bans, the less effective said bans are. This is why the market has not reacted at all at the South Korean ICO ban and Swiss ICO ban. Once you do it once, the next time is not interesting for the market, so the next time exchanges are banned somewhere else, it will be the same. You simply can't stop this at this point, pandora's box has been opened. Get in and get yourself a strong bitcoin position or be lefit behind, no other options.

[OROBTC]

...

In my mind there is little doubt that The Elite want more and more.  And they can (and do) rig the system to their benefit.

I have no idea how big the role the Elite plays in Bitcoin, but I do accept the idea that they are buying it on a larger sale than is realized.

Yet, the Elite NEED the rest of us, if "they" destroy the 90% (as per rumors re "Georgia Guidestones"), then they lose their comfortable lives...

IMO the best we can do is to stay alert and diversified in our savings.  BTC has a real role to play, as does gold, among other investments.

[mrayazgul]

It is never that far away and it will always happen, well for quite some time. People follow the rumors and the fear and drop and run, but not the big boys and not the ones that make the markets hum, that is where the price gets most of its power and it is a great thing. No need to worry, speed bumps here and there and the rest is smooth sailing.

[BobK71]

Your post was very quickly buried by spammers inhabiting this section. They appear to bury attempts at intelligent discussion here almost as if they receive a lifetime achievement award for it. I try to reply only to posts with less than 100 responses on pages 2, 3, 4, etc. That seems to help.

Interesting...

I think at the beginning of the state-driven financial inflation cycle in the united states around 1913 when income taxes were passed...  All americans were taxed @ 1% of income. The wealthy were taxed @ 6% of income.

That could explain why the beginning of inflation cycles are prosperous. As time passes and taxes are hiked 50% to 70% of income it has a strangling effect upon an economy and everyday life. There are massive diminishing returns for every $1 taxed.

Trump's initial proposal, reducing income taxes and the corporate tax may be the only opportunity we have to escape the state's insistence on attempting to tax its way into prosperity.

For sure, the beginning of the cycle is the most free-market and democracy based society.  (We want the world to lend us their money, right?)  Things go downhill from there, if not by design, then as a clear consequence of the design.

Here is an interesting piece done on that very topic, if you ever feel like reading.  

http://healthland.time.com/2011/10/19/how-economic-inequality-is-literally-making-us-sick/

Thank you.  That is good.  I too have a feeling happiness is related to being connected and trusted.  When you have a society whose core nature is deception, you can see how that might be a problem.

Good overview.

I don't understand why the wealthy bother monetizing their already impressive holdings. Many of them don't do seem to do much with the wealth they have other than buy overpriced junk.  

[BobK71]

Interesting that you would call it that lol. I hear that it's a deflationary currency and will be balancing out the debt that is currently circulating in US dollars.

Well, think of gold.  Gold and silver are deflationary, right?   But for about 90% of the modern age, the elites didn't suppress, but used gold and silver to enhance their ability to issue promises that gave them their power and wealth.

You can use a state-free money to lend trust to your issued money, if the combination of how much you own, how much the state-free money is trusted, what the current exchange rates are, and how much debt you have outstanding is right.

In fact, it may well be that the 10% of modern history that used totally fiat money is the one that must be abandoned, from the elites' point of view.  Most economists have tried to praise fiat money (and remember they praised the gold standard, when that was in effect -- both times saying just what the elites want/wanted them to say.)  Ultimately, though, it may well be that the fiat experiment was doomed to fail from day one.

How do you get inflation, which you need, out of a deflationary money?  By changing the parameters of that combination above.  (Good chance Bitcoin will go up a lot!)

[jaysabi]

Money, debt, and finance can get as complicated as you want.  But they can also be stunningly simple when looked at the right way.  And I like simple.
 
Basically, you have real wealth and financial wealth.  Real wealth is made up of goods, services, infrastructure, knowledge, etc.  Financial wealth is the various tickets that are claims on real wealth: money, bonds, stocks, derivatives, etc.
 
