Dec 072017
 
 December 7, 2017  Posted by at 12:25 pm Finance Tagged with: , , , , , , , , ,
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Gustave Courbet The wave 1870

 

 

Chapter 1 of this five-part series by Dr. D is here: Bitcoin Doesn’t Exist – 1 .

Chapter 2 is here: Bitcoin Doesn’t Exist – 2

Chapter 4 will follow shortly.

 

 

Dr. D: The money, the unaccountable, uninhibited release of tokens can do more than just buy centuries of hard labor in seconds, it‘s also a method of control. Banks, our present issuers of money, can approve or destroy businesses by denying loans. They can do this to individuals, like denying loans to unpopular figures, or to whole sectors, like gun shops. They can also offer money for free to Amazon, Facebook, and Tesla, which have no profitable business model or any hope of getting one, and deny loans to power plants, railroads, farms, and bridges as they fall into the Mississippi.

The result is banks and their attending insiders are a de facto Committee of Central Planners in the great Soviet style. What is fashionable and exciting to them can happen, and what they dislike or disapprove of for any reason can never happen. And once on a completely fiat system, this is how capital is allocated through our entire system: badly. What’s worse has been a 20-year turn toward Disaster Capitalism, whereby loans are extended to a business, sector, person, or nation, and then suddenly cut off, leading to the rapid foreclosure and confiscation of companies, assets, or continents by the “Development Team.”

Imagine a Bitcoin where Satoshi could erase your coins in your wallet for giving him a bad haircut. Or because he likes your wife. Nor is there any help for independent nations like Iran, or even nuclear powers like Russia. Both have been cut off, their funds suspended at a whim with no recourse. Even being a fellow insider is no insurance, as the NY banks cut off Lehman from funds they were owed, driving it into bankruptcy to buy the pieces in receivership. Unpopular Billionaires are treated likewise. This is a system with no justice, no order, no rules, and no predictability. Anyone within it is at grave and total risk. And yet before Bitcoin it was the only system we had, short of returning to the 19th century, it was the only way for modern commerce to deliver food, water, power, or function at all.

This is seen in its abuses, but also by its effects. The present system not only controls whether you are a winner or loser, whether you may go or stay, whether you may live or die, but also tracks every purchase, every location, in effect, every action throughout your entire life. These records will describe what books you read, what movies you watch, what associates you have, in real time Already these daily actions are being approved or denied. Take out a variable-rate jumbo loan? We’ll give you 110% of the value, paying you to be irresponsible (we’ll foreclose later). Want to buy gas when driving through Cheyenne 3:30 at night? Sorry, we disabled your card as a suspicious transaction. Sorry about you dying there of crime or of cold; we didn’t know and didn’t care. All your base are belong to us.

 

You say you don’t care if JP Morgan has your pay stubs to disturbing porn sites and Uber purchases to see your mistress? Well the future Mayor of Atlanta will, and he hasn’t graduated college yet. With those records it’s child’s play to blackmail policemen, reporters, judges, senators, or generals, even Presidents. And all those future Presidents are making those purchases right now, the ones that can be spun into political hay, real or unreal. So if you don’t worry what everyone knows about you, that’s fine, but imagine reading the open bank records, the life histories of every political opponent from now until doomsday. Then Don’t. Do. It. The people who have those records – not you – then have not just all the assets, not just all the money, but all the power and influence. Forever.

Are you signing up for that? Bitcoin doesn’t. Bitcoin doesn’t care who you are and with some care can make it very difficult to track you. And without tracking you, it makes it impossible to boycott you. And without a central repository, it’s impossible to march in with tanks and make them give you the records, turn money on or off, to make other people live or die and bend to your will by violence.

No one will care about that, because no one cares about it now unless, like Russia or China, it’s directed at them personally and then it’s too late. The real adoption of Bitcoin is far more mundane.

The long-term interest rate is 5%. Historically banks would lend at 8%, pay at 4%, and be on the golf course by 5. No one thought much about it because like a public utility, banking was a slow, boring affair of letting business do business. You know, farming, mining, manufacturing, all that stuff we no longer do. For decades, centuries even, banking was 5%-15% of a nation’s GDP, facilitating borrowers and lenders and timescales, paying for themselves with the business efficiencies they engender.

