Author Topic: Money/inflation, the Fed, Banking, Monetary Policy, Dollar, BTC, crypto, Gold  (Read 512830 times)

Crafty_Dog

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The Fed: What us worry?
« Reply #1300 on: March 17, 2021, 06:02:37 PM »
WSJ

So much for interest-rate and inflation jitters. The Federal Open Market Committee on Wednesday dismissed the recent show of market nerves and kept its foot on the monetary accelerator even as it predicts a post-pandemic economic boom this year and into 2022. Happy days are here again.

FOMC members raised their median growth estimate for 2021 to 6.5% from 4.2% in December. They predict the current 6.2% jobless rate will fall to 4.5% by year end, down from their 5% estimate in December. Robust growth will continue in 2022 at 3.3% while unemployment falls to 3.9%. This is a V-shaped recovery, and it’s nice to see the Fed finally acknowledging this now that Chairman Jerome Powell no longer feels he has to lobby for a fiscal blowout.

The monetary sages are even buoyant that long-dormant inflation will finally breach the Fed’s 2% target and hit 2.4% this year. The Fed’s PCE price deflator has risen 2.8% in the last three months at an annual rate, so hitting that target should be easy. But then the FOMC forecasts that inflation will fall back modestly and stay at 2% or above through 2023, meaning that any increase in prices will be transitory.


That’s where questions arise. The FOMC’s sunny forecasts coincide with its predictions that it will keep its interest-rate target at near zero into 2024. The Fed will also have to keep buying Treasury bonds at a gulping pace to finance soaring federal debt. In other words, the Fed is forecasting that the economy will boom, reaching nearly full employment with inflation at or above its 2% target, but it still won’t tighten monetary policy.


If this all turns out to be true, Milton Friedman will rise from the dead and rewrite his monetary history.

It’s hard to believe all of the Fed forecasters believe this, and seven of the 18 dared to predict rate increases in 2023 and (gasp) four of them even in 2022. But that’s all something for financial markets to worry about in the future. For now, and as far as Chairman Powell can see, the policy is to keep flooring it.

G M

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DougMacG

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Re: Pushing on a string?
« Reply #1302 on: March 18, 2021, 09:09:19 AM »
https://charleshughsmith.blogspot.com/2021/03/our-dead-money-economy.html?m=1


Interesting analysis.  Some oversimplification [necessary to summarize 40 years in a short piece] but also some excellent points in there.

I am also interested in velocity of money, but none of these measures are perfect so it takes some analysis to know what we are looking at.
From the article:  "There's one part of the definition that is often overlooked: the velocity of money only tracks domestically produced goods and services, so all the transactions that end up in a container of goods from China being unloaded in Long Beach aren't counted."

For example, the US had a phenomenal economy from 2018 through the start of covid 2020, as good as anyone could hope for given the political conditions of the country, but that barely shows  in this M2 velocity chart:

https://fred.stlouisfed.org/graph/?id=M2V

Can't put toothpaste back in the tube, or un-print money.  Look at M2 2020:
https://fred.stlouisfed.org/series/M2SL

Crafty_Dog

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Scott Grannis responds
« Reply #1303 on: March 18, 2021, 09:23:37 AM »
I much prefer looking at “money demand” rather than the velocity of money. M2/GDP (money demand) is just the inverse of GDP/M2 (velocity of money). When you look at it my way, instead of  concluding that the banking system is “pushing on a string” you see that the demand for money is unprecedented. And obviously it is not going to remain in unprecedented territory forever. People have stockpiled tons of M2 relative to their incomes and they are going to want to reduce this at some point. And if the Fed doesn’t reduce the amount of M2 in the economy, then a decline in M2 demand can only produce one result: higher inflation.

This is what I have been talking about on my blog off and on for years. And it looks like the demand for M2 is in fact beginning to decline. Inflation expectations are increasing significantly, but they have a long way to go.