Over the modern centuries, top politicians and bankers have tended to issue too much financial wealth for the real wealth available.  To prevent a collapse of savers' confidence in the financial wealth, power and deception are used to prop up its value.  One of the favorites is somehow to keep the price of goods and services low by concentrating financial wealth.  As long as not all the dollars chase goods at the same time, all the saved dollars can appear to be still valuable.
 
At this point, the elites can play all kinds of tricks to keep this game afloat, for a while, but ultimately, the only way to true stability is to let prices rise.  When prices go up, the values of the financial wealth and real wealth will be more equal.  Real faith will return to the financial wealth, and the elites can go back to issuing more of it without worry.
 
The only problem with inflation, though, is that the public will lose faith in state-issued money.  This is the reason why the elites have tried not to resort to inflation until the last possible minute.  Helicopter money hasn't come, yet.

Enter cryptocurrencies.  If the elites can get the public to believe in crypto as a decentralized, limited-quantity money, then they can feel free to create inflation by issuing more money and debt: the normally embarrassing depreciation of state-issued money against non-state-issued money as a result of the inflation will be described by central banks and the media as free-market demand for a new type of money.  Crypto will help limit the demand for gold and silver, whose appreciation will be embarrassing.  And the state-issued money will be stable at the new 'exchange rate,' since the elites are likely buying up many bitcoins now to prepare for future suppression of Bitcoin's rise.

Imagine late 19th century central banks suddenly receiving a lot of gold from heaven, and you have almost the right picture.  Just that they have to first convince the public that this is gold.

This being a perfect play for the elites, plus the many observations in support of this story in recent months and years, we really have to consider the good chance that the Great Reflation is underway as we speak.

I find parts of your post really interesting, as it's an eloquent statement of ideas I've been thinking about for a long time, particularly the idea of the accumulation of "wealth" being more of a concept than an actuality, and also being necessary to keep prices stable. However, where I would differ from you is that you seem to view this as a conspiratorial conceit that's been implemented, and not the natural state that arises in a large group of self-interested and rational economic actors looking to create stability. Also consider that so much "wealth" is in the form of debt, which is just an expectation of future wealth. When the goods and services underwriting that debt are realized, the debt can be serviced. When they are not, the debt gets written off and that money essentially disappears from the economy. I think the default of debt is a natural way the system prunes itself and helps to prevent money creation from running away on itself, although that's not to say it makes it impossible. But I don't see crypto playing in to your idea at all, or being part of a concerted effort to game the monetary system by the "elites." 

[BobK71]

I find parts of your post really interesting, as it's an eloquent statement of ideas I've been thinking about for a long time, particularly the idea of the accumulation of "wealth" being more of a concept than an actuality, and also being necessary to keep prices stable. However, where I would differ from you is that you seem to view this as a conspiratorial conceit that's been implemented, and not the natural state that arises in a large group of self-interested and rational economic actors looking to create stability. Also consider that so much "wealth" is in the form of debt, which is just an expectation of future wealth. When the goods and services underwriting that debt are realized, the debt can be serviced. When they are not, the debt gets written off and that money essentially disappears from the economy. I think the default of debt is a natural way the system prunes itself and helps to prevent money creation from running away on itself, although that's not to say it makes it impossible. But I don't see crypto playing in to your idea at all, or being part of a concerted effort to game the monetary system by the "elites." 

Thank you.  It's nice to hear compliments from what is clearly a thoughtful response.

As you imply, under a free market, the pricing, repayment and/or default of debt would be a naturally healthy process where certain investments just didn't work out.  Unfortunately, this is actually what the modern world system prevents from happening, at the core of the system.

The modus operandi of the system is to use state power to under-price credit risk, and thus prop up financial asset values to benefit the top politicians and bankers who issue the assets.  The distortion at the core spreads across the entire system, and the incentives for individual members of the elites are almost always to destabilize their own system.  It's no wonder that financial crisis always seems to come back, despite all the apparent studying by economists.

But the financial and economic problems are only half the story.  The other half are the imperial machinations, including regime changes and wars, ultimately for propping up the monetary and other assets issued by the empire and its allies.  If you need a smoking-gun proof of probable actual conspiracy (as opposed to a naturally-forming exploitative system,) there's an insider's account by John Perkins called 'Confessions of An Economic Hit Man.'

