Oddbean

Only the top four banks are profitable enough to be considered “solvent”. Ultimately the fed itself has not had an audit for the past 50 years and Nixon defaulting on its gold debt to the British was the proof of its insolvency, But we both (The British and the Americans) mutually benefit from this mutual insolvency. What is interesting to see is this new demand for T bills from digital stable coin tokens like tether. What happens when China launches a new digital stable coin based on its US forex reserves?

What happens as an individual bank becomes more insolvent? My guesses: - they issue fewer loans - they chase more deposits (higher yields, bonuses, etc.) - Since the fed recognizes the underwater treasuries at full value, they recognize them as solvent and keep lending to the bank. So, they are just a bank run away from collapsing, which is why they are cutting off access to Bitcoin markets where they would have to clear with the market maker. If you buy ETF then the banks can move around the balances and underwater securities (since banks can recognize at full value). As long as they cooperate, it seems the larger banks doing clearances for Bitcoin ETF purchases will have take on more and more risk by accepting underwater treasuries for clearances. If the larger ETF clearing bank actually buys Bitcoin, they will have to spend actual liquid cash while accumulating more and more underwater treasuries.

The SVB collapse is a perfect example of bank endgame. They can run in the red forever as long as people don’t ask any questions. The dumpster fire that is traditional finance is perplexing. It’s hard to think that a bitcoin product will fill the role of actual bitcoin custody, But this is a whole system built on a mutual understanding of plausible denial, But it does seem like bitcoin is going to fill the role oil was taking. @Excellion had some interesting points about Canadian UBI, That less than a trillion per year would give everyone in Canada 2000$ a month. The E-CNY is the only reason banks are getting caught with their pants down and we need to see more moments like Peter Thiel pulling out before quant hedge fund traders want to move to bitcoin. 60% a year is plenty when you are trading 5 billion of other peoples money. How many people even have 5 billion dollars in bitcoin? A handful?

E-CNY is the Chinese CBDC equivalent, Is an ERC-20 token, And is totally programmable. The social credit score system is totally built in, The government can deposit or withdraw E-CNY from wallets without permission, It is exactly what bitcoiners are afraid the dollar will turn into. Complete surveillance currency. There is even an app on the apple App Store to swap for E-CNY. https://apps.apple.com/hk/app/e-cny/id1571652872?l=en-GB This whole system is why congress is bringing up this whole discussion, Because the most fraudulent players are about to be put on blast by a totally transparent financial system, Or China will be the largest shareholder of USA inc.