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Should The Bankers Be Careful What They Wish For?


wonderpup

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HOLA441

The prospect entirely without High Street branches isn't a very appetising one. It might save the banks money but do they expect people to turn up at the Head Office with any complaints etc - probably not so customers will be stuck. Computer says No.

All things being equal (similar interest rates, similar financial stability etc etc) then few would care about the name of the lender. There will be rules and regulations limiting entry but once in if nothing changes then they can create money out of thin air to their heart's content - who wouldn't want a business like that. Digital money is one less hurdle to entry. It is a surprise that the likes of Amazon, Microsoft etc and all the others haven't made the move - like Virgin Money.

Maybe they see some problems ahead or are waiting for the economic collapse dust to clear. It wouldn't be a complete surprise if the VI established bankers rewrite the rules (or might have done so already) to make it very difficult for even very successful and big companies to gain full entry to full banking. Perhaps Virgin just managed to opportunistically slip through the net in a moment of government desperation.

I think the idea of Googs is an interesting one along with Bitcoin as clearly in time there are going to be alternatives to the traditional currencies and how/if they will manage to get them into general use and even eventually supplant traditional money is also interesting. It also ties into issues of control and possible loss of freedom etc as well of course.

Are you kidding? The big banks and mega-corps already create money out of thin air to their heart's content! Jeff Skilling's reinvention of Enron as a de facto stockmarket for natural gas in 1992, a considerable for instance. To further that end, these groups lobbied continuously for the repeal of decades-old regulatory structures such as Glass-Steagal and used their effective ownership of the political class globally to water down and/or postpone the introduction of successive Basel treaties. They campaigned vigorously to ensure the legal status of derviatives remained unsupervised and opaque and that the markets in which these debt instruments are traded were kept offshore and untaxed. Central banks don't control the money supply, and haven't done so for decades, a situation entirely akin with nineteenth century America before private banks were outlawed from printing their own local currencies.

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HOLA442
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HOLA443

There needs to be an alternative to State (cashless money) not least because it prevents the system of money being used to control democracy.

In a cashless society the State could just turn off money, and starve protesting citizens into submission.

If they could survive on say 'Google credits' or bitcoins it makes that impossible.

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HOLA444

Are you kidding? The big banks and mega-corps already create money out of thin air to their heart's content! Jeff Skilling's reinvention of Enron as a de facto stockmarket for natural gas in 1992, a considerable for instance. To further that end, these groups lobbied continuously for the repeal of decades-old regulatory structures such as Glass-Steagal and used their effective ownership of the political class globally to water down and/or postpone the introduction of successive Basel treaties. They campaigned vigorously to ensure the legal status of derviatives remained unsupervised and opaque and that the markets in which these debt instruments are traded were kept offshore and untaxed. Central banks don't control the money supply, and haven't done so for decades, a situation entirely akin with nineteenth century America before private banks were outlawed from printing their own local currencies.

No I wasn't kidding. I'm sure you're correct about the big banks and mega corps but I was specifically referring to Google and similar when saying they could create money out of thin air to their heart's content if given full banking status - legally and without lobbying as part of the existing system and all within the current law.

Indeed the mega corps seem to have had a lot of financial freedoms and lack of scrutiny but part of the period of apparent "success" of the likes of Enron was as a result of their illegal operations which they eventually fell foul of. Also they didn't have banking status for bail outs. Accepted that the way some of them operate is almost as good as the freedoms the banks have but to get to the same scale they have to be even more illegal than the banks illegal operations. It's a separate issue.

Edited by billybong
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HOLA445

It was apparent to me very early on in Bitcoin's lifecycle that Google were intrigued by it, and there are connections to some employees who have branched into the Bitcoin arena since then. They are surely looking to profit from it, or look at doing something similar in order to profit from it.

