Princes of the Yen

In this outstanding documentary, loosely based on Professor Richard Werner‘s book with the same title, we can not only better understand the post WWII japanese economic history, but also comprehend how “independent” central banks were introduced in Asia, first in Japan with the legal modifications induced by the 1989-1990 japanese stock market crash and, later, with the 1997 Asian Crisis, also in the “tiger” economies of South East Asia.

The documentary convincingly argues and documents, that modern central banking serves purposes and objectives that often have very little to do with the welfare of their own nations and a lot to do with projects of economic and social engineering and financial colonization by western financial institutions, most of them based in America. The often perverse role played by the International Monetary Fund (IMF) is compellingly explained.

One of the strengths of the documentary is to explain with precision how the transformation of the social and economic structures of whole countries, and of successful ones by the way, are planned years, in the case of Japan, decades, in advance, how are economic crisis artificially created and how, when crisis finally break out, “independent central banking” and fire sale of domestic assets to foreign investors are systematically imposed on nations that lose their economic independence…forever.

The documentary ends with a warning to Europeans about the true nature of Europe’s own “independent” central bank: the European Central Bank (ECB).

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Dark Belgian Chocolate

In his  article, Who Is The New Secret Buyer Of U.S. Debt?, Brandon Smith tries to solve one of the mysteries of recent events in financial markets: the enormous increase in US Treasury Bonds reserves held by Belgium. As you can appreciate in the chart above, Belgium has, in a few months, increased its reserves of US Treasury Bonds by more than 70%. This, for a country like Belgium, does not make any sense and it is suspected that those bonds belong to somebody else. Mr. Smith floats the theory that the real buyers of US Bonds would be the International Monetary Fund (IMF) and the Bank for International Settlements (BIS), as part of a long term plan to displace the US Dollar and introduce the IMFs Special Drawing Rights (SDR) as the New World Order’s new global currency. Of course, he cannot prove his case, but the article is interesting nevertheless.

Mr. Draghi & the “european banking union”

ECB on collision course with Germany on banking union @ Financial Times

Financial Times publishes this article about the reluctance of Germany to the intent of the ECB to get total supervisory and resolution control over all banks in the eurozone. The so-called “european banking union” plans seek to place eurozone banks under the overarching supervision of the ECB, followed by the creation of a bank resolution scheme for the bloc and, eventually, a common deposit scheme.

“In the 32-page opinion to EU institutions in Brussels, the ECB said the new agency, known as the single resolution mechanism, should be “strong and independent” with clear, unitary powers to force failing banks to either recapitalize or shut down.”

“The stance puts Mario Draghi, ECB president, in direct conflict with Wolfgang Schäuble, the German finance minister, who has repeatedly said the EU’s new bank bailout system should instead start as a “network” of national authorities because EU treaties do not allow for a single decision maker for all of Europe.”

“Differences between Brussels and Berlin over the way forward for a new EU bank executioner – which many officials believe is the biggest shift in sovereignty for the eurozone since the creation of the single currency itself – has slowed progress towards banking union to a crawl.”

Mr. Draghi’s haste in trying to get total control of the european banking system, something well beyond what was envisioned both in the intentions and the written law of the EU and ECB treaties, is another, perhaps the definitive, step towards protecting the banking industry from accountability and democratic (even if very mild and imperfect at present) control.

Germany’s reluctance is very logical, since once the ECB gets supervisory and resolution authority over all banks in the eurozone, it will have all the tools to perpetuate a “dual economy”, with a financial sector that not only finances itself at rates (basically zero) that have nothing to do with the rates at which citizens and small and mid enterprises have to finance themselves (if at all), but whose supervision would be in “friendly hands”. Friendly hands to them, banks, but unfriendly to citizens, whose savings are being constantly debased by a zero-interest-rate-policy that increasingly looks no longer like a temporary fixture but as a permanent feature of a new neo-feudal financial architecture.

It is a pity that such aspects are seldom mentioned when discussing the implications of the innocently named “european banking union”. One would hope that Germany would stand firm (even if partially for selfish reasons), but fear it will not. The “european banking union” is not a positive development for those who believe in a democratic Europe and a restrained and accountable financial sector.

Bitcoin a virtual currency that defies the NWO

Bitcoin the emerging monetary phenomenon created by a pseudonymous Satoshi Nakamoto in 2009 is no longer a joke, but a potential real threat to the neofeudal NWO whose visible components are the western Central Banks, from the Federal Reserve (FED) , to the European Central Bank (ECB), to the Bank of Japan (BoJ), to the Bank of England (BoE), to others.

Bitcoin poses a direct challenge to fiat based Central Bank created currencies that are continually being debased in order to maintain a “dual” economic system in which the banking industry is continually being subsidized (thru access to cheap money via the Central Bank, thru continuous bailouts paid by taxing the rest of the economy, thru covert inflation achieved by distorting the inflation measures).

It is likely that if the threat posed by Bitcoin materializes, Central Banks will fight it (they have already started), but whatever the outcome, Bitcoin is the most brilliant and lethal tool devised so far to fight a social order described decades ago, in “1984”. Forget, “Occupy Wall Street”, forget “indignados”, Bitcoin might be “it”.

It should thus not be a surprise that, as Zerohedge reported today, “US Begins Regulating BitCoin, Will Apply “Money Laundering” Rules To Virtual Transactions”.

So…What is Bitcoin?

According to Wikipedia, “Bitcoin (sign: BTC) is a decentralized digital currency based on an open-source, peer-to-peer internet protocol. It was introduced by a pseudonymous developer named Satoshi Nakamoto in 2009.”

