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Author Topic: Central Banks Are The Scam—Not Bitcoin  (Read 2228 times)
Astrohacker
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June 29, 2011, 10:04:53 PM
 #1

I've written a new article on bitcoin. Feedback appreciated!

http://astrohacker.com/ahc/central-banks-are-the-scam-not-bitcoin/

People regularly argue that bitcoin is a “scam” (e.g., 1, 2) because early adopters got a lot of bitcoins for cheap, and they can now sell their bitcoins to new adopters for a profit. Thus it sounds vaguely like a pyramid scheme or Ponzi scheme, because adopters from one generation only profit at the expense of the next generation. Except, it’s not. Adopters from later generations are not losing to the early adopters; they, too, are profiting. In this sense, bitcoin is not fundamentally different than any appreciating asset, like stock in Google. No one argues that Google is a scam because early investors profited. Thus, bitcoin is not a scam either, because people profit through exactly the same mechanism.

Further, not only is bitcoin not a scam, it is actually relief from the giant scam that is central banking and fiat currencies. With bitcoin, your money appreciates in value and no central organization can confiscate your wealth by printing more money and giving it to themselves. But with fiat currencies and their associated central banks, central organizations actually do print more money, constantly, and give it to themselves, and to organizations that are well-connected (in particular, other banks), which has the effect of confiscating wealth from everyone who uses the currency and who is not well-connected enough to get the new money. Bitcoin is not a scam—central banks, and their associated inflating fiat currencies which redistribute wealth to a well-connected elite, are the scam.

Fractional Reserve Banks

Fractional reserve banks (FRBs) are such a common, established kind of institution that it might be hard to believe, at first, they are actually scams that do not create wealth but actually steal it. However, it’s true. They do this by writing down that they have more money than they actually have. If their reserves are 20%, what that means is that they actually have, say, $20 million, but they have created an additional $80 million by editing the number “20” in their computer and changing it to “100”. Of course, the reality is a little more complicated, because they do not create all this new money at once. But the end effect is the same; they have counterfeited 80% of the money supply, and given it to themselves. They then loan this new money out, and charge interest for it. In effect, they have stolen 80% of the money, and charge a toll for anyone who wants to use it.

Fortunately, FRBs are voluntary, so you do not have to use them if you don’t want to. But the most devious of bankers fixed this flaw in their scheme by creating central banks that people are forced to use. You cannot legally opt-out of central banking.

Central Banks

Central banks, like the Federal Reserve in the United States, are banking cartels and/or monopolies that print fiat currencies that everyone is legally required to accept for payments and legally required to pay their taxes with. Anyone who attempts to create a competing currency is jailed. There are limits to the amount of money that FRBs can create out of thin air, because if they try to create too much, fluctuations in daily withdrawals would reveal them to be insolvent, and they would collapse. Thus, FRBs keep a certain amount of “reserves” to prevent that from happening. Central banks, however, have no such limit, because they can create new reserves by literally printing money (or having the Treasury print it for them). Like FRBs, central banks declare themselves owner of most of the money and charge a toll (interest) for using it. But central banks are even worse than FRBs because they constantly inflate the money supply with no end, so that its value asymptotically approaches zero while they get all the new money, which has the effect of constantly channeling wealth from everyone else to them. Central banks will also literally put you in jail for attempting to compete with them, which non-monopoly FRBs can’t do.

The fact that the US dollar has lost 95% or so of its value since the invention of the Federal Reserve shows that 95% of the people’s wealth has been irrevocably snatched and given to bankers. To call this a scam is a understatement. It is the greatest theft in the history of the world.

Bitcoin—Finally, Relief

There are only 21 million bitcoins, and it is impossible for greedy bankers to make more and give it to themselves. The only way to get bitcoins is to ensure the security of the network by mining, or by doing something else productive for them.* This is a tremendous, revolutionary advance in the technology of money. Finally, wealth created by productive hard work cannot simply be confiscated by the people who control the money supply. There is no understating how important this development is. Hard work and savings will actually be rewarded! Productive people everywhere should literally let out a sigh of relief upon realizing this fantastic fact.