It's a good question whether an honest, ie truly free-market, system is possible, given current human awareness.  I would like not to overthink these deeper questions, as there are only theories and no answers at this level.  I'd like to give justice a try, and if I give up, I'd like to make absolutely sure I'm not really giving up for such reasons as expediency.  Like I said, nobody knows, so why not give it a fight.

[BobK71]

If the so called elites are buying bitcoin instead of banning it, it just makes already rich bitcoin whales (which have pro-crypto agendas) richer. The amount of BTC they would need to buy is simply too high.

They can't do that much beyond causing price crashes with bans, and we already saw how that played out for China. We are about to hit an all time high after China basically banned all exchanges, think about that again.

All they can do with bans is temporal price crashes which will get bought up again, restoring confidence since the more times bitcoin resurges after bans, the less effective said bans are. This is why the market has not reacted at all at the South Korean ICO ban and Swiss ICO ban. Once you do it once, the next time is not interesting for the market, so the next time exchanges are banned somewhere else, it will be the same. You simply can't stop this at this point, pandora's box has been opened. Get in and get yourself a strong bitcoin position or be lefit behind, no other options.

China and (to a lesser extent) Russia trying to ban Bitcoin and other cryptos will play right into the hands of the Western elites, if cryptos succeed.  These countries are financial as well as geopolitical adversaries of the West, as evidenced by their support for gold and 'de-dollarization.'  They'll just lose crypto wealth.

Why they would shoot themselves in the foot is harder to understand.  I have a theory that, money and finance being hard for political leaders to understand, central bankers really make the decisions.  But central bankers around the world might somehow work as a united front to support the countries at the top of their system. Napoleon complained how French bankers undermined their own country in favor of Britain.  It's only a theory.

This might be why, during late-19th-century, even though Britain and a rising Germany became bitter imperial rivals, Germany's central bank joined others to lend gold to bail out the Bank of England in the financial crisis of 1890.

An major example of CBs NOT cooperating was post-World-War-I France, where the Banque de France worked only for the benefit of France, devalued the franc and redeemed its paper sterling reserves for gold.  France attracted gold, investments, growth and demand, and became the best-performing and most stable economy prior to the Great Depression.  But it's also argued, from the point of view of the global elites, that 1920s French policy caused a major fracture in the global system and was one of the major contributors to the onset of the Great Depression.

[BobK71]

I have no idea how big the role the Elite plays in Bitcoin, but I do accept the idea that they are buying it on a larger sale than is realized.

The major signs I see of elite promotion of cryptos are:

- The price rise.  This speaks volumes when the elites could have killed it with laws.

- The unknown buyer of cryptos shelling out $60 million at a time, over months.  What private entity would put that kind of funds at risk?

- The BIS ('central bank of central banks') recent release of the 'new taxonomy of money' where state money is no longer solely legitimate as today's economists like to say.  Instead, a plethora of monetary forms are recognized, including precious metals and cryptos.  Most significantly, it states that state-issued cryptos won't compete with non-state cryptos by trying to be limited-supply.

- In the political sphere, the disappearance of talk about Bitcoin being a crime-enabler and the need to tighten control over it.  The appearance (in a small way) of proposals to help cryptos.

- The SEC's quick response to the need to control the proliferation of ICOs.

- Between an essay by an ex-central-banker from South Africa and the ECB's recent announcement, it's pretty clear that the Western elites are going to adopt the narrative that cryptos' rise is simply due to market demand, and that authorities won't and shouldn't interfere.  This sounds morally impeccable, but is highly misleading as a description of reality.  Of course, it will benefit cryptos.

[BobK71]

It is never that far away and it will always happen, well for quite some time. People follow the rumors and the fear and drop and run, but not the big boys and not the ones that make the markets hum, that is where the price gets most of its power and it is a great thing. No need to worry, speed bumps here and there and the rest is smooth sailing.

Yeah, it seems to be the pattern that the price goes up a lot, then drops sharply but is still much higher than the last stable level.  Then it sits there for a while before repeating the cycle.