 

 

 

 

All that changed after WWII. Banks rose in proportion to the rest of the economy, passing the average, then the previous high, then when that level reached “Irrational Exuberance”, Greenspan started the printing presses, free money was created, and Senators and Presidents whose bank records were visible suddenly repealed Glass-Steagall. An economy stretched to breaking with free, centrally-allocated and misallocated money crashed and shrank, yet the banks– now known as the FIRE stocks: Finance, Insurance, and Real Estate – kept growing. How can banks and finance keep growing with a shrinking economy? By selling their only product: debt.

How do you sell it? Reduce the qualifications past zero to NINJA-levels, and use your free money to FORCE people to take it via government deficits and subsidized loans. No normal economy could do this. No normal business model could do this. Only a business now based on nothing, issuing nothing, with no restraint and no oversight. And the FIRE sector kept growing, through 15%, 20%, 25% until today most of U.S. GDP is either Finance selling the same instruments back and forth by borrowing new money or GDP created by governments borrowing and spending.

Remember when we started, banks paid 4% and charged at 8%. Now they openly take savings with negative interest rates, and charge at 30% or higher on a credit card balance averaging $16,000. And still claim they need bailouts comprising trillions a year because they don’t make money. The sector that once facilitated trade by absorbing 5% of GDP is now 5x larger. There’s a word for a body whose one organ has grown 5x larger: Cancer. Unstopped, it kills the host.

 

What does this have to do with Bitcoin? Simple. They’re charging too much. They’re making too much both personally and as a group. They’re overpriced. And anything that’s overpriced is ripe for competition. And the higher the markup, the more incentive, the more pressure, the more profit there is to join the upstart. Bitcoin can economize banking because what does banking do? It saves money safely, which Bitcoin can do. It transfers money on demand, which Bitcoin can do. It pays you interest, which mining or appreciation can do.

It also can lend, register stocks and ownership, rate credit risks, and allocate capital which other non-Bitcoin Tokens can do. In short, it can replace the 25% overpricing of the financial sector. If it could reduce the overhead of outsized profit, the misuse of expensive brainpower, of Wall Street and London office space, and reduce financial costs to merely 10% GDP, it could free up 20% of GDP for productive purposes. Why did you think Detroit and Baltimore fell in on themselves while N.Y. and D.C. boomed? That’s the 30% they took, $4B a year, from every other state, every year for 40 years.

That money and that brainpower could be much better allocated elsewhere, but so long as the Finance sector can print free money and buy free influence, they will never stop on their own. Only an upstart to their monopoly can cure the cancer and bring them back to a healthy size and purpose. Bitcoin can do this only because they charge too much and do too little. Of course, they could go back to paying 4% and charging 8% with a CEO:employee pay ratio of 20:1 but history says it will never happen. Only a conflict, a collapse, or competition can reform them, and however long it takes, competition is by far the best option.

 

 

So why would people pick Bitcoin? It costs less and does more. Amongst adopters, it’s simpler and more direct. It pays the right people and not the wrong ones. It rewards good behavior instead of bad, and can help producers instead of parasites. It’s equitable instead of hierarchical. What else? While not Bitcoin proper, as a truth machine Blockchain technology is the prime cure for the present system’s main problem: fraud. There is so much fraud at the moment, libraries of books have been written merely recording the highlights of fraud since 2001. But merely recording the epic, world-wide, multi-trillion dollar frauds clearly does not cure it. Like other human problems, no one cares about your problems, only your solutions, and Blockchain has the solution.

While the details of fraud are complex, the essence of fraud is quite simple: you lie about something in order to steal it. That’s it. It could be small or large, simple or complex, but basically fraud is all about claiming what didn’t happen. However, the Blockchain is all about truth, that is, creating consensus about what happened, and then preserving it. Take the Robosigning scandal: accidental or deliberate, the mortgage brokers, banks, and MBS funds lost the paperwork for millions of houses. A house could be paid off could be foreclosed, as happened, or it could be owned 5 times, as happened. Like the Sneeches, no one knew which one was who, and the only certainty was that the official authority – county courthouses – did not know because to register there would have cost Wall Street and inconvenient millions or billions in shared tax stamps.

