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Friday, December 6, 2013

How The Bit Coin Holds up vs. the Byte Dollar.

You only get a guy to Burst Your Bubble.

In 2005, as the housing market peaked and the Greedsphan-Bernanke nexus declared that housing prices only go up and there is no such thing as a national housing market, even as they created a national mortgage market via shadow banking's unregulated free-for-all of asset-stripping the value of the American public's real estate, Ned Shchmidt coined the phrase 'moneyization' for the global financial phenomenon he saw occurring wherein certain individuals and businesses, the ones ignoring the siren song of Fed monetary manipulation and dollar debasement in the guise of securitization of risk into CDO's destined to plummet in value, given the wrongheadedness of the algorithms on which they were based, moved their funds to monies in which they had the highest confidence.

But as Greedsphan denied that a Real Estate bubbles existed then, he is adamant, when talking of bitcoins, that one exists now, declaring that "Bitcoin prices are unsustainably high, and that the virtual money isn't currency", despite the fact that, since it's used as currency and accepted by certain businesses and even countries as a mean of exchange, it is used as one. As though, just as he felt that simply denying a bubble exists it didn't, he now feels that simply by his denying that bitcoin is currency, it isn't: "“It’s a bubble,” Greenspan, 87, said today in a Bloomberg Television interview from Washington. “It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it. Maybe somebody else can.”

Yet the entire structure of floating exchange rates over which Greedsphan presided for "The Great Moderation", during which he bailed out Wall St.'s most egregious criminals, assumes exactly that. No fiat currency has an intrinsic value, but is instead only worth what the Market, using various matrices, such as the GNP of the underlying economy and it's relative value as compared to the world's other economies, assigns it.

If the dollar really had intrinsic value, he wouldn't have to deride bitcoin. But because of moneyization, it's obvious that confidence in the Dollar is plummeting as a means of exchange and that individuals and businesses around the globe are so concerned about its lack of intrinsic value, which its overt manipulation by the Fed for more than five years screams out from the rooftops, (subtlety not being Bernanke's forte), they have bid the price of Bitcoin up to such astronomical levels that this wrinkle-faced troglodyte crawled out of his silk-lined casket, was propped up and  his Chatty-Kathy string pulled, to assure us that it's the dollar, not Bitcoin, that has intrinsic value.

But the more he "talks up the dollar", the more the virtual currency appears to be a better, less obviously nationalistically-manipulated, means of exchange. Because, the more they talk of the "printing press" of "Helicopter Ben", the more obvious it is that the Dollar, as much as Bitcoin, is itself a virtual currency, existing only as electrons, none of its trillions upon trillions of value physically existing anywhere but in cyberspace, it's value unabashedly manipulated by an out-of-control Central Bank that simply makes up its own laws as it goes along, something Bitcoin, at least as advertised, is immune to.

Because just as MBS's created a National, and in fact, an international, market for home mortgages, (and then, eventually, virtually anything else they could contrive to throw in with them), Globalization, and its doppleganger, dollar hegemony, via its role as the world reserve currency, has left no mechanism by which to value the intrinsic value of a country's currency, because, having to accumulate dollars, countries are forced to become export platforms for products available, not to their own citizens, but to those in the US. This dynamic has been and is still being used to suppress wage demands in the US by severing the tie between the country's currency and its industrial output, while, via blatant Fed purchases that have bloated it's balance sheet to over $4trillion dollars, by purchasing MBS that even Fannie Mae won't touch and government debt that no one else will buy because, the more of it the Fed purchases, the less the interest rate reflects the amount of risk its purchasers are assuming, simultaneously elevating asset prices of both stocks and homes beyond the reach of those continually declining wages.

In an insert in the Bloomburg article is a telling question: "Is it really money if it doesn't come from the Mint?" A question, in terms of the electronic form of monies which are constantly transferred over fiber optic cables and never ever been issued by any mint, that has ever been asked before, never mind answered. The reason for that is because electronic currency, never having been minted, has no place. You can put your money into a bank, but it can then be whisked out of your account and used to build a factory on a shore a world away to take advantage of the "Freedom" to use slave-like labor force, unregulated power generation and resource despoliation to compete with the factory you work at and bring it to its knees, and then flood, via outposts of pernicious peddling, such as War-Mart, the market with those shabby goods at cheap prices.

This they refer to as Capitalism, but it is Creditism. Capitalism leaves in the hands of local markets, politicians, businesses, and workers, not an inchoate, ill-defined, all-powerful Market Force, the ability to decide just what they should invest in to make their lives more fulfilled and productive. This is the true pursuit of happiness the founding fathers referred to and that has  been systematically and deliberately destroyed. What was new in the United States' version of Capitalism was the idea that history might be rooted not in the strictures of nature or the whims of the gods, but in the mass actions of men themselves.

But when a city, a State, an entire country, can have its wherewithal simply sucked dry by the instantaneous transfer of its citizens' savings to other lands, the only freedom left is for those who effect the transfer, skimming their fees and usurious percentages into their own accounts. To those whose hands did the work and accumulated the savings, nothing is left. This is the way that the Greedsphans of the world wish the economy to function, and Bitcoin is a threat to that hegemony. If the dynamic I describe were not a reality, there would be no need for, and therefore there would be no such thing as, Bitcoins. Whether it becomes a viable currency is certainly open to doubt, as its volatility, on which the Greedsphan remarks were made, leaves it untenable for anything but the shortest of transactions. But should it fail, another idea will come forth and then another, until the current sea of turmoil, obfuscation, and periodic Maelstroms is calmed. That, however, may be some time in coming.

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