This page has been archived and commenting is disabled.
Money does not exist
Yesterday the US Senate held hearings on "virtual currencies" (meaning Bitcoin). Meanwhile the "virtual currency" ran up above $800/USD and it was reported it got above $900. It pulled back but as of now, is hovering above $700.

It was interesting at the hearing, the so called Bitcoin 'experts' included FinCen and the Secret Service. The focus seemed to be on potential criminal activities in the digital currency (not other benefits such as a replacement currency in the event of a US Dollar collapse, etc.).
Using phrases such as "money laundering" and "criminal activity" and "child pornography" certainly did not paint a good picture of Bitcoin, for those watching with less knowledge about Finance and Bitcoin, and especially for those who had the hearings on in various bars, restaurants, airports, and other places where viewers were not focused on the hearings but could pickup the occasional keyword such as "drug trafficking." Silk Road and a newly discovered Assassination Market have been over reported in the news and used by anti-Bitcoin antagonists as a justification to shut down the use of Bitcoin as much as possible (or at least to make it look dirty, as if users of Bitcoin are all drug dealers and child smut peddlers). To put things in perspective, it's been reported that the largest holders of US Dollars next to central banks are drug cartels. Oh, and banks such as HSBC and others have been involved in the laundering of their US Dollars, some knowingly.
It’s being described as the largest cartel money-laundering scheme in history, and today, HSBC Bank headquartered in London, with offices in the U.S. will forfeit $1.256 billion and enter into a deferred prosecution agreement with the Department of Justice (DOJ). HSBC Bank USA violated the BSA by failing to maintain an effective anti-money laundering program and failed to conduct appropriate due diligence on its foreign correspondent account holders, DOJ said.
But the DOJ is not suggesting we stop using the US Dollar because of it's use in the drug trade, nor are they suggesting HSBC is shut down because it was laundering money for criminals. They get fined, and we all move on.
Virtual Currency?
What is exactly a "virtual currency" ? Merriam-Webster defines "virtual" as:
very close to being something without actually being it
Ok so Bitcoin is not a virtual currency. It could be a digital currency, as it's purely electronic and not in physical form. But of the Trillions created by the Fed during the QE program, still only $1.3 Trillion of M0 (physical cash & coin), as of July 2013, according to the New York Fed.

Note the green line, M2. (M3 no longer being reported.) But this chart will suffice to show the discrepancies between M0 and M3. M0 is less than M1 (red line) by about $700 Billion. The different between M2 and M1 is still about $8 Trillion. That means at least $8 Trillion USD exist in digital form, electronically. So does that imply the US Dollar is also a 'digital' or 'virtual' currency? Or are the only 'real' US Dollars M0, physical notes?
Money does not exist
Mike Maloney has an excellent series about the differences between "money" and "currency." But let's take things a step further, to divide our economy into 2 simple logical components, things that exist (real economy), and things that don't (virtual economy).
Things that DO exist:
- Tools
- Machines / Factories
- Gold, Silver
- People!
- Buildings
- Transportation systems
Things that DO NOT exist, except in our minds, as concepts:
- Money or currency (it's electronic entry in your bank account)
- The markets (again, the markets themselves are virtual, although with commodity markets a virtual contract will result in the delivery of physical goods)
- Derivatives
- Law
- Knowledge
- Value, i.e. 'asset prices'
- Theories, concepts
- Belief
Paper money exists, yes, but as they say it's just paper. If I write a $100 on a napkin even if I'm Ben Bernanke, it will not be accepted by anyone unless they believe they can take said napkin and use it for whatever they need to obtain in the real economy. What makes physical notes accepted is the belief the US Dollar system, and the Fed, not the paper it's printed on.
The fact is the US Dollar is not backed by the Fed, although the Fed is the primary emission, the "Prime Mover." The US Dollar is backed only by a belief system (as are all other currencies today). The belief system is backed by the US military (stop believing in USD and bombs will fall shortly after, yes the villagers were right). So money doesn't exist, it's all an illusion. That is not to cast aspersions on illusions, as a matter of fact, the higher up you go on the Maslow pyramid the more 'virtual' things become. Intelligence is non-tangible, as are many of the ideas we hold dear, philosophy, morality, etc. Our financial system is virtual, it's all a big video game (to use analogy) with money being the method of accounting (not the store of wealth!). Money is a means of exchange, not a store of value.
