Fed's Powell Says He Doesn't See Cryptocurrencies as 'Financial Stability Concern' (marketwatch.com) 66
Federal Reserve Chairman Jerome Powell said Wednesday that he doesn't view cryptocurrencies as a "financial stability concern." From a report: Cryptocurrencies "are really speculative assets," Powell said in a press conference Wednesday after the Fed said it would accelerate the pace of its tapering of bond purchases and penciled in three hikes of its benchmark interest rate next year. However, "I don't see them [cryptocurrencies] as a financial stability concern at the moment," Powell said. "I do think they are risky, they're not backed by anything. And I think there's a big consumer issue for consumers who may or may not understand what they're getting."
Powell also highlighted the role of stablecoins, and said he supported the views expressed in the President's Working Group's report, which called on Congress to quickly pass new legislation that would require stablecoins to be issued by insured banks. "Stablecoins can certainly be a useful, efficient consumer serving part of the financial system if they're properly regulated," Powell said. "And right now they aren't. And they have the potential to scale particularly if they were to be associated with one of the very large tech networks that exist," Powell added.
Powell also highlighted the role of stablecoins, and said he supported the views expressed in the President's Working Group's report, which called on Congress to quickly pass new legislation that would require stablecoins to be issued by insured banks. "Stablecoins can certainly be a useful, efficient consumer serving part of the financial system if they're properly regulated," Powell said. "And right now they aren't. And they have the potential to scale particularly if they were to be associated with one of the very large tech networks that exist," Powell added.
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Re:The grand master plan of crypto (Score:4, Informative)
An entire nation state with a $20 trillion GDP and the world's largest military.
Re:The grand master plan of crypto (Score:4, Insightful)
If the US can't pay soldiers anymore and the dollar is worthless, then your NFTs aren't going to be exchangeable for food either. You'll have needed to invest in bullets and beans.
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"An entire nation state with a (lot of economy) and the world's largest military."
And that's why the denarius never crashed, and we still use it to this day.
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"An entire nation state with a (lot of economy) and the world's largest military."
And that's why the denarius never crashed, and we still use it to this day.
If the US goes down the drains, the USD will crash. Having any BTC will not help you in that situation.
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> An entire nation state with a $20 trillion GDP and the world's largest military.
Thats not how "backing" works. Backing is when you promise something wont lose value by offering to exchange it for some other asset in a fixed amount.
You arent promised any fraction of the US's "GDP" or any of its military might to buttress the value of the dollar. In fact military spending depletes the value of the dollar and certainly doesnt offer any guarantees to maintain its value.
There are no guarantees that the doll
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Fiat currency is backed by the nation state that issues it....period. The nation state IS what backs that currency. That nations sovereignty and solvency is what underlies that backing. So a $20 trillion GDP and the world's strongest military absolutely plays a role in maintaining the dollars worth. Crypto currency has NONE of that. It acts like a fiat currency, but with nothing to back or support it's value beyond pure market forces. It's quite delusional for anyone to think otherwise. But that is u
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> An entire nation state with a $20 trillion GDP and the world's largest military.
Thats not how "backing" works.
Actually, it is. Stop fantasizing.
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The problems with the 'thin air' argument are:
0. The 'value' of most cryptocurrencies is their conversion to 'hard' or at least state-backed, currency. Which leads to...
1. Since many bought cryptocurrency with hard currency, they did not acquire new value, merely changed the medium from one to the other.
2. Which leads to the argument of volatility, since some very popular cryptocurrencies are not tied to anything but themselves, and fluctuate fairly remarkably.
3. And all avoids the realization that even sta
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Your Item 3 is incorrect. When created, a fiat currency needs to have pretty solid and obvious backing or it does not attain the absolutely critical level of stability any "currency" needs in order to be useful at all. Traditionally, you put in Gold for that, but other approaches exit. Then, over time (often centuries), the backing factor usually changes to the countries economy, what it produces, what is there in real-world assets like real-estate.
Seriously, get some background in financial theory before c
Re: The grand master plan of crypto (Score:2)
So your rebuttal ends up being that fiat currency is often guaranteed by they nation's economy, or reputation? I'm not sure your argument disproves my statement. Fiat currency, I've been told, is backed by the 'full faith and credit' of the backing state. Essentially, they promise. I've been misled on this?
Re:The grand master plan of crypto (Score:4, Informative)
What is the USD backed by? Unclear what he is saying differentiates it from bitcoin.
The USD is backed by the hundreds of trillions of dollars of assets owned by the citizens of the United States.
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Assets which are all nullified by the huge debt of the United States.