Crafty_Dog

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a response to Scott Grannis
« Reply #1304 on: March 19, 2021, 05:48:01 AM »

Last time we talked about this concept, Scott, you didn't explain why you think my logic is in error. If you can, I sure would appreciate that because your argument just isn't making any sense to me. To keep it simple, I will make just two points.

First: Rising M2/GDP does not imply a high demand for money. Last time, you said that you believe it does indicate a high demand because it is being held in zero interest demand accounts and other very safe venues. My comeback was, and still is, that the aggregate amount of money in such accounts cannot change until the Fed reverses its policies. If I want to reduce my bank account, I can buy something and the money will disappear from my checking account -- but it will immediately appear in the seller's checking account. The aggregate number of dollars held in zero interest bank accounts cannot be reduced by individuals who want to hold smaller cash balances. It's impossible.

Second: People have been trying to reduce cash balances. The Fed's notion that inflation exists only when the CPI (or core CPI) is rising is pretty strange. The CPI is based on a narrow list of goods -- but people can obviously reduce their individual cash balances by buying many other things.

Until recently, all of the Fed's newly created money was going to investment security holders. Isn't it reasonable to assume that those new-money recipients would buy another investment product if they found their cash balances too high? Interestingly, when we look at securities we see rising prices in nearly every category. Yes, the very safe Treasury bills have been bid up to virtually a zero yield. But every other investment security has also been bid up to very low yields. Even "junk" bonds enjoy historically low yields, and many extremely risky "investment" products have been bid up to interesting heights: Tesla, ARKK, SPACS, ...

These facts suggest to me that people are, in fact, trying to reduce their cash balances. But every security purchase simply moves the excess cash into somebody else's bank account, and then the next transaction puts it into somebody else's account, ... and the churning continues. With excess cash in the aggregate, people will keep right on buying until some part of the population would rather hold the cash than buy more securities at current prices. As people reach that point, some may decide to increase their spending on non-investment goods -- but these investors are not going to buy more hamburger. They are going to buy luxury goods, collectibles, and countless other items that don't show up in the CPI.

As spending on goods increases, of course, the new cash recipients will increasingly be "ordinary" people. And with the distribution of COVID payments, that process may be accelerated. But even there, some people think that many COVID billions have been used by new retail "investors" to buy highly speculative securities and options -- driving selected prices to unimaginable heights for a time.

Anyway, Scott, please show me where this logic breaks down. I would appreciate it very much.

Crafty_Dog

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Crafty_Dog

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GBTC
« Reply #1306 on: March 19, 2021, 03:05:17 PM »
« Last Edit: April 07, 2021, 07:59:14 AM by Crafty_Dog »


ccp

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"Things Are Out Of Control" - There Is A Shortage Of Everything And Prices Are Soaring: What Happens Next?"

obvious
we fight racism sexism transism muslim ism
  anti semitism anti asiansim anti black and tan ism
  call every white person who is not a democrat a nazi racist privileged
 
shut down oil and gas
spend like crazy hyenas
tax like crazy coked up hyneas
massively increae dole government
make slaves out of tax payers

make us the laughing stock overseas
and have the elites steal rob control manipulate
and jerk us around

I dont know if that is what we should do but this what those who control us are doing

time to somehow protect ourselves as GM has been saying for yrs

and pray for bitcoin  :wink:

G M

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You need to get to the reddest county in the reddest state you can find. A place where you have water and the ability to grow food.
Once things really collapse, turn kinetic, then it's too late.


