Trump went after Bitcoin today.
I am not surprised, except by the timing.
Bitcoin Doesn’t Care
I discussed Bitcoin on live national radio Tuesday night on Coast-to-Coast with George Noory.
I am a frequent Coast-to-Coast guest, typically for a few minute economic update about 4-5 times a month, going all the way back to 2007.
On Tuesday, George and I discussed the economy and upcoming recession for two full hours.
A caller asked about Bitcoin.
I replied that it was a free-market construct, but if governments or central banks ever felt that it was a threat, they could squash it.
The caller said it couldn’t be done.
I disagreed. I stated that if governments ever felt threatened they would make up excuses to shut it down.
Fictional Reasons
I specifically mentioned money laundering, tax avoidance, and drug trafficking.
I added that the charges would mostly be fictional, but it would not matter.
Trump Surprise
I am surprised Trump mentioned this today.
It’s just happenstance that a warning I made two days ago and it came into play today.
Bitcoin Doesn’t Care
I do not think governments or central banks will shut down cryptos just yet. But the threat is real.
Wait a second, Bitcoin doesn’t care.
Indeed it doesn’t. Nor does the ocean or moon rocks.
Hash rates can go to the moon, or not. But if Governments will not allow conversion of Bitcoin into fiat and refuse to allow stores to accept Bitcoin, it would become worthless overnight.
Bitcoin will not care one bit.
Nor will Bitcoin care when governments ban cash and force everyone to use their own digital currencies. But those sitting in millions of dollars of profits will care when their profits suddenly vanish into thin air.
Best Case for Bitcoin
The best thing for Bitcoin, actually, would be if it did not display these tendencies to blast-and-crash because that provides governments another excuse to shut it down.
The battle cry will be: “We need to protect the consumer“.
That’s another reason I mentioned the other night.
When?
I have no idea. Nor does anyone else. I rather doubt the threat is imminent.
Yet, it could be, and it would not surprise me in the least.
Feelin’ Lucky, Crypto Holders?
Why not?
After all: Bitcoin doesn’t care.
Mike “Mish” Shedlock
Mish, the US government cannot ban bitcoin anymore than Zimbabwe can ban its citizens from using US dollars. As long as bitcoin is convertible in some other currency and on the black market it will still have value.
Touche!
The solutions to the decay imposed by totalitarian government, will originate in the fringes; as far from said governments as one can get.
Rome was weakened from the inside. But finally sacked from the outside. By guys who weren’t weakened by its ever accelerating currency debasement, the way once productive Romans were.
Trump is right about these unregulated currency markets. Bitcoin can’t have it both ways. There were many similar online trading/currency markets shutdown because of human trafficking, terrorism and other ties. These charges weren’t fictional. Kim DotCom was the creator and actually involved. I actually like cryptocurrencies as a concept but I think central banks will co-opt the good parts of it and then shut down all the unregulated markets which now trade cryptocurrencies in the dark side of the internet. That dark side is involved in the same things previous online trading markets were shutdown for. Would it surprise you to learn that Epstein trafficked humans via his hedge fund ?
Less than 1% of crypto transactions have anything to do with “dark side” stuff. Criminals prefer US cash 100x more often.
I think that’s 1% of bitcoin transactions. The overall number is still in the double digits percentage wise and bitcoin by itself is approaching $1B in illicit transactions.
Why is facebook not buying a country with a currency?
I think the takeaway is that “stable genius” has been talking with advisors about strong/weak dollars and the role currencies and money plays in life.
“But if Governments will not allow conversion of Bitcoin into fiat and refuse to allow stores to accept Bitcoin, it would become worthless overnight.”
There are still pockets where governments aren’t quite totalitarian enough ( nor are populations pliant, subservient and bent over enough), to ban much of anything. And, as is inevitavle, those are the places with expending populations and an expansionist drive.
Many of those places don’t currently have an infrastructure making digital crypto currencies convenient. But that infrastructure gets cheaper and more available every day. And once the infrastructure is in place, “banning” cryptos resolve to “banning” cryptography. Not really all that easy a thing to do.
You don’t need convertibility in San Francisco. If you have convertibility in Mogadishu, you can buy your gold and guns there. As can the guys you need to anonymously bribe to get it safely back to San Francisco.
Of course Trump’s handlers tell him to scare his pliant, uncritical drones away from cryptos. They’re a mouse trap infinitely superior to anything any totalitarian thugband of undifferentiated mediocrities cold ever hope to offer. And slowly, then all at once, people will figure this out:
If the western world countries banned bitcoin the demand would plummet in turn dramatically reducing the value
“Dramatically reducing” and “reducing to forever zero” are two very different things.
Western governments have been banning cocaine for almost as long as their greatest aspiration has been to become totalitarian hellholes. Yet the stuff still isn’t entirely worthless.
Furthermore, the more said hellholes tax, print, ban, mandate, debase, rob, regulate, harass, torture and destroy; the greater the benefits to finding a way to route around them. And the quicker their material, hence military, advantage over less totalitarian groups, will wither away.
