'European governments have targeted 1992 for abolishing individual European currencies and replacing them with the European Currency Unit, the ECU. Next they plan to set up a European central bank. The next step is the merger of the Federal Reserve, the European central bank, and the Bank of Japan into one world central bank'.
Japan has been captured by global banking since WW2 and is a puppet neo-liberal state whatever WORLD BANK says Japan does. We see Japan is heading for 2% inflation printing lots of money to get there. Mugabe in Zimbabwe did the same and created HYPER-INFLATION such that everyone in the nation lost all wealth and citizens had no money. Now, the US FED and its 2% rate increase tells us this will not happen in US----Japanese are being told the same----but global financial analysts all predict the US FED rate will go higher and the US as Japan will experience HYPER-INFLATION at the same time we hit an economic crash.
Below they tell us this is the beginning of the end of independent CENTRAL BANKS.
Since all national politicians are working for ONE WORLD ONE GOVERNANCE ONE WORLD CENTRAL BANK breaking the independence of any nations' central bank is to MOVE FORWARD to consolidating these central banks with the WORLD CENTRAL BANK. The Japanese Central Bank working with Japanese government on economic policies will lead to joining this ONE WORLD CENTRAL BANK MODEL.
Bernanke and the US FED for the first time in US history and without legal direction allowed the FED to take on trillions of dollars in debt-----the toxic subprime loan buyback from global Wall Street banks soon heading to our US Treasury. Basically our US FED tapped itself out while the US Treasury went to $20 trillion in national debt.
THIS IS PAVING THE WAY TO DISSOLVING THAT NATIONAL CENTRAL BANK STRUCTURE MOVING FORWARD TO ONE WORLD WORLD CENTRAL BANK.
This is very complicated for our citizens new to public policy discussions but these US FEDERAL CENTRAL BANKS are tied to policy creating the economic stagnation in our US cities----the expansion of our corporations overseas----the constant global Wall Street frauds of our retirements, housing, pensions, and public trusts. These central banks are behind moving all wealth to the 1% killing our town and city economies.
The Bank of Japan is coordinating policy with the Japanese government. That is a big deal.
By Neil Irwin January 22, 2013
The Bank of Japan made a blockbuster announcement overnight, saying that after nearly two decades of economic stagnation and falling prices, it is aiming for 2 percent inflation and will print more yen on an unlimited scale—by the trillions, if necessary—to get there.
That alone is big news; the Japanese central bank has now joined the Federal Reserve and the European Central Bank in pledging bottomless resources to address their respective economic crises. The Bank of Japan, under pressure from the newly elected government of Shinzo Abe, went a step further.
It released a joint statement with the government, pledging to “strengthen their policy coordination and work together” on a range of policies.
The Bank of Japan's policy committee made a giant leap Tuesday. (Japan pool/AFP/Getty Images)Jens Weidmann, the president of the German Bundesbank, sees in this and other developments the beginning of the end of the era of independent central banks.
“It is already possible to observe alarming infringements, for example in Hungary or in Japan, where the new government is massively involving itself in the affairs of the central bank, is emphatically demanding an even more aggressive monetary policy and is threatening an end to central bank autonomy,”
Weidmann said in a speech in Frankfurt Monday. Weidmann was polite enough, on this occasion at least, not to mention the ways the ECB has risked its independence by standing ready to backstop markets for European nations’ debt (an action on which Weidmann dissented.)
So, it’s worth asking, is the era of independent central banks over? And if so, does it matter?
The answers begin with understanding why central banks are given independence from political authorities to begin with. The idea is that elected officials, with their short time spans in office and limited technical knowledge, will forever be inclined to allow higher inflation in exchange for stronger growth and lower unemployment, and that over time this will significantly worsen the economy. The lesson of the 1970s was that you want your central bankers to have the power and leeway to take actions that will be unpopular (namely, raising interest rates to fight inflation) but will make your economy better off over the long run. The lessons learned in fighting inflation back then led to the modern age of independent central banks.
In other words, independence is a more recent phenomenon than you might think: The Bank of England gained legal independence in 1997; the central banks of France, Italy and many other Western European nations that aren’t Germany weren’t truly independent as late as the 1990s, when there began a push to create the ECB. The Federal Reserve gained independence in the 1951 Treasury-Fed accord, but sure didn’t act like it in the 1970s, when the Nixon administration used all manner of tools to encourage easy money policies out of the central bank (and resulting high inflation). It was Fed chief Paul Volcker’s willful leadership, serving in the Carter and Reagan administrations, that brought independence to the Fed in practice, if not in law.
The argument against independence in the current environment boils down to this: Different times call for different measures. In the 1970s, the real problem was that central banks were tolerating too much inflation amid both analytical mistakes and pressure from short-sighted politicians.
