I’ve seen lots of YouTube videos by “stackers”, basically people who have their savings in silver and gold, who talk about the incoming “reset”, the event where fiat currency will undergo hyperinflation and the value of gold will skyrocket, and the value of silver will rise to parity with gold, which will make them all rich and they will be the new financial elite.
This all sounds like something only an American could believe or take seriously. Let me explain why I think so.
Yes, in times of hyperinflation it is realistic to expect that an ounce of gold will cost a million dollars. However, it’s also realistic to expect that a loaf of bread will cost ten thousand dollars. Basically, what happens in hyperinflation is that the currency goes down in free fall, the prices of all retail products are revised upwards several times a day, there are shortages of all products in the stores because the producers are taking heavy losses due to inflation and basically doesn’t make sense to sell anything at those prices because if you negotiate the prices at the beginning of the month and you are paid at the end of the month, by the time you get the money it’s no longer worth anything. In theory, you could circumvent this by anchoring the prices to some hard currency, or precious metals if there no longer is a hard currency anywhere, but the state will not allow this because it will prevent anything other than its own currency from being accepted as legal tender. This is why black markets flourish in times of hyperinflation, because people who sell on the black market don’t care much about what the state would want, they will price things in hard currency, and the prices will be actually higher than they are today, measured in gold or silver, because they will be increased by scarcity and black market premiums. In the best possible scenario, a 1oz silver coin will buy exactly as much stuff as it would today, minus a black market premium charged by smugglers, and possibly minus a premium charged by the precious metals dealers who will exploit the situation to earn exorbitant profits. I actually made a small research here in Zagreb, and compared the purchase prices for gold bullion between a legitimate precious metals dealer (the one I currently buy from), and a chain of pawn shops that buys precious metals from the uninformed populace on the street. It’s around 20% of a difference, and the legitimate gold dealer isn’t doing it for free either, so you can imagine how bad the pawn shop is, and that is most likely what we will have access to in times of extreme crisis, and the prices will be worse than they are today. If you think I’m painting a depressing picture, just have in mind that I lived through the hyperinflation of the Yugoslav dinar, and hyperinflation of the Croatian dinar, I learned to think in German marks early on, as we all did, and I learned to manage the retail shortages and black markets, as we all did, with the little money we had. So, unlike the Americans on YouTube, I actually know what I’m talking about. It’s still difficult for me to shake the habit of spending my earnings immediately because they’ll be worthless by the end of the month, and the currency has been quite steady for the last 20 or so years.
There’s another aspect of the hyperinflation economy that’s unimaginable to the Americans, who are used to thinking in terms of investment in stocks and bonds and saving for retirement in domestic currency, who think in terms of 30 year mortgages and long-term financial planning, and that’s the fact that prices are revised upwards hourly, and your pay is revised upward monthly. All savings in domestic currency become instantly worthless. Working a steady job for a monthly pay check becomes a matter of slavery where the pay check doesn’t even cover the price of public transport to work. If you don’t change your pay check into hard currency at the beginning of the month, and then change small amounts into domestic currency daily, on demand and just in time, by the end of the month your pay check would buy you a loaf of bread or a roll of toilet paper. Every time you change from or to hard currency, you need to go through the black market people, who charge exorbitant fees, or you can go to the bank where the exchange rate is some laughable number the state would want you to believe in, and nobody in his right mind would buy or sell at those rates. The first think you lose in hyperinflation is the ability to think long term, and to plan finances strategically. You do everything on a daily or even hourly basis, you spend the money instantly because savings kill, and currency exchange robs you of a significant percentage. And I’m talking about a localized hyperinflation, where your currency is debased but everybody else’s is fine. The German mark was fine, the US dollar was fine, the Swiss frank was fine. Those were money; dinar was toilet paper, but it was the only currency accepted in the stores. On the black market, however, you paid in German marks. Also, the freelance work you did was paid in German marks, and *everybody* did freelance work if they wanted to eat and pay the bills, and they kept their “day job” only pro forma, and they put in only formal effort, which additionally contributed to the collapse of economy.
Yes, people who had hard currency because they worked abroad were the only ones well off, but that had more to do with them generating income in hard currency, not with them having savings in hard currency. Any amount of savings will eventually be spent on expenses, that’s the reality of it.
