Topic: Debt Does Matter, and Why Cryptocurrencies Have to Go up - page 2. (Read 435 times)

Right, there is high finance too, with its mountain of derivative bets worth more than can be bailed out by the entire world economy when things go wrong.  I hope I'm assuming with good reason that this can eventually be taken care of by unwinding and inflating away the positions.  Still, some pain will likely be in store for the major investment banks, (even if mitigated by secretly buying cryptos) and that might be why Jamie Dimon doesn't like Bitcoin.

It won't be difficult at all for the banks to order an unwinding of the positions from the top down; the rationale for doing so will be obvious.

Part of what I tried to do, in focusing on the real economy and 'real credit,' is to showcase what really happens on the ground, i.e. the distortions and instability that come from elite control of money and other core financial assets (and how Bitcoin may be the best thing that happened to the elites in modern history.)

The insane amount of debt out there is obviously not some guy wanting to start their own restaurant/tangible business, but the excesssess of the insanity of high finance which end up creating trillonaire (soon quadrillonaire? is this even a word) debt that will never be paid.

Naturally, newer generations will look at Bitcoin as a new asset class to hedge against this impeding doom.



Bitcoin is just a reaction to that, and that is the real bubble.

Sorry if this is confusing.  Both people spend money all the time.  It's just that, what I buy from you is balanced by what you buy from me, except for the deficit and credit parts.

So, when I 'spent all my $1', what really happened was that I spent $1.2 to buy from you, and you spent $0.20 to buy from me.

Debt default (refusing/being unable to repay a loan) is covered by the model.  In fact, the main reason you cut back spending when I'm too deep in debt is that you're afraid I might default.

This is absolutely what I believe too.

The catch is that the global banking elite will generally find a big country with decent rights and freedoms, and ally with that country to create the next global empire, by promoting the financial assets issued by that country and painting that country as a 'city on a hill.'  The 'free' wealth and power enjoyed by that country will eventually doom it to decline in all ways.

They did that with the Netherlands, Britain, and the US, in that order.  They are looking to do it 'to' India next.

As long as they still want to keep the US bubble afloat, they'll have to strip away freedoms and rights mainly in secret.  This creates secrets which can get exposed, and which will threaten imperial reputation and soft power.

But if they put in a good fix at the deep monetary level, the manipulation is well-hidden, there will be no need for any heavy-handedness, and the empire can appear to 99.9% of the public as a free and open society.  They were able to do this with the international gold standard, starting in the 1870s, and cryptocurrencies give them an opportunity to do it today without the embarrassment of devaluing against gold.


Don't worry, I often sound that way too.

This is a pretty strange model.In your model only you spends money,the other person just saves his dollar and gives it as a loan to you and you spend it again.How come the other person doesn`t spent his dollar for anything.He has the same needs as you-food,water,clothes...
I guess that your model is wrong.There are better ways to explain the debt economy,you should learn more about the market economy and finance.
You forgot about another scenario in your model.What if you bankrupt and refuse to return the loan to the other person?

That's another good breakdown for you. One facet which might be worth focusing on is potential for destruction of wealth, productivity, innovation and time. Money and cashflow could represent these four paradigms. Money that doesn't exist is being burned at record rates with future generations left to pick up what may be an insurmountable bill. The wealth rich(er) nations enjoy could be directly correlated with rights and freedoms they have.

It is possible destruction of wealth parallels destruction of rights and freedom. Having a strong middle class and a high(er) average riches lends political influence. In countries where average wealth is high politicians, governments and the private sector are forced to listen to the opinion of the people. If that wealth were to be destroyed, that could eliminate one of the primary reasons anyone in power has to take us seriously.

I'm sorry to always err on the side of negative analysis and worst case scenarios btw but it could be a scenario worth considering.

Imagine a 2-person, 2-dollar economy.  I have a dollar, and you have a dollar.  The total amount of money in the economy is $2.

Now imagine, later, my net worth is -$1, and your net worth is $3, because I spent my $1, borrowed $2 from you and spent another $1, so you have $1 in cash plus $2 in IOU from me.  The 'net total money' in the economy is still $2, but we now find ourselves in a totally different world.  Why?

The reason is that you will start thinking, since I have financial problems now, I might still buy food from you, but I'll likely stop buying expensive clothes and fancy cars from you.  So you take a break when you would normally be making these luxury items.  (In the real world, this means unemployment.)

When I see that you're producing and earning less, I know you'll stop having gourmet meals at my restaurant and staying at my resort.  As I plan to close down these operations, you'll know that my income will be reduced, and wonder if I'll ever be able to pay back the principal and interest of what I owe you.

You cut back even more.  The entire economy is trapped in a low-demand, low-activity, deflationary mode.  (And the media are trapped in a mode of telling us everything is OK!)

This is essentially where the world economy is today.  If enough people voted for Brexit and Trump (as they also voted against the establishment in Italy, France, and Germany,) we have big-enough economic problems.

Now, since I seem to blame all the problems on debt, you might ask, isn't it true that debt was what allowed both of us to feel richer, and justified my opening a gourmet restaurant and your investing in luxury car production?  Ultimately, debt is the engine of investment and higher living standards.

That is all true, but we need to ask ourselves, what kind of debt?  Is the debt truly free-market, or are the values of IOUs artificially propped by state-bank elites who benefit from issuing and underwriting the debt?  It is the latter kind of debt that allowed me to borrow $2 after I've spent all of my $1, that eventually created too many luxury items in the economy whose demand can collapse at any time.

But, that's where we are.

The elites' solution to the problem of global debt will be to generate enough inflation to wipe out the real value of the debt.  If we have a $10 economy now, that $2 debt becomes a small problem.  Unless they absolutely have to, they won't want to get inflation by throwing money from helicopters or devaluing their currencies against gold.  Those would tend to expose their system.

Bitcoin and other cryptocurrencies will become extremely convenient to the elites in this way.  They will allow these to go up (while buying up a lot for future control of the system,) and say, if people like cryptocurrencies, what can we do?

Directly or indirectly, inflation will come, and savers in cash and debt based assets will see a large portion of their real wealth wiped out.  Since the world system is fundamentally promise-breaking, we can't be surprised that those who suffer most are people who have the most trust in the system.