I’ve always been pro-technology because it has made my life way better. However in recent years I’ve started to look back at technology and see how it has been used for bad.
😬Risks of being in “the System”
From my observations there are a lot of risks by having your money in the banking system:
Zero Fractional Reserve Banking
Banks used to hold a percentage of deposits in reserve for liquidity purposes. This reserve was meant to ensure that if many depositors wanted to withdraw their money at the same time, the bank would be able to meet these demands. If liquidity goes to zero, a bank can collapse.
I just found out recently that in March 2020, the Federal Reserve changed the rules so that banks no longer have a mandatory reserve requirement. This means banks are not required to hold a specific fraction of deposits as reserves.
Counter Party Risk - case study Silicon Valley Bank
A great friend of mine - his company used Silicon Valley Bank as their primary bank. It collapsed. They got bailed out. If they hadn’t he would have lost the last 7 years of accumulated wealth.
Just for the record -
Banks shouldn’t get bailed out - it socializes losses and privatizes gains
Have you paid attention to the amount of unrealized losses banks are carrying from Real Estate? This could cause banking collapse
Arbitrary freezing of assets
The truckers in Canada had their bank accounts frozen - arbitrarily
You don’t own your money when it is in a bank
When you put money in the bank - it is no longer yours. The bank now has an IOU to you. If a shock event occurs, you are likely last on the line to receive your money back.
Bank Bail Ins
In 2013, Greece implemented a "bail-in" during its financial crisis, which forced depositors to share in the cost of bank rescues. Unlike traditional bailouts that rely on taxpayer money (wider spread theft), a bail-in involves converting deposits into equity or reducing the value of deposits to stabilize the financial institution (localized theft)
The Great Taking
Recently it has emerged that the financial system has been putting law in place across multiple countries to completely steal from people under certain shock events.
Inflation - money printing - 10% inflation over 10 years, if your income hasn’t increased your purchasing power is ~40% of what it was. CPI or government measures of inflation are distorted and untrustworthy. A lot of people in finance that I absorb information from say that inflation was way north of 10% for quite a long time
Changing the Rules - The End of the Gold Standard. In 1971 The US stopped allowing paper currency to be exchanged for gold.
Bitcoin - The immaculate Asset
Bitcoin is distinct from cryptocurrencies
Bitcoin provides solutions to the Casino tokens that Government forces us to use:
Money supply that cannot be inflated - Governments steal by increasing money supply
Permissionless - Governments will say you can and can’t buy/do something
Decentralized - The source of all control. Centralization
Divisible
Fast
Guaranteed payments
Secure
The government sees Bitcoin (and other Cryptocurrencies) as a direct threat to their own control.
Since Bitcoin’s inception I see frequent smatterings of:
Fear/Uncertainty/Doubt - “Bitcoin is for drug dealers and black market activities”
Closing of On Ramps / Off Ramps - An on ramp is a way for you to convert from Fiat to Bitcoin. An off ramp is a way for you to convert Bitcoin to Fiat. These are typically incorporated entities that Government can pin point and destroy.
Taxation Government will Tax the shit out of anything they don’t like. I’ve seen alternative Cryptocurrencies penalizing proof of stake rewards.
🥰The Trifecta
The Trifecta - Central Banks, Governments, Big Business lobbyists
They are all in cahoots with one another. They share common interests and work to be mutually beneficial.
For Central Banks and Governments their pain points in their current system are:
Pesky small businesses dealing with Cash are able to take money under the counter and not claim it as income - more juice can be squeezed from that orange
Pesky middle men - Banks are part of the financial system but what if there was a way to cut the middle man? Letting all the juice flow to the top 😉
The Government would like more control over its people. It would love to:
Have insight into anything it deems “illicit”
Be able to directly stop / penalize any one doing “illicit” activities
Inefficiencies and cost of a physical cash system
😍The Opportunity
I believe those that are calling the shots want a consolidation of Central Banks into one mega entity with Governments slowly following suit.
Its harder for governments to do so due to cultural differences that are sticky and hard to shift.
Digitization of Assets on the same platform mean that Central Banks can interoperate with each other, quickly. Central banks are following the makeup of Bitcoin and other Crypto Currencies, copying what they like while leaving the yucky bits that they don’t like.
Bits they want - Control
Bits they don’t want - Freedom
Within a cryptocurrency a key tenet that prevents the abuse of control is Decentralization. Therefore
Centralization is a key ingredient they should add to the recipe for control
The ability to steal is also another key ingredient. Therefore
No max supply is a key ingredient
The ability to improve on execution of Monetary and Fiscal policy would be a huge win for Central Banks and Governments.
Monetary Policy - The actions taken by a central bank to manage the money supply and interest rates
Fiscal Policy - The use of government spending and taxation to influence habits and the economy
If Central Banks and Government could directly read/write to your personal ledger, they could:
Tax you immediately as you get paid
See that you are spending too much on meat, not eating enough insect protein
Stop you from buying tickets to travel
Implement finer and finer levels of Taxation for any number of ideas
If you mix this in with AI - this would be the most enslaving idea I could possibly think of.
Governments across the world are currently building, trialing and rolling out Central Bank Digital Currencies (CBDCs).
☠️CBDC - Risk Recap
Increased surveillance
Control and censorship
Cybersecurity risks - All that juicy data in one place!
Monetary policy manipulation
Loss of Anonymity
Exclusion of the unbanked
Erosion of financial freedom
Centralization of power
Smaller economies might face challenges in maintaining financial sovereignty
Excellent article ! I'd also suggest goldback.com , they off gold within the "bill" it doesn't come with a1099 .
Thank you for this article! Excellent!