You know fiat = government money like US dollars and crypto = centralized coins usually tied to a specific actor or exchange, usually with great risk, right? They are not the same, though I agree fiat is bad (because itтАЩs centralized). This is why Bitcoin.
Well, actually - there are two types of *currency* - centralized currency, which is always a scam, whether or not it has been discovered, and decentralized currency, which is not. I'd bet my cash, gold, and Bitcoin on that.
Is art a "scam?" Is fiat a "scam?" Are insurance contracts a "scam?" This is a hard question to answer. All value is relative, which makes defining one as a scam relatively complicated. In truth, hard crypto's (those that can't be divided - like bitcoin) have both value in their scarcity and value in that they are built on transactional rails complete with a distributed ledger. In many ways, purely from a construct perspective, they should garner significantly more faith than fiat. I know that's very hard to see for a modern American, but ask a German in the 30's or a Venezuelan of a generation ago how much faith fiat deserves (pun intended).
The takeaway from this scam should have absolutely nothing to do with Crypto. What the overvalued asset happened to be is irrelevant. This is EXACTLY the Bear Stearns story told over again, and it will happen again in a few years with some new mechanism, and in every case the principles will be protected because they are powerful, and the people will be screwed because they aren't, and we'll vote in more politicans who will promise "more protection," and they'll deliver it - more protection for the powerful, more indifference to the people. For as long as we've had statist economies masquerading as capitalist economies (so we can blame capitalism for their failures as praise people for the markets successes - which is, of course, exactly backward) we've had regulators who reward fraud, and that won't stop regardless of your feelings on the asset in question.
Bear Stearns massively overvalued their synthetic CDO's, and, just like in this case, when the bank run began their fractional reserve system meant they couldn't pay back their debtors. It could be options contracts, currency itself, mortgage backed securities, insurance contracts on those mortgage backed securities, crypto-currencies, or tulips - the asset in question is just a tool to overleverage...
Of course, as long as we allow the government to launder money through foreign "aide," and allow the government to create currency out of thin air any old time they feel like it, can we really blame people for doing exactly the same?
Art and insurance are not currency. Many things have value but are not currency. The problem is currency. As for "blame" there is plenty of that just no accountability.
So bad behavior is essentially rewarded. Otherwise your analysis is spot on.
I believe that "accountability" and "holding X accountable" have joined other popular words/phrases like "problematic, existential threat, wealthy, middle class" just to name a few. They've become labels with an assumption that their use is understood by those who are hearing/reading but that might not be the case. In this specific case there is a need for vigorous prosecution, conviction, and jail time for the offender(s).
I completely agree with your thesis, but we should be specific (and shame on me earlier) regarding what accountability means at the different levels. For the perpetrators of the theft, yes, they should be jailed. For the regulators, they must be dismantled, and reassembled with TRUE independence. This should be the hardest job in the world to get. If you're going to appropriately regulate trillion dollar industries, you don't need tens of thousands of people making 100k a year. You need a couple dozen making hundreds of millions of dollars a year. But we won't do that, because we're dumb. The structure is broken, and accountability of the structure of regulation means dismantling it. Given these people REAL power, and REAL wealth, to really monitor financial improprieties with HUGE financial incentive to be VERY good at it, and then when they fail, fire them, and when they succeed in catching crime, punish the perpetrators VERY harshly. But they wont' do that, because our government is itself a ponzi scheme, and it needs to keep growing and growing to be successful, and this would be the antithesis of growth...
Crypto is not currency. It is currently treated as property. It's called currency, obviously, but that is not its asset class, how it is "regulated," nor how it is valued. It is not a means for transacting (what currency is) but instead an asset class whos value is based on demand - a la a house, or, more accurately, something like website URL. This is a commonly misunderstood reality of crypto and part of why we can get away with nonsense articles like this that blame the asset class (pretending it's a replacement for fiat) rather than the malicious actors and government enablers...
Exactly. Line from (sorry) Harry Potter, "Never trust anything with a brain that you can't see." It should not take rocket scientists to know that a thing with no value... has no value. But apparently even a lot of Really Smart People ate up this codswallop.
Warren Buffett said no way. He said he wouldnтАЩt invest in anything he couldnтАЩt understand and he didnтАЩt understand crypto. Plus it didnтАЩt make anything
Everyone needs to become educated about Fourth Turning/generational cycle theory. Just don't believe that the crisis is somehow a Republican phenomenon. That's just Google gaslighting with the algorithm
Crypto has always been a mystery to me. I've tried to educate myself on it, figure out what it was I was missing because I never came to the conclusion that it was valuable in any way. I chalked it up to my age (over 50) and being "set in my ways" and radically accepted that I'd just always be a USD person. I feel awful for those who have lost everything.
I did the same thing as you; and ascribed my decision to avoid cryptocurrency to my 'age'. But here we are, older and proven to be 'wiser'. I am always upset when good people are cheated, diminished and impoverished by some slick snake. But the problem that I see is that rarely are these snakes ever held accountable to the fullest extent of the law. If they are NOT held accountable, some other snake will see that and try to do it again. Madoff is the only one I can recall and I suspect because of some of the people he scammed he was brought down.
There are two types of cryptocurrency: Those in which the scam has been uncovered, and those in which the scam has yet to be.
That's my view, until proven otherwise. Thoughts, anyone?
I agree. I've been suspicious of cryptocurrency from day 1, so this collapse does not surprise me at all. Fiat currency is a dangerous thing.
Huh? How can bitcoin rise to the level of fiat currency when there is no one involved who can credibly issue the fiat?
You know fiat = government money like US dollars and crypto = centralized coins usually tied to a specific actor or exchange, usually with great risk, right? They are not the same, though I agree fiat is bad (because itтАЩs centralized). This is why Bitcoin.