So, what happens when nobody has income in hard currency, because nobody is getting paid in gold or silver now, and I seriously doubt that will change significantly in periods that might make a difference? One projection is that everybody will be fucked, the entire global economy will have to be restructured very quickly or the breakdown will result in 6 billion people dying of hunger, violence, poor medical care and poor hygiene in a catastrophe approximating the worst-estimates of a full-exchange nuclear war. Imagine the collapse of the Soviet Union, collapse and civil war in Yugoslavia, and Iraq after its infrastructure was destroyed by America, and you’ll get a realistic assessment of what that would look like in the initial phases, from which it would get worse.
There is another possibility, and that’s the one stackers are hoping for, and that’s the reset of the global economic system, which would wipe out all derivative assets in something similar to the 2008 crisis, wipe out most of the value of USD and all national currencies backed by USD bonds or other USD derivatives, which means EUR would be hurt worse than the USD, and GBP would be hurt worse than the EUR. This ratio is already visible in the gold price per currency; USD is actually hurting the least because EUR has all the USD problems plus their own, and GBP has all the EUR problems plus their own. At a certain point, some form of gold standard will be established, with partial backing of currency with gold, which will revise the price of gold upwards to the amount necessary to back the monetary mass in circulation, and that’s the point where everybody holding physical gold might actually get rich, if the retail prices of goods and services follow the paper currency and not gold, which is a rather large “if”. There are some indications that this might be going on, because at this point the price of gold is actually rising steeper than the perceived inflation, but this might all collapse at some point because that’s what currency collapses look like: at first, due to inertia nothing seems to happen. Then the prices start going up slowly, and then they start going up like crazy, and at the point where people writing main stream news start getting it, it’s already doomsday.
There’s also the expectation that bitcoin will be the new gold and those holding the bitcoins will be the new elite. Bitcoin, as well as the entire crypto asset class, will be the first thing to be wiped out. The only thing that gives them value is perceived ability to convert them into fiat currency and other assets. This is one American decree from being blocked and then crypto will have as much value as all the other things on America’s sanctioned list. Payment industry insiders would know what that looks like. I’m what you would call a payment industry insider.
Another expectation is for silver to rise from its current 90:1 ratio relative to gold, to something closer to the historic 16:1, even 12:1 from Roman times; silver is some 17 times more naturally abundant than gold, and is a byproduct of gold mining. There are valid arguments that point to relative scarcity of silver, great potential demand, and the current price ratio that is far below historic values, however there are also the arguments for the opposite: the current demand for silver is around 60% industrial, which means that the collapse of industry and trade wars might reduce the industrial demand for silver, and the people with actual money no longer take silver seriously as a monetary metal, and their entire focus is on gold. Also, the reason why silver was historically regarded as a monetary metal is because it serves as a good material for making smaller-denomination coins, because gold is too valuable to be practical for that purpose. However, in modern times I expect the means of payment to be completely digital, which will remove the need for circulating the lesser-value monetary metals altogether. Also, I expect gold to be only a part of the currency backing, because the gold-only system would be too constrictive and ill suited for the needs of an expanding economy, which will mean that mortgages and similar forms of currency-backing with tradable economic assets will persist. Also, other metals might serve a role in currency backing, also because there simply isn’t enough gold for backing the modern economy the way it used to. However, the precious metals will serve a much more prominent role in currency backing after the inevitable demise of the USD and all derivative currencies. Even the people who currently hold gold and silver will eventually be provided a service by the banks where they will deposit their precious metals into the bank, and spend it with a debit card that will dynamically charge their gold balance. This will be more economical than exchanging gold bullion at the pawn shops or other dubious places, and most people will find it reasonable.
This, of course, assumes a scenario where the economic collapse will proceed according to the projections done by people like Jim Rickards and his colleagues. They all know the dollar is going down and the gold standard of some kind will be reintroduced after the collapse of the fiat system, but they all expect the transition to be more-less orderly. I, however, don’t see this outcome-type featuring prominently among my projections.
So … not to be disrespectful…. as an American, please don’t dispell any perceived beliefs on us. Bottom line, like everyone, we are all scrambling to preserve our wealth in Real Tangible Assets. Unlike unprecedented digital illusions of wealth that ALL governments are cramming on us most of us know what is coming.
