"If crypto is not the answer to our money problems, what is?" Good FT article

Again with the dishonesty. You can twist and turn every which way but the reality is that those banks wouldn't have failed if they didn't employ fractional reserve banking. You can acknowledge that and still wax lyrical about the advantages of fractional reserve but you can't be taken seriously by refusing to acknowledge that basic fact.
Custodia Bank is a bank as well as a custodian. It's entirely relevant. SVB custodied $3B for Circle - and would have been out of pocket on that basis had the government not stepped in.
 
if it wasn't for wheels there would be no car accidents
ditto fuel ditto
ditto roads ditto
it it wasn't for fire we would have no fire deaths
if it wasn't for electricity we would have no electrocutions
etc. etc. etc.
if it wasn't for lending out deposits we would have no bank runs (there, I have acknowledged the tautology, does that mean I escape the cult Inquisition)
If bitcoin reaches an adoption level where we have intermediaries (banks) accepting bitcoin deposits and onward lending them the fact that this is happening with bitcoin in no way rules out bank runs, actually bank runs would be more likely as the printing press would not be there as a possible bail out mechanism,
Take away point - banks lending deposits (FRB) is totally irrelevant to the bitcoin vs fiat debate.
 
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You may not believe this but I actually am conscious of avoiding car accidents by not travelling by car as much as many people do. It's one of the most likely ways you'll be seriously injured or killed that you can actively avoid.
 
You may not believe this but I actually am conscious of avoiding car accidents by not travelling by car as much as many people do. It's one of the most likely ways you'll be seriously injured or killed that you can actively avoid.
Well, this is an interesting line of thought. Lets take that forward.

Lets say you were one of a gazillion people in the world that assumes (wrongly) that there is no counterparty risk in depositing your savings in a bank. Let's say like a gazillion people out there today you have no earthly notion what fractional reserve banking is - but someone brings you up to speed. If all you wanted to achieve was to maintain your savings and maybe keep them at par with inflation, if someone offered you a way to do that without the counterparty risk, would you? I know I would.

And any merits of fractional reserve banking (which of course there are) doesn't change that. The widespread knowledge of and familiarity with such an option may just mean that those responsible for the TradFi system act competently and safeguard the savings of ordinary people and the funds of SMEs without exception. Incentives can be powerful. Optionality can be powerful.
 
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You may not believe this but I actually am conscious of avoiding car accidents by not travelling by car as much as many people do. It's one of the most likely ways you'll be seriously injured or killed that you can actively avoid.
I take the analogy. As you have already pointed out the need to use banks for custody is more acute where the only direct access to the monetary base is physical notes and coin than where it is encrypted digital. Yet it has also been pointed out that this argument does not apply to the big girls.
 
Junior Cert Lesson on Banking and Money
It is the human economic condition that there will always be those that have more money than they need right now and those who need the money now and will pay back later.
The interest rate is the mechanism for matching these two constituencies.
But there is a very basic mismatch between the two. The lenders would much prefer immediate access to their money on notice. That would be useless to borrowers who will have utilised the money, for example in buying a house. The lender would also need to trust the borrower.
Enter trusted intermediaries - the banks, who can accommodate this mismatch.
If bitcoin aspires to one day grow up to be "money" it will have to accept that it too will be forced to play these adult games - people will not be content to hold large sums of a stable native bitcoin when they can hold fiat instead earning an interest rate. As it happens there is absolutely nothing in bitcoin's DNA to prevent it doing so, no matter how much it is told that such a practice is Satanic.
 
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How Marquess Marmalade Failed His Junior Cert (and other short stories)

We regret to inform the House of Marmalade that the Marquess failed his Junior Cert. Here's why. He droned on about something that had nothing to do with the discussion at hand. The question that he was set was how did the Fed screw up such that 108 banks are now at risk of going the way of SVB, endangering customer deposits and/or resulting in the money printer being switched back on? Nothing in what he wrote addressed that - in fact, quite the opposite -> "Enter trusted intermediaries". The whole point is that they're NOT trusted, they're not deserving of that trust.