The only people who should be worried are bankers. They will not be able to continue snatching wealth from everyone by printing more money. Their giant scam now has a time limit—as bitcoin grows, they will shrink. They will have to learn how to actually produce wealth rather than steal it if they want to survive.

Conclusion

Bitcoin is not a scam. Bitcoin is a solution to the giant scam that is central banking. The sooner you realize this, the sooner you can be freed from banking tyranny.

* Of course you can also steal bitcoins, but assuming people take proper security precautions with their money, that is much harder and less effective than the printing of new money that central banks do.
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June 29, 2011, 10:13:14 PM
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Good read.

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cypherdoc
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June 29, 2011, 10:13:44 PM
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that is actually very well written and understandable to the average joe.  its also very true.
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June 29, 2011, 10:13:47 PM
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here is the current system thats been widely accepted by americans for the last few hundred years: (note that the ppl at the top can just print out money whenever they need more)


fascistmuffin
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June 29, 2011, 10:53:21 PM
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Good article. Have you tried posting it to the reddit bitcoin section?
Oldminer
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June 29, 2011, 11:07:21 PM
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It is the greatest theft in the history of the world.

Bitcoin—Finally, Relief


QFT

Well written article. Great read.

If you like my post please feel free to give me some positive rep https://bitcointalk.org/index.php?action=trust;u=18639
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BubbleBoy
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June 29, 2011, 11:28:27 PM
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Fractional Reserve Banks
If their reserves are 20%, what that means is that they actually have, say, $20 million, but they have created an additional $80 million by editing the number “20” in their computer and changing it to “100”.

Get a clue. Banks need to account for each $ in their balance sheet. To lend out money they need to either:
- have the money they just lent out earlier return to them via another customer (ex. the previous owner of your mortgaged house), to which they must pay interest
- get it from another bank and pay interest for it; the central bank targets a certain level of this interest, which in US is called Federal Funds rate
- get it from the central bank that will freshly print it for them (discount window/Lombard facility), at an interest higher than the market rate, and requiring good collateral, preventing most banks to make a profit out of it, but useful in case of liquidity crises

The common idea is that they must pay interest to others before they can "print".
As long as you understand that putting your money in the bank means making an investment, and taking risks, FRB are ok. It's only when the government ensures all deposits, remove all risks, and manipulates the credit market to very low interest rates, that the moral hazard starts to happen, bankers turn into banksters, and the economy pops.

Quote
The fact that the US dollar has lost 95% or so of its value since the invention of the Federal Reserve shows that 95% of the people’s wealth has been irrevocably snatched and given to bankers.

Up until recently most of the money printed by the federal reserve went indirectly to the government. Recent bailouts made it about 50-50. In 2011 the fed is accumulating govt. debt like there's no tomorrow. Bankers are evil alright, but it's still your lawfully elected representatives that take the cake.


Quote
Bitcoin is a solution to the giant scam that is central banking. The sooner you realize this, the sooner you can be freed from banking tyranny.

And the sooner you can participate into the glorious achievement of making a few early adopters very rich. Act swiftly, you might be an early adopter too Wink

chuckypalumbo
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June 30, 2011, 02:15:40 AM
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Great article, people need to continue to get the word out Smiley

If you're looking to sign up for an exchange try Bitcoin7 or Tradehill, referral codes are listed below. Sign up for Tradehill and get 10% off of every trade you ever make.

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The revolution will be monetized!


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June 30, 2011, 02:35:24 AM
 #9

Good job Astrohacker! I re-tweeted your well written argument. Kiss

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fascistmuffin
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June 30, 2011, 02:37:15 AM
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Bankers are evil alright, but it's still your lawfully elected representatives that take the cake.

Welcome to America, where taking bribes is a government job.
cypherdoc
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June 30, 2011, 05:13:29 AM
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Get a clue. Banks need to account for each $ in their balance sheet.

oh they do huh?  how about the trillions in SIV's and other off balance sheet accounting vehicles that have been well documented?  how about the trillions in loans marked to model vs marked to market?  never mind that they were happy to mark to inflated market on the way up but NO, not on the way down!


