Tag Archives: collateral



A credit default swap, CDS, is a form of insurance against a loan default. The seller of the credit default swap insures the buyer of the swap that he or she will be compensated for the face value of the loan or a percentage of it if the loan defaults.

The problem is that there are even CDS’s which are not backed by any collateral on a loan and are truly high risk swaps on intangible assets which may be paper assets only. Effectively a loan on nothing or a fraudulent piece of paper.

A financial institution can create a counterfeit phony bond loan with an interest rate return which may be paid for a few years just to make it seem legitimate, sell it to a buyer who in turn insures it with a CDS given by a private investor or other financial institution which is left holding the bag when the loan defaults with no collateral backing it. A real Ponzi scheme with the issuer or seller of the CDS left with a total loss when the loan defaults as it inevitably will.

In 2007 CDS’s were at 62 trillion dollars and have fallen to 25 trillion dollars in 2012. CDS’s are high risk gambling and are another potential area which can cause a liquidity crisis if massive loan defaults occur.

Lack of transparency or not having all the necessary information is the real problem where humans make investments based on trust of a financial institution and not knowing whether the loan is truly legitimate or not.

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Bitcoin money is speculative virtual or traditional “paper” money with no collateral or backup real wealth if the currency collapses. If the controllers of bitcoin decide to take down the fake monetary system on a whim or reduce its value via a secret computer algorithm you will become impoverished with less or no value or money for what you have invested. A bitcoin crash to zero is a realistic probability if those controlling the monetary system decide to steal it all from you.

The basic idea of bitcoin is a worldwide currency which is an ultimate ideal currency but any worldwide currency should be tied to tangible assets such as commodity mines, real estate, and solvent businesses manufacturing real products and/or services. The currency should not be a speculative currency which is inflated by a computer algorithm and based on no real tangible value or matter and/or energy.

Governments like the United States and China are counterfeiting currency or printing money without tying it logically to the growth of tangible assets in the GNP and inflating the money supply causing worldwide prices to go up and concentrating the wealth into fewer and fewer hands and impoverishing many in the middle class who are in great debt and paying exorbitant interest rates. There is a great danger that in the not so distant future we will once again have feudal like lords or the elite at the top and billions of serfs living at subsistence levels or working for subsistence wages without hope of advancement.


The world will eventually need a worldwide currency to avoid wars between nations but a just one which is tied to reality and a currency which is not a speculative crap shoot which can implode at any time. What is realistically needed is a currency which maintains its value or purchasing power without inflation on into the foreseeable future of the world. The bitcoin scam is definitely NOT that JUST worldwide currency for all its inhabitants.

In fact bitcoin is now being used to hide illegally made money and to transfer wealth across international borders without paying a tax.

You can see by the chart that there is a bitcoin bubble or an irrational increase in value and when it bursts the shit will hit the fan!!!!!!


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