Ch 11.22 - Money/Reserve Currency/Cash
"In God we trust. All others pay cash." - Unknown
a. Money/Exeter’s Pyramid
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"We have energy blindness. Energy is the base layer of money. When we work we expend energy. Debt is a future promise to expend energy. Energy has to remain a small % of the economy. If it becomes too large it becomes impossible to pay back the debt. People consume too much of their energy just to find energy. Debt starts to default. Entitlements are promises to expend energy in the future. If you promise too much relative to the size of the energy market you either have to default on promises or you have to inflate the energy market to be big enough to back the promises. Money is nothing but a manifestation of the expenditure of energy." - Luke Gromen
Money was invented to allow for the division of labor. It allowed people to specialize and trade their labor without needing to barter.
Issuer Acct Digital Physical
Central Bank CB Reserves CBDC Banknote/Coins
Commercial Bank Bank Deposit Bank DC's Banknote/Coins
Private Pmt Provider Stablecoin Prepaid Card
None n/a Bitcoin/Crypto Precious metals/Gold
"Exeter's inverted pyramid:
____Highest Layer of Abstraction____
NFTs/Tokens - .3t - Depend on Bitcoin/CBDC's
Bitcoin/CBDC's - 2t - Outside the system, but on/offramps controlled by the system
____Highest Counterparty Risk____
Derivatives, Unfunded Government Liabilities - 2-4 quadrillion / 1,000t - All paper markets
Commercial Real Estate, Corporate Bonds, Muni Bonds - 300t - Can't pay debt
Equities and Bank Deposits - 200t - Banks/pension fund assets
Government Bonds - 120t - Healthcare, supply chains, social security collapse
Bank Deposits - 50t
Paper Money - 40t - (up to infinity under hyperinflation)
Commodities - Non-Money Commodities
Land - Debt-free farmland, self-sufficient homesteads
____Zero Counterparty Risk/Zero Abstraction____
Gold - 2.5b oz - 13.8t - separate from the pyramid (no counterparty risk)
Silver - 4b oz 1.3t - bottom of pyramid (money of the people)" - made from a combination of the pyramids from Parallel Mike and Rafi Farber with some modifications by the Author
"Understand three fundamental truths about modern banking.
1) The money isn't yours.
2) The money isn't actually there.
3) The money isn't really money." - Unknown
"Fake money to pay people to work fake jobs to make fake stuff." - Unknown
"For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows." - 1 Timothy 6:10 KJV
b. Reserve Currency
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exorbitant privilege - "the benefits the United States has due to its own currency (the US dollar) being the international reserve currency." - Wikipedia
Reserve currencies throughout history:
211BC Rome (455 years) - Roman Denarius
244 Dark Ages (856 years) - n/a
1100 Florence/Venice (350 years) - Italian Florin / Ducat
1450 Portugal (80 years) - Portuguese Real
1530 Spain (110 years) - Spanish Real
1640 Netherlands (80 years) - Dutch Guilder
1720 France (95 years) - French Livre
1815 Great Britain (129 years) - British Sterling
1921 United States (77 years) - US Dollar/Bretton Woods/Eurodollar
"[Bretton Woods] is an asymmetric financial system [where foreigners] see themselves supporting American living standards and subsidizing American multinationals". - Valéry Giscard d'Estaing, French Minister of Finance
"It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one." - Barry Eichengreen
"In February 1965, President Charles de Gaulle announced his intention to exchange its U.S. dollar reserves for gold at the official exchange rate. He sent the French Navy across the Atlantic to pick up the French reserve of gold and was followed by several countries.As it resulted in considerably reducing U.S. gold stock and U.S. economic influence, it led U.S. President Richard Nixon to end the convertibility of the dollar to gold on August 15, 1971 (the "Nixon Shock"). This was meant to be a temporary measure but the dollar became permanently a floating fiat money and in October 1976, the U.S. government officially changed the definition of the dollar; references to gold were removed from statutes." - Wikipedia
c. Cash
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"We are currently experiencing unforeseen difficulties, but are diligently working to resolve this as soon as possible. Our slot machines are available to play with cash. For MGM Rewards members, please insert your card (light around card must be green). Slot play will be recorded and credited to your account when our systems are back online. Freeplay and slot dollar redemption are not available at this time. When play is completed, press the cashout button, and the amount will be paid in cash in person at the machine by a slot attendant. Thank you for your patience." - MGM Resorts after a cyberattack crippled their reservation systems