We, and all humanity are,scrambling and hope to survive the upcoming calamity.
God bless us all. And see you on the other side.
Keep your posts coming. Refreshing insight. God bless.
It is of course clear to me that in a country as big and as politically diverse as America, it is very difficult to generalize “Americans”, yet in the context of this article, I think my generalizations are valid. Sure, both the crypto hipsters of San Francisco and the rational down-to-earth people who save their money in silver coins, grow their own food, live their lives according to the traditional Christian principles and detest this modern madness, they are both American, and it appears one cannot hope to find any common ground between the groups, but that would be false. You see, if you look at it from my perspective, neither of the insanely diverse groups had the experience of hyperinflation. They never had the experience of their money being worthless. They both lived in the economic environment of long-term security, which makes it possible to have a 30 year mortgage. They both lived in an economic environment where gasoline is much cheaper than in the rest of the world. They both share the experience of living in a country that was never actually invaded by a foreign power, a country that implicitly assumes it’s impossible for a foreign power to invade it. Neither group had to flee their homes carrying the most important belongings in nylon bags because the enemy overran the defenses. None of the groups had their country lose all international power, dissolve into chaos, there being no more pensions, no more health care, no more paying jobs, with mafia groups taking over the country on the inside while the foreign powers deplete the remainder of your resources.
For Americans, this forms a basis of commonly shared experience and I cannot overstate its importance. You can intellectually hypothesise different scenarios, but from the perspective of someone who survived the collapse of Yugoslavia or Soviet Union, all Americans appear quite similar in their basic assumptions.
Again, please don’t generalize all Americans. The ‘few” that are awake are saving Real Tangible Wealth in the form of silver and gold. Just like our grandparents did a mere 60-70 years ago.
When there was no healthcare, pensions, and social services. All my grandparents and parents lived in the Midwest where death was just one winter away. Where Go ing outside to the outhouse in a blizzard could lead to death.
Bottom line… notwithstanding invading armies, the US will go back to the pre-1940’s, where one depended on neighbors and there were no government social programs.
Those of us saving in Real Tangible Assets make no provisions for grandeur but are just trying to survive the upcoming calamity on the horizon.
Just like our grandparents. And your family.
May God Bless all of us.
Generalizations are intuitive understandings of statistical truths. You can’t say all generalizations are false, because that too is a generalization and would thus cancel the rule.
If I said that all Americans are fat and stupid, that would be a generalization that’s easily disproved by citing a sufficient number of examples to the contrary, but that’s not the case with the generalizations I used. They are all indisputable facts. America never had fought, let alone lost, a war with a superior enemy on its own homeland. The price of gasoline in America is 0.695 EUR per liter. The price of gasoline in Croatia is 1.31 EUR per liter. This means our energy costs are almost double of yours. There is no VAT on silver bullion in America. There is 25% VAT on silver bullion in Croatia. This means that an American with my income will be able to go much farther with his money than I can, which means his income basically buys more silver, more energy, and who knows what; I’ve seen your car prices and I started laughing, because I’d have to pay 25% VAT in addition, and on top of that a special “expenditures tax” (basically an arbitrarily imposed tariff) that grows exponentially and is basically a tax on rich people. So, basically, my generalizations are merely a statement of fact, and not prejudice of any kind.
The purpose of my generalizations is to establish a fact that Americans have a very poor understanding what it looks like to be someone’s colony, whose foreign policy is suppressed/controlled by the domineering superpower, what it’s like to live in a defeated nation that broke up due to tensions, and what it’s like to have your currency completely debased, your country destroyed by war, and what it’s like to be a refugee. Before you start about how hard it was for your grandparents, let me remind you that Croatia was a part of the Austria-Hungary empire since forever; our chessboard was on the Austria-Hungary coat of arms, and our country broke down after 1918, having lost the first world war. Then we were basically occupied by the Serbs who treated us like a conquered land, we rebelled in the 1940s, joined the axis forces (perfectly normal for a country that was a part of Austro-Hungarian civilizational circle for the entirety of its history), lost the second world war, and were again occupied by the Serbs who proceeded to kill Croats and throw the bodies into pits for years after the war, and then after a few decades of “brotherhood and unity” with the Serbs we again sought independence, and were devastated by an extremely savage and bloody civil war. This is the perspective from which I authoritatively state that Americans have no idea how something like that would feel. Imagine Alamo, but where Santa Ana proceeded to conquer the rest of USA, and you lived as a conquered colony of Mexico for the rest of your history, with all dissent silenced by a firing squad, and your children being taught in Spanish in school, English being seen as a suspicious language of terrorists and war criminals. Had you endured that, you’d be right to claim that I misread your situation.