However, one worrying aspect that has come to light about the Bitcoin project is that although the software and the network is decentralized, the development isn't, and there are significant egos and various political infighting under the hood that are rocking the foundations. It was highlighted recently for example that with enough support from half a dozen "mining pool" owners (collective groups of individual miners), a couple of developers could fork the blockchain, change the rules of the software to suit their own agenda and establish a tyrannical hierarchy within the development process that would have hijacked the decentralised ethos of the Bitcoin community and potentially created something very far from it. They tried, and they failed. But it wasn't necessarily the decentralised nature of the project that prevented them from succeeding. It was simply that a very select handful of people with enough power made the right decision not to support them. Not something I personally have much faith in going forward. I always suspected if Bitcoin were to perish it would be from the enemy within. Computers I trust, humans not so much...

There is also an argument that a handful of developers are holding back development due to their connections with a startup company that relies on part of the software being the way that it is, and not changing. There's no doubt in my mind that if this sort of corruption is allowed to flourish it will kill Bitcoin. The creator, Satoshi Nakamoto, was obviously very bright. Unfortunately, mankind will always find a way to screw things up when they're onto a good thing. I hope it evolves. There is a lot of utility there.

Google have a tendency to enter their arena very carefully, with a longer term strategy in mind, and they are likely wary of Bitcoin's experimental nature, despite being very aware of it. So I would agree with the OP that they are positioning themselves for something else. I think it's good logic.

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HOLA446

It was apparent to me very early on in Bitcoin's lifecycle that Google were intrigued by it, and there are connections to some employees who have branched into the Bitcoin arena since then. They are surely looking to profit from it, or look at doing something similar in order to profit from it.

However, one worrying aspect that has come to light about the Bitcoin project is that although the software and the network is decentralized, the development isn't, and there are significant egos and various political infighting under the hood that are rocking the foundations. It was highlighted recently for example that with enough support from half a dozen "mining pool" owners (collective groups of individual miners), a couple of developers could fork the blockchain, change the rules of the software to suit their own agenda and establish a tyrannical hierarchy within the development process that would have hijacked the decentralised ethos of the Bitcoin community and potentially created something very far from it. They tried, and they failed. But it wasn't necessarily the decentralised nature of the project that prevented them from succeeding. It was simply that a very select handful of people with enough power made the right decision not to support them. Not something I personally have much faith in going forward. I always suspected if Bitcoin were to perish it would be from the enemy within. Computers I trust, humans not so much...

There is also an argument that a handful of developers are holding back development due to their connections with a startup company that relies on part of the software being the way that it is, and not changing. There's no doubt in my mind that if this sort of corruption is allowed to flourish it will kill Bitcoin. The creator, Satoshi Nakamoto, was obviously very bright. Unfortunately, mankind will always find a way to screw things up when they're onto a good thing. I hope it evolves. There is a lot of utility there.

Google have a tendency to enter their arena very carefully, with a longer term strategy in mind, and they are likely wary of Bitcoin's experimental nature, despite being very aware of it. So I would agree with the OP that they are positioning themselves for something else. I think it's good logic.

There may be a few bitcoin developers , but there are 1000's or tens of 1000's (probably more) eyes watching them. Any person who understands programming can use the source control software that stores the code to discover in 2 minutes that there have been changes and exactly where and what the changes are. That's how 2 devs failed to sneak in new dodgy code. People were onto them in a flash.

It is probably impossible to sneak through changes unseen. Bitcoins, cross reference on so many levels , all consistent with the laws of supply and demand.

That satoshi is a towering genius.

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HOLA448

No I wasn't kidding. I'm sure you're correct about the big banks and mega corps but I was specifically referring to Google and similar when saying they could create money out of thin air to their heart's content if given full banking status - legally and without lobbying as part of the existing system and all within the current law.

