PQC: Read these two articles below if you already understood the “blockchain technology” and can differentiate between Government Crypto, Private Crypto, and Public Crypto. If not please educate yourself so that you will not fall into their tricks!

Date: June 17, 2019

Cryptocurrencies are winning. If you need proof look no further than Facebook’s proposed Libra stablecoin. While the details are scant, the salient point is Libra is another attempt by the current banking establishment to slow the flow into the world of hard money.

In this respect Libra is no different than Ripple or dollar-settled Bitcoin futures contracts. These are products designed to slow the exodus out of the shadow banking system. Ripple is a way to lower foreign exchange fees and off-chain futures settlement is a way to control Bitcoin prices and exacerbate volatility to slow crypto-adoption by so-called normies.

Now we have Facebook and Libra. As Caitlin Long points out in her excellent Forbes’ article, Libra will get major financial players backing it. The goal is to become a standard creator in the vein of the Dow Jones Committee or the IMF since it will determine the basket weighting of Libra.

Date: June 17, 2019Author: Tom Luongo0 CommentsTweet

Cryptocurrencies are winning. If you need proof look no further than Facebook’s proposed Libra stablecoin. While the details are scant, the salient point is Libra is another attempt by the current banking establishment to slow the flow into the world of hard money.

In this respect Libra is no different than Ripple or dollar-settled Bitcoin futures contracts. These are products designed to slow the exodus out of the shadow banking system. Ripple is a way to lower foreign exchange fees and off-chain futures settlement is a way to control Bitcoin prices and exacerbate volatility to slow crypto-adoption by so-called normies.

Now we have Facebook and Libra. As Caitlin Long points out in her excellent Forbes’ article, Libra will get major financial players backing it. The goal is to become a standard creator in the vein of the Dow Jones Committee or the IMF since it will determine the basket weighting of Libra.

It won’t, however, be a cryptocurrency in the traditional sense. It won’t have a limited supply, defined inflation rate or any commodity character whatsoever.

Proof-of-work? Phsaw! Every good Friedmanite knows that opportunity cost in creating new monetary units is simply wasted capital!

Only mouth-breathing rubes stuck in the 19th century think that’s important.

Instead Libra’s supply will be regulated just like every other fiat currency, by a central authority. Facebook already wants all your data, whether you’re an account holder or not.

Now they want to control your currency as well.

The Central Bank of Facebook

When you extrapolate out the power of Facebook’s platform to where this coin will be marketed to, emerging markets, Libra is looking for all the world like Facebook’s application into the cartel of price-setting central banks.

Ms. Long even hints at this in her article. In fact it’s her first of six important points about Libra.

1. Facebook’s cryptocurrency will be a powerful force for good in developing countries, which is where Facebook intends to market the product.

Why? Because central banks in developing countries are notorious for their lack of discipline in maintaining the value of their fiat currencies, which too often lose purchasing power. The best example among many is Venezuela, which is experiencing hyperinflation worse than that of Germany after World War I. By providing citizens of developing nations with access to a store-of-value that is more reliable than their government-backed currencies, Facebook’s cryptocurrency will indirectly exert fiscal and monetary discipline on developing nations—which will improve the lives of many people globally.

Leaving aside the fact that much of Venezuela’s hyperinflation stems from the U.S. sanctioning and cutting Venezuela off from the global banking system, she has a strong point.

Governments are terrible at managing the value of their currencies for all the reasons Austrian economists have laid out in painstaking detail for decades.

Think this through for five seconds and you get to the obvious conclusion. Facebook and the Wall St. banks which actually control it are creating a coin to do away with national currencies in the countries most vulnerable to the Fed’s control over the global monetary system.

This is the next step in the quest to create a world currency.

And if the current system’s long-term health is threatened by, oh I don’t know maybe, the implosion of a bunch of SIFI banks like Deutsche Bank sparking a global sovereign debt crisis, then a stablecoin like Libra to replace a discredited dollar/euro/yen/pound makes some perverse sense.

If the plan has always been, as Jim Rickards has been saying for years, that the response to a collapsing monetary system would be national currencies replaced with IMF SDR’s as the reserves of the banking system, then having a ‘cryptocurrency’ Trojan Horse to bait and switch with has to be part of the plan to maintain confidence in the institutions that fomented the crisis in the first place.

And what better platform to do that with than Orwell’s Panopticon itself, Facebook?

