Central Bank “Cryptocurrencies”? Just a Different Kind of Funny-Money

Sprott Money's picture

 

 

Central Bank “Cryptocurrencies”? Just a Different Kind of Funny-Money

Written by Jeff Nielson, Sprott Money News

 

It is quite hilarious to watch the posturing of central banks and their media mouthpieces on the subject of cryptocurrencies. A recent Reuters article on the subject provided numerous moments of mirth. The title alone is good for a chuckle.

 

Too Soon to Determine Risks of Central Bank-Issued Cryptocurrencies: BIS


It’s always amusing when these shameless con-men (and women) attempt to portray themselves as sober arbiters of risk. Those who understand our monetary system are aware that the funny-money that these shysters are currently peddling is completely worthless.

 

The “fiat currencies” of Western central banks have had highly questionable value ever since the final connection to the gold standard was severed in 1971. However, since 2009 there has no longer been any question at all – ever since the Federal Reserve launched the Bernanke Helicopter Drop.

 

 

U.S. dollars have value only to the extent that they are strictly limited in supply.

-- B.S. Bernanke, November 21, 2002

 

Since 2009 and the era of unlimited dollar-supply began, the U.S. dollar (and all its fiat currency derivatives) has been completely worthless. It is with this backdrop that we watch these Clown Princes of our monetary system debating the “risks” involved with crytpocurrencies.

 

The article starts with a straight line and then heads straight for laughs.

 

It is too soon to determine whether central banks should issue their own cryptocurrencies, the Bank for International Settlements said on Sunday, as the risks could not yet be fully assessed and the technology underpinning them is still unproven.


Central banks already use electronic money - only a very small proportion of their assets are now backed by gold - but this is exchanged in a centralized fashion, across accounts at the central bank.


“Only a very small proportion of their assets are now backed by gold”. What proportion would that be? Zero – a very small proportion indeed.

 

Currency reserves (including gold) represent – at best – indirect backing for these worthless currencies. A government trying to prop up their own paper can liquidate their currency reserves, and use the proceeds to buy-up their own currencies. Hardly “backing” in any formal sense.

 

The whole objective of these criminal central banks in assassinating the gold standard was to completely divorce their money-printing from gold. Gold-backed money is Honest Money, and there is nothing remotely honest about central bank fiat currencies.

 

Central banks already have their own funny-money that they can conjure into existence in infinite quantities. So why are these institutions of monetary crime openly expressing interest in cryptocurrencies?

 

Envy.

 

Blockchain technology enables peer-to-peer payments to be made using decentralized cryptocurrencies like bitcoin, by means of a shared ledger that verifies, records and settles transactions in a matter of minutes.


“While it seems unlikely that bitcoin or its sisters will displace sovereign currencies, they have demonstrated the ability of the underlying blockchain or distributed ledger technology (DLT),” BIS said.


Cryptocurrencies can also be conjured into existence in infinite quantities, limited only by the algorithms that spawn them into existence. But adding blockchain technology adds a money-pump dimension not possessed by current central bank money-printing operations.

 

“Peer-to-peer payments.”

 

What is the appeal here? Such a totally electronic means of delivering payment for transactions makes the War on Cash that these criminals have already declared even easier to impose upon us. Furthermore, the whole concept of cryptocurrencies adds an element of quasi-legitimacy not possessed by central bank fiat currencies.

 

What gives a gold-backed currency value? It is backed by a hard asset with a 5,000 year pedigree.

 

What gives a fiat currency value? Our (honest and trustworthy) governments say that that this funny-money has value.

 

What gives a cryptocurrency value? An algorithm.

 

The vast majority of our populations have no clear understanding of what an algorithm is. That’s how and why the banksters have gotten away with imposing their totally fraudulent trading algorithms on our markets – no one understands the obvious criminality of allowing computers to hijack our markets.

 

So it comes down to a choice. Are the masses more likely to retain faith in our funny-money knowing that it is “backed” by an algorithm, or “backed” by the good word of our governments? Framed in those terms, the choice seems obvious: fiat currencies out; cryptocurrencies in.