Indeed the mega corps seem to have had a lot of financial freedoms and lack of scrutiny but part of the period of apparent "success" of the likes of Enron was as a result of their illegal operations which they eventually fell foul of. Also they didn't have banking status for bail outs. Accepted that the way some of them operate is almost as good as the freedoms the banks have but to get to the same scale they have to be even more illegal than the banks illegal operations. It's a separate issue.

The market must be run on the principle of caveat emptor. For if it isn't, then we are back to govts making our decisions for us. Of course , caveat emptor implies thorough knowledge, through private rating agencies(the public will decide if they are worth anything, not the govt) and good education(not the education today that ensures nobody has a clue what money really is).

Once the principle of caveat emptor is properly in place, then anyone should be able to print money and the market will soon cull the usurers and the soundest money will quickly become completely dominant.

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HOLA449

They'd make a lot of money being the new digital Green Shield Stamp bank in town but if they didn't resolve the interface/exchange issues of Google money satisfactorily with the main banking system's currency then it's difficult to see it progressing much further using its own Google currency. No doubt it could be resolved to some extent but it would require the cooperation of the traditional banking system and its banks.

It's also just possible that the Central Banks might prefer Google money to its own money and effectively hijack it, it's feasible that they might need to ditch and switch at some time in the future and Google currency might then be the ideal candidate - Google might then turn the tables and come out on top to take over the Central Bank role. There are lots of possibilities.

Possibly Google is getting into the insurance business to gain experience as a starter position in the financial sector (didn't Virgin do something similar?) and in the event it would be well placed when there's another economic collapse to take over a mainstream bank, another creator of money out of thin air (what other business would anyone wanting to make money want to be in - and creating money out of thin air ties in very neatly with creating digits out of thin air) - like Virgin Money did.

..not worth over-thinking ....the real measure and success of any institution are their values and ethics ...if they match your aspirations and expectations go for it...if they don't turn away and keep at a distance..... :rolleyes:

Edited by South Lorne
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HOLA4410

No I wasn't kidding. I'm sure you're correct about the big banks and mega corps but I was specifically referring to Google and similar when saying they could create money out of thin air to their heart's content if given full banking status - legally and without lobbying as part of the existing system and all within the current law.

Indeed the mega corps seem to have had a lot of financial freedoms and lack of scrutiny but part of the period of apparent "success" of the likes of Enron was as a result of their illegal operations which they eventually fell foul of. Also they didn't have banking status for bail outs. Accepted that the way some of them operate is almost as good as the freedoms the banks have but to get to the same scale they have to be even more illegal than the banks illegal operations. It's a separate issue.

AFAIK, neither Morgan Stanley or Goldmans were technically qualified to receive their bailout lucre prior to September 2008. No problem, just let them become traditional bank holding companies overnight, and viola! They can help themselves to a fat wodge of the TARP and buy up a clutch of fellow Wall Street bankrupts at cents to the dollar with whatever they've got left to spare. Brown performed a similar shotgun manouvre, of course, with Lloyds and RBS. I guess the moral is that too big to fail almost never equals too big to bail. The legal obstacles will be simply thrown aside.

I understand the anti-fiat arguments and consider them to have some merit but unless the shadow banking system is effectively regulated they're irrelevant. Offshored non-banks and financial intermediaries will continue to use derivatives and synthetic loans to inflate the money supply outside the authority of the currency issuer, this artificial surplus will continue to feed back into the real economy creating demand for traditional loans that otherwise would not have existed, in turn enabling a further expansion of the derivatives trade. A continuous, pro-cyclical hyperinflation of broad money is the most likely result - pretty much what we've witnessed since the late 50s when the so-called Eurodollar deposit markets first became established in Europe and London.

Central banks have played their part too, of course. A reluctance to let financial excesses work themselves out via creative destruction is archly hypocritical given their ideological attachment to the free market in just about everything else. All they've done is prolong the crisis and make the inevitable collapse 10x worse. 'The Long Emergency' is a phrase of Kunstler's that I like a lot. This mess has got years and years to run.

Edited by zugzwang
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