The US Securities and Exchange Commission has demanded more authority over trading, lending and selling cryptocurrency, unable in its jealous rage to grasp that crypto exists because it’s a safe haven from a venal banking system.
SEC Chair Gary Gensler cited “investor protection” as the reason the commission should have carte blanche to take the “crypto” out of “cryptocurrency” in a speech to fellow finance bigwigs on Tuesday, describing the sector as “like the Wild West” as he urged Congress to rein it in.
But Gensler, a former Goldman Sachs partner and later advisor to the US Treasury, either knows nothing about the industry in which he has worked for most of his life or is (more likely) playing dumb. If anything, it’s the Wild West casino capitalism of investment banking that has wrecked the US economy repeatedly, and seems poised to do so again.
Cryptocurrencies throw a wrench into that machine by allowing Americans to stash their assets outside the rigged financial system in a way that’s more portable than gold or other traditional hedges, and the old system has nothing to offer the customer to lure them back. Clearly, crypto’s gotta go.
After all, it’s not like the US central bank or its financial “regulators” like the SEC have done a great or even satisfactory job when it comes to running a functional system. Regulators utterly fail to protect consumers, leaving their pensions to be plundered by asset managers and their houses to be foreclosed on by robo-signing fraudsters. And the Federal Reserve – itself neither federal nor, these days, much of a reserve – can’t stop printing money at full speed or the whole house of cards will collapse. The US is upwards of $28.4 trillion in debt, and when one takes into account the murky global derivatives markets, whose risk is largely concentrated in the US, the figure could be orders of magnitude higher.
Pointing the finger at bitcoin as if it is the source of all this instability, as Senator Elizabeth Warren (D-Massachusetts) did last month, requires stunning amnesia, especially from the woman who built her public profile railing against the “too big to fail” banks that turned the American dream into a nightmare a decade ago with a wave of foreclosures the nation never really recovered from. Warren’s gone from demanding their prosecution to attacking their enemies – earlier this year, she was tearing into Robinhood, the trading platform that allowed ordinary people to go toe to toe with hedge funds and, at least briefly, in the case of GameStop, win.
Absent any oversight from entities like Warren’s Consumer Financial Protection Bureau, the banks have just grown bolder in the intervening years, the bizarre swings of the market during the pandemic, while the real economy cowered in the corner like a kicked dog, illuminating just how little the realities of Main Street have to do with shifts in value on Wall Street. But sure, it’s bitcoin that’s wrecking the American financial system.
But the planet / terrorism / (insert excuse here)!
The “real” financial sector has come up with an endless string of smears to justify shutting down cryptocurrencies, much of it swirling around the notion that mining bitcoin is environmentally unsustainable. It does require an enormous amount of electricity, but miners are increasingly turning to sustainable power sources in order to blunt this criticism, and one recent report found bitcoin mining to be one of the most planet-friendly industries on a global basis, using 56% sustainable power mix. It’s a lot easier to solve bitcoin’s environmental problem than to try to fly a fighter jet with solar power – or a private jet, for that matter. Microsoft tycoon Bill Gates is among bitcoin’s most vociferous climate-based critics, but can’t seem to part with his own private jet – and, like most crypto climate critics, never seems to utter a word about the sustainability of the Pentagon.
Warren has admitted it’s not really bitcoin’s environmental footprint that keeps her up at night. “It’s speculative in nature and going to end badly,” she told CNBC in March. Of course, that descriptor could be just as easily (if not more so) applied to the US financial system. In 2020 alone, the Fed printed over a fifth of the total supply of dollars ever created, and much of that has gone to buy mortgage-backed securities. The 2008 crash happened when most such securities were found to be worthless or close to it – and because no one was ever really punished for that fraud, the practices that created the bubble didn’t stop. Now it’s the Fed, not the big banks, holding the bag on a bunch of worthless mortgage paper as another housing bubble prepares to pop. But it’s crypto holders who are speculating the economy to death?
There are also the claims that bitcoin funds terrorism – an accusation the US government has at one point or another made against every industry and government it doesn’t like. To this, one must ask Washington to look in the mirror, as it has done more to arm, equip and fund terrorists around the world than any crypto could hope to do, even before one takes into account the cartel-funding shenanigans of HSBC. Should the rest of the world stop trading in US T-bills because they’re blood money?
If you can’t beat them, join them
The rapidly-disintegrating global financial system doesn’t so much want to wipe out cryptocurrencies as it would like to replace them. With every transaction logged on a permanent, indelible blockchain ledger, crypto could flip from the privacy lover’s dream to the pirate’s nightmare should that ledger become public – or merely fall into government hands. Enter central bank digital currencies (CBDCs). Most global powers have been working on developing their own CBDC for years now, aware to a greater or lesser extent that fiat currency pegged to an increasingly weak dollar reserve has an expiration date. They’ve also received the message from supranational groups like the Bank of International Settlements (BIS) and the Financial Stability Board.
The BIS’ Jabba-the-Hutt-esque General Manager Agustin Carstens, for example, recently gushed about the potential CBDCs have in terms of surveillance – essentially the opposite of cryptocurrency, they would use blockchain to ensure every transaction an individual ever makes becomes part of their permanent record.
“We don’t know who’s using a $100 bill today and we don’t know who’s using a 1,000 peso bill today. The key difference with the CBDC is the central bank will have absolute control on the rules and regulations that will determine the use of that expression of central bank liability, and also we will have the technology to enforce that,” he bragged in October.
Carstens, unsurprisingly, is no fan of bitcoin, which he deems an “ecological disaster.” But a CBDC – cryptocurrency minus the “crypto” – would neatly solve many of the ruling class’ biggest problems with the current financial system, from the existence of cash (and thus, privacy) to the inability to exclude certain actors from the system.
Efforts are already underway to create the structure into which CBDCs will fit, turning one’s every move and interaction into nodes of the global surveillance state. France and Italy are making it impossible to do business without proof of vaccination against the novel coronavirus or a recent negative test, a move that risks permanently tying health data to financial data, a profound violation of privacy that is clearly intended to spread to the rest of the EU. Online payment processors like PayPal are joining forces with entities like the Anti-Defamation League, whose purpose is to stamp out wrongthink on the internet and punish its practitioners by barring them from the marketplace. The UK, Italy and France have all weighed the idea of prohibiting anonymity on social media for similar reasons.
And all of these layers of surveillance are eventually intended to merge into the Known Traveler Digital Identity (KTDI) system, a combination health-travel-banking-passport and social credit score envisioned by the World Economic Forum.
Needless to say, cryptocurrencies have no place in the world of CBDCs and KTDI, and the very concept will be promptly jettisoned after it has served its purpose – which, arguably, has been to soften up the privacy-loving set to the notion of blockchain. Without bitcoin, after all, what sane person would think to embrace the idea of an indelible record of every action an individual has ever made in the marketplace?