The Crypto-Antibody

As I pointed out at during last year’s meltdown in cryptocurrencies, Bitcoin was needed to replace these Ponzi schemes masquerading as money.

… Bitcoin was born out of the extreme fraud of the financial system under Greenspan and Bernanke.

They used leverage ratcheted up post-Y2K to levels which could only be supported through legislative fiat to wall off capital fleeing the system.

And the response was a group of folks applied the teachings of Austrian Economics and Ludwig von Mises’ Regression Theorem to create a digital asset which became more resistant to fraud the more it was adopted.

The result was Bitcoin.

Bitcoin was a catastrophic mutation.  A thing born out of necessity to free human beings from a central issuing authority of new monetary units.  That relationship needs to be broken if we are going to free ourselves from the cycle of tyranny of the few at the expense of the many

In short, Government ineptitude and/or fundamental evil created Bitcoin.

This is the essence of what Ms. Long talked about around the same time as that post in her Mises Weekend talk “Will Blockchain Free Us from Wall St.”

It’s a wonderful talk that focuses on the domestic reasons why the dollar is yet to collapse and why Bitcoin provides the framework in which we can craft money that isn’t controlled by a central issuing authority.

This is the key point that she mentions but doesn’t emphasize in her talk. For the first time in history we have been presented the option to choose money whose new units are not subject to the whims and corruption of humans.

That’s set by math. And math both determines the rate of inflation and the rate of trust developed by the money itself. This continues to be Bitcoin’s biggest advantage as long as the economic incentives to maintain the network remain positive and are not perverted.

A Farewell to Kings

It means no philosopher kings deciding the rate of inflation or deflation. It means minimizing rent-seeking behavior. It means an end to counterfeiting as we have experienced in the past.

But as I said earlier, things like off-chain settled futures contracts create ‘Paper Bitcoins’ which suppress its exchange rate versus the U.S. dollar. They are an attempt at counterfeiting through through leverage. So are stablecoins like Tether, if not managed properly and, don’t kid yourself, Libra.

Facebook and Wall St. are banking on Facebook’s pervasiveness to drive mass adoption to build an adjunct to the existing financial system which slows the growth of the real cryptocurrency marketplace.

They value blockchain to lower costs and replace antiquated clearing systems of increasingly opaque ledgers, as Ms. Long points out in her talk. But they still want to retain control over the value of the money itself and what that money represents.

They want to retain the system of perverse incentives they have created which rolls up the wealth of the world to them.

It was, as I said earlier, these perverse incentives that created Bitcoin in the first place. And with each new attempt to co-opt the technology and/or suppress its usage through ridiculous laws they validate cryptocurrencies all the more.

Which is Ms. Long’s conclusion in her recent article:

6. Facebook’s cryptocurrency will turn out, in the end, to be a Trojan horse that benefits Bitcoin.

During a period of monetary upheaval, one in which the faith in the Institutional Order tends towards zero, there will be a fundamental shift away from public-issued money as trusted media of exchange.

If Martin Armstrong is correct and we are approaching the end of a mega-cycle in Public trust and a massive shift in consciousness to Private assets as stores of wealth, then it again makes sense for the powers that be, those I like to call The Davos Crowd to create a private-in-name-only “cryptocurrency” to co-opt that shift and remain in control.

But it also means that these same people, who have fed at this trough for so long, aren’t any more capable of managing it successfully than they were the dollar and the euro.

So we really do have little to fear from Facebook and Libra in the long run, because as we know from the Trojan Rabbit, it came back to land squarely on their heads.

Now we have Facebook and Libra. As Caitlin Long points out in her excellent Forbes’ article, Libra will get major financial players backing it. The goal is to become a standard creator in the vein of the Dow Jones Committee or the IMF since it will determine the basket weighting of Libra.

It won’t, however, be a cryptocurrency in the traditional sense. It won’t have a limited supply, defined inflation rate or any commodity character whatsoever.

Proof-of-work? Phsaw! Every good Friedmanite knows that opportunity cost in creating new monetary units is simply wasted capital!

Only mouth-breathing rubes stuck in the 19th century think that’s important.

Instead Libra’s supply will be regulated just like every other fiat currency, by a central authority. Facebook already wants all your data, whether you’re an account holder or not.

Now they want to control your currency as well.

The Central Bank of Facebook

When you extrapolate out the power of Facebook’s platform to where this coin will be marketed to, emerging markets, Libra is looking for all the world like Facebook’s application into the cartel of price-setting central banks.

