Daniel Dăianu Claims Bitcoin Will Never Replace Fiat Money & Reveals Why It Should

2019-02-09T13:26:11.000Z Honest Cash

During a conference this week, Daniel Dăianu, member of the Board of the National Bank of Romania, made the statement that cryptocurrencies will never replace fiat money. The influential economist of the European Union said that "[c]ryptocurrencies will never be able to substitute the currency issued by a central bank". His reasoning is that currency "is always backed by a last-resort lender". However, this statement is not true. In the history of money, the need for a last-resort lender has been virtually non-existent. There was no need to socialize debt and losses. Everyone budgeted reasonably for him- or herself.


Fiat Solving the Problems It Creates

Historically, players in the market that have not performed well simply went bankrupt. In our system, they simply continue to perform badly as the state socializes any losses. Historically, banks did not have an incentive to wage unnecessary risks as they did not have access to cheap money. Today the banks flood the market with the cheap money that our fiat system creates. As a consequence, big banks gain a position in which their very existence becomes relevant for the system to work. Dăianu declares the central banking system necessary for the very problems that it exclusively creates.

The Financial Crisis of 2008

In the following, Dăianu refers to the financial crisis of 2008 in which "the banking system was saved". He states "that it wasn’t crypto banks that were [sic] saved". Instead, "Central banks intervened by issuing base currency". The Romanian economist relies on the usual central banking lingo that conceals the true nature of the processes. "Base currency" (a term of Forex trading) might be a wrong translation but issuing currency is a euphemism for artificially inflating everyone's money to the benefit a few bad players that are rewarded for their mistakes. It would go beyond the scope of this article to explain the financial crisis here. But if you want to read up on how the fiat money system is responsible for this crisis and why its roots were not solved, the Mises Institure explained the crisis brilliantly in 10 points.

Satoshi Nakamoto Created Bitcoin Precisely Because of Our Defective Monetary System

What is ironic about Dăianu and any other proponent of the fiat money system that argues, in the same way, is that Satoshi Nakamoto addressed this problem of our current monetary system. Subtly but striking. His very first message on the blockchain is simply a quotation: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"

Responses


RE: Daniel Dăianu Claims Bitcoin Will Never Replace Fiat Money & Reveals Why It Should

by @btcfork

He unfortunately ignores the fact that in the lender of last resort is decentralized, not centralized.


This point has already become apparent to millions of people. Keeping up the illusion of benevolent centralized banking - the Great Protector - will not be possible.


It is good and healthy to rid ourselves of this illusion in the 21st century.