Debt Rattle June 18 2018


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    Paul Klee Pflanze und Fenster Stillleben 1927   • The US Should Break The German Lock On The European Economy (CNBC) • Merkel Gets Extra Time To
    [See the full post at: Debt Rattle June 18 2018]

    V. Arnold

    I was here well more than 10 years before I saw my first cavendish banana; it was a bit of a shock. I thought I was well shut of those horrible bananas.
    In the states I avoided them as best I could; Dole had a far better type of the fruit.
    There are many, many different varieties of bananas here and they are so far superior it boggles the mind.
    The reason you don’t see them in the west is simple; they mostly don’t travel well.
    Recently, cavendish are showing up here more and more; locally grown. They are admittedly better than in the states.

    Australia? They destroyed the oldest (60,000 years) known, still existing, civilization on the planet; what more needs be said.
    I think Assange knows full well what to expect from “his” government; Britain and Australia; two peas in the same pod…fuck’em both; I am, of course, speaking about governments…

    Dr. D

    Don’t know where they think they’re going with this Crypto thing, but it’s technical rubbish. It may be the reporter, but I don’t think so.

    “The fragility of the decentralized networks…” Really the flagship quote here. Cryptos have a lot of drawbacks, a lot of overhead, that’s why you never use them unless, due to a complete lack of morality, trust, and ethics, you literally had no alternative. But the one thing they ARE is anti-fragile. As they expected to come under attack from the BIS and everybody else, they were designed so from the ground up. That’s why they’re decentralized. So calling them fragile is akin to saying water isn’t wet.

    Other problems, sure, but like them or hate them, most technical challenges, for monetary-oriented coins, have been solved. Bitcoin can’t handle throughput transactions, yes, but there are like 2,000 coins now. Even #2 Litecoin can do transactions in seconds for pennies. What allows that? The number of people on the network + software. So Bitcoin COULD in fact fork to add that level of speed. They simply chose not to for other reasons. Litecoin then could fork as well to double their present transactions, and so on.

    Newsflash: all credit card transactions are done on computers. These are the same computers with the same processing power used by everybody else, and in fact, the CC/bank machines are a tiny fraction of processing power on earth. Yet somehow just a few servers owned by a few people can keep up. So a network made of everyone, adding millions of computers…can’t keep up? You’re not tech’ing well here. Obviously if 1X can do a task 100X can do it.

    It’s literally suggested here that the more people who use this money, the LESS stable and valuable it is, unlike our experience of money anywhere on earth over all recorded history. Therefore if 99% of the people use a coin, then I what? …LOSE trust that it will have value to the next guy and it will drop from 99% uptake to 1% uptake in the next transaction? Have I fallen into Oppositeland again? And their argument is that it’s BECAUSE 99% of people use it that no one will use it. This is what they mean when they say “trust can disappear instantly.” No. No it can’t. That’s what “Trust” means, but being a bank you may have no familiarity with the concept. Trust is not digital but is a component of human psychology and experience; it moves in the human timescale of months, years, decades.

    Loss of trust, by the way, is probably the only way a “cryptocurrency can simply stop functioning,” and would in fact, “result… in a complete loss of value.” Yes, if 99% of people taking it turned to 1% instantly, that would happen. And in all possible universes, the earth could fall through a wormhole in space, but that’s not happening either.

    ““Without users, it would simply be a worthless token. That’s true whether it’s a piece of paper with a face on it, or a digital token.” Yes. Yes it would. But explain to me how 99% of users suddenly become no users. There’s a market for Confederate and Soviet currency, and even hyperinflating currencies running at 5-digit monthly inflations don’t have zero users, AND there is a single cause for their flight: a loss of faith in the central authority issuing the currency, an event that cannot happen in a decentralized one.