The system broke down, and to this day no one has attempted to define ownership, choosing instead to usher all the questionable (and therefore worthless) material into the central bank and hiding it there until the mortgage terms expire, forcing the taxpayers to bail out a multi-trillion dollar bank fraud at full value. And this is just one messy example. The S&L crisis was not dissimilar, nor are we accounting for constant overhead of fees, mortgage transfers, re-surveys, and title searches nationwide.

 

With Blockchain it’s simple: you take line one, write the information, the owner, title, date, and transfer, and share it with a group. They confirm it and add mortgage #2, then #3 and so on. It’s a public ledger like the courthouse, but the system pays the fees. It also can’t be tampered with, as everyone has a copy and there is no central place to bribe, steal, and subvert as happened in 2006 but also in history like the 1930s or the railroad and mining boom of the 1800s. If there are questions, you refer to the consensus If it’s transferred, it is transferred on the ledger. If it isn’t on the ledger, it isn’t transferred, same as the courthouse. Essentially, that’s what “ownership” is: the consensus that you own something. Therefore you do not have a mortgage due disappear, or 4 different owners clamoring to get paid or take possession of the same property, or the financial terrorism of shattering the system if you even attempt to prosecute fraud.

It’s not just mortgages: stocks have the same problem. Since the digital age began, the problem of clearing stock trades has steadily increased. Eventually, the NYSE trading volume was so large they couldn’t clear at all, and the SEC let trading houses net their internal trades, only rectifying the mismatches between brokerages. Eventually, that was too large, and they created the DTCC as a central holder and clearing house. Yet, in an age of online trading and high-frequency trading mainframes, it became apparent there was no way to clear even residual trades, and they effectively no longer try, and the SEC, instead of forcing them to compliance, lets them. There are 300M failed stock trades a day and $50B a day in bond failures, or $12 Trillion year in bonds alone. And so? If you sell your stocks and bonds, the brokerage makes it come out whole, so what?

 

 

Chapter 1 of this five-part series by Dr. D is here: Bitcoin Doesn’t Exist – 1 .

Chapter 2 is here: Bitcoin Doesn’t Exist – 2

Chapter 4 will follow shortly.

 

 

Home Forums Bitcoin Doesn’t Exist – 3

This topic contains 15 replies, has 9 voices, and was last updated by  V. Arnold 4 days, 18 hours ago.

Viewing 16 posts - 1 through 16 (of 16 total)
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  • #37545

    Gustave Courbet The wave 1870     Chapter 1 of this five-part series by Dr. D is here: Bitcoin Doesn’t Exist – 1 . Chapter 2 is here: Bitcoi
    [See the full post at: Bitcoin Doesn’t Exist – 3]

    #37546

    Griselda DeSaranno
    Participant

    Dr. D’s writing is so exciting, that it makes my non-gender specific nipples hard.
    The current economic system is like prison sex without the romance.
    Bitcoin freed me to back ventures that are socially valuable, and back my own well-being.
    Exodus, the movement of Jah people.

    “I have seen the finest minds of my generation destroyed
    Graduated from colleges of mendacity,
    their angelic dreams of contributing to society
    seduced by the money of apple, microsoft, google, amazon
    into Ad-Sense, HFT and metadata collection.”

    RMS, Nicole and Satoshi have it right.

    AYBABTU!

    #37552

    Diogenes Shrugged
    Participant

    Dr. D,
    Thanks much for your Bitcoin tour de force. The inexorable transition from debt based fiat is accelerating, so I hope V. Arnold, for one, sees the light soon.

    It seems to me that the comparison between Bitcoin and debt-based fiat is a lot like the comparison between fuel injection and carburetors. When fuel injection took off, was it in a bubble? Clearly not. Did a lot of weekend mechanics howl and rail against the loss of carburetors? Inevitably. Debt based money systems are obsolete. It’s just going to take some time for everybody to recognize the superiority of the alternative.

    A lot of people see the rapidly rising price and say, “I can’t even afford one Bitcoin now.” So they resign themselves to being spectators rather than speculators. But their choice not to participate is based on an understandable misconception. A Bitcoin will soon be akin to a $20,000 note. Imagine if the only denominations for dollars were $1 notes and $20,000 notes. People would complain, “I can’t even afford one $20,000 note.” So it’s important to stress that conversion from dollars to BTC always preserves purchasing power, regardless of the price of BTC.