"Things Are Out Of Control" - There Is A Shortage Of Everything And Prices Are Soaring: What Happens Next?"

obvious
we fight racism sexism transism muslim ism
  anti semitism anti asiansim anti black and tan ism
  call every white person who is not a democrat a nazi racist privileged
 
shut down oil and gas
spend like crazy hyenas
tax like crazy coked up hyneas
massively increae dole government
make slaves out of tax payers

make us the laughing stock overseas
and have the elites steal rob control manipulate
and jerk us around

I dont know if that is what we should do but this what those who control us are doing

time to somehow protect ourselves as GM has been saying for yrs

and pray for bitcoin  :wink:

G M

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DougMacG

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Re: Bitcoin ATMs
« Reply #1311 on: March 21, 2021, 04:15:34 PM »
https://www.zerohedge.com/markets/bitcoin-atms-are-landing-gas-stations-delis-and-convenience-stores-near-you

Wherever lottery tickets are sold.    :wink:

That's a good idea.  I remember reading about a gold bar vending machine in Dubai, but this is way more practical. 

At 6 - 20% fee, who cares how much they buy, the more the better.
----------
https://btcgeek.com/buy-fractions-bitcoin/
« Last Edit: March 21, 2021, 04:22:51 PM by DougMacG »

ya

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Unbelievable, 1 BTC=1kg Gold

« Last Edit: March 22, 2021, 04:24:34 AM by ya »

ccp

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"Unbelievable, 1 BTC=1kg Gold"

The ingenuity of man!

since gold was discovered man tried to be able to make
i understand that it is possible today to do. but at huge cost and with atomic size results

so man decided to invent a virtual gold!

price is high .  a bitcoin specialist we follow keeps raising his buy price - now to $74 K
 that said , who knows of course
 maybe an average retail investor like me could buy 1/10 of a coin 
  but is it worth it?  If one believes in hundreds of thousands for a coin in yrs to come , or more,  yes

tongue in cheek:

https://www.youtube.com/watch?v=JnbfuAcCqpY

waiting for the Left to announce a specific targeted crypto tax
   they will do this as they spend all night dreaming of ways to pick off more personal wealth form the new members of slavery -   taxpayers

Crafty_Dog

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What do we make of GBTC's chart?
« Reply #1314 on: March 22, 2021, 09:40:03 AM »

ccp

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https://www.yahoo.com/news/lawyer-cuomo-accuser-warns-ny-202100841.html

up down left right round and round we go , where the Dreidel stops nobody knows.

A lot of talking heads all with opinions enough to make your head spin
establishing the "grain of salt " rule .

Take what they say with a grain of salt.

I remember seeing Charles Payne on a show once.  They were going around the tables asking a few "analysts" including him about a particular stock and if it was a buy.
When they got to Charles he kind of hesitated they said "buy".
Next he was asked why , and he had not a clue.
Didn't even know what the company was.


Crafty_Dog

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GBTC failing to meet/match previous high and turning down.  Sure hope it respects the 50 day.

ccp

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hedgefund man says us might make bitcoin illegal
« Reply #1317 on: March 24, 2021, 09:52:10 AM »
https://finance.yahoo.com/news/ray-dalio-on-bitcoin-and-probability-of-ban-130008375.html

he compares it to 1933 when FDR made owning gold illegal

of course he did not mention Gerald Ford reversed it in 1974.

of course as a hedge fund owner what are the odds he is either short or actively buying BC as we speak

to me the fact this guy needs to even talk about is a plus for bitcoin

US could make it illegal
after mulling it , I would guess the Gov .especially while controlled by Dems will tax it

crypto tax

that way rather then get rid of it they get in on it and rob the rest of us as usual.
   

Crafty_Dog

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GBTC down on increasing volume today; threatening the 50 day line.

ya

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GBTC is having issues because there are many BTC funds now to share the wealth (Canada, Brazil Europe etc). This has lead to a decline in the premium. This is a "normal" BTC pull back so far.

Crafty_Dog

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DougMacG

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Re. Money, Tesla, Bitcoin
« Reply #1321 on: March 26, 2021, 06:04:31 AM »
Bitcoin is not a currency if the product is priced in dollars and converted  to btc.  Tesla is screwing the btc customer on the return policy: https://mobile.twitter.com/jordan_mcrae_/status/1374741251895988224/photo/1

ya

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BTC supply is shrinking...BTC can only go up

DougMacG

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"BTC can only go up"

   - Reminds me of some things I may have said about tech in the time leading up to the tech crash.  Some specific stocks come to mind.  I don't want to be the naysayer or spoil any fun but I think there are at least two directions it can go at any time.  Limited supply is definitely its strength, but demand, it seems to me, is the main determinant.

