Read original post

Central Banking Business Model

In our current monetary system, central banks around the world are pivotal in shaping national economic policies and managing currency systems. A key function of central banking is the issuance of currency. This power allows central banks to control the money supply, which can impact inflation and economic stability. The Reserve Bank of New Zealand's governor, for instance, recently bragged about the unique position of central banks in being able to create money that is widely accepted and trusted by the public.

Economic Theories and Fiscal Policies

Keynesian economics is a predominant theory taught in academia, which advocates for government intervention in the economy to mitigate the effects of recessions and booms. It supports government spending as a means to stimulate economic activity during downturns. Critics, however, argue that such theories justify excessive government spending and can lead to unsustainable fiscal policies.

Inflation and its Causes

Inflation is the general increase in prices and the consequent decline in the purchasing power of money. It is often perceived as a natural economic phenomenon; however, it is typically influenced by government spending and central bank policies. High government expenditures can lead to increased money printing to finance debt, which can contribute to inflation.

The Role of Enforcement in Currency Use

Fiat currencies are typically mandated for use within their respective countries, often enforced through legal tender laws and the tax system. Citizens are required to pay taxes in the national currency, and failure to comply can result in legal penalties, emphasizing the compulsory nature of fiat money.

Bitcoin as an Alternative

Bitcoin presents itself as an alternative to traditional fiat currencies. It operates on a decentralized network, free from central bank control, and participation is entirely voluntary. Bitcoin transactions are not enforced by any entity, nor is its use mandated by governments. It is an ethical form of money due to its opt-in nature and its potential to reduce reliance on the traditional banking system.

Fiscal Deficits and Debt

The United States, like many other nations, faces fiscal challenges, with significant portions of the budget allocated to Medicare, Medicaid, Social Security, defense, and interest on debt. Tax revenues often fall short of covering these expenditures, leading to budget deficits and increased borrowing. This borrowing results in the issuance of government bonds, which if not purchased by external investors, may lead to the central bank acting as the buyer of last resort, potentially exacerbating inflation.

Market Reactions and Monetary Policy

Monetary policy, whether expansionary or contractionary, influences financial markets and the broader economy. Tight monetary policy can lead to a decrease in asset prices, affecting government revenue from capital gains taxes and potentially necessitating increased borrowing. Conversely, loose monetary policy can inflate asset prices but may also increase inflation.

Bitcoin's Market Performance

Bitcoin's market behavior is often independent of traditional financial markets. It has shown resilience during times of economic uncertainty, operating as a hedge against inflation. Bitcoin's value relative to other asset classes, such as US government bonds, suggests a growing confidence in Bitcoin as a potential store of value and a global reserve asset.

Debates Surrounding Bitcoin's Viability

Contrary to some central bankers' skepticism about Bitcoin's role as a medium of exchange, store of value, and unit of account, there is evidence of its increasing use for transactions in various countries. Its value has generally appreciated over time when compared to fiat currencies, challenging the traditional monetary system.

Conclusion

The discussion around central banking, economic theories, and the rise of cryptocurrencies like Bitcoin is complex and multifaceted. Central banks play a crucial role in managing economies, yet their actions often lead to further inflation. Bitcoin emerges as a decentralized alternative that offers a different approach to money and value storage, one that is gradually gaining acceptance and challenging traditional financial systems.

Read original post

The central bankers are getting cocky.

“It’s a great business to be in. You can print money and people believe it.”

“We actually fund ourselves.”

Pride cometh before the fall.

Bitcoin is a much more ethical and sensical monetary system.

pic.twitter.com/AeY8xEDKJf

— Marty Bent (@MartyBent) February 13, 2024

The Finance and Expenditure Committee of the New Zealand government held a meeting with the nation's central bank governors yesterday during which the country's central bankers admitted two things; they are openly stealing from their population via overt monetary debasement and they do not understand how successful bitcoin has been to date.

“It’s a great business to be in, central banking. We print money and people believe it.”

For those who are unfamiliar with the gif above, it is from a scene in The Big Short, which chronicled the lead up to the Great Financial Crisis and a few members of the "select few" within the world of finance who were able to correctly identify and grasp the fact that the US housing market was built on a foundation of sand. In this scene, Steve Carell's character is perplexed after a conversation with a couple of mortgage brokers in South Florida who openly admitted that they were accepting mortgage applications from people who shouldn't have been receiving them because it was highly unlikely that they would ever be able to pay them back. To make matters worse, the brokers were bragging about how much money they made from accepting these applications and were quite frank that they actively try to push riskier subprime loans with adjustable rates because they make more money on those loans.

