Armstrong Economics Blog/Cryptocurrency
Re-Posted Dec 3, 2017 by Martin Armstrong
QUESTION: You have said that the future will be cryptocurrencies. The Bank of Canada has come out and acknowledged what you have been saying that such private issue challenges the government’s profit structure. Do you think electronic money will be viable sooner or later down the road?
ANSWER: Electronic currency is ALREADY the bulk of the money supply. When you deposit $100 in a bank, it lends out $90 from your deposit and your bank statement still reflects you have $100. However, the person who borrowed the money now has $90 in their account. The government did not “print” money to cover that extra $90, rather they just created “electronic” money.
So what is the big thing about cryptocurrencies? The idea is that it is money that will not depreciate and is strangely not “fiat.” Yet, it is no different than the electronic money created by the bank, which is also outside the strict domain of government.
If you just look at the price of Bitcoin, it demonstrates that this is merely a speculative boom indistinguishable from the Dot.COM Bubble, which also reflected a new era in technology. If Bitcoin was truly an alternative currency that was supposed to retain its value, the mere fact that the rice has soared like any stock proves that it is by no means a “store of wealth” that somehow is better than currency in which it must still be converted to use in the bulk of the economy.
If the power grid failed, everyone would be broke. You could not even buy food. Society would revert immediately back to barter. There are risks to any form of electronic money be it a bank or crypto. The government WILL move toward cryptocurrencies THAT THEY WILL CONTROL, not the private sector. I have stated before, they argue electronic money eliminates cash crime from bank robberies, drugs, prostitution, etc., but it introduces more sophisticated hacking computer crimes.
The crime issue is the excuse, but the real issue remains the hunt for taxes. I have to wonder if the government is not behind this entire cryptocurrency phenomenon. Satoshi Nakamoto is the name assigned to this mysterious unknown person or people who designed Bitcoin and created its original reference implementation. Nobody knows who invented this technology. It is entirely possible that this movement is a false flag created by the government to move society to accept the end of tangible money. It is very strange that the person who invented this technology is unknown and has not stepped forward to demand some royalty.