Many lose sight of the fact that money doesn't exist, they say they 'need' money or they 'have' money - how can you have something that doesn't exist? It must be a boomer concept, too much experimentation in the 60's. For those of you who have trouble grasping this, checkout Eric Fromm, "To Have or to Be." He explains that when you own things, or have things, they end up owning you! We won't get into the legal reality that when you have money in a bank account it's actually their asset (deposits are not bailment). Also, anyone who bothered to read the new account opening contracts when they open a forex account would have seen the clauses that state you are basically handing your money over to the broker and should consider yourself lucky if you get any back.
Bitcoin has emerged at an interesting time, at a time when the Fed has declared there's 'no limit' to the amount of USD he will create. At a time when few other currencies offer stable alternatives. It gives us good perspective to stand back, objectively, and examine the financial system for what it is; a construct, based on concepts, backed by 'the real economy' which is dying.
Maybe the conclusion is that the system is just outdated, and we are in a long generational transformation process to a new system, based on technology, not on fiat decree of our central banking lords.
- advertisements -


that video is innacurate. 100% of tax money goes to service interest on debt. spending, such as enemployment benefits, comes from borrowing.
Ahhhh... but look at the point of this silly article
Bitcoin has emerged at an interesting time, at a time when the Fed has declared there's 'no limit' to the amount of USD he will create. At a time when few other currencies offer stable alternatives. It gives us good perspective to stand back, objectively, and examine the financial system for what it is; a construct, based on concepts, backed by 'the real economy' which is dying.
Maybe the conclusion is that the system is just outdated, and we are in a long generational transformation process to a new system, based on technology, not on fiat decree of our central banking lords.
So your soft peddling your 'virtual currency' with the benefit of there being a fixed amount and no ability to endlessly print them or create them. The problem with your logic is they are priced in dollar assets and they have 8 decimal places so they may be an alternative to central banking but the central banks will end up owning them or an elite group of powerful insiders that control most of the BtC and drive the price action.
There is no way to truly deal with the situation we have. 13 or so families own the Fed and control the price of US currency. They dictate all those that own dollar denominated assets. 2008 seems to have been a test run and this long term 6 year bull market is sort of large bear trap if you think about it. The markets will tank and so with it many other things. BtC may be the last thing left standing since it's so widely and internationally adopted. I just think the price right now makes no sense at all and the volitility is not something to be excited about if you bought in the last 2 months. If you bought 12 months ago, sitting well if you think about it.
There will be a lot of pushers but I really think that precious metals will bridge the gap - it is expensive and harder to find gold and silver and other precious metals. They form the foundation of industry and jewelry and society relaly if you think about it. We will never go to far off the main path though we will be tempted and pulled in many directions. The tulip mania is a good example because of the athstetic beauty and percieved rarity and percieved demand. Unless all companies start accepting BtC and the man on the street has some in his pocket, it would be more prudent to own gold and or silver.
Lately the largest exchange volume of fiat to Bitcoin has been in China. Most of the trade is renminbi to acquire BTC and they seem to not care how much "in dollar terms" they spend.
What gives money value is the fact that if you don't have any you DIE.
The bigger the threat to the value of $ the more people must die.
Clever little monkeys.
Think about this too in the power structure of things Money is above Oil and you've seen what our people in power do to us in the name of oil... control the money then the oil then the people... think pyramid of power. all seeing eye - Bow to Ra slaves.
Hey they called my name! Famous.
You are now very super famous.
http://www.youtube.com/watch?v=Fi6Ddd6eRqM
'when you have money in a bank account it's actually their asset'
no it's not; your Deposit is recorded in the Bank's balance sheet as a Liability
similarly incorrect: 'Mike Maloney has an excellent series about the differences between "money" and "currency." Yes, a truly excellent series - the crux of which is that Money does indeed exist, it's Currency which is the confidence trick
its hard to take this article seriously when the author is 180 degrees out of alignment with the facts he purports to rely on
"liability" and "asset" are oppositely labeled for deceptive purposes.