China owns that country, they just haven't asked to be paid yet.
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Biggest holders of US government treasuries:
Total US Debt - $21.8 trillion
Total foreign debt ownership - $7 trillion (33%)
The Federal Reserve - $7 trillion
US Social Security System - $2.9 trillion
US State Governments - $1.1 trillion
Mutual Funds - $1.3 trillion (which include foreign owners, but not direct and most are US)
Top foreign owners:
Japan - $1.2 trillion
China - $1.1 trillion
UK - $386 Billion
Ireland - $300 bi
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> The USD is backed by the hundreds of trillions of dollars of assets owned by the citizens of the United States.
Nah, that's wrong. Assets are assets, they can be valued in dollars or ounces of gold or bitcoin or sheep- whatever is fungible. Currencies have crashed in the past- including in America- while the underlying assets remained unchanged and totally fine.
The USD is backed by the fact that people have faith that they will be able to exchange some reasonable number of USD for some goods.
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he USD is backed by the fact that people have faith that they will be able to exchange some reasonable number of USD for some goods.
It's been a reliable assumption for a long time. That means something to a lot of people. It's not a 100% guarantee, but that's life.
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Worth mentioning that with poor money management (ie, printing too much cash), the USD could still lose most of its value.
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Worth mentioning that with poor money management (ie, printing too much cash), the USD could still lose most of its value.
Sure. But there is a huge interest for the whole US economy and hence the state to not let that happen. Because if that happens, the USD stops being useful for buying things abroad and all modern countries need to do that.
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Practically speaking, you are correct.
However it's easy to imagine scenarios where hyper-inflation could happen anyway. For example, imagine if most of our politicians (and a good segment of the population) decided they had found a perfect inflation hedge (either buying gold, or crypto, or whatever, and they thought they would actually make money off inflation). Then they would be motivated to encourage inflation. Another example is if people see inflation as the fault of 'the other' party, and are happy wh
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Well, yes. But practically speaking, there would be rather strong incentives to prevent that and there are organizations that have monitoring things and preventing this scenario (among others) as their primary tasks, for example the FED. It requires a lot to make these mechanisms fail really badly. They can fail, but usually it takes a really large war (compared to country size) or a prolonged really bad economic crisis.
For crypto-"currencies", it requires very little to make things fail as most of the stab
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so according to your logic, bitcoin is backed by the trillions of dollars worth of assets owned by the people who own bitcoin internationally.
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so according to your logic, bitcoin is backed by the trillions of dollars worth of assets owned by the people who own bitcoin internationally.
The US population is represented by a federal government which manages the USD. Bitcoin has no similar regulating body with as much power and clout as the US government. The USD is the world's reserve currency because of the size and strength of the US economy, the US financial markets, and the US federal government. The world is not forced to do this, it is a choice based on how strong the US Treasury is.
Comparing the strength of the entire US economy and its financial markets to the bitcoin industry is si
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What is the USD backed by? Unclear what he is saying differentiates it from bitcoin.
The USD is backed by the hundreds of trillions of dollars of assets owned by the citizens of the United States.
Ah. So please explain hyperinflation during Weimar republic. Value of Weimar mark went down trillionfold, so according to your theory that currecy is backed by national assets, the German assets must have reduced trillionfold too?
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The funny thing is. If these citizens switch to bitcoin those assets will suddenly back bitcoin.
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The USD is backed by the hundreds of trillions of dollars of assets owned by the citizens of the United States.
This is the best explanation of fiat currency I have ever seen. Bravo!
Obviously there is more nuance to it. But the general idea is there.
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Not only is the USD backed by a nation state with a 20 trillion GDP and the worlds most powerful military, it is also backed by the fact that it is the worlds reserve currency. Which means that all the other nations won't let it slide very much, because that devalues their assets, too.
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The US is backed up by assets that have value. Property, businesses, ect. Bitcoin has no inherent value. It only has worth because people believe it will become more scarce.
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It only has worth because people believe it will become more scarce.
Bitcoin is 13 years old and 90% has already been mined.
30% of the dollar supply was printed in the past two years.
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It only has worth because people believe it will become more scarce.
Bitcoin is 13 years old and 90% has already been mined.
30% of the dollar supply was printed in the past two years.
Money supply can increase or decrease as needed in the economy. Bitcoin can't.
The economy does not "need" expanding money supply. The governments do, to steal from their subjecets.
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Oh, you mean taxes, the stuff that we build roads and airports and fund the development of things like internets. I suppose you've never used any of those things so I can see how you'd be bitter about governments 'stealing from their subjects'
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Oh, you mean taxes, the stuff that we build roads and airports and fund the development of things like internets. I suppose you've never used any of those things so I can see how you'd be bitter about governments 'stealing from their subjects'
No, I mean govt stealing through debasing the currency. If you don't know the difference between that and taxes, please STFU while adults are talking.