Crafty_Dog

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So, if YA is right then what we are seeing now is a moment of consolidation to be followed by another sharp upward movement on volume triggered by some manifestation of shit heading for the fan? 

ya

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"BTC can only go up"

   - Reminds me of some things I may have said about tech in the time leading up to the tech crash.  Some specific stocks come to mind.  I don't want to be the naysayer or spoil any fun but I think there are at least two directions it can go at any time.  Limited supply is definitely its strength, but demand, it seems to me, is the main determinant.

Yes you are right theoretically...but if you scroll to the right, supply shortage has never been more acute, institutional demand is rising, pension funds are starting to take positions, sovereign states are likely getting involved. Today BNY Mellon came out with their BTC note, they will allow their clients to buy and store BTC, many other banks doing the same. Every day only 900 new BTC can be mined...the rest must come from people willing to sell.

See Institutions below

https://www.youtube.com/watch?v=y24_-GFEfsc
« Last Edit: March 28, 2021, 07:14:14 PM by ya »

ccp

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Ya
you make a good case

how many times do we hear bashing of bitcoin on CNBC etc by some big shot
only to find out not long after the same big shot is buying millions or even more
all the while

My thought is US will not ban it
but they will find way to tax it is confiscate a % like they do in every other way in society

One could argue Bitcoin may not go up,
but with Dems in power NO ONE can argue taxes will not go up
 or spending will not go through the roof.

ccp

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ether
« Reply #1327 on: April 01, 2021, 02:21:29 PM »
bitcoin market cap 1.1 trillion

ethereum market cap ~ 200 billion.

ethereum could go up mulitple times this yr catching up to bitcoin

is. shaping up to be the facebook or the apple app store of cryptocurrencies

near its high

Crafty_Dog

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Help me understand Ethereum and its interaction/competition with BTC please.


ccp

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ethereum new high
« Reply #1330 on: April 02, 2021, 08:07:59 AM »
may be a buy on pullback if there is one

on its way up to $1,000,000,000,000
market cap

by end of yr ?  some predict
 and so far they are right about BC

(of course I have add - do not spend more than you can afford to lose  :wink:)

I would have bought more but am out of cash.


ccp

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FWIW Mark Cuban likes ether
« Reply #1331 on: April 02, 2021, 04:40:12 PM »
https://news.bitcoin.com/shark-tanks-mark-cuban-says-ethereum-is-closest-crypto-we-have-to-a-true-currency/

he either reads the same sources as me OR
he reads this board and saw my previous post

 :wink:

ya

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Help me understand Ethereum and its interaction/competition with BTC please.

Please see this free site https://danheld.substack.com/p/bitcoin-vs-ethereum

Crafty_Dog

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Thank you CCP and YA.

ccp

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https://www.newsbtc.com/analysis/eth/ethereum-bullish-lifetime-opportunity/

100. apps now on ethereum

https://consensys.net/blog/news/90-ethereum-apps-you-can-use-right-now/

Apple has 1.96 million apps

Ethereum leads the pack on becoming the go to app store of crypto ( so I read)




Crafty_Dog

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So, how do I buy Ethereum?

ya

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Open an acct with Coinbase and Coinbase Pro. Fees are less on Coinbase pro. If you want to store them with the exchange, it can be done free at Coinbase, or you can store them yourself. Self custody is a learning curve and worth it, if you are investing a significant amount. Start with a small amount and learn the process.

