{"id":28809,"date":"2017-12-13T07:43:24","date_gmt":"2017-12-13T12:43:24","guid":{"rendered":"http:\/\/olduvai.ca\/?p=28809"},"modified":"2017-12-13T07:43:24","modified_gmt":"2017-12-13T12:43:24","slug":"could-central-banks-dump-gold-in-favor-of-bitcoin","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=28809","title":{"rendered":"Could Central Banks Dump Gold in Favor of Bitcoin?"},"content":{"rendered":"

Could Central Banks Dump Gold in Favor of Bitcoin?<\/a><\/h3>\n

All of which brings us to the “crazy” idea of backing fiat currencies with cryptocurrencies, an idea I first floated back in 2013, long before the current crypto-craze emerged.<\/i><\/p>\n

Exhibit One: here’s your typical central bank, creating trillions of units of currency every year<\/b>, backed by nothing but trust in the authority of the government, created at the whim of a handful of people in a room and distributed to their cronies, or at the behest of their cronies.<\/p>\n

And this is a “trustworthy” currency?<\/b><\/p>\n

<\/p>\n

Exhibit Two: central banks can’t become insolvent, we’re told, because they can create as much currency as they want, whenever they want.<\/b> And this is a “trustworthy” currency?<\/p>\n

<\/p>\n

Exhibit three: and here’s what happens when trust in the currency is lost due to excessive currency issuance:<\/b> the currency goes from 10 to the US dollar to 5,000 to $1 and then to 95,000 to $1, on its way to 2,000,000 to $1:<\/p>\n

<\/p>\n

Yes, this was once a “trustworthy” currency.<\/p>\n

While many people expect China to issue a gold-backed currency some day, they overlook the inconvenient reality that China is creating far more fiat currency than it is adding in gold reserves.<\/b> They also overlook that gold-backed means nothing if the currency isn’t convertible into gold<\/i>.<\/p>\n

If it isn’t convertible, it isn’t gold-backed. Claiming there’s gold somewhere in a vault doesn’t make a currency gold-backed, as the central bank can devalue the currency it issues at will. Gold-backed means the currency is pegged at X units of currency to 1 unit of gold, and X units of currency can be exchanged for 1 unit of gold.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

Could Central Banks Dump Gold in Favor of Bitcoin? All of which brings us to the “crazy” idea of backing fiat currencies with cryptocurrencies, an idea I first floated back in 2013, long before the current crypto-craze emerged. Exhibit One: here’s your typical central bank, creating trillions of units of currency every year, backed by […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[4174,124,127,15611,309,374,587],"class_list":["post-28809","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bitcoin","tag-central-banks","tag-charles-hugh-smith","tag-cryptocurrency","tag-fiat-currency","tag-gold","tag-of-two-minds"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28809","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=28809"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28809\/revisions"}],"predecessor-version":[{"id":28810,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28809\/revisions\/28810"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=28809"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=28809"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=28809"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}