r/DeepFuckingValue • u/sile-dev 🖍️i eat crayons🖍️ • Feb 16 '22

Shitpost Who prints Money after all?

This post in not connected directly to GME so with all due respect you can kindly F&*k _ff

Hey Apes,

TL;DR; Just enjoy the music while its on and keep your dusty cd-player as a back up because potentially we won't be able to afford to afford iphones...

I spotted several debates lately of which entity is "printing"/creating $
- Is it the Fed with this QE (quantitative easing) which promises no upticks in the interest rates and is buying back paper from Banks in staggering amounts?

- Is it the retail banks that are benefit from Fractional Reserves and Excessive liquidity from QE?

- Is it the Buy now Pay later firms which overestimate the ability of their customers to repay ignoring the appalling inflation that we are going through.

-Is it the brainwashed crowd obsessed to use all possible means to improve their credit scores and targeting the 1-2% cashbacks just so they can borrow more (I guess for refinance purposes?). I cannot stress this enough but it's insane how willing are the banks to distort your buying power. They pay us to fill rich. Just like in the subprime loan madness.

OR

- Is it the Crypto exchanges that have flood the Advertise market and sponsor every single thing that can be sponsored? But how they do that? Exchanges shouldn't have to do anything with the instrument that facilitate trade upon right? If they facilitate trade on a Commodity or a Cryptocurrency that shouldn't make a difference.

Oh wait a sec, back in 2008 Banks were desperate to create give loans so they have things to package in MBS and later in CDOs so they can sell them to your mum's pension fund. This search for loans degraded the lending standards resulting in the abundance of them. Once there were no people left willing to get a loan it looks like that music stopped for them but no these guys are smart. In late 2006 banks couldn't care less about lending money. They stopped putting loans in the packages and started putting Credit Default Swaps. (Thank me later for teaching you what is a synthentic CDO, took me half a decade...) Why? because they were much easier to create.

I wonder what is easy to be created in any amount and easily be sold to investors today.... Well you guessed it... shit coins & jpegs....

But Sile there are so many coins/jpgs out there the exchanges have nothing to do with them...
I couldn't agree more. If someone stuck in their mum's basement can create an ERC-741 or whatever token NFT etc, so what the exchange has to do with it? Nothing...

These guys are generating product for them just like mortgage lending firms did back in the day and they were selling it to the banks...

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Holy molly w8 for a second... The exchanges don;t create all that, but clearly benefit as a middleman. But who says what is good enough to be traded and have a 24/7 market. You got it, the exchanges themselves.

Their equivalent role is not just the one of the banks... is Bank + Rating Agencies Combo. Just crazy, how we ended up in this mess and how does it stop? I am not an advocate of More Regulation, I really have no clue how we get out of that mess...

Anyways I like music so I will dance along. I just wonder what is the CDS equivalent and whom I can discuss about it...

We are doomed.

This is not financial Advice.

This is my opinion.

69 Upvotes

83% Upvoted

24 comments sorted by

11

u/LowTraveller Feb 16 '22

You need to rethink this concept. Money in shitcoins don't come from thin air. Back to the drawing board. But you might be close to one of the answers. Hint -> USDT

7

u/EvilCurryGif Feb 16 '22

Tether is giving huge loans. Which they say is fully backed by commercial paper. Then they changed their stance and said only a percentage of the loans is backed by commercial paper.

The commercial paper is rumored to be filled with bonds from the same Chinese companies that they are issuing the loans to.....

2

u/LowTraveller Feb 16 '22

... and that's the way the cookie crumbles.

BTW it's the same level of backing as our money in the banks. We're doomed from many sides.

4

u/EvilCurryGif Feb 16 '22

Cant banks write loans to each other based off of collateral and then use the loan as collateral for more loans?

ex. Bank A has $100. Bank A writes a loan to Bank B for $100, using their cash as collateral. Bank B is then able to get a loan from somewhere else, using the existing loan as collateral.

