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The thumbnail shows Woody Allen's reaction when he learned that the international financial establishment was devising a cryptographic system for issuing centralized currencies, called CBDC, to replace the outdated fiat system in place.

The problem is that it is very easy for corporations to order their subjects – congressmen and governors – to print fiat, and for them, it is very cheap to do so. For this reason, the fiat deteriorates every day with the inflationary effect, and it is no use for anyone to have and save fiat.

Bitcoin's greatest strength is its high cost of issuance. What for some is a weakness (those who live their lives shouting that Bitcoin consumes more energy than in some countries like the Republic of Bankland), in reality, it is the best way for the ecosystem to demonstrate that no criminal can take over Bitcoin cheaply or for free.

Traditional fiat system

When you deposit cash in the bank, in fact, you are reducing the debt/risk of the Central Bank by the same amount as the cash you deposit. The currency is "guaranteed" by the Central Bank, it is a debt for it, therefore, if you return cash you reduce its risk. And when you withdraw money from your account to pay something, you reduce the risk of the commercial bank in which you have the account.

When a bank grants a credit, it is creating a deposit in the final recipient, and in the end, it is creating money in circulation. The bank does not have the money that it claims to be lending you, it is creating it and you are going to have to pay for it. Commercial banks create money because deposits (your account) are just a promise to pay and with that promise to pay they create other deposits through credits. More than 95% of the money in circulation is made up of bank deposits. At the time a commercial bank grants credit, it is creating a deposit. That created money is debt in private hands.

The money issued by Central Banks is what commercial banks demand. The only thing that the Central Bank decides is the interest rate and depending on it, the commercial banks decide what amount to request based on the market interest rates, the final demand for credits, and the benefit they can get. The reserves issued by the Central Bank are established based on the deposits that commercial banks want to create based on their profit expectations.

Commercial banks have no problem with reserves. If they are lacking, other banks lend them to them at the end of the day and, if in an exceptional situation they do not want to lend them, the Central Bank comes. In practice, there is no limit to the creation of money and debt by commercial banks. There are no limits to the speed with which banks can create money because even if they don't have reserves from the Central Bank to make their payments, they know that they are going to receive money from other banks and even the Central Bank itself.

The banking system is conceived as a control system for the transfer of value between households and companies. The MMT "legalizes" the issuance of promissory notes by a Central Bank, which in this way gives value to money in circulation every day. The common man and woman are unaware of the pernicious manipulations of this system and have no idea how they have been manipulated for centuries. The whole apparatus is mounted on the debt.

The fundamental premise is to get us into debt so that we can never get out of the trap and have to spend our lives feeding the machine.

Commercial bank deposits are backed by central bank reserves and government bonds. Government bonds are backed by the central bank's ability to create reserves and buy those government bonds if needed. This happens in practice, even though government bonds are thought by many to be backed by the government's ability to tax taxpayers.

In other words, the Modern Monetary Theory MMT looks dangerously like a Ponzi scheme. It is like a universe created by the elites for the elites, with rules of physics that only they know and know how to handle. As a result, they have made laws that allow them to bail out banks and countries, if it suits them, so that the machine continues to operate, while ordinary men and women watch in terror as the prices of the goods they need to consume rise.  And worst of all: if the bond market crashes, the money that ordinary people have in the banks can be used to save the system, according to those laws that they themselves pushed through Congress.

Image by Claudio_Scott from Pixabay

We Argentines know this well since we experienced it firsthand during the 2001 crisis when the experiment that pegged the peso to the dollar 1:1 exploded and all the banks fell massively. The so-called “corralito” (“little poultry yard”) consisted of the confiscation of all the money that the savers had in the banks to help “save” the poor banks that suddenly had to face their irresponsibility. The banks were saved, and society had to face the most severe crisis that the country had in its history during the first ten years of the beginning of the millennium. So don't tell me this can't happen, because it already happened.

None of this could have happened if society had had its money in a distributed and decentralized system like the crypto ecosystem. But of course, in a system like this, the banks, the central banks, and ultimately the governments, have no power to confiscate, so power cannot be exercised and there is no possible humiliation. This makes us think about the tough battle that crypto-fighters still have ahead of us.

There are two monetary systems clashing with each other, and the main problem is ideological.

The traditional system is a game played by the elites, for the elites, in which only the elites win. The wealth distribution figures show it very clearly. It is not necessary to be very intelligent to easily recognize how wealth is distributed on the planet thanks to this system. The other system allows you to manage your own money freely, without intermediaries or permits. It is Bitcoin against fiat. It is Bitcoin against the establishment.

But this is not the crossroads Woody Allen is referring to.

Do you remember when a high-ranking employee of JP Morgan shouted loudly that Bitcoin and everyone who bought Bitcoin had to be crushed?

I understand that a person like Warren Buffet feels intimidated by his ignorance about the decentralization of money because he is an old man educated in another cultural code, who made his fortune based on the traditional system, and that any change makes him tremble. This man has the same fear of being electrocuted that citizens had at the beginning of the 20th century when the use of electric lighting began to spread through the streets of cities.

But the JP Morgan boy is quite a bit younger. Ignorance of him terrifies us. But of course, it may not be ignorance but quite the opposite, and he has the sad role of being the spokesman for the establishment. Or, at least, he had it.

It turns out that now, JP Morgan is planning to dedicate itself to DeFi. The turns of life.

JP Morgan last week made its first trade using DeFi decentralized finance, in a project led by the Central Bank of Singapore.

