Lebanese here. To answer some of the questions in this thread:
- No, Lebanon does not follow Islamic Banking.
- No, people can't make wire transfers anymore. All bank accounts are frozen, you can't withdraw your own money. You have to beg and wait in line for weeks to be able to get a tiny amount of your account to be able to buy bread etc.
- The local currency collapsed, lost more than 90% of its value. If the bank decides to give you some change (from your own money), they play money conversion tricks so that e.g. your account is down $1,000 but you get $100 only.
- This person did not "rob" the bank. He tried asking the bank for money because his father (and some people said his child as well) were in the hospital, needed medical care, and for that the hospital needed money. He had $210K in his account, but the bank kept kicking him away in previous attempts to appeal to them. He came back with a gun, and held hostages. Negotiated until they give back $35K, to his brother who was waiting outside. Then he surrendered without hurting anyone.
- He is now in bad health because he's on a hunger strike after they arrested him. (In the negotiation they promised him not to arrest him, but of course they need to make an example out of him.)
- Why is this all happening? Bad economic and financial policies for 40 years, rampant corruption. The economy was unproductive, but they kept the local currency subsidized, as it turns out by just spending the money that people deposited in the banks. And it's all gone now.
I understand the sentiment. This has already happened in Argentina in 2000 (the infamous "corralito"). Many people lost the savings of their lives. After this a big distrust against banks was installed and people decided to put their money not in bank accounts but in bank safe boxes, which in theory can't be touched. At the time I was a teenager in school but after that experience I've learnt not leave a single dollar in Argentinian banks. There seems to be literally no difference to what's happening there than what happened to us 22 years ago.
I know the Chicago boys get some flak for what they didn't get right but it sounds like Argentina would have benefited greatly from a few of them... jeez
Not arguing whether what he did was morally correct, but holding hostages at gunpoint is something that you always get arrested for, independent of negotiations
I don't disagree. After all, without such deterrent, the very next day all the banks in the country would be held at gunpoint.
There are many, many people who feel just like he does and are already on the edge, after having been shit on by banks and bank employees for 2 years now. Bank employees humiliate people, as it became a kind of Stanford Experiment. There were even demonstrations outside in his support, during the hostage situation, the moment it hit the news!
And this is why this story is making the rounds.
Even from a legal perspective, the banks don't have the right to do what they're doing. But the government is enabling them to do so, while the parliament is "trying" to work on new laws to regulate this period of "capital control". But no one will come after the banks. The government(s) caused this situation in the first place by borrowing the money from the banks, so it's not like there is anyone on the side of the regular Joe in all of this.
People are on edge, and desperate. Poverty and humiliation, after long hard working lives, to see all of their life savings disappear.
This the kind of environment in which people stop believing that the rule of law is just or should continue.
Lebanon has practically two different currencies. If you put money into a bank account now, you can access it. It's the old bank accounts that are locked unless you're willing to take a 90% loss.
What has happened in practice is that the old bank accounts contain have actually dropped in value, but the banks nor the government can admit that. Hence, this situation.
Disclaimer: I have been to Lebanon a few times, and a lot of my colleagues are Lebanese, and my knowledge of the situation comes from them.
There are two different exchange rates: The official rate and the black market rate. The latter is the actual value of the money. No one can actually get at their money using the official rate. That's why banks have two different types dollar accounts, one for old dollars (prior to the crash) and ones that have new money.
>There are many, many people who feel just like he does and are already on the edge, after having been shit on by banks and bank employees for 2 years now. Bank employees humiliate people, as it became a kind of Stanford Experiment.
Are bank employees actually mistreating people, or are they simply refusing to help?
A mix of both. Sometimes they tell people "we don't have cash anymore", they close the doors and don't let anyone in. Or just close the bank altogether for a long time (sometimes for fear of their lives).
Other times they give the account holder only one option to take money (say to send to their child's to pay for college abroad). And that option always involves the holder losing 5X to 10X of the value of their money. Write a check for $1000, sell it for $100, to get a $100...
At the end of the day, scarcity creates conflict.
And with that conflict, some employees choose to keep treating people with dignity and politeness, but without helping them (because they're following their bosses' policies.) And some just don't give a shit, slide into their dark side, and enjoy the power trip...
This is making me scared of seeing a stock market collapse in my life time. If the market collapses in the US, and people lose their pensions, who knows what will happen.
I have the same fear. And more I read about the macro outlook it looks more grim.
Consider this situation - inflation is now what at 8%. That means the prices were up by 8% than last year. If it stays this high, federal reserve will raise rates but how high can the rates go? Turns out every 1% rate raise causes almost 33billion debt payment by US Treasury since US at this point has close to 33 trillion debt and growing.
A rate raise by 5% means around 150 billion for just the debt payment alone. This is obviously unsustainable as the Treasury doesn’t get more income unless it substantially raises taxes.
If we somehow come out of this situation, the debt will continue to rise since the US has a balloning social security spending and it’s only going to get worse due to more and more aging population.
So our generation (GenZ and millennials) are kind of screwed. I can’t see how we get out of this.
> Treasury doesn’t get more income unless it substantially raises taxes.
Government revenue generally should increase inline with inflation.
As long as GDP growth (unadjusted by inflation) is higher than the interest rates the amount of real debt will go down over time.
Historically debt to GDP ratios went down during periods of high inflation, even without any real growth it’s possible to inflate most pf the debt away as long you find people willing to lend you money at low rates (even 5% when inflation is 8-9% is mot that bad$
Not if the Fed keeps raising rates because that will make cost of borrowing high and given at this point how debt reliant the US economy is it will not be a comfortable path.
But yeah that has been my thesis as well that after a point there will be another “hedonic adjustment” in defining the inflation and that will bring down the official inflation number even though the real numbers are far higher. Just like how the housing market has inflated far more than the actual inflation numbers in last decade but the real numbers barely took it into account.
In regards to government debt (since the thread was originally about it), the government's debt is denominated in its own currency and the US is in the very cushy position where the USD is core to global trade, so the government can print itself out of any problem up to the point that the USD loses the trust of the international community. For the above reason, the number that makes up the US government debt is actually meaningless and is only good for political maneuvering around "increasing the debt ceiling".
In regards to the wider US economy, creating pain via high borrowing costs is the whole reason the interest rate is being increased. People and companies see the higher borrowing costs and change their mind on borrowing to spend, demand is choked, inflationary pressure reduced. The hard part is finding the rate that chokes it enough to control inflation while not choking it so much that you cause a recession.
Inflation isn't a solution. It only cuts the value of existing debt. But future borrowing costs will increase, and potentially spiral out of control. In the long run some form of technical default is a distinct possibility.
Everyone suffers. Bank employees are among the few who are maybe grateful they still have a job; their salaries are also reduced. They fear for their lives many days, because they get so much anger directed at them. Some branches close for a week in some areas because they're afraid of the people. But to do their jobs, many eventually become accustomed to treating the people as the "other"; perhaps similarly to how doctors/surgeons sometimes end up treating people like subjects.
The police went through periods of low wages as well. But the government prioritizes supporting them financially, because otherwise they'd have to make their money to support their families with other means!
At the end of the day though, every person's suffering is being delivered to them by another person.
Americans tend to romanticize revolution in general, especially ours, but if you actually look at history violent revolutions with a positive outcome are the exception, not the rule.
A stable nation with good quality of life for it's citizens, as opposed to a revolving door of failed governments, or a new dictatorial government that quickly becomes as bad as the one that was ousted. Which is often what violent revolutions lead to. It turns out that a civil war leaves a nation on fragile ground, and the leaders who are so effective during your uprising often are not the ones best suited for rebuilding after the fact. And that's assuming your uprising has a single coherent faction and not many who will now set to squabbling amongst themselves about how the new government should work now that the common enemy is gone.
Which in the longer run benefited France quite a bit. It's hard to immediately judge whether something is beneficial or not. See also the 'We'll see' parable.
And what happened after that? You're not being serious if you just end there. Liberal democracy, capitalism and the metric system in most of the world...
Are you implying that the Napoleonic wars, all of the resulting politics, etc. are the natural result of revolution? That the revolutionary ideal requires military defeat in order to reach a positive end state?
The question is if these ideas, already in place would have come to fruition without the suffering of people up front. We just can't know. I remember a similar discussion with my history professor and us students when talking about the French Revolution and about the Enlightenment. We basically have only one history and are not able to state that the French Revolution was the cause for these good ideas to follow. We couldn't even state it as a catalyst with certainty.
Not a meaningful metric. Changing when you need to change is a good thing. One could just as easily argue that the US elevation of its original constitution into a quasi-religious document has a lot to do with the country's current dysfunction.
I don't think the country realising it's mistakes and trying a different thing is all that bad. Compared to the American model where the constitution ia considered as the word of god and it cannot be touch, i know which one i prefer.