At face value, Trump has quite a sane view of cryptos, only if he could extend the same line of thinking to central banking fiat. I am still hoping that one day he wakes up, and tweets that he is going to put an end to this insanity, and end the FED.
I think cryptocurrencies are a two-edged sword. They’re probably acting as algo-driven hot cash incinerators presently (and helping to hold down inflation?), but criminal cartels, driven increasingly to use them will eventually, and utterly, corrupt every government that allows them Think Al Capone, 1920s prohibition and corrupt Chicago cops and judges, St. Valentine’s Day Massacre, etc., etc.
I think the Chinese are ahead of us in banning them.
BS. Criminals use US cash 100x more often than crypto.
Governments monopolize or try to monopolize control over all important human activities. Among them are violence (think police and armed services), marriage (even religious services require a marriage license), communication (think licensing of airways and control over internet), transportation (think drivers licenses and control over GPS), psychoactive substances (drug laws), and money (think the “legal tender” law). There is no reason if our government or others begin to feel threatened by crypto currency they won’t find a way to destroy it or drive it underground.
They couldn’t if they tried.
I’ve stated this since the beginning of bitcoin. “It’s illegal to own, you have 30 days to divest of your holdings” is all it takes. Any country could do it at any time and once one does others will follow. Now it may still continue to trade as a black market currency but then there will be problem of a hidden centralized or series of exchanges. Most likely a or several govts will eventually take the exchanges and then run them themselves for “back alley” transactions ie CIA, etc. It started as a fringe currency and will end as one. Also any appreciation as measured by fiat money (ie gold) will be taxed as the devaluation of currency cannot be threatened by an asset that avoids just that.
Good luck with that. No one can take your crypto when you hold the password in your head with a brain wallet. How did that whole gold confiscation work out again? Even if they tried, it would only make other countries that embrace crypto more competitive. Dumb idea.
They don’t have to. They just have to deny you access to the means of using those funds. If it’s illegal and you don’t declare it, they can and will lock you up. In regards to countries embracing cryptos, how many countries don’t participate in FACTA?
I’m not anti-crypto currency. I just don’t see how it’s allowed beyond what any govt wishes it to be used for.
What’s truly ironic is it is a strong dollar that blows up sovereign debt, and the fact the euro was created to compete with the dollar so it wouldn’t get too strong again. The desire to cut rates in the face of the “strongest economy” is further proof that the real concern is interest expense on the mountains of debt, especially outside the US and the fact that so much of the foreign debt is dollar-based. The Fed has caved to international interest at the expense of pensions, Social Security, and savers.
If you believe the govt will be successful in shutting down cryptos, then you also believe the govt will be successful confiscating people’s guns. It’s not that they won’t try, but believing that revolutions are a relic of the past is about as ignorant as believing global temps only move up. Believe both at your own risk.
There were times when people paid with beads and shells and other intrinsically worthless items, next came currencies backed by valuable stuff( food stock, precious metals, diamonds etc), then out of pure desperation and to stop healthy economic cycles in order to guarantee uniterrupted eternal economic growth, the increasingly ‘clever’ sapiens ape, its central banks representatives in particular, developed unlimited fiat currencies increasingly and exponentially backed by…. free DEBT and a almost religious belief in a uncertain, cheap debt driven economic future……NOW the latest hype are cryptos backed by …….well, rrrrmm, well …yep , you nailed it….I think…
The oldest form of money was credit. Throughout millenia this credit money was often related to (“backed”) by certain measures of grain. People in villages (beads and trinkets) never settled their debts, so the shells were only to trade with other peoples. Gold and silver were also primarily used for commerce and banking, not for everyday economic activity.
Valuable stuff only evolved with trade. Before that, fertile land by the river was the most valuable asset, which can be substituted by well fertilized land. So the original currency was actually cow manure, and it will be again, when this SHTF.
I’m guessing someone told him that Obama is a fan of cryptos.
Regarding the timing: 30y T-Bonds had a very poor auction today. Inflation higher then expected. I would not be surprised if both the Fed and Trump will fight in tandem at some point to prop up the dollar. This might be a first collaboration (coordinated) between the 2 parties to send signals to the markets that some of the competing options to the dollar are not being viewed well. Powell was not either much in favor of the libra in his testimony.
Waiting for the day when Trump will say something about gold too. That will be a signed that they are really scared about the dollar’s fate.
I doubt Trump has much of an opinion on cryptocurrencies in general, in which case he defers to his advisors. They probably told him it’s bad because drug lords and rogue governments love it or something along those lines, rather than telling him that crypto could undermine their statist fantasies.
Trump has a few issues he genuinely cares about and I’m glad he got squeamish about a war with Iran, but he’s generally easy to manipulate and people have had a few years to practice with him.
This will drive liberals to Bitcoin – expect a price hike. Trump then outlaws it and liberals go broke….?
I am a progressive and the only things I have faith in are my gold and my Luger.
If the only things you have faith in are your gold and Luger you are not really a progressive.
No True Scotsman fallacy strikes again. Many of us are liberal, gun-owning, bitcoin-loving hard money believers.