The Phaserl


Bitcoin, Bitgold, and Counterparty Risk – Jeff Nielson

by Jeff Nielson, Sprott Money:

“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.

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