The Real Reason for Bitcoin's Rise, Take II

[BobK71]

Let us take a different angle this time.

Western governments and central banks would like us to believe the rise of cryptos is due to supply and demand, and that they will not and should not interfere.

But would that make sense from the elites' point of view?  It might make sense to suppress cryptos and eliminate competition against the assets they issue, which are the basis of their power and wealth.  Call this case A.  It might also make sense to use cryptos to support their assets, by buying a lot early so they can (effectively) peg their money against cryptos in future.  Call this case B.  It would *not* make sense to let market forces decide the fate of cryptos.

For centuries, the Western elites have artificially suppressed the value of gold and silver.  (The 'gold standard' was just one of such schemes.)  Markets for money and key financial assets have never been free in modern humanity (with the possible exception of the Italian Renaissance at the start of this period.)  There's no reason to believe that, today, all of a sudden, they are.

Judging by the price movements and official actions recently, case B is looking more likely than case A.

To be a good detective, you have to think like a criminal.  To be a good macro investor, you have to think like the elites.

[1713914905]

1713914905

[1713914905]

1713914905

[1713914905]

1713914905

[1713914905]

1713914905

[1713914905]

1713914905

[Mometaskers]

Could be the only reason. After all, they have the capacity to buy these coins en masse. I think it was just last year that we heard news about banks getting in to this but they probably started years ago. These people live and breathe money, always on the look out for the next profitable scheme.

[Silberman]

Let us take a different angle this time.

Western governments and central banks would like us to believe the rise of cryptos is due to supply and demand, and that they will not and should not interfere.

But would that make sense from the elites' point of view?  It might make sense to suppress cryptos and eliminate competition against the assets they issue, which are the basis of their power and wealth.  Call this case A.  It might also make sense to use cryptos to support their assets, by buying a lot early so they can (effectively) peg their money against cryptos in future.  Call this case B.  It would *not* make sense to let market forces decide the fate of cryptos.

For centuries, the Western elites have artificially suppressed the value of gold and silver.  (The 'gold standard' was just one of such schemes.)  Markets for money and key financial assets have never been free in modern humanity (with the possible exception of the Italian Renaissance at the start of this period.)  There's no reason to believe that, today, all of a sudden, they are.

Judging by the price movements and official actions recently, case B is looking more likely than case A.

To be a good detective, you have to think like a criminal.  To be a good macro investor, you have to think like the elites.

The only problem with case B that I see from the point of view of the elites is that if they choose to invest in crypto and this takes off, they are still powerful but there is going to be a big difference, they do not make the rules anymore, they will no longer have the politic power to affect outcomes like the power they wield right now, right now they can print all the money they want and receive all kind of benefits but with bitcoin this is not going to be the case, so I still think case A is their preferred option.

[BobK71]

Could be the only reason. After all, they have the capacity to buy these coins en masse. I think it was just last year that we heard news about banks getting in to this but they probably started years ago. These people live and breathe money, always on the look out for the next profitable scheme.

The chief reason is that they must stabilize their money, which is the most basic support for their power.  

After their peg to gold finally failed in 1971, they have had to use different things to prop up the dollar: the most major support systems were first oil, and then Chinese labor.

These systems have turned out to be a lot of trouble, maybe even more trouble than they're worth over the long haul.  They now have to deal with Mideast instability and a rising China.  Objectively, from their point of view, gold is a much better prop -- it's just that they ran out of gold after centuries of issuing money and debt on the promise of converting them freely to gold.

So my theory is that they would love to go back to gold, but that would be highly embarrassing.  Bitcoin has the properties of gold but is much less embarrassing, so it is a perfect play.

But it probably won't be a 'Bitcoin standard' exactly like the gold one -- they've learned a few lessons.  The new narrative won't be, 'gold is money, state money is debt' but 'Bitcoin floats freely according to supply and demand, and the dollar must maintain a healthy range of exchange rates to be competitive and so help maintain policy control.'  The story will be different (and equally false,) but the end result, in all aspects, will be the same.

[lottoken@lottoken.org]

Guys, bitcoin is a currency. As such it has no inherent "rate of return" (unlike say you would expect from a stock of a company or a bond or a CD) . the only reason its going up in value is because demand outstrips supply. Why does demand outstrip supply - is a longer discussion. Does anyone keep track of who are the buyers ?