    I saw a reference to a crowd of women in an article posted somewhere the other day. They were described as “tons of women” who participated in some event. I had to laugh. When did the standard unit of measure for women become tons?
    “Hi, Dio, what can I get for you today?”
    “Hi, give me a ton and a half of women.”
    “You want that bagged?”

    I read somewhere that a millionth of a BTC is being called a “Bit.” That’s a potentially ambiguous term, so I hope it changes, but nearly everybody would be able to afford to buy a useful stash of “Bits.” Your request that everybody buy “just” 0.01 BTC (= 10,000 “Bits”) was nothing short of humanitarian.

    #37554

    zerosum
    Participant

    Using a credit card cost money.
    Using a bitcoin cost money.
    Banks make money from you using credit cards.
    Exchanges make money from you using bitcoin.
    Printing press make the most money

    #37555

    Boogaloo
    Participant

    So what happens when central banks buy up all the bitcoin with their unlimited fiat so they can try to control it? What happens to the price of bitcoin then?

    #37556

    zerosum
    Participant

    Duhhh!

    bubble price nows!!!

    Duhhh!

    More bubble prices!

    #37557

    V. Arnold
    Participant

    Everything Dr. D said about the western model of economies is correct; it’s a racket; or as George Carlin said; “It’s a club and you ain’t in it…”
    As for “seeing the light”?
    It’s not light I’m seeking; it’s a full understanding of crypto-currencies.
    At this juncture; I’m not impressed, there having been a pretty large theft yesterday, from NiceHash.
    That does not bode well for security.
    Crypto currency is in its infancy; it needs to mature to realize its full potential.
    I don’t see the criminal enterprize, otherwise known as the U.S., allowing that to happen.
    We’ll see…

    #37558

    Diogenes Shrugged
    Participant

    Boogaloo,
    Answer: the price rises more quickly. If you wish, sell enough at some point to recover your initial investment. And concede that nothing will ever eliminate risk from your investments.

    V.A.,
    “Crypto currency is in its infancy; it needs to mature to realize its full potential.”
    Well said!
    “I don’t see the criminal enterprise, otherwise known as the U.S., allowing that to happen.”
    I’m betting quite heavily that even if they appear to win battles, given time, they’ll lose that war.

    #37560

    Dr. D
    Participant

    No doubt they will. But their problem is they have to bid on BTC “fairly”, not just click a mouse and assign themselves a trillion for free. I mean, we just had accounting showing $21 TRILLION missing from the Pentagon budget, including blank-line transfers amounting to $700 Billion…totaling ANOTHER entire Pentagon budget without oversight.

    So…they print US$ and buy BTC? Yes, it’s called hyperinflation. As they actively engineer to make their own currency worthless and discarded, and therefore transfer the value of whatever they print into their competitor. Destroying your own system, the castle and moat of the monetary control is not exactly a winning hand. Many hope and pray they buy all BTC with their US$ and convert the system themselves without our help.

    Me? To me it looks like a new system of control. Different from the old, but if the people don’t like justice or hold anyone accountable, for anything, ever, as we see in the news 10x a day, what do you expect?

    “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.” – John Adams

    That’s no less true of our social or monetary system. The American plan is built on “We the People”; if we’re corrupt, lazy, mendacious, self-serving sots, nothing can help us and Bitcoin will only serve as the new name to our slavery. Sorry, but “The price of “Liberty is eternal vigilance.” It’s unpaid work followed by more unpaid work. Bitcoin doesn’t change that.

    #37562

    clueless
    Participant

    Great writing! thank you for the information. Now, is there some synchronization to force all US political positions to volunteer positions only? Unfortunately for the coming generations in the US- Ben Franklin was right. Congress should never have had the entitlement to vote, and assume control for their own income. US citizens need to usurp that “financial position of power” over Congress, Judiciary, Presidential and all state elected and appointed positions.

    #37563

    TheTrivium4TW
    Participant

    DR. D., nice clear elucidation on the machinations of the Debt-Money Monopolist Mega-Corporate Near-Global Fascist Empire.
    Since nearly everything is a setup, I tend to look for setups.
    I doubt that Bitcoin was created outside of the sphere of influence of the Money Power and their assets. IOW, they were almost certainly involved from the beginning. Believe the propaganda if you must, but keep one eye open.
    Bitcoin is soaking up money from something else, most probably gold and silver.
    All Bitcoin needs to be nullified is a Money Power false flag and blaming the financing on Bitcoin… The Money Power Fascist Government outlaws Bitcoin… wipes out the types of people who flock to Bitcoin (and Banksters would love to wipe out that crowd, no?).