Other than that, the Marquess seems to think that everyone that has a current account or demand account is looking to 10x their funds or some such rather than safely retain those funds. The Marquess fails to understand that for those that are not looking to 10x their funds (nor gain a few percent), those folks would benefit from a system where they have control over their funds and these "trusted intermediaries" that he talks about can't just steal them to pay for their risk management failures.

The Marquess waxes lyrical about the joys of earning interest but fails to address the event at hand -> i.e. what's the bloody point when your money just went bye-bye due to a system that can't be trusted. To that end, the Marquess has failed his Junior Cert. That said, we take pride in guiding condescending blaggards to adulthood and in this instance, we won't advertise the F he got in 'Banking and Money' lest he might embarrass himself when he becomes a Duke.

One last topic of note, you might want to send the young Marquess for some psychological testing as he continually refers to "cult this" and "satanic that", labeling those that hold a different opinion to his own with these tags
 
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The cultists are certainly having their day in the sun. It was, after all, the GFC that triggered the birth of bitcoin and now they are wetting themselves at the prospect of the second coming. It is a wonder bitcoin is still more than 50% below its ATH.
 
It is a wonder bitcoin is still more than 50% below its ATH.
Apparently its not as you said there was only a 50% chance of it hitting $20,000 ever again and 25% chance of it ever hitting $30K again. Also, you said over about fifty posts in 2018/9 that it would never hit its previous ATH price of $20K. The ATH price then like the one last year was produced in short-lived short-term hype cycle runs, in the first one over a number of days and in the second over a number of weeks...but no matter, use them Duke. Bitcoin will provide you with a new ATH figure to aim at in the future.

Now do the same comparison with tech stocks - or we don't apply the same standards there??

How about bank stocks?


Bitcoin price action may be volatile but its monetary system is entirely predictable, transparent and calm. Fiat money is less volatile as they can print and manipulate it but the system on which it runs is all over the place, opaque, inequitable and held together with duct tape.

Silvergate, Silicon Valley Bank, First Republic, Credit Suisse, Deutsche Bank...who's next? How about Capital One and Pacific Western Bank?
Still, my words don't speak to you so here's the main stream financial media for you in their words:

"Financial crises happen when the value of assets people think the financial system holds does not add up to the sum of all claims they think they have on it." Also known as fractional reserve banking and a highly leveraged banking system.
 
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My dear @tecate I see you are really excited at the prospect of the second coming (of the GFC). I shouldn't really spoil your fun but what is happening now is light years different from the GFC and completely less of a threat to the established order, in fact no threat - sorry to disappoint you.
Both situations are driven by issues with the asset side of the bank balance sheet. Under the GFC it was sub-prime mortgages and silly lending to developers. These were genuine asset failures, and the amazing thing is the system survived, no more amazing than in Ireland where the bank asset failures were astronomical.
This time round we are talking about government bonds - not sub-prime mortgages.
Yes, mark to market reduces the "value" of Government bonds when interest rates rise but what is being missed here is that the market value of the liabilities i.e. deposits is kept at their face value because they are callable at notice. But the interest paid on deposits is very small and a mark to model at today's high interest rates and allowing for average duration of deposits would seriously reduce their value, more than compensating for the loss of (market) value on the assets.
There is of course a liquidity issue and a possibility of a bank run by the uninsured big girls. But this is precisely the sort of situation that Central Banks can handle no problem. No chance of those big girls following Saylor into bitcoin.
Apologies again for making you put the champagne back on ice - maybe next time.
 
My dear @tecate I see you are really excited at the prospect of the second coming (of the GFC). I shouldn't really spoil your fun but what is happening now is light years different from the GFC and completely less of a threat to the established order, in fact no threat - sorry to disappoint you.
Apologies again for making you put the champagne back on ice - maybe next time.
This is a fiction. I'm not "excited" or putting champagne on ice or any such other nonsense. The same way as I'm not in a "cult" and I don't think that fractional reserve banking is "the devil". And I understand - I can keep pointing out these things to you and you'll choose to ignore them because you want to construct a certain counter-party to this discussion - that has never appeared here. But you do you Duke.