Ms. Long even hints at this in her article. In fact it’s her first of six important points about Libra.

1. Facebook’s cryptocurrency will be a powerful force for good in developing countries, which is where Facebook intends to market the product.

Why? Because central banks in developing countries are notorious for their lack of discipline in maintaining the value of their fiat currencies, which too often lose purchasing power. The best example among many is Venezuela, which is experiencing hyperinflation worse than that of Germany after World War I. By providing citizens of developing nations with access to a store-of-value that is more reliable than their government-backed currencies, Facebook’s cryptocurrency will indirectly exert fiscal and monetary discipline on developing nations—which will improve the lives of many people globally.

Leaving aside the fact that much of Venezuela’s hyperinflation stems from the U.S. sanctioning and cutting Venezuela off from the global banking system, she has a strong point.

Governments are terrible at managing the value of their currencies for all the reasons Austrian economists have laid out in painstaking detail for decades.

Think this through for five seconds and you get to the obvious conclusion. Facebook and the Wall St. banks which actually control it are creating a coin to do away with national currencies in the countries most vulnerable to the Fed’s control over the global monetary system.

This is the next step in the quest to create a world currency.

And if the current system’s long-term health is threatened by, oh I don’t know maybe, the implosion of a bunch of SIFI banks like Deutsche Bank sparking a global sovereign debt crisis, then a stablecoin like Libra to replace a discredited dollar/euro/yen/pound makes some perverse sense.

If the plan has always been, as Jim Rickards has been saying for years, that the response to a collapsing monetary system would be national currencies replaced with IMF SDR’s as the reserves of the banking system, then having a ‘cryptocurrency’ Trojan Horse to bait and switch with has to be part of the plan to maintain confidence in the institutions that fomented the crisis in the first place.

And what better platform to do that with than Orwell’s Panopticon itself, Facebook?

The Crypto-Antibody

As I pointed out at during last year’s meltdown in cryptocurrencies, Bitcoin was needed to replace these Ponzi schemes masquerading as money.

… Bitcoin was born out of the extreme fraud of the financial system under Greenspan and Bernanke.

They used leverage ratcheted up post-Y2K to levels which could only be supported through legislative fiat to wall off capital fleeing the system.

And the response was a group of folks applied the teachings of Austrian Economics and Ludwig von Mises’ Regression Theorem to create a digital asset which became more resistant to fraud the more it was adopted.

The result was Bitcoin.

Bitcoin was a catastrophic mutation.  A thing born out of necessity to free human beings from a central issuing authority of new monetary units.  That relationship needs to be broken if we are going to free ourselves from the cycle of tyranny of the few at the expense of the many

In short, Government ineptitude and/or fundamental evil created Bitcoin.

This is the essence of what Ms. Long talked about around the same time as that post in her Mises Weekend talk “Will Blockchain Free Us from Wall St.”

It’s a wonderful talk that focuses on the domestic reasons why the dollar is yet to collapse and why Bitcoin provides the framework in which we can craft money that isn’t controlled by a central issuing authority.

This is the key point that she mentions but doesn’t emphasize in her talk. For the first time in history we have been presented the option to choose money whose new units are not subject to the whims and corruption of humans.

That’s set by math. And math both determines the rate of inflation and the rate of trust developed by the money itself. This continues to be Bitcoin’s biggest advantage as long as the economic incentives to maintain the network remain positive and are not perverted.

A Farewell to Kings

It means no philosopher kings deciding the rate of inflation or deflation. It means minimizing rent-seeking behavior. It means an end to counterfeiting as we have experienced in the past.

But as I said earlier, things like off-chain settled futures contracts create ‘Paper Bitcoins’ which suppress its exchange rate versus the U.S. dollar. They are an attempt at counterfeiting through through leverage. So are stablecoins like Tether, if not managed properly and, don’t kid yourself, Libra.

Facebook and Wall St. are banking on Facebook’s pervasiveness to drive mass adoption to build an adjunct to the existing financial system which slows the growth of the real cryptocurrency marketplace.

They value blockchain to lower costs and replace antiquated clearing systems of increasingly opaque ledgers, as Ms. Long points out in her talk. But they still want to retain control over the value of the money itself and what that money represents.

They want to retain the system of perverse incentives they have created which rolls up the wealth of the world to them.

