Wouldn't it be nice if such a rehypothecation law -- or, really, any law -- were applicable to cryptocurrency? Regulators were way behind the boat on this one, so far behind that I have to wonder what the ultimate reason for that was.
$3T in faith-based assets that are an economic burden to maintain is enough to have a real impact on the…
Wouldn't it be nice if such a rehypothecation law -- or, really, any law -- were applicable to cryptocurrency? Regulators were way behind the boat on this one, so far behind that I have to wonder what the ultimate reason for that was.
$3T in faith-based assets that are an economic burden to maintain is enough to have a real impact on the real economy if they go belly up. There are plenty of people who have borrowed in USD against these.
As far as Europe goes, yes. We really blew up Deutsche Bank in particular.
One might restrict or prohibit using "collateral as collateral"...but then our entire banking system would be absent what it calls a hedge. Right? Or no?
Fractional reserve lending needs to be re-examined in light of this, but rehypothecation laws are basically to prevent too much leverage from happening. One of the great(?) things about public blockchains is that you could literally trace the money and prevent this from happening if you had enough information embedded in the blocks.
I don't know much about most of these protocols. I developed federated identity as my main work in life, and that necessitated learning all about cryptography. I've read the Bitcoin white paper and laughed that people were paying for the incorporation of their transactions in blocks with very small SHA hashes. It was a cute trick, but, srsly. I doubt any of them actually contains enough information in there to say "this is a loan collateralized by yadda", but it's entirely possible to do.
Our "hedge" in real money land is nominally the FDIC and then the Fed once things get too horrible for the FDIC to help (hi, LTCM). It does little to actually throttle risky behavior, and now few things do because of bailouts, one of the many wonderful gifts bequeathed upon us by Geithner & Bros.
There may be a central bank digital currency someday, but I will almost guarantee you that it would be implemented using a simple, centralized database rather than a blockchain. You can't easily erase errors in a blockchain. It's got computational overhead. It reveals all of everyone's transactions to everyone, including those of the government, so long as you can dereference a public key to an entity -- and I'll guarantee you most states are able to do that.
The USD gets another perpetual bid because we're the best country for money laundering. We -- and in particular, our government -- won't give that up easily.
I copied and pasted this into my notes for future reference. There's a lot of sense in this and most of what gets reported people ultimately believing is nonsense.
That's a pretty good analysis. In fact, it's an excellent analysis.
Re: laundering...yup. England and America are the land of the free....laundry. Imagining the money folks are going to let that profit sector erode is magical thinking.
Wouldn't it be nice if such a rehypothecation law -- or, really, any law -- were applicable to cryptocurrency? Regulators were way behind the boat on this one, so far behind that I have to wonder what the ultimate reason for that was.
$3T in faith-based assets that are an economic burden to maintain is enough to have a real impact on the real economy if they go belly up. There are plenty of people who have borrowed in USD against these.
As far as Europe goes, yes. We really blew up Deutsche Bank in particular.
No clue how one might enforce such a law...
One might restrict or prohibit using "collateral as collateral"...but then our entire banking system would be absent what it calls a hedge. Right? Or no?
Fractional reserve lending needs to be re-examined in light of this, but rehypothecation laws are basically to prevent too much leverage from happening. One of the great(?) things about public blockchains is that you could literally trace the money and prevent this from happening if you had enough information embedded in the blocks.
I don't know much about most of these protocols. I developed federated identity as my main work in life, and that necessitated learning all about cryptography. I've read the Bitcoin white paper and laughed that people were paying for the incorporation of their transactions in blocks with very small SHA hashes. It was a cute trick, but, srsly. I doubt any of them actually contains enough information in there to say "this is a loan collateralized by yadda", but it's entirely possible to do.
Our "hedge" in real money land is nominally the FDIC and then the Fed once things get too horrible for the FDIC to help (hi, LTCM). It does little to actually throttle risky behavior, and now few things do because of bailouts, one of the many wonderful gifts bequeathed upon us by Geithner & Bros.
There may be a central bank digital currency someday, but I will almost guarantee you that it would be implemented using a simple, centralized database rather than a blockchain. You can't easily erase errors in a blockchain. It's got computational overhead. It reveals all of everyone's transactions to everyone, including those of the government, so long as you can dereference a public key to an entity -- and I'll guarantee you most states are able to do that.
The USD gets another perpetual bid because we're the best country for money laundering. We -- and in particular, our government -- won't give that up easily.
I copied and pasted this into my notes for future reference. There's a lot of sense in this and most of what gets reported people ultimately believing is nonsense.
That's a pretty good analysis. In fact, it's an excellent analysis.
Re: laundering...yup. England and America are the land of the free....laundry. Imagining the money folks are going to let that profit sector erode is magical thinking.
Faith based assets....exactly.