ETH has its supporters, but some pros feel that it will never be money, though it will have many applications on the ETH blockchain. The reason to buy should not be unit bias, i.e. its cheaper, because one can also buy a fraction of a BTC. Plotting a long term chart of ETH-USD (expressed in $) and ETH-BTC (expressed in BTC) is instructive and eye opening, see chart from 2017 onwards Check out Tradingview.com

ETH expressed in BTC looks pathetic, ETHBTC
ETH expressed in USD looks great, ETHUSD
« Last Edit: April 03, 2021, 08:06:00 PM by ya »

ya

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BTC and the American West, a fun serious read
https://www.citadel21.com/bitcoin-and-the-american-west

Crafty_Dog

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GBTC chart
« Reply #1338 on: April 05, 2021, 09:18:22 AM »
The GBTC chart is at an interesting moment.  The previous high failed to meet/exceed the prior high and then on increasing volume there was a test of the 50 day line.  Now the chart test the previous high-- on low volume.

Crafty_Dog

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WSJ: China creates its own digital currency
« Reply #1339 on: April 05, 2021, 10:51:06 AM »
China Creates its Own Digital Currency, a First for Major Economy
A cyber yuan stands to give Beijing power to track spending in real time, plus money that isn’t linked to the dollar-dominated global financial system
The digital yuan seen on a mobile phone. COSTFOTO/BARCROFT MEDIA/GETTY IMAGES
By James T. Areddy
April 5, 2021 10:48 am ET
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A thousand years ago, when money meant coins, China invented paper currency. Now the Chinese government is minting cash digitally, in a re-imagination of money that could shake a pillar of American power.

It might seem money is already virtual, as credit cards and payment apps such as Apple Pay in the U.S. and WeChat in China eliminate the need for bills or coins. But those are just ways to move money electronically. China is turning legal tender itself into computer code.

Cryptocurrencies such as bitcoin have foreshadowed a potential digital future for money, though they exist outside the traditional global financial system and aren’t legal tender like cash issued by governments.

China’s version of a digital currency is controlled by its central bank, which will issue the new electronic money. It is expected to give China’s government vast new tools to monitor both its economy and its people. By design, the digital yuan will negate one of bitcoin’s major draws: anonymity for the user.

Beijing is also positioning the digital yuan for international use and designing it to be untethered to the global financial system, where the U.S. dollar has been king since World War II. China is embracing digitization in many forms, including money, in a bid to gain more centralized control while getting a head start on technologies of the future that it regards as up for grabs.

“In order to protect our currency sovereignty and legal currency status, we have to plan ahead,” said Mu Changchun, who is shepherding the project at the People’s Bank of China.

Digitized money could reorder the fundamentals of finance the way Amazon.com Inc. disrupted retailing and Uber Technologies Inc. rattled taxi systems.

That an authoritarian state and U.S. rival has taken the lead to introduce a national digital currency is propelling what was once a wonky topic for cryptocurrency theorists into a point of anxiety in Washington.

Asked in recent weeks how digitized national currencies such as China’s might affect the dollar, Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell have said the issue is being studied in earnest, including whether a digital dollar makes sense someday.


The dollar has faced challengers before—the euro, to name one—only to grow more important when rivals’ shortcomings became apparent. The dollar far outstrips all other currencies for use in international foreign-exchange trades, at 88% in the latest rankings from the Bank for International Settlements. The yuan was used in just 4%.

Digitization wouldn’t by itself make the yuan a rival for the dollar in bank-to-bank wire transfers, analysts and economists say. But in its new incarnation, the yuan, also known as the renminbi, could gain traction on the margins of the international financial system.

It would provide options for people in poor countries to transfer money internationally. Even limited international usage could soften the bite of U.S. sanctions, which increasingly are used against Chinese companies or individuals.

Josh Lipsky, a former International Monetary Fund staffer now at the Atlantic Council think tank, said, “Anything that threatens the dollar is a national-security issue. This threatens the dollar over the long term.”


A customer pays using the digital yuan at a department store in Beijing. Some people were given small amounts of the digital currency to test it.
PHOTO: VCG/GETTY IMAGES
The digital yuan resides in cyberspace, available on the owner’s mobile phone—or on a card for the less tech-savvy—and spending it doesn’t strictly require an online connection. It appears on a screen with a silhouette of Mao Zedong, looking just like the paper money.

