Banking crisis: Hoskinson blames money printing, fractional reserve banking – not crypto Banking crisis: Hoskinson blames money printing, fractional reserve banking – not crypto
Input Output CEO Charles Hoskinson says that crypto is the "escape valve" to the corrupt banking system — not the cause of the crisis.
2 min read
Updated: Jul. 22, 2023 at 11:32 am UTC
Web Summit / CC BY 2.0 / Wikimedia. Mixed by CryptoSlate
Charles Hoskinson dismissed the notion that crypto triggered the banking crisis — turning the claim on its head and stating that digital assets are the “escape valve.”
Recent weeks have seen several banking collapses and regulatory seizures. A general account of the problem stems from illiquidity and overvalued assets on balance sheets.
When tied with a run on deposits — as set off 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 to the par value of assets held.
While the action may have calmed fears of an imminent banking collapse among the general public to some extent, Hoskinson alluded to the inevitability of banks going under eventually.
“Things that seem permanent and stable, they change quickly, and it’s something that people don’t want to admit, but then after the fact they say that was obvious.”
Cryptocurrencies are the “escape valve”
Sharing insights on his latest live stream, Hoskinson spoke prophetically about legacy finance — saying that the current issues witnessed were always expected as the banking system is a Ponzi.
“You have this business where you take other people’s money; they use that 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 these losses collectively, Hoskinson said.
Not letting up, he pointed out that this system had eroded the dollar’s value by 95% over the last 100 years, forced a doubling of the money supply in the previous three years, and been responsible for “evil, reprehensible behavior.”
With that, the Input Output (IO) CEO said crypto is the “escape valve” to this system as it provides an alternative to its insidious practices.
“The escape valve has been cryptocurrencies. It gives us the ability 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 was to blame.
Hoskinson responded to this by discarding the idea that crypto is to blame. Instead, he pointed to money printing and fractional reserve banking — both of which are needed to sustain and manage the money system.
Continuing further, the IO CEO proceeded to name additional factors in rampant corruption, nepotism, the U.S. warfare culture, and the mishandling of the health crisis — none of which are related to digital assets.
Summarizing his argument — “the powers that be” are looking for a scapegoat, but crypto is the solution, not the problem, Hoskinson said.
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Author 
Samuel Wan
Samuel Wan, a finance professional turned full-time crypto content creator, values individual autonomy and personal freedom in his pursuits.
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Input Output
Input Output Hong Kong (IOHK) is a research and development company committed to using the peer-to-peer innovations of blockchain to build accessible financial services for all.
Charles Hoskinson, based in Colorado, stands out as a prominent figure in the blockchain and cryptocurrency sphere.