But now, the problem is that central banks around the world are near the “zero lower bound,” with short-term interest rates sitting ultra low. Their remaining tools to pump more money into the economy to encourage recovery seem to pack less punch than their usual management of interest rates. That might change, though, if the central banks’ policy of printing money and using it to buy bonds, known as quantitative easing, was matched by coordinated spending or tax cuts by governments.
Macroeconomists have long known that in a “liquidity trap,” like that underway in the United States, Western Europe and Japan, it could theoretically be better policy to turn the normal rules of central bank independence on their head. The institutional design that made sense for one era may not be the best for another.
But the problem is that institutions can’t turn on a dime. That is true of central banks, led by small-c conservative men and women, more than most. The Bank of Japan has been dealing with a deflationary world for nearly 20 years, and only now, amid new pressure from the government, is it committing to deeper coordination. The forays by the Fed and ECB into this unconventional terrain have been filled with reluctance and hand-wringing. And, indeed, if the policies are successful, and the major economies can get out of their liquidity traps in the next few years, the central banks could be laying the groundwork for a new bout of inflation -- if they aren't able to regain greater independence from political authorities when the world changes again.
But for the moment, central bank independence isn’t what it used to be, and that’s not entirely a bad thing.
The liquidity trap was Nixon and FIAT MONEY setting the stage for all US wealth to be taken to the 1% that ERA as this article states was the ROBBER BARON ERA. So, MACROECONOMISTS say its time to turn central banking on its head-----meaning WORLD CENTRAL BANKING.
'Macroeconomists have long known that in a “liquidity trap,” like that underway in the United States, Western Europe and Japan, it could theoretically be better policy to turn the normal rules of central bank independence on their head. The institutional design that made sense for one era may not be the best for another'.
Below we see TRUMP TURNING THE CENTRAL BANK ON ITS HEAD.
Trump brings in the YALE/STANFORD ECONOMISTS after these few decades of HARVARD/UNIVERSITY OF CHICAGO ECONOMISTS---- the neo-liberal economists fleeced America the neo-conservatives are now moving to what is a computer-generated analysis of who, what, when, where, and how economic policy should change over time. This is the BIG ARTIFICIAL INTELLIGENCE HEAD we are now all supposed to WORSHIP. All human interaction will be taken out of these economic standards ergo things will run smoothly. Who programs the BIG FED HEAD? The global 1%.
What this does is sets a platform for standardization globally with the goal of ONE WORLD ONE GOVERNANCE WORLD CENTRAL BANK.
This is obviously an article written by the right wing because it tells us these policies are written BY VERY SMART PEOPLE. Very smart people would of course be able to use their minds to create a functioning economy for 99% of citizens and not ROBOTICS THINKING FOR A GLOBAL 1%.
These are the far-right wing extreme wealth extreme poverty guys-----they see nothing but inhabitable earth and planetary mining colonies in our future.
We see how these same terms from World Bank to Trump are the same----Trump is simply MOVING FORWARD WORLD CENTRAL BANK.....but we thought Trump was a conservative Republican ----no he is a global Wall Street CLINTON/BUSH/OBAMA-----------
Here is how Trump’s nominee for the Fed could turn central banking on its head
12 Jul 2017 at 11:33 ET
Randal Quarles (U. S. Treasury hard copy for G8 Summit)
President Donald Trump on July 10 nominated Randal Quarles to be one of the seven governors of the Federal Reserve System, the central bank of the United States.
Before I get to Quarles and his qualifications, it’s important to understand the Fed and what it does. Its decisions are vital to every person on the planet who borrows or lends money (pretty much everybody) since it has enormous influence over global interest rates. Its board of governors also influences most other aspects of the global financial system, from regulating banks to how money is wired around the world.
Quarles, for his part, is clearly qualified for a job at the pinnacle of financial regulation. He has held numerous positions in the U.S. Treasury Department, including undersecretary for domestic finance under George W. Bush, and was the U.S. executive director at the International Monetary Fund (IMF). He has also worked on Wall Street for The Carlyle Group and founded his own investment company, The Cynosure Group. He also has a law degree from Yale.
The issue that I believe deserves careful scrutiny, however, does not involve his qualifications. Rather it’s a view of his that, if allowed to permeate the Fed, would represent a seismic shock to how the central bank operates and could potentially have severe consequences if – or when – we stumble into another financial crisis like the one we endured only a decade ago.
How the Fed controls the world
Currently, the Fed rules the financial world using a very simple model: A handful of very smart people sit together at least eight times a year and decide how to execute the country’s monetary policy.
The implications are enormous. In the words of the Fed itself, decisions made in these meetings:
“trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit and, ultimately, a range of economic variables, including employment, output and prices of goods and services.”
Janet Yellen currently chairs this group, called the Federal Open Market Committee (FOMC), and its decisions, like those of the Supreme Court, are final. There are few or no absolute rules, and there is no appeal.