Well, actually - there are two types of *currency* - centralized currency, which is always a scam, whether or not it has been discovered, and decentralized currency, which is not. I'd bet my cash, gold, and Bitcoin on that.
I agree.
Tulips.
Is art a "scam?" Is fiat a "scam?" Are insurance contracts a "scam?" This is a hard question to answer. All value is relative, which makes defining one as a scam relatively complicated. In truth, hard crypto's (those that can't be divided - like bitcoin) have both value in their scarcity and value in that they are built on transactional rails complete with a distributed ledger. In many ways, purely from a construct perspective, they should garner significantly more faith than fiat. I know that's very hard to see for a modern American, but ask a German in the 30's or a Venezuelan of a generation ago how much faith fiat deserves (pun intended).
The takeaway from this scam should have absolutely nothing to do with Crypto. What the overvalued asset happened to be is irrelevant. This is EXACTLY the Bear Stearns story told over again, and it will happen again in a few years with some new mechanism, and in every case the principles will be protected because they are powerful, and the people will be screwed because they aren't, and we'll vote in more politicans who will promise "more protection," and they'll deliver it - more protection for the powerful, more indifference to the people. For as long as we've had statist economies masquerading as capitalist economies (so we can blame capitalism for their failures as praise people for the markets successes - which is, of course, exactly backward) we've had regulators who reward fraud, and that won't stop regardless of your feelings on the asset in question.
Bear Stearns massively overvalued their synthetic CDO's, and, just like in this case, when the bank run began their fractional reserve system meant they couldn't pay back their debtors. It could be options contracts, currency itself, mortgage backed securities, insurance contracts on those mortgage backed securities, crypto-currencies, or tulips - the asset in question is just a tool to overleverage...
Of course, as long as we allow the government to launder money through foreign "aide," and allow the government to create currency out of thin air any old time they feel like it, can we really blame people for doing exactly the same?
RIGHT.
Art and insurance are not currency. Many things have value but are not currency. The problem is currency. As for "blame" there is plenty of that just no accountability.
So bad behavior is essentially rewarded. Otherwise your analysis is spot on.
I believe that "accountability" and "holding X accountable" have joined other popular words/phrases like "problematic, existential threat, wealthy, middle class" just to name a few. They've become labels with an assumption that their use is understood by those who are hearing/reading but that might not be the case. In this specific case there is a need for vigorous prosecution, conviction, and jail time for the offender(s).
I completely agree with your thesis, but we should be specific (and shame on me earlier) regarding what accountability means at the different levels. For the perpetrators of the theft, yes, they should be jailed. For the regulators, they must be dismantled, and reassembled with TRUE independence. This should be the hardest job in the world to get. If you're going to appropriately regulate trillion dollar industries, you don't need tens of thousands of people making 100k a year. You need a couple dozen making hundreds of millions of dollars a year. But we won't do that, because we're dumb. The structure is broken, and accountability of the structure of regulation means dismantling it. Given these people REAL power, and REAL wealth, to really monitor financial improprieties with HUGE financial incentive to be VERY good at it, and then when they fail, fire them, and when they succeed in catching crime, punish the perpetrators VERY harshly. But they wont' do that, because our government is itself a ponzi scheme, and it needs to keep growing and growing to be successful, and this would be the antithesis of growth...
Absolutely agree. I almost whiplashed myself when I heard the "too big to fail" press statement. Bad acts and actors should fail.
That is indeed what I mean by accountability.
Crypto is not currency. It is currently treated as property. It's called currency, obviously, but that is not its asset class, how it is "regulated," nor how it is valued. It is not a means for transacting (what currency is) but instead an asset class whos value is based on demand - a la a house, or, more accurately, something like website URL. This is a commonly misunderstood reality of crypto and part of why we can get away with nonsense articles like this that blame the asset class (pretending it's a replacement for fiat) rather than the malicious actors and government enablers...
Silly me. Thanks for the clarification. So it is art.
Bingo. When someone asked me last night: "Where did all the money GO that the people "invested" in FTX lost?"
I said: "Nowhere...the same place it came from when the Fed PRINTED IT."
WONDERFUL analysis, ButTheDataSays!
Exactly. Line from (sorry) Harry Potter, "Never trust anything with a brain that you can't see." It should not take rocket scientists to know that a thing with no value... has no value. But apparently even a lot of Really Smart People ate up this codswallop.
Warren Buffett said no way. He said he wouldnтАЩt invest in anything he couldnтАЩt understand and he didnтАЩt understand crypto. Plus it didnтАЩt make anything
Looks to me like 'ol Warren understood it COMPLETELY.
Sorry RT, but I have to laugh. One world gov't??
We can't even get it right in the USA.
Everyone needs to become educated about Fourth Turning/generational cycle theory. Just don't believe that the crisis is somehow a Republican phenomenon. That's just Google gaslighting with the algorithm
Crypto has always been a mystery to me. I've tried to educate myself on it, figure out what it was I was missing because I never came to the conclusion that it was valuable in any way. I chalked it up to my age (over 50) and being "set in my ways" and radically accepted that I'd just always be a USD person. I feel awful for those who have lost everything.
The Bitcoin Standard is a good book if you want to understand this. Saifedean Ammous.
I did the same thing as you; and ascribed my decision to avoid cryptocurrency to my 'age'. But here we are, older and proven to be 'wiser'. I am always upset when good people are cheated, diminished and impoverished by some slick snake. But the problem that I see is that rarely are these snakes ever held accountable to the fullest extent of the law. If they are NOT held accountable, some other snake will see that and try to do it again. Madoff is the only one I can recall and I suspect because of some of the people he scammed he was brought down.