    PS – According to MIT research Stephanie Seneff, 80% of male babies will eventually be diagnosed with autism by 2032 if the current exponential growth rate of diagnoses doesn’t drop from its current path (50% of children, 80% of boys).
    If you care about humanity, I **highly recommend** you review and save the research of one of the fallen heroes of our age, Dr. Andrew Moulden (he’s a true hero, of course, you’ve never heard of him).
    His intellect reminds me of Nicole Foss’ intellect – he’s a sharp cookie. He had a B.A., an M.A., and M.D., and a Ph. D. in Neurophysiology, and was top of his classes all the way. He was being trained to head the management of the Canadian medical system.
    Then it happened.
    What is it? Well, he figured out a specific and probably mechanism through which aluminum in vaccination was flocculating the blood and creating micro-strokes in our tissues. These are especially important in watershed locations where only one capillary system feeds the tissue.
    In addition, he specifically identified physical effects of this brain related neurological damage and was teaching parents how to document the face and eye movements of their children pre-vaccine and post-vaccine. BTW, my son exhibits this “lazy eye” neurological damage and, looking back at his infant photographs, he does not appear to have the same problem prior to his battery of vaccines.
    The damage is cumulative. The aluminum is an uber powered flocculant that “sludges” colloids, and your blood is a colloid. 7 micron diameter blood cells need to fit, single file, into 600,000 thousand miles of capillaries that are 5 microns diameter. 95% of your blood is in this capillary system at any given time, AND YOUR PHYSICIAN IS COMPLETELY BLIND TO IT.

    Dr. Andrew Moulden – if you investigate one thing, investigate Dr. Andrew Moulden’s work.

    Or all your Bitcoin profits taken at the Bankster Bubble top (assuming you keep it when they bankrupt the system by design) might be spent covering for a couple drooling, tortured grand children or grand children.

    #37564

    TheTrivium4TW
    Participant

    Hi Clueless, the first step is to get the Money Power out of the hands of the private cartel of people that currently control it – and they control it globally. Here’s some history they don’t teach in Money Power programming institutions called schools – whenever they attack a country, one of the first things they do is set up a debt-money based central bank. There has never been a debt-money central bank that has fought another debt-money central bank country – because once that debt-money bank is set up, the whole society has become a vassal to their Money Power Overlords. This may change when they implode Europe and the world (should happen while Trump is in office), but only because the Money Power wants it to happen.

    How To Be a Crook

    Poverty – Debt Is Not a Choice

    Renaissance 2.0 The Rise of [Debt-Money Monopolist] Financial Empire

    It’s not about the shoes, money, it’s about the Money Power, money…

    #37565

    clueless
    Participant

    “Bitcoin is soaking up money from something else, most probably gold and silver.”…
    This is kinda interesting———https://seekingalpha.com/article/4129543-bitcoin-one-way-go-true?li_source=LI&li_medium=liftigniter-widget

    #37566

    V. Arnold
    Participant

    clueless
    Yes, it is interesting. Thanks for the link.
    I remain skepticle; the skyrocketing prices are a dead giveaway, IMO.
    The magical thinking Usian’s are ripe for get rich quick schemes; again, IMO.
    I think Dr. D has a good handle on this…

    #37568

    V. Arnold
    Participant

    This from ZH, gives legitimacy to my extreme skepticism; re Bitcoin and crypto in general.
    http://www.zerohedge.com/news/2017-12-08/bitcoin-has-whale-problem-1000-investors-control-nearly-half-market
    The small investor has only one defense; anonymity and staying away from “the latest, greatest, investment opportuniy”; Bitcoin and crypto-currencies in general.
    Stick to conservative, historic, tried and true, store’s of value; while using anonymity to keep no profile.
    The no profile bit may involve taking some drastic steps; radical lifestyle changes.
    Surviving the quickly coming world order (already hear for Usians) will take thinking wildly out side of all the known boxes…
    I think it’s a feat few can accomplish…

    #37570

    V. Arnold
    Participant

    Congrats Dr. D; you’re featured over yonder at Zero Hedge with Ilargi’s attribution; well done you and Ilargi.
    VA

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