It was, as I said earlier, these perverse incentives that created Bitcoin in the first place. And with each new attempt to co-opt the technology and/or suppress its usage through ridiculous laws they validate cryptocurrencies all the more.

Which is Ms. Long’s conclusion in her recent article:

6. Facebook’s cryptocurrency will turn out, in the end, to be a Trojan horse that benefits Bitcoin.

During a period of monetary upheaval, one in which the faith in the Institutional Order tends towards zero, there will be a fundamental shift away from public-issued money as trusted media of exchange.

If Martin Armstrong is correct and we are approaching the end of a mega-cycle in Public trust and a massive shift in consciousness to Private assets as stores of wealth, then it again makes sense for the powers that be, those I like to call The Davos Crowd to create a private-in-name-only “cryptocurrency” to co-opt that shift and remain in control.

But it also means that these same people, who have fed at this trough for so long, aren’t any more capable of managing it successfully than they were the dollar and the euro.

So we really do have little to fear from Facebook and Libra in the long run, because as we know from the Trojan Rabbit, it came back to land squarely on their heads.

What Facebook’s Cryptocurrency Means: 6 Predictions

Caitlin Long

What does Facebook’s new cryptocurrency mean? According to news reports, Facebook will shortly launch Libra, a global cryptocurrency available to users of its suite of platforms (including Messenger and WhatsApp). Presumably any merchant with an account on these platforms could transact in the cryptocurrency with customers who also have accounts—for anything, such as online purchases, and physical-world purchases such as groceries and restaurants. Facebook this week revealed plans to announce details on June 18 and confirmed its cryptocurrency will be a “stablecoin” whose value will be tied to a basket of fiat currencies. Based on Facebook’s statement and several anonymous comments made by people tied to the project in interviews with The Information, here are my six predictions.

  1. Facebook’s cryptocurrency will be a powerful force for good in developing countries, which is where Facebook intends to market the product.

Why? Because central banks in developing countries are notorious for their lack of discipline in maintaining the value of their fiat currencies, which too often lose purchasing power. The best example among many is Venezuela, which is experiencing hyperinflation worse than that of Germany after World War I. By providing citizens of developing nations with access to a store-of-value that is more reliable than their government-backed currencies, Facebook’s cryptocurrency will indirectly exert fiscal and monetary discipline on developing nations—which will improve the lives of many people globally.

  1. Facebook will pay interest to holders of its cryptocurrency, and this will eventually lead to populist calls to repeal corporate subsidies to banks at the heart of the US banking system.

I’ll go out on a limb and predict Facebook will pay interest to users of its cryptocurrency. Why? Because the assets backing the cryptocurrency will generate interest income (especially if, according to some reports, that basket includes “low-risk securities”). If Facebook doesn’t share these interest spoils with users, a chorus of critics will loudly publicize how much money Facebook and its partners are pocketing.

What’s the magnitude of the interest income at play? If Facebook parks the entire US dollar balance at the Federal Reserve via one of its bank partners, for example, it could earn 2.35% risk-free—that’s $235 million for every $10 billion deposited into its cryptocurrency. These profits will quickly turn into a new hot potato for Facebook politically, if not shared with users.

But there’s a side benefit—the brouhaha this issue could create would reveal the magnitude of corporate welfare at the heart of the US banking system. The 2.35% number is the actual interest rate the Fed pays its member banks for interest on excess reserves (IOER)—and this year it’s projected to amount to $36 billion of corporate welfare paid to US banks, which equates to roughly half the amount the US spends on its food stamp program. Just imagine how critics will have a field day shouting “corporate welfare for Facebook” if Facebook and its partners simply pocket that amount.

It’s true that other stablecoin issuers almost always pocket the float rather than sharing it with their customers. But Facebook’s stablecoin will probably be too big and visible to get away with this—so it’s unlikely to be able to sweep the issue under the rug. That’s a good segue to the next point.

  1. Facebook’s foundation will grow to garner big power in global capital markets.

Facebook plans to cede governance control of its project to an independent foundation, which it recently formed in Switzerland. This is a positive—not only does it give Facebook defense against antitrust allegations, but it also helps reduce the degree of its cryptocurrency’s centralization. This foundation is likely to become a huge power within global capital markets relatively quickly—because it will do what central banks do, which is to define the basket weights for the fiat currencies to which the stablecoin is pegged and manage the assets to ensure the peg doesn’t break. There are plenty of powerful “basket-setters” in capital markets, and their power to move markets can be significant—think of the committee that defines components of the Dow Jones Industrial Average Index (DJIA) or the S&P 500 Index, or central banks that peg their currencies to baskets (such as China’s PBOC).