Yes, I understand that there is a huge difference between the leftists in the coastal cities and the reasonable people in most other parts of America, and I understand that you identify with the latter group, but you both pay 0.695 EUR for a liter of gas, you both have cheaper cars than we have in Europe (in the sense that we pay more for the same thing), neither of you has 25% of VAT on silver bullion, and your country didn’t have hyperinflation where bread cost ten thousand dollars 30 years ago, and you didn’t have subtitles on every TV show, displaying the areas of your country currently under artillery fire and air raids.
Why am I pressing the point? Because the Americans implicitly assume they’ll overcome all obstacles, conquer and be victorious. The reality is, when *this* kind of shit starts hitting the fan, you start to understand how much in your life depends on random chance, for instance having the misfortune of being born in Vukovar and not Zagreb when the war starts and suddenly your city is overrun. Here, we have abundant experience with things being completely out of our control, and we have a much healthier attitude regarding our ability to use our actions to navigate through events. The point I’m pressing is, if you asked my wife how she imagined her childhood before the war started, she most likely wouldn’t tell you she’d be hiding in the basement and eating from cans, have her legs full of artillery shell fragments, be in Vukovar hospital during the fall of the city, be evacuated as a refugee, have her father in a Serbian concentration camp while other male family members were executed, and basically spend years as a refugee in this or that hotel. When that kind of shit starts going on, everybody’s life is suddenly fucked and you have no control whatsoever over what happens, it’s for the most part completely random. You’re at the mercy of an enemy soldier, who can either give you a cigarette or shoot you, at random, and you never know what it will be when he approaches you.
Please, don’t look at this as some form of adversarial criticism. Instead, look at it as an opportunity to understand what your American situation looks like from a distance. The knowledge I have as someone who already survived a very bad SHTF situation might actually help you prepare more constructively.
This is rather unique situation since money in real life is very much digitalized for all practical purposes making physical money almost obsolete, which makes current situation different from any such situation in history because many people have zero physical money or any other physical form of payment like gold or silver.
Which makes me wonder – how long would it take to fallback to gold/silver payments in crisis situation? (which is not catastrophic since in that case all bets are off anyway).
Short term, gold is useless because I have corn, guy next street has pigs and you have gold. I need pigs or I starve, he needs corn or his pigs starve and then we both starve – why would we take gold?
And who will determine the price of a pig in gold? How much gold would you pay to feed your family? Guy in next street can charge as much as he wants for a pig at least short term since pigs need corn today and not in two weeks.
You are better off using gold in black market to buy guns and people and simply march in and enslave us all, because I don’t see gold as form of payment when people are hungry and are trying to gather resources to survive.
It will take time for gold/silver to return as daily payment simply because almost no one has it and survival trumps universal trade system every time.
So, feudal state is most likely scenario where me and a guy next street will simply have to pay up in food or be killed. And it will l work. Again. Because people don’t like getting killed.
And gold would be used as payment between feuds, which makes sense.
I’m just having hard time preparing for any kind of crisis scenario because whenever I start thinking about it, first thought is “But, I don’t care”, not even sure why. Only thing I know, I really don’t like this world.
Well, since according to Basel III gold was re-qualified as level 1, the banks already started the process of transition, so we’re not talking about some long term future here. The real question is how long will it take for the economy to “cool down”, thermodynamically speaking, and solidify the basis from bonds and derivatives into metals, and what percentage of the abstract assets will simply evaporate, lose value like they did in the 2008 crisis and all others before them. The question is not how long will it take for businesses and people to start using metals as instruments of payment. I don’t think that will ever become common. It’s just that digital instruments of payment will become metal-backed.
Of course, we’re talking about a soft-landing, orderly-transition scenario, where you have a crisis, not a complete disaster. Most of my projections simply don’t allow this.