Juries are a component of common law (and not used in all common law countries at that), and the vast majority of the world runs on the civil law system (which is, IMHO, better).
France has juries for 'crime' trials under the civil law system. I'm not sure the presence of juries can tell you which of the system you have, nor the system you have tell you whether you have a jury.
Lebanon has a lot of french influence so I thought it might be possible, not being myself familiar with the Lebanese system.
Ha, my mistake, i thought it's an exclusively common law thing.
> In France, a defendant is entitled to a jury trial only when prosecuted for a felony (crime in French). Crimes encompass all offenses that carry a penalty of at least 10 years' imprisonment (for natural persons) or a fine of €75,000 (for legal persons). The only court that tries by jury is the cour d'assises, in which three professional judges sit together with six or nine jurors (on appeal). Conviction requires a two-thirds majority (four or six votes).
Article 421 in the Lebanese law allows acquiring asset owned by one provided that he does not commit other crimes such as causing damage, or taking hostages. He or she is required to sign up with the bank that his current balance reflects the amount he/she has taken, otherwise that amount would be considered as theft.
source: https://www.lebarmy.gov.lb/
If I understand the core underlying issue (as opposed to downstream result) is a currency that lost majority of its value through volatility.
Who can look me in the eye with a straight face and say bitcoin protects against volatility? That bitcoin "protects exactly" against mismanaged economy and corrupt government?
It's become my mantra but I swear people on HN don't understand how crappy life can get, how oppressive governments can get, how many rights and things we take for granted can be taken away by thugs, and believe a super high tech complicated software stack can magically fix it. sorry if that sounds harsh, but you know what, it is also harsh to listen to hungry angry oppressed people and constantly claim "bitcoin can fix that for ya".
> Who can look me in the eye with a straight face and say bitcoin protects against volatility?
In 5y, 1 USD went from 3.44 Turkish Lira to 17.94; Sri Lankan Rupee collapsed overnight from ~200 to ~360 per USD. Argentine Peso went from 17 to 134 per USD in 5 years.
I can easily look you in the eye and say that for countries with shitty governance and poorly managed economies, Bitcoin is a far better bet than their local currencies. So far, a common alternative was USD but after it was demonstrated that even a nuclear armed country like Russia can lose its USD reserves overnight, I think a lot of countries would be looking for alternatives. Bitcoin and Gold are credibly neutral alternatives.
You are simply saying one of two things:"deflationary thing would be nice to keep your savings in" and "the USD is a strong currency". What kept people from buying gold, bitcoin or commodities or other speculative assets in those countries? The fact that they are still a bad currency, because a currency is ultimately what your state demands taxes in and wants/subsidizes for transactions to be in. A currency without a state is just a ledger with faithful devotees, and as we see with tornado cash and the continued lack of a bitcoin or Crypto economy producing basic things like food, it faith doesn't seem to be enough (which is ironic because we call traditional currencies fiat now to differentiate from Crypto, when we should call them tax-based and fiat respectively)
+1 on this, you nailed the issues exactly! Bad fiat currency is simply a proxy for bad state, bad government, bad governance. USD is safe and sound as long as USA and USG are. Would reuse tax-based and fiat-crypto - you got that right too - except for fear of all mighty confusion. :-) Money, currency, banking are confusing enough for most people already.
> USD is safe and sound as long as USA and USG are.
I agree. People living in USA or Eurozone may not see the need for BTC since they have good stable governments with well-managed currencies[1]. People outside of those pockets, however, need some option to escape from their governments' corruption and tyranny. BTC is a neutral, and hence better, option. Because if your country falls out of favor of USG, your savings just became a collateral damage when USG imposes sanctions n all.
[1] this sentence might come as a shock to some since news media constantly paints apocalyptic picture. But US and Eurozone is a really good area of the world to live in.
Yes, agreed. I understand what you mean. I grew up in "in Europe but not quite european" country. I hope at some point e.g. BTC version 23 is going be as convenient to use as is a credit card - no need to DL 300GB, wait 10 mins for transaction etc, but yes still I can hold my own keys. That will be the technical part solved. The societal part - where we place trust in yet unknown future people, removed from us in place and time, to do useful stuff for me b/c here&now I do useful stuff for third set of people - will follow. The best system that's evolved this far, Fiat - or as a grandparent wrote tax-backed money - is abused often (not by US, EU - they are the good guys; plenty others like Zimbabwe, Yugoslavia etc impoverishing millions - they are bad guys) enough that there is scope for improvement. Trust can be proxied as simple as 1-5 stars... but that may need lots of control - and so on.
> The fact that they are still a bad currency, because a currency is ultimately what your state demands taxes in and wants/subsidizes for transactions to be in.
I guess you have not lived in a third world country. I have, for multiple decades. And I have seen first hand how black market or under-the-table transactions work. There is a huge economic activity in corrupt countries which happens out of government taxation reach. Bitcoin is a perfect instrument for that. Bitcoin or USD or Gold are great options for preserving value of your savings in such countries. For ordinary transactions, Bitcoin or USD are much better since Gold is harder to exchange in exact quantities needed for the transaction.
Done that. As a store of value - USD has lower volatility than BTC => USD wins as a store of value. As a medium of exchange - USD paper notes are more convenient to work with (on balance) => USD wins as a medium of exchange. Hence - people in 3rd world countries are not silly or un-informed to prefer another country fiat currency (from a - comparatively - well enough run country), over theirs' (badly run) country fiat.
> As a store of value - USD has lower volatility than BTC => USD wins as a store of value.
Depending on your place of residence, USD may have a high tail risk if your country decides to cross USG's plans. For those places, better to have a non-USD non-EUR alternative. Only Gold and BTC come to my mind.
Even when the country gov is hostile to USG, the citizens will still use USD. Citizens use cash, USD notes - not USD bank accounts. No bank accounts are involved. The relations between USG and the local gov bears no consequence to the use of cash. I saw through civil wars in the 1990s, and did not see a single use of gold for anything. The next big state fiat was used for everything. Sorry for the downer.
In 1y, 1 BTC went from USD$47,113 to USD$24,735 (365 days period). If you compare from the high point, it went from USD$67,582 to USD$24,735. Doesn't sound like a good store of value, sure it's (theoretically) better than the 500% inflation of the Turkish Lira but anything is better than that.
> [...]but after it was demonstrated that even a nuclear armed country like Russia can lose its USD reserves overnight,
That's purely due to sanctions, which can affect cryptocurrency as well due to the entire ledger being public.
> That's purely due to sanctions, which can affect cryptocurrency as well due to the entire ledger being public.
Woah boy, that's a lot to unpack. I guess you heard some news about recent sanctions to TornadoCash... and then you thought that cryptocurrency can be confiscated/frozen as what happened with Russian's USD reserves?
What has happened so far: some arrest of at least one developer, some freezing of some (centralized-)stablecoin accounts, some closure of github accounts, etc. But pure (as in, not centralized stablecoin) cryptocurrency stored in cold wallets cannot be frozen at all; and that's the whole point of cryptocurrency.
No, I was not referring to or using Tornado as example here. I was referring to US sanctions on Russia forbidding trade, therefore causing Russia to fall back on their reserves and unable to access further USD reserves.
Cryptocurrency is vulnerable to this as well because, even if you have a cold wallet and run your own node, your transactions are still public and taint every wallet that receives your coins. Vendors might not want to trade with you so that they don’t get the same treatment, exchanges might not want to risk their entire liquidity to cash your BTC out, etc.
Indeed everyone holds non-local currency too. I'd presume USD and/or EUR have taken on the role of "store of value". I lived through collapse of a state 30yrs ago, and exactly that happens: locals refuse to hold the local currency (that reflecting on the health of the state is quickly losing value), there is a vigorous fx exchange market (either white-legal, grey-tolerated, or black-illegal but existing), and locals exchange their savings from local to foreign fiat currency. No one ever used gold, not once I saw gold being used for anything. Nor any other commodity. Foreign fiat currency that is stable is much more practical and convenient. Until BTC is as convenient as a credit card, can't see it used as "means of exchange". As store of value - maybe, but foreign currency maybe again more stable less risky (on humant time horizons), so again wins for that too over BTC. Sorry for the spoiler.
How would they hold bitcoin to begin with if they need to pay for local services? How would they get paid in bitcoin, or do they need to convert their funds to bitcoin ahead of time? In such a case they could’ve easily picked USD instead.
Dollar cash is as valuable in Russia as it was before. I don’t know why countries use electronic dollar. Just use cash. Nobody can arrest it. I don’t know the precedents at least. If Germany would refuse to accept those, Chinese will accept it.
Last time I checked, it was illegal to take more than $10k out of Russia per person. Even private plane passengers were thoroughly checked for cash (something completely unheard of before). And yes, governments all around the world have, and will arrest your cash.
