License to print money... BitCoin?

Quote: Pacomartin

A It could be that Sweden is always thinking about a massive real estate crash that will break the commercial banks. The difficulty in quickly re-instituting a cash based economy may be swayed by having electronic cash issued by the central bank.

We have nothing to fear but fear itself. The 'tipping point' can come at any time from any direction. In Iceland I would maintain it started with Great Britain declaring Iceland to be entirely composed of terrorists and seized Icelandic assets and accounts in the UK. This made Icelandic banks fail and brought riots as well as losses to bank owners as well as account holders.

So was it really an internal economic trigger? Demand deposits is an accounting term that emphasizes whose money it really is but the essence of bank operations is that there will never be a line out the door and around the block of depositors making those demands. A run on the bank can be triggered by a great deal. In the USA many orientals use only oriental run US banks.

If you read Scandinavian crime fiction or watch their movies right now you will learn that police officers are all drunks and drug addict and criminals who rob, rape and pillage with careless abandon and are never caught or punished. (well okay that is a bit of an exaggeration, but not by much). So what faith should their population have in their bankers? If foreigners read of police officers who are mental and social defectives going thru a midlife crisis will they also form similar opinions about Scandinavian bankers? where does the tipping point arise? Is the beast slouching toward Bethlehem or towards Stockholm?

George Soros (born August 12, 1930) Born in Budapest, he survived Nazi Germany-occupied Hungary and emigrated to England in 1947. He is known as "The Man Who Broke the Bank of England" because of his short sale of US$10 billion worth of Pound sterling, making him a profit of $1 billion during the 1992 Black Wednesday UK currency crisis. Many people in the UK recall Black Wednesday as a national disaster, brought about by an adopted immigrant.

Quote: Fleastiff

We have nothing to fear but fear itself. The 'tipping point' can come at any time from any direction.

Black Wednesday does indicate how quickly economics can change. The Swedish banking rescue followed a housing bubble in Sweden that deflated during 1991 and 1992, and resulted in a severe credit crunch and widespread bank insolvency.

Even though the banking crisis occurred in Iceland in 2008 the 5,000 kr. note was still the biggest unit of currency in Iceland. Since it was worth only EUR 30, many people felt that was impractical — especially in a relatively expensive Nordic country.

It wasn't until 2013 that the note was finally issued. Even today the 5,000 kr note is worth EUR 39 but nearly 3 million 10,000ISK notes have been issued (roughly 9 per capita).

Sweden may be sensitive to how long it takes to get banknotes into circulation after a banking crisis. At present 1 EUR = 9.53 SEK. However, in the event of a crisis, Sweden could page the Swedish Crown to the Euro at 1 EUR = 10 SEK. Immediately all the Euro banknotes spent by tourist could begin circulating inside Sweden providing a much needed cash to ease people's concerns about banks. At the end of the crisis the Swedish Crown could float again, and the Euro banknotes will return to Germany.

Iceland now has a large number of banknotes in circulation and you can't put the rabbit back in the hat and call them back in..

Iceland is thinking of pegging their currency to the Euro because tourism has become the lifeblood of the resurgent country. With 1 EUR = 128.5 ISK there is no easy conversion between the two currencies. The Euro banknotes will not circulate easily with the Icelandic Crown banknotes.

It is possible that Iceland will simply give up their 17 million banknotes and 232 million coins for a population of only 326K. They could then print new banknotes of the same denomination as Euros (the way Bahamas and Bermuda do of the US banknotes).

In any case the process of pegging one currency to another is made much easier if the original country is using electronic money.

Quote: Pacomartin

In any case the process of pegging one currency to another is made much easier if the original country is using electronic money.

Yes. Tourists do most of their buying via credit/debit cards and don't lug currency with them. Electronic is always easier.

I forget what Soros was betting on.. Turkish currency or Spanish currency or something. He was basically using a high stack of chips because he was certain the currency would falter.

Quote: Fleastiff

Yes. Tourists do most of their buying via credit/debit cards and don't lug currency with them. Electronic is always easier.

