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Greenspan Baffled Over Bitcoin 'Bubble': "To Be Worth Something, It Must Be Backed By Something"
"In order for currencies to be 'exchangeable' they have to be backed by something," is the remarkably ironic initial comment from none other than debaser-of-the-entirely-fiat-dollar Alan Greenspan when asked about the "bubble in bitcoin," by Bloomberg TV's Trish Regan. Unable to "identify the intrinsic" backing of Bitcoin (or see bubbles in equity, credit, real estate, or greater fools) Greenspan is, apparently, capable of identifying Bitcoin "as a bubble," because "there is no fundamental means of "repaying' it by any means that is universally accepted." The farcical double-speak continues as the Maestro does a great job of making Bitcoin (which Ron Paul earlier noted could be the "destroyer of the dollar") look even better than the readily-printed fiat we meddle with every day.
Greenspan explains...
"when we were on the gold standard, [currencies] had intrinisc value which made people willing to exchange their goods and services with no question."
"Alternatively, when we went into "currencies", it was the "backing" of the issuer of the currencies... whose "great credit-standing meant his checks could circulate as money.""
So either its backed by real physical metal with intrinsic value - or the promise of someone...(increasingly politicians of course) with good credit (or a big army)?
"I do not understand where the backing of Bitcoin is coming from. There is no fundamental means of "repaying' it by any means that is universally accepted."
Like fiat currencies (just ask the Venezuelans)...
"Individuals with very high net worth and great reputations could create their own currency... because people would be willing to exchange their checks with each other at par."
So coming soon the BuffettCoin or MuskCoin (oh wait reputation), or the GatesCoin?
But, Greenspan sums it all up...
"I haven't been able to identfy the intrinsic value of Bitcoin - maybe someone else can...
but if you ask me if this is a bubble in bitcoin... yeah it's a bubble.
Which ironically (perfectly circular) is exactly what Bernanke said about gold...
- BERNANKE SAYS `NOBODY REALLY UNDERSTANDS GOLD PRICES'
So - after that - go buy his book!?
And some more color from Ron Paul on Bitcoin as "destroyer of the US Dollar":
Via Mike Krieger's Liberty Blitzkrieg blog,
While we believe it is the Federal Reserve that is systematically destroying the US dollar, Bitcoin could merely be the preferred conduit through which fed up citizens decide to express their displeasure with the incredibly corrupt corporatist-facist state being shoved down our throats by a handful of insane and greedy oligarchs. Interesting comments nonetheless. From CNN Money:
Imagine a world in which you can buy anything in secret. No banks. No fees. No worries inflation will make today’s money worth less tomorrow.
The digital currency Bitcoin promises all these things. And while it’s far from achieving any of them — its value is unstable and it’s rarely used — some have high hopes.
“There will be alternatives to the dollar, and this might be one of them,” said former U.S. congressman Ron Paul. If people start using bitcoins en masse, “it’ll go down in history as the destroyer of the dollar,” Paul added.
It’s unlikely that Bitcoin would replace the dollar or other government-controlled currencies. But it could serve as a kind of universal alternative currency that is accepted everywhere around the globe. Concerned about the dollar’s inflation? Just move your cash to bitcoins and use them to pay your bills instead. Tired of hefty credit card fees? Bitcoin allows transactions that bypass banks.
“That’s the holy grail for people who believe in freer markets and currency,” said Adam Gurri, a libertarian economics writer in New York.
There are no middlemen charging fees to move money between users. You can transfer bitcoins — even infinitesimally small fractions of one — directly to others’ digital wallets.
But don’t expect governments and banks to let Bitcoin take over so easily. Financial institutions will lose business if people stop using their payment systems, and central banks like the U.S. Federal Reserve would lose their ability to help slow and speed up economic activity. Paul expects banks to lobby and authorities to crack down.
“Governments absolutely demand a monopoly on money and credit. They’re not going to give it up easily,” Paul warned. “They will come down hard.”
Interesting times…
Full article here.
