Breaking News

Bitcoin fanaticism - a precursor to the global economic crisis

According to the official statement, since the global financial crisis of 2008-2009, the world economy is in the best period of growth. But the fact is that this period ushered in the worst economic recession since the Great Depression of the 1930s.

According to a report released last month by the Organization for Economic Co-operation and Development (OECD): "The global economy has been growing at the fastest rate since 2010, and the upward trend among nations is increasingly synchronized. With the stimulus of policies, Steady growth in employment, modest investment rebound and gradual recovery of trade, the long-awaited global economic growth began to emerge. "

Once upon a time, such a "rebound" would be accompanied by an increase in productive investment resulting from the growth of the real economy, rising wages and living standards. However, such days are gone.

In recent days, a fact has proved this way: This week's biggest economic news was nothing but the sale of encrypted currency bitcoin futures. The first Bitcoin exchange was launched Sunday night by Chicago Board of Trade operator Cboe Global Markets. Next week, the larger CME group will also be allowed to start trading Bitcoin futures.

Although futures trading was relatively slow, the fusing mechanism was triggered as a result of excessive price increases, trading was halted. The contract price for January 2018 is $ 17,420, while the price for buying bitcoin directly on the crypto currency exchange is $ 16,250. Last month, the price of bitcoin rose nearly 50%. Earlier this year, the price of bitcoin was only about 900 U.S. dollars. In the past 11 months, the figure has become the largest financial bubble in the history of modern economy.

Bitcoin originated in 2009 by an unknown Japanese named Satoshi Nakamoto or a group of computer programmers using the name invented on the basis of a new mechanism called blockchain. The new technology claims to be able to use the Bitcoin or other cryptocurrencies over the Internet to bypass the national currency and financial regulatory authorities for direct currency transactions.

Bitcoin's technology itself is based on a public ledger system in which information is stored simultaneously on the participant's computer system rather than centrally on the central server. This blockchain technology may be more widely used to facilitate faster transactions, accelerate the flow of information, track the flow of goods, and digitize services.

However, curiosity from Bitcoin in the first few years to the sudden emergence of the financial sector in the past year has nothing to do with potential technological innovation. On the contrary, it has become the best tool for rampant speculation in the global financial arena.

The Financial Times reported on the launch of Bitcoin futures trading as a "groundbreaking moment in the cryptocurrency of alternatives to the global monetary system." However, the main effect of the introduction of futures trading is not whether it can alter the global monetary order, but rather it enables major hedge funds and other financial speculators to cash in on rising prices and to make huge profits from the transactions.

Initially bitcoin was skeptical of some pundits in the financial world, such as JPMorgan CEO Jamie Dimon. Earlier this year, he said he would fire anyone who is trading bitcoin.

But just as Chuck Prince, the head of Citigroup, commented in a speculative subprime bubble in 2007, you had to stand up and dance while the music was playing. The opening up of futures trading offers the opportunity for a massive inflow of capital into this latest form of speculation.

Since the financial crisis of 2008-2009, bitcoin fever has become a more extensive part of the global financial system. The Fed and other central banks responded to the speculative subprime bubble bursting and the collapse of the global financial system by helping banks and investment agencies first and then tapping into trillions of dollars to set a record low interest rate.

As a result, asset prices, stock prices, and housing prices in some areas have been raised to new heights, well above the very limited growth in the real economy.

As John Authers, the Financial Times commentator, puts it: "The stock looks surely overestimated, the bond looks the same, the price of art has hit a record high, and compared to what is already a bubble, bitcoin Like their absurd accessories.

One of the main factors in the maintenance of the bubble is the United States commitment to reducing or exempting large-scale enterprises and the super-rich income tax. Currently, the Trump administration's legislation is now in the final stages of parliamentary adoption.

Shares in the United States have risen 25% since Trump was elected. Since March 2009, the stock market has risen by more than 350%. The tax cuts have no effect on the promotion of real economy and economic growth but are intended to provide more speculative funds and at the same time result in a further reduction of social public expenditure.

Apple is an example. It is estimated that it will increase its annual profit by 47 billion U.S. dollars over any U.S. company due to a reduction in the taxation of 250 billion U.S. dollars in cash overseas. These funds are not used for investment but for "financial engineering" such as stock repurchases to further enhance the value of their shares and thus achieve a market valuation of $ 1 trillion.

Former U.S. Treasurer Lawrence Summers wrote in the Financial Times and the Washington Post that the U.S. economy is "at a high point."

He pointed out that this year's economic growth was driven by the rising stock market and that "a small part of the population" had an increase of more than 6 trillion U.S. dollars in family wealth. Despite unprecedented low-cost capital and generous cash on the business-both ways of attracting investment-productivity growth has been slow, and even innovative companies like Apple and Google can not find enough high returns Investment, so only choose to engage in large-scale stock repurchase.

Summers' "overdraft" diagnosis means that the United States and the world economy are going to collapse.

Instead of coming to such a conclusion unequivocally, Summers issued the slogan, "We urgently need a new economic base," but the bitterness of Bitcoin clearly shows that all the conditions for a massive financial crisis are form.