 

A recent article distinguished cryptocurrencies from real money: gold and silver or precious metals-backed money.

 

mere currencies (such as all of our
paper currencies) are not “money”. They are not a store of value. They are not rare or precious. They have no intrinsic value. Their utility is purely as a medium of exchange.


Crypto-currencies, as the name directly implies, are not money. They are not a store of value. They are mere currency.


They can still be distinguished from our fraudulent (central bank-created) fiat currencies. As was previously discussed, many credible sources will attest to the fact that crypto-currencies are not fraudulent.


Here is the appeal. Cryptocurrencies are not money, meaning they are not a store of value, thus they will not intrinsically help the masses preserve their wealth. At the same time, unlike the central bank’s fiat currencies, cryptocurrencies are not open frauds that are rapidly losing any veneer of legitimacy.

 

Cryptocurrencies are becoming more legitimate in the eyes of the masses, eyes which (more and more often) are coloured by greed. See how high Bitcoin soared last week/month/year?


For 45 years, all we have seen is the purchasing power of our (so-called) money plummeting. The same chocolate bar that cost a dime when the gold standard was killed costs a dollar today. Now the masses are actually catching a glimpse of currencies that rise in purchasing power, even as the supply increases.

 

Something for nothing.

 

Of course, in the real world there is “no free lunch”. Understand that the value of a cryptocurrency cannot increase as the supply increases simultaneously. That is nothing more than the same lie that the central bankers currently peddle regarding the U.S. dollar.

 

The price of a cryptocurrency can go up (temporarily), but only for so long as holders are willing to bid up that price. As soon as the tide goes out, a cryptocurrency has identical value to a fiat currency: zero. Framed in those terms, it’s no wonder that our monetary con-men are expressing more and more public interest in cryptocurrencies.

 

Central bank flirtations with cryptocurrencies may be viewed by some as the green light to pile into this new form of currency. Think again. There is a 100% opposite way in which this scenario could play out.

 

It goes like this. Central banks continue their “risk assessment” of cryptocurrencies as the price of these virtual currencies spirals higher. But before the central banks embrace cryptocurrencies officially, the bottom falls out and these currencies plummet to near-worthlessness.

 

Sound implausible? Whose money has fueled the spike in value of these cryptocurrencies to date? Very probably it is the dirty money of the banking crime syndicate.

 

The motivation should be obvious to astute readers. Cryptocurrencies represent competition for the official (but fraudulent) fiat currencies produced by central banks. The oligarchs who control this crime syndicate despite competition in any form – and even more so with respect to their money-printing monopoly.

 

What is the modus operandi of these oligarchs when it comes to anything which seeks to compete with their criminal empire? Control it. Or destroy it. Or control it then destroy it.

 

As regular readers already know, the banking crime syndicate has the capacity to legally counterfeit infinite quantities of its fiat currency funny-money. Surely this crime syndicate would not be sloppy enough to simply watch these cryptocurrencies emerge as direct competition?

 

Throw some of their spare change into Bitcoin et al and they take control of the competition. At that point they are free to promote their success, or to destroy these cryptocurrencies by suddenly and dramatically pulling out all their own dirty money.

 

Are cryptocurrencies going to become the successor to our fiat currencies, and another stepping-stone toward “a cashless society”? Or, are these virtual currencies destined to be a flash-in-the-pan, destroyed by the banking crime syndicate before they can become formidable competition for our official (but worthless) currencies?

 

The latter scenario seems the more likely one, for one important reason. If central banks embrace cryptocurrencies and thus confer even greater legitimacy upon them, they would be legitimizing the competition.

 

The whole theft-by-money-printing scam of the central banks is based upon us holding and using their fiat currencies. If we are holding and using independent cryptocurrencies instead, this weakens their control over us and reduces the amount of our wealth they are able to pillage. It's almost as bad (for the bankers) as if we were holding precious metals.

 

Central banks are showing cautious interest in cryptocurrencies today. They may even express open admiration tomorrow. However, we may still see the banking crime syndicate completely and utterly destroy these cryptocurrencies the day after that.