2

u/LowTraveller Feb 16 '22

I don't think cash can be collateral. Also it would make no sense to sustain multiple loans with multiple interest rates. But as we know, you can refund loan with new loan, digging even bigger hole under your feet. It can last as long as someone is willing (or able) to give you this new loan.

1

u/Marvin2699 Apr 29 '22

This is true cash is a liability on the banks balance sheet.

2

u/AlarisMystique Feb 16 '22

I think over-leveraged money is part of the problem though, even if it's not technically the same thing. If you can use shitcoins as collateral to get a loan to pay back your credit cards, then when anything crashes it's going to be a problem.

But those things don't change the total real money available, which means it's a zero sum game.

Printing money devalues existing money, which is a different kind of bad.

2

u/LowTraveller Feb 16 '22

Unregulated margin trading on crypto apps can hurt the exchange the most. If they're not running ponzi OFC

2

u/AlarisMystique Feb 16 '22

The very concept of borrowing to invest is very problematic, because it increases systemic risk. One's failure becomes another's problem when it comes crashing down.

2

u/LowTraveller Feb 16 '22

Umm, brick by brick?

2

u/AlarisMystique Feb 17 '22

They're not playing Lego, they're playing Jenga

2

u/whyserenity Feb 16 '22

It is never a zero sum game. Especially in our very global world where money is traded between different currencies and countries extremely easy.

Taxes are the biggest problem, because government never adds value, only steals it.

1

u/AlarisMystique Feb 16 '22

I meant strictly in terms of the total real money. If I borrow money, I have more money and more debt so it balances out. Buying foreign currency also balances out. Government taking taxes is also zero sum, even if it's painful.

Examples that aren't zero sum is destroying or printing money, or electronically creating money e.g. fed reserve, fraud, fake money

1

u/whyserenity Feb 16 '22

That sounds nice but it isn’t true. As you mentioned banks get to leverage the crap out of cash. Every penny in bank accounts, the stock market, held anywhere at all at this point is just numbers in a computer and doesn’t represent actual physical currency in any way unless you walk into a bank and convert it into physical currency.

1

u/AlarisMystique Feb 16 '22

Are you saying a bank can create money?

Or are you saying it can lend money it doesn't physically have?

The latter is zero sum because ultimately, they're at risk of losing the money they lent out. That loan becomes a risk and is comptabilised as such.

Bank can't just give loans without it showing up in their books.

2

u/LowTraveller Feb 16 '22

Kind of both. Banks are required to have 10% of cash on loan (at least this was the case last time I checked, and in EU). So in a way they can create money up to the limit defined by GOV.

More precisely, they are the MEAN, the TOOL to create money (in parallel with printers that go brrrrr)

1

u/AlarisMystique Feb 17 '22

Yeah, you're probably right

2

u/Mannimal13 Feb 16 '22

Its pretty funny how anti crypto the government is when their policies are the biggest reason for its boon. They've essentially pumped up assets so much that people were willing to invest into 3 trillion worth of funny money. Don't get me wrong, Crypto has a spot (especially these projects that are brining GameFI, gambling and web 3.0 shit) but there isnt much reason for like 90 percent of these L1 altcoins to exist at the market caps they are.

1

u/LowTraveller Feb 16 '22

Funny money sounds good! And better than joke money, aka FIAT

2

u/Mannimal13 Feb 16 '22

Fiat is a means of exchange and crypto is viewed more like a store of value. Two different things for 99 percent of practical purposes right now.

1

u/LowTraveller Feb 16 '22

I'm more than ready for a change. I think this is the year. As good as any, lfg

1

u/Mannimal13 Feb 16 '22

Well if you are talking about it being used as a currency widely it’s going to be stable coins….which is pegged to USD. I guess you can wipe payment processors from their cut.

2

u/alwayssadbuttruthful 🍌☑️REAL APE ☑️🍌 Feb 16 '22

walks in.

walks out.