In tests in recent months, more than 100,000 people in China have downloaded a mobile-phone app from the central bank enabling them to spend small government handouts of digital cash with merchants, including Chinese outlets of Starbucks and McDonald’s.

“It’s pretty good,” said Tao Wei, a young woman in Beijing, after spending a test allotment. It took her just an instant to pay for her two-year-old daughter’s birthday portrait by pointing her iPhone toward a scanner. The Chinese Communist Party has also let members settle monthly dues with digital yuan.

China has indicated the digital yuan will circulate alongside bills and coins for some time. Bankers and other analysts say Beijing aims to digitize all of its money eventually. Beijing hasn’t addressed that.

Digitized money looks like a potential macroeconomic dream tool for the issuing government, usable to track people’s spending in real time, speed relief to disaster victims or flag criminal activity. With it, Beijing stands to gain vast new powers to tighten President Xi Jinping’s authoritarian rule.

China's New Digital Currency Is Easy to Use but You'll Be Watched
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China's New Digital Currency Is Easy to Use but You'll Be Watched
China's New Digital Currency Is Easy to Use but You'll Be Watched
The WSJ traveled to Chengdu, China, to see the money revolution in action. Photo: Lorenz Huber for The Wall Street Journal
Elements of this kind of control already exist in China, as digital payments have become the norm. Mr. Mu has said the central bank will limit how it tracks individuals, in what he calls “controllable anonymity.”

The money itself is programmable. Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start.

It’s also trackable, adding another tool to China’s heavy state surveillance. The government deploys hundreds of millions of facial-recognition cameras to monitor its population, sometimes using them to levy fines for activities such as jaywalking. A digital currency would make it possible to both mete out and collect fines as soon as an infraction was detected.

A burst of cash-accumulation in China last year indicates residents’ concern about the central bank’s eye on every transaction. Song Ke, a finance professor at Renmin University in Beijing, told a recent conference that China’s measure of yuan in circulation, or cash, popped up 10% in 2020.

What about volatility? Cryptocurrencies such as bitcoin are famous for that. But the People’s Bank of China will strictly control the digital yuan to ensure there aren’t valuation differences between it and the paper bills and coins.


That means it won’t make sense for investors and traders to speculate in the digital yuan as some do with cryptocurrencies. Anti-counterfeiting measures will be designed to make it impossible for anyone besides the People’s Bank of China to create new digital yuan.

While China hasn’t published final legislation for the program, the central bank says it may initially impose limits on how much digital yuan individuals can keep on their person, as a way to control how it circulates and provide users a dose of security and privacy.

China’s central bank won’t use the new technology as a way to get more money into circulation, since every yuan issued digitally will essentially cancel one yuan circulating in physical form.


The People's Bank of China will control the value of the digital yuan. The PBOC building in Beijing.
PHOTO: QILAI SHEN/BLOOMBERG NEWS
When bitcoin launched in 2009, most nations’ policy makers largely played down its significance. China paid attention.

Always hypervigilant to threats, the leadership feared that a cryptocurrency could undermine government power if people began using it in earnest. Zhou Xiaochuan, China’s top central banker from 2002 to 2018, has said bitcoin both dazzled and frightened him. In 2014, he launched a formal study for a possible Chinese digital currency.

China hardly looked like a currency pioneer. Its strict government control of the yuan, for instance, ran counter to the rip-roaring trade in other major currencies.

At the same time, a financial-technology revolution was under way in China, with the frenetic adoption of the AliPay and WeChat apps making cash mostly unneeded, and turbocharging startup companies with ways to pay on the go.

Then, in mid-2019, Facebook Inc. said it would pursue its own cryptocurrency. The realization this could circulate in a user base far bigger than any national population brought immediate recognition that technology could upend traditional currencies.