You would need it to make objective valuations, such as “what’s the price of corn” and “what’s the price of pig”, and then you can make precise trade. You can actually do all the valuations in gold without ever seeing any gold; you just need to know how much corn to trade for half a pig. Or you can do all the payments in some digital currency over the Internet, as long as you know the currency is metal-backed. That’s what people did during the gold standard era, they paid with banknotes, or they wrote a cheque. They stopped carrying bags of gold with them somewhere during the crusades. I have physical gold and silver not because I intend to pay for things with them directly, but because I think the banking system will for the most part be destroyed before it consolidates on the metal-basis, and I don’t want my money to evaporate in that process.
Me neither, but if I’m not allowed to die, I’d rather not be poor.
I thought of some more remarks re: pig vs. corn trading. If you have situations where you have 1:1 trading, your concept can work: one guy has corn, the other has pig, they settle on a ratio and everything works. However, the guy with corn might need toilet paper, gasoline, fertilizer, condoms, chewing gums, bread, milk and a garden hose. If he sells his corn for gold, he can then spend the gold on all of the above things, and pig. The guy who grows pigs needs corn, but he also needs boots, kerosene for the lamp, gasoline for his car, clothes, bread, milk and sugar. If he trades his pigs for gold, he can get all of those things, plus corn. So basically you need metal not only to determine value against a neutral measure, but also to be able to perform precise granular transactions with multiple parties that don’t require your product for barter.
I completely agree that metal trade is a way to go (it’s not like it was invented because goods trade was perfect).
However, no one has it, so you can’t trade for gold and you need to trade the very next day.
In history you always had at least some form of physical payment, even if you were poor, but now you mostly have none – even if you are not poor at all.
Even my parents who run a retirement home receive most payments digitally.
Scenario in which metal trade could work is so niche I can’t even imagine it.
Global fiat currencies would crash, but entire digital and banking infrastructure would continue uninterrupted converting everyone’s assets to metal? Is that even an option? Even without US nuking everyone?
Because, if digital infrastructure fails, mostly everyone is instantly poor without any physical asset to trade which makes gold useful only to build feudal state.
It is possible, as you already mentioned that something like this might function in short transition period between now and total chaos.
I expect this to last very short because … well, people.
There is a “soft landing” scenario that actually seems to be where the central banks are going, but I don’t give it much long-term chances for success.
Basically, the central banks lowered the interest rates to the point where a large percentage of bonds are now yielding negative interest. Negative interest on bonds is technically called a default. Also, Basel III magically reassigned gold from a level 3 security (valued at 50% nominal) to a level 1 security (valued at 100% nominal). Before that, only the bonds were level 1. This means the central banks can now legally swap bonds for gold, and they are actually doing that for quite a while. If they reach more than 20% of monetary emission backed by gold, and more likely 40%, we are then technically on a gold standard, although the public might not even realize. There are, however, problems with this. According to my estimate, dumping bonds for metal will deflate the economy, in a process very similar to what’s going on in a refrigerator, when the compressor liquifies the gas, and bleeds extra energy into the environment. This will basically bleed bullshit from the economy and solidify assets into smaller volume but greater reality and reliability. As this takes place, the states will lose the ability to convert debt into monetary mass, since the market will be saturated by their unwanted, negative-yielding debt. Also, all sorts of imaginary n-th order derivatives will evaporate, they will collapse into nothing, or at least very minor percentage of their overall volume will be converted into solid assets.
Eventually, as the monetary mass is converted into real assets, monetary metal will appreciate at least by a factor of 10, but that is a conservative assessment. Silver might actually over-correct and appreciate by a factor of 100. Basically, if you don’t want some asset-class to evaporate, you will need to convert it or back it with solid assets. The central banks will buy the most of monetary metal on the market before anyone else smells the coffee, so the fiat currency might actually survive the impact with purchasing ability relatively intact, but money might be quite scarce. The rest of the asset-holders will fight for scraps and try to buy whatever monetary metal and other solid assets on the market for extremely high prices and in very small quantities,
During this process, there will be a huge social crisis due to the reduced availability of money, where the populist politicians will rally the mob against the central banks “that hoard gold while people starve”, and they will successfully pressure the governments into printing money to throw at the mobs wielding pitchforks, at which point the system will collapse and civilization will die in a hyperinflatory explosion. The alternative is for the government to figure out how to kill off a significant portion of the population that is currently in debt, creates no solid income and is reliant on government aid. Basically, either those people die, or everybody dies. My assessment based on game theory is that everybody dies.