 

Virtual currencies can be destroyed. Real money (precious metals) cannot. All that can be done is what has been done: temporarily suppressing the price of these eternal metals.

 

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

 

Central Bank “Cryptocurrencies”? Just a Different Kind of Funny-Money

Written by Jeff Nielson, Sprott Money News

 

 

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Captain Nemo de Erehwon's picture

How did we get to this stage where capital is the most important thing and profits the most important motive, but we are not sure what money should be? It is just another smokescreen to keep people confused, and the smarter ones busy trying different algorithms all the while real wealth flows upwards.

Money is something you can use to get whatever else you want without having to do more work. It requires (1) other desirable goods and services to be available so that you can exchange your money for them (2) people who would want the money in exchange for goods and services, implying that the money must be backed by something universally desirable.

Gold is rare and imperishable, so it can keep track of transactions in a primitive society. It has no intrinsic value except for monkeys fascinated by shiny things. If in a post-apocalyptic world, there is a real shortage of food, would you give away food in return for gold? Artificially ascribing intrinsic value of gold leads to situations where (1) you become rich just by digging the earth and finding it, destroying the scenery in the process, but then if you really were to get lucky and find enough of it that it were no longer rare  its value would suddenly decrease (2) you also become rich by going and destroying the productive assets of a neighbour and simply carrying away their gold.

The move to oil would be a rational step because oil is a good store of energy and with available technology is it key to all production processes and raw materials, and even their transportation. However the value of oil depends on technology. Before we had the technology to use oil, it would just be a dirty liquid spoiling the area. Now that we have the technology to use it, it is valuable but still can cause pollution. If we get clean energy it would again not be valuable.With changing conditions the value of oil, in terms of desirable goods and services again changes considerably, leading to more chaos which only hurts those at the bottom of the rung.

Why not just get to the end result and generate currency against available stored surplus essentials, regardless of how such surplus is generated? Storage technology has advanced enough to be able to store sufficient essentials. It is possible to create a system that fixes the price if essentials in terms of currency without imposing economic regulations (google "Basics first: let money buy happiness"), it is backed by something universally desirable as everyone wants survival essentials and it can be used to create an electronic currency that is transparent and free of any manipulation. What if food gets spoilt? The available currency decreases as it should because value has been destroyed.

passerby's picture

A central bank is pretty much the opposite of decentralized.

illuminatus's picture

For honest money or trade settlement a marriage of blockchain ledger and periodic settlement of that ledger in gold  or other valuable goods, such as oil or widgets would be ideal. With blockchain you have a completely failsafe proof that can not be altered from ventdor to buyer, and we already know the virtues of settlement in gold. The problem with gold is that it is not suitable as a trading vehicle. For example if I ship a pair of shoes to a customer how will he pay me unless he has a system that links his account to a stash of gold at a clearing house. How could I be certain that the customer would send me $ 20. in gold or even silver through the mail to satisfy me as the vendor, let alone a supertanker full of oil. It is just too convenient to use digits like we have in credit cards. 

 Gold and especially Silver can still be legal tender for some trades, just like federal reserve notes ar used now, (as they should be as set forth in the US constitution) but I think that going back to a pure gold and silver standard will not happen again as long as we have international and even intranational trade the way we do now. For that, blockchain and the crypto currencies ( linked to proof of work or value) are supremely well suited because they are completely fraud proof, or as it is called in blockchain language, trustless.

TheLastMan's picture

To make it "trustless", who validates and how is the asset of the asset-backed blockchain address validated as true, physical and actual?

For example, ownership / title of a Texas real estate token is validated to the blockchain in what manner?

Cognizant authority?

illuminatus's picture

There can be no cheating in blockchain it is automatically verified and verifiable in and through the block itself. The enforcement is still through the legal system and also through a rating system like ebay or amazon have for example, but instead of amazon being able to cheat and call 1 star 5 stars, there will be millions of people able to verify that the chain is intact and valid, or not. Anyone caught cheating will automatically be shunned by everyone as a cheat and no one will want to do transactions with them.  the blockchain is self policing. Plus the proof is right there in the block, so whatever proof of any wrong doing is obvious and undeniable. No smart lawyer will be able to dispute. The legal system will be there to mete out whatever punishment.

