COMMENT: Hi Martin, I really love your work. You are the only one financial guy I follow. Your power is obviously your prediction computer program Socrates which I use every day. I understand that your other posts are just your opinions and I would like to point out some of the flawed arguments you make about Cryptocurrencies( in my humble opinion) as I would really like to see you put a little more effort to study them if you are interested in this field

1) As you said many times. The majority must be wrong in order for big moves to happen. Well, I can see that this might be the case for cryptos.

2) Government can just kill Cryptos by banning them. Well, they can but they would have to do it simultaneously. Which will never happen. If US ban cryptos, all that will happen is that ale IT specialist and all money created in this new industry will shift elsewhere. There is no benefit at doing this. It is the same if any state would ban Internet back at 90ies. They would get isolated. Also, keep in mind that law which is not enforceable is not a law. People will just ignore it. You cannot ban cryptos, same as you cannot ban torrents or internet.

3) Bitcoin cannot be used as currency because the economy needs fractional lending to create money and elastic money supply. That is true. Number of Bitcoins is fixed. That is why Bitcoin in the crypto world is called digital gold.

However, there are other cryptos which can fulfill this role easily. That is why we have hundreds of them and each is experimenting with different branches of society. For example, there are cryptos which have steady inflation mechanics build into them. And suddenly there you have predictable inflationary money supply which everyone can predict. I can remember you actually rooted for this idea – Why do we have taxes after all? The more easy way would be if the state just prints its money it wants to spend, for example, it will say that it will print 30% of GDP each year. Well, this is easily achievable by cryptocurrencies.

You can do ANYTHING with them. They are protocols, programs and they can take a shape of whatever you like. Their common trait is that they do not need a central authority to operate, they do not need hierarchy, they use flat hierarchy. That is the 1st time on this planet we can do this kind of stuff without hierarchy. I hope this message will get to you. Please do more research on cryptos.

Do not get obsessed with bitcoin. It is just one of the players. It is pain for me too see your posts which lacks more insight into this subject as I know you are a brilliant mind.

Best, Jan

REPLY: My skepticism of cryptos becoming the world monetary system is a question of political power, not technology. You also have to understand the law and how they use it to manipulate events. Let’s look at how they broke up the South and segregation. Each state passed its own laws and dealt with segregation in their own way. Then in Washington, the question was State Rights v Federalism. Then a brilliant idea popped into their heads. Hey – there are no State Rights! They suddenly used the Supremacy Clause in the Constitution to nullify anything a state does.

The Supremacy Clause of the United States Constitution (Article VI, Clause 2) establishes that the Constitution, federal laws made pursuant to it, and treaties made under its authority, constitute the supreme law of the land. … Even state constitutions are subordinate to federal law.

Once they discovered that power, they have used it ever since. Take marijuana. The Feds put people in prison for selling it. Some are there for life no less. Then the reality is that marijuana is by no means dangerous and is even beneficial in certain medical conditions. Cocaine used to be the ingredient in Coka Cola which was named back in 1885 for its two “medicinal” ingredients. These secret ingredients were an extract of coca leaves and kola nuts. The original drink formula was a secret. Consequently, the drink unquestionably contained some cocaine in its early days. There were taxes on opium, cocaine, and marijuana. The Marihuana Tax Act of 1937 was overturned by Congress in 1970. From that period on, after the Fed used the Supremacy Clause against segregation in the South, they then applied to drugs.

I don’t think you appreciate that when it comes to revenue, the governments will get very aggressive. I have stated before I was one of the three largest market makers in gold – perhaps the biggest. The IRS walked into my office and simply said that they classified me as a bank because gold was not officially demonetized. Therefore, I had to comply with the same reporting as a bank and tell the IRS every client who bought or sold more than $10,000. They said the fine was $50,000 per transaction I had failed to report up to the full amount of the transaction. I asked did they just want the keys to the business? They then said they understood I did not realize I was a bank so they would forego the penalties if I let them in to audit all my customers. I decided to retire. It was a joke.

