Fantasmas in a FIATocracy

“Confiscation all comes down to this: the government makes the rules, changes the rules, and enforces the rules. Though it lacks the moral right, it can create legal authority.

Though it lacks the constitutional empowerment, it can turn a blind eye to the Constitution…The Constitution did not stop the government from taking people’s gold in 1933.”

The Eurodollar system emerged as a workaround to the limitations of the Bretton Woods monetary system established after World War II. Under the Bretton Woods System, gold was the basis for the U.S. dollar and other currencies were pegged to the U.S. dollar’s value.

The problem was that in the wake of the war destruction, the sheer amount of money needed to rebuild Europe and initiate globalism was so large, that for the United States to service such demand would mean devaluing the dollar out of existence.

This is known as Triffin’s Paradox, a dilemma where a country issuing the global reserve currency must supply the world with enough of its currency (in this case dollars), leading to potential economic imbalances and conflicts of interest.

In response, the City of London orchestrated the collaboration of private commercial banks in Europe to establish the Eurodollar system i.e. “ghost money system”.

This system, rather than functioning like a traditional currency, operates more akin to a telecommunications network or a ledger. The Eurodollar system made money creation more efficient by combining the processes of creating money and facilitating transactions.

In essence, it operates similarly to bookkeeping, where dollar claims are traded between banks and recorded like an accountant keeping track of who owes what to whom.

It resembles bookkeeping, with banks trading dollar claims and maintaining records like an accountant keeping track of debts.  

For instance, if HSBC owes one million dollars to BNP Paribas, instead of an immediate repayment, BNP deducts the owed amount from a future transaction with HSBC a simple ledger entry, just like in a blockchain.

Banks were able to fuse the money creation function with the intermediation function.

The problem of scalability remained.

U.S. treasuries became a preferred form of collateral for foreign lenders due to their high liquidity, providing a level of standardization that reduced the need for extensive knowledge about the other side of the trade.

If a business needed a loan, all they had to do was show their U.S. Treasury, and a bank would give them the loan. These U.S. claims are also called “pristine collateral”.

Contrast this with the old system based on unsecured transactions and the need for specialized knowledge of each business field. Now private commercial banks could use their U.S. dollar claims and treasuries to lend to other banks, forming a global interbank lending network.

Banks worldwide, having extra cash, wanted to invest it. This led to the creation of a network where these banks could take in deposits denominated in foreign currencies, “swap” them into dollars, and then use these dollars for investments.

In other words, the dealer banks were able to mass produce money outside of confines of Bretton Woods that is physical currency.

By 1971, the Eurodollar system had surpassed Bretton Woods, averting a financial collapse when the U.S. abandoned the gold standard.

In 1981, a financialized economy, featuring fiat money and a 40-year interest rate downturn, emerged, necessitating exponential Eurodollar growth for stability. With its intricate interbank lending system, even a minor default could send ripples across the entire market.

This is where the Repo (repurchase agreement) markets took center stage as lenders of last resort. Money market funds, flush with cash, extended loans to hedge funds, traders, and banks in exchange for collateral.

While they preferred U.S. treasuries (considered the most pristine collateral), they also accepted other securities such as foreign debt or Mortgage-Backed Securities.

Problems arose when the Repo market’s acceptable collateral shrank, as seen in 2008 when mortgage-backed securities ceased to be accepted. Naturally, with fewer options for accepted collateral, a shortage of pristine collateral ensued.

The lack of overnight lending left overleveraged businesses unable to cover day-to-day operating expenses, triggering the 2008 Monetary Crisis that was basically a massive global dollar shortage due to freezing credit markets.

Ever since 2008, the Eurodollar market experienced a huge wakeup call, where banks stopped lending at the same scale as pre-2007. In all Eurodollar instrument charts, lending between 2008 and today has slowed dramatically, which severely contrasts pre-2007 and the exponential rise in foreign exchange derivatives.

This shift challenges the notion of sustained easy money. The data reflects a notable change in the trend after 2008, suggesting that money and credit were not generated at the same accelerated rate as witnessed in the years leading up to the financial crisis.