This is true, and this notion is completely misguided. People, and even otherwise smart people, are always looking for silver bullets that will get them rich without any effort. There are no silver bullets. The same thing that happens with lottery winners who are unable to defend their winnings is happening with anyone who earns large amount of money fast. Notable examples include professional sportsmen, actors and singers, which can get wealthy fast.
The truth is that people who got rich in Bitcoin early didn’t get rich fast, they had to wait for years and years for bitcoin to appreciate and not do anything stupid each day in the meantime, during the period where every hacker-thief and conman was trying to relieve them of their money. People who wanted to get rich fast were – and still are – the ones who buy on top, during the greatest hype, and then lose their nerve and sell at the bottom, becoming even poorer in the process.
When people come to me and ask me how they can buy the latest crypto, I tell them to do what I did – spend at least two years studying the Forex trading and economy before even touching any kind of riskier things like crypto, and then doing it with small amounts and increasing the stake only after they manage not to lose it for at least a year. Diving that much into finance is not for everyone, but on the other hand, everybody should become aware that their own financials are just a bunch of high-stake bets even if they’re not aware of it. People tend to have their life tied to a single job/company, a single currency/country, a single profession and market, and because of it they’re financially fragile as fuck.
You mean, wiped out like those illegal bittorrents which everybody is absolutely terrified to use, technologies like PGP, or sites like Wikileaks, people like Snowden or Kim Dotcom, and countries like Russia or Iran? You come out as absolutely confident in the ability of the US to whip their own population and the rest of the world into line. US is formidable and it has almost endless resources, but their reach is not absolute, and it’s surprisingly hard to kill a global currency.
Honestly, I simply can’t think of a way that even gold can be wiped out by a US decree (and that actually happened in the past and was easy to enforce), yet alone Bitcoin. I simply can’t think of the way how it would work. You can send “government officials” to go from house to house and confiscate gold, you can get buyer records from gold sellers. And even that’s not truly effective. For Bitcoin, you can’t search for it, even if you find a bitcoin wallet you can’t break into it easily, and you while you can squeeze exchanges for records, most of them are not under your jurisdiction, and a lot of the buying and selling is done in P2P fashion between individuals.
Don’t get me wrong, I agree with about everything you write about the gold. I’m not exactly a Bitcoin fanboy, I’m acutely aware of Bitcoin shortcomings, but I’ve also had a lot of experience with it, since about 2011 when I was first paid with bitcoin. And I think US executive order would be a great trading opportunity in the Bitcoin world, excellent promotion of Bitcoin rather than its doom.
Mind you, I don’t find your scenario of Bitcoin US executive order improbable. Although executive order is more of a Chinese style, US is more sneaky and operates behind the scenes. US government agencies have provided a new attack on Bitcoin almost every year. They’ve been intimately involved with MtGox demise, with Silk Road case, there’s NY Bitlicense, FUD attack on Tether, almost every Bitcoin shitstorm can be tracked back to the US three-letter agencies. So it’s not that I’m saying that US government won’t act against Bitcoin, I’m saying they already did, more than once, and will continue to do so, but that won’t be the end of Bitcoin.
Yes, I’m absolutely convinced that US can reduce Bitcoin to a $200 token that’s traded by drug dealers and terrorists only, with a single decree, and I’ll tell you why.
There’s an enormous amount of money to be made by connecting file sharing services to the payment system. There’s also a huge amount of money to be made by trading with Iran and, for instance, installing a modern payment system there and connecting it to the western infrastructure.
Go, make a hundred million dollars exploiting those business opportunities. Be my guest.
They have the infrastructure in place whereby they can completely and without recourse block your ability to receive money, by simply placing you or your business model on a list. This list will be obeyed by the entire banking system and by Visa/MC. Even Russia and China will obey this list.