Quarles, however, has described the discretionary decisions of this small group as “a crazy way to run a railroad.”
Instead, Quarles argues that the Fed should use a rules-based approach, with little or no discretion. Economic data would be plugged into a simple model, which would spit out the decision the Fed should take.
Since the model would be well-known and the relevant economic data (such as GDP, inflation rates, etc.) are already widely publicized, everyone from Wall Street to Main Street who cares about interest rates would be able to predict how the Fed is going to react under such a rules-based approach.
The Taylor rule
While Quarles has not specifically referred to which rule he would favor, a frequently cited one is called the “Taylor rule.”
It is named after Stanford economist John B. Taylor, who proposed it in 1993 as a new guiding principle for central bank decision-making. In recent years, the rule has gained much interest among people who watch and study the Fed.
The Taylor rule states that the Fed should establish short-term interest rates using a mathematical formula. It would use the current rate as a starting point and then factor in data tied to inflation and GDP, both based on the difference between the actual figures and the bank’s targets.
Since it would rely on a few human inputs from the Fed, the Taylor rule is somewhat flexible, enough to accommodate different situations by allowing central bankers to specify the importance of inflation compared with GDP growth.Inflation is an important variable because price changes impact people’s standard of living, while GDP growth affects the number of jobs available in the economy.
Some countries, like Germany, primarily focus on keeping inflation extremely low. Others, such as the U.S., try to balance both inflation and GDP growth roughly equally. Central banks in some developing countries like those in Africa often put stronger emphasis on boosting economic growth with less regard to inflation.
But that’s about as far it will stretch.
Why does this matter?
In general, the Taylor rule would lead central banks to increase interest rates when inflation is high or when unemployment is very low. Conversely, the rule indicates central banks should lower interest rates when inflation is too low (or there is deflation), when economic growth is poor or unemployment is climbing.
But therein lies the rub. Rules work well when things are “normal,” but when the unexpected happens, they become much less useful – even harmful.
If the Taylor rule were an effective and straightforward method of transforming complex choices into simple, easy-to-understand decisions, the question is, why doesn’t every central bank use this rule?
The answer is as simple as the Taylor rule itself. Sometimes a country faces an economic quandary, such as what the U.S. experienced during the oil price shocks of the late 1970s. Back then, inflation was too high and GDP growth was too low, leaving the country stuck in what is known as a period of stagflation.
In these circumstances, the Taylor rule breaks down. It tells central bankers there is nothing they can do to improve economic conditions. The rule signals that interest rates need to be raised to combat high inflation, yet at the same time that would weaken already-sluggish GDP growth.
Had the U.S. followed the Taylor rule back then, it would have done nothing. Instead, the Fed raised interest rates and broke the back of inflation expectations.
Simply put, central bankers around the world – including those at the Fed – have not adopted rules-based monetary policy using the Taylor rule or another because in times of economic crisis, a simple precept usually fails to provide effective solutions.
The current ad-hoc approach provides maximum flexibility and allows central bankers to reach for untested methods that help them get the economy back on track.
Quarles may be right. It might be a crazy way to run a railroad. But then again, monetary policy – and the US$18.6 trillion U.S. economy – is a bit more complex than operating a train on a set of rails. The crazy thing might be to do it any other way.
By Jay L. Zagorsky, Economist and Research Scientist, The Ohio State University
Now, this article is more than any average citizen would want to read----but it shows how global finance has moved to being completely computerized guided by mathematical PREDICTIONS. This is to where all our MATH GEEKS have gone these few decades. This 'crash' that plunged the world banks into catastrophe was the massive US Treasury bond debt fraud that will soon bring down US as well as most nations.
What global 1% are building is an extension of this----it is tied to the massive DERIVATIVES market----computers buy and sell stocks thousands a second making it impossible for any citizen to participate in a fair stock market. This is what corrupted our US Wall Street beyond RECOGNITION. It only works for those global 1% rich enough to afford the increasing complexity of technology needed. IT IS CRAZY STUFF.
This is the model a BASEL BIC----or a WORLD BANK/IMF WORLD CENTRAL BANK would use. It has no human input except from those 'SMALL GROUP OF REALLY SMART GUYS'. WE THE PEOPLE THE 99% have watched these few decades as a CLINTON/BUSH/OBAMA turned a stable national economy into havoc----MOVING FORWARD to this totally computerized economic model. Know who is smarter? The 99% have the talent and the brains---the global 1% need computer technology to do the work for them----they are simply talented at LYING, CHEATING, AND STEALING. Global 99% of citizens will have absolutely no ability of voice or control of economics in their towns and cities.
This is why main street investors have had no way to know how to invest------only the top insider investment firms have the knowledge of how stocks will be BEAR AND BULL.
