For years now the legacy pre-crypto financial markets have been inflated by the worldwide network of central banks. This would have been unthinkable 20 years ago, but somehow it became OK when it was deviced by the then-number-2 world economy. The name of the beast is “Quantitative Easing”, or QE for short.
QE was invented to artificially inflate the financial markets of Japan, around 16 years ago. The idea is very simple and those familiar with Tether will find it extremely familiar.
But first, some context. The markets of Japan were halted, nobody was buying anything, wages were frozen for years, the Japanese society had apparently found equilibrium and didn’t need to consume exponentially to keep going. This sounds nice, but the banks cannot stand equilibrium, they need volatility, consumerism and exponential growth in order to keep their own FiatConnect system in business.
Japanese banks even paid you to borrow money (negative interest rates). The population was also aging and the new generation was not marrying or having children. The markets needed an injection of energy.
Since Japan had deflation, there’d be no problem in printing money. You usually can’t print money because it causes inflation, or devaluation of currency due to excessive supply. But in a stagnated market you’d rather risk having stagflation than to remain in the chasm Japan found itself in.
So Japan came up with what is now known as “Quantitative Easing”. It probably took more time to come up with the fancy name than the idea itself.
In very simple terms, QE means that the central banks print fiat money, just like Tether mints more coins when its value rises above U$ 1 and buys back $USDT when its value drops below $1, maintaining a constat $1 value. Just like Tether has to maintain a value close to U$ 1 for $USDT, the European Central Bank prints money in order to keep inflation at or about 2%.
Japan had found its solution. In order to promote inflation, they’d simply print money while calling it something fancy that nobody would ever question.
If they had called it “printing money” perhaps this practice would have raised eyebrows earlier. But who in your circle of friends has any idea what “quantitative easing” means? Not many, we bet.
Milton Friedman might have gone crazy in 2008, seeing how the economy has turned 100% virtual and how it’s apparently OK to bail out failed banking scams.
Money is invented, there is no standard, central banks are The Authority, so they’re free to do what citizens aren’t. If you print money in your basement, you will go to jail. But central banks do it all day 24×7 and it’s “OK”. Their problem is, Bitcoin has now made “legal money printing” available to the masses. And this is why bankers are desperate. The cat is out of the bag and there’s no way to stop Bitcoin and alternate cryptocurrencies.
So what’s the problem with QE, you might ask?
The problem is very simple: this money does not exist. Central banks are printing money and injecting it into the markets because they want inflation to remain close to a certain target. But those in the know are asking the central banks to print more and more money. Since “money is free” now, and doesn’t have to be generated from actual value, countries like Spain, for example, are demanding more and more easily printed money from the ECB. And they get what they want too. Just this week the ECB will pump in $ 43 billion into the Spanish economy. Run out of money? No problem, banks are too big to fail and they know they’ll get bailed out no matter what happens (but your lemonade stand won’t).
When you see traditional banks calling Bitcoin a bubble, it’s because they recognize exactly what’s going on with the Bitcoin market cap – they do it every day. The same way traditional banks inflate the value of the stock market artificially is how Tether is pumping the value of cryptos via the virtual Bitcoin USD price.
In essence, traditional banks have been cornered by Bitcoin. They see what Bitcoin is doing and they can’t say a thing, because they do the exact same thing in the legacy markets. If they denounce the Bitcoin market cap, they’ll be in contradiction, because the fiat currencies work in the exact same manner in this day and age. Money is virtual. China can print their own money, Europe and the FED can issue money at will.
The legacy financial markets are rigged to the bone and there’s nothing they can do about it because Bitcoin has exposed to the masses how the traditional markets work.
There’s a good reason for all the anti-crypto noise coming out of the World Economic Forum : bankers have to either admit they rigged the markets through quantitative easing, or they must accept Bitcoin and live with it for a while longer while they clean up their act. Either way Bitcoin has exposed the traditional banking system and is helping rein in one of the most blatant schemes for market manipulation ever devised.