> Can you really say with a strait face that you think BTC's volatility is worse than literally losing your bank account with all it's content?!
Ask Luna holders for their opinion on this matter, it seems they experienced pretty much the same thing (or holders of any other crashed cryptocoin). Bitcoin itself might not be down 100%, but it also lost a serious amount of value in the last half year. Plus, there are a lot of ways to completely loose your bitcoin, be it hardware failure or scams.
So yes, I can say with a pretty straight face that Bitcoin is not a great protection against volatility, which is what the original comment claimed.
Imagine if money didn't exist at all and we invented it today. It would be such an enormous technological game changer its value would change very very rapidly as we're going from zero to a huge "market cap" very quickly.
Imagine a pool. If you fill it with a lot of water rapidly, there's going to be a lot of turbulence. Doesn't mean that in the long run, as it gets filled, it won't settle down.
The volatility argument doesn't consider the fact that it's gone from zero to something big players and states invest in in 13 years. And that frankly it was not good enough to be digital cash but it's getting there. That's bound to cause a lot of turbulence.
>the average fiat currency has a lifespan of roughly half your life expectancy (37yr irrc).
Just like our products, fiat currencies have planned obsolescence and limited lifespans, this is because permanent money is a fantasy that cannot exist in the real world. Almost nothing in the real economy is permanent, not even humans.
If you want a currency that lasts forever it will have to not only have children, it will also have to be able to die like humans.
> Who can look me in the eye with a straight face and say bitcoin protects against volatility? That bitcoin "protects exactly" against mismanaged economy and corrupt government?
You are conflating volatility and corruption
Bitcoin won't protect you against the former (and neither did the lebanese pound), but it does offer protection against the latter.
With bit coin, and other cryoto, being using as the go to way to oay ransom attacks I highly doubt bitcoin does anything other than making corruotion easier.
After the Roman empire fell common things were still priced in equivalents of the old currency everywhere even though the currency was dead. When converting BTC to anything, the common denominator it will be compared to for purposes of trade is another equivalent everyone intuitively knows the value for such as the US dollar.
You have no idea why Id think the average person living in the west right now is dealing with significantly less problems than people living in a country that is experiencing full scale economic collapse?
Really? I think it is pretty self evident that most people living in the west are dealing with much smaller problems than people living in places like Lebanon right now.
If someone is unable to see this pretty basic fact, that their lives are likely much better than the people experiencing full scale economic collapse, then I guess that privilege is stronger than I expected.
I have replied to your original comment, as it was written then.
You have now edited it, which fair enough, but therefore I think your "really? You can't imagine why I'd say this [...]" Is unwarranted and I cannot meaningfully address it anymore.
Great, so then you agree with me completely that people living in the west are dealing with significantly less problems than people who are living in an collapsing economy, which is my point.
If it were true that somehow a crypto currency could hold its own in a collapsing economy surely it would just lead to massive queues/shortages? If the economy isn't producing enough it really doesn't matter what sort of currency you use, it's gonna be bad for almost everyone. It may make some difference in terms of foreign debt.
> If it were true that somehow a crypto currency could hold its own in a collapsing economy
I am not sure why you are speaking in hypotheticals. The economy of lebanon did collapse. And if you were holding bitcoin, you'd be much better off than holding that local currency.
Economies collapse all the time, around the world. And because the coin is a global market, it is insolated from local collapse.
> it really doesn't matter what sort of currency you use
But it did matter! Just look at the current situation, in Lebanon right now. If you were holding the local currency, you'd be screwed. If you were holding a global currency, you'd be much better off.
Actually, you’d be way better off with a stack of crisp $100 US bills or silver coinage.
Good luck finding a way to convert your bitcoin into some sort of locally fungible currency while that economy is in a state of collapse and the crypto brokers are on a similar path.
Would you be? If the economy doesn't produce enough food, what food there is just goes up in price. You can say "buy from the global market" but that requires having money, a tall order for a country with a weak economy.
Only if there's actually a mechanism in place to get such things to your door. Various regulations and logistical impediments are likely to mean many basics simply cannot be shipped from overseas and delivered to you just because you were holding currency to buy it with. But I suppose at least you can keep your Netflix subscription (assuming the infrastructure to keep high speed internet connectivity is still being maintained adequately and you can afford to pay for that).
I always wonder if these collapses happen all around the world, why does nobody have the decency to simply accept Bitcoin in their local farm as payment?
Of course there are many reasons, probably the most prominent being that you need to download a 400GB blockchain on your device to actually be secure. No wonder all these Bitcoin people want their technology to have as few transactions as possible, because popularity will ruin it's decentralized nature.
This means you will need a custodial solution like lightning which merely uses game theory to create rewards and incentives for following the rules in a decentralized way but ultimately it is still custodial and knowing and trusting the counterparty is still superior.
This gets to the crux of the problem. Due to the custodial nature of scaling Bitcoin transactions, you will have a centralised organization that can be shut down by the government. The local Bitcoin bank or PayPal equivalent will have the exact same problem as any other bank.
If you argue that this entity can exist outside of the borders of the collapsing country, so do USD banks. Despite its flaws even the USD is a better medium of exchange than Bitcoin.
> why does nobody have the decency to simply accept Bitcoin in their local farm as payment
Farmers do not accept payment in any currency on their farm. They sell futures on the commodity market before the growing season begins to lock in a price and hedge against volatility.
> you need to download a 400GB blockchain on your device
You can use light wallets such as Electrum without trusting a third party, and with no loss of security (though it potentially sacrifices privacy).
Even if that weren't true, a 512GB drive costs $10 these days. That shouldn't be a barrier for anyone.
> This means you will need a custodial solution like lightning
Lightning is not custodial. You do not need to trust any counterparty.
Situation 1: Person has no money, or worthless money.
Situation 2: Person has 50k USD worth of global currency.
Situation 2 is obviously better. Massively. It is absurd to pretend like situation 2 isn't clearly, obviously, and massively better.
Yes there are some issue with global trade, or whatever. But it is clearly, and obviously better, to have 50k USD in an offshore account, or 50k worth of currency somewhere else.
Think about this situation, specifically. No, it is not just "you can keep your Netflix subscription".
That is a bad argument. It is worth more than that.
> Various regulations and logistical impediments
No. You would be wrong to just say "regulations" means that having 50k worth of USD money somewhere is now worthless. I can promise you, that anyone at all, living basically anywhere in the world would be better if if they had 50k USD in an offshore account.
You cannot seriously, with a straight face say "yep! Having 50k in an offshore account is worthless!"
> You cannot seriously, with a straight face say "yep! Having 50k in an offshore account is worthless!"
Good job I didn't say it seriously then, or at all, for that matter.
I was writing in context of a thread about a guy who "robbed" a bank to get back his own money to pay for essentials. I still don't see how owning crypto or any sort of global currency would have helped him (or the millions of other Lebanese currently in the same boat) very much at all.
> Good job I didn't say it seriously then, or at all, for that matter.
Awesome! So then you agree that having 50k$ of equivalent value, outside of the lebanon bank would not be worthless, and would instead be worth a lot! Glad you agree with me.
> I still don't see how owning crypto or any sort of global currency would have helped him
Well, it would be because now they have 50k$ of equivalent value, in a place that is not the Lebanon bank. Therefore the Lebanon bank can't take it from them.
That is how it would have helped. Having that money, outside of a local collapsing banking system, would mean that any of those people would now have 50k$ of value, in a place that the Lebanon bank can't take it.
And you agree with me on this, because you are not saying "yep! Having 50k in an offshore account is worthless!".
You aren't saying that. Which means that you agree with me completely, that it would not be worthless to have that money, or equivalent value of that money, in an offshore account.
Good point - if 12 million people could leave Ukraine in the middle of a war in principle a decent % of Lebanon's population could do the same. You do wonder what effect that might have on the chance of the economy then recovering again within a reasonable timeframe.
> "You do wonder what effect that might have on the chance of the economy then recovering again within a reasonable timeframe."
Yeah - my take on this is if the government has failed the people to this extent then the people have the right to exit and the government should not be able to hold them and their wealth hostage. Naturally if the government can, it probably will, which is why the capability of self custody provided by bitcoin (and other cryptocurrency) is such a powerful thing.
Sure you could get this by hoarding cash or gold in theory, but in practice that's way harder and it's way harder to safely move it, especially across a border.
With BTC you memorize 12 seed words and you're good, can go anywhere and recreate access to your wealth on the other side safely.
I guess I’m protesting that while B is better for an individual, it doesn’t work for the whole country. It’s the equivalent of having a well-connected relative abroad to get you out. It’s a godsend, but it doesn’t scale.
Assuming you could buy basics from an international market and somehow get them delivered to you at a reasonable price using said global currency, true. But how realistic is that?
Unless your crypto is with one of the many exchanges currently in the process of collapsing and blocking withdrawals... While the rich guys running the show walk away with mass profits. Yeah, definitely better.
