Quote from: slapper on Today at 10:56:45 AM

Quote from: mv1986 on September 04, 2023, 07:22:07 PM

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CEOs of major US banks conspiring? The idea is almost absurd. While a handful have power, it's foolish to presume they're puppet masters behind every scandal. For instance, the LIBOR scandal? That was a systemic issue, not just a few prominent people.

However valid, centralization of power doesn't inevitably mean widespread manipulation. Powerful people aren't necessarily evil. Decentralization, like Bitcoin and other cryptocurrencies, gives many optimism. Ironically, 'whales' cause large price movements in Bitcoin. So, what's your point exactly?

I would like you to not imply things I haven't said. I was talking about a hypothetical scenario (I called it hypothetical plans) and then said that where power is centralized, there is also a window of opportunity for fraud (or conspiracy as you call it). The LIBOR scandal is one example of that and Anshu Jain, a former Deutsche Bank boss was also involved (surprise surprise). If they didn't have the power, they couldn't have executed the manipulation.

This is the so called fraud diamond:

I have investigated a few fraud cases during my academic path and the fraud diamond is simple, it almost looks trivial, but a lot can be derived from it. Capability in most cases reverts to centralization of power. Top-down structures that can either command the execution of a fraudulent activity directly or indirectly by creating pressure/incentive. The LIBOR scandal can be very well explained and it is also very well documented. I assume you have never looked into it from an investigative perspective, because if you had would would know what I was talking about.

Yes, Banks collude! Absolutely do they collude. Again, this can happen either work through discreet implied "contracts" / collusion because everyone knows what to do without talking, or there can be the obvious version, meaning a few CEOs meet for a coffee and afterwards something happens (which is probably rarely the case Wink

).

Do we have examples? Oh hell yes, the subprime mortgage crisis was a kind of collusion, but eventually everyone colluding was competing with each other because of fire sales and the subsequent liquidity crunch, blowing up balance sheets and letting them crash altogether, or at least those who were worst at the round-robin-game.

The funniest of it all is that you are bringing up the term conspiracy and that "centralization of power doesn't inevitably mean widespread manipulation". A knife doesn't inevitably mean murder and a chair could mean murder and not inevitably mean sitting. But Bitcoin exists because "not inevitably" could translate into "possibly", and since the world has not fared that well with your "not inevitably", Nakamoto thought about the system that sets in stone the rules and the mechanics of the game.

The fraud diamond shows that there is massive incentive to tamper with the blockchain, rationalization for tampering it is also conceivable, but capability and opportunity are possibly infinitely small.

Can Bitcoin the market be manipulated? Yes, but Bitcoin has an interesting feedback loop because as the price rises through manipulation, adoption and the network actually grows because rising prices usually draw attention to something, increasing future resilience for further manipulation.

Centralization is among the most important factors reflected by capability and opportunity in the fraud diamond. How could the mortgage crisis enfold like that? Because of centralization of power. Banks paid the auditors that attested to the validity of MBS reported fair value. A lack in independence led to those misstatements. An enmeshed network of top-down power and dependencies without negative feedback loops including penalties led to the whole thing to burst in the end.