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November 16, 2018 | Central Banks Take Aim at Bitcoin

Is an American author of books and articles on economic and financial subjects. He is the founder and president of Agora Publishing, and author of the daily financial column, Diary of a Rogue Economist.

DUBLIN – We’re in Dublin… en route to the USA for the holidays.

Dublin is a vibrant, lively city. Not especially elegant, unlike Paris… and not especially dynamic, unlike London… Nor is it especially huge and imposing, like New York or Chicago.

Instead, it is a comfortable, charming, livable place… with many restaurants, hotels, and bars where you can pass an agreeable hour in front of a fire while drinking a pint of Guinness.


Bill shares the view of Dublin’s Grafton Street

But let’s turn to our beat – money.


The feds and their cronies were among the major beneficiaries of the fake money system and the unfairness at its heart.

Their stocks, bonds, real estate, options, bonuses, and salaries rose… while the common man’s chief asset – his time – fell in value. Our guess is that when the next crisis comes, the feds will take desperate measures to protect their ill-gotten gains.

Among the many spectres haunting us today is the ghost of one of them – digital money.

This week, Christine Lagarde, head of the International Monetary Fund (IMF), spoke… and bitcoin fell.

From MarketWatch:

A single bitcoin was last changing hands at $5,545.08, down 1.5% since Wednesday at 5 p.m. Eastern Time on the Kraken cryptocurrency exchange. Earlier in the session, bitcoin hit $5,263.20, its lowest level in more than a year. Over the past 24 hours the total value of all cryptocurrencies has lost more than $30 billion to a one-year low of $181 billion, according to data from CoinMarketCap.

What set off the sellers is, of course, unknown.

But the day before, Ms. Lagarde had given a speech in Singapore. The former Holton-Arms student and present Deep State insider suprema suggested that central banks should get into the cryptocurrency business, too. Not as buyers of cryptos, but as sellers of their own digital currencies:

For their part, cryptocurrencies seek to anchor trust in technology. So long as they are transparent – and if you are tech savvy – you might trust their services.

Still, I am not entirely convinced. Proper regulation of these entities will remain a pillar of trust.

Should we go further? Beyond regulation, should the state remain an active player in the market for money? Should it fill the void left by the retreat of cash?

Let me be more specific: should central banks issue a new digital form of money? […]

Technology will change, and so must we. Lest we remain the last leaf on a dead branch, the others having decided to fly with the wind.

In the world of Fintech, we need to harness change so it is fair, safe, efficient, and dynamic.

Amid the politically correct blah-blah was a warning to the crypto industry: we can do this too. And better.


Military and Money

Governments have always controlled two things: the military and the money.

With the former as with the latter, their control is never complete. Popular generals go over to the enemy (Benedict Arnold… Charles de Gaulle…) or attempt coups d’état (Sulla… Caesar… Napoleon). In 1990 alone, there were eight failed military coup attempts worldwide…

And money, too, is submissive to the feds… but only to a point. In Zimbabwe 10 years ago, for example, the government declared the Zim dollar to be lawful money… and it made the currency available by the truckload. But nobody wanted it.

In our panel discussion in Kilkenny last weekend, we touched on why money lends itself to disruption… digitization… and government manipulation.

“Money is just information. But it’s important information. It tells us how much of a claim we have on other peoples’ stuff – their time, their resources, and their output. As T. Boone Pickens once said, ‘It’s how we keep score in life.’”

In the U.S., as always, the counterfeit claim tickets went to the rich, the elite, and the insiders.


Wads of Cash

Dear readers will see how easy it would be for the feds to introduce a form of digital money. For all intents and purposes, our money is already digital. But cash is available and can be used as needed.

In Argentina, until recently, whenever you did a transaction, you showed up with wads of cash. Even when buying and selling million-dollar properties, people came with paper bags (so as not to arouse suspicion) full of dollars.

They didn’t trust banks. And the government had put in place exchange controls to prevent people from moving money around.

The result was an elaborate confusion wherein everyone had to calculate prices in “legal” pesos, illegal pesos, and dollars… and arrange to transfer part of the purchase price above the table… and part below.

As long as you had access to cash, you could still do business – and defy the government.

And, of course, the Argentine feds wanted to buy and sell, too. And they didn’t want to shut down the economy completely.

So they made exceptions… and tolerated many things they had declared illegal. At one point, they even posted policemen out in front of outlawed money-changers to make the prohibited transfers safer.

Cash is hard for governments to control. And next-to-impossible to track. A digital currency emitted by a central bank, on the other hand, would make it easy.

And by forcing you to keep your money in an account at the central bank, the feds would be able to control your money… and how you spend it.

And control you, too.

Stay tuned…




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November 16th, 2018

Posted In: Bill Bonner's Diary

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