Money Does Not Exist

globalintelhub * ZeroHedge

Yesterday the US Senate held hearings on “virtual currencies” (meaning Bitcoin).  Meanwhile the “virtual currency” ran up above $800/USD and it was reported it got above $900.  It pulled back but as of now, is hovering above $700.

It was interesting at the hearing, the so called Bitcoin ‘experts’ included FinCen and the Secret Service.  The focus seemed to be on potential criminal activities in the digital currency (not other benefits such as a replacement currency in the event of a US Dollar collapse, etc.).  

Using phrases such as “money laundering” and “criminal activity” and “child pornography” certainly did not paint a good picture of Bitcoin, for those watching with less knowledge about Finance and Bitcoin, and especially for those who had the hearings on in various bars, restaurants, airports, and other places where viewers were not focused on the hearings but could pickup the occasional keyword such as “drug trafficking.”  Silk Road and a newly discovered Assassination Market have been over reported in the news and used by anti-Bitcoin antagonists as a justification to shut down the use of Bitcoin as much as possible (or at least to make it look dirty, as if users of Bitcoin are all drug dealers and child smut peddlers).  To put things in perspective, it’s been reported that the largest holders of US Dollars next to central banks are drug cartels.  Oh, and banks such as HSBC and others have been involved in the laundering of their US Dollars, some knowingly.

It’s being described as the largest cartel money-laundering scheme in history, and today, HSBC Bank headquartered in London, with offices in the U.S. will forfeit $1.256 billion and enter into a deferred prosecution agreement with the Department of Justice (DOJ). HSBC Bank USA violated the BSA by failing to maintain an effective anti-money laundering program and failed to conduct appropriate due diligence on its foreign correspondent account holders, DOJ said.

But the DOJ is not suggesting we stop using the US Dollar because of it’s use in the drug trade, nor are they suggesting HSBC is shut down because it was laundering money for criminals.  They get fined, and we all move on.  

Virtual Currency?

What is exactly a “virtual currency” ?  Merriam-Webster defines “virtual” as:

very close to being something without actually being it

Ok so Bitcoin is not a virtual currency.  It could be a digital currency, as it’s purely electronic and not in physical form.  But of the Trillions created by the Fed during the QE program, still only $1.3 Trillion of M0 (physical cash & coin), as of July 2013, according to the New York Fed.

Note the green line, M2.  (M3 no longer being reported.)  But this chart will suffice to show the discrepancies between M0 and M3.  M0 is less than M1 (red line) by about $700 Billion.  The different between M2 and M1 is still about $8 Trillion.  That means at least $8 Trillion USD exist in digital form, electronically.  So does that imply the US Dollar is also a ‘digital’ or ‘virtual’ currency?  Or are the only ‘real’ US Dollars M0, physical notes?

continue at ZeroHedge:

http://www.zerohedge.com/contributed/2013-11-19/money-does-not-exist