Along these lines, at first blush it struck me as backwards that Facebook is selling the right to participate in its network for $10 million each, since usually the transaction processers (“miners”) in cryptocurrency markets are paid for their services rather than need to pay-to-play. But, remember #2—there’s a big pot of interest income for all of them to divide among themselves, especially if they don’t pay interest to users, and a lot of foreign exchange trading volume is at stake. No wonder why dozens of banks will potentially be involved.

  1. Facebook will face regulatory uncertainty—which will shed light on many outdated financial regulations in the process.

Is Facebook’s cryptocurrency a security? If it is, will users face the absurdity of needing a US brokerage account to buy a cup of coffee with it? Will Facebook catch breaks from regulators that smaller start-ups haven’t—because of the tax data honeypot Facebook’s project will generate for governments? That’s a good segue to the next prediction.

  1. Facebook’s regulatory reporting program will open all kinds of interesting discussions.

We may be about to find out how many of Facebook’s 2.3 billion users are real—since users of its cryptocurrency would need to prove their identity and pass know-your-customer compliance requirements. The Information story noted Facebook “plans to provide more stringent forms of identity verification and fraud detection than do most cryptocurrencies.”

But there’s more. Discussions about Facebook’s data privacy and corporate power are about to extend to money. Grab the popcorn!

This will open all kinds of conversations about the extent of data privacy, financial privacy, overseas asset reporting and tax compliance and reporting burdens—and could potentially challenge the extra-territorial reporting requirements imposed by the US government on non-US businesses. Governments everywhere will view Facebook’s cryptocurrency as a huge honeypot of data about how users spend money—with all the privacy and tax reporting implications that data honeypot entails, because every transaction would be traceable by governments. This would give certain officials what they’re hoping for, which is the ability to trace, monitor and analyze every dollar spent rather than piecing together piecemeal reports (currently, banks file suspicious activity reports for transactions above $10,000). Here’s one example in a statement made during a May 2019 speech by Sigal Mandelker, Under Secretary for Terrorism and Financial Intelligence:

“When FinCEN analyzed millions of dollars of remittance transactions with suspected links to terrorism, it found they averaged less than $600 each. In an era where a radicalized suicide bomber can bring a tragic end to the lives of hundreds for nothing more than the price of duct tape, a vest, and supplies, we cannot afford to allow any money to flow to terrorists.” (emphasis added)

Moreover, these reporting requirements are about to grow substantially once the Financial Action Task Force recommends that all financial transactions (including cryptocurrencies) embed data about the beneficial owner in each transaction, for both the sender and receiver.

As I’ve explained in a previous Forbes.com post, I doubt the data dragnet required by US reporting requirements would survive a constitutional challenge. How interesting if Facebook were at the center of such a challenge. Would it fight or cooperate??

  1. Facebook’s cryptocurrency will turn out, in the end, to be a Trojan horse that benefits bitcoin.

Here’s my biggest prediction: Facebook’s foray into cryptocurrency will end up benefiting bitcoin. It will take time, but Facebook will greatly accelerate the pace of teaching people about cryptocurrencies. And when this happens, more people will turn to bitcoin for one simple reason—bitcoin is scarce, while Facebook’s cryptocurrency is not. People will migrate over time to the most honest ledger for storing their hard-earned wealth—and that’s not fiat currencies or derivatives thereof, including Facebook’s cryptocurrency.

This phenomenon actually happened in Venezuela, as early bitcoiner Nick Spanos recently pointed out to me. When the Maduro regime introduced the ill-fated petro cryptocurrency, the government made a concerted effort to educate Venezuelans about cryptocurrencies—and it correlated to a spike in bitcoin use by Venezuelans.

Facebook’s foray into cryptocurrency will likely end up being a beneficial detour on the path to broader bitcoin adoption. Bring it on!

Introducing Forbes Blockchain 50: Learn about the companies investing in the tech that will speed up business processes, increase transparency and potentially save billions of dollars. Caitlin Long Contributor

I’m a 22-year Wall Street veteran who has been active in bitcoin since 2012, and whose passion is a fair and stable financial system. I saw inaccuracies in Wall Street’s…

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