Hoskinson blames money printing, fractional reserve banking – not crypto

Charles Hoskinson dismissed the notion that crypto triggered the banking crisis – turning the claim on its head, stating that digital assets are the “escape valve”.

In recent weeks, there have been several bank collapses and regulatory seizures. A general explanation of the problem stems from illiquidity and overvalued assets on the balance sheet.

When they are tied up with a run on deposits – as counteracted by a lack of confidence – institutions are forced to realize losses on the overvalued assets to pay withdrawals, eroding their balance sheets.

On March 12, the Fed announced emergency measures to counter the problem. The Bank Term Funding Program (BTFP) will provide financial institutions with additional liquidity via loans at the face value of assets held.

While the action may have somewhat assuaged fears of an impending bank collapse among the general public, Hoskinson alluded to the inevitability of banks eventually failing.

“Things that seem permanent and stable, they change quickly, and that’s something people don’t want to admit, but afterwards they say it was obvious.”

Cryptocurrencies are the “escape valve”

Sharing insights into his latest live broadcast, Hoskinson spoke prophetically about legacy financing – saying that the current problems witnessed were always expected as the banking system is a Ponzi.

“You have this business where you take other people’s money; they use it to multiply and create money out of thin air”

Adding insult to injury, when the banking model fails, the losses are socialized, and society is expected to shoulder those losses collectively, Hoskinson said.

He did not give up, but pointed out that this system had eroded the dollar’s value by 95% over the past 100 years, forced a doubling of the money supply over the previous three years, and was responsible for “evil, reprehensible behavior.”

With that, the Input Output (IO) boss said that crypto is the “escape valve” of this system as it provides an alternative to its insidious practices.

“The escape valve has been cryptocurrencies. It gives us the opportunity to go into the digital space and take money to the next level, put people back in charge, embrace full reserve.”

Crypto caused this problem

Despite the crisis being derived from systemic, unsustainable “Ponzinomics”, there is a growing narrative that crypto is to blame.

Hoskinson responded to this by rejecting the idea that crypto is to blame. Instead, he pointed to money printing and shared reserve banking – both of which are necessary to maintain and manage the monetary system.

Furthermore, the IO chief went on to cite several factors in widespread corruption, nepotism, the US culture of warfare and the mishandling of the health crisis – none of which are related to digital assets.

To sum up his argument – “the powers that be” are looking for a scapegoat, but crypto is the solution, not the problem, Hoskinson said.