This is going to be a two part series about how Hive has the ability to construct a financial network that is truly outside the reach of governments.
It is an important point.
We now see the Bitcoin world anxiously awaiting the decision of Gary Gensler, of the Securities and Exchange Commission (SEC), a government entity, to decide whether a spot ETF for Bitcoin is legal within the United States. Isn't that an interesting turn?
Before getting to the Hive Financial Network and how is compares with the present independent, i.e non-government, banking system, we must take a look at some of the components. There is one fact that is repeatedly overlooked in the entire discussion about money, the economy, and where the world is going.
Central banks take a lot of blame. In reality, they are backed into a corner. At this point, they are basically propaganda organizations since there is little they can do. We will look at that and why something like the Hive Financial Network is so important.
The Three-Headed Government Monster
Politicians campaign on the promise of helping. Sadly, they are some of the most evil doers there is. When it comes to society, this group of people causes more damage than any other. Sadly, they often get a pass since partisan politics is more important to many.
This is done through the three-headed monster of taxation, war, and government spending.
These will get some attention periodically yet rarely are they the focus in totality. It is much easier to believe the central bank is responsible since, after all, they are "printing money".
For example, how often did you hear about war and the impact upon inflation.? Historically, this is a great driver of price increases. Yet it is not often discussed on either the media or in economic circles. Compare that to the false narrative of money printing and the quantity theory of money.
That is all over the place.
The three-headed monster is something central banks have no control over. Politicians are the ones running that show and they are all the same. The United States is now run by warmongers who are intent on creating World War III. All the gains in the drop of inflation go out the window if that happens.
If you thought 2020-2021 was bad, just wait if war kicks off in a major war across Europe.
Impotent Central Bank
There are a couple reasons why central banks are impotent. One has to do with the changing nature of the world while the other is due to government intervention.
The Fed, as an example, was designed to be an independent organization. This was first crushed by Wilson, then further obliterated by FDR. These two were the first in a series of government agents that pulled the Fed's power to Washington.
Wilson forced the Fed to buy government bonds to help fund the war. This was suppose to be a temporary measure. Now, more than 100 years later, the Fed is still forced to facilitate whatever Congress wants to spend.
President Roosevelt (the second one) was even more destructive. Did you ever wonder why there are 12 branches to the Fed? The reason it was set up this way was to manage the capital flow within the United States.
During the Panic of 1907, as a result of the 1906 earthquake in San Francisco, capital flowed from the east coast. As money poured into the West, banks on the other coast found themselves with a shortage of cash. This caused many bank failures.
Hence, when the Fed was designed, there were 12 regional banks, each with their own interest rate. This meant that if a region had too much money, it could lower rates. With the opposite situation, too little, rates could be raised to draw capital in.
Roosevelt destroyed this by going to uniform interest rate. Notice how none of this has anything to do with the quantity of money. Here is another fallacy that people believe. Interest rates do not directly alter the money supply. Instead, their major impact is with capital flow.
The second reason for the impotency is the fact that globalization altered the economic landscape. Post World War II, the entire economy shifted to one that was global in nature. Because of this, the national existence of central banks limited their ability to affect things.
Non-Government Controlled System
Why are we taking a walk down central bank history?
We now have the stage set as to what tends to be the real problem. All the media attention on central banks is really just noise. It is governments and, more specifically, politicians that are at the root of the problems. Look at the three-headed monster again.
There was a development that caused a massive shift. It is what bought the world a half century of progress.
After World War II, starting in the 1950s, the bankers took it upon themselves to construct a new system. They realized there was still a demand for money. In the United States, banks (and other entities) were limited by Bretton Woods. The goal of that was to restrict capital flow. Does this make sense in a global economy? Obviously not but that is how little foresight they had.
Long story short, the banking cartel set up a system of borrowing, lending, collateralization, and cross-border payments that was completely outside the central bank system. It was also outside any governments. In fact, the bankers were very secretive for a few decades about this. What started in the mid-1950s was still not known in the 1970s.
This is an important point. There is a lot of power in being under the radar and not noticed by the governments. It allows for building while the attention is elsewhere.
The Great Financial Crisis was the swan song for the banker's system, know as either the "shadow banking" or Eurodollar system. The implosion due to mortgage-backed securities left it on life support. It was further affected by the negative interest rate policies adopted by so many countries.
Nevertheless, it does provide a blueprint of how to model things.
Why Hive Financial Network
We will delve a lot deeper into this and how Hive can offer up a solution not really available elsewhere.
For now, we will focus upon the fact that, from a network standpoint, we are dealing with software that is truly decentralized.
Anyone with the technical ability can run the software. Nodes can be anywhere in the world. For now we are dealing with a server system. However, the goal is to get to the point where the network can run on a series of PCs.
The lesson from the Fed is that politicians are going to attack anything that threatens their power. This should come as no surprise. What the banking cartel set up is still outside the control of the governments.
Where the system broke down is in the fact that the banks are regulated. Hence, their balance sheets are dependent upon government action. This is especially true when the highest quality collateral is government debt, in this case U.S. Treasuries.
Now we see how the system is only fed what the government decides. It has no control over what is created since that is outside its hands. If the U.S. Treasury decides to issue long term bonds when the system is looking for safety and liquidity, this is a problem.
Here is where the Hive Financial Network is different. We overcome this limitation by not even dealing in that realm. Nothing about this is tied to the present banking system in any way. That means government meddling is removed. The shadow banking system is outside the reach of governments. However, the problem arises in the fact the players, for the most part, are not.
We will dive into the particulars in the next article to show how we are able to create strong collateral that can be expanded or contracted as the market determines. From this, we have the basis for development of financial services that can address the needs the modern world is facing.