Too Fast to Fail: How High-Speed Trading Fuels Wall Street Disasters
Computer algorithms swap thousands of stocks each instant—and could set off a financial meltdown.Nick BaumannJanuary/February 2013 Issue
The mathematical equation that caused the banks to crash
The Black-Scholes equation was the mathematical justification for the trading that plunged the world's banks into catastrophe
In the Black-Scholes equation, the symbols represent these variables: σ = volatility of returns of the underlying asset/commodity; S = its spot (current) price; δ = rate of change; V = price of financial derivative; r = risk-free interest rate; t = time.
Photograph: Asif Hassan/AFP/Getty Image
Saturday 11 February 2012 19.05 EST First published on Saturday 11 February 2012 19.05 EST
It was the holy grail of investors.
The Black-Scholes equation, brainchild of economists Fischer Black and Myron Scholes, provided a rational way to price a financial contract when it still had time to run. It was like buying or selling a bet on a horse, halfway through the race. It opened up a new world of ever more complex investments, blossoming into a gigantic global industry. But when the sub-prime mortgage market turned sour, the darling of the financial markets became the Black Hole equation, sucking money out of the universe in an unending stream.
Anyone who has followed the crisis will understand that the real economy of businesses and commodities is being upstaged by complicated financial instruments known as derivatives. These are not money or goods. They are investments in investments, bets about bets. Derivatives created a booming global economy, but they also led to turbulent markets, the credit crunch, the near collapse of the banking system and the economic slump. And it was the Black-Scholes equation that opened up the world of derivatives.
The equation itself wasn't the real problem. It was useful, it was precise, and its limitations were clearly stated. It provided an industry-standard method to assess the likely value of a financial derivative. So derivatives could be traded before they matured. The formula was fine if you used it sensibly and abandoned it when market conditions weren't appropriate. The trouble was its potential for abuse. It allowed derivatives to become commodities that could be traded in their own right. The financial sector called it the Midas Formula and saw it as a recipe for making everything turn to gold. But the markets forgot how the story of King Midas ended.
Black-Scholes underpinned massive economic growth. By 2007, the international financial system was trading derivatives valued at one quadrillion dollars per year. This is 10 times the total worth, adjusted for inflation, of all products made by the world's manufacturing industries over the last century. The downside was the invention of ever-more complex financial instruments whose value and risk were increasingly opaque. So companies hired mathematically talented analysts to develop similar formulas, telling them how much those new instruments were worth and how risky they were. Then, disastrously, they forgot to ask how reliable the answers would be if market conditions changed.
Black and Scholes invented their equation in 1973; Robert Merton supplied extra justification soon after. It applies to the simplest and oldest derivatives: options. There are two main kinds. A put option gives its buyer the right to sell a commodity at a specified time for an agreed price. A call option is similar, but it confers the right to buy instead of sell. The equation provides a systematic way to calculate the value of an option before it matures. Then the option can be sold at any time. The equation was so effective that it won Merton and Scholes the 1997 Nobel prize in economics. (Black had died by then, so he was ineligible.)
If everyone knows the correct value of a derivative and they all agree, how can anyone make money? The formula requires the user to estimate several numerical quantities. But the main way to make money on derivatives is to win your bet – to buy a derivative that can later be sold at a higher price, or matures with a higher value than predicted. The winners get their profit from the losers. In any given year, between 75% and 90% of all options traders lose money. The world's banks lost hundreds of billions when the sub-prime mortgage bubble burst. In the ensuing panic, taxpayers were forced to pick up the bill, but that was politics, not mathematical economics.
The Black-Scholes equation relates the recommended price of the option to four other quantities. Three can be measured directly: time, the price of the asset upon which the option is secured and the risk-free interest rate. This is the theoretical interest that could be earned by an investment with zero risk, such as government bonds. The fourth quantity is the volatility of the asset. This is a measure of how erratically its market value changes. The equation assumes that the asset's volatility remains the same for the lifetime of the option, which need not be correct. Volatility can be estimated by statistical analysis of price movements but it can't be measured in a precise, foolproof way, and estimates may not match reality.
The idea behind many financial models goes back to Louis Bachelier in 1900, who suggested that fluctuations of the stock market can be modelled by a random process known as Brownian motion. At each instant, the price of a stock either increases or decreases, and the model assumes fixed probabilities for these events. They may be equally likely, or one may be more probable than the other. It's like someone standing on a street and repeatedly tossing a coin to decide whether to move a small step forwards or backwards, so they zigzag back and forth erratically. Their position corresponds to the price of the stock, moving up or down at random. The most important statistical features of Brownian motion are its mean and its standard deviation. The mean is the short-term average price, which typically drifts in a specific direction, up or down depending on where the market thinks the stock is going. The standard deviation can be thought of as the average amount by which the price differs from the mean, calculated using a standard statistical formula. For stock prices this is called volatility, and it measures how erratically the price fluctuates. On a graph of price against time, volatility corresponds to how jagged the zigzag movements look.
