Wirecard's Over $2 Billion Missing reflected a root defect in monetary and financial systems

These days that news that German payments firm Wirecard AG missed 1.9 billion euros (over $2 billion) shocked us. As we know banks typically have a series of complex processes in guaranteeing security like KYL, AML. But even under such rigorous protection, there is still space for misconduct and illegal activities. What we can learn from the scandal?

(1) we need to introduce more checks and separation of management responsibilities to prevent such behaviors. 

But the problem is that the money in banks is simply a pile of paper certificates and digital records on the bank IT system. That means we have to trust banks that they will not modify or delete the account record. Where there is dependence there is a risk of being enslaved and controlled. The root problem is that we have to trust their behaviors, we rely on them, they typically have credit.

Actually such trust is a root problem and if we look back at history, we are proven records trust is not trustworthy at all. 

(1) national credit. This is is the highest type of trust. But even the most reliable country like the US has a record of national default. The latest recent national default is the Collapse of the Bretton Woods system in 1971 which marked the end of "gold standard" and pushed us into a world where money issuance is based on "national credit" passively. After that, the government seized the absolute power of "monetary issuance" from the public, starting the road to "monetary enslavement" internally and "monetary colony" internationally. 

The typical money enslavement is devaluing the currency. That means more supply of money which led to inflation as push up prices of products. As satoshi, bitcoin's founder once said.

The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible. In this sense, it’s more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value.

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