You're basically making the same argument as 'just swap all your money for a different currency.'
It's interesting, I seem to always see these comments on behalf of people who might find crypto useful to avoid local currency issues, not people actually doing it.
> Unless your crypto is with one of the many exchanges
Bitcoin believers always say - "not your keys, not your coins". I am sure you have heard it a million times by now since you also seem to be keeping tabs on which crypto exchanges are collapsing.
Unless your crypto is with one of the many exchanges currently in the process of collapsing and blocking withdrawals... While the rich guys running the show walk away with mass profits. Yeah, definitely better.
You're basically making the same argument as 'just swap all your money for a different currency.'
> If I understand the core underlying issue (as opposed to downstream result) is
> a currency that lost majority of its value through volatility
No, that is incorrect, the Lebanese pound did not lose it’s value through volatility. It lost it’s value through debasement, a fractional reserve and outright theft by the central bank of Lebanon.
Here is an article that explains the process [1].
Successive governments used bank savings as a piggy bank beginning after the 1975-1990 civil war. Things accelerated in 2016 when the banks started paying unsustainable interest rates on savings to entice savers in a grand government-sponsored Ponzi scheme that ended in 2019 when banks could no longer pay back savers and froze accounts.
Had the savings been held in Bitcoin, on-chain, no government or central bank could have stolen the savings. 1 BTC=1 BTC on-chain and there can be no debasement, no freezing of funds, and no ponzinomics. Despite Bitcoin’s short-term volatility, as a self-custody asset, it would have been the ideal store of value for Lebanese savers. Remember, the Lebanese pound has been debased by 10x, even if you can access those funds. Bitcoin truly does fix this.
Bitcoin can't fix this because it would promote even more corruption, imagine if politicians sole goal in their political career was to get Bitcoin as soon as possible to live off their constantly growing savings? How do you get Bitcoin as fast as possible? Corruption is quick and dirty.
It's because of fractional reserve and banks and governments colluding to print money out of thin air or just spend most of it.
Volatility is a different problem: I agree btc is not the solution, we need a political solution for that.
And maybe a currency backed by real things (not necessarily precious metals, common goods would represent the economy better). Either the bank has it and I can get it anytime or it's fraud.
>It's because of fractional reserve and banks and governments colluding to print money out of thin air or just spend most of it.
Have you ever considered that the way money is currently structured requires ever more creative solutions that sound pointless and counterproductive yet are entirely necessary to keep it alive?
I think it’s people who, in good faith, still deeply believe in the theory behind Bitcoin but ignore or dismiss the decade of experiments showing it just isn’t working.
The fact that you could hold some % of your wealth in BTC (in self custody) and have insulated yourself from the failure of the Lebanese currency is evidence that it is working.
How would self-custody of BTC allowed this man to pay for his father's medical bills? As far as I'm aware the hospital did not accept bitcoin payments.
There have also been several instances in time where BTC has lost 80% of its value (and many more instances of 50%+), so it doesn't protect against the downside risk of needing money in an emergency.
> How would self-custody of BTC allowed this man to pay for his father's medical bills? As far as I'm aware the hospital did not accept bitcoin payments.
Sell your BTC for cash, in person.
> There have also been several instances in time where BTC has lost 80% of its value (and many more instances of 50%+)
Better than the 90% inflation (or withdrawal "correction") in Lebanon.
There are P2P non custodial exchanges where you can sell your BTC in person (e.g. LocalCryptos), in case you need to stop hodling for some sudden expense, like the medical bills for your dad.
Did you try to search Lebanon on localcryptos or localbitcoins? The former has no listings which transact in LBP, only one which requires Western Union (USD).
I’m not advocating for putting 100% of your money into BTC, but a chunk would help (especially in countries with less stable currencies).
The hospital might not take it directly, but he’d still retain control of it and be able to find a way to exchange it for something the hospital does take.
It might help in this situation, but it's not the best possible solution. Storing it in USD or gold is more stable. You could keep those in a vault or in a foreign bank account. Bitcoin is very volatile and, as you said, still requires exchange, which might also be very tricky in a situation like this.
I do think allocating some percentage into BTC makes sense depending on an individual's risk tolerance. But only as a speculative investment and absolutely not for emergency funds, due to the volatility.
> But only as a speculative investment and absolutely not for emergency funds, due to the volatility.
In a country with a sound financial system, 6 months of expenses in a savings account might suffice. However in a country without a sound financial system you'd want 6 months of expenses in a savings account to protect against your own job loss, and maybe 6 months of expenses in bitcoin/offshore account to protect against a local financial system collapse.
>can be useful in an emergency situation as shown here.
Clearly holding Lebanese currency in a bank may not be useful for holding emergency funds. But I do not believe that it's been shown that at point in time an asset which can drop 50% in value over two months, which is the type of acute timeline in which an emergency can occur, and requires transacting into LBP anyways in this scenario, is useful for holding emergency funds either.
A: his money would be on the blockchain where it's unable to be seized by the bank.
B: as Bitcoin is a world currency it's unlikely would face inflation to the level that the local currency has
C: if he was unable to change Bitcoin into the local currency to pay for the medical procedures, he could transact with someone like a money changer instead
This scenario is kind of the whole reason the Bitcoin exists
Once he finds a local Lebanese money changer willing to exchange LBP for bitcoin (for how large of a fee?) and sends the BTC, he now finds himself in the exact same situation as the bank - having to trust a centralized entity.
And inflation is also not so much a concern if the value of the asset itself drops 50% in two months.
Trusting a 'centralized' entity of your own choosing, rather than a limited choice of broken banks, for a short period of time for a single transaction is a big step up to having to trust a centralized bank of little of your own choosing in the midst of a banking crisis _for the entire duration of ownership of the money_.
This is Lebanon, not someplace like France. This could be a money changer with an AK at his side, a buyer with AK at his side, money and BTC changes hands and after the confirmations finish out on the BTC side they're on their way, simple as.
Well even if you had BTC and can convert it to cash somehow, where do you put that cash? How does this guy pay the hospital? Turn up with $30k in a duffle bag?
Somewhere your money has to go into the countries financial systems. Which makes sense. Money isn’t just for trade. It’s to exert soft power.
I'm just curious how many people here have been to a money changer in the middle east. I've interacted with them in Iraq and Syria. A dude will stand there with gigantic bricks of currency in a clear box on a cart, including stacks of hundreds. He could easily have 50k+ there.
It's all very safe though. There is some guy standing around the corner with an ak behind a counter, and you can be sure 7.62mm size holes end up in the head of anyone who would try to rob the people doing the exchange. On one occasion the money trader made a very obvious calculation heavily in my favor, that he likely did not intend to make. I tried to walk away quickly with the money, and 3 men chased me down. I'm quite sure if I had stolen the money instead of merely gotten "lucky" they would have chopped an arm off instead of nicely asking to reverse the transaction (which I found wise to do).
The whole thing could be extended to BTC quite easily, and it's been awhile since I've been to the ME but it wouldn't surprise me if they've already added BTC to the mixup. From a western perspective it sounds insane to hear large sums of cash could potentially be traded easily and readily in a relatively "impoverished" nation on the street but for these people it's just regular business in the cash-economy world they live in.
Fair enough. My point is that the local power can enforce how transactions work and Bitcoin is still at their mercy. Most governments will want to retain control and crypto isn’t going to change that.
Whether you're talking USD or Lebanese Pounds, you could fit this into something much smaller (eg. an envelope, with reasonably large denominated bills).
Soft power? Henry George argues owning land is "hard power" but ground rent is a residue, money can absorb ground rent through interest payments, making money also "hard power".
No, I mean the local centralized entity that would need to have sufficient LBP available for exchange for BTC to solve this man's problem. He needs to pay a hospital, not trade crypto with an anonymous counterparty.
That's still just a counterparty. It would be centralized if there were a third actor that mediated all transactions between two parties, e.g. a FOREX exchange or bank that processed the transaction.
That's like saying TOR is centralized because you interact with a "centralized" peer.
>It would be centralized if there were a third actor that mediated all transactions between two parties, e.g. a FOREX exchange or bank that processed the transaction
the comment I responded to specified a "money changer". I don't know if you've used one before, but they quite literally are forex broker/dealers.
Even if we move the goalposts from the "money changer" which was specified, TOR is not really comparable to in-person exchange (not to mention an individual can certainly be considered a centralized entity). Anyways, sure, let's call it a counterparty if you wish, the semantics debate isn't really relevant to the point.
Another interesting potential alternative is the systems that arose as a response to the Irish banking strikes in the 1960's and 70's.
> Though the money supply did contract sharply, neither trade, commerce, nor industry came to a grinding halt.