For anyone who has seen this movie, it is impossible to watch the clip from the New Zealand Reserve Bank Governor and not immediately connect it with this particular scene. The parallels are stark. You have an individual bragging about a moral hazard produced by a perverse incentive system that benefits them unduly at the cost of the Common Man, who is completely unaware of the systemic risk inherent in the system. In the lead up to the Great Financial Crisis the Common Man believed that the US housing market was ironclad and that Wall Street was filled with the smartest people in the world. Little did they know that the smartest people in the world, benefiting from easy money, had blown one of the largest asset bubbles in human history. As bubble that inevitably popped and wrecked havoc throughout the global economy.

What we hear coming out of the New Zealand central bank is exactly the same, just another layer down the stack of finance with, astonishingly, a bit more arrogance. Most of the world is completely unaware that the global monetary system is built on a house of cards, better referred to as a Ponzi scheme. The mass of men believe that the money they hold is good money and that the people who control that money, the central banks, are the smartest people in the room. This class of unwitting men is completely unaware that every central bank around the world is engages in moral hazard on a day to day basis because they are operating in a system with completely perverse incentives. And our central banking friend is basically admitting this. He's openly saying it is hilarious that billions of people are falling for the immoral scam that is central banking and then enjoying a good laugh with the committee as they bask in the fact that they are pulling one over on every one.

We should give him credit though, this type of forthright honesty is rare in central banking circles. You're supposed to dress up the scam with McKinsey-speak so that it is masqueraded in opaque language that is hard to decipher for the layman. The Federal Reserve here in the United States knows how to do this well as is evidenced by the way they disclose how they do not have to produce a GAAP cash flow statement:

You see pleb, the central banks have "unique powers and responsibilities" that enable them to skirt the proper accounting principles that everyone else is forced to abide by. It's not supposed to be framed as "a great business to be in". That makes the con too obvious. The con most be hidden behind a facade of nonsensical, yet just-official-sounding-enough jargon to make the masses believe that there is some legitimacy backing the Ponzi scheme. The perceived legitimacy is what is backing the fiat currencies of the world. You're not allowed to let everyone know that it's a pure belief with no legitimacy! That may lead to some uncomfortable questions!

They print money and most people believe it. That is all that is backing the global monetary order at the moment. The belief that there is some legitimacy behind it. Well freaks, I hate to burst your bubble, but there isn't. This has been made abundantly clear after every crisis that was created by a central bank reaction that was initiated to solve the crisis that preceded it. If you haven't read Parker Lewis' Enders Game, I highly recommend you do so because he does a masterful job of highlighting that the Federal Reserve had absolutely no idea what it was doing in the lead up to and aftermath of the 2008 crisis.

[

Enders Game - Unchained

For context, the following research piece was written just before the Fed began to unwind its balance sheet (October 2017) and it hasn’t been revised or altered since. At the time, I had set out to better understand the financial crisis and the impact of quantitative easing (QE) in an effort to then forecast what […]

UnchainedParker Lewis

](https://unchained.com/blog/enders-game/?ref=tftc.io)

What's even funnier about the committee meeting in New Zealand is that same central banker attempted to paint bitcoin as an illegitimate competitor to the fiat monetary system.

“Bitcoin is not a means of exchange, it’s not a store of value, and it’s not a unit of account.” New Zealand Reserve Bank Governor

In reality:

- BTC is up 71,001,457% since 2009
- 965,356,378 txs have been confirmed
- More people are selling sats denominated services every day pic.twitter.com/XBP7f4NJlM

— TFTC (@TFTC21) February 13, 2024

This, ladies and gentlemen, is what we in the psyop business like to call projection. The rotting, corrupt and incompetent central bankers are trying to project their shitty attributed onto the bitcoin network. This is nice to see. They are scared and they should be. Bitcoin is eating their lunch and humanity will be way better off because of it.

Final thought...

Blaring jazz while being the last one in the office is a nice vibe.

Use the code "TFTC" for 15% off