While U.S. regulators focused on stopping Facebook, ultimately succeeding, China accelerated its pursuit of a digitized yuan, launching trials in April 2020.


Suddenly, China’s money moves bore watching. Central bankers from the U.S. and other Western economies fret that what Facebook planned with a digital currency could now be done by China, a powerful government.

“There is a sort of Uber fear,” said a senior European central banker who has spoken to Western counterparts, referring to stress on taxi systems when the ride-hailing company arrived in cities around the world. “You don’t want another country’s currency circulating among your citizens,” the banker said.

The U.S., as the issuer of dollars that the world’s more than 21,000 banks need to do business, has long demanded insight into major cross-border currency movements. This gives Washington the ability to freeze individuals and institutions out of the global financial system by barring banks from doing transactions with them, a practice criticized as “dollar weaponization.”

American sanctions on North Korea and Iran for nuclear programs hobble their economies. Swiss banks abandoned their famous secrecy eight years ago to avoid Washington’s wrath in a showdown over taxes. After the February coup in Myanmar, the U.S. used sanctions to block the movement of top military officials’ financial assets through banks. The Treasury’s database of sanctioned individuals and firms—the “Specially Designated Nationals and Blocked Persons List”—touches virtually every nation on earth.

Beijing is especially discomfited by a fast-expanding part of the sanctions register: more than 250 Chinese names, including politicians the U.S. accuses of atrocities against ethnic minorities or of curtailing freedoms in Hong Kong. Sanctions left Carrie Lam, China’s top official in Hong Kong, with a stockpile of cash in her home because banks feared that accepting her business would risk exposing them, too, to an American freeze.

The digital yuan could give those the U.S. seeks to penalize a way to exchange money without U.S. knowledge. Exchanges wouldn’t need to use SWIFT, the messaging network that is used in money transfers between commercial banks and that can be monitored by the U.S. government.

The chance to weaken the power of American sanctions is central to Beijing’s marketing of the digital yuan and to its efforts to internationalize the yuan more generally. Speaking at a forum last month, China’s Mr. Mu, the central bank official, repeatedly said the digital yuan is aimed at protecting China’s “monetary sovereignty,” including by offsetting global use of the dollar.

In a 2019 war game at Harvard University, veteran U.S. policy makers scrambled to craft a response to a nuclear-missile development by North Korea secretly funded with digital yuan. Because of the currency’s power to undercut sanctions, the participants, including several who are now in the Biden administration, deemed it more threatening than the warhead.

Nicholas Burns, a longtime American diplomat and favorite to be ambassador in Beijing, told the group, “The Chinese have created a problem for us by taking away our sanctions leverage.”

As China’s marketing for the digital yuan kicks into high gear, an English-language animation circulated online by state broadcaster CGTN shows a man in an American-flag shirt knocked out by a golden coin depicting digital yuan.


A VIDEO FROM CHINA’S STATE MEDIA EXPLAINS THE DIGITAL YUAN

“This is one of the building blocks of China’s move toward world market status and greater involvement in setting the framework of the global economy,” the narrator says.

Initially, the digital yuan won’t change significantly how money circulates through China’s financial system. Under the central bank’s direction, the six biggest commercial banks—all government-owned—will distribute digital yuan to smaller banks and to app providers AliPay and WeChat, which are expected to manage sender-recipient interactions.

Unlike electronic transactions today, the digital yuan is designed to move from A to B instantaneously, at least in theory removing a way banks and financial apps profit off fees and brief built-in delays in such handoffs. The only necessary middleman is the central bank. Mr. Mu has said the digital yuan, because it is state-backed, will reduce risks to the financial system posed by China’s dominant payment platforms that are private companies.

When a global TV audience turns its attention to skaters and bobsledders in Beijing’s Winter Olympics next February, authorities are expected to give visiting athletes digital yuan to spend while they are in the spotlight, an indication of ambitions that stretch beyond China’s shores.

