Skip to comments.With Amazon minting currency, Fed at risk
Posted on 02/13/2013 5:38:26 PM PST by george76
The euro may well be on the road to a chaotic collapse, taking some of the worlds biggest banks with it. A currency war may break out between Japan, the U.S. and Europe. Printing money has run out of steam, but there is still little sign of the global economy returning to the kind of growth rates it saw before the credit crunch.
But in the long term what they should perhaps be most worried about is losing their monopoly on issuing money. A new breed of virtual currencies are starting to emerge and some of the giants of the web industry such as Amazon... are edging into the market.
Of course, governments and central banks will try to stop it. They wont give up their monopoly over money without a struggle. A virtual currency will never be legal tender. But the online universe is very hard to regulate. Governments havent managed to stop spam, or pornography, or terror chat rooms, or any of the other online activities they dont like. There is little reason to imagine they can prevent virtual currencies circulating either.
(Excerpt) Read more at marketwatch.com ...
The national governments should perhaps worry about this.
A corporate currency would be tied to the corporations products. So and Exxon “Petro” or Amazon “Booker” would, in effect have an intrinsic value based upon the value of the product being marketed because corporations could not issue more of the currency than could be redeemed for the products they provide.
That would make them safer currencies in many ways.
Quite an interesting story.
Unfortunately in my view, all the competing entities he mentions are also in league with the progressives.
Will the goesinto’s be based on length or caliber?
Government needs to be the coiner of money.
The exact trouble with governments that have central banks, like the Fed, is that money creation has been turned over to the private sector, specifically, a very small group that engineered the establishment of “central banks”.
That small group now is loan shark, I mean, lender, to the government, instead of the government creating money that it has every right to.
And now the people find their government beholden to this money-monopoly, allowing their associates to puppetmaster the whole country.
Any government that does not create its own money is forced to borrow when reaches the limits of taxation and finds that it still needs more money. And the lender certainly will do everything he can to make sure the government outspends its taxing capability.
Of course, governments and central banks will try to stop it. duh They wont give up their monopoly over money without a struggle. double duh A virtual currency will never be legal tender. credit cards are legal and virtual But the online universe is very hard to regulate. Governments havent managed to stop spam, no incentive or pornography, lost first amendment battle and I wonder how much porn the Chinese have access to? or terror chat rooms, and give up their easy to get publicity entrapments? or any of the other online activities they dont like. I wonder how megadownload owner is feeling? How's online poker working out for you? There is little reason to imagine they can prevent virtual currencies circulating either.
Everything old is new etc. Until the 1930s most paper money in Canada was issued by private banks; the two largest banks here continued to issue notes until 1944.
All money has to come from somewhere. If the currency issued by the government is not backed with real wealth (borrowed or taxed) then it becomes worthless, the most striking examples being Weimar Germany and Zimbabwe.
Microsoft has already started something similar to their own currency, with MS Points.
However if the Amazon “Money” holds value better than the Federal Reserve notes, then it will have great appeal. People can easily redeem Amazon Money for Dollars as they need to pay taxes, etc
You disregard the largest export nation on earth?
China trade now bigger than US
If you borrowed the money you did not create it.
Get it ?
If fovernment borrows, government has to pay back.
That means government did not create money, it borrowed it.
The U.S. government does not exercise its power to create money. It borrows.
So when it spends $1T more than it takes in in taxes, it has promised to someday pay back the $1T plus interest.
But it is not creating any money ! So it will have to get it from taxes.
“Backing” money is completely unnecessary - it’s meaningless.
Think about it - if the Treasury actually wanted to have 1 ounce of gold for every $1500 it created - it would have to buy the ounce of gold from someone and pay them $1500 they printed.
Just to back the dollars that exist right now, the government would need to acquire an utterly enormous amount of gold at current prices.
Seeing as how the government has no dollars now (most dollars are out in circulation), they’d need a huge amount of gold somehow for free, just to back the dollars out in circulation now. Of course, they wouldn’t get the gold for free. And they could not print new dollars to buy the gold, because they would all need to be backed by the gold they were exchanged for. Necessarily, the price of gold would skyrocket. And the international bankers would profit immensely, to say the least.
Then the government would have to keep its gold on hand, so all spending would have to come from taxation and borrowing anyway.
It would be the same scam as we have now - Treasury needing bankers.
What gives money a stable value is if it is very hard to counterfeit (the orginal purpose of using precious metal for coins), and the supply of money is simply adequate for people and businesses to have the cash on hand that makes it possible to do business without a liquidity crunch and yet also without a lot of excess cash on investor’s balance sheets with nothing to invest in.
We have to bear in mind that population increases, and, if a nation gets wealthier over time, i.e., the amount of “nice stuff” the private sector has, per capita, increases over the generations, the total money supply should stay about the same proportion to total national wealth in terms of assets on the balance sheet.
The more money creation far outpaced or fell short of the need, depending on how much and how it entered the economy, the worse consequences there would be.
But if the money supply increased simply as necessitated by the economy, if government simply spent the new money into the economy that would work fine, like a boost on tax revenue.
If we’re worried about Congress creating too much money, we should consider that right now they’re allowing the Fed to create over $1T per year and the Treasury is spending that into the economy. The only difference from the Treasury simply creating it is that taxpayers have the $1T per year adding to their future tax bills.
IMHO, I don’t think that will be faced by our children and grandchildren, I think our generation will see that debt blow up in our face.
The private sector should never be allowed to create money, of course, because, like counterfeiting, the motivation is then to create money instead of produce and earn the money.
Government should only do the bare essentials, and tax if money creation is not sufficient for it’s spending needs. With how much government spends now, of course, and how slow the economy is growing (or actually shrinking), money creation should be close to zero, which, if government does not borrow, means that spending needs to be cut to tax levels or less.
All these silly things we’re talking about here are not money, they are accounts.
You know, like customer accounts, I credit my customer $100, customer pays $150.
That’s the whole confusion with fractional reserve banking.
After the 1st deposit, the model is talking about customer accounts. At the end of all the deposit / lending, if you started with 100 dollar bills, you’d still have 100 dollar bills. You’d also have customer deposit accounts at all the banks and loan instruments, but that’s not money.
Economists then mumbo-jumbo with “near-money”, m1, m2, etc. A deposit account is a deposit account and a dollar is a dollar.
Bitcoin is promoted by libertarians, not progressives. All kinds of things are getting out of government control. We live in interesting times.
It’s wildcat banking all over again.