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Watching zerocoin.
-- He who signed the Federal Reserve Act, the Underwood-Simmons Act, and requested a Declaration of War Against the Imperial German Empire
(France and Britain were heavy borrowers from the House of Morgan you see)
Fuck Greenspan and the all the other slave drivers who've ever been employed by the Federal Reserve. End The Fed!
any money is just a contract (can be enforced or voluntary) between an individual (holding the money) and a society
a contract in which society agrees to perform some work in exchange for the money
so what backs any money is the willingness of the society to perform some work in exchange for the money in question
the difference between USD and BTC is that USD is enforced contract and BTC is a voluntary one
the key question is will BTC stay that way or not ? For example when you buy a house with BTC will IRS come to you and ask where did you get the BTC from ? will they ask you to pay taxes on your BTC transactions ?
I bet they will and that is where you will have to convert your BTC to USD to pay taxes and "legalize" your purchase of a house.
"will they ask you to pay taxes on your BTC transactions ?"
If you are a U.S. citizen or U.S. resident alien, absolutely.
Ahh! the poor old twat, won't somebody be kind and put him down.....
The curse of Hugh Hendry:
China warns banks to avoid bitcoin.
http://rt.com/business/bitcoin-china-financial-institution-754/
Less than 24hrs after this from Max Keiser;
@maxkeiser: On basis of Ron Paul's comment: 'Bitcoin could destroy US dollar' we're raising BTC price target from $1500 to $1,700
To explain the mystery of Bitcoin to Greenspan and all those "best and brightest" morons who have built Pax Americana debt hole and hubristic NWO mantra I would suggest the following line of reasoning :
1° The Origin of Bitcoin works on the eternal principle attributed to the Devil : THe fallacy of all hegemonial constructs; aka "GOD wills it" type Greenback God logic; is hidden to the common eye by "control and fear" regulatory capture. Its inherent weaknesses lie in the INTERSTICES of the false godly construst. So that's where the devil Bitcoin should reside and flourish : in the interstices of the fiat empire, as it decays and froths in Bubble-o-mania paranoia all festering behind the tinsel curtain of Emperor's illusory regal posturising in name of the PEOPLE.
Bitcoin is a cure to hegemonial monetary constructs. That is its "raison d'etre".
2° To thrive and grow it has to be faceless and unidentifiable; like the original evangelical religion; peer to peer and unknown to Caesar's legions. It only thrives in the Catacombs of Rome during secret meetings where only the initiated come, not from greed but from faith and Necessity. Its a true Heretic breed. Its an alterworld in the making. And Caesar; God's purported and elected effigy on earth; does not like it and will want to burn it and crucify its followers if he could.
3° It has to have its own growth mechanisms based on three cardinal values : faith, hope and charity. Charity being a very important aspect, as all systems only survive as much as in the peer to peer relationship there is TRUST based on COMMON VALUES. We never cheat each other as long as the world is ruled by hegemons.
4° For it to become viable it has to have a fool proof growth formula within its OWN MIcrocosm. That formula has to be an intelligent one, an ALGORITHM that none can fathom nor debase allowing it to create value based on total democracy and faith in each other's EXEMPLARITY fed on necessity to survive in a HOSTILE PREDATORY world; that of Oligarchy fiat. The buck stops with each peer to peer node. We are our own keepers. But the formula is beyond the tinkerings of ANY of us. That is the cardinal rule. Bitcoin will never survive if this oNE precept is not cherished by its community; as then we go back to fiat ROme. We are no different to them.
What Black Merton and Scholes did to fiat none should be allowed to impose on Bitcoin. No derivative disease to confound the purity of the original tree of wealth dissemination. If this rule is never crossed like a virtual Rubicon, the Republic of true monetary value stays pristine and undebased. No Oligarch could corner the system as its NOT centralised and Bitcoin exchanges only live on their own reputation (and pay for their sins in front of unmanipulated courts of law). If competitors make a Buffetcoin or Gatescoin that's fine; if they never cross the Rubicon and declare themselves Hegemon; if they respect the principle of true democracy and peer to peer "free" and "illusory" market value transaction legacy. The more the merrier.
