The Anti-Bank

This week has been crazy in the world economy. With the Swiss Reserve Bank unpegging their currency (the fourth largest in the world) and lowering their interest rate to NEGATIVE 0.75! The Swiss frank dropped to the floor and then jumped through the roof like a drunken teenage crypto-currency. Japan has already been at negative 0.25 for ages to no avail. The Euro is at zero. The US Reserve bank is offering 0.15 percent on their bonds and because of this tiny fraction of interest the US dollar has hit record ..what. .Highs? Considering that they've announce that they are going to stop printing trillions and think about only billions.This all compares to a New Zealand economy that is just scrapping by really, but still manages to run a rate of 3%.

“Lets face it, the US economy is not exactly a rockstar. The internet of things not really that rockin just yet.”

This week the word is “black swan” and.. I feel like I better post this quick before this all becomes to retrospective. What did we really do to fix the world economy after the GFC?

Let’s get this whole complicated macro economic thing in perspective for a second. In Macro economics (basically economics for countries) Zero is supposed to be the bottom limit for reserve bank rates. Simplified this makes sense because how would you convince someone to give you a million dollars for your government bond without offering a financial incentive in return. So, with a negative rate no-ones going to want to give that government any money. That is unless they where loosing more than 0.75 percent where they had their money originally, then they might opt to take the smaller loss i guess.

“Smith, Marx and Keynes would be pulling eachothers few remaining white hairs out in a triangle of dribbling geriatric rage.” 

The other side of it is that banks are required to hold a certain percentage of their deposits in government bonds. In NZ its 5% so that means 5% of the money you have in the bank gets held at treasury (the other 95 odd percent actually just gets lent out again FYI). So the bank is forced to put money in the government, and with a negative interest rate it also has to pay that at the end of the term. Sounds ok to us, but actually it means that the bank doesn’t want to hold deposits and is encouraged (even further) to get rid off depositors and get all its customers into dept. Further more when the bank needs to get some extra cash from the reserve bank to make some new loans, the reserve bank will pay them to do it. No Deposits, heaps of liabilities. Sustainable? .Not really! In macro economics eventually the value of the nations dollar has to come down.

“How can we let this happen, lets face it these bank exec’s screwed us all over.”

Sorry about the economics rant, but if you think this is confusing, it's because it is! It's all way too complicated and now its being twisted into an even bigger mess. Makes Bitcoin math and a few encrypted codes seem like childs play in a sand box.

What does this mean for bitcoin? the price has been thrashed in the last few weeks, never mind the last six months. Well, it doesn’t actually change much. Bitcoin has always been a kind of solution to the sort of problems posed here and by the GFC etc. In a way this is just a deepening of what’s been happening over the last 20 years in finance. In that way all this mess should be helping the cause, still can’t see it in the price though?! It's the status quo for bitcoiners, but it may get some currency traders back in on the game.

But here’s the thing. Bitcoin has nothing to do with all this crap! Over the last couple of years bitcoiners and Bitcoin companies have been trying to gain legitimacy by trying to assure their place in the financial system. We’ve debated over whether it is considered legal money in parliaments. We’ve made Bitcoin branding that looks just like what you see at the bank. Websites which are flasher. Security protocols on trading sites that are more indepth than UK emigration. New feed’s that never end, bottemless archives of information explaining the entire workings of the system. A comedic culture and international profile.

And Its good, It has worked. Bitcoin is totally legit. We now have Bitcoin traded on the stock exchange in CFD’s and we have multiple brands of Bitcoin money machine, we have other crypto-currencies that are strong in their own right, you can buy anything easily with Bitcoin and the governments didn’t ban it. The truth is though this is not what its about.

Bitcoin is not a bank! We aren’t all professional techie stock market people and governments couldn’t ban it even if they wanted to. The average bitcoiner is just an everyday person, who’s got a smart phone and likes to travel. And more importantly, distrusts banks.

Bitcoin doesn’t just do what banks do for free. It does more. It can change the world by turning money into something else, something unmoney.

It allows amazing tracing of abstract value to enhance equality.

It allows micro payments to be made seamlessly and without investment.

It adds accountability to the wealthy

It allows transparency for corporations

It facilitates global co-operation

It is a great tool for the local community with easy and safe value transfer for free

It’s not left or right wing, no one can take it over and it doesn’t trap people in dept

It can look however we want it to!

And this is my new pitch. The Anti-bank. The price only matters if your rich. Lets make it rad.