Beijing has joined an initiative to develop protocols for the cross-border use of digital currencies, working with the Bank for International Settlements and the central banks of Hong Kong, Thailand and the United Arab Emirates.


A sculpture in Guangzhou represents an ancient Chinese coin and a suanpan, a type of abacus used widely in the past. China has launched a trial of a trial of digitized money.
PHOTO: ALEX PLAVEVSKI/EPA-EFE/SHUTTERSTOCK
China’s digital strides draw attention to how the U.S. needs to modernize its own financial infrastructure, according to Kevin Warsh, a former Fed governor now at Stanford University’s Hoover Institution. “If we wait 5 or 10 years, we may well end up with some very bad policy choices,” he said.

More than 60 countries are at some stage of studying or developing a digital currency, according to research group CBDC Tracker. Digital currencies hold some of their biggest potential for the 1.7 billion people globally who the World Bank says lack a bank account. The Bahamas has already issued a digital currency to address financially underserved populations. Some central banks say such currencies would come in handy for families of migrant laborers who make tiny fund transfers that are cumbersome and expensive.

SHARE YOUR THOUGHTS
What long-term implications do you think a digital yuan might have? Join the conversation below.

The senior European central banker noted that international person-to-person money transfers can take days and worried that speed and efficiency could eventually make the digital yuan a preferred currency for remittances as countries deepen financial ties with China.

China, with a working model, is offering a ready way for managing digital cash. President Xi last year called for China to seize opportunities to set international rules for digital currencies, much as Beijing has sought to influence and dominate an array of advanced-technology standards such as for 5G telecommunications, driverless cars and facial recognition.

Asked during a recent Senate appearance whether the dollar could be digitized to help the U.S. defend its supremacy, the Fed’s Mr. Powell said researching that question is a “very high-priority project.”

“We don’t need to be the first,” he said. “We need to get it right.”

—Grace Zhu contributed to this article.



DougMacG

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Re: WSJ: China creates its own digital currency
« Reply #1340 on: April 05, 2021, 12:32:41 PM »
"It is expected to give China’s government vast new tools to monitor both its economy and its people."

   - I don't think people are going to choose these state based currencies.  Hard to imagine who you trust less to monitor you than the Chinese government.  Looks like our own government wants to follow suit and monitor us more thoroughly.  The cash economy is their enemy.  If Bitcoin is a way around them, they will fight it.  From my point of view, finding all the ways to track us more thoroughly is evil and dangerous.

ya

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crypto market cap exceeds that of banks
« Reply #1341 on: April 06, 2021, 04:13:20 AM »
Crypto market cap exceeds that of banks



« Last Edit: April 06, 2021, 06:39:08 AM by Crafty_Dog »

ya

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Wildly bullish. The BTC peak is far away. Outflows from exchanges means no one is selling. The peak inflow, corresponds to 2017 BTC peak.


Crafty_Dog

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GBTC chart continues to look weak.  Even the past two days up were on really low volume.

ya

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GBTC price is messed up due to its premium. Need an ETF ASAP. I have some BITW which has the same issue. Am planning to sell on this spike and then wait for the ETF. I read somewhere that Fidelity acct holders can buy the Canadian ETF, but you have to call their international desk.

Crafty_Dog

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Confused.  GBTC is an ETF, yes?

ya

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No, there is no ETF in the USA.

Crafty_Dog

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Then what is GBTC?

G M

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DougMacG

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Re: Full faith?
« Reply #1349 on: April 11, 2021, 06:02:06 AM »
https://www.rogueeconomics.com/bill-bonner-diary/advice-for-holders-of-government-bonds/

"the feds are causing inflation intentionally, by passing out too much money."

   - True and they have no shame about it anymore. With end of "stepped up basis",, they tax the inflation they create.    In the long run there is no hedge against it.  It is wealth destroying. A taking without trial or compensation.
« Last Edit: April 11, 2021, 06:04:19 AM by DougMacG »