To those who say crypto was just a bystander in this now global banking collapse, they are lying. Crypto is entirely fake, and was the trigger for this banking meltdown. Crypto has been in meltdown mode since Terra/Luna last May, then FTX last November. Banks that were heavily involved in crypto are now the first to go under, which has set off an industry panic and crisis of confidence in big banking.
The greater issue of the insolvency of the big banks, who all hold devalued treasury bonds, has been caused by the same policy that crashed crypto– a decade of free money followed by a sharp interest rate rise by the Federal Reserve. There is a connection there.
The EU (and everyone else) follow from the US Fed, since dollars are the international exchange currency and have been since the end of WW2. But increasingly, dollar dominance is being called into question by many different interests, particularly the government of China, hence the constant US propaganda campaign to demonize China & embolden fascist racist filth.
What we are witnessing now is a complete breakdown of the post-war monetary system. The Bretton Woods system of US dominance was established in 1945, by the winners. Richard Nixon took the US off the gold standard in 1971, because Fort Knox was running out of gold to convert into dollars at $35/ounce. Since then, all currencies float against the US dollar. All international settlements, particularly oil, are done in dollars. This is what makes the US dollar almighty.
Stagflation of the 1970’s, then Fed chairman Paul Volcker’s interest rate hikes in the 1980’s, which reached nearly 20%, enriched banks. Big corporations even started their own lines of credit cards to cash in for themselves. It was the best of times to be rich, as Reagan/Bush are revered for their conservatism on issues like global warming, and their enthusiasm for corporate & banking deregulation, etc.
In 1987, the first stock market crash in America’s post-war era (which took every bourgeois economist by surprise) established the “Fed put”, which ensured a taxpayer bailout for any bank or corporation deemed “too big to fail.” Timeline ahead: Asian tiger crash in 1998, dot com crash in 2001, and then the big one– the sub-prime mortgage collapse in 2008. All caused by corporate criminality. All the big fish got bailed out.
By 2010, the Fed started printing money and gave it away to all its cronies for over a decade. Every other central bank in the world followed suit. By the end of 2021, after a few abortive attempts (Dec 2020 – March 2021, most notably) at quantitative tightening, the Fed has taken a hard line on raising interest rates to induce a recession and quell workers wage demands.
Inflation is caused by massively increasing the supply of money, without having the economic fundamentals to back it. By ‘economic fundamentals’ I mean, actual (real world) use value. The Fed, Wall Street, the White House & US Congress all believe that inflation is caused by workers’ wages going up. That’s the class war that’s always raging underneath the fake news.
With capitalism in its speculative death throes, crypto has emerged as the libertarian answer to the international currency question. As far a being real money, you can buy lots of black market things with bitcoin. Things you can’t do with crypto include: pay rent, pay credit card, pay taxes… pay for a Big Mac. It simply has no value to the vast majority, and therefore must be abolished.
Trotskyists are the only ones who have taken this intolerant policy towards crypto from the start. The SEC, DOJ, & White House have now pivoted to an anti-crypto policy since the Silvergate Bank collapse less than two weeks ago.
Slivergate CEO Alan Lane, second from right, rings the New York Stock Exchange opening bell before his bank’s IPO begins trading, on Nov. 7, 2019.
There’s been lots of talk about making depositors whole, making sure small businesses can make payroll, etc, in the wake of these US bank collapses, triggered by crypto’s meltdown. Everyone knows the FDIC guarantees accounts up to $250,000. For businesses with more than that, there is the Deposit Insurance Fund, which is a privately-owned, industry-sponsored insurance program.
The DIF’s purpose is to 1) insure bank accounts over $250K, and 2) resolve failed banks. If crypto start-ups like Circle ($3.3B in SVB) didn’t hedge with DIF and can’t make their payroll, etc, then the CEOs of these companies need to pay out of their own pockets– or else go bankrupt. Poor risk-management is on the CEO/CFO, and NOT the responsibility of the US taxpayers.
Why didn’t these smart tech companies with million$ & billion$ in venture capital money have a DIF policy to protect against a bank collapse? Corporate Leadership 101– FAIL. NO bank bailouts!