The Eurodollar market’s growth relies on a continuous expansion of lending by banks. However, ever since 2007 many financial institutions stopped partaking in riskier collateral, only accepting pristine collateral such as U.S. treasuries.

Without more lending, economic growth can only be sustained by massive government borrowing.

The constant expansion of the U.S. debt market is crucial for preventing a collapse in the Eurodollar system due to lack of acceptable collateral.

To secure additional collateral, most of the time those in power have deliberately initiated endless wars. The latest iterations are conflicts in Ukraine and Israel.

Each military involvement serves as a convenient pretext to issue more government bonds, increasing the overall debt in circulation. This influx of debt contributes to expanding the pool of high-quality collateral within the markets.

Wars tend to be inflationary by nature and also offer an opportunity to acquire a nation’s gold and natural resources, which can later be used by global western banks as valuable collateral.

Expect the next decade to be characterized by conflicts on multiple fronts, which will serve as an excuse for governments to pursue stealth quantitative easing.

These wars have been and are kinetic.There is another way for banks to get additional collateral when push comes to shove during the crisis.

The second maneuver is popularly referred to as the “Great Taking”, wherein central banks seek to seize and control various financial assets, bank deposits, stocks, bonds, and underlying properties of the public through engineered crises.

Debt-ridden assets will be confiscated, similar to the events of the Great Depression. In the 1930s, when 9,000 U.S. banks failed, taking $7 billion in depositors’ assets with them, only the Federal Reserve backed banks survived.

However, the depositors’ debts in the banks that went out of business were not canceled; instead, they were consolidated into the Federal Reserve backed banks and enforced.

In the past, one used to receive physical stock certificates, tangible proof of ownership of shares. However, stock certificates have become obsolete, replaced by mere digital entries held with brokers.

Despite the presence of SIPC insurance, which is limited, and FDIC coverage for insured deposits (up to $250,000), the legal claim over the securities with a broker is questionable.

Just like with bail-ins, you do not have a legal claim over the securities that you own.

In the 1960s, the dematerialization trend phased out traditional paper securities, introducing an order book/ledger system. This transition led to a fundamental change in the understanding of ownership, moving towards entitlement.

A subsequent development involved establishing a system where custodians and clearinghouses hold your shares; notably, these entities operate without regulation and lack collateral.

Securities, held with an entitlement claim rather than outright ownership, are then pooled together as collateral for various investments, with a primary focus on derivatives.

Same practice applies to centralized cryptocurrency exchanges

It’s important to note that this intentional setup could serve as a mechanism for a deliberate devaluation or a rug-pull of assets.

The strategy is clear: by obtaining access to energy sources outside the conventional banking system, individuals can survive outside of the traditional banking system.

The most pristine, transparent, trustless energy resource there is:

Bitcoin

This is why weaponized virtuous movements such as the environmentalists and health mandates are designed to remove people from their farmlands and forbid them access to natural medicines, and even more so on the EU regulatory crackdown on non compliant stablecoins, cryptocurrencies.

Every financial bubble has brought in more repossessed wealth to the ultra rich, taking the assets away from anyone not in the 0.1 percentile.

Formally called a Monopsony: when there’s a powerful buyer instead of a powerful seller. No one knows this word because there isn’t a family destroying board game with this name.

This monopsonistic market appears in many different sectors. It’s the motif of the tech sector. Think of Uber, where you have to supply the car; you have to drive it the way they tell you; and everything you do is scripted, down to the finest details. But you don’t know how much you’re going to get paid until you pick up your fare.

Amazon drivers have machines watching their faces and their eyeballs. The company can dock their pay if they fail to comport themselves facially in the way they’re supposed to. Their payment is determined post facto, unilaterally, by the employer. This is a very powerful employer that wields a lot of political influence.

You invest your own money and spend weeks producing a video, and the algorithm doesn’t show it to anyone not even the people who follow you because it violated a rule.

This looks a lot like Uber, the centralized cryptocurrency markets and many labor markets.

