You may or may not have heard of this, but in case you haven't, Mr. J.T. sent this article, and it's worth your attention. As most regular readers here are aware, I'm not a big cryptocurrency fan. In fact, I'm very skeptical of them. They started out being touted as "virtually impregnable",  and so they were, until people learned how to start hacking and stealing. Their biggest selling point, however, was something akin to a battle cry, that they would by-pass the central banks, and a new utopia of central-bank-free transaction would emerge and we'd have debt-free money (i.e., real money) and everything would be Wonderful.

Then came the stories that the Old Lady of Threadneedle Street, the Bank of England, were doing their own study of a gold-backed crypto, so the central banking part of the narrative sort of fell apart (at least, for a while), then we heard no more about the Bank of England thing, and the narrative of a central-bank-free crypto-utopia re-emerged, though not with as much wind in  its sails as before.

Well, another bank is now announcing its own cryptocurrency, and though it's not a central bank, it might as well be:

JPMorgan is creating a cryptocurrency pegged to the dollar

Oh joy... JP Morgan is getting into the cryptocurrency parade... what could possibly go wrong?

Well, for starters, consider this:

JPMorgan Chase is developing a new cryptocurrency called JPM Coin whose value will be tied to the US dollar, the bank said on Thursday. The new private blockchain platform is designed to help large JPMorgan clients move money around the world. The new cryptocurrency will be built atop JPMorgan's Quorum blockchain technology, a variant of Ethereum that has been modified to serve the needs of a major financial institution like JPMorgan.

The Ethereum network is public and open to anyone; Quorum is a private blockchain where a network owner can control who has access. All transactions on the Ethereum network are visible to everyone on the network. In contrast, nodes in the Quorum network can create encrypted transactions (and smart contracts) that are only visible to parties to the transaction.

Quorum also jettisons the wasteful proof-of-work algorithm that secures the Ethereum network in favor of a simpler scheme that relies on majority voting among network nodes.

Wait... whoa!  what the heck does that mean, that bit about the network's being secured by "a simpler scheme that relies on majority voting among network nodes." Majority vote of whom? JP Morgan stockholders? Federal reserve stockholders?

Ah... wait...presumably it means this:

Public blockchain networks like Ethereum use proof-of-work algorithms to guard against Sybil attacks, in which someone tries to take over a network by creating a lot of zombie nodes. But Sybil attacks aren't a concern in a permissioned blockchain like Quorum, because each node is tied to a real-world identity that has been vetted by the network owner.

Whew! I feel better now! Thank you JPMorgan for vetting nodes and determining which ones are real or not. I feel like a real person again! At least, I'm beginning to feel more like a node.

But there's another big catch toward the end of the article:

big unanswered question here is what value is added by doing this as a blockchain network rather than a conventional database running on JPMorgan servers. The selling point of a conventional blockchain network like bitcoin or Ethereum is that it's open for anyone to participate and therefore can enable cooperation among people who don't otherwise trust each other.

But JPM Coin is only going to be open to JPMorgan customers. And two parties who are both JPMorgan customers can already rely on JPMorgan as a trusted intermediary for any financial transactions they might want to undertake. So it's not clear how using a blockchain is helpful.

So, in all seriousness, what's really going on here? Well, in my high octane speculation of the day, I suspect what we're looking at is "a scheme", a "scheme" rather like those "robo-signed" mortgages of yesteryear, only this one may be much cleverer. Indeed, Mr. J.T., when he sent along this article, spotted it immediately. Gee, surprise surprise! A "scheme?" From a Rockefailure bank? Say it isn't so! So...

...what's the "scheme"?

Well, toward the middle of the article there are these two things: first, you'll note that the new crypto's value is tied to the dollar, mentioned toward the beginning of the article. This is affirmed elsewhere:

The value of bitcoins and Ethereum's ether float on the open market. In contrast, JPMorgan will guarantee that each JPM Coin can be redeemed for $1.

Then there's the second thing:

There's also the potential to expand this system to other types of transactions. The system is flexible enough to have JPM Coins denominated in euros, yen, or other major currencies. There's also the possibility that it could be used to facilitate the sale and transfer of other assets, like stocks or bonds.

So what might be really going on? My high octane speculation - and I think I'm on the end of the twig on this one - is that this is an attempt to create a version of the old European "Snake", the Exchange Rate Mechanism whereby the currencies of smaller countries were pegged, within certain percentage points of valuation, against the German Deutschmark. When currencies fluctuated outside that benchmark, the central bank (in this case, the Bundesbank) stepped in to restabilize those currencies. It was this mechanism which France later joined, and the emergent result was the euro and the Eurozone. So it's those parts about JPMorgan's new crypto being tied to (1) the dollar and (2) the possibility of expanding that to handle other currencies and possibly even types of securities that really catches the eye, for it suggests that it is a move to peg other currencies, and securities, to the dollar and dollar-evaluation. Think of it as a kind of combination of SWIFT, the Exchange Rate Mechanism, and a securities brokerage all in one fell swoop. And, oh yea, lest I forget, you'll notice it's also a nifty move to allow JPMorgan to become a kind of international central bank, too.