A bank "liability" is what they get to spend (asset) and it's almost impossible to get it back if they don't want to give it back.
So in reality it's YOUR liability (your loss, your trouble) and their asset (cash in hand, you get it back only if you ask nice-nice and they agree, or you sue them and lose because you CAN'T win against a billion-dollar bank & their army of lawyers)
Reality vs fiction: the fiction is the inverse-labeling of "liability"
ignorance is strength, right Winston?
"Why do you rob banks Al (Capone)?......... because that's where the money is". ....or was it Clyde Barrow?
Neither. It was Willy Sutton.
thanks!
Neither, either:
http://www.snopes.com/quotes/sutton.asp
A deposit, by legal definition, is not considered a bailment, but even if there was a question involved, all contracts with all commercial banks explicitly state that deposits of funds are a full title transfer of ownership to the financial institution. The fact that funds can be 'repaid' to you 'on demand' is incidental. When you make any bank deposit, you are giving up title to your funds to the bank, and the bank does not have to store them, and may do with those funds as it pleases. Your funds become the immediate property of the bank, in return for what is essentially an IOU. http://wiki.answers.com/Q/Is_deposit_of_money_in_bank_a_bailment
the simple fact is that a Deposit placed with a Bank is recorded by that Bank as one of its Liabilities; yes, because Balance sheets 'balance' - there will be a corresponding Asset, but the Deposit itself is not such; the article is plain wrong to suggest otherwise, and the author appears to miss the entire point of fractional reserve banking (in which 90% of currency is created by the Banks, not the Fed itself)
the fact that the Author may have intended to illustrate that your Deposit is no longer a legally distinct item, but merely a fungible unsecured claim against the Bank, is irrelevant - what he stated (twice) is factually incorrect, and it is hard to have confidence in the entire article when the author plays fast & loose with the English language
Whoever junked you doesn't understand basic banking.
"no it's not; your Deposit is recorded in the Bank's balance sheet as a Liability"
correct, which is why in a bail-in, the bank's liabilities are destroyed since their assets have been destroyed as well (their NPLs).
Values are a matter of opinion, debt is real. - "Swirvin'" Mervyn King
Things that DO NOT exist, except in our minds, as concepts:
Governments
think about it. one can have the biggest army in the world, but it will never be enough to oppress everybody when standing united. of course it's possible to kill all the citizens, but what's the point of doing that? so government is as much a belief as a religion, money etc
Actually through history armies have been very good at wiping out entire nations doing exactly that.
If I was born in a jungle where there was no government it would not be in my mind even as a concept. The minute I came out of that jungle I would be subjected to the full weight of government whether it forms part of my mind or not.
Thanks for saving me the trouble of pointing that out.
There are lots of things that don't exist.
Money is just one of them.
The distinction between things that exist and those that exist only in our mind is very flimsy.
Utility and a guarantee to perform are the basis of things generally.
As long as fiat in any form is accepted as payment it will have value.
If the creator behind Bitcoin goes crazy and floods the market with them what will happen to people's opinion of Bitcoin.
All forms of currency have limitations and their greatest limitation is time because they eventually all fail.
Ontological status is a subject for stoner dorm room bull-sessions.
Exclusively.
[Edit: to be clear, that was a flip, backhanded way of saying "I agree with you"...]
"Money does not exist"
There is no spoon
"Money does not exist".
Neither does Bitcoin.
I would love to have you as a customer of my personal bank. When you come in to make a withdrawl I woukd tell you that money does not exist.
Money and I presume you mean fiat does exist. The only problem though is that because of fractional banking we really only own it on a time share basis. That is, we can't all be holding our money at the same time.
The cake is a lie.
This is not a pipe.
...
Two hours!? tl;dw
Couldn't the industry panel have contained Jeff Berwick? He would have at least pointed out the hypocarcy if those statist fools . . . I'm tired of these industry guys treadung so softly with the ignorant monopoly on force.
"Meanwhile the "virtual currency" ran up above $800/USD and..............."one virtual currency(btc) bidding against another virtual currency(usd), wtf".......I think I'll stick with non-virtual assets, my au & ag.
Law exists and is real. If it wasn't, you'd be floating off into space right about now.
I am Chumbawamba.