A couple topics I’d like to touch on in this writing today
Financial censorship
Ukraine accepting bitcoin donations
Russia being kicked off the Swift payments network
Possibility of a bank run in Russia
Censorship in this world has been pervasive in terms of social media, news narratives, and “cancel culture.” Whether you think it is right or wrong is up for debate but most people haven’t spent any time thinking about the next stages of this.. monetary censorship. This is something we saw up in Canada recently when a government doesn’t like the way you’re acting, they will literally freeze your bank account. It’s not about whether you agree or disagree with what is going on, but rather the ability to do so is too much power in the hands of the few. This year the government freezes your account because of an “unlawful” protest but how about in the next 5-10 years? Do they freeze your account because you said the wrong thing? Because you weren’t wear a mask? Because you didn’t get the vaccine? It’s a slippery slope that starts to look like the Chinese social credit scoring system. I’m not willing to go there and that’s why I keep my money in bitcoin - a censorship resistant, decentralized, peer-to-peer electronic cash system.
Ukraine
I haven’t looked into this completely but my assumptions are that with Ukraine under attack you can’t go up to your friendly bank teller and withdraw some money. ATM’s are out of order, bitcoin donations are pouring in to help fund the Ukrainian military, and citizens are using bitcoin as a means to flee the country with their wealth.
A real life example - my wife’s co worker has family in Ukraine. They own large commercial property that was seized by Russian soldiers - they were told it is being turned into a hospital and hotel. My wife’s co worker was able to send his family bitcoin to help finance bus tickets and a way out of Ukraine, below is an email he sent her.
Russia
Swift (the Society for Worldwide Interbank Financial Telecommunication) is the main secure messaging system that banks use to make rapid and secure cross-border payments, allowing international trade to flow smoothly. It has become the principal mechanism for financing international trade. In 2020, about 38 million transactions were sent each day over the Swift platform, facilitating trillions of dollars’ worth of deals. - The Guardian
Read that again - Swift is the main way banks make rapid and secure cross-border payments… sounds exactly like bitcoin and sounds like a system ripe for disruption. It is only a matter of time in my eyes.
This is what is used when they talk about “sanctions.” If Russia is cutoff from the traditional monetary system then you would assume they start looking for alternatives, one of which being, bitcoin. As I stated in my previous writing TRH #39, this could be the beginning of the end for the US dollar as world reserve currency. All oil is sold in dollars worldwide and Russia exports 4-5 million barrels per day (bpd) of crude and another 2-3 million bpd of refined products.
Another implication that a lot of people don’t think about is that the Russian citizens also suffer from this, it isn’t just the Russia government. The Russia Ruble is immediately devalued and people fear they won’t have access to their money. As we can see from the post below that a possible bank run is ensuing. Visa stops working and people want their money now in case they aren’t able to get it later. This has happened historically usually when a money goes through hyperinflation, banks restrict withdrawals, hoping to prevent the fragile fractional reserve banking system from collapsing. Begs the question, is it really your money if it’s in the bank? This is the moment when money under your mattress is extremely valuable because there is no counter-party risk. Bitcoin is the ultimate “cash under the mattress” and the ultimate insurance against financial catastrophe.
Lastly, I would encourage you all to try and read this. Some of it is kind of confusing but a very interesting breakdown of how this could play out with eery similarities to the collapse of Lehman Brothers in 2008.
QT is quantitative tightening and the opposite of QE - quantitative easing aka printing of money which ends up on the Fed’s balance sheet.