[NUFCrichard]

I do agree that the government must be aware and is allowing the price of bitcoin to skyrocket.

I don’t know why it would be in their interest though, they can’t have significantly invested in crypto, maybe they are content to let bitcoin be crypto 1.0 before the government coins take over.

That would be essentially letting bitcoin iron out the problems, then stepping in and making a mature crypto dollar, along with heavily regulating/taxing bitcoin. We will see.

[BTCHakan]

As long as you have money, you can manage and direct everything. Thus, always big players and rich people will win. They will always have their plans and wishes.

[Hydrogen]

 Markets for money and key financial assets have never been free in modern humanity (with the possible exception of the Italian Renaissance at the start of this period.)  There's no reason to believe that, today, all of a sudden, they are.

This is a quote from Lewis Mumford which does a decent job of summarizing the status quo of financial markets.



As the quotation states industry, like the financial sector, is built around being as expensive as possible to inflate profit margins. Bitcoin bucks the status quo in that it was developed and designed to be as efficient as possible which makes for an interesting contrast.

At this stage of the game, I don't know if elites care about money or profits. Their main focus appears to be maintaining a united front and not turning against each other. This could imply that bitcoin won't be banned outright as this might upset the bankers and whales holding btc. An outright ban could divide and splinter the united cartel of elites who tend to coordinate, cooperate and work together to achieve mutual goals. I think it is unity and not money that is a motive.

[bubblebit]

Basically theories can only be form from small pieces of facts. And I agree that this would be one of they’re strategy but I will be sure that this won’t work. Cryptocurrency can’t be hoard by them like gold and silver, because if they do do and the bubble they’re also commenting and might be a million loss in they’re investments. But I don’t if they will sacrifice those millions destroying bitcoin than profiting. I really been confused of how greed to money produced such bad influence and affecting our society right now.

[farhaan]

I think that even if western governments and banks want to manipulate bitcoin price in future by investing huge amounts of money in buying bitcoins,i would say that they are a little bit late in the game.

Earlier,they could have bought huge number of bitcoins making it out of the reach of the normal people,but they didn't judge earlier that bitcoin would grow to this gigantic stage even becoming powerful to decide the fate of people in countries facing economic crisis like venezuela,zimbabwe.

And now,when they have realized its potential and decide to buy more bitcoins,they are too late since bitcoin has crossed international boundaries now and they could not manipulate bitcoin price even by dumping as there is huge buy wall for bitcoins increasing day by day.

[aleksabat]

The real rase of the current price it is the segwit in december. The second reason is high demand vs amount of bitcoins at markets.

[glowing10]

The real rase of the current price it is the segwit in december. The second reason is high demand vs amount of bitcoins at markets.

One of the reason for this rise is due to the fork happening in coming days and people would like to get the extra coin which will be free to them. Also we have panic sellers who fear the market may crash as people will start selling before the fork.

[BobK71]

The only problem with case B that I see from the point of view of the elites is that if they choose to invest in crypto and this takes off, they are still powerful but there is going to be a big difference, they do not make the rules anymore, they will no longer have the politic power to affect outcomes like the power they wield right now, right now they can print all the money they want and receive all kind of benefits but with bitcoin this is not going to be the case, so I still think case A is their preferred option.

I imagine this is a pretty widespread point of view.  In these things you never know for sure (plus the elites may go down one road and change their mind later, or more likely position themselves for multiple options down the road,) but at this point, watching the news unfold, I would say case B is looking more likely than case A.  (Or, at least, the elites are positioning themselves so they can take case B if necessary.)

When I have time I'll post the series of recent news items that support this view -- I suspect most Bitcoiners miss these hidden currents.

The bigger picture is that the last 40+ years of totally fiat money has been the most financially unstable period of modern history, with the possible exception of the interwar period that included the Great Depression.  We can expect the elites and their economists to bad-mouth gold, for obvious reasons, but the fact remains that they never gave up any gold or silver standard until they were about to run out of the precious metal.