Black-Scholes implements Bachelier's vision. It does not give the value of the option (the price at which it should be sold or bought) directly. It is what mathematicians call a partial differential equation, expressing the rate of change of the price in terms of the rates at which various other quantities are changing. Fortunately, the equation can be solved to provide a specific formula for the value of a put option, with a similar formula for call options.
The early success of Black-Scholes encouraged the financial sector to develop a host of related equations aimed at different financial instruments. Conventional banks could use these equations to justify loans and trades and assess the likely profits, always keeping an eye open for potential trouble. But less conventional businesses weren't so cautious. Soon, the banks followed them into increasingly speculative ventures.
Any mathematical model of reality relies on simplifications and assumptions. The Black-Scholes equation was based on arbitrage pricing theory, in which both drift and volatility are constant. This assumption is common in financial theory, but it is often false for real markets. The equation also assumes that there are no transaction costs, no limits on short-selling and that money can always be lent and borrowed at a known, fixed, risk-free interest rate. Again, reality is often very different.
When these assumptions are valid, risk is usually low, because large stock market fluctuations should be extremely rare. But on 19 October 1987, Black Monday, the world's stock markets lost more than 20% of their value within a few hours. An event this extreme is virtually impossible under the model's assumptions. In his bestseller The Black Swan, Nassim Nicholas Taleb, an expert in mathematical finance, calls extreme events of this kind black swans. In ancient times, all known swans were white and "black swan" was widely used in the same way we now refer to a flying pig. But in 1697, the Dutch explorer Willem de Vlamingh found masses of black swans on what became known as the Swan River in Australia. So the phrase now refers to an assumption that appears to be grounded in fact, but might at any moment turn out to be wildly mistaken.
Large fluctuations in the stock market are far more common than Brownian motion predicts. The reason is unrealistic assumptions – ignoring potential black swans. But usually the model performed very well, so as time passed and confidence grew, many bankers and traders forgot the model had limitations. They used the equation as a kind of talisman, a bit of mathematical magic to protect them against criticism if anything went wrong.
Banks, hedge funds, and other speculators were soon trading complicated derivatives such as credit default swaps – likened to insuring your neighbour's house against fire – in eye-watering quantities. They were priced and considered to be assets in their own right. That meant they could be used as security for other purchases. As everything got more complicated, the models used to assess value and risk deviated ever further from reality. Somewhere underneath it all was real property, and the markets assumed that property values would keep rising for ever, making these investments risk-free.
The Black-Scholes equation has its roots in mathematical physics, where quantities are infinitely divisible, time flows continuously and variables change smoothly. Such models may not be appropriate to the world of finance. Traditional mathematical economics doesn't always match reality, either, and when it fails, it fails badly. Physicists, mathematicians and economists are therefore looking for better models.
At the forefront of these efforts is complexity science, a new branch of mathematics that models the market as a collection of individuals interacting according to specified rules. These models reveal the damaging effects of the herd instinct: market traders copy other market traders. Virtually every financial crisis in the last century has been pushed over the edge by the herd instinct. It makes everything go belly-up at the same time. If engineers took that attitude, and one bridge in the world fell down, so would all the others.
By studying ecological systems, it can be shown that instability is common in economic models, mainly because of the poor design of the financial system. The facility to transfer billions at the click of a mouse may allow ever-quicker profits, but it also makes shocks propagate faster.
Was an equation to blame for the financial crash, then? Yes and no. Black-Scholes may have contributed to the crash, but only because it was abused. In any case, the equation was just one ingredient in a rich stew of financial irresponsibility, political ineptitude, perverse incentives and lax regulation.
Despite its supposed expertise, the financial sector performs no better than random guesswork. The stock market has spent 20 years going nowhere. The system is too complex to be run on error-strewn hunches and gut feelings, but current mathematical models don't represent reality adequately. The entire system is poorly understood and dangerously unstable. The world economy desperately needs a radical overhaul and that requires more mathematics, not less. It may be rocket science, but magic it's not.
Ian Stewart is emeritus professor of mathematics at the University of Warwick. His new book 17 Equations That Changed the World is published by Profile (£15.99)
Now that we know the model structure for the WORLD CENTRAL BANK ----and its tie to mathematics computer technology generated models-----let's look at that ONE WORLD ONE DIGITAL CURRENCY.
There are of course lots of products being allowed to make all this seem DEMOCRATIC----START UP ENTREPRENEURS are the drivers of this march to digital control of a world economy. As with our outsourced public works and public services where patronage is thrown at the 5% to the 1% to make them think they are PLAYERS.......THE DESIGN FOR THIS DIGITAL CURRENCY is already assigned to global corporations.