> How? People created their own currencies, to substitute for the collapsing money supply. They kept using checks to pay one another, but then, people’s checks began trading within communities. Here’s how Antoin Murphy, one of the few scholars to have studied these strikes, which took place in the 1970s, describes it: “a highly personalized credit system without any definite time horizon for the eventual clearance of debits and credits substituted for the existing institutionalized banking system.”[0]
There is also a great chapter in Money, The Unauthorized Biography that covers it.
Maybe my experience with money changers colors my view.
The only time I've used one and not a bank is when making land crossings between countries in Central America. The money changers are just a random assortment of dudes walking around the bus depot ready to swap between 2-4 different currencies. And I've only done it for a small amount of cash to have on hand in case of immediate need.
I imagine a cottage industry would pop up as a result of situations like Lebanon given the government enforced cash shortage. I remember reading an article a while back, which I'm failed to dig up, which described a similar system appearing in Venezuela as inflation was getting out of control. Money changers would come to you to swap bitcoin for other currencies.
But I understand your point and this would be a sketchy alternative for the amount of money discussed.
> as Bitcoin is a world currency it's unlikely would face inflation to the level that the local currency has
If Bitcoin drops in value substantially, that has the same effect to retail shoppers as inflation.
And with all of the bonkers things to happen in the last decade, seeing Bitcoin drop to a small fraction (like 1/10th) of its current value in the next 2-3 years seems unlikely but not entirely out of the question. And that's a pretty big downside when talking about ones' life savings or even ones' emergency fund.
But if you’re in a place where this sort of thing is necessary (keeping your money out of government or bank hands), you might be willing to take that risk. Because being able to get some money out of the country, is still far better than having no money. Imagine for a second you had to flee and claim asylum. I think it’s fair to say that this use case for crypto is undisputed.
The major problem with this is that these people have to use systems that’s full of scams and the value of their money is controlled by people in the first world with tons of cash to burn.
Probably some combination
of Bitcoin, commodities you could carry on a person (gold? jewelry?), and real-estate (relatively less likely to be taken than cash) is a good plan. But I'm not an expert.
It solves the initial problem of "how do I get my money out of the bank" because you ARE the bank (sort of). BTC doesn't directly solve the problem of liquidity, exchange to other currencies, etc. however.
> It solves the initial problem of "how do I get my money out of the bank" because you ARE the bank (sort of).
Unless you use an exchange, which a lot of people do. You don't have to, of course, but you could also keep your savings in cash - which would not only avoid the above problem, but also rid you of the need to exchange it.
Lebanon is not a country lacking people who keep savings in cash, and some of those people likely need to send it out of the country without suffering their broken banking system. Honestly I'd be surprised if it _was_ hard to trade crypto for cash in Lebanon.
Yes, Lebanese people with foreign bank accounts were probably better off. But not all USD-denominated accounts are necessarily safe (it depends on the country), and sometimes it might be hard to open an account.
Fiat already has self custody, it's called storing banknotes under your mattress (this is sometimes done in countries with poor bank records btw). The trouble is that you need to cover yourself any risks, like losing the money to robbery or fires
Which incidentally is the same problem of cryptocurrencies: you need to have good security practices to not lose money to malware or simply forgetting the password
When you choose a bank you also have risks, but a different set of risks. It's more like systemic risks, that everyone else would also be affected
I recommend Saifedean Ammous' interview with Lex Fridman.
He's got strong opinions and a somewhat dour persona, but as Lebanese-Palestinese he's lived in a very different environment than what we're used to here in the West.
If you keep an open mind and understand where he's coming from, I think he's good some insightful ideas on Bitcoin and its role in economic upheaval.
FWIW this episode turned me from a "fuck any form of crypto" stance to an appreciation of BTC the technology. All the other scam coins and Ponzi schemes can't collapse to zero soon enough.
BTC has the same problem with exchanges gambling with their customers' currencies, setting up prices that work for them, running out of Bitcoin to trade and collapse when people want to take their money out.
The Lebanese lira might as well have been a cryptocoin and the Lebanese banks might as well have been exchanges. Anyone keeping their savings in their own home wouldn't need to rob banks to get their deposit out, just like anyone who keeps their Bitcoin in their own wallet doesn't run the risk of exchanges collapsing around them.
In this specific case, perhaps yes, but in most cases where your country is collapsing you will also want to cross borders. Your cash is likely to be confiscated.
I like how people often suggest to “just” open an account in a foreign bank.
Even assuming the foreign bank would not “just” refuse you for not being a resident, or being a significant risk, or not accepting your identification, or whatever. Then your Lebanese bank would surely wire the money there without any issues, and your Lebanese employer would be happy to do so as well, and of course there are no laws stating that only liras are legal payment currency for services rendered in Lebanon.
I have a few friends who worked in China and the default is you immediately move any money out of the country as soon as you can. It's simple to bring it in, but getting it out can range from "here are 5 forms to fill out" to "sorry, we aren't processing transfers at this time".
Or you can memorize 12 words. Not saying this should be the common practice or that everyone should do it, but having the ability to store your wealth in your mind is useful.
This feels like a parody, you don't store wealth in your mind otherwise you could create it out of thin air you merely keep track of your personal share of the world's wealth.
Great doco. TFS. Core point @ 26:51, alleges $100B stolen by politicians and bankers from the general public's USD-denominated bank accounts. Head of central bank has USD$300M unexplained wealth in Switzerland. 90% of majority shareholders in Lebanese banks are relatives of politicians.
I saw that one too, just a few days before the event. Really eye opening. DW Documentary may be the best Youtube channel, bar none. Another on Chinese zero Covid was equally eye opening.
>> No, people can't make wire transfers anymore. All bank accounts are frozen
This is only true for old funds (precrisis). However, you can wire any "fresh money", AKA funds put in a lebanese bank from a foreign bank
>>The local currency collapsed, lost more than 90% of its value.... they play money conversion tricks
'Lost value' as measured in the black market float. The peg has been fixed for decades and its never floated freely. In fact, banks are giving you the official central bank conversion rate, which is awful and benefits banks (which is why it was never changed)
>> because his father (and some people said his child as well) were in the hospital
This is not true.
>> Why is this all happening? Bad economic and financial policies for 40 years, rampant corruption
No. This is happening because the federal govt issued sovereign debt that was primarily purchased by local lebanese banks, using depositors money. The government budget was chronically in deficit, with exoenses exceeding taxes for decades, so the govt resorted to pay its debt with more debt. Finally they run out of other people's money to keep buying debt, the govt couldnt raise taxes to pay (remember the laughable WhatsApp msg tax??), so govt could not pay banks, thus banks couldn't pay people, so people's cash was turned out to be fake numbers stuck in a bank screen. Banks have since refused to lose money (insolvency really) on their govt debt purchases, so the bank holiday ensued.
Its important that we spell this out because to put a face to Lebanons predicament. There was no 'corruption' vodoo. Its just debt.
The only differences between USA and Lebanon are Lebanon's gdp/debt ratio is higher , and USA quick ratio (interest expense/tax collection) is better vs Lebanon.
It was bad financial policy to peg the Lira to the Dollar. It should have been free so that the exchange rate reflect its true value. The lifestyle with all the things you could buy in the country since the 90s at the official 1,500 LBP rate was a big lie; things should have been more expensive.
It was bad economic policy to ignore agriculture and industry, and make everything about tourism and services. So many imports could have been produced locally but weren't. E.g. as it became evidently clear when people couldn't find things like cheese and milk to buy anymore.
> There was no 'corruption' vodoo. Its just debt.
Debt that was spent to do nothing, to build nothing, but to fill the pockets of politicians and their cronies. Through 10 levels of contractors who fix nothing, to 100K new government jobs given in one year to people who don't even know where their offices are...
There was about 80B dollars lost only in the Ministry of Energy, presumably spent to get electricity to people, all now unaccounted for and still no electricity.... Politicians are billionaires, and only their cronies can get the important jobs and the big projects. And on and on...
Yes, there was rampant corruption. Still is. And it had a lot to do with the crisis.
Having the global reserve currency is a pretty big difference too. The base economy of the Lebanese government is Lebanon, the base economy of the US government is the world.
How easy is it for the common citizen to acquire a firearm in Lebanon? I believe that this man came back with a pistol, which ostensibly would be harder to come across than e.g. a hunting rifle, no?
Nowadays to buy one would be expensive, a black market.
But there is a defensive gun in every house in Lebanon. Some regions more than others. It's part of the history and, in a way, the culture.
There is no "random mass shootings" problem though. Innocent gun victims die in other ways, like stray bullets from celebrations in weddings and in speeches of political leaders, or the casual skirmish between the followers of two opposing political factions!
The run on the banks was an effect, not the cause.
So in the 1990s, after the country came out of a 2-decade civil war, the government adopted a policy of fixing the currency against the U.S. dollar. So regardless of the economic happenings, the conversion rate from LBP to USD was fixed.