Bitcoin does not answer the more philosophical question of what the VALUE of a product is and WHY it is ephemeral and changing depending on fads and fancies of transactors or on launch of rival products.
5° Now we come to when the Bitcoin having established its preeminence has to face the test of perenity and sustainability.
What does it have to do to never face the decay of corruption and hubristic delusion?
Just be the Opposite of the GREENSPAN legacy to $$$$$$ FIAT!
Over and out Mr Greenspan!
NB : If the Bitcoin construct exposes the fiat hegemony based on QE infinity and DEPOSES it into the dustbin of history, it would have served its purpose to humanity as antidote.
Not saying any system is a "and they lived happily ever after" deal; no way!
Got to love the old 'intrinsic value' canard. Gold has no intrinsic value - nothing does, value is imputed onto things as a human concept, it is nothing to do with the underlying object, idea, information or whatever. If we value gold at $0, or at $1 trillion per ounce - the gold doesnt give a shit. It doesnt change, it doesnt expand or contract - the concept of value exists only in our minds.
Money is a concept - IT IS THE IMPUTED VALUE, it is not the underlying object, idea, commodity. Therefore it is easy to see that there is no fundamental difference in the process of valuation of one item or another, except the MAGNITUDE of that value as interpreted by human beings.
The value is always the same concept, namely; "what can I use it for, how does this item/object/information help me achieve my goals". The more something is deemed useful, the higher the value. Money of course has certain properties that make it serve as money; portable, fungible, divisible, acceptable, limited supply, durable, secure (I divide 'store of value' into three properties, limited supply, durable and secure).
Money is backed then by one thing, whether it is a store of value - that is how we percieve it as; secure, durable and limited in supply. Everyone makes their own judgement on these properties, and through the free market a value is discovered.
EDIT: Some note that FRN's are also 'backed' by the threat of violence, that is legal tender laws. This is quite correct, to an extent. I will illustrate the limitions of this method by drawing your attention to the use of Assignats after the French revolution - the death penalty was liberally applied to those who used or hoarded other forms of money, yet eventually the Assignat fell to zero. Violence has its limitations.
EDIT: The FRN also had a store of value when it was convertible to gold. After that it was a store of value because it was limited in supply by issuance of US debt. The idea was that US debt issuance must have a limit, that is debt could only be issued to the limit that it could be paid back - so there must be some finite limit of debt issuance. We can see that this idea was just that, an idea - US debt has exceeded the ability to pay it back, and therefore the US and T-Bills have lost their store of value because the 'limited supply' was obviously a mythical attribution.
yeah I watched him on Bloomberg yesterday.
his 2 points:
1.) BTC does not have "intrinsic value";
2.) BTC is a bubble;
make me be more confident to be long BTC.
everyone who says "intrinsic value", deserves a laugh. there is no such thing as intrinsic value. any "value" is constructed and attached to a particular asset class by the human mind, let that asset be gold, oil, shares, fiat currencies, or bitcoin.
many people are just confused by the fact that bitcoin only exists in the internet infrastructure.
***************************
Bitcoin CRASH due to CHINA
http://btcpost.net/index.php
The last duty of an (ex) central banker is to tell the public the truth.
Crane the fuckin' lot.
Holy shit Bitcoin just crashed from 1340 to about 1000, seems like one big player just cashed in big time.
I thought Greenspan did not know how to identify bubbles?
He invented "irrational exuberence" as explanation; aka don't blame the system I made, blame SOME individual actors.
This is the crux of the matter IMO.
Was the Reaganomics system and NWO-MIC/labour arb extension which has spawned CHindia outsourcing, ME OIL patch asymmetric wars, cheap goods buying, deindustrialization decay and mega debt; along with derivative soup and supply side FIRE financial bonanza; the work of a few Gordon Gekkos; aka M. Milken / Soros/LTCM types; or something more insidious called crony capitalism and Oligarchy vertical social construct, that resulted from LBJ/Nixonian hubris gone viral after USSR collapse?