Whether BitCoin vs Ethereum-----global 1% are laughing their BIG HEADS off at a global 99% allowing themselves to be made totally helpless. We cannot have a functioning economy that addresses a 99% of citizens with rights and dignity with computer modeling geared to maximize profits for a global 1%. That is what MOVING FORWARD WORLD CENTRAL BANK has as a goal.
Main street buys stock in these corporations always tied to global 1% families unaware these are stop-gap corporations simply driving government DEREGULATION OF ALL ECONOMIC POLICY setting the stage for what global 1% already has as the WORLD CENTRAL BANK DIGITAL CURRENCY.
Main street buys stock in these corporations always tied to global 1% families unaware these are stop-gap corporations simply driving government DEREGULATION OF ALL ECONOMIC POLICY setting the stage for what global 1% already has as the WORLD CENTRAL BANK DIGITAL CURRENCY.
Killing that developed nation feeling of stable economy and stable currency----this currency control by computer models will have a DIGITAL CURRENCY worth one thing one day ---worth another the next day----no set currency value.
Ethereum was launched in the middle of 2015 by a 21-year-old college dropout, Vitalik Buterin, who was born in Russia and raised in Canada.
Move Over, Bitcoin. Ether Is the Digital Currency of the Moment.
By NATHANIEL POPPERJUNE 19, 2017
A virtual currency called Ether has been growing alongside Bitcoin in the last year to $35 billion, compared with Bitcoin’s $43 billion.
Source: Coinmarketcap.com | By The New York Times
The price of Bitcoin has hit record highs in recent months, more than doubling in price since the start of the year. Despite these gains, Bitcoin is on the verge of losing its position as the dominant virtual currency.
The value of Ether, the digital money that lives on an upstart network known as Ethereum, has risen an eye-popping 4,500 percent since the beginning of the year.
With the recent price increases, the outstanding units of the Ether currency were worth around $34 billion as of Monday — or 82 percent as much as all the Bitcoin in existence. At the beginning of the year, Ether was only about 5 percent as valuable as Bitcoin.
The sudden rise of Ethereum highlights how volatile the bewildering world of virtual currency remains, where lines of computer code can be spun into billions of dollars in a matter of months.
Bitcoin, the breakout digital currency, is also hitting new highs — one Bitcoin was worth $2,600 on Monday. But the Bitcoin community has struggled with technical issues and bitter internal divisions among its biggest supporters. It has also been tainted by its association with online drug sales and hackers demanding ransom.
Against this backdrop, Ether has been gaining steam. The two-year old system has picked up backing from both tech geeks and big corporate names like JPMorgan Chase and Microsoft, which are excited about Ethereum’s goal of providing not only a digital currency but also a new type of global computing network, which generally requires Ether to use.
In a recent survey of 1,100 virtual currency users, 94 percent were positive about the state of Ethereum, while only 49 percent were positive about Bitcoin, the industry publication CoinDesk said this month.
If recent trends continue, the value of Ethereum’s virtual currency could race past Bitcoin’s in the coming weeks. Virtual currency fanatics are monitoring the value of each and waiting for the two currencies to switch place, a moment that has been called “the flippening.”
“The momentum has shifted to Ethereum — there is no doubt about that,” said William Mougayar, the founder of Virtual Capital Ventures, which invests in a variety of virtual currencies and start-ups. “There is almost nothing you can do with Bitcoin that you can’t do with Ethereum.”
Racks of machines at a server farm mining Bitcoins and Ether in Guizhou, China, last June. Credit Gilles Sabrié for The New York Time
Even though most of the people buying Ether and Bitcoin are individual investors, the gains that both have experienced have taken what was until very recently a quirky fringe experiment into the realm of big money. The combined value of all Ether and Bitcoin is now worth more than the market value of PayPal and is approaching the size of Goldman Sachs.
Investors buying Ether are placing a bet that people will want to use the Ethereum network’s computing capabilities and will need the currency to do so. But that is far from a sure thing. And real-world use of the network is still scant.
Bitcoin, on the other hand, has made inroads into mainstream commerce, with companies like Overstock.com and Expedia accepting Bitcoin for purchases, along with the black-market operators who use the currency.
The fact that there are fewer real-world uses for Ethereum has many market experts expecting a crash similar to the ones that have followed previous run-ups in the price of Bitcoin and other virtual currencies. Even during recent pullbacks, though, the value of Ether has generally continued to gain on Bitcoin in relative terms.
Ethereum was launched in the middle of 2015 by a 21-year-old college dropout, Vitalik Buterin, who was born in Russia and raised in Canada. He now lists his residence, jokingly, as Cathay Pacific Airlines because of his travel schedule.
The Ether he holds has made him a millionaire many times over, but he has generally avoided commenting on the price increase in Ether.