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A US dollar is essentially a non-voting share in the corporation that is the United States of America.
The voting shareholders (citizens) elect a board of directors who can decide to issue more shares or buy back outstanding ones.
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What is the USD backed by? Unclear what he is saying differentiates it from bitcoin.
That tired old idiotic question again. The whole US economy, essentially. Also partially quite a few foreign economies, because the FED and US banks hold other currencies as well. And banks in other countries hold USD. And then there are other assets like stocks, real estate, etc. And the banking system is carefully regulated. And banks need to have real assets as safety. And banks are insured. And other things.
While Bitcoin has ... nothing?
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ah yes, the grand master plan. all of the "crypto boys" gather around at a round table and discuss this biweekly, of course. they'll all coordinate and sell out at the same time! truly nefarious!
or perhaps some will leave, and others will continue to buy every dip, and there'll be highs and lows, and some will be rich, and some will be poor. essentially just like every other speculative asset.
do you think there's a grand master plan behind people who own stocks as well?
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(those burdened by "gorvernments and regulations") - they called it "DeFi" for "Decentralized Finance", but its dirty little secret is that it's really "Deregulated Finance".
Is this ramble your morning moronic chant? There are tons of coins that have regulated backing on them already. USD being the US's version. You dumb?
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(those burdened by "gorvernments and regulations") - they called it "DeFi" for "Decentralized Finance", but its dirty little secret is that it's really "Deregulated Finance".
Is this ramble your morning moronic chant? There are tons of coins that have regulated backing on them already. USD being the US's version. You dumb?
Absolute bullshit. The UDS is not a "coin" in this sense. Stop fantasizing.
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You literally agreed that the USD is backed by the military, further down the thread.
You get retarded between this comment and that one?
as for it "not being a coin" I guess grass isnt green either. You are the morons they want buying coins. Keep going.
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You literally agreed that the USD is backed by the military, further down the thread.
I did not. Apparently you cannot read. I said it is backed by the US economy and other economies and by government stability mechanisms in said economies.
Insidiious details in his comments (Score:2)
Implications of this:
1. A bunch of other cryptocurrency tokens should be declared illegal.
2. The US congress has the jurisdiction do legislate that.
3. Only the long-established financial interests should be allowed to participate in the creation and operation of this new generation of algorithmic financial infrastructure, despite having ignored and actively resisted it.
4. Central regulation, by
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I mean, no one issuing stablecoins in the USA has done so without jumping through the hoops- for instance, coinbase's USDC is fine under these rules, because coinbase is also a bank. This would be about tether, USDT- which is not from a US company. It would be more interesting if he was trying to shut down trading of USDT on centralized exchanges in the US, or make it illegal for Americans to interact with USDT (and all other stablecoins issuesd by non-American banks), but there's no sign of such a thing.
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Hahahah, got to love it: "Please note that this license does not cover the transmission of virtual currency."
No, Coinbase is not a bank.
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Well, crypto-"currencies" are still no currencies and unless that list (well, the real version, not your mangled one) gets implemented, even "stable"-cons are not stable.
The REAL reason why Banks hate crypto (Score:2)
They don't like Crypto Sam I am. They don't like bitcoins
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Crypto is not instantaneous, it's as fast as the exchanges. Bank transfers could be as fast as bitcoin, but they are not for regulatory purposes. Soon Crypto will face the same scrutiny
Re: The REAL reason why Banks hate crypto (Score:2)
Crypto is instantaneous I'll lend you 1BTC. If you can turn it into cash in, forget instantaneous, let's say 5 minutes you can keep it. If not, you give me my 1BTC back plus one more. Betcha won't.
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Better. I'll give you 1 BTC, and you give me 1 back at the same time. If it's instantaneous then it's a fair exchange and neither of us are risking anything.
Ready? Go.
Crypto is indeed not a big issue (Score:2)
Now printing a lot of money out of thin air like a madman on the other hand...
Rant (Score:2)
And our inflation is transitory (Score:3)
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How can someone so wrong be in a position with so much power?
Because he wouldn't have been able to get into that position if he had said otherwise.
That is very much not what he said (Score:2)
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Nope. The one out of touch is you.
Admitting fragility is even more destabilizing (Score:2)
I'd not expect the Federal Reserve to _ever_ admit that any economic practice is destabilizing. "All is well in the garden" is the mantra of bureaucracies around the world.