In a clear acceptance of the more than famous "If you can't beat them, join them", JP Morgan and other financial entities of the traditional system, made their first pilot program in which they carried out currency and government bond transactions with funds from liquidity composed of tokenized Singapore Government Bonds, Japanese Government Bonds, Japanese Yen (JPY) and Singapore Dollar (SGD). And the funniest thing is that they enhance the concept of "cost savings". According to them, this frees up the costs involved in executing trades through clearing and settlement brokers and managing counterparty trading relationships, as required in today's over-the-counter (OTC) markets.

No words...

CBDC

(Central Bank Digital Currency)

In the current financial-banking system, you get paid for your work in cash that is deposited in your bank account. You pay your bills through home banking and withdraw money in the form of bills from an ATM. With that money, you go to the greengrocer and buy a kilo of carrots. Cash is totally anonymous. No one will ever know that you used it to buy carrots unless the greengrocer is also a snitch for the local tax agency.

Instead, if you get paid for your work on CBDC, you will be forever traced on a blockchain that belongs to a gang of gangsters in power. You won't be able to buy carrots without the state knowing. Your purchasing history can be accurately traced and your data crossed with other data recorded in your medical history by your doctor, who may have recommended that you better not eat carrots because they transmit a new virus designed at the discretion of the health corporation that has fallen out with carrot growers. (Don't tell me this can't happen, remember "swine fever"?)

CBDC is the most powerful Orwellian nightmare that has ever been designed, and, unfortunately, its creation, diffusion, and acceptance by the herd is imminent as one more benefit that the banking corporation grants us to protect us and guard against scams. That's what Woody Allen is referring to. CBDCs drive us to extinction.

By replacing cash with centralized electronic money, governments have full knowledge of all transactions of all individuals and businesses, and thus this information is used for financial supervision, political repression, and discrimination.

A CBDC is simply another form of fiat that will end up being massively over-printed, debasing its value.

Not only that. We see banks developing crypto asset “custody” services for their clients. Would anyone in their right mind give their crypto assets to a bank for safekeeping?

We see Central Banks making plans to issue their cryptocurrencies. Would anyone in their right mind buy a cryptocurrency issued by the most centralized institution a country has?

There are more than 100 countries actively exploring the launch of their CBDCs, pushed by their respective central banks and central planners who are going to put up a hard fight before admitting they lost because the people wanted it that way. The gestation of a parallel economy with cryptocurrencies is imminent because people chose it that way. The CBDC economy will be launched with pomp and trumpet, saying “the future is here”, but it will not last long, even when the armed forces are there to watch us, as they were in Orwell's novel with the thought police.

CBDCs cannot conceptually solve the scourges of the current economy, especially inflation, because governments will be able to issue them at will when they need them, without any type of brake. They can also be confiscated when the government and corporations need them. CBDCs are fiat fueled by the fact of a total loss of privacy. In reality, CBDCs are a centralized surveillance tool that is intended to be disguised as the electronic money of the future. Being programmable money makes things a lot easier for central planners.

The constant devaluation of the country's currencies with respect to the dollar is a mechanism of silent power that has been giving good results for power, not for the people who see their savings devalued day by day. The difference is that they can't do anything with Bitcoin, as was recently tweeted by Michael Saylor.

We will see the campaigns against Bitcoin intensify in the coming days, telling us that it uses a lot of energy and that its production is not sustainable, or that it is the currency used by terrorists, or that it is an ecosystem full of scammers. And they are right, only that the dollar also meets the same three conditions, to which are added its inflationary characteristic and its intoxicating sensation of power for those who issue it.

Conclusion

In the current state of things, whoever thinks that he/she owns something is seriously mistaken. Everything that is owned can be claimed by some centralized authority when needed so as not to lose power.

Of course, except for the BTC that you have in your decentralized wallets.

Many believe that this can never happen. I have already recounted the events of 2001 in Argentina, but I can also show you that this has already happened in the USA.

On April 6, 1933, President Franklin D. Roosevelt signed Executive Order 6102, "forbidding the hoarding of gold coin, gold bullion and gold certificates within the continental United States." This essentially banned the private ownership of gold in the United States. Executive Order 6102 demanded that every citizen surrender their gold to the Federal Reserve by May 1, 1933. Violators of this executive order were subject to a $10,000 fine, which amounts to $209,000 in today's dollars, and a 5-10 year prison term.

All we need is widespread awareness of how we are being used to build a pyramid of power. With only that, the parallel economy of Bitcoin will win the battle against centralization. I repeat this will not happen overnight and without a lot of bloodsheds. They have a lot of power to lose, and they are not going to give it up passively.

There is a fundamental rule of strategy that says that you must always leave your opponent with a possible way out because if he/she feels cornered and defeated, he/she will fight fiercely until his/her last breath. If this possible way out is the CBDCs, then let them fulfill their function. But don't forget Woody Allen's phrase. It is the freedom of each one of us that is at stake, and not a simple tool for transferring value such as money.

Bitcoin is backed by math and by energy. The large expenditure of energy (which in the end is not that large, as has already been demonstrated many times) is the best reassurance that the network has to remain immutable and secure. Ethereum's case is not so easy now that it has switched to PoS. We could say that today, Ethereum is supported more by Vitalik than for any other logical reason, understanding, of course, that this support is very strong. But I can't trust something that depends on one person...

Thank you for reading! Decentralize yourselves as much as you can, and much more! Work for yourselves, not for others. When you work for someone else, they pay you what YOUR POSITION is worth, when you work for yourself, they pay you what YOU are worth. No one achieves financial independence by working as an employee. Live long and prosper!

Never forget:

As usual, none of the things written in this post are financial advice and are not intended to replace personal research. My sole intention in writing this post is informative. Several of the things discussed here could be wrong, so in no way can this post be construed as financial advice, and in no way should it replace your own research.

If you have any questions or comments, please feel free to leave them down below

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