    “The dependency of users on so-called miners to record and verify crypto transactions is also flawed, according to the BIS, requiring vast and costly energy use.” We have that dependence now, in the BIS’s and world’s banks’ centralized servers who chew enormous power from the cash register through Citi and Chase to the Fed and all the way up to Switzerland. Difference is, like Europe’s ATM’s, their network can be shut off or fail in an instant. To stop the Atomic Swap/Litecoin network, the whole internet and all users have to go down. Permanently. Were that to happen, we would have other, more pressing problems. Yet the coins would still exist on ledgers, on backups, on fobs, and on paper, should the Internet ever exist again.

    While not being compared equally, the power consumption is a legacy issue. Most PCs and phones are already wasting energy doing nothing. In addition, only those transacting need to participate. But failing that, we already have “Proof of stake” and “Proof of work” basis, which are not constant-users the way Bitcoin is, but use fractions of the power. Like from basis 100x to basis 0.44x. Any of those additions, when proven and trusted, can be forked into any coin at any time.

    Since every line of this article is technical nonsense, and they’re too smart not to know that, what is the BIS really up to? And where did they find a reporter dumb enough to cooperate? Oh, Reuters, that’s right.

    V. Arnold

    Tom Luongo has an article in RI about Trumps idiotic trade war.
    From my POV it may well prove to be the best move he could’ve made; the world may return to a balanced trade economy (I’m certain not Trumps intention[?]);

    Trump may force trade into using gold, which cannot be run with deficits;


    Whatever one may feel about crypto, that BIS piece is weird. You’d think they can come up with something better. Or do they do it on purpose?


    Trump’s ‘trade war’ is not fully idiotic. The US have financed much of the world. But it should have seen that its manufacturing would suffer bigly from that. It’s what building up German and Chinese manufacturing does. But it’s also what being the reserve currency does. Are they ready to let that status go? Perhaps they see it as unsustainable long term anyway.

    V. Arnold


    But it’s also what being the reserve currency does. Are they ready to let that status go?

    Yes, I agree it’s not completely idiotic. And I don’t know if they’re ready to let their reserve currency go.
    But, bull in the china shop Trump, has set in motion a thing even he doesn’t fully understand, IMO.
    Chaos ensues…
    And reserve currency’s days are numbered, IMO…
    Gold is coming, one way or the other.

    V. Arnold

    My opinion of crypto has not changed; a cult currancy of no intrinsic value.
    Fiat at best, a pyramid likely, and a fraud at worst.
    The block chain may have value, but that remains to be seen and is only a means where by.
    Gold has more than 5,000 years behind it; hard to be in denial that it’s a genuine store of value.


    But in all fairness we should be reading this from Mish on the BIS crypto report as well:


    So my earlier criticism of the BIS should have been aimed at the Reuters journalist. As Mish shows, the original report has substance. Right or wrong.

    V. Arnold

    While my knowledge of the crypto micro is limited; I’ll go with my gut, based on a fair amount of knowledge of economics. I do not trust the galoots. The galoots are the majority of the economic forecasters and commenters.
    As things get too technical for the proletariate, we’ll be disempowered to the point of mere servetude; we’re nearly there as I type this because the proletariate cannot possibly follow and understand the bullshit!.
    Things created out of thin air tend towards their origins, thin air.
    History is a pretty tangible meter of value.
    As populations increase and access to the intertubes expands, so does scams, grifting, fraud, and myriad illusions to lure us away from what is real.
    Populations lacking genuine educations and critical thinking skills, are prey for this fantasy of the new world order.

    Dr. D

    Edit: you’re ahead of me. Yes, it’s odd. With so many very real obstacles and drawbacks, why put in essentially false charts and false arguments?

    With trade, I was set aback by the “Germany living off their fellow Europeans” and that “the U.S. should do something about it.” Huh? Germany, who worked hard to deliver stuff on credit that will be defaulted on? Doesn’t sound like Germany won that entirely. And how about the U.S. get their nose out of it for a change?