“Internationally, bitcoins can be exchanged by personal computer directly through a wallet file or a website without an intermediate financial institution. In trade, one bitcoin is subdivided into 100-million smaller units called satoshis, defined by eight decimal places.”

According to Erik Voorhess, that provides an excellent introduction to Bitcoin in his blog, “Bitcoin is two things: it is a digital currency unit and it is the global payment network with which one sends and receives those currency units. Both the currency unit and the payment network share the same name: Bitcoin.”

“As a currency unit, consider Bitcoin like other currencies. The world has euros, dollars, yen, gold and silver ounces, and now it has Bitcoin as well. The properties of the Bitcoin currency unit are as follows:”

  • There will never be more than 21 million in existence, and they are released over time at a declining rate (at the time of writing, about 8.5 million Bitcoins exist).
  • As new coins are released on the set schedule, they are given at random to those who contribute computing power to securing the network. This is called “Bitcoin Mining” but it should more accurately be called “Bitcoin Auditing.” Those who contribute more computing power to this work have better odds of receiving the new coins, but the rate of new coin creation never increases (in fact it diminishes over time until all 21 million coins exist). Inflation is thus pre-determined and ever-decreasing toward zero. The below graph shows the release schedule and inflation rate:

  • Each Bitcoin is divisible by one hundred million. You can thus possess 0.00000001 Bitcoins.
  • Bitcoins are perfectly fungible, they are divided and combined seamlessly in your account.
  • It is theoretically impossible to make a fake Bitcoin (to fully understand why this is true, one needs to study cryptography and fairly advanced mathematics).
  • As a currency existing in a perfectly free market, Bitcoins always have a market price. At the time of this writing, this price is about $4.80 each. Because Bitcoin is global, there are also market prices for Bitcoin in every major national currency from yen to Brazilian reals.
  • Bitcoins are traded like other currencies on exchange websites, and this is how the market price is established. The most prominent exchange is MtGox.com

“So those are the details of Bitcoin as a currency unit, but Bitcoin is also a payment network. As a payment network, Bitcoin replaces the function of banks (especially the Federal Reserve as money creation is not at the whim of any person nor group), inter-bank funding networks (like SWIFT and SEPA), payment processors (like PayPal) and remitters (such as Western Union). The entirety of these massive industries as they relate to the creation, storage, accounting, and transfer of money has been usurped by Bitcoin. If Bitcoin succeeds, it is likely that PayPal and Western Union would be removed from the marketplace. The Federal Reserve (and every central bank) would be made redundant. “Disruptive technology” is thus an understatement.”

Is Bitcoin “money”? Does it have the characteristics that define that elusive concept called “money”. According to the traditional definion, “money” should be a store of value, a medium of exchange and a unit of account. Let’s see:

  • Is it a store of value?. Yes. Why?. Because it cannot be counterfeited and because it is scarce. Only 21 million Bitcoins will ever be issued by 2140. Being a store of value is based on being scarce, and Bitcoin is scarce.
  • Is it medium of exchange?. Yes. Why?. It is used to purchase and sell products and services.
  • Is it a unit of account? Yes. Why?. It is fungible, divisible and can be used to accumulate wealth.

Bitcoin is an experiment, and it could fail. Its success depends on its creators fulfilling the pledge never to issue more than 21 million units, on keeping it scarce. But so far it is succeeding. Check the price of the Bitcoin in USD in this chart provided by Blockchain: It went from 10 USD in July 2012 to 70 USD this last week. Check also the market capitalization of the Bitcoin market in this chart also provided by Blockchain: It went from 100 million USD in July 2012 to about 800 million USD this last week.

Its success also depend on it being widely accepted. This condition has the characteristics of a self-reinforcing loop: The more it is accepted, the higher the chances of it succeeding as a medium of exchange. So far the prospects are good. Transactions mediated by Bitcoin are growing fast.

As Bitcoin is decentralized, it can be hard to find all the resources one might want. Below is a list of some of the most useful websites and tools for learning about and engaging the Bitcoin economy (compiled by Erik Voorhees)

Paytunia.com – Very nice online ewallet service with Android app. Store your coins here.

BitSpend.net – Enables you to buy ANYTHING online by paying with Bitcoin. Very cool.

Bitcoin.org – Official site of the Bitcoin project, download the wallet software here.

MtGox.com – The leading Bitcoin exchange. Buy and sell Bitcoins here.

BitcoinTalk.org – The official discussion forum, and large enthusiast community.

Wiki.Bitcoin.it – Encyclopedia of most aggregated Bitcoin knowledge, very extensive.

Bitcoin.it/wiki/trade – Partial list of companies that accept Bitcoin as payment.

Blockchain.info – Tool for viewing accounts, payments, and numerous economic statistics.

BitcoinCharts.com – Shows current market prices and economic statistics.

Preev.com – Super easy Bitcoin<->fiat calculator, multiple currencies supported.

BitcoinMonitor.com – Live view of transactions as they happen on the Bitcoin network.

Paysius.com – Enables businesses to automatically accept Bitcoin payments on their website.

Bit-Pay.com – Another excellent merchant solution for businesses that wish to accept Bitcoin payments.

Coinabul.com – Leading gold and silver bullion seller for Bitcoin

Coinapult.com – Send Bitcoin via Email or SMS

WorkForBitcoin.com – Bitcoin job board – freelance projects which pay in Bitcoin.