But the economy was not really producing enough. It was mainly focused on tourism, which kept taking hits due to political instability. Too much imports, very little exports, but the currency was kept fixed.
This imbalance was sustained by the government borrowing from the central bank and the banks. They kept lending the government, even though it was clear that the money wasn't coming back.
Some of the money was being spent to support imports and big projects. But most of it was being siphoned away by corrupt politicians; which was pretty much all politicians.
After about 25 years, most of the money ran out. The depositors' money.
So what did the banks do? They started offering higher interest rates to attract foreign deposits. We're talking 10% or 15% interest rates. And they used those new deposits to support the continuing needs to lend the government. Incurring more debt to pay the previous debt.
That was essentially a Ponzi scheme, and the final tailspin began. Crash.
This is a classic tale of imbalanced trade resulting in a debt trap, the moment debts become unpayable, the government has no choice but to borrow money for interest payment, which mean interest starts fueling inflation and since more inflation means higher interest rates, the government will have to borrow more and more, leading to hyperinflation. If the government cut interest payments to zero, it would actually stop the hyper inflation assuming that the government pursues austerity and tight monetary policy afterwards. Any negative effects of austerity can then be countered by lowering the interest rate below zero.
What people don't seem to understand though is that it is easy for a developed country to refuse to import products from a developing country, which in turn makes this a structural problem in the global economy rather than a failing of any particular politician.
If I may ask, did the tragic explosion in Beirut back in 2020 have a significant long lasting impact that contributed to the collapse or what it about this bad prior to that as well?
The explosion came in a really bad time, and made things quite worse. Other than the destruction of half the capital, it also closed the main port for trade. And the tragedy pushed more people to lose hope and leave.
So did the pandemic. Salt to the wound, as people were unable to travel anymore (to get to their jobs, as most of the jobs are abroad).
So did the Syrian refugee crisis due to Syria's war (right next to the border). Lebanon has about 30% of its current population made of Syrian refugees, so there is less resources to go around for everyone. No country in a perfect economy could support that much influx of refugees at once.
The explosion and COVID acted as a double tap kill shot
One cannot imagine the level of misery created by both events. Its a country that went from Greek standards to scrapping by in true Somalia-level collapse
I think the point you’re making is that he used violence to coerce the bank.
To OP’s point, he was only asking for his own money back, whereas a robbery is trying to take someone else’s money. I guess it all depends on the bank agreement and procedures during a bank run or a default. Sure, you get a statement that says you’re credited with $210k, but you don’t actually own that much money anymore if the bank lost some of it and can’t pay everyone their full balance.
It doesn't Have to include threats of violence or acts of violence: It simply usually does.
It does Always include theft of goods, though. This man wasn't stealing things, but rather trying to get his own cash. Despite the violence, this wasn't robbery.
> Why is this all happening? Bad economic and financial policies for 40 years, rampant corruption. The economy was unproductive, but they kept the local currency subsidized, as it turns out by just spending the money that people deposited in the banks. And it's all gone now.
I can see the future of Turkey right in this paragraph.
> There are many people who are convinced that it was all "money printing". … there was indeed some money printing going on - but it accounted for less than 10% of the new money creation during the crisis.
> The facts are that the overwhelming majority of the new money - came right out of our bank accounts. Using the Federal Reserve as its intermediary, the U.S. government reached into the bank accounts of the nation, took out trillions of dollars, and then sent those dollars back out to the nation in redistributed form.
That is the whole point of “printing money”. It takes value away from the money in bank accounts. It is used to forcibly redistribute money into the economy during a down turn when people would rather not spend it. If you have 100 “pie tokens” and then create an extra 900, there’s still only a single pie to go around.
Of course this targets middle class and poor people because the rich don’t keep money in a bank, they keep it in assets. At least, not enough to materially affect them.
>Of course this targets middle class and poor people because the rich don’t keep money in a bank, they keep it in assets.
This is a classic internet myth. The rich have more of everything. They have more houses, more cars, more yachts, more stocks, more bonds and obviously more money.
The idea that the wealthy exclusively hold assets is such an obvious lie, first of all, the rich keep 10% of their wealth in liquid assets that means money as a general rule of thumb for the sake of speculation. Second, as interest rates go below liquidity preference but at least zero, people start holding a bigger and bigger portion of their wealth in liquid assets. During the pandemic 40% or more of the money held at banks was in demand deposits, aka checking accounts, hundreds of billions of liquidity, enough to basically make any bank insolvent with the snap of a finger, hence the need for excessive amounts of QE even though banks don't want to lend out any more money.
For some strange reason people parrot this and then think that the poor have all the money despite the fact that most of them are in debt and most rich people have millions or hundreds of millions in their bank accounts and even more in assets. When you argue for a negative interest rate, people are going to shout how this ruins poor people because they don't have any stocks and most of their savings are held liquid when that is completely wrong, most poor people's wealth is their own body and the income it lets them derive from work, which is almost entirely illiquid. What poor people actually need is an opportunity to use their most prized asset and a negative interest rate doesn't harm them in any shape or form. It is only the rich that keep millions in checking accounts that really feel the pain.
> of course they need to make an example out of him.
The precedence was set, people who are on the edge and have nothing to lose now know, they themselves may land in jail but at least they can help their loved ones..
What's keeping the economic situation from freefalling even deeper into the abyss, is the money of the diaspora. Expats send back money to support their families. That's the lifeline, without which there would be famine.
What's keeping the economic situation from coming back up, is exactly what brought it down in the first place:
It's the complete failure of the state, with a political system that is rotten with power-hungry warlords, old and new, who won't let go. A people who remains divided because every few decades a faction decides it's so powerful now that it's its prerogative to hijack the country's destiny by use of force... And some big countries with huge influences (follower factions), using Lebanon as a card on their negotiating tables - some even see the situation as "chemothraphy to remove a cancer", and don't mind it staying. (Pardon the vagueness; the politics is quite complicated and not possible to give a clearer picture than this in a brief comment).
If with a magic wand all of those problems disappeared, and a new government materializes with full support from everyone to start fixes and reforms, it is estimated that it would take at least 10 years to bring the economy back to a healthy state.
But 3 years into the crisis and the governments since then still have not provided a single plan to come out of it. Just grandstanding, mutual accusations, deadlocks, hindering investigations, etc.
They always hope that some rich country would want to help and make big investments. But those countries, and world organizations, rightfully, do not trust the country's consecutive governments anymore because no reforms have been made and it's still the wild west of corruption.
The biggest problem is that those 3 years have witnessed the largest brain drain in the history of the country. Most doctors and nurses left; engineers, technicians, scientists, students, you name it. Resilient people who had seen everything and stayed, but there's always an edge too far.
He was asking for 15% of his own money, and not for a donation. To save a sick family member in an emergency.
If you come to me asking for your own money in such a situation, and I say - hard luck, I can't give them to you because I only have 5 ferraris now instead of 100 ferraris, and I kick you out humiliated... yeah I'd expect you to, at some point, snap!
It's easy to argue from an ivory tower, in a just society. But harder to imagine what it would be like when there's no justice anymore and there is no rule of law protecting your rights.
I think it's a moral question, and everyone will see this question from their viewpoint. Which is fair.
If I was holding on to your property which belongs to you and refusing to give it to you, then I think you'd be entirely within your rights to use an AK-47 for persuasion.
If someone is keeping me hostage so that a third party does something (say, releasing others from jail) - I might be a hostage, but the incident still isn't robbery.
You have to steal stuff for it to be robbery.
So yes, I'll make the same claim. There is no point in saying that I was a hostage in a robbery if I was in a hostage situation for different reasons.
It used to be a big thing; a major attraction for international depositors.
But it's beginning to be removed under the current situation, because they want to disallow (criminalize) people from transferring their money out of the country (to protect it)
It's happening because people use banks to store their wealth instead of doing self-custody.
Cyprus, Argentina, various east block countries in the 80's, etc... How much more proof do you need?
Storing your wealth in a Bank is a bad move, independently of the country you live in, and especially in 2022 where you earn exactly zero on interests in most places.
Lebanon is just an extreme example of why it's a bad move.
Self Custody of digital currencies is tricky in different ways. What if you forget your 12 words seed phrase? Then your life savings are gone as well..
This is not appropriate due to the tough situation Lebanese people are currently living, but your quote was in a very funny chinese bank robbery story :
There was this robbery in Guangzhou, the robber shouted to everyone: "All don't move, money belongs to the state, life belongs to you."
Everyone in the bank laid down quietly.
This is called "Mind Changing Concept --> Changing the conventional "way of thinking".
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One lady lay on the table provocatively, the robber shouted at her "Please be civilized! This is a robbery and not a rape!"
This is called "Being Professional --> Focus only on what you are trained to do!"
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When the robbers got back, the younger robber (MBA trained) told the older robber (who is only primary school educated), "Big bro, let's count how much we got", the older robber rebutted and said, "You very stupid, so much money, how to count, tonight TV will tell us how much we robbed from the bank!"