See you on the flip side...




  1. well J P Morgan are wonderful chaps, cause in the Paul Hogan Story TV movie (2 part) they get a very very special mention towards the end when Crocodile Dundee production is in trouble financially and, whoooah, cavalry to the rescure and JP and the RottenLads chip in for a speciallymentioned 20k.
    This was a 200x movie about a 80’s movie.
    I don’t suppose they will have to chip in with microchips for everyone to enforce the credibility of their wonderfowl new crypto endevours?

  2. Dr. JPF’s speculation as well as several in the comments all seem plausible. I’ve always thought that the blockchain is a multi pronged operation. It would ease the implementation of “off world” banking/transactions whilst simultaneously pushing the cashless society dream. We’ve discussed numerous times on here the cash conundrum for the bankers – tax free peer to peer transactions are not ideal in their banking model.

  3. Just like the traditional imperial stick became nuclear and the imperial carrot virtual; crypto currency mimics the perverse disguise of humanitarian aid that was used to destroy nation states.
    First red flag/J.P. Morgan. Second red flag/tied to dollar. Third red flag/Controls access[denied]. 4th red flag/majority vote. 5th red flag/mumbo-jumbo about real identity. 7th red flag/forget about proof of work[four letter word]. 8th red flag/exclusivity. 9th gate of hell/able to interchange w/foreign currencies using a crypto currency that can multiply at will. Thus, like the snake, constrict any smaller economic sovereigns to an eatable size. Or, expand beyond measure?

    #10, as they say in the orient/issue any currency into circulation?/Now that’s the dark-side of alchemy.

  4. After rereading the following-

    There’s also the potential to expand this system to other types of transactions. The system is flexible enough to have JPM Coins denominated in euros, yen, or other major currencies. There’s also the possibility that it could be used to facilitate the sale and transfer of other assets, like stocks or bonds.

    I have to follow Dr. Farrell not just to the end of that twig, but perhaps jump off it, for its that odd last sentence in that paragraph above-for if you ponder what could encapsulate the “sale and transfer” of those “other assets” could be, well you have to suspect that JPM would not just be an international central bank but an interplanetary bank as well.

  5. (Sorry, I node-ed off… *grin* )

    Lest anyone forget:

    “Although the London house of Junius S. Morgan and Company continued to be the dominant branch of the Morgan enterprises, with the death of the senior Morgan in 1890 in a carriage accident on the Riviera , John Pierpont Morgan became the head of the firm. After operating as the American representative of the London firm from 1864-1871 as Dabney Morgan Company, Morgan took on a new partner in 1871, Anthony Drexel of Philadelphia and operated as Drexel Morgan and Company until 1895. Drexel died in that year, and Morgan changed the name of the American branch to J.P. Morgan and Company.

    LaRouche tells us that on February 5, 1891, a secret association known as the Round Table Group was formed in London by Cecil Rhodes, his banker, Lord (Nathaniel) Rothschild, the Rothschild in-law, Lord Rosebery, and Lord Curzon. He states that in the United States the Round Table was represented by the Morgan group.

    Dr. Carroll Quigley refers to this group as ‘The British-American Secret Society’ in [his book] Tragedy and Hope , stating that:
    ‘The chief backbone of this organization grew up along the already existing financial cooperation running from the Morgan Bank in New York to a group of international financiers in London led by Lazard Brothers (in 1901).’

    William Guy Carr, in “Pawns In The Game” states that:
    ‘In 1899, J.P. Morgan and Drexel went to England to attend the International Bankers Convention. When they returned, J.P. Morgan had been appointed head representative of the Rothschild interests in the United States. As the result of the London Conference, J.P. Morgan and Company of New York, Drexel and Company of Philadelphia, Grenfell and Company of London, and Morgan Harjes Cie of Paris, M.M. Warburg Company of Germany and America, and the House of Rothschild were all affiliated.’

    Apparently unaware of the Peabody connection with the Rothschilds and the fact that the Morgans had always been affiliated with the House of Rothschild, Carr supposed that he had uncovered this relationship as of 1899, when in fact it went back to 1835.” [my italics]

    So, I would place JPMorgan Chase under the Rothschilds, rather than the Rockenfelders. Knowing the reputation of the Rothschilds for ‘honest dealings’, what could go wrong?

  6. When solid community principle applies, then everyone controls everyone. Clearing becomes gridlocked.

    When one oligarch hub controls all the one-armed nods, then Morgan’s casino can add extra coins, and that is printing money out of thin air.

    Cancerous growth is unlimited expansion, and that is greedy gambling on street corners by criminal underworld.

    1. I have sympathy for the idea of Nation 2.0, which does not imply Masonry 2.0, because it will lead to Swamp 2.0.

      Creating gridlocked clearing, as it was originally done in Europe, is actually what the symbolic Rune system is all about.

      The way of getting there is to apply some deep thinking, and redefine Old English Cyning as less deified monarch.

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