Some people believe that the stock market has been propped up by the government and central banks in order prevent another collapse, financial crisis and widespread panic. The Plunge Protection Team is not a conspiracy theory. It is a colloquial name given to the Working Group on Financial Markets, which was created to make financial and economic recommendations to various sectors of the economy in times of economic turbulence.
The team consists of the Secretary of the Treasury, the Chairman of the Board of Governors of the Federal Reserve, the Chairman of the SEC and the Chairman of the Commodity Futures Trading Commission. "Plunge Protection Team" was the nickname given to the Working Group by The Washington Post in 1997. The team was initially perceived by some to have been created solely to shore up the markets or even manipulate them. The team was created in response to the 1987 market crash.
The theory is that the team manipulates markets by executing trades on several exchanges when the market isn't behaving as it would like. It is said to only work with big banks such as Goldman Sachs and Morgan Stanley, only to report to the President, and to keep no records of trades.
With bitcoin and other cryptocurrencies, I think the people running the government behind the scenes and the central bankers (or do I repeat myself?) are beginning to see the writing on the wall. They ignored it for quite some time, but as Gandhi put it:
First they ignore you, then they laugh at you, then they fight you, then you win.
Western governments, the central bankers that control them and the media that support them, totally ignored bitcoin for the longest time. Then they ridiculed it, claiming it was just imaginary internet money that would never be worth much. When the price climbed above $1,000 and then $2,000, I think they started to panic. With the growing number of transactions and widespread acceptance at places including Microsoft, Overstock.com, Expedia and even Subway, it suddenly wasn't a laughing matter. They could no longer write off bitcoin as just for drug dealers and nerdy computer coders.
I imagine as the legitimacy of the currency has grown, there has been many back-room conversations over scotch and expensive cigars concerning how to deal with bitcoin. After all, it is precisely the ability to print the world reserve currency that has given such great power and economic advantage to the elite in Western nations, with some minor trickle-down to keep the masses soothed, satisfied, dumbed down and unwilling to threaten the power elite.
So, we are probably just now entering the stage where "they fight you," with the recent SEC ruling a likely first shot across the bow of the cryptocurrency sector. But was has to wonder why they have allowed it to grow and progress to this stage without major intervention?
One theory is that the rich and powerful have been buying up bitcoin and other cryptocurrencies in a bid to control the supply and have some stake in the future of money. Perhaps the Federal Reserve and other power brokers in the United States that have benefited so much from the ability to print the petro-dollar have some to understand that their days are numbered. The world is shifting away from fractional reserve fiat paper money and the legacy banking system in general. It won't happen overnight, but the writing is on the wall.
I am sure that many of the world's wealthy and powerful want to fight bitcoin and the cryptocurrency revolution. They don't want to let go of the power and wealth they have amassed via connections to government and banksters. They will miss the ability to create money out of thin air, with a few strokes of the computer keyboard and then charge interest of up to 30% on that money. Much of the Western world still faces slavery, but they have become debt slaves this time around and don't quite grasp the significance.
Bitcoin has the potential to level the playing field, free humanity and enrich the lives of everyone that holds it. It is ushering in a new era of decentralization and with it will come the decentralization of wealth and resources. The new wealth that is being created is available to all, not just those that are well connected, have royal bloodlines or ass-kiss their way to prosperity. Acquiring wealth and freedom in the cryptocurrency paradigm does not require that you exploit your fellow man, commit fraud, fudge the books, pollute the environment, threaten or use violence. This is the beauty of our revolution and few still see it coming.
If they fight, they face a battle they cannot win. Just ask the Recording Industry Association of America (RIAA). How effective have they been at stopping torrents, even with their deep pockets, political connections and troves of ivy league lawyers? With decentralized systems, there is no headquarters to raid, no servers to shut down and no leaders to arrest. They have tried to "make an example" of people they have caught, thrown the books at them, locked them up in cages for years, yet the number of torrent downloads have only increased. They continue to shut down Pirate Bay sites and new proxies pop up twice as fast.
So, if they can't beat bitcoin and the growing community of cryptocurrency enthusiasts, they will have to join them (us). What does this mean exactly?
If I was in their position, I'd probably look to buy up as much of this new money as possible, while the paper money that I can print in unlimited quantities still holds value. Consider this for a moment... whales with printing presses.