Mr. Buterin was inspired by Bitcoin, and the software he built shares some of the same basic qualities. Both are hosted and maintained by the computers of volunteers around the world, who are rewarded for their participation with the new digital tokens that are released onto the network each day.
Because the virtual currencies are tracked and maintained by a network of computers, no government or company is in charge. The prices of both Bitcoin and Ether are established on private exchanges, where people can sell the tokens they own at the going market price.
But Ethereum was designed to do much more than just serve as a digital money. The network of computers hooked into Ethereum can be harnessed to do computational work, essentially making it possible to run computer programs on the network, or what are referred to as decentralized applications, or Dapps. This has led to an enormous community of programmers working on the software.
One of the first applications to take off was a user-led venture capital fund of sorts, known as the Decentralized Autonomous Organization. After raising over $150 million last summer, the project crashed and burned, and appeared ready to take Ethereum with it.
But the way that Mr. Buterin and other developers dealt with the problems, returning the hacked Ether to users, won him the respect of many in the corporate world.
“It was good to see that there is governance on Ethereum and that they can fix issues in a timely manner if they have to,” said Eric Piscini, who leads the team looking into virtual currency technology at the consulting firm Deloitte.
Many applications being built on Ethereum are also raising money using the Ether currency, in what are known as initial coin offerings, a play on initial public offerings.
Start-ups that have followed this path have generally collected Ether from investors and exchanged them for units of their own specialized virtual currency, leaving the entrepreneurs with the Ether to convert into dollars and spend on operational expenses.
These coin offerings, which have proliferated in recent months, have created a surge of demand for the Ether currency. Just last week, investors sent $150 million worth of Ether to a start-up, Bancor, that wants to make it easier to launch virtual currencies. If projects like Bancor stumble, Ether could as well.
Several big companies have also been building programs on top of Ethereum, including the mining company BHP Billiton, which has built a trial program to track its raw materials, and JPMorgan, which is working on a system to monitor trading.
Over the last few months, over 100 companies have joined the nonprofit Enterprise Ethereum Alliance, including global names like Toyota, Merck and Samsung, to build tools that will make Ethereum useful in corporate settings.
Many of the companies using Ethereum are building their own private versions of the software, which won’t make use of the Ether currency. Speculators are betting that these companies will eventually plug their software into the broader Ethereum network.
There is, though, also the possibility that none of these big trials come to fruition, and the current excitement fizzles out, as has happened many times in the past with Bitcoin after big price surges.
“I hope this is the year where we start to close the gap between the speculative value and the actual value,” Mr. Mougayar said. “There is a lot at stake right now.”
'Is it possible the Russian central bank is allowing the ruple to devalue to the point of inevitable collapse - so that Ethereum can take its place'?
'The problem here is the Bank of Russia is a part of the international banking cartel'.
This article is great at showing the ridiculous national media on RUSSIA RUSSIA RUSSIA....Putin and Stalin were tied to global banking as much as CLINTON/BUSH/OBAMA---we see another MYTH of a START UP by Buterin called an ordinary college drop out----as was Bill Gates as was Zuckerberg. This young man is no doubt tied to Russia's oligarch families.
Here we see RUSSIA taking a swing at its CENTRAL BANK----think ONE WORLD ONE GOVERNANCE ONE WORLD CENTRAL BANK is on Putin's mind? Well, no one does OLD WORLD MERCHANTS OF VENICE GLOBAL 1% FREEMASONS better than Russia and Putin.
We see here the BRIC nations minus Russia going to GOLD STANDARD...Brazil, China, and India.....think they will stay a separate global economy? Since the BRIC nations have that 1% tightly bound to OLD WORLD MERCHANTS OF VENICE ----we think they are MOVING FORWARD.
The FAKE revolutionary groups pretending to be against the central bank are lying as they say these digital currencies fight central banks------they are paving the way for what WILL BE THE WORLD CENTRAL BANK------
'fuck yeah dude. wouldn't be surprised if he browsed /biz/ himself. smart af, looks like he's 12 yet he's a one man army against the central banks. an enigma'.
Ethereum Will Soon Become Russia's National Currency
last monthsquawker.org29 in ethereumFor a cleaner presentation, visit Squawker: Become the Counterculture
Ethereum Will Soon Become Russia's National Currency
Over the last few months, we consistently hear about how Russia, along with Brazil, India, China, and South Africa (known as the BRICS nations) plan to abandon the U.S. dollar for gold; a move that would seem as if Putin is breaking free from the international banking system.
Titles on articles have emerged that run with this idea, claiming he is battling the ruling elite - that he is a traitor to the New World Order."
Putin himself, in front of a gathering inside the Kremlin, has stated:
"I'm going to defeat the Illuminati with my bare hands."
The problem here is the Bank of Russia is a part of the international banking cartel.
Last week Putin meets with Ethereum founder Vitalik Buterin.
