For a long time it has been becoming more and more difficult and dangerous to perform international transactions in fiat money. It has suddenly become a lot more difficult and dangerous.
Crypto currency is replacing fiat currency. The breakdown of trust and trustworthiness means that there is no alternative. That is why crypto currency scaling problems are now biting hard, and will soon be biting a great deal harder.
Bankers have an incentive to create unsustainable debt bubbles. To prevent this, need to pop term transformation bubbles early and often, and have draconian consequences for bankers that fail. But, because bankers have a lot of pull, and because sovereigns tend to lose control of their bureaucracy, the opposite policy tends to be followed.
Popping a term transformation bubble is painful and hurts a lot of people, primarily powerful and influential people, so the problem keeps getting kicked down the road until it gets too big to kick.
That the Rothschilds were out of power was suddenly revealed to everyone when their too-big-to-kick-any-further bubble popped in 1931. Which is why today all the Soros shills say “Rothschilds, Rothschilds, Rothschilds, pay no attention to the man behind the curtain”
In the great depression, and postwar, the US debt bubble was largely nationalized. Additional nationalizations of debt bubbles left outside have occurred since then, most dramatically mortgage backed securities following the great minority mortgage meltdown.
People keep investing in unsustainable debt bubbles, expecting them to be nationalized when problems happen.
But even nationalization cannot kick the bubble down the road forever, and the United States dollar is reaching the end of the road.
Wartime controls will both accelerate its end, and simultaneously extend the pretense that everything is fine and normal, as it is slowly and shockingly discovered that everything is not fine and normal.
War makes the end both faster and also considerably slower and more painful. Lots of proposals are floating around to make de-facto nationalization even more de-jure than it already is. The likely result of such measures is that in the end official reality will be completely fine while you are living in the street and eating bugs.
In the Chinese Evergrande crisis, international investors were mighty shocked when the theoretically communist Chinese government, in a surprising display of commitment to Hong Kong capitalism, cheerfully allowed Evergrande’s debt to pop. The ordinary man who put a down payment on an apartment is now at the head of the line, and the international investors at the back of the line. And if you are at the back of the line, the obligations that Evergrande owes you are likely to worthless. In similar situations, the theoretically democratic and theoretically capitalist American government seldom allows the bubble to pop, and if it does pop, the ordinary man is at the back of the line, and the international investor at the front of the line. We have an ever growing pile of unpopped zombie bubbles denominated in American dollars. Biden promises to address this problem by soaking the rich, while the problem exists in large part because certain rich people have far too much state and quasi state influence and power.
Those rich are not going to be soaked. The productive rich, such as Musk, will be soaked, but no amount of soaking of anyone is likely to make much of a dent in the problem. It became far too big to be solved by any amount of soaking of anyone long before it became far too big to continue kicking it down the road.
It is impractical for Russians to receive payment in gold from an unfriendly country, or even from a friendly country with high levels of elite defection, because the gold would be intercepted. And these days every major trading country has high levels of elite defection, particularly China.
And impractical for Russians to receive payment in Euros or dollars, because the Euros or dollars would be intercepted on the ground of sanctions.
Thus the Putin policy simply reflects what is in the individual interests of individual businessmen who are simply trying to do business and are horrified that war is in the way.
Every businessman in every country has one foot in the same boat, since every businessman doing business internationally is evading sanctions, or might well be evading sanctions unknowingly, because there is no clear way of complying with sanctions, or doing business with someone who is evading sanctions, or likely to be accused of attempting to evade sanctions by someone who wants to seize money in transit.
This is making it very difficult to do business internationally.
I would like to say “crypto currency to the rescue”, but …
Bitcoin and Monero are both hitting their scaling limits hard, even though the Monero blockchain is nowhere near as large as the bitcoin blockchain.
Neither data structure was designed to handle enormous sizes, and the Monero data structure handles enormous sizes considerably worse even than the Bitcoin data structure.
There is no way of knowing the bitcoin current mutable state (the set of unspent transaction outputs, the set of public keys that govern non zero value on the blockchain) other than grinding through the entire immutable append only data structure from the beginning without a single error or failure, and in Monero, there is in a sense no way of knowing the current state at all, which makes it very possible that due to subtle bugs or coordinated fraud (brigading), Monero is being inflated under the covers.
To scale, you have to have a data structure that gracefully handles some small part of the data getting lost, corrupted, or incorrectly processed. And we just don’t have that. It has long been known how to do that, but it just has not been done.
And we are going to need a representation of the immutable append only data structure that gracefully extends over several disks, and if one disk fails, we only lose and only have to restore one disk’s worth of data.
If you have a single corruption or data loss issue in the bitcoin blockchain, you have to re-index, which takes a very long time. And if you have a single corruption or data loss issue in the Monero blockchain, you have to re-download the entire blockchain from the beginning, because the Monero blockchain is all one gigantic memory mapped file. Which takes a very long time. And as the blockchains get larger and larger, data corruption necessarily happens more and more often.
Once a single memory mapped file gets big enough, it is always going to have data corruption and data loss issues. Monero does have all sorts of measures to mostly accommodate this problem most of the time, but as the blockchain gets larger and larger, they take longer and longer, and failures that cannot be accommodated happen more and more often.