It’s akin to a Monopoly game where all pieces and money are reclaimed by the bank, and then starting a new game. Beginning afresh, the narrative becomes one where they possess everything, and you have nothing, would you like to borrow something?

This scenario mirrors what the central bank digital currency (CBDC) represents. It becomes extremely challenging for people to resist using it, given the essential nature of basic needs. Imagine an app available for download the cavalry coming to the rescue. By downloading this app, you can load your phone with digital currency, enabling you to purchase necessities like water.

However, each usage entails borrowing money from the system, creating a subtle but impactful dependency.

They may even provide a “free” initial CBDC offering, which will be a Central Bank loan disguised as Universal Basic Income.

So, what are the solutions?

For starters, individuals in the stock and crypto markets should significantly deleverage.

In many cases, it is more prudent to invest in tangible wealth, such as bitcoin, real estate, land, precious metals, rather than keeping money in a bank, stocks or cryptocurrencies that one does not really own.

Plausible scenarios, such as international power outages or a cybersecurity hack affecting financial institutions, could wipe out one’s trading portfolio, assuming that a margin call doesn’t do it for them.

Also one has to be aware of the responsibility of becoming your own bank and custodian.

However, this does not mean to complete disregard for traditional investments. In fact, contrary to public opinion, having a stake in U.S. dollars may be the best option from all liquid vehicles.

You can still have exposure to US dollars and T-BIILLS, just do it in a private and permissionless fashion using stablecoins in DeFi and cash.

The notion of BRICS nations trading energy outside the US dollar is frequently discussed, but the success of dedollarization initiatives may be overemphasized.

While there is a desire to dedollarize, the ability to achieve this seamlessly is often exaggerated. Dedollarization will happen out of need, not desire.

Historical trends show that the dollar tends to strengthen during crises because of the global dollar shortage (such as in 2008 and during the Covid pandemic) and then weaken afterward. However, this is not necessarily indicative of the end of dollar hegemony.

In times of crisis, such as the events of 2008 and the Covid pandemic, the US dollar typically experiences an initial rise followed by a subsequent fall post-crisis. This could easily happen again in the near future.

However, it is crucial to understand that this does not mean the end of dollar hegemony; instead, it reflects that the existing system continues to work. During periods of dollar weakness, countries, corporations, and individuals often choose to issue more dollar debt instead of paying it down, driven by the high demand for dollars.

For the collapse of dollar hegemony to occur, countries would need to seize the opportunity presented by the weakened dollar to pay down their dollar debt, which is a very rare occurrence nowadays.

Even if dedollarization were to take place, it would be a gradual process rather than an overnight phenomenon.

This does not mean you go all into U.S. equities or dollarized assets.

It does mean however, that when it comes to a cash position, the dollar has outperformed most other currencies in both the Global Monetary Crisis of 2008, and the Covid Pandemic in 2020.

When it comes to the underlying solution, any investment that makes people less dependent on the government and thrive in a redacted environment is a safe bet.

The first thing that governments have access to is their own tax reporting data, and no one wants to have their properties showing up in databases in their own name. Continuing operating in the digital economy without having to give up your privacy or security.

The Eurodollar fiat money system requires more collateral, and the tokenized economy through future Central Bank Digital Currencies addresses this concern.

Many pundits argue for complete disconnection from the grid, avoiding all involvement with future technocratic systems.

As HIM, I believe this is not a sustainable long-term solution because certain services and products cannot be handmade, making it an impractical way to live.

The goal is to harness the best of both worlds, guiding you on how to maintain peripheral access with financial institutions while embracing a fantasma lifestyle, securing your personal freedom.

Securing one’s digital wealth and achieving near-anonymity on the web can turn into a challenging daily task for many, discouraging less technical individuals from prioritizing online privacy and security.

Simultaneously, many Western countries are becoming more tyrannical, with societal breakdowns and city violence on the rise.

While many European, Asian, and American countries appear to be veering towards more restrictive governance, certain countries worldwide, once under the yoke of strict dictatorships, have propelled their populations to a point where they’ve developed a heightened awareness of the perils of government overreach.

The prior communist administrations and military juntas in these nations have contributed to fostering this awareness.

