Mark Zuckerberg is not to be trusted. From Michael Krieger at libertyblitzkrieg.com:
ZUCK: yea so if you ever need info about anyone at harvard ZUCK: just ask ZUCK: i have over 4000 emails, pictures, addresses, sns FRIEND: what!? how’d you manage that one? ZUCK: people just submitted it ZUCK: i don’t know why ZUCK: they “trust me” ZUCK: dumb fucks
– Leaked messages sent by Mark Zuckerberg to a friend at Harvard as he was building Facebook
Years ago, Mark Zuckerberg made it clear that he doesn’t think Facebook is a business. “In a lot of ways, Facebook is more like a government than a traditional company,” said Mr. Zuckerberg. “We’re really setting policies.” He has acted consistently as a would-be sovereign power. For example, he is attempting to set up a Supreme Court-style independent tribunal to handle content moderation. And now he is setting up a global currency.
For a long time, I’ve maintained there’s no doubt the current system/paradigm we live under will collapse under its own weight, but that doesn’t keep me up at night. What keeps me up at night is understanding we still have no idea exactly what will replace it. It could very well be a more decentralized and free world, a world less defined by brute force, grotesque power concentrations and coercion, but it could also very easily go the other way. The coming out party for FacebookCoin (aka Libra) is in my view the first real indication the forces of corporate oligarchy are determined to ensure the new world reflects their vision and is under their control.
Anyone with half a brains knows to beware Zuckerbergs bearing gifts, so the announcement that Facebook is getting into cryptocurrencies should be greeted with immense skepticism. From Tom Luongo at tomluongo.me:
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?
… 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.
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.
A lot of decrepit institutions are scheduled for extinction, including central banks. From Tom Luongo at tomlouongo.me:
There’s something about the timing of this Bitcoin rally that should have your attention. It’s happening in the wake of President Trump’s big push to remake the world economy along his lines.
It’s also happening as central banks stand exposed as having no answers for the continued deflation and collapse of money velocity a decade of QE and zero-bound (or negative) interest rates were supposed to cure.
Trump’s Trade and Tariff War will not solve this. He won’t address the real problems but rather blame China. And now he’s putting upward pressure on Bitcoin while the yuan is under serious pressure.
Because while Trump is out tweeting this morning about how bad it will be for China, he’s also moving to label anyone with a trade surplus with the U.S. a ‘currency manipulator.’
So, there is no escaping Trump’s ignorance on trade. And now he’s trapped.
So much for “trade wars are easy to win.”
Now that the trade war is in full flower because Trump doesn’t get basic economics things will get worse from here.
The major capital markets stare on in disbelief, hoping for a last minute miracle in China trade talks. They’ve priced in Trump folding at the last minute and he hasn’t done so. The big markets resist big moves because of both deep liquidity pools and investor normalcy bias.
Never underestimate the resourcefulness of those denied platforms on the internet. From Tom Luongo at tomluongo.me:
The recent deplatforming of Sargon of Akkad by Patreon has a lot of people very nervous. I became worried we’d get to this state the first time they went after Gab for not allowing their app in the Google or Apple stores.
It became obvious then that we would wind up here today. It starts with saying that certain things are unacceptable based on arbitrary enforcement of Terms of Service and ends with backroom pressure to cut a person off from making money.
Google began demonetizing channels which were politically unpalatable to its senior management. So, a lot of demonetized YouTubers moved to Patreon, asking subscribers to support them directly rather than deal with intrusive ads.
And now Patreon has gotten into the game. But, we always knew that they would. They went after Laura Southern last year.
Alex Jones was simultaneously thrown off every platform and then Gab was taken down over a 48-hour period with no warning over having a particular user on its platform.
Yes, that guy shot up a synagogue. That’s not Gab’s problem.
Brandon Smith is probably right on this one. From Smith at alt-market.com:
There are two kinds of globalist schemes: First, there are the schemes they spring on the public out of nowhere haphazardly in the hopes that the speed of the event along with some shock and awe will confuse the masses and make them psychologically pliable. This strategy loses effectiveness quickly, though; the longer the plan takes to implement, the more time the people have to reconsider what is actually happening and why.
Second, there are schemes they slowly implant in the collective psyche of the citizenry over many years, much like subliminal messaging or hypnosis. This strategy is designed to make the public embrace certain destructive ideologies or ideas as if these ideas were their own.
The cryptocurrency scam is of the second variety.
I have been suspicious of the cryptocurrency narrative of a “decentralized and anonymous monetary revolution” since 2009, when I was first approached by people claiming to be “representatives” of bitcoin and asked to become a promoter of the technology. After posing a few very simple questions and receiving no satisfactory answers, I declined to join the bandwagon or act as a frontman.
A growing number of people have trust issues with a growing number of institutions, including financial intermediaries. That is why cryptocurrencies are here to stay, and their roles will undoubtedly evolve and expand. From Electric Capital at medium.com:
A form of disruptive innovation occurs when a cultural shift is combined with utilitarian technology that allows the culture shift to scale. Blockchain and cryptocurrencies have both of these properties. They are a cultural shift manifesting through useful technology:
We are in the midst of a global collapse of trust in institutions.
Technologies (blockchain, digitally scarce coins, distributed consensus, etc.) allow us to operate without these trusted intermediaries are now emerging, and allow us to reimagine a world without these intermediaries.
In the midst of crypto-mania, we believe it important to focus on the utility behind the hype: Blockchain is software that allows us to reimagine trusted intermediaries. Cryptocurrencies are one of the first killer applications. Cryptocurrencies are reimagining the world’s most successful means to transmit trust: money.
Many cryptocurrencies are not at all “anonymous,” free from the prying eyes of governments. From Simon Chandler at cointelegraph.com:
Much noise has been made about the untraceable qualities of Bitcoin and other cryptocurrencies. Bitcoin “can be used to buy merchandise anonymously” said early primers on crypto, it offers users the kind of financial privacy that was previously available only from a “Swiss bank account,” say more recent commentators. And given its ability to provide people with a layer of anonymity and privacy, it has been smeared by politicians, experts and mainstream journalists alike as a hiding place for almost any hacker, drug dealer, gang member, terrorist or despot you could possibly name (even if cash is still the preferred financial medium of such personae non gratae).
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