Bitcoin was created to bring back people’s control over their own hard-earned money. Perhaps no greater example exists of how we don’t currently have real influence over how our capital is being spent than banks getting bailouts from the government at taxpayer expense. This very real story has already happened on several occasions and bankers take the money impunity, then the government gets into debt and directly creates more public debt that ends up paid by the most deprived social classes, as an example we have the crisis of 2008, with garbage mortgages.
A story that is to deprive taxpayers of money. Governments all over the world have been bailing out companies for decades, if not longer. And it seems that whenever a financial crisis arises, failed businesses call on the authorities to save them. While directly giving funds or just sweetheart loans to physical companies such as car manufacturers, airlines and the like is harmful to the economy, it is usually easier for the public to accept in order to save working class jobs. Bank bailouts on the other hand are almost universally hated. Because the same people who bankrupted those institutions receive the money.
Economists see bailing out banks as creating bad incentives for executives to keep taking more critical risks, knowing that major losses will be covered by the taxpayers while outsized gains will be kept by them. And the general public objects to ‘fat cat’ bankers getting enormous sums of money due to their crony connections to politicians. This is why governments and central bankers must always declare the situation a national emergency and warn that a cleanup of the banking system might cause a complete economic collapse.
This theory is fed by the same media that in the end its owners finance the communication companies, social networks, digital magazines, opinion makers, who receive economic benefits, from the bankers themselves, it is a perverse union, to the detriment of the working society.
The most recent example of this process, the backlash and the futility of it, is the US’ 2008 bank bailouts. After the 2007 subprime mortgage crisis, major American financial institutions became insolvent the following year and the Bush administration came to their rescue.
The Troubled Asset Relief Program (TARP), which propped up the too-big-to-fail banks with hundreds of billions of the taxpayers’ dollars, was passed with much protest both from the ideological right and the ideological left. The controversial process is credited with triggering both the Occupy Wall Street and the Tea Party movements.
Prior to 2008, the biggest modern bank bailout in the US was the 1989 Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). It came about following the savings and loan crisis, and cost taxpayers an estimated $200 billion. Both events similarly led to greater control, supervision and regulation by the government of the economy.
What can be worse than a bailout? A bail-In. How the government gave the taxpayers’ money to the banks, again and again. As bad as bank bailouts can be, there are now even worse ways for people to learn that they don’t have control over their own money. Bail-ins are a new concept that has been floating around in recent years, which refers to depositors taking a hit to rescue banks instead of the taxpayers. As this is a more obvious and direct confiscation of wealth, governments will try to avoid bail-ins if they can just print more fiat or take on debt.
It is a vicious circle that is repeated directly, the government does not explain to the people, that the future will be uncertain and new generations will be born indebted, the quality of life decreases, poverty will grow, health systems will be compromised, education and other conquests of social classes will be unknown, all these new hardships are not said by governments that hegemonize power.
The precedent for this was set not by some bankrupt dictatorship but by the EU member nation of Cyprus, where a bail-in was first attempted in 2013. As part of a €10 billion bailout deal with the ECB and IMF, the Cypriot government has agreed to impose a levy on on all uninsured deposits in the country’s second largest bank and up to an estimated 48% of uninsured deposits in the biggest bank in Cyprus. This incident left a scar on the psyche of many locals and only served to make them less trustful of the government and banks.
In summary, the financial systems of the world are going through a moment of mistrust on the part of their users, in some countries hyperinflation punishes savers who see how the fiat currency loses value every day, likewise, in other nations they submit to the users to income tax payments that make your estate almost complete or disappear, therefore, the blockchain-bitcoin technology emerges as a solution made so that each conscious person can program their expenses and save a surplus for future generations that are children, therefore, bitcoin is a solution, where each user of the ecosystem can take control of their wealth.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.