In 2008, the support reserve consisted essentially of houses. In cryptocurrency, I’m pretty serious about it, the reserve of support is gullibility.
It sounds like you’re saying, one, crypto is nonsense, but, two, the nonsense will go on forever, because as long as you can invent money out of thin air, you can find a sucker for it. buy. Unless governments step in and say you can’t do certain things anymore.
Yes. The good news is that there are regulations to come. The Treasury is looking at these things very closely because they basically have to make sure that these crypto bozos can’t screw up the real economy where people live. And they’d screw it up, because they’re idiots. And they got a taste of it in 2019 when Facebook made its cryptocurrency Libra, or tried, and every regulator, central banker, and finance ministry in the world said, “No, you’re not screwed.” Because Facebook didn’t know what they were doing and they were really arrogant in not caring that they didn’t know what they were doing. So basically, about a month later, the entire US government, Democrats and Republicans, were united in this project, crushed it like a bug.
So on the issue of regulation, are we talking about something like, if you have a stablecoin, you actually have to get audited and prove that you really have a dollar for each of those stablecoins that you believe is backed by a dollar?
This kind of proposal, yes. There are different versions of this, like requiring stablecoins to be issued by genuine highly regulated banks, etc. Laws have been proposed to this effect. None passed, but these ideas are very much in the air.
The fact is that regulators are reluctant to move too fast and they also have tight enforcement budgets. But I will tell you who really wants to regulate crypto: money laundering cops. FinCEN are absolutely humorless cops who don’t care if they run over your business. And internationally, FATF, which has established rules that regulators are asked to follow if they want their country to be allowed to do business with anyone else. These guys put a bunch of rules which came in 2021 to make crypto transactions more traceable. I think we’re going to end up with a sort of two-speed crypto market. You will have the entities that are known exchangers where people are traceable, and changing it back and forth to real money is relatively easy, and then there will be another market that operates high on crack and is just incredibly unregulated and has a much more difficult time to get to the precious US dollars.
Most People Don’t Own Any Crypto, Yet You Have Fidelity offering bitcoin in 401(k)s, you have Wall Street institutions that are increasingly investing in crypto. How might a crypto meltdown affect the broader economy?
The main thing you need to worry about is that these bozos really want to put their tendrils into the real money world. I think for a lot of them that’s the end game: putting it in people’s retirement accounts. However, the Department of Labor actually issued a notification in March warning financial advisors not to tell retirees to put their 401(k) in crypto. And Fidelity went to offer this product anyway. They really, really want to get into big stuff, because that way when it falls apart, they expect the government to be the bag holder of last resort. And this is something that must be fought hard. It hasn’t happened yet, but we have to fear it.
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