I forget what Soros was betting on.. Turkish currency or Spanish currency or something. He was basically using a high stack of chips because he was certain the currency would falter.

The European Exchange Rate Mechanism (ERM) was a system introduced by the European Economic Community on 13 March 1979, as part of the European Monetary System (EMS), to reduce exchange rate variability and achieve monetary stability in Europe. The ERM is based on the concept of fixed currency exchange rate margins, but with exchange rates variable within those margins. This is also known as a semi-pegged system.

On 8 October 1990, Thatcher entered the pound into the ERM mechanism at DM 2.95 to the pound. Hence, if the exchange rate ever neared the bottom of its permitted range, DM 2.773, the government would be obliged to intervene. With UK inflation at three times the rate of Germany's, interest rates at 15% conditions for joining the ERM were not favourable at that time.

George Soros began building an immense position in short selling the pound sterling, so he would make a huge profit if the pound went below DM 2.773 .Soros' Quantum Fund began a massive sell-off of pounds on Tuesday, 15 September 1992. The Exchange Rate Mechanism stated that the Bank of England was required to accept any offers to sell pounds. However, the Bank of England only accepted orders during the trading day. When the markets opened in London the next morning, the Bank of England began their attempt to prop up their currency . They began buying orders to the amount of 300 million pounds twice before 8:30 AM to little effect. The Bank of England's intervention was ineffective because Soros' Quantum Fund was dumping pounds far faster. The Bank of England continued to buy and Quantum continued to sell until Lamont told Prime Minister John Major that their pound purchasing was failing to produce results. At 10:30 AM on 16 September, the British government announced a rise in the base interest rate from an already high 10 to 12 percent to tempt speculators to buy pounds. Despite this and a promise later the same day to raise base rates again to 15 percent, dealers kept selling pounds, convinced that the government would not stick with its promise. By 7:00 PM that evening, Norman Lamont, then Chancellor, announced Britain would leave the ERM.

George Soros made an estimate £1 billion profit.

United Kingdom voted to opt out of the Euro Zone around this time.

The sale of UK gold reserves over the period between July 1999 to March 2002, resulted in 395 tons of gold over 17 auctions at an average price of $275 per ounce.
By 2007, the price of gold had reached US$675, and the loss to the UK taxpayer (contrasted to selling the gold later) was estimated at more than £2 billion, as the Euros bought with the proceeds had also risen in value.

Quote: Fleastiff

Yes. Tourists do most of their buying via credit/debit cards and don't lug currency with them. Electronic is always easier.

Sweden has 60 million 500kr banknotes circulating for a population of 10 million or six notes per capita. This denomination is 66% of the banknotes in circulation by value. The Euro zone circulates 28 banknotes of denomination 50 Euros per capita. Right now 500 SEK =52.5 EUR.





In a traditional run on the bank as dramatized in "It's a Wonderful Life" everyone tries to turn their savings into banknotes. Naturally the bank runs out of cash and people start making desperate decisions based on fear. In Sweden there are very few banknotes in circulation, and you can only get them from an ATM and not at a teller window. All the bank has to do is reprogram the machines to give only a single 500kr banknotes per day (like they did in Greece when you could only withdraw 50 Euros).

In the event of widespread bank panic in Sweden, one way or the other the Swedes will get a hold of Euro banknotes. They may encourage tourists to pay in cash, and not deposit them in banks. They may travel to Germany. In reality, I suspect many Swedes are holding a small envelope of Euro banknotes at present.


The Bahamian money is completely backed up by US treasury bonds, and US banknotes freely circulate in the Bahamas. Bahamian money is pegged at parity with the US dollar.

Puerto Ricans couldn't use bitcoins very well for everyday currency. http://www.zerohedge.com/news/2017-09-25/hurricane-maria-has-transformed-puerto-rico-cash-only-economy

Free floating currencies can seem cruel. Overnight the price of gasoline can double as a result of your currency crashing. Your business can completely fail without you being able to do anything about it.

