"Money doesn't grow on trees and isn't created by politicians" - with Phil Lojacono
Apr 4, 2023
In this podcast episode, Niko talks to Swiss entrepreneur and author, Phil Lojacono, about the current banking crisis, its background and how Bitcoin offers a solution to these problems.
This weekly podcast about Bitcoin is the initiative of the Viennese financial journalist Niko Jilch. The goal: to strengthen and network the German-speaking Bitcoin community - and to bring the Bitcoin phenomenon closer to as broad a mass as possible.
We accompany this project as one of the main sponsors in this blog and also make all podcast episodes available here as a video.
What Bitcoin brings. Episode from 24.03.2023
About 10 days ago, entrepreneur and author, Phil Lojacono, was a guest on Niko's podcast for a deep dive on the current banking crisis. He provides a close analysis of what's happening around finance, banking and bitcoin every week with his newsletter on coprnic.us.
As a Swiss, Phil has a lot to say about the takeover of Credit Suisse by UBS - but as a Bitcoiner, his understanding of the current financial crisis goes much deeper: "The fundamentals of Bitcoin only go in one direction," says Phil. And, with a glance in the direction of Modern Monetary Theory: "Money doesn't grow on trees and isn't created by politicians," he notes sarcastically.
With regard to the bank failure of the SVB as well as Credit Suisse, he sees above all the management of the banks, regulation and also monetary policy as being responsible. "The system was massively manipulated for over 10 years, and of course the banks suffer from that. Money was defacto free, you basically even had to pay for having money. Actually, we should have raised interest rates again much longer ago, but politicians probably delayed that because many highly indebted countries could not have afforded higher interest rates at all. Then during Covid, they took it all to absurdity, creating over 13 trillion new dollars!"
"Maturity matching and & fractional reserve banking: Lending money can make perfect sense. It is thus shifted from "unproductive" savers to "productive" firms. This is also the case with a Bitcoin system. Only the money does not suddenly exist multiple times. A Bitcoin consists of 100m Sats (Satoshis) and in total there will never be more than 21 million Bitcoins. These cannot be duplicated, counterfeited, or arbitrarily multiplied. Any person in the whole world can check at any time whether he/she holds real Bitcoin or not."
"Monetary policy and expanding money supply: The global economy ran on all cylinders for ten years due to low interest rate policies. Huge bubbles were created, real estate prices went through the roof, zombie companies were left alive, crypto Ponzi schemes went through the roof and some people became incredibly rich. Obviously, not everyone benefited to the same extent, which will also lead to social unrest in the medium term. Now, economic lessons differ and one can have different opinions on active monetary policy - but it is undisputed that the effect is huge. With Bitcoin, there is no such thing. Bitcoin's monetary policy is quite clearly defined and cannot be changed by anything or anyone. As of today, 6.25 new Bitcoin are created every 10 minutes, from April 2024 it will be 3.125 and then always 50% less every four years. Until finally in the year 2140 the last of the 21 million Bitcoin will be "mined"."
"Human factor: No matter what your opinion is on what is happening, whether you want no or omnipotent regulation, whether you are in favor of a big, small or non-existent state, whether you think tech companies or Wall Street are cool or not - all problems have one thing in common: they always fail because of the human factor. Be it greed, incompetence, egomania or whatever, human errors are always responsible for the suffering of many. Bitcoin removes the human factor from the system. You have to trust mathematics and physics, not Jerome Powell as the FED's overseer-in-chief, Gregory Becker as the CEO of Silicon Valley Bank, or Urs Rohner as the long-time VRP of Credit Suisse."
Phil concludes his article by writing that a Bitcoin standard wouldn't solve all the problems either, of course, but that it's certainly worthwhile to go through the world with your blinders open and look for alternatives to the current, incredibly centralized monetary policy.
The Coinfinity Bitcoin App is here! Stay humble, stack sats.