TheLastMan's picture

I haven't studied this much but the logical progression seems apparent.

And you must know the BIS Banksters will be involved.

 

Blockchain / DLS is the muscle that underlies the "system".

 

"Cryptocurrencies" such as bitcoin are digital coupons accepted by various vendors and are an interim transition in the digital scheme.

 

"Tokenization" is the next phase - asset-backed "bitcoins" unique to each asset.  The tokens will be globally interchangable with other asset-backed and non-asset-backed tokens.

Not fiat mined, but "asset-backed".

Silver and gold-backed tokens will be available.

Real estate tokens, commodity tokens, human tokens (yep-PeopleCoin), SDR (basket of tokens), etc.

Once again "trust", title and possession come into play  - as in the (in)ability to take physical delivery of SLV / GLD.

It could facilitate global commodity exchange without the use of FRNs/Yuan/EUR.

I am not saying this is preferencial to holding physical. I am only surmising how blockchain / DLS will evolve into a vastly more complex system.

 

But as with Goedel's Theorem - an exchange rate point-of-reference outside of the blockchain would have to be established.

<how many acres of Iowa farmland would 1000 kilos of vintage china tea buy>

That is where the SDR token fits in - it would be the univesal common denominator to equate the exchange of the variety of tokens.

 

I would be surprised if at some future point you and I are not addresses in the blockchain of humanity.

Bricks in the wall.

 

 

 

 

NoBillsOfCredit's picture

You people are all confused because you don't know the meaning of the words. Dollars are not Federal Reserve Notes, Cryptocurrencies are not actually currencies. The word currency comes from slang attempting to describe a note that is due and current. But that it is so small it can be traded in daily commerce rather than trading the underlying metal represented by the promise to pay. Therefore, a Federal Reserve Note document that does not have a promise to pay is not actually a Note. In the financial sense of the word. It is nothing more than a fraudulent piece of script. So when you stop calling Federal Reserve notes dollars and stop calling slug coins cents and you understand that the word cryptocurrency is not a currency because it is not an I owe you or a note that is due and current. We actually might get somewhere with this conversation. Cryptocurrencies would be more aptly named Cryptomoney. 

On to the term "intrinsic value". The value of something is determined by what people are willing to trade for it. Intrinsic value is a misnomer because it requires a desire on the part of another party or on the part of yourself to create this thing called intrinsic value. And intrinsic value argument is a red herring argument.

KingTut's picture

You're right about our paper money.  They are not notes in the sense of being a liability of the goverment. They are not a debt and not strictly backed by anything.  However, they derrive value from being legal tender.   The goverment asserts that they can be used to pay taxes, fines, fees, and to leagally settle contract disputes.  They say they are backed by the "Full Faith and Credit of the United States", but that means nothing.  However, the US goverment clearly has suffient real collateral to back all the paper money and then some.  So our FRNs have utiltiy, but are really an act of faith.

Aristotle is the one who made such a big deal about "intrinsic value", identifying gold as the ultimate form of value.  But that's nonsense.  What has Intrinsic Value is your life, your freedom, your family, your friends.  And to keep those things you need Intrinsic support: (in order) Air, Water, Food, Shelter and free access to Community.  Everything else, gold, diamonds, paper money, bank accounts, stock certificates etc., are just symbols or tokens, mere placeholders for the things with real Intrinsic Value.

 

Money_for_Nothing's picture

The power establishment only has one problem that isn't fun to wrestle with. Disloyalty. For every one Huma Abedin their are thousands of James Comey's. Cryptocurrencies cut down on the number of people you have to trust. Cryptocurrencies are open bank ledgers that track account activity in a way that is hard to falsify. There still has to be reconciliation or the same bitcoin could be spent multiple times by changing venues.

Maestro Maestro's picture

I agree.