I know this for a fact because I’m a payment industry insider, I actually make a living by connecting people who are marginally connectable to the payment system. With grey areas some things can be done if you’re really good. In the black areas, nothing can be done. It’s cancer. You touch it, you die. EU attempted to create the entire alternative payment system to circumvent American sanctions on Iran, and all it takes is a single “desist” note from America and they will collectively shit themseves. Literally, if you connect something from the American blacklist, you need to be ready to win a nuclear war with America.
And nobody who is not an insider would believe me if I told them what is considered to be a “grey” area in the payment industry. Did you know that air travel and tourism are on a “high risk” list? Did you know that being paid a commission for reselling someone is placed on a “high risk” list by America? Why? Because that’s something only Americans are allowed to do. If you’re not an American, obstacles are placed on your path. Things are made more difficult and expensive for your business. But if you want to succeed, move your business to America, and those obstacles will suddenly disappear, and you’ll be showered with cheap credit and venture funds will help you inflate the value of your company to billions, to grow American GDP.
Can they ban bitcoin, don’t get me started. Can they ban drugs? That’s the right question. They brought everybody to the point where it’s normal that if you sell Heroin you are a criminal and it’s fine to lock you up for ten years. However, Heroin is a Bayer company trademark, like Aspirin. They were sold in pharmacies as normal medications. Go to a local pharmacy now and ask for some Heroin. Be my guest. Because you seem so sure Americans can’t ban something if you really want it to be valuable. Sure, Heroin is really valuable today, probably much more than it was when Bayer manufactured it. I guess it was as cheap as Aspirin back then. So, be my guest, make huge money selling it.
If they wanted to ban a tomato plant just for shits and giggles, people would be scared of selling it the way they are scared of selling Coca leaves or Marijuana today. Sure, you could do it, if you wanted to be a “criminal”, but then you’re not part of this world, you are part of your own.
You are absolutely right. That’s also what they did to Russia and to Alex Jones.
To be frank, it’s not that I think they can’t do such things; I think that they can’t do it with absolute precision and account for all factors, and I think that they by pure coincidence missed a window of opportunity to do it with Bitcoin when it was small and insignificant enough. But the jury is still out there, it’s still very early to tell what will happen.
I actually think there’s a good chance that Bitcoin might be CIA’s plaything. They can launder all kinds of money off the books with it, *and* they can also track all their enemies’ connections. Because there is that nasty fact that nobody knows who actually invented it.
I’ve actually heard that theory before, though I don’t believe it’s true. It’s not that outrageous, I mean, large percentage of Tor nodes was actually run by the FBI at one point. And the FBI did technically run Silk Road on their own for a short while.
Of course you can’t do payments with people on American blacklist, because the entire banking system and Visa/MC is owned by the US. It’s theirs, they have admin rights, they see everything that happens in it, of course they can ban anybody from it, and of course they will enforce this by literal force.
I wonder what would happen if there was alternative payment system that’s not owned by a country that can be bombed or intimidated, that’s outside the US-owned payment system, that anybody can participate in within minutes, and is not regulated. I bet it would be made illegal, fought with FUD campaigns, and the government would send their spooks to try to infiltrate it and make it look like only pedophiles, drug addicts and terrorists use it, in order to try to scare population from using it. You know, something like stuff that’s been happening with original Silk Road, where the people doing the worst stuff are actually found out to be government agents in the end.
Funnily enough, now they have both Wall Street and Silicon Valley lobbies with their hands in the crypto pie, in addition with Chinese interests, and they can’t just shut it down like they would like to, so they play games. But the fact that they do play games, and that Pirate Bay and Wikileaks and everyone from American shitlist is using Bitcoin, makes me think there’s some use to that crypto stuff.
Exactly. And the argument for crypto is “oh, you can avoid American sanctions with it”. And that’s where I have a combination of facepalm and cold shivers, because eventually, at some point, someone will want to convert that crypto into the actual money. And that is the point where the entire ledger ceases to be anonymous, and everybody dies.
There is a kind of Mexican standoff there. At first, the US basically banned Bitcoin and made it almost illegal. Then the crypto industry moved out of the US, and US citizens had to jump through hoops to participate in crypto. And then the US found out that they can’t really control something that doesn’t go through their companies they can tap into (like with Visa, Master, Google, Facebook), and besides, they’re missing their part of the profit pie, and now they are deregulating crypto.
Of course, scales can tip in any direction at any time. But I don’t think they intended for crypto to grow as much as it did.