More generally, the global imperial system that operated since the 1600s has never shoved its power down the throat of the world totally by force.  (This goes to the core 'design' of the system.)  It always uses a combination of soft and hard power, where neither power is enough by itself, but the combination is enough for the global elites to dominate the world.

A good part of the soft power is the perception that the global imperial power is the most 'liberal' of all states -- meaning it has the most respect for free markets and other 'libertarian' institutions.

Since the global empire has grown used to having both soft and hard power, it has come to rely on soft power and doesn't have enough hard power.  (Also, in today's world, it's questionable if hard power alone will ever be enough.)  To ally itself with a state-free system like Bitcoin will represent a big boost to soft power.

[BobK71]

I do agree that the government must be aware and is allowing the price of bitcoin to skyrocket.

I don’t know why it would be in their interest though, they can’t have significantly invested in crypto, maybe they are content to let bitcoin be crypto 1.0 before the government coins take over.

That would be essentially letting bitcoin iron out the problems, then stepping in and making a mature crypto dollar, along with heavily regulating/taxing bitcoin. We will see.

This can never be ruled out totally (and at one point I thought quite likely,) but is becoming less likely after the release of the 'Taxonomy of Money' by the Bank for International Settlements (the 'central bank of central banks'.)  The paper lists all the available forms of money today, and states that state-issued cryptos of the future won't become limited-quantity like Bitcoin.  Rather, their blockchain will amount to a replacement for shipping paper money around from central banks (or the electronic equivalent.)  I believe this is aimed at  reassuring crypto investors.

Thus, holding back from competing with state-free cryptos looks like a policy of at least the Western central banks.  If non-Western central banks issue limited-quantity cryptos, they'll have to compete with the alliance between Western central banks and state-free cryptos.

This would also be consistent with the centuries-old pattern of modern Western empires of using a combination of elite power and the appearance of market-friendliness to acquire enough power (soft and hard power combined) to dominate the world.

[BobK71]

As long as you have money, you can manage and direct everything. Thus, always big players and rich people will win. They will always have their plans and wishes.

It's not all-or-nothing.  For every bit of extra awareness by the public (that they're being screwed!) there is an extra bit of constraint against the state-bank alliance's taking from and destabilizing the world.  Not all is in vain.

[RenegadeMind]

Your average finance professor doesn't view Bitcoin as any kind of relevant thing in the financial markets.

And they have a point. The tiny amount of transaction volume in crypto is nothing compared to the fiat markets.

However, I think many of them are a bit short sighted.

As for PMs manipulation, that's 2 very different things.

The first is debasement, as in how the Roman emperors debased their currency.

The second is financial manipulation in the markets, such as the London fix. This is relatively new.

[Silberman]

The only problem with case B that I see from the point of view of the elites is that if they choose to invest in crypto and this takes off, they are still powerful but there is going to be a big difference, they do not make the rules anymore, they will no longer have the politic power to affect outcomes like the power they wield right now, right now they can print all the money they want and receive all kind of benefits but with bitcoin this is not going to be the case, so I still think case A is their preferred option.

I imagine this is a pretty widespread point of view.  In these things you never know for sure (plus the elites may go down one road and change their mind later, or more likely position themselves for multiple options down the road,) but at this point, watching the news unfold, I would say case B is looking more likely than case A.  (Or, at least, the elites are positioning themselves so they can take case B if necessary.)

When I have time I'll post the series of recent news items that support this view -- I suspect most Bitcoiners miss these hidden currents.

The bigger picture is that the last 40+ years of totally fiat money has been the most financially unstable period of modern history, with the possible exception of the interwar period that included the Great Depression.  We can expect the elites and their economists to bad-mouth gold, for obvious reasons, but the fact remains that they never gave up any gold or silver standard until they were about to run out of the precious metal.

More generally, the global imperial system that operated since the 1600s has never shoved its power down the throat of the world totally by force.  (This goes to the core 'design' of the system.)  It always uses a combination of soft and hard power, where neither power is enough by itself, but the combination is enough for the global elites to dominate the world.

A good part of the soft power is the perception that the global imperial power is the most 'liberal' of all states -- meaning it has the most respect for free markets and other 'libertarian' institutions.

