Post #52
Money signifies credits and debits in financial transactions. If I give you twenty dollars, that twenty-dollar bill indicates that you are 20 dollars richer and I am 20 dollars poorer. If you and I make a financial transaction with, let’s say, bitcoin, a database in the clouds tract all bitcoin transactions via the blockchain, that is, debits and credits among participants. Crypto means that there is no central authority controlling the system. Instead, the system uses a predetermined set of rules to limit the number of coins (virtual) that can come into existence at specified periods. Therefore no bank has authority over crypto markets.
According to the Wall Street Journal September 23, 2021, one of China’s largest companies, Evergrande, missed its multi-million dollar interest payment to its bondholders. When Evergrande collapses, it could lead to a domino effect on the world banks, similar to 2007 and 2008. Because cryptocurrencies provide a way to opt-out of the official system, people will leave banks, worsening the economic spiral to the basement. China’s Central Bank has declared all cryptocurrencies illegal, causing cryptocurrencies to plummet. The bank also prohibited foreign exchanges from providing services to Chinese investors to facilitate cryptocurrency trading through the web. Will other countries follow suit? Will governments ban gold and silver next?
When the world economy crashed in 2007 and 2008, the government made banks whole with bail-outs. The government borrowed money from the world bankers, stuck the taxpayer with the bill, and gave the money to the banks. Not wanting to repeat this scenario in the future, Congress legalized bail-ins. With a bail-in, banks can take your deposits to make them whole. According to blogs.harvard.edu, economists argue that bail-outs and bail-ins are better than bankruptcy for the coming depression brought on by COVID-19 policies. With bankruptcy, the courts decide asset distribution. But with bail-ins, depositors’ assets will keep bankrupt companies whole.
Please copy blog address https://kennethelongauthor.com/ to friends