Both situations are driven by issues with the asset side of the bank balance sheet. Under the GFC it was sub-prime mortgages and silly lending to developers. These were genuine asset failures, and the amazing thing is the system survived, no more amazing than in Ireland where the bank asset failures were astronomical.
This time round we are talking about government bonds - not sub-prime mortgages.
Yes, mark to market reduces the "value" of Government bonds when interest rates rise but what is being missed here is that the market value of the liabilities i.e. deposits is kept at their face value because they are callable at notice. But the interest paid on deposits is very small and a mark to model at today's high interest rates and allowing for average duration of deposits would seriously reduce their value, more than compensating for the loss of (market) value on the assets.
I mean you raise a consideration I simply haven't given a moments thought to. You seem to think that what's going on right now is only an issue if its as big a crapfest as the GFC? I mean, firstly I think we should wait for the whole thing to play out before you reach for the measuring tape.

Beyond that, as it stands today, its big enough of an issue to underscore the deficiencies in the conventional system that over a number of years, you refuse to acknowledge. And as this has unfolded (with this post and your previous posts) not only will you not acknowledge those blemishes but you'll go into these multi-post defenses of how nobody should dare point out that fractional reserves are at the heart of what's going down right now.

Secondly, it has almost fully undone the entire 9 months worth of fiscal tightening that took place, in the space of a couple of weeks. That's significant from a Bitcoin perspective. We've had someone else here claim many months ago that the good times were over and it would be sober monetary policy from here on in. The system is broken and they can't stop printing.

Thirdly, this recent episode of discussion was sparked off by people claiming that crypto was to blame for this nonsense....and we had those in high office distributing those lies - until even for the uninformed they weren't believable any more.

There is of course a liquidity issue and a possibility of a bank run by the uninsured big girls.
The liquidity problem is never an issue for very long in the fiat world - they just turn the taps back on. So we're in agreement - there's no big problem here (while we keep kicking that can down the road). Here's Agustin giving an indication of how much liquidity is available - that should be enough, right?
But this is precisely the sort of situation that Central Banks can handle no problem.
I have full faith in your comment and in their ability to go and shake some more green off the magic money tree. :-D

No chance of those big girls following Saylor into bitcoin.

For something that isn't going anywhere, it seems to be living rent free in a lot of headz at the highest of levels these days..lol
I used to post the odd update on developments in the space back in the 2019 bear market but those developments just became so numerous I didn't see the point anymore. But I'll make an exception - related to your Saylor point today.

This morning Nasdaq told us it was going to become a crypto custodian and would have that up in running by Q2, 2023. An awfully strange move given that we're told that crypto is done and dusted. Also today, the Financial Accounting Standards Board (FASB) in the US came out with a report where they're proposing amendments to their current standards on crypto-related accounting, taking a much called-for fair value approach to valuing and accounting for crypto going forward. This is something Saylor and others have flagged as requiring an update so that Corporate Treasuries can more easily work with digital assets. Onwards and upwards Duke.
 
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@tecate
Try tossing a coin (if the cult permits you to handle such idolatry). 50% chance it will come up Heads. Try it a few times, you will see that it can happen. There is even a 25% chance it will come up Heads twice in a row - hard to believe though you might find that.
The Minister of Finance in Latteland must be tearing her hair out. After a year with inflation of 250% she now has 6 months with deflation of 50%. I bet she wishes she had a Central Bank, not that that she dare mention the blasphemy.
 
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So it seems on reflection rather than provide this "wisdom" you'd have preferred to have said "I've no earthly idea." I guess you can go with that next time. ;)
 
More evidence that crypto is most useful for the wrong kind of people:

Israel Seizes Binance Accounts Allegedly Linked to ISIS, Hamas​


An Israeli anti-terror finance squad halted suspicious Binance accounts the government says are linked to Islamic State and Hamas, two notorious extremist groups with a history of violence and terrorism, forcing Binance to once again defend its compliance record.

The agency seized some 190 accounts on Binance over the past 18 months, Reuters reported on May 5, citing documents from Israel’s counter-terror authorities. Two of those accounts were tied to Islamic State and others were linked to the infamous Hamas group.
 
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