Last week in the July 11th. update I started to talk about crypto currencies but I wanted to have a bit more of a discussion on why I believe that the blockchain is here to stay but the current offerings like bitcoin and Ethereum, etc. are likely to be worthless at some point in the near future.
The blockchain is the system where cryptos are built. There are many other uses for the blockchain- far more than just the issuing of currencies.
I have had discussions with tech-savvy people and virtually anyone can start a crypto currency if they have the knowledge of how to do so. The whole idea is to get people to USE the crypto so that there is a perceived value to it. This is one reason why the Facebook Libra idea could be good- except that the “authorities” will likely put the kibosh on it before it gets off the ground.
I am aware of the advantages of Bitcoin, etc. as it is set up outside of the central planners and supposedly offers privacy and security (not able to be stolen). I have to wonder out loud why 9 people are currently sitting in jail for trading bitcoin on unauthorized exchanges and why there were stories in the Financial Times (that I wrote about last year) where there were four examples of people watching their accounts being drained right before their eyes. Hmm- maybe not so “private and secure” as it is built up to be?
If this isn’t enough to raise some significant questions about the value of bitcoin how about the fact that it is backed by nothing and is merely a mathematical equation? This, many will say leads to scarcity and the price will rise over time. Maybe. Maybe not. I also have to wonder- if the power is out for an extended period of time just how would you buy or sell?
In a free and unfettered market, it is likely that bitcoin would rise over time if it became more accepted and didn’t have the boom and bust cycles that make it a bit hard to hold as a store of value. Anything that can drop 85% in a year is not on my list of “safe” assets.
This doesn’t mean that people can’t make money trading this asset. I just believe it is speculation and not an investment. It certainly does not appear to me to be a store of value.
In addition to these items that I bring up there are other reasons that I mentioned last week that make me think some major changes are in the air. Goldman Sachs is advertising for someone to come in immediately and work on a crypto currency. JP Morgan has announced it is going to produce a crypto.
Keep in mind that JP Morgan is said to have over 850 million ounces of silver and over 20 million ounces of gold according to Ted Butler that they have amassed in the past 8 years or so.
Russia is talking about a gold-backed crypto. I just read where Russia has their Ruble 84% backed by physical gold- right now! No other country that I am aware of has anywhere near that percentage. China is also talking about a crypto. There is a lot of speculation that China has FAR more gold than they admit to. According to Dave McIlvaney of the McIlvaney Report China has added 84 tons of gold year to date through June. Many others on King World News have reported up to 18,000 tons may be held by China.
I have to wonder if all of the gold buying by central banks, countries, and major banks, have anything to do with issuing cryptos backed by a physical asset- like gold. This in and of itself would destroy the value
of any crypto that is backed by nothing- just like it would destroy fiat currencies around the world that are also backed by nothing.
More importantly, if central banks, countries and major banks issue their own cryptos their cronies in high places will likely make using private cryptos illegal. Simply by government decree those cryptos not “authorized for use” could just shrivel up and go away.
I would expect some high-profile prosecutions for anyone brazen enough to defy the central bankers, their owners at the major banks, and their willing accomplices in governments around the world.
As we look at the current landscape it is obvious that the rest of the world is weary of the USA using the US dollar as a financial weapon. Many are starting to set up their own systems to trade without the US dollar going forward. Leading the charge is Russia. They have, according to Reuters on March 19, 2019, have set up their own Financial Messaging System designed to bypass the SWIFT global payment system. They along with China, India, Iran and Turkey, and other Arab countries are meeting to make use of this system going forward. It also appears that Europe is joining in the fun by setting up its own version of a SWIFT Global Payment System called INSTEX that will allow EU countries to trade with Iran and avoid the sanctions placed upon Iran by the USA. There is also mention in the Reuters article about the Russian system being linked to the European system. This would hardly be bullish for the US dollar or for the financial wars we are fighting globally right now.
Foreigners are also starting to shun US assets as over $213 billion was withdrawn from US equity markets by foreigners year to date as reported by Zerohedge. Real Estate prices are falling fast in places like New York City, San Francisco, Vancouver and many other “hot spots” for foreign money which appears to be drying up.
Why is all of this important?
Because those in power want a one-world currency. It would allow them to track and tax virtually all transactions. While they will try to sell the “convenience” anyone on this system would be not much more than a slave. In China they already have a merit system based upon your electronic profile. If you are “good” according to the government, you will be treated well. If you are “bad” according to the government, you may wind up living in a van down by the river- if you are lucky!
So how would they get people to agree to this? First you would likely need a crisis to cause a large problem. The solution has probably already been created and will likely be ready to be rolled out when those “in charge” decide the time is right. It may include many central bank, country or major bank currencies that may form a “basket of currencies” likely run by the IMF for international trade and you are well on your way to a totalitarian regime. Just like they want.
The current mantra of “greatest economy of all time” is, in my opinion, an illusion to mask the truth that the economy is imploding before our eyes. Interest rates are cratering across the globe. A record $13.4 TRILLION in debt trades at NEGATIVE RATES. 30% of CORPORATE investment grade bonds in Europe have a negative yield. There are 14 companies with high yield (junk bonds) with NEGATIVE yields- you can’t make this up!
The terrible economic reports that we have been getting since at least the end of 2018 have been trending down and getting worse month after month. More store closings, falling sales, manufacturing
indexes falling through the floor both here in the USA and globally. Shipping, container usage and trucking are all reporting dire times are here.
If you are looking for numbers that are going up you can look at those “not counted” when the “greatest job market with the lowest unemployment rate” doesn’t count over 96 million people because they are so discouraged they can’t find a job for years in many cases. That 3.8% unemployment rate skyrockets to over 20% (depression level) unemployment when all are counted. You can also look at all forms of debt and defaults which are rising to levels that should be concerning to everyone.
The writing is on the wall. The financial games that have been played have masked the fact that we are, as a people, insolvent. Basically, we can’t even pay all the interest we owe and roll over debt without creating new debt or currency units from nowhere. This is true of many corporations, cities, states and individuals also.
Many are aware that I have said we have been in a depression since at least 2008 and maybe since the year 2000. In an article from “The Great Recession Blog” many of my theories appear to be confirmed. According to John William’s Shadow Government Statistics (where he uses the government’s own numbers and reports them the way they USED to be reported) GDP has been in recession since 2000 with a slight uptick in 2004. So instead of the “longest recovery in history” we actually have the longest running recession that we have ever seen. As is stated in the article “It is only the longest expansion on record if you change the way you calculate GDP from the way previous records were calculated”. I have written about this in the past- like the year when they added Research and Development costs to GDP calculation and it added about 3% or so to that year’s number and all years numbers going forward. Things like that- and many others.
Basically, we are in a crisis right now. If things were so rosy we would see talk of rate increases and rising wages. What we are seeing is talk of rate cuts and stimulus that if all were well would not be needed.
It is only a matter of time before the SHTF. It has taken so long that most people are totally complacent and will likely to be taken to the cleaners for the third time in the last 20 years.
I urge ANYONE who thinks that any of what is happening is normal to study just a little financial history and you will find that this experiment has no match in history. I believe 3 is the charm. We had an implosion from 2000-2003. We had an implosion in 2008-2009. I believe another implosion is near. This one may just be big enough to create the changes we need to get on a system that will allow real economic growth and prosperity and not the “printed” version which benefits the VERY few.
It is likely that this paradigm change will allow those who are astute enough to see it coming the ability to buy assets that you can’t imagine owning today if you have purchasing power at that time.
Watch what they do- NOT what they say!