Bitcoin, Bitgold, and Counterparty Risk - Jeff Nielson

June 6, 2016

“Get your wealth out of paper fiat currencies.”

If you’re reading this article, the chances are that you already have some idea of either the history of fiat currencies, or the “fundamentals” of fiat currencies (i.e. there aren’t any). All fiat currencies go-to-zero over time. This is because all fiat currencies are an inherent fraud: an attempt to literally conjure wealth into existence.

The reality is that a fiat currency monetary system does the opposite. It is a system for draining wealth out of any economy: out of the pockets of the legitimate wealth-holders, and into the (illegitimate) pockets of the money-printers. The means by which the money-printers use fiat currencies to loot wealth from an economy is the financial crime known as “inflation.”

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.

- Alan Greenspan , 1966

We’ve been warned of this scam from the lips of one of the premier Thieves . Humanity’s oldest-and-surest means of protecting ourselves from this thousand-year-old scam has always been gold and silver. However, while we are focused upon the primary, specific risk of holding any of our wealth in fiat currencies (inflation), what has been forgotten by many is the secondary, non-specific peril of allowing our wealth out of our own, personal custody: counterparty risk.

In a time of rampant, systemic fraud and monetary crime, in a time when the Rule of Law has essentially ceased to exist within the Corrupt West, counterparty risk has never been a more important consideration in attempting to navigate our own financial survival . In other words, the peril of allowing our wealth out of our own custody has never been greater.

Indeed, today we already have the ultimate real-life examples of counterparty risk, in forms which are so insane, so extreme, and so completely unlawful that they would have been beyond our wildest imagination, as little as a decade ago.

The “bail-in” is nothing but a lawless act of naked theft. A corrupt Big Bank points at some stack of paper wealth which it doesn’t own and claims that it “needs” that wealth in order to temporarily restore solvency to its fraudulent operations. An equally corrupt government then rubber-stamps the transfer (theft) of that wealth.

“Negative interest rates” are just another (insane) euphemism of financial crime. It is the act of borrowers literally stealing from lenders and savers. More naked theft. It is more financial crime which would never be possible within regimes which maintained even the slightest adherence to the Rule of Law.

This brings us to two, new, “financial innovations”: Bitcoin and BitGold. Let us put aside the fact that in the 21 ^st century the phrase “financial innovation” has almost always been a euphemism for some new/different form of Big Bank crime. Let us assume as fact that (currently) both Bitcoin and BitGold represent entirely legitimate systems of commerce. Even given these parameters, by no means does this imply that either Bitcoin or BitGold have eliminated the constant/ultimate financial peril of counterparty risk.

In the case of Bitcoin and BitGold, the primary form of counterparty risk involved here is that they exist in markets. As regular readers know; we no longer have “markets”. What we have, instead, are institutional, systemic price-rigging operations . As regular readers know; this systemic crime is perpetrated by a single, Big Bank crime syndicate, which has previously been dubbed “the One Bank” .

To demonstrate the near-omnipotence and relentless malevolence of this crime syndicate, we need do nothing more than merely look at what are called “precious metals markets”: systemic, paper fraud, where literally less than 1% of all the trading in these “metals” involves actual metal. Ninety-nine percent fraud.

In such a world, why would anyone seek to invent a new market in which to place their wealth? The word “market” is now a synonym for counterparty risk, and a synonym for financial crime.

Give me control of a nation’s money, and I care not who makes it laws.

- Mayer Amschel Rothschild (1744 – 1812)

Why did the patriarch of humanity’s oldest banking crime syndicate place such fundamental importance on control of the official money supply of any nation? Because once in possession of such (monopolistic) financial control, it is a form of monetary coercion. We are forced to conduct our commerce in the corrupted currency produced from the Criminals’ printing press, and via that control, almost any level of systemic, financial thievery becomes possible – as we see every day of our lives.

Both Bitcoin and BitGold are “alternatives” to this monopolistic system of coercive, financial theft. This leads to a very, very obvious question. Will the Big Bank crime syndicate simply sit back passively, and allow these “alternative currency” systems to impinge upon their current monopoly of financial crime?

The best answer to that question is another question. What does the Mafia do when someone tries to “muscle-in on its territory”? Answer: it eliminates the competition . What will the Big Bank crime syndicate do with respect to Bitcoin and BitGold? Answer: it will eliminate the competition.

This brings us to a slightly more difficult question: how? It would take a book to describe all of the different ways in which the Big Bank crime syndicate perverts markets, in order to control or destroy any entities which threaten its monopolistic supremacy. For those readers who cannot imagine this happening to Bitcoin, BitGold, or both, you need to work much harder on your imagination.

For the sake of brevity, this analysis will briefly describe the two most-obvious/most-common means by which the banksters control or destroy anything in their path. With a printing press which allows these Criminals to counterfeit (literally) infinite quantities of funny-money , the easiest way to “eliminate” any competitor is to buy it, and then corrupt and pervert it.

Note that in the era of “the bail-in” the moment that Bitcoin or BitGold falls under the control of one of these financial Tentacles, any and every penny in any and every account becomes a potential target of a bail-in: point-and-steal.

However, let’s engage in the unrealistic assumption that Bitcoin and BitGold are commercial enterprises which could not be bought-out – not at any price. This brings us to the favorite activity of this Crime Syndicate: bubble and crash .

The value of BitGold (and Bitcoin) is derived from a price index, i.e. a market. Anything which exists in market-form can be pumped-up, via an influx of the Big Banks’ counterfeit paper. High tide. It can then be “crashed” via doing nothing more than pulling out some/most/all of that fraudulent paper. Low tide.

For those readers who choose to engage in a second, unrealistic assumption, and assume that somehow Bitcoin or BitGold can’t be crippled (or destroyed) by one or more bubble-and-crash cycles, here is one word for you: China. China is now the world’s real economic superpower. Just look at what has been done to its markets over the past two years.

This is not merely a reference to China’s equity markets. What we have seen there are the Big Banks pumping vast quantities of their own funny-money into those markets (high tide), and then rapidly pulling out much of that funny-money from those markets (low tide).

It also applies to China’s currency. The renminbi has just hit a five-year low in its exchange rate versus the dollar. Understand what this means. Every day; the U.S. economy has gotten weaker and weaker versus China’s economy. Yet the value of its currency versus the renminbi has gone higher and higher and higher. Total perversion of fundamentals.

This means that, ultimately, any believers in Bitcoin and/or BitGold must cling to a third unrealistic assumption. While the currency of the “world’s economic superpower” (China) is vulnerable to the economic terrorism of the One Bank, somehow Bitcoin and/or BitGold currency is immune to the same economic terrorism.

If people choose to use Bitcoin or BitGold as very temporary mechanisms for conducting occasional acts of commerce, there may be some utility in these markets. However, as any sort of long-term “home” for any significant portion of our wealth, this involves choosing to incur needless financial risk.

Counterparty risk . It is the real reason why people are fleeing the bankers’ world of fiat-currency fraud, in the first place. We have a simple phrase for people who choose to move their wealth out of fiat currency, but into Bitcoin/BitGold currency: out of the frying pan; into the fire.

After thousands of years, why do gold and silver remain humanity’s best “safe haven” for protection from financial risk? It is because these financial assets provide the best form of insurance against all forms of financial risk, including counterparty risk.

We live in an era where counterparty risk is much greater than it has been at any time in our history. In such an era, nothing less than the best form of insurance against such risk will suffice. If you don’t hold it, you don’t own it. Understand that simple phrase, and you understand counterparty risk.