Many people have written about the effect of the rich and institutional money coming into the cryptocurrency markets. This is slowly starting to happen and this alone is likely to continue driving prices significantly higher. Their entrance into
But what happens when the wealthy central bankers wise up and realize what is happening to their power and future wealth? What happens if they decided to use not only their personal wealth, but their ability to create money in order to buy up the limited supply of bitcoin available (currently at 16.5 million of the maximum 21 million that will ever be created)?
While I would benefit personally from the meteoric rise of the price of bitcoin, I hope they aren't planning to do this anytime soon. I want their wealth to evaporate and for a new generation to take over the reins. I want to see the coders, the techies, the early adopters, libertarians, anarchists and younger generation have a chance to truly thrive and prosper.
So, I hope they don't wise up anytime soon or read articles like this on Steemit. If they can stick with the Wall Street Journal and the highly manipulated stock market a while longer, the rest of us can continue to accumulate cryptocurrencies at current prices, securing independent futures that aren't reliant on government handouts or mind-numbing jobs with little chance for creative or intellectual growth.
But rest assured, it will happen. Here is what I am doing to take advantage of the shift that I see occurring:
Hodl. The strong hands that hold through the volatility will be rewarded. I will look to buy the dips, but I don't sell unless it is absolutely necessary.
Find ways to increase my earnings and acquire as much crypto at current prices as possible. I hold gold and silver as well to anchor and diversify my portfolio, while providing means of transacting in a SHTF scenario or with the grid down. Hopefully the goods folks at Nexus will have established internet redundancy with the low-orbit satellites by then.
Become your own bank. Hold your assets in crypto accounts, support businesses that accept cryptocurrencies and spend via debit cards linked to your crypto accounts when necessary. Doing this takes power away from the banks in a leveraged manner, as they can no longer loan out your money at a 10-1 ratio, charging ridiculous interest rates to those that can least afford to pay it. Usury be damned and we reduce the scourge of TBTF (too big to fail) that created the financial crisis and devastated so many families.
Do not spend your newfound wealth frivolously. I know it is tempting to rush out and buy that dream car that hung above your bed as a kid, but don't do it. If you must, rent the lambo for weekend and realize how impractical it would be to own one. The opportunity cost is too high if cryptocurrency prices continue on the trajectory we have mapped out.
Educate others, spread the word about cryptocurrencies and blockchain technology. The faster we transition from the current antiquated monetary system, the sooner we can realize the positive results. I am not naive enough to believe that the transition will be smooth and painless, but better to address the problem than ignore it and allow it to continue to fester.
Senators in Australia are putting their political differences aside and are banding together to urge the Reserve Bank to back bitcoin as an official currency. Japan has legalized bitcoin and eliminated taxes on the currency. South Korea, Russia and a growing list of nations are getting onboard. Bitcoin and cryptocurrencies are the future of money and as this trend accelerates, the demand for this asset with a strictly limited supply will increase significantly.
Economics 101 tells us the increased demand with flat supply leads to higher prices. Suddenly, those wild price forecasts for $1,000,000 bitcoin don't seem so outlandish. Wences Casares, a member of PayPal's board of directors and CEO of bitcoin wallet Xapo notably predicted that bitcoin will hit $1 million within 10 years. John McAfee says it will hit $500,000 with 3 years and has offered to wager $10 million and "eat my dick on national television" if the price does not exceed his forecast.
That is something that I don't care to see. And if my theory about banks getting involved is true, we won't have to.
If bitcoin was valued at $1 million each, the total market cap would be $16.5 trillion. This is roughly equal to the M2 money supply of the United States alone. The value of stock markets is $67 trillion, the global M2 money supply is estimated as closer to $69 trillion and the chart below shows all money at around $84 trillion.
So, bitcoin at $1 million would be just one quarter (25%) of the value of stocks or the global money supply. It would be just 20% of the value of all money (including bank deposits, notes and coins).
If we want to consider the estimated value of stocks and bonds combined at over $100 trillion or the estimated value of derivatives at $700 trillion+, bitcoin at $16.5 trillion is just a fraction of these values. This comparison by no means guarantees that bitcoin will trade at $1 million, but it suggests that such a price level is not as outlandish as it first sounds.
Will you be along for the ride?
Get our precious metals and cryptocurrency research here: http://goldstockbull.com
Interesting research and analysis. It will certainly be a grand drama unfolding in economics, that is for sure.
Excellent article, quite complete and well researched as well.
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