"Currency is share price for a country." - Unknown
"Warren Buffett thinks of cash as a call option with no expiration date, an option on every asset class, with no strike price." - Unknown
"Paper money is just an option with slower theta burn and no precise expiration date, change my mind.." - Unknown
"First, cash makes managing your money clear and simple. Keeping a firm grasp on your spending with notes and coins is easier. You only have to open your wallet to see if you can afford additional expenses. It is with good reason that parents usually give children their pocket money in cash. By contrast, when you hold a plastic card up to a payment terminal, all you see is an amount that will be debited from your account at some point in the future. Second, thanks to its simplicity of use, cash allows everyone to participate in the economy in social life. You do not need an account or a mobile phone to pay with coins and banknotes, nor do you need an affinity with digital technology. Third, when paying by cash, you do not need to provide personal details such as your name or card number. With electronic payments, however, information about the persons making the payment and their payment behaviour is stored." - Unknown
"I had to go get cash out of the bank for a atv . 2,500 . There she is counting 20 100 dollar bills. WTF Why do we not have a 500 or a 1000 dollar bills ? Oh yeah the usual large bills are only used by criminals." - Unknown
"Printing higher denomination notes is something the fed hates. Interest free money. JFK/Lincoln tried and assasinated." - Unknown
"1) The money isn’t really yours. You’re just another unsecured creditor if the bank goes bust.
2) The money isn’t actually there. It’s been lent out to borrowers who are illiquid or insolvent.
3) The money isn’t really money. It’s credit created out of thin air.
The point is that cash is freedom. And when the State limits the utility of cash—physical dollars that don’t leave an electronic trail—they are limiting your personal freedom to act and compromising your privacy. Governments are naturally opposed to personal freedom and personal privacy because those things limit their control, and governments are all about control." - Nick Giambruno on money in bank accounts.
"Epstein sold and r*ped children and never lost his access to banks. Know who did? Truck drivers and the mypillow guy. That's who. You better wake up fast, folks." - Unknown
"Visa offers restaurants $10,000... if they stop accepting cash." - Unknown
"Cash is particularly crisis proof. You can still pay with banknotes even when a card terminal has stopped working, when your mobile phone has no reception or when there is no electricity. Cash therefore serves as an important back-up in the event of local – or even widespread – interruptions to card or app payments." - Unknown
"If some people want to rely solely on digital financial transactions, let them. But don't take away cash for the rest of us. My $50 note can't be hacked. If I'm robbed, I lose $50, not my entire life savings. If my $50 note is accidentally immersed in water, it still works. My $50 note doesn't need batteries; it can't be 'out of range' and it won't break if it's dropped. If the system is down, I can still use my note. My $50 note can be put into a charity box or given to a homeless person. Sure, I use a card sometimes for large purchases, but for everything else, please leave me the option of cash. It simplifies life." - senatormalcolmroberts
"A great idea for Australians to take on the French way to deal with keeping Cash Alive! I've been in France for three months now. Their approach to this is simply fantastic. I'd like to share a bit about it. A very well known supermarket here decided to go cashless. A group of 50 people got together and agreed that they would all do a big shop on the same day. Piling their trolleys to the brim and each person getting to the checkout - the human check out, not the machines - and having everything scanned before bringing cash out. The staff were absolutely overrun. There management in a complete tizz, everyone repeatedly, calmly and in a very organised and polite fashion acting as if they knew nothing. No edges, no rudeness, no humiliation. The supermarket reinstated cash. Petrol stations: filling up with fuel then only having cash to pay. Restaurants: groups of friends going out for dinner and nobody taking phones or credit cards, only cash ... They are doing it in every single area of France. Simply refusing to be part of it. The reason it works is because it's organised in large groups. One person here and another there doesn't work. It needs to be really carefully constructed." - Unknown
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