Ethereum is a cryptocurrency that utilizes blockchain technology and is backed by several major banks, investment firms, and corporate giants, such as Microsoft, J.P. Morgan, Credit Suisse, ING, Intel, UBS Financial Services ... the list goes on.
As the U.S. seeks to fear monger the incredible revolution that is blockchain, a technology that is said will not only change currency, but our world as we know it, Putin wants to implement it and change his nation's currency ...
... as do most of the central banks of the world.
According to Kalukhov, who joined the Russian central bank as deputy chief information officer in February 2015:
"Regulators support its adoption to a variable extent: some countries just don’t have enough technology companies, desire to do this or interest to the technology."
He further indicated that the Bank of Russia is keeping a close eye on technology developments, calling it a "key interest as the regulator".
According to a Bloomberg article: Russia’s central bank has already deployed an Ethereum-based blockchain as a pilot project to process online payments and verify customer data.
“The digital economy isn’t a separate industry, it’s essentially the foundation for creating brand new business models,” Putin said.
Vlad Martynov, an adviser for the Ethereum Foundation, a non-profit organization that backs the cryptocurrency:
“If Russia implements it first, it will gain similar advantages to those the Western countries did at the start of the internet age.”
Then this past Friday we have the Russian ruble sliding 1.3% against the dollar as an influential banker fueled speculation about a possible sharp devaluation of the currency and the Russian central bank slashed the main interest rate.
In fact, the ruple is down more than 26% from a year ago.
Is it possible the Russian central bank is allowing the ruple to devalue to the point of inevitable collapse - so that Ethereum can take its place?
Putin is not battling the international banking system - he is becoming their new world leader that will pilot the next major empire once the Western Nations crumble.
When we see today's central banks going to digital currency this is the first stage in creating a ONE WORLD DIGITAL CURRENCY-----there is no intent of having separate national sovereign digital currencies. Each step they take in these pathways to international online banking and currency DEREGULATES AND VOIDS centuries of economic and financial laws and court precedence ------it nulls what our US Constitution calls COMMON LAW-----this is why they are showing WE THE PEOPLE individual central banks taking this digital step---MOVING FORWARD to that WORLD CENTRAL BANK DIGITAL CURRENCY FOR ALL.
World’s Oldest Central Bank Could Be First to Issue Digital Currency
Sweden’s central bank could soon introduce and issue its own digital currency.
Samburaj Das on 21/11/2016
Sweden’s central bank is reportedly considering the issuance of its own digital currency, ekrona, in an effort to address the significant decline of the use of cash in the country.
First revealed in a Financial Times report, Sweden’s Riksbank could introduce and issue its own digital currency before the turn of the decade. As the report reveals, Sweden has seen a rapid decline of the use of physical cash – both coins and notes – in recent times. Circulation has dropped by 40% since 2009, leaving Riksbank little choice but to come up with an alternative solution. A large number of Swedes have abandoned cash for cards and other forms of digital payments – apps, e-transfers etc – making it a notable candidate as a prominent cash-free society.
In a public release, deputy governor at Riksbank Cecilia Skingsley addressed the dire cash-adoption situation. Furthermore, the lack of a template or an example of a central bank-issued digital currency could make the endeavor a tricky effort.
The declining use of cash in Sweden means that this is more of a burning issue for us than for most other central banks. Although it may appear simple at first glance to issue e-krona, this is something entirely new for a central bank and there is no precedent to follow.
Skingsley further revealed her personal preference to design the digital currency – similar to that of traditional currency in its properties. The ekrona would not earn any interest and would be designed in a way to not enable illegal activity. This means that the ekrona could be traced by the central bank, in some capacity.
As the FT report notes, the Riksbank first issued paper banknotes in the 1660s, making it the world’s oldest central bank to do so. The report also suggests that blockchain technology could be used as the framework for Riksbank’s If developed, the effort would prove a significant endorsement of blockchain technology, the innovation powering bitcoin, the most prominent digital currency around.
The Krona could soon see its digital counterpart issued by the central bank.
Skingsley’s comments, while relevant to Sweden’s case as a society that has already seen a tremendous decline in cash-usage, comes during a time when China’s central bank has publicly revealed its intention to issue its own digital currency. Earlier this year, the People’s Bank of China stated it is looking to develop and introduce it “as soon as possible.” The governor of the PBOC also opined that paper cash as a “last generation currency”, hinting that China would opt for blockchain technology .
The bank also issued a recruitment notice recently as a call to developers to help enable the design and issuance of its digital currency.
Ultimately, it’s a matter of addressing society’s preference in Sweden’s case, according to Deputy Governor Skingsley.
The less those of us living in Sweden use banknotes and coins, the clearer it becomes that the Riksbank needs to investigate whether we should issue electronic money as a complement to the money we have today.
Sweden’s central bank is expected to make a call on its digital currency within the next two years, according to the report.