    In any case, the minute Trump says “America First” the very next guy he meets is going to say we have a massive, unprecedented trade deficit the world will stop. So it’s literally impossible for the multi-polaring of trade and power to be an accident. A better read is that the U.S. is hollow and overextended and knows they need to re-industrialized before they’re cut off, and the Empire people vs the National people is the struggle we see daily. Some return of the gold standard is an obvious consequence, both parts written about by admin members and advisors, but obviously, you want Mnuchin out there keeping them busy until you have to pull the trigger ’cause it won’t be pretty and like an earthquake will run mostly outside of their control.


    “… the United States’ backyard…”

    is being misused, exploited, abused

    Dr. D

    It doesn’t end. Salinas Price exact same article here:

    What he calls “unexpected” or “unintended” we’ve been talking about on our side for 20-40 years, since it began, and there is a readership of 500K-1 million in the Alt-Ec space.

    Yes, if you stop this trade deficit, you create a US$ shortage that will more or less collapse the world. The world will then HAVE to get off the US$ reserve system, the one that has been de-industrializing and unemploying the U.S., like it or not. By force if necessary, and if they are adequately coordinated, the administration can dictate the exact time, which they seem to be doing. Rate hikes + US$ liquidity + Trade wars + attacking DeutscheBank.

    I’m sure the U.S. doesn’t WANT to go back to a gold standard and will lie and cheat about it, but if you get off Triffin, it basically WILL happen and the alternative is Ayn Rand’s vignette where former Detroit factory workers in bark huts hunt rabbits with sticks and stones. (P.S. this is long since actually happening. Viz. “Roger and Me”, 1989) When it becomes a national security issue, which it long since has, the Generals put a stop to it to salvage the very existence of the nation, which appears to be what happened. …And it’s all in 500 words of Hugo!


    The UK was a net contributor to the European Union budget. This should be a surprise to no one. No, the UK was not being subsidized by Poland, Estonia or Portugal. It was pouring about 10 billion pounds per year net to the EU coffers, 12.5 billion US$. As the UK exits the EU, this is money that will be available for spending wherever its government sees fit, and NHS could be it. The Guardian wailing as a banshee that there can be no such thing as a Brexit dividend is just casuistry, hairsplitting, smokescreen from the very same technocratico-mediatic class that was so adamantly opposed to it and is now so bitter about it. Yes there will be fresh money in the UK government coffers as soon as it disentangles itself from the EU, and yes it could go to the NHS.


    I can’t see how a return to the gold standard would solve anything. Saying that I realise that Russia and China are buying up gold as if there is no tomorrow. In the past Countries went off the gold standard to print a lot of money, usually to wage wars, and then back on it when that was done. The introduction of the fiat system of money in 1971 stopped that nonsense and made political activity more transparent. However we have an economics profession which was brought up on the gold standard and just can’t let go of it. The mental gymnastics they have to do to merely justify their existence is beyond belief. Certainly it is true that it is very difficult to change someone’s mind if their salary depends on them not doing so but creating a structure that depends on gobbledygook that nobody understands is a sure way of maintaining power- until it doesn’t. The fiat system of money is, in my view, an elegant system but it is the politicians and the economic profession that stop us from realising its full potential.

    Dr. D, I disagree with you on pretty much every point you made.
    1. When BIS talks about fragility they don’t define what they mean by that. And they admit that our current monetary system is fragile as well – see endnote 10.
    2. Litecoin didn’t solve the problem of transaction throughput. It’s capable of 56 transactions per second. A big improvement over 7 tps of Bitcoin. VisaNet (Visa backbone) tested to 56,000+ tps and it actually ran at 1,600 tps in 2016. And before you bring up Raiden let’s agree to talk about “on the chain” transactions.
    3. Credit card transactions are done on a trusted network. Bitcoin (and probably 1999 out of 2000 coins) run on trustless networks. That’s why credit cards require a tiny fraction of energy and computing power on the Bitcoin network – different tasks.
    4. Most PC and phones are NOT wasting energy when doing nothing. Compare standby (doing nothing) time of your phone and movie playback (doing something) time. “Proof of stake” is still ways away. So, it’s not a legacy issue.
    5. This BIS report was mentioned by all major news agencies, not just Reuters.

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