Bitcoin & all cryptos = CIA = The Fed = ECB

Now you're not only exchanging your labor and your goods for electronic digits created out of thin air, but you also believe that they are (1) scarce (2) thus intrinsically valuable and (3) worth wasting resources like huge amounts of electricity and expensive hardware that has to be constantly replaced because it becomes obsolete the moment you buy it, reducing your ability to mine more cryptos faster.

There is no hope for the human race.

conraddobler's picture

Crypto's are an interesting thing and I believe are here to stay in some form.

It's a bit like the VHS and Betamax thing though in that it could be really tough to figure out which one will end up truly enduring.

The problem I would have with Bitcoin is that it's in grave danger of being insta usurped by something that works better or is more easily adopted.

Because it has no intrinsic value you have zero protection from it going the way of any waypoint technology.

I have a big box of old computer cables I haven't figured out what to do with but if anyone wants some parallel cables I have a few dozen.

bluerivercard's picture

JSECoin -

Business case

1. Anybody can mine using their web browser!

2. Competitor to Google adsense. Runs mining in background of visited sites instead of annoying adverts

Referred link

https://jsecoin.com/platform/?lander=1&utm_source=referral&utm_campaign=aff270&utm_content=

Silver Savior's picture

I don't care what these bastards do with money supply. I just want currency easy to get and gold/silver be worth a huge amount and that's it. Universal Basic Income or Socialism I don't care. Just give me easy money or currency whatever it is. 

Allow me to buy a pallet of Scottsdale 10 ounce silver  stackerbars on a whim. Or a good delivery gold bar. 

JailBanksters's picture

If a Dollar is worth 100 Cents today, it should be worth 100 Cents in a years time, not 96 or 97 cents.

 

Quatermain's picture

It's always worth 100 cents, its the cents that arn't worth anything...

NoBillsOfCredit's picture

You are both wrong because you don't know what a dollar is or what cents are. When we all stop calling Federal Reserve notes dollars we will have accomplished a major transition.

Silver Savior's picture

Yet people still believe in fiat currency as being money. I can not come to terms with that. I don't want the fiat I want the silver and gold. I dumped a lot of fiat shit. Just like a load of fish guts.

JailBanksters's picture

Unless they can create a Bazillion dollars with a few key clicks, they're not going to use it.

 

rphb's picture

I don't think there is anything funny about cryptoes, but that would be the only thing that could give them value.

Pasadena Phil's picture

Cryptoes are plenty funny. Especially the part about how cryptoes demonstrate that one worthless currency can compete against any worthless currency. There is absolutely nothing but hopeful thinking enabling cryptoes to be temporarily viable. Just like all fiat currencies. But once users figure out that it's all an illusion, that there is no connection to real value, POOF! Game over!

I don't know. There is humor in there somewhere. Imagine the expression on the E-Trade baby's face!

Yellow_Snow's picture

Sprott - another 'gold pumper' trying to drag crypto's down...  Just pushing potential investors further away. 

I used to have a neutral view of gold until recently...

'Goldbugs' have done a good job of isolating themselves on their own 'tin-hat' island.

rphb's picture

We don't "need" to drag cryptos down, we are trying to warn you, but ye stubbornly keeps dancing to the music even as the Titanic is sinking.

beyondtheprogramming's picture

Only two words needed to describe the Banksters who always play all sides = Flying Monkeys. Please stop feeding the Flying Monkeys.

East Indian's picture

Central bank "crypto" currency? What is 'crypto' about it, when the Central Banksters create it, keep track of it, and can disable it in no time? It will be like Monsanto's organic food.  

Pasadena Phil's picture

If you can't beat them, join them. Then take them down with you when you crash and burn. No place to run. No place to hide.

. . . _ _ _ . . .'s picture

Why would central bankers want this? Give the people a choice between fiat 1.0 and fiat 2.0.
The illusion of choice. Either way, the banks will profit, and people will have no phys.

If they play both sides against the middle, they never lose.

Dogman57's picture

Funny money?  That would be all the Central Banks making money out of thin air.