A fifty year road to deperdition or just a few gung ho speculators? ...
( With Dear Henry masterminding MIC control of S.AMerica, shuttle shuffle of ME alliances, OPEC petrodollar setup, and China Ping ponging to get the Chindia ball rolling down the road; having built the OECD and TRilateral oligarchy frameworks. He was the Deus ex Machina of this construct that Reagan-Thatcher inherited).
No government or corporate control is all BTC needs to succeed.
As for Greenspan, he was good at blowing bubbles but incapable of seeing them, even after they went pop.
Remind me again what is the US dollar backed by?... oh that's right 17T+ of debt.
I laughed so hard, I thought I was going to choke. My God; it's like a comic book. You couldn't make this stuff up. "Greenspan baffled by money that's not backed by anything"; WOW. The idiot who printed billions of worthless IOU's; created the Nasdaq bubble, and followed that with the housing bubble, discovers that money should be backed by something. I swear to God; it's like the National Onion.
People's Bank of China says no to bitcoin;
http://www.zdnet.com/cn/china-forbids-banks-to-transact-in-bitcoin-7000023967/
"Greenspan Baffled Over Bitcoin 'Bubble': "To Be Worth Something, It Must Be Backed By Something"
Correct - that's the big difference: Our EURO is backed by liabilities against Greece, Spain and Cyprus....
"Must be backed by something". How ridiculous this man now looks. There must have been a point in his life where the club members either bought or threatened him. I don't know whether I should hate him or feel sorry for the poor bastard.
Batra on how Greenspan sank Social Security
to the benefit of the super rich, which
doesn't talk about G's econ per se.
http://www.thomhartmann.com/blog/2005/07/greenspans-fraud-how-two-decade...
Batra, talking about G's econ per se.
http://smu.edu/experts/stories/batra-qna.asp
Batra's perhaps most famous for explaining
in the 20's/30's the rich ran out of
qualified borrowers but lent anyway to
juice their returns.
In the last bubble they simply sold the
loans, insured the loans, and shorted the loans.
As to Greenspan's latest comment,
in "The Verdict" after Frank Galvin (Paul Newman)
says he declined the offer of $210,000
Mickey Morrissey (Jack Warden) says
"What is this, some kind of joke?"
The line works here.
I doubt people are trading the new
currency as in the manner of forex
so much as they're simply looking for
a safe haven of value. People don't
part with the money they're used to
for that purpose lightly.
Though if I were from a nation whose
policies favored a strong currency
and strong wages, reflecting a
people's worth, achieved by democratic
processes and an informed, well
educated public, I might nonetheless
venture a little into the new
currency betting that a lot of
value will be fleeing elsewhere.
Reasons why people use the new
currency instead of play money from
Toys-R-Us may include some
see them being backed by proxy of the
risk equalized currencies last used in their
acquisition.
Suppose those currencies dwindled to
half their number.
The overall shared risk proportionate
to the ones used for purchase, intrinsically
accounting for the volume of each
currency used, would still offer
an advantage to those with shaken
faith in their home currencies, and
one might still see underlying
backing by way of proxy of the
the currencies used.
Suppose all the currencies used
for purchase failed.
Perhaps the new medium would still
exist as the medium of barter
people trusted, so long as it
could be freed from manipulation.
People obviously are scared of
TBTF/QE. When gold's been in
backwardation people have seemed
to have paid a premium for its
barter value.
But see:
http://www.wired.com/wiredenterprise/2013/11/ddos_bitcoin/
If the only currency, BTC would then be a people's
currency with no backing other
than their faith in each other
as a unified public serving itself.
The people who would be privatizers
of monetary policy would still be
welcome to participate.
Gold BTC coins sound interesting
for the open ended gold put value,
assuming the coin's upside relative
to state and other new currencies
is somehow made "official."
The FUD onslaught continues!