But, people argue that Greek style recessions are made worse by not having a free floating currency, or being pegged to a wealthier nation.

After the banking crisis of 2008, Iceland applied to join the European Union on 16 July 2009 and formal negotiations began on 27 July 2010. However, on 13 September 2013 the Government of Iceland dissolved its accession team and suspended its application to join the EU.

However, in April of 2017 the idea of pegging the Icelandic Crown to the Euro was widely circulated.

In Iceland they were also circulating only six 5000 ISK banknotes per capita in 2006 and that denomination was worth 70% of the value of banknotes . So it resembled Sweden today.

But Icelanders could not as easily lay their hands on foreign currency as their own currency lost half it's value. But they had to wait 5 years until the central bank began issuing a 10,000 ISK banknote.

5000 ISK banknote worth in Euros at end of year
2004 €57.33
2005 €64.12
2006 €57.05
2007 €56.89
2008 €39.36 - commercial banks go bankrupt
2009 €28.77
2010 €31.51
2011 €30.96
2012 €31.09
2013 €30.82 - Central Bank introduced 10,000 ISK banknote September 2013
2014 €30.95
2015 €35.27 - tourist boom to Iceland
2016 €41.67
pres. €39.00

If the Icelandic crown goes back to 100 ISK: 1 EUR where it was in 2008, and they peg it there, than the two banknotes can easily circulate side by side.

Quote: Argument against Iceland pegging to the euro.

http://bilbo.economicoutlook.net/blog/?p=35691


In the depreciation period, the Icelandic central bank would have had to raise interest rates sharply to attract foreign capital and the fiscal authority would have had to cut domestic growth to constrain imports even further than what happened as a result of the collapse.

That is, a Greek-style Depression would have been inflicted on the nation.

The central bank would also have had to be furiously selling euros into the foreign exchange markets in return for Króna, which would have soon exhausted its stocks.

Meanwhile the speculators would have been shorting the currency knowing that the capacity to maintain the peg would be exhausted (such were the forces that led to the actual depreciation of the scale we observed) and, thus, making matters worse.

Similarly, in the period that the exchange rate has appreciated against the euro as a result of the economic recovery (boom), the central bank would have been under pressure to lower interest rates and buy up foreign exchange (euros). Both actions would not be indicated during a boom that was in danger of spilling over into an inflationary situation.

The exchange rate fluctuation avoided these destructive binds on policy, which a peg would bring.

Pegging a nation’s exchange rate (effectively surrendering monetary independence) means that all adjustments that arise from trading fluctuations have to be borne by the domestic economy. The terminology that is now popular in the Eurozone for that process is internal devaluation.

So instead of allowing an exchange rate to depreciate when a nation’s exports slump relative to imports or financial flows are more out than in, a pegging nation will be forced to engage in internal devaluation, which is a process that effectively brought the Bretton Woods system of fixed exchange rates down in the 1960s (finally ending in August 1971).

A peg is more damaging when there are downward pressures on a currency than when the trading position of the nation is strong and it is facing upward pressure on its currency relative to the currency it is pegging against.

https://techcrunch.com/2017/11/19/100-cryptocurrencies-described-in-4-words-or-less/

I had no idea there were anywhere near that many.

Disrupt Berlin is accepting bitcoin payments for their seven hundred Euro Early-Bird tickets.

Quote: Fleastiff

I had no idea there were anywhere near that many.

There are 1301 crypto currencies
56.9% Bitcoin
82.97% the top four
91.25% the top thirteen (over $1 billion apiece)

Quote: Pacomartin

There are 1301 crypto currencies
56.9% Bitcoin
82.97% the top four
91.25% the top thirteen (over $1 billion apiece)

Bitcoin just hit $8,000!

I look at this like the internet stock era of the late 1990s. The strong are the ones who will survive, in this case maybe 10 or so will make it. Lots of people are wasting money on the latest alt-coins hoping for a Bitcoin repeat. It will not happen. Not that money will not be made, just not on AZD-coin.