"excruciating economic pain"

Isn't this the bank that backed Trump? I suspect he is quite the credit risk right now...

John :-#)#

Post WW1 Germany embraced insane political ideologies because of mass brain damage caused by hyper-excessive coal burning and heavy metal toxicity. The whole place was in a perpetual haze. Only a fool would think the politics was an accident. We're experiencing a similar effect now, except it's making people stupid versus violently insane.

We are all credit risks now. Trump at least has some real assets, land and buildings.

Cryptocoins are the ultimate absurdity. They are expensive to make and essentially worthless. Like printing paper money on insanely expensive printing presses.

Hear, hear, Deutsche Bank issues a warning? }:->

The next financial crisis in the EU is likely to start at that institution, so letting them issue a warning is on the verge of insult.

The current rate of production of the Federal Reserve Notes is well past the point of no return. Unfortunately, Weimarica is bound to fail. Get used to this vision:

So are fiat currencies, with no exception. They are only as strong as the economies behind them. The north American FRNs are backed by the US army, particularly by its quickly deliverable heavy metal branch, so they are going to stay with us for a while. These of the lesser sort will fall first and violently, no worries. Cryptos at least can't be forged as easily as buying a faster printer. I'm wondering if the recent spike in the lumber price is caused by the FED wholesale purchases. Printing 40% of all the FRNs in existence in just a single year is admittedly an achievement and needs plenty of raw material.

Bullion dealers are even more insane. You send them paper and they send you sound money in return.

Best regards, Piotr

I suspect he is fairly highly leveraged.

What /is/ the key characteristic of money? Simple: it is a /promise/ that you can exchange it at some time in the future for something that isn't money.

If you believe the promise, then the money has value. If you don't believe the promise, then the money is valueless.

That's true for gold, paper, buildings, long numbers, and deciduous forests.

The price of lumber is a direct consequence of the demand for wood pulp to print trillions of dollars.

The dollar is backed by "the full faith and credit of the United States". While that's certainly selling at a discount at the moment, cryptocoins are backed by nothing whatsoever except for the desire to escape government scrutiny and control. (There's considerable excuse for that, of course.)

Cheers

Phil Hobbs

The US doesn't need that much inflation to solve its debt problems. Just 3:1 or some such would do.

Since John Larkin is an ill-informed idiot when he posts about politic and economics his comments really aren't worth repeating. He's silly enough to want to reminds how frequently he gets this kind of stuff grossly wrong. He even approved of Donald Trump - bribed by the ill-advised tax cut that put money in his pocket..

There's some debate about whether the real assets he claims to own are worth more than he owes. Traditionally, crooks like him used the same assets to secure multiple loans for a total of lot more money than the asset was worth, often when the asset wasn't actually worth buying.

Paper money is even more worthless. Gold does have practical uses, but you can't eat it. From that point of view, currency of any sort is worthless, even though having some medium of exchange or other is pretty much essential to any extensive and complicated society.

In fact they've just shut down their nuclear reactors. The energy grid distributes the power that has been generated, and there's no evidence that they are puling down poles and wires.

The proposition that " nuclear energy is obviously the way to go" is one that John Doe embraces, largely because he is a gullible idiot.

Solar power captures the nuclear energy generated by our sun, which doesn't generate dangerously radioactive waste products. So does hydroelectric power. Even the fossil carbon that we dig up and burn was originally generated by same nuclear fusion going on in the sun.

And REprinting those same bank notes as they age?

Exactly. There was a scifi story where "obligations" (obs) were the currency of the planet. People gave (sold) you things, services, etc. based on the obligation it imposed on you. Failing to honor your obligations ended up leaving you ostracized -- once your promise is proven worthless, how do you get folks to "give" (sell) you anything thereafter?

Now that's something with intrinsic value!

The key characteristic of *money* is its being store of value. FRNs have lost that property. It is just a *currency*, like many other on the planet. And the average lifespan of a fiat currency is about 27 years.

Even the pharaohs understood the vale of gold and silver. I guess they wouldn't accept paper FRNs.

Best regards, Piotr

It's more that it is medium of exchange - the "store of value" feature is an incidental consequence of that.

Which is plenty for a medium of exchange. Greshams Law - bad money drives out good - is an obvious consequences of this.

The pharaohs understood that everybody fancies jewelery, and gold and silver make easier-to-care-for jewelery than less noble metals.

They probably understood that you can't eat jewelery, even if you mostly can swap it for food for people who have more food than they need right now.

Being a medium of exchange is another property, but the store of value feature is sort of in conflict with the former. It becomes important when you explicitly refuse to exchange the tender and start accumulating it.

So the Zimbabwe folks must have been the wealthiest on the planet and openly threaten the position of the US dollar. I have all the trillions except for the 20 trillion note, which is a bit rare in the UNC state. The Weimar republic "One hundred billion marks" notes are printed only on one side to save the paint. Another good example of wealth from the printer.

So are the modern Central Banks driven by jewelry fetishists? They are buying gold like crazy now and Basel 3 is only one part of an answer.

Are FRNs edible?

Best regards, Piotr

Hence that brilliant "in rod we trust". At least you cannot print ferrite.

That's much more complex. The US and EU financial markets have been flooded with liquidity and the financial institutions don't know what to do with that deck of speed. So you have the blossoming stock exchange and real estate market in the very center of a collapsing economy. For the same reason cryptos were bound to happen. The downfall will be epic.

Another aspect is that there different types of cryptocoins. The Central Banks are hectically working on their own (Central Bank Digital Currency), so the principle is here to stay. Just the private competition will be eradicated one day. CBDCs can have many interesting features, for instance rumor has it that the Chinese one will have built-in expiry date. The capability of disconnecting you from the system if you don't scream loud enough during your daily "Two Minutes of Hate" is not even worth mentioning.

Only certain coins have been designed to be anonymous, e.g. Monero. All the rest is not so much. The entire registry of bitcoin transactions is open and available to everyone -- that's the idea behind blockchain, after all.

Best regards, Piotr

The key difference is that it no longer is a tinfoil hat conspiracy theory. Deutsche Bank, among others, has brought it to the mainstream.

While that particular bank would better shut up, the message is legitimate.

Best regards, Piotr

Zimbabwe and the Weimar Republic indicate what happens when people don't believe in such "full faith".

The /reasons/ people believe in any forms of money are less important than the belief itself. Not many people claim that belief has to be rational :(

Yup :(