Christopher Whalen, an investment banker with 30 years of experience, writer and Creator of the portal, the Institutional Risk Analyst, told about the reason for the boom in the cryptocurrency market and how it relates to the policy of Central banks.
“Investing” in the blockchain scheme has always struck me with a tinge of pity for the gullible poor souls caught in these scams. Of course, the blockchain there are a number of interesting properties, but its commercial applicability outside of bitcoin raises questions.
The blockchain is openly violating the three laws of investing in high — tech solution must be cheaper, faster and better, but I guess nobody cares.
However, much funnier by the fact that many of the investors in various IPOs of digital tokens easily accepted the fact that ICO is not the purchase of shares and do not get a share in the company, and pure charity.
Very strange that, although the ICO clearly violate several provisions of the securities act of 1934, aimed at combating fraud, the Commission on securities and exchange Commission and the Department of justice has not yet imposed a ban on the implementation of such schemes. The Commission rightly describes bitcoin as “tokens”, it would fall under the definition of securities, but the company does not have time to deal with these schemes, and the government is slow.
I must say that one of the reasons for the popularity of cryptocurrencies has become a practical disappearance on the planet of real money. The resolution on legal payments made in 1860, forced Americans to accept paper money — dollars — as a means of payment “for all debts public and private”, which helped to Finance the civil war.
In the 1930s, when Franklin Roosevelt confiscated Americans ‘ gold, paper money ceased to be a security, which the citizen could convert into gold or silver.
Today our money is a medium of exchange and accounting values, but its value as a means of capital preservation they lost decades ago.
The item purchased in 1913, the year the Federal reserve for $20 today will cost about $500, so the total level of inflation during this time was 2400% — here you have an independent Central Bank.
For Treasury securities distributed in the United States before the Civil war, at least pay the interest, and today’s dollars issued by the fed, it’s just cards with pictures of dead presidents.
And recently, a few years ago, Central banks decided to conduct another wave of confiscation of the capital with negative interest rates and techniques with deceptive names like “quantitative easing”.
Negative interest rates is a global confiscation of private financial assets in the interests of debtors, especially debtors to the public sector.
Experts John Taylor and Allan Meltzer discussed what quantitative easing is the practice of competitive devaluation. First it was used US, and behind them went the others, but the only result was a huge outflow of capital in the American economy.
Given that the global volume of bonds with negative yields is already 10 trillion dollars in American assets became a safe haven in the global confiscation of capital, the European Central Bank and the Bank of Japan.
Mark TWAIN claimed that “the only truly American mafia — a Congress”, but curiously, what would he say about the officials of the fed, ECB or Bank of Japan.
In General, if you look at the situation overall, fans of bitcoin don’t seem to be something outstanding. Yes, bitcoin is such a virtual tulips. Supporters of the cryptocurrency at least decided to get away from authoritarian paper currencies, and adopt an alternative standard.
Professor Larry white has published an article called “the Blockchain + gold“, where he writes:
“The bitcoin system has a great advantage reliable transfer of values directly from stranger to stranger. It is open to any person. In this case the sender does not need to trust neither the recipient nor the Bank nor any other institution.”
Funny those who for fear of investment in bitcoin, talking about the imaginary advantages of the inefficient technology of the blockchain. Owners of bitcoins, at least have the potential to make a profit, and “investors” in the blockchain just got money to burn. You’ll see, a few years later and many billions of dollars we did not see any economically justifiable implementation of the blockchain besides bitcoin.
In addition, not to mention the ten-year anniversary of the “shotgun wedding” between Merrill Lynch and Bank of America. One investment Manager has admitted that the shares of the merged company brought him a lot of money, but then anxiously asked, whether it seems to us that 50% growth for the year is a bit much.
Recently Chris Cole of Artemis Capital noted that “the stock market have organized themselves and turned into one big game for a fall in volatility, a kind of snake that eats its own tail”.
Cole also notes that in addition to Central banks, bought public and private assets of 20 trillion dollars, there are still private companies with their 4 trillion dollars of debt.
“Like a snake eating its own tail, the stock market cannot indefinitely feed the illusion of growth.”
Of course, shares in the largest banks overvalued from the point of view of turnover or profit, but who cares if the Central banks of different countries, from Japan to Europe, are driving the prices of all assets in a desperate attempt to avoid default of sovereign debt — in this situation, to talk about price and profit is meaningless.
If you remember, ten years ago, the fed forced Merrill Lynch to merge with Bank of America in a desperate attempt to preserve access to U.S. Treasury bond markets — then, in 2008, primary dealers bankrupt almost every day, it is enough to recall the dealer division of Washington Mutual, Bear, Stearns & Co, Countrywide and Wachovia.
Now, the fed’s concern is not inflation, not unemployment, not the reliability of the banks or the financial system. The main task of the fed is to do so that the U.S. Treasury was able to sell us debt.
It is a growing US national debt explains the lack of price stability — and it will not be until the Treasury will not be forced to live within its means. That is why alternatives to the dollar, including imperfect bitcoin, which revolves around a bunch of swindlers, attracted the attention of those who seek to escape from the tyranny of paper money.
The opinion of the author may not coincide with the position of the editorial Board