Precious metals & crypto-currency are the two hottest investment markets right now. The stock markets are all being propped up with central bank money & interventions by Plunge Protection Teams, which indicates they are bubbles about to burst. Bonds are also high-risk for default, and mostly junk. The US dollar has no real backing anymore, as most of its manufacturing has been outsourced to China & the third world. This creates a demand for gold, which is considered a safe haven for investors.
What is gold? Gold is a precious metal that has high malleability, ductility, conductivity of electricity, and is resistant to corrosion. Gold has been used in jewelry, art & dental restorations for millennia. That is real world use-value for gold, which cryptocurrency doesn’t have. That is why gold is stable, and coveted in times of economic uncertainty. The earliest forms of money were gold coins.
All crypto-currency is “mined” by super-computers at a high cost of electricity. The most popular crypto is Bitcoin ($3,400) now trading at over $600 below average unit cost ($4,060), as reported by Bloomberg news a week ago. What other use-value does crypto have? There obviously is none, so therefore no one can honestly explain crypto-currency as anything but a giant financial swindle.
Gold survives the “acid test,” which is in fact where the term came from. Bitcoin is “mined” by supercomputers that use a massive amount of electricity to create just one unit. Theoretically the cap amount is 21,000,000 bitcoins, with ~ 4,000,000 still to be created. That’s a lot of electricity for a superfluous accounting tool. There are over 1,500 crypto-currencies currently being traded globally, to give you an idea of the scale of waste going on here.
Electricity is created by raw materials that are mined, such as coal, gas, oil & uranium. Thus electricity has a cost, and with global warming, it can only go up in the future under capitalism. What this means for all crypto-currencies, is that their production costs will only increase. The only way electricity will stabilize is when solar power becomes the norm, and this can only occur through a political revolution.
All crypto depends on electricity, which is a driver of cost & value in today’s world. The internet depends on electricity, and all crypto is developed & traded online. A huge spike in electrical prices will instantly kill all crypto-currency value, as it will skyrocket the production cost (and then price), while offering no extra use value.
It can be argued that crypto-currency inherently has no use value, in a global economic sense. It’s purpose is to hide transactions, avoid taxation, and allow anonymous usership. This is a political-economic problem that Libertarian computer programmers tried to solve through mathematics. They’ve failed because their equations break down in the face of class relations, which dictate that the ruling class control all levers of power- especially money.
Crypto-currency was innovated as a hack, to end-run the US & global banks. That won’t be happening, because the puppet-masters won’t allow it. The only way to gain true monetary freedom is to transform society with a socialist revolution in permanence. That’s why Trotskyist Marxism is stable, as compared to any Libertarian capitalist ideology.
A more practical method to gain financial security is for the masses to appropriate the banks & all government institutions– most importantly the media, military & police– then these here-to-fore instruments of class war can be brought under democratic control. Only a socialist revolution can bring a true “government of the people.” Currently we have a plutocracy, a government of the rich, and it’s always been that way.
The American Revolution of 1776 was bourgeois in character. America was then a British colony, striving for independent nation status. Today the United States is a failed nation-state (like all the rest), whose masses are striving (whether they know it or not) towards socialism.
The level of mass political conscious is the “great unknown,” but the youngest generation has surely given up on capitalism. Most see no future, just more Bitcoin-like gimmicks. The rest are learning the hard way that things won’t improve without facing reality, and dealing with it in a rational & scientific manner.
Accounting tricks like crypto-currency, and the fervent support they garner from like-minded intelligentsia, reveal their poverty of thinking. Most of these self-proclaimed “cypherpunks” have never considered the true cost of mining one ton of coal, etc; in terms of environmental degradation, or health impact on the laborers. These costs don’t show up in their spreadsheet analysis, so they can carry on in blissful ignorance of the facts, and create new algorithms to reflect their versions of “reality.” They’re so smart, and some of them– very rich.
I’m not “smart” like them, so I have to work for a living. As a professional dentist for 25 years, I’ve restored many teeth with gold restorations. Gold crowns on back teeth have the best wear & bio-compatible characteristics for oral health & longevity. Most patients prefer porcelain restorations these days, because of improved color-matching aesthetics, but gold still has its uses. Relieving pain while restoring health & looks has value, and it always will. I’m not seeing any market for crypto-restorations in dentistry. Do you?
Final Thoughts– February 7, 2019 ~3:45 PM ET : Who is going to recognize any form of crypto-currency during a world war? That’s the acid test for capitalist currency. Precious metals have monetary basis. Currency backed by a functional economy & government has value. Crypto is none of that. Marxists are materialists, and that means we see through the hype.
Sat 09 Feb 2019 11:00 AM EST
If bitcoin is going to “decouple” from all other alt-coins, then bitcoin is the leader, and all other crypto is dead. My reply to Jack Dorsey, “I only have Facebook, and so do many others. Does that mean Twitter is superfluous?”
Dorsey says the bitcoin community is a “global experiment in trust.” When it comes to the value of money, it takes a whole lot more than a small community of trust to back it– in the real world. If only the alt-coin programmers & CEO’s had some identifiable substance of value behind their products, then we would be impressed.
By “real world” I mean global acceptance of its value & stability. Bitcoin & cryptro have been around for only 10 years, and there is still too much uncertainty & volatility. Keep in mind, the crypto-currency market has had tens of billions of hot US dollars pumped into it, and it is still nothing close to stable, much less verifiable.
Why is bitcoin trading at $3,600? Answer: Because it costs a lot to produce. That’s an expensive accounting ledger. I recommend blockchaining anonymous Quickbooks accounts to any global currency. That would be a lot cheaper. The concept of a single global currency is progressive, but it will only happen through revolutionary socialism.
Comments originally posted here.
Tue 12 Feb 2019 06:30 PM EST
Censored comments on above: Alexandria Ocasio-Cortez is not a socialist, she’s a Democrat. Trotskyists won’t let that line be blurred.
I’m a fan of this show because Max Keiser gives us the inside story & details. He & Stacy are capitalists, so revolutionary socialists can’t fundamentally agree on crypto due to politics. Everyone thinks they’re correct on politics, so debate is futile. World events will prove who is correct.
Marxists understand the revolutionary potential in crypto-currency, which is its threat to the international banking establishment. The political problem is: every nations’ banks are intimately connected with a government, military & deep state. They’ll take away your internet. Then what do you have?
Keep reporting the crypto story from the inside, Max & Stacy! Real socialists respect differences in politics, when learning expertise from others who know their field. Marxists understand that putting politics aside (once mastered), is a good way to learn– all around.
Below is a current list of the top-20 cryptocurriences. Anyone can see that Bitcoin (BTC) is in a class by itself, as far as asset price. Bitcoin is the only alt-coin that even approaches meeting its cost of production, which says something profound about the whole crypto market.
Asset Last Price