Since the global empire has grown used to having both soft and hard power, it has come to rely on soft power and doesn't have enough hard power.  (Also, in today's world, it's questionable if hard power alone will ever be enough.)  To ally itself with a state-free system like Bitcoin will represent a big boost to soft power.

Looking forward to it, I’m always interested in these kind of topics, you are right, but I also think the necessary amounts of soft power and hard power to pull this off changes as well, they have a lot of hard power since they have access to weapons that could wipe out the entire world, but at the same time that makes the use of soft power more critical since they cannot wield that hard power recklessly, so a possibility is they are preparing to give up some of their power in order to gain even more power under this new reality.

[BobK71]

Your average finance professor doesn't view Bitcoin as any kind of relevant thing in the financial markets.

And they have a point. The tiny amount of transaction volume in crypto is nothing compared to the fiat markets.

However, I think many of them are a bit short sighted.

As for PMs manipulation, that's 2 very different things.

The first is debasement, as in how the Roman emperors debased their currency.

The second is financial manipulation in the markets, such as the London fix. This is relatively new.

These are good points to bring up.  Thanks.

If the thesis that the elites will use Bitcoin to help support their money in future (and help inflate away the debts, directly or indirectly) is correct, then the small market capitalization of Bitcoin is a big argument to buy more, because its market cap must be brought much higher before it can be useful for this purpose.

Yes, the PM manipulation takes many forms, but generally the elites' game is to use state power to prop up the values of their issued assets artificially (be they coins denominated in denari or bonds in fiat dollars.)  When the artificial values hold up, they take the lion's share of the benefits.  But the incentives for the elites are always to destabilize this, their own system.  When eventually the asset values must crash, ordinary people pay most of the price in lost jobs, business, and asset values.  (This pain is made especially bad by the economic distortions and misallocation that happened during the artificial asset inflation.)

In modern times, the price of gold is manipulated *down* whenever possible, because gold already has the public's trust.  Any more trust and it would erode confidence in state money.  (This manipulation includes the so-called gold standard, which forced gold to have a return of zero.)

The price of Bitcoin is likely manipulated *up* because the public doesn't yet have enough trust to make it a store of value that can be leaned on by state money, if and when that help is required.  (And if you ask me, the incentives inherent in this system almost guarantee such a need, the only questions being when and how.)

Most important of all may be that trusted cryptos will dilute the need to lean on gold in a crisis, whose appreciation tends to be embarrassingly revealing about the elites' system.

[davinchi]

Let us take a different angle this time.

Western governments and central banks would like us to believe the rise of cryptos is due to supply and demand, and that they will not and should not interfere.

But would that make sense from the elites' point of view?  It might make sense to suppress cryptos and eliminate competition against the assets they issue, which are the basis of their power and wealth.  Call this case A.  It might also make sense to use cryptos to support their assets, by buying a lot early so they can (effectively) peg their money against cryptos in future.  Call this case B.  It would *not* make sense to let market forces decide the fate of cryptos.

For centuries, the Western elites have artificially suppressed the value of gold and silver.  (The 'gold standard' was just one of such schemes.)  Markets for money and key financial assets have never been free in modern humanity (with the possible exception of the Italian Renaissance at the start of this period.)  There's no reason to believe that, today, all of a sudden, they are.

Judging by the price movements and official actions recently, case B is looking more likely than case A.

To be a good detective, you have to think like a criminal.  To be a good macro investor, you have to think like the elites.

Uuhm… the case of suppressing the value of gold and silver, I don’t know, but I believe they’re doing it in favor of the people. If the price of gold and silver are not being suppressed and people are allowed to raise the price to any rate of their choice, they might reach rate in which they can’t be afford.Coming to case A, if they suppress cryptos to avoid competition against their own issued assets, it won’t make any sense, cause those will be centralized.

No government will allow it its citizen to purchase another government’s asset and make them rich while their own country gets poor lol. I don’t know what to say on case B, so I guess I will just have to end this here.

[ladydark]

I think that they might go with case B as we too hear nowadays that financial firms have started to show interest in buying bitcoins.But i think that they are a little bit late to enter the market since bitcoin price has reached very high now.They would have not expected bitcoin to have such a tremendous progress within such a short period.But their involvement in bitcoin to manipulate the price in future could not be denied.