Courtesy of Mish
Jamie Dimon, JP Morgan CEO, made quite a headline splash last week when he proclaimed “Bitcoin ‘is a Fraud“.
Is Bitcoin a fraud? Or are dollars, euros, yen, and yuan a collective set of frauds? Which, if any are Ponzi schemes?
Modern Finance is the Fraud
In an article that I wish I had written myself, Viktor Shvets, head of Macquarie’s AsiaPac equity strategy, accurately explains “Modern Finance”, Not Bitcoin, Is The Real Fraud.
Paragraphs rearranged for clarity.
“Bitcoin is a sort of tulip… it is an instrument of speculation but certainly not a currency and we don’t see it as a threat to central bank policy.”
Vitor Constancio, ECB Vice President, September 2017
“You can’t have a business where people can invent a currency out of thin air… it is fraud and worse than tulips bulbs.”
Jamie Dimon, CEO JP Morgan, September 2017
If one describes Bitcoin as a fraud, how would one describe a ‘financial cloud’ that is at least 4x-5x larger than the underlying economies? It is unlikely that US$400 trillion+ of financial instruments circulating around the world would ever be repaid and most are now backed by assets that are already either worthless or are diminishing in value. How does one describe rates and the yield curve that are either directly determined by Central Banks (BoJ or PBoC) or heavily influenced by them (Fed or ECB)?
While we maintain that despite the presence of US$7.5 trillion of excess reserves (amongst G4+Swiss central banks), global deflationary pressures are so strong that break-out of inflationary pressures is unlikely. However, if public sectors continue to insist on suppressing business/capital market cycles, then some form of full credit market nationalization and/or currency debasement becomes inevitable.
Dripping Irony
Dimon’s statement on Bitcoin represents the irony of the year. Euros, dollars, etc. are precisely fabricated out of thin air.
That was not always the case for dollars. They were once exchangeable for gold. But euros right from the start were a complete fabrication.
The Eurozone problems we see today are a direct result of the fraudulent nature of Target2 guarantees on top of the fraudulent nature of the euro itself.