They have already done the same thing to Coinbase. They have declared Bitcoin miners to be financial institutions the same as they did with me. They have focused on requiring you to declare if you have more than $10,000 in cryptocurrencies when traveling as if you had that cash in your pocket. If you fail to tell them you have that and they discovered you failed to report it, that will be jail-time and they confiscate everything you have. The crime will be a failure to report the same as it is in income tax. The crime is not PAYING taxes, the crime is FAILURE TO FILE. This is the same. It is not a crime to “own” cryptocurrencies, the crime will be a failure to declare you have them when traveling.

This idea that we can overpower governments and eliminate central banks may sound great to some and no central ledger. What you are really advocating is a single currency for the entire world that eliminates governments. Do you really think they will just stand down quiet?

This is why I say they are an ASSET CLASS. Calling them a “currency” will only bring them down against everyone using laws to devastate whatever you are doing. You cannot win that battle. They own the judges as well.

None of the big IT firms are backing blockchain. This is the reason. You cannot dance with the devil and expect to win – IMPOSSIBLE!

Cryptocurrencies are an asset class and should remain in that category. You can trade them and make money. That’s all good. Will one emerge and overturn the world? Not without blood in the streets. You are taking on the most ruthless opponent that exists. There is no rule of law that will save you. You have ZERO rights. Everyone thinks you have the 5th Amendment right to remain silent. It does not exist whenever they want to ignore it. They put me in contempt under the theory that a corporation has no such right and thus me PERSONALLY was never in prison on contempt, it was the corporate officer. They play with legal fictions to accomplish whatever they desire. I released ONLY because it made it to the Supreme Court. Without that, they would have killed me in the blink of an eye. You have NEVER faced such evil people as you will in the Department of Just Us.

Your cryptocurrency is whatever they declare it. There are people in prison for “money laundering” they defined a (1) hiding cash from the government, and (2) paying off one credit card with another. Look at the fine print on a safe deposit box in a bank. You are not allowed to put cash in there or gold – only documents. They can confiscate cash or gold because it is now considered to be “money laundering” to hide money from the government. This is why I also say if you buy gold, make it $20 gold pieces so you can claim you are a coin collector and it is not bullion. That gets around most of the safe deposit rules.

I fully understand that many as desperate to cryptocurrency will overturn the financial system. It is just not going to be so easy or without blood in the streets. If a guy comes up to you walking down the street and sticks a gun in your face and says give me your money, do you really think lecturing him on the robbery is illegal as well as unregistered guns? You are facing the worst of the worst for the government is the court system and they will NEVER rule in your favor on an issue that brings down the government and the judge will be out of a job

The Hunt for Taxes has now led to criminal charges for manipulating stock ownership to avoid the tax on dividends. There German Attorney General has filed criminal charges against a number of traders for the first time in what is called Cum-Ex transactions. The name seems a bit strange but it involves shifting the ownership of shares around between various people on the dividend record date (Latin: “cum”) and without dividend taxes applying (“ex”). The German Federal Ministry of Finance has said that banks and other suspects have avoided taxes by more than five billion euros.

These type of transactions have been going on since the 1970s. Honestly, the one you heard of was concerning the French. They would sell their shares to a Brit who would be exempt from the tax and then the following day buys them back splitting the tax savings. Not the Germans are licking their lips at how much money they can now fine banks for helping these type of transactions while they are threatening the traders with ten years imprisonment.

Of course, there is no specific law against this practice. It has been a loophole for decades. This attempt to use the criminal proceedings in Germany is by no means a solid case. There is such a thing as Ex Post Facto, which means you cannot declare something to be a crime after the fact.  It appears that ten years in prison is the favorite means to extort money from people against the law over controversial share transactions, that are retroactively applied when they were not before. They will challenge this is the Wiesbaden district court which will decide by the end of August. If that court rules for the government, as far too often is the case when taxes are involved, then it will go up to the Federal Court or even all the way to the Federal Constitutional Court