Anthony Migchels — henrymakow.com Jan 19, 2014
After five years, the verdict is out on Bitcoins: they represent a ‘free market’ Globalist dream, paving the way for a global cashless currency.
Its rise in value is quite stunning. Bitcoin started trading in early 2009 at just a few cents. Later in 2011, a Bitcoin was worth $6 and today people pay about $650. Recently, it reached $1000, when Chinese buyers started weighing in but took a big hit when the Chinese Government clamped down, citing ‘lack of consumer protection’. Bitcoin has crashed a couple of times on the way up, but has always rebounded.
Major retailers all over the world are now starting to accept it.
But while this remarkable appreciation is the key to its perceived success, it’s actually symptomatic of its main problem: it was designed to be scarce. Only about 20 million can ever be mined. Its rising price is a reflection of supply and demand.
When money rises in value, all other assets decline. It is good for those holding money, bad for those offering labor or goods and services, i.e. the real economy. In this way it behaves very much like Gold, which is also infamous for its deflationary nature.
Because it is appreciating so strongly, hardly anybody is paying with it. While the total outstanding value of Bitcoins is now somewhere between five and ten billion dollars, real trade is minimal. Who’s going to pay with Bitcoin, when it is going to be worth another hundred times more in two years?
To be effective in servicing real trade, the money supply must grow and shrink with economic activity, allowing stable prices.
As it stands now, Bitcoin is a wholly bogus speculative item, with no real economic significance at all.
And it’s a pure ponzi scheme, of course. Later adapters pay for the gains of those holding Bitcoin from the early stages. As long as there are new buyers, it’s party time, but it’s ultimately unsustainable.
MONEY POWER CONTROL