Just ran across this paper by University of Chicago professor Nichloas Plassaras, titled "Regulating Digital Currencies: Bringing Bitcoin Within the Reach of the IMF." Hope you've got your barf bags ready:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2248419Things get interesting (not in a good way) starting with page 17: "The Dangers of an Unregulated Bitcoin." It begins, "As Bitcoin continues to grow in popularity and value, it poses an increasingly serious threat to the stability of the foreign currency exchange and, by extension, international commerce. Recall that the IMF was created to tackle two global economic problems: the artificial devaluation of one’s currency to gain an economic advantage; and unstable exchange rates between various currencies. Bitcoin cannot trigger the first concern because the algorithm that supports it prohibits users from artificially manipulating its value. Bitcoin does, however, have the potential to create severe and possibly irreversible fluctuations in the foreign currency exchange. Specifically, Bitcoin poses a liability to the IMF and its member nations in the event it is used in what is referred to as a 'speculative attack' on another currency."
Did anyone catch that little slight of hand? It took me a couple readings before it dawned on me: "Bitcoin cannot trigger the first concern [artificial currency devaluation] because the algorithm that supports it prohibits users from artificially manipulating its value. " In other words, bitcoin is IMPOSSIBLE to devalue by direct manipulation—the oldest and most powerful destabilization tool in the IMF's playbook!—which is precisely WHY bitcoin is such a threat to the global central banking system. This paper is teeming with this kind of Orwellian doublespeak.
Now, I don't fancy myself the least bit knowledgeable about currencies, or about the IMF's role in managing global currency exchanges; if I had to hazard a guess I'd say that the IMF's boilerplate description of its own role is probably a gross distortion of its true purpose, at best. However, I DO know a bit about the IMF's record in other arenas, which generally involves looting the economies of underdeveloped nations by saddling them with unsustainable debt and then attaching draconian "conditionalities" to their repayment plans—forcing them to sell off public infrastructure and utilities, slash public payrolls, raise taxes and fees, etc.—all so that their victim's budget can replace these "luxuries" with astronomical debt service. I also know it's played a major role in destabilizing countries' currencies over the last 4 decades, particularly in South America (in direct contradiction of its stated mission, obviously). So needless to say a paper begging for the IMF's intervention into bitcoin made the hairs on the back of my neck stand up.
While there's too much nonsense here to parse paragraph by paragraph, check out some of the absolutely absurd assertions in this paper (page 18, last graph):
"Herein lies the threat posed by Bitcoin. In the event that a wealthy Bitcoin investor—or a number of Bitcoin investors—launch a speculative attack on a currency, what can be done to counter it? In theory, individual countries could diversify their reserve portfolio by purchasing Bitcoins from an online exchange. But if a central bank’s reserve is unable to absorb the maturity mismatches suffered by its central banks, who can it turn to? The IMF has no supply of Bitcoins; indeed it has almost no way to obtain them directly. The IMF obtains currency via the quota system and the IMF can only collect quotas from its members. Bitcoin is neither a member of the IMF, nor could it become one if it wanted to—IMF membership is only open to nation-states. The IMF could try to purchase its own reserve of Bitcoins, but whose money would it use? Which part of the IMF’s general fund would it deplete? In short, Bitcoin’s potential to become a major player in the foreign currency exchange raises a number of substantial questions for the IMF. In its current state, the IMF would be unable to supply the currency needed to counter the destabilizing effect of a speculative attack by Bitcoin users on a member nation’s currency."
The IMF has no way to obtain bitcoins, because it can't decide which of its funds to tap, and it's physically incapable of buying them? A few wealthy bitcoin investors have the juice to bring down entire currencies? What a load of horseshit. The true meaning of this paper should be absolutely clear: bitcoin has the potential to be a direct threat to the global central banking regime because it is immune their manipulation/politicization, and it must be regulated or controlled before it becomes big enough to be a serious competitor. Take this proposed "solution" to the "danger" of bitcoin (page 21):
"There are, however, two ways to incorporate Bitcoin into the IMF’s regime. The first option is to grant the IMF indirect control over Bitcoin by expanding the interpretation of an already-existing provision of the IMF. This approach requires the least amount of change and leaves the overall IMF framework mostly intact. The second option is to grant the IMF more direct control over Bitcoin by granting it and other digital currencies quasi-membership status. This more radical approach would require and amendment of the Articles of Agreement and would fundamentally alter the existing framework’s conception of a non-state actor’s role in the IMF."
Again, I don't claim any special knowledge about global currencies, economics, or finance; however, when a professor from a neo-liberal training ground like UC makes a statement like "the first option is to grant the IMF indirect control over bitcoin" (on what authority?)—and suggests that the financial powers-that-be should be willing to consider re-writing IMF treaties and bylaws and literally RESTRUCTURING THEIR ORGANIZATION in order to assimilate bitcoin—you'd better believe that the digital p2p currency revolution has the full attention of the global financial terrorists.
Thoughts?