This is called "Experience --> nowadays experience is more important than paper qualifications!"
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After the robbers left, the bank manager told the bank supervisor to call the police quickly. The supervisor says "Wait, wait wait, let's put the 5 million RMB we embezzled into the amount the robbers robbed".
This is called "Swim with the tide --> converting an unfavorable situation to your advantage!"
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The supervisor says "It will be good if there is a robbery every month".
This is called "Killing Boredom --> Happiness is most important."
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The next day, TV news reported that 100 million RMB was taken from the bank. The robbers counted and counted and counted, but they could only count 20 million RMB. The robbers were very angry and complained "We risked our lives and only took 20 million RMB, the bank manager took 80 million RMB with a snap of his fingers. It looks like it is better to be educated to be a thief!"
This is called "Knowledge is worth as much as gold !"
-------------------------------------------------
The bank manager was smiling and happy because his loss in the CINOPEC shares are now covered by this robbery.
This is called "Seizing the opportunity --> daring to take risks!"
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Give a man a gun and he can rob a bank.
Give a man a bank and he can rob the world
It is absolutely right, but just as absolutely not how most people think, nor how bank accounts are presented to people. In fact, it's considered "foolish" not to store money in a bank account (and, in many cases, it is), but there's also this small chance this kind of thing can happen, but it's never talked about normally – therefore, out of sight, out of mind.
It's unfair to blame people for blaming the banks on this, because the banks get a disproportionate benefit from this kind of system, and most people in modern society have no choice but to rely on banking systems. Again, a person avoiding banking systems is scrutinized as backwards and ignorant, but then folks turn around and shame people for not being aware of how the banks truly work. It may not be a secret, but it's far from common knowledge.
It should be common knowledge that this is an intended outcome of a permanent money system, it is going to collapse one day and all you can do is delay it.
This is mostly wrong in modern economies. In Denmark you are not able to to buy a car with cash (Yor are legally required to use banks when transacting more than DKK 20.000, ~USD 2.700).
This has promoted the banking system to nation critical infrastructure, and the money in the bank is not a representation of "paper money". It is the money.
I am arguing that it is futile to see it as a loan to the bank.
* There is no "lending" risk by depositing your money, only the currency risk (government insured deposits)
* Banks provide critical infrastructure to transfer funds mandated to be used by the government.
* It is even called deposits when you add money to you account, not a loan.
* In Denmark we, still, have negative interests on deposits (at -0.6%, also for consumers) -- lending out is mandated to cost interests as in the tax authorities will force me to add interests at ~2.5% when I give a loan to somebody.
All in all, depositing money in a modern bank should not be seen as providing a loan.
It looks like a movie from here La Odisea de los Giles (Heroic Losers [1]) about normal people that was robbed by a bank (in 2001 all banks were not giving back the money to people) and plan to recover the money.
It's plenty plausible. Every civilization collapses eventually, sometimes totally and sometimes partially. The western Great Depression wasn't all that long ago, historically speaking. The USSR wasn't that long ago, at all. Etc., etc.
Given enough time you’d expect it to happen, but the chances of it happening now are very slim.
Let’s say the Roman Empire lasted ~1,000 years.
If there’s a once in a ~1,000 year event and you warned every day of it, you’d be wrong 99.9998% of the time and right 0.0002% of the time. I’m not sure how useful a warning like that is.
How does that work? For tail risk, you buy what you need. That’s why it’s tail risk.
Like, if I’m buying flood insurance, I don’t buy less insurance because I don’t think floods are likely in my area. I buy floor insurance to cover my house.
Does insurance exist for when a country's banking system collapses? (This is different from a bank collapse, where in the US, FDIC deposit insurance should do the job, if you're within its limits.)
It is called a negative interest rate and it is the most despised kind of insurance because everyone thinks they are the grifter that will get ahead this time and a negative interest makes grifters pay for the damages they cause to society which means they stop grifting. By grifting I mean delaying the usage of the medium of exchange until the breaking point of the economic system to get concessions from it which is effectively a bribe by society to cease this collapse seeking behaviour.
This is actually supposed to happen. Our system looks nothing like the system of ancient Egypt which lasted thousands of years. Our system has always collapsed within a modern human livespan. There are always exceptions but ancient Egypt was no fluke
So I take it Lebanon doesnt operate on the strict islamic system of banking, that I thought was designed to prevent financial collapses like these? Or am I just wrong in assuming that said system is meant to be more robust?
I think Lebanon and especially Beirut are pretty liberal. There hasn’t been an “Islamic rule” in Lebanon. I could be wrong on this but even the Hezbollah doesn’t have much of a social agenda - probably not yet.
Western media likes to classify along a bell curve (radical Islamic, moderate, liberal, etc). That classification is mostly wrong though. As an example Iran is more liberal than Saudi Arabia in its treatment of women. It’s not the west, but women have been in government, can hold jobs, drive etc. However, Iran is generally radical but the Saudis are moderates. So go figure
Only about 60% of Lebanon is Muslim. Roughly, it's like 30% Shia, 30% Sunni, 30% Christian, and 10% Druze. Their laws are made such that they can accommodate all the different religions and lifestyles.
Their banking system is similar to Switzerland's, at least that's what it used to be. Now it's just a fully burnt down dumpster.
We're talking about modern Lebanon. No matter how foolproof you make a system on paper - if most of the actors involved are corrupt and passably clever, it can only appear to function correctly for a while. Until they've stolen so much of the assets that the facade collapses.
No, you are basically wrong to assume that Lebanon crisis has anything to do with islamic banking. Lebanon is not even a Muslim majority country. The problems arises from just how bad their reliant on financial sector for decades and how much unsustainable debt they acquired.
You don't have to go to them. they know that if you include Lebanons who mainly live outside Lebanon they will be majority Christians. The CIA 2020 estimation that Wikipedia and state website report doesn't include them.
Yes, you should. Then you wouldn't be propagating such nonsense.
Not only are Muslims officially (by gov stats) in the majority, it is also widely known and commonly accepted that if a modern, true census was to be done today, it would show that the Shia's at least were hugely undercounted.
Because of the schizophrenic nature of Lebanon's power structure, the other factions have refused to allow such a counting to take place.
No-one who has spent more than 5 minutes in Lebanon, and how has some basic affinity for the truth, would deny that.
But you carry on googling stuff and quoting CIA reports.
Why would you count Christian emigrants as part of Lebanon’s population? They lose their citizenship and their descendants are not entitled to it either.
No they do not losw their citizenship and it transferred if the father of a new born carries it out. [1]
And I include that because in this context they are counted and allowed right to vote ( many do). They are even the biggest source od foreign currency for Lebanon. The system in Lebanon is unique (you vote according to your religion and the power is splitted according to that) but also it is not considered Muslim majority country because of this numerical fact.
Lebanon never had any islamic financial system and their system gives the power of the Lebanon central bank to Christians as part of the split [2]. Lebanon usually follow france and their elite class is very attached to foreign power. sunni supported and attached to the golf, Christians to France and shia mostly to iran influence.
Thank you for the follow up, looks I had outdated (pre-2015) info. Given the voting and financial support I'd agree it's questionable whether it should be considered Muslim majority. It certainly has a fascinating history.
Outside of disaster porn enthusiasts, glorious for who? If EU, USA, or China falter the whole world will suffer. With the worst of it falling, as always, on the poorest. The wealthiest (countries and people) tend to gain ground in a global crisis.
I think it is majority muslim, but since there are many secular muslims and muslims who consume alcohol etc, then I guess practically speaking you could consider it that way.
This article is a perfect response to anyone asking 'why do you need blockchain?'.
Maybe you live in a stable and developed country. Nice. Those people don't and it's extremely hard for them to open a banking account elsewhere. What they can do is save in usdt or usdc on ethereum. It's empirically much, much safer than holding dollars in a Lebanese bank.
Yea, then you lose all your money to cryptobros instead of traditional finance bros. Voyager & Celsius halted all withdrawals within the last month. You can claim "no true Scotsman", but the fact is billions of dollars of customer funds are locked up in these platforms.
Not the amount of crypto, the value of crypto is the problem. Assuming you invested in Cardano or Bitcoin, now you lost 70% of your money in 1 year. Value crashes because of unknown background trading and shady chinese whales.
With the "small" marketcap of crypto, any shake in the market will lower the value a lot. Scary is seeing how big the inflation rate has been in USD and EUR.
The value of the Lira dropped by 44% in 2021 alone, and is expected to be as low as 70% by the end of 2022. So the use of fiat currency in Lebanon seems kind of on par with BTC in that respect.
If you buy Celsius, you should already know the added risk of buying a shitcoin and act accordingly. Meanwhile when you use a bank, then you expect to always be able to access your funds. If that social contract is broken, then you can expect real consequences. In this case it was a man making legitimate use of force to get access to his own property.