 To lend out money they need to either:
- have the money they just lent out earlier return to them via another customer (ex. the previous owner of your mortgaged house), to which they must pay interest

its common knowledge that some of these banksters like GS or LEH were leveraged over 50-1.  thats NOT just lending out what you just took in.

- get it from another bank and pay interest for it; the central bank targets a certain level of this interest, which in US is called Federal Funds rate
- get it from the central bank that will freshly print it for them (discount window/Lombard facility), at an interest higher than the market rate,

LOL!!!! 0-0.25% is higher than market rates?  Funny, i have to pay 6-7% to get a mortgage from a bank thats borrowing at 0-0.25%!

this is an important pt which you don't understand; or you do but you just don't want us to understand.  b/c they are giving out money to the banksters at BELOW market interest rates, this is precisely why the USD has decreased in value over the last 100 years b/c this is the equivalence of PRINTING money to the banksters benefit via buying down the interest rates on US Treasuries so that they can then turn around and use that cheaply borrowed money to speculate on assets of all kinds like stocks, commodities, real estate, etc.


 and requiring good collateral, preventing most banks to make a profit out of it, but useful in case of liquidity crises

are you kidding me again?  good collateral like all the bad subprime loans, commercial loans, PIK's, bad CDS (from AIG) that they dumped onto the Fed and by extension the US Treasury?

Bernanke was only supposed to have temporarily lent USD's to the banks to take on this shitpile but this has somehow morphed into a BUY.


The common idea is that they must pay interest to others before they can "print".
As long as you understand that putting your money in the bank means making an investment, and taking risks, FRB are ok. It's only when the government ensures all deposits, remove all risks, and manipulates the credit market to very low interest rates, that the moral hazard starts to happen, bankers turn into banksters, and the economy pops.

let me guess; you're a banker aren't you?  i flip the causation logic; the banksters via their printing press has bought off the gov't and influences their legislation to their own benefit. ex: the repeal of Glass Steagall.


Up until recently most of the money printed by the federal reserve went indirectly to the government. Recent bailouts made it about 50-50. In 2011 the fed is accumulating govt. debt like there's no tomorrow.

 Bankers are evil alright, but it's still your lawfully elected representatives that take the cake.
deception, deception.



Quote
Bitcoin is a solution to the giant scam that is central banking. The sooner you realize this, the sooner you can be freed from banking tyranny.

And the sooner you can participate into the glorious achievement of making a few early adopters very rich. Act swiftly, you might be an early adopter too Wink


early adopters are no different than founders of all the stock companies on the NYSE
qualia8
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June 30, 2011, 06:15:46 AM
 #12

Great piece and cypherdoc, +1
dennis_sweden
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June 30, 2011, 10:42:44 AM
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"Quote from: cypherdoc on June 29, 2011, 05:13:29 am

"Quote from: BubbleBoy on June 29, 2011, 11:28:27 pm

Up until recently most of the money printed by the federal reserve went indirectly to the government. Recent bailouts made it about 50-50. In 2011 the fed is accumulating govt. debt like there's no tomorrow.
[/quote]

 Bankers are evil alright, but it's still your lawfully elected representatives that take the cake.
deception, deception."

[/quote]


Since a few years the Treasury has found it increasingly difficult to sell bonds on the market, and the Federal Reserve is the primary purchaser. In February this year the Fed became the single largest holder of Treasury Bonds. However, the "lawfully elected representatives" are puppets on a string, obeying their monetary masters, while in no doubt also benefitting economically themselves.

http://www.ft.com/intl/cms/s/0/120372fc-2e48-11e0-8733-00144feabdc0.html#axzz1QkoEpeW4


How can you tell when a politician is lying? His lips are moving. A little girl asked her father, 'do all fairy tales begin with "Once upon a time"? The father replied, 'No, some begin with - If I am elected.' How come political leaders don't have all the answers until they write their memoirs?
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