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Author Topic: Debt Does Matter, and Why Cryptocurrencies Have to Go up  (Read 277 times)
BobK71
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January 09, 2018, 05:54:14 PM
 #21

The problem started with Fractional-reserve banking practices. Banks accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities. Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank. <Silly Money>

These loans are meant to fuel the economy, but it is used to pay for worthless/depreciating assets or expensive Holidays.

Bitcoin cannot change the system, but it has the characteristics to force people to change their behaviour. < Bitcoin will encourage people to hoard their coins, cultivating a saving culture. >

Absolutely agreed.  Fractional reserve banking is one example of how the state-bank elites use state power to prop up the values of financial assets artificially, to benefit themselves who issue most of them.

When banks are allowed to lend out part of the deposits, it helps to expand the money supply, and to support the values of government bonds, private debt, stocks, real estate, etc. directly or indirectly.

I believe the effect of Bitcoin will very generally be restraining the financial instability of the last few decades since the end of Bretton Woods in 1971 (i.e. the end of the last vestiges of the gold standard.)  When cryptocurrencies are firmly established in the public mind, the elites will have a new motto, that governments and central banks will have to rein in their profligacy in order for their currencies to compete with cryptos.

This will in effect be a return (or partial return) to the gold and silver standards, even if the public-facing narrative will sound completely different.  Gold and silver standards have been around for centuries during the modern era, compared to the few decades of 'fiat money' which have also been among the most unstable periods.  (But they won't make the mistake of anything like announcing 'gold is money and currency is debt,' which painted them into a corner when they, inevitably, ran out of gold.)
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January 09, 2018, 06:02:26 PM
 #22

But the European politicians are already sacrificing their political capital when they are succumbing to orders from Washington which seems to be your point. If they didn't want that they would choose to resist the pressure from over the Atlantic, right? So what difference does it make at the end of the day? Could it be that you underestimate them when you basically say they are shortsighted and look only for short-term popularity among the masses?

Could it be that they are actually trying to solve the long-term population issues?

Nothing in this world, at the top level, works according to idealism.  If you believe top European politicians have the long term future of Europe in mind (which I'm sure is what they claim publicly is the reason for allowing refugees in,) bless you heart for your optimism, but I don't agree.

Instead, everything works according to leverage.  Washington has leverage on every country in the world, which is why no country has used gold and silver as money or base money, even though it would be best for their countries. (Instead, the dollar functions almost exactly like gold in the past -- and only Washington can print it.)  Whatever leverage the US elites had on Merkel, it was strong enough to make her pay the political cost.

I don't particularly disagree about the leverage part because ultimately, this is what realpolitik is all about, economics attached. No one in their right mind will deny that Washington has a lot of leverage on Germany. The long list of US military bases in this country speaks for itself and louder than any words.

With that said, I still have to note that the leverage we are talking about is not absolute. For example, the US leverage on France is definitely smaller than on Germany. But that means that even in case of the latter, Washington may not be given a free pass on anything they are looking for. There is always some leeway which can leave enough room for top European politicians to act on their own.
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January 09, 2018, 06:24:15 PM
 #23

This is obviously different as what you asked in there, but it has some coincidences too.
You are talking about the debt, and a lot of people who are in here doesn't even know the incredible debt that the united states has.

They are printing about 160 million dollars aproximately a DAY.

This is why bitcoin needs to improve much more, so it can replace it.


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January 10, 2018, 05:51:23 AM
 #24

This is obviously different as what you asked in there, but it has some coincidences too.
You are talking about the debt, and a lot of people who are in here doesn't even know the incredible debt that the united states has.

They are printing about 160 million dollars aproximately a DAY.

This is why bitcoin needs to improve much more, so it can replace it.



Wrong,

During Fiscal Year 2014, the Bureau of Engraving and Printing delivered approximately 6.6 billion notes to the Federal Reserve, producing approximately 24.8 million notes a day with a face value of approximately $560 million. <Dec 1, 2015>

The U.S. dollar is the most widely used currency in the world today. No wonder the printing presses at the U.S. bureau of Engraving and Printing in Washington, D.C. run 24 hours a day! All the nation's paper money is printed in Washinton, D.C. In 24 hours, the bureau can print ten million one dollar bills.

There are about U.S. $1.2 trillion floating around the globe. ^WoW^

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January 10, 2018, 02:27:19 PM
 #25

I don't particularly disagree about the leverage part because ultimately, this is what realpolitik is all about, economics attached. No one in their right mind will deny that Washington has a lot of leverage on Germany. The long list of US military bases in this country speaks for itself and louder than any words.

With that said, I still have to note that the leverage we are talking about is not absolute. For example, the US leverage on France is definitely smaller than on Germany. But that means that even in case of the latter, Washington may not be given a free pass on anything they are looking for. There is always some leeway which can leave enough room for top European politicians to act on their own.

True, it was a disaster for the US in the 1960s and early 70s when Western European governments redeemed their dollar reserves for gold at the fixed price of $35/ounce.  And there was no way to 'regime-change' those countries under the circumstances.

Most people use the word realpolitik as if it was a mode of behavior that the elites sometimes get into.  Realpolitik is all there is.  Any top politician who diverges from realpolitik is at a disadvantage.  The book "Confessions of An Economic Hit Man" is a great read and has a list of leaders from around the world, over the years, (Iran, Panama, Guatemala, Chile, etc.) who paid the price by following their conscience and offending Washington.
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February 05, 2018, 02:33:25 PM
 #26

This is obviously different as what you asked in there, but it has some coincidences too.
You are talking about the debt, and a lot of people who are in here doesn't even know the incredible debt that the united states has.

They are printing about 160 million dollars aproximately a DAY.

This is why bitcoin needs to improve much more, so it can replace it.

There's a difference between printing dollars and issuing federal debt, but in practice I don't think the US can ever afford to let federal debt be less than 100% money, in modern times.  If the US elites ever abandoned the debt to protect the dollar, I think the level of economic and social pain would just not be sustainable in today's world.

The $20 trillion of US national debt today is only a fraction of the real debt, if you count all the future spending the federal government is obligated by current law (e.g. old age benefits called Social Security.)  These laws of course can be changed, but that is politically painful and will likely just shift (if not magnify) US weakness into other areas.

You can't postpone doom forever.
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February 20, 2018, 09:59:24 PM
 #27

These loans are meant to fuel the economy, but it is used to pay for worthless/depreciating assets or expensive Holidays.

The important issue is not whether a loan will benefit the economy.  It is: who should have the power to decide if a loan will benefit the economy?  If credit is a free market, then anyone who invests in a bad loan will pay the price.  Credit will naturally go to projects that make things people want, ie grow the economy.

What we have today is that central banks artificially cheapen the price of credit, so anyone who doesn't take out a loan is missing cheap goodies.  No wonder, people borrow too much and waste it away.

This is similar to the argument for democracy.  The important issue is not whether this or that law is good policy.  It is that we get to choose our leaders.  If they make bad laws, we have the power to replace them.  There must be a 'free market' in politics.
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