Many crypto coins attempt to solve the problem of third parties confiscating your property, and first and foremost of them is Bitcoin. That's where the moniker "unconfiscatable" comes from. And let’s face it, if the guy had instead used Bitcoin, he would never have gotten into this problem (tho the value of his holdings would indeed be very volatile).
Sure, you can always act like a criminal and make threats or use torture to get it. But IMHO that's a very quaint and sad example that only serves to prove the point, because those are the lengths you have to go to in order to get it, as it's otherwise impossible to pry out of your brains. That’s why all serious "cryptobros" suggest that your highest allocation should always be Bitcoin, before you even consider any other crypto coin. Because the quainter and more experimental the alt coin is, the higher the risk of frozen accounts or worse, a coin that goes to zero such as Luna.
Neither voyager or celsius are defi. They were exclusively used by people that trusted centralized financial institutions more. They are the equivalent of those Lebanese banks here. The fact all those companies put people's funds into a ponzi scheme was only mildly surprising.
Picture this. You're in Lebanon circa 2020. You face a guaranteed loss of 90%+ if kept in traditionally Lebanese system. Or you can self custody a usd stablecoin. Which do you choose?
> Stablecoins aren’t a zero-trust system. It’s a system where you need to trust both the underlying currency and the developer.
You can minimise and swap these risks for others. It all depends on what the threat model is.
The collateral can be asset backed diversified across multiple countries and not dependent on a single currency. Some of the newer and upcoming stablecoins use asset in crypto to back themselves to reduce any dependency on country backed currency reserves.
Developers can and do burn control of the contracts once its established that they are safe and not exploitable. Of course this is a risk where you cannot make any future change but protect against risk of developers rugging you.
You can't effectively "diversify" by buying other cryptos. To truly diversify, you have to buy completely different assets. Assets that aren't crypto, but in completely different sectors, such as - oh, IDK - the sugar industry, or car manufacturers, government bonds, even gold. Crypto is extremely high risk, especially if you venture outside Bitcoin. But to many it's far more accessible than even the stock market.
>You can't effectively "diversify" by buying other cryptos. To truly diversify, you have to buy completely different assets.
The context was crypto. I was talking about diversifying your crypto, surely the readers here aren't as pedantically naive as to confuse diversifying crypto holdings with a fully diversified basket of different products. And of course owning different coins is diversification: owning multiple assets instead of just one is practically textbook example of increasing diversification.
I'm aware that "the context was crypto." Except when that's the context, non-savvy people need to learn what "diversification" really means, and it's not buying other cryptos, which is just a horrible euphemism for speculation. But if that's what you're really claiming, then—no matter the "context"—you're just scamming them into buying something that is far less "safe" than Bitcoin.
Bitcoin of course being the "safest" crypto, since it's so ubiquitous, and because no one person really controls it. Not so even for Ethereum, even though it's the next best thing to "diversify" into (read: speculate on) in regards to crypto.
I think the casual reader needs to know that distinction, lest they get a nasty surprise such as—oh IDK—Bitcoin dumping 80%. Because if it does, then all the other cryptos will most likely dump 95% or more. Or worse, go to zero like the "safe bet" Luna. And so much for "diversification!"
It's like that due how all crypto coins are high risk assets that are all highly correlated to Bitcoin. And so the correct wording for buying other cryptos should never be "diversification" but speculation.
Use whatever words you like. The entire world except yourself considers splitting assets to multiple (still correlated, but not quite 100% correlated) as increasing diversification. You can speculate with diversification :)
>you're just scamming them into buying something
If you want to consider me a "scammer" for thinking maybe to not put 100% of your crytpo money in UST, or whatever shitcoin was used as an example above, so be it. Y'all are the ones that mentioned specific coins, not me, I don't even understand what you think I'm selling to "scam" people on. I don't even hold any crypto to sell right now, I'm not sure what benefit I could possibly have from advocating that someone consider diversifying their holdings.
Damned if I do, damned if I don't. If I have crypto, I'm a "scammer" trying to fuck people over by encouraging them to diversify. If I don't, it means I don't hold "investments" and am not worthy of recommending that people diversify their holdings. If I lived in Lebanon I would absolutely own some crypto, it's almost as if people adjust their holdings based on the environment in which they live.
If you think holding a single crypto is more diverse than holding multiple, have at it bro.
No, you're only damned if you demonstrate a lack of knowledge while not even having any skin in the game. That's not a good look, man. But sure, you're obviously not a scammer, I'll give you that. I'm sorry if that's what you thought I meant. Though it is misleading to call something that is actually speculation for diversification when it's clearly not. But look, I think I've made my point. Take it as a tradesman's advice. You don't need to follow it, but do it at your own risk. ;)
That would be a witty reply, were it I were guilty of making your hypocritical statement by association. As it stands, you were the one discounting the validity of not having skin-in-the-game, not I. Personally I think having the opinion of both those with and without skin in the game is often useful in forming a more well rounded observation. Of course you already voided your argument by stating your lack of the skin of the game makes your own argument "damned."
Dude, you're making investment advice, which you so obviously don't know jack about. That's the point. You should read a book on investments and try it out for yourself, instead of acting sore for being schooled and trying to pin your own failure on others. Anyway, good luck in life. And I guess especially with your future investments. I'm sure you'll be great some day, but that day ain't today.
I mean it sounds as if you can't trust either one on an individualized basis, but it may be more pragmatic to diversify your hedge with different coins than diversify 20 different bank accounts which all suffer under a broken national framework.
Western banks will likely never fail in the way banks can fail in a place like Lebanon. In a situation where all US banks are falling flat, the fed will just happily print money to fulfill the FDIC insurance and you'll be left with some great toilet paper.
Many people were trusting a stable coin to which they had 0 understanding on how it worked. Was sad to see some people finding out that they actually didn't have any backing at all for the UST value (USDT, USDC are examples of cryptos with actual backing, though some people don't trust USDT)
Apparently some are skeptical that cryptocurrency would solve anything here, but a year ago there was a story, posted on HN, about the Lebanese using it for sending money into the country:
Edit: Not saying it's an ironclad defense of relevance to this use case, but your eyes should at least glance there first before resuming their ordinary eyeroll upon mention of crypto.
Why is there a need to withdraw thousands? The article only mentions restrictions on cash withdrawal, wouldn’t bank transfers which are purely ledger entries still work normally? If not, the financial system is completely off the rails and any money is as good as lost…
No, they are really not, as the article sticks to using the term withdrawing, regarding what's being restricted. Generally it's expected that you read things before correcting others here.
That said, and to answer the grandparent, transfers are probably also restricted, it's not just about limits on withdrawing cash. Or they need to pay in cash, because all accounts are frozen transfers-wise - so, even if they could just make do with transfers internally, they can't use them to pay any foreign imports/services/etc.
> Banks are running low on cash to issue to people, leading them to place strict limits on the amount of money people can withdraw.
I interpret “running low on cash” as physical notes. This does not imply any restriction on transactions, or does it? It’s a genuine question.
Note: on the topic of expectations, I’ll quote from HN guidelines available at the bottom of the page: “ Please don't comment on whether someone read an article.”
Not sure about Lebanon, but in Russia right now you can't do pretty much anything with your money if it's USD/EUR and is in the bank account. Cash withdrawals are banned, SWIFT transfers are blocked, and there's only one bank that allows sending USD between its users (it is generally prohibited but they've found a loophole). Go figure.
Well, "withdraw in local currency, exchanged with a fair market conversion rate" is very far from "cash withdrawals are banned" or "can't do pretty much anything". And if you need cash, you can easily exchange that rubles back to good old USD cash with a 5% to 10% premium.
Furthermore, SWIFT is not entirely blocked, it is just prohibitively complex and expensive for ordinary people now.
The financial system in Lebanon is in fact completely off the rails. Also, in the article it says the reason for needing to withdraw thousands is to pay a medical bill for his father. Guess the hospital doesn’t want a bank transfer to their own frozen account.
The numbers in bank accounts are not fake, if banks could materialize money out of thin air they would not need clients. The numbers mostly stay in the system but the balance betweeen banks needs to be settled everyday, and that can’t be done with fake money.
(to be fair, all money is fake but only governments have the power to enforce the value of their fake money)
Let's say I have $1000 on a Lebanese bank account. If it's true what they say that they actually spent a good fraction of my money that means that the number is fake, and I actually have only a faction of that ($100?). In fact when I want to actually take it out the bank would give me say $100 but decrease the amount in my deposit by 1000.
But, does it matter? If people inside Lebanon could still transact with the "fake" amounts with bank wires and card payments and whatnot, the illusion would work as long as no interaction with the external world (International wires, and cash transactions)
https://web.archive.org/web/20220813215554/https://www.unila...