Thursday, August 22, 2013

CNBC — Bitcoin recognized by Germany as "private money"

Virtual currency bitcoin has been recognized by the German Finance Ministry as a "unit of account", meaning it is can be used for tax and trading purposes in the country.
Bitcoin is not classified as e-money or a foreign currency, the Finance Ministry said in a statement, but is rather a financial instrument under German banking rules. It is more akin to "private money" that can be used in "multilateral clearing circles", the Ministry said.
"We should have competition in the production of money. I have long been a proponent of Friedrich August von Hayek scheme to denationalize money. Bitcoins are a first step in this direction,"said Frank Schaeffler, a member of the German parliament's Finance Committee, who has pushed for legal classification of bitcoins.
CNBC
Bitcoin recognized by Germany as "private money"
Matt Clinch | Assistant Producer
(h/t Rohan Grey on FB)

UPDATE:
Correction: an earlier version of this story incorrectly stated that bitcoin was legal tender. The virtual currency has been confirmed as a financial instrument or "private money".

16 comments:

y said...

"If the euro does go belly up the German authorities could potentially still collect tax if everyone started using the bitcoin - that's a good example of German forward-thinking!"

That's a good example of really stupid thinking.

y said...

In my opinion the production of money is none of the government's business," Schaeffler said.

delusional.

Dan Kervick said...

Yikes, the Austrians are taking over Germany now too. It's like a reverse Anschluss.

MoveThroughIt said...

"In my opinion the production of money is none of the government's business," Schaeffler said."

Then he has no business taking any of it. Or maybe he means none of the Public Government's business, but would be fine with it if that function were handed over to the Banksters, like just before Weimar flipped into hyperinflation.

"Chase. It's what you do so that we don't have to. Member FDIC (Fraudulent Despots In Control) and the Human 'Race to the Bottom'."

Tom Hickey said...

"He who controls the money supply of a nation controls the nation." -Pres. James A. Garfield

James said...

"In my opinion the production of money is none of the government's business," Schaeffler said."

These people are certifiable, you're dealing with a cult.

Ralph Musgrave said...
This comment has been removed by the author.
Ralph Musgrave said...

Normally a good 95% of money in circulation is privately produced (though the proportion might a bit lower at the moment as a result of QE). That is, money is produced whenever a private bank makes a loan.

Unfortunately, depositors demand their money be 100% safe, so we have deposit insurance (e.g. FDIC and TBTF subsidies). Now what’s the state or taxpayer doing backing up privately produced money?

Where anyone wants their money to be 100% safe, that’s a reasonable demand, and the state should provide that facility. Indeed it already does in that a wad of $100 bills is safe: it’s highly unlikely to suddenly lose its value. Alternatively, money placed in a money market mutual fund which invests just in short term government debt is near 100% safe.

But deposits in private banks which the bank then lends on to less than entirely credit worthy customers? My attitude is: “stuff that”. It’s not the job of the taxpayer to back that sort of thing.

Bob Roddis said...

the Austrians are taking over Germany now too.

We're taking over the world, Pinky.

And you MMTers are such a marvelous help with that by pointing out that the government really does create funny money out of nothing. That simple truth has long been purposefully obscured by government and government schools to hide the looting facilitated by the funny money regime. Normal people who finally understand the process are appalled because they do not have the lust for totalitarianism that apparently afflicts MMTers.

y said...

you're mentally ill bob. seek help.

Auburn Parks said...

To the extent that T-bonds are bought with reserves and not bank deposits, deficit spending does in fact add net new bank deposits.

Bond purchase accounting:
Bond buyer A +100 security -100 deposit
A's Bank B -100 reserves
TGA +100 reserves

Deficit spending accounting:
TGA -100 reserves
SS recipient M deposit +100
SS Recipient M's Bank B +100 reserves

At this point there would be a net zero change in bank deposits. But Bond buyer A would have a NFA bond

Paying back the bond accounting:
Bond buyer A's deposit +100 (+interest)
A's bank B +100 reserves
TGA -100 reserves
Securities account -100

Assuming that the TGA sold a bond to another non-bank depositor, then bond buyer B's deposit would have gone down 100 so there is a continual net zero in new bank deposits.

Now if the bond purchaser is a bank.....
Bondbuying bank B securities account +100
Bank B's reserve account -100
TGA +100 reserves

Now the deficit spending:
TGA -100 reserves
SS recipient M deposit +100
SS Recipient M's Bank B +100 reserves

And the bond redemption accounting:
Bank B's securities account -100
Bank B's reserve account +100
TGA -100

Now in this example, assuming that the new bond purchaser is also a bank whose initial accounting transaction would be a -100 reserves to make up for that last line of TGA -100. To this extant, we would have a net +100 in new bank deposits

Matt Franko said...

"they do not have the lust for totalitarianism"

Bob,

You all do not have a view of our authority we can delegate to our govt institutions... yours is barbarian thinking.

Try to think "civilized" Bob...

rsp,

Greg said...

"We're taking over the world, Pinky."


He says this and then follows it up by claiming someone else is totalitarian!! Gosh , that level of hubris/ignorance/obliqueness to fact is truly mind numbing>

Tom Hickey said...

Ralph, see Paul Meli, Does credit drive the economy? and Does Credit Drive The Economy Part II

Tom Hickey said...

Austrian Economics and the Rise of Hitler

Weimar hyperinflation was quelled by application of Austrian principles that lead to very high unemployment and social unrest that led to political instability and the rise of Hitler and the Nazi Party. Wasn't until Hitler adopted a Keynesian-type approach that Germany quickly turned around and became the powerhouse of Europe that cleaned everyone's clock until the Amie's stepped in after Pearl.

Ralph Musgrave said...

Tom,

I had a look at Meli. I’m not impressed.

I’m referring above strictly to STOCKS (not flows). Meli in contrast seems to get totally confused between stocks and flows. E.g. “current Federal expenditures” looms large in his thinking. That’s a flow, not a stock.

Also he seems to think that because some people like me claim that privately created money makes up 95% or so of the stock of money, that therefor we claim that that 95% DOMINATES. He says “Where do these claims regarding credit domination of the system come from?”

Speaking for myself, I make no such claim. Indeed, I go along with the idea that I think most MMTers adhere to, namely that central bank created money is dominant in that it is what MMTers call a “net financial asset”. Put that another way, the amount of privately created money is determined by the desire of the private sector to do business. And that idea is born out by the figures for the UK. That is, prior to the crunch, commercial banks were lending money into existence to fund house purchases like there was no tomorrow, and the money supply figures reflected this. In contrast, over the last three years, commercial banks have hardly created any new money.