Redacted places where laws are interpreted as suggestions.

To begin, there is no single solution, but rather a comprehensive approach: the willingness to adapt and relocate.

Just as Eastern European migrants who left their homelands before the Soviets arrived in 1944 were spared five decades of oppression, individuals today can choose to move to safer, less oppressive regions.

In a digital era with excessive government information demands, business owners are struggling to keep their trading and bank accounts in restricted jurisdictions.

Recent examples of account closures reflect this growing trend Nigel Farage, a British politician, found his Coutts bank account closed, alongside Bank of America’s Coinbase customers and Canadian truckers in 2022.

Heightened government regulations now mandate stringent Know Your Customer (KYC) protocols, incorporating biometrics.

In response to regulatory pressures, Binance withdrew from several countries, including the Netherlands, U.K, and Cyprus. Their euro-denominated crypto trading share plummeted by 40% in 2023, leading to significant staff layoffs.

Instead of hopping from one exchange to the next, skirting one regulation after another, large trading account holders can set themselves up for long term, stable trading.

Additionally, take into account future U.S. and E.U. taxation and regulation through the establishment of asset protection structures, crypto on/off ramps, and diversification of investments into portable assets.

• Inflation is on the rise.

• The world is at war.

• Governments are borrowing more money than ever.

An increasing number of people are starting to realize that traditional investment strategies, such as debt instruments and pension funds, are actually losing them money. The old concept of ‘sit and earn,’ where wealth is confined to a stagnant wealth management advisory plan, does not work anymore.

For the past decade, banks have been driven by global regulatory pressures to “de-bank” unfavorable customers. This was first put into play by then sitting president Barack Obama and his well-known Operation Chokepoint 1.0, where the White House pressured banks to terminate service with certain legal, yet “unfavorable to the administration” businesses.

Joe Biden, then Vice president and now acting as President, has continued in his former boss’ footsteps with Operation Chokepoint 2.0, which since 2021 has de-banked multiple crypto businesses.

With the advent of the Markets in Cryptoassets (MiCA) regulation within the European Union, Centralized Crypto Exchanges will face stringent measures. By December 30, 2024, they will be mandated to track transfers of crypto-assets exceeding €1,000, ushering in an era of heightened scrutiny and more Know Your Customer protocols.

For example, MiCA regulations will introduce a daily transaction cap of €200 million for private stablecoins like USDT & USDC. For context, Binance’s current Tether trading volume against Bitcoin alone (not counting other trading pairs) is at $2 billion- 10 times more than future transaction limits.

Numerous trading platforms, including Binance, Gemini, Kraken, and Coinbase, have encountered substantial government regulation, leading to the suspension of operations in various European nations.

Traders who find themselves without accounts often resort to hopping to a different exchange , yet this is approach proves unfavorable due to the high probability of continued government crackdowns in countries that have already banned specific platforms.

In light of the imminent introduction of Central Bank Digital Currencies (CBDC) and a monetary reset, our strategy is to play their game to our advantage, own nothing and control everything.

Forget about if you can’t beat them join them, you can beat them by proactively playing their games against them:

Solutions are designed to adapt to the forthcoming times characterized by regulation, warfare, technocracy.

The 2020-2022 Crypto Bull market showed the inevitable trend- central banks will never allow private non-bank companies to control their own money. Centralized exchanges will keep getting regulated, and the only way to participate in the future crypto market is to anonymize your trading.

Recent episodes of de-banking, swift lockdowns and stay-at-home orders trapped those without a portable wealth or contingency plans.

If you believe that these technocratic systems can and will be implemented in the near future, proactive steps can protec your assets and freedom.

The solution is three-fold: first, migrate existing entities and assets to a favorable jurisdiction.

Second, structure KYC out of your personal name if you can’t totally adapt a zero KYC lifestyle.

Finally, create a strong structure to stay in control, trust no one, move assets off-balance sheet and use protective assets ~ BITCOIN to your advantage.

Fantasmas are individuals with direct experience in navigating international jurisdictions, global monetary limitations, and pervasive surveillance.