In 1971, the United States made the decision to leave the gold standard. This kickstarted the modern economic experiment of debasement while weaponizing the US dollar to artificially stimulate the economy.
Like a mad scientist in a laboratory, the Federal Reserve twisted levers and knobs in an attempt to achieve its mandate of full employment and stable prices. Often perceived as the smartest guys in the room and speaking in complex financial terminology, the Fed magically avoids tough questions and always stays in control.
One thing is certain, the Fed’s devaluation experiment destroyed savers and reaped gluttonous rewards for debt seekers.
The speed of devaluation has only accelerated over the past 15 years thanks to undisciplined monetary policy and a low interest rate environment. Unelected Fed officials chose to create asset bubbles and provide bailouts instead of letting natural market forces work their magic.
The playbook has been pretty consistent over the past 15 years. A financial crisis occurs, a bailout is determined, the Fed promises to tighten financial markets once conditions improve, and another financial crisis begins.
Big ideas like this can be humbling to grasp and they take time to grasp.
And there is no end in sight. On February 1, US debt topped $30 trillion, and debt has been growing about 11% per year since 2010. On the same day, the US Treasury announced it would issue $729 billion in marketable net debt from January 22 to March. ’22, an increase of $476 billion from the November estimate. This aroused neither indignation nor protest. As the $475 billion stimulus from the Great Financial Crisis was met with shock and awe.
Inflation is the most often discussed phenomenon that results from money printing and debt mania. However, stealing your time is just as important. Many of us work for a salary and as this hourly rate is devalued we have to spend more time earning a living to maintain relative purchasing power. Many are trapped in this insidious financial purgatory as their hopes of a home, a family or a comfortable retirement grow out of reach.
Meanwhile, investment options become increasingly limited or risky. Bonds are yielding negative real rates, the CPI is at 7% (over 14% if you use the original pre-1980s calculation), stock valuations have been stretched, and savings accounts are yielding zero. interest.
And that’s why we Bitcoin…
Bitcoin is the life raft for storing time and value. Bitcoin is the new version of a coupon-free bond issued at a 99% discount with the network effects of a technology company. A simple daily purchase of $15 worth of Bitcoin since January 2020 has generated a gain of 127% (~$11,000).
Diving down the Bitcoin rabbit hole can be daunting. It is a complex web of finance, monetary policy, game theory and technology wrapped in a global web that is changing at a rapid pace. Most people try to understand it from their area of expertise (e.g. technology, finance, politics), but find that mastering multiple disciplines is optimal to see the potential impact.
Big ideas like this can be humbling to grasp and they take time to grasp. When asked about Bitcoin recently, Lloyd Blankfien replied “I may be skeptical, but I’m also pragmatic about it. And so guess what, I would definitely like to have an oar in this water.”
As skeptics are turned into believers, many are beginning to understand the humanitarian principles Bitcoin represents. Hard money that protects the value of your time is a basic right. The transaction register is transparent and the