Friday, March 28, 2014

"I Remain Baffled as to the Hooplah about Bitcoin"

By Yves Smith
Bitcoin is getting hammered today. The Caixin website says it has seen the draft of a Chinese central bank ruling that would require banks and payment service providers to stop dealing in Bitcoin as of April 15. The implications:
This means people will only be able to use cash to buy bitcoins, an analyst who has been following the matter said, and will force all trading websites in the country to close…
The requirement, which Caixin saw in a document the central bank’s headquarters recently sent to regional offices, says money can be taken from the accounts before the deadline, but no deposits can be made. Banks that fail to close the accounts will be punished, the PBOC said, but it did not elaborate on what those punishments would be.
And notice how the thinking of the Chinese authorities is similar to that of their counterparts in Japan and the US, albeit even more forceful:
The circular said bitcoins are a commodity, not a currency. It added that investors are free to trade in bitcoins at their own risk, but should know they cannot be used as legal tender.
This would be a serious blow, since roughly 60% of global Bitcoin trading occurs in China. Bitcoin prices fell by almost 10% today.
Separately, Bitcoin enthusiasts seem not to have grasped the implications of the IRS notice in the US on the status of Bitcoin. As we predicted, the IRS has deemed it to be property, which means that Bitcoin mining will be subject to income taxes. While Bitcoin may be viable as a speculative vehicle, this ruling will make it impractical to use it in commerce.


  1. I remain baffled by the acceptance of the obvious quid pro quo…..

    Ben Bernanke to address eight top hedge funders

    Former Federal Reserve chairman Ben Bernanke was booked for an intimate dinner Wednesday to address eight masters of the universe at Le Bernardin, we hear, including hedge funders David Einhorn, Louis Moore Bacon, Larry Robbins and Mike Novogratz.

    Sources said Bernanke’s expected to make about the same $250,000 fee he commanded at a recent Abu Dhabi speech.

    A spy said topics would include “the 2008 banking crisis, the current state of affairs in Washington and monetary policy” at the dinner hosted by trading firm BTIG, which was co-founded by former Goldman Sachs partner Steven Starker.

    Bernanke will reportedly get another $300,000 for an upcoming talk in Turkey this year.

  2. The Political Terrorist (China Division) have more than 1 billion tax slaves and will murder anyone who tries to escape...Get use to this everywhere.

  3. 27/March/2014

    The Dollar Cannot Be Devalued and Suicidal Bankers

    A rising price of gold does not devalue the dollar, because there is no official link between gold and the dollar. The world’s monetary and financial systems have no link to gold. Gold can be any price without causing any effect upon those systems. We have seen gold at $1900 dollars per ounce, and things were running just as they were when gold was $300 dollars per ounce.

    However, the rising price of gold is a huge embarrassment to the US government not because it devalues the dollar (it does not do this) but because it provokes a loss of confidence in the dollar. When the dollar is seen as falling in value against gold, its fall causes investors to exchange dollars and other currencies for gold as a means of protecting wealth. The rising price of gold is a blot on the prestige of the US dollar and the prestige of the US itself.

    The price of gold in dollars is therefore under strict government control. This fact, once derided as ridiculous, is increasingly accepted as truth by those interested in monetary matters around the world. The means for controlling the price of gold lies in the massive sales of “paper gold” which take place to suppress its price, as so many investigators have amply documented.

    US monetary policy considers that the dollar is here to stay forever, and that gold is no longer - and never again will be - the world’s ultimate money.

    The governments of several nations around the world do not share the same conviction with regard to the permanence of the dollar. China invented irredeemable paper money – which is what the whole world uses today – some one thousand years ago, and several dynasties of Chinese emperors learned to their cost that paper money always degenerates into simple trash.

    The Chinese government knows that the dollar will not be around forever. China is purchasing enormous amounts of gold to add to their huge pile of US Bonds in the reserves of the Bank of China; the government of China is more enlightened than the government of the US, because it is encouraging the Chinese to purchase gold and silver.

    The US government tells the world that it possesses some 8,000 tonnes of gold; the fact that it cannot deliver physical gold held for Germany’s account belies the assurances regarding the physical gold stock of the US.

    The situation for the US – and for the world – is dangerous: the US is like a ship with no lifeboats, because it is presumed to be unsinkable.

    maybe the Chinese gov't has justified reservations regarding bitcon?

  4. Japanese Prepare For "Abenomics Failure", Scramble To Buy Physical Gold

    As we reported yesterday, the world's most clueless prime minister, Japan's Shinzo Abe, has suddenly found himself in a "no way out" situation, with inflation for most items suddenly soaring (courtesy of exported deflation slamming Europe), without a matched increase in wages as reflected in the "surprising" tumble in household spending, which dropped 2.5% on expectations of a 0.1% increase in the month ahead of Japan's infamous sales tax hike. How does one explain this unwillingness by the public to buy worthless trinkets and non-durable goods and services ahead of an imminent price surge? Simple - while the government may have no options now, the same can not be said of its citizens who have lived next to China long enough to know precisely what to do when faced with runaway inflation, and enjoying the added benefit of a collapsing curency courtesy of Kuroda's "wealth effect." That something is to buy gold, of course, lots of it.

    According to the FT, "Tanaka Kikinzoku Jewelry, a precious metals specialist, reported that sales of gold ingots across seven of its shops are up more than 500% this month. At the company’s flagship store in Ginza on Thursday, people queued for up to three hours to buy 500g bars worth about Y2.3m ($22,500). March has been the busiest month in Tanaka’s 120-year history."