What Would John Kenneth Galbraith Say About bitUSD?

  “The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version. All financial innovation involves, in one form or another, the creation of debt secured in greater or lesser adequacy by real assets. All financial innovation has involved similar debt creation leveraged against more limited assets with only modifications in the earlier design.” 

“Since these financial innovations are the basis for the speculative frenzy, all financial crises have involved debt that, in one fashion or another, has become dangerously out of scale in relation to the underlying means of payment.”        -John Kenneth Galbraith

                           This man may have endorsed bitUSD.

Had Galbraith lived to see it what he would say about bitUSD? It appears to be financial engineering of a very different type. Galbraith noted financial panics result from ever decreasing assets securing greater obligations. Yet, bitUSD cuts in another direction – surplus collateralization. This is a feature of the zero counter party risk protocol on the bitshares blockchain. When a user borrows a bitUSD into existence there is no counter party.  On bitshares it’s just you and the protocol. The protocol doesn’t care whether you have $10 to your name or your name is Goldman Sachs, you are putting up a minimum multiple 1.75 of the value of each loan as collateral. 

Imagine traders had to put up 1.75 x collateral for loans on Wall Street. Would we have seen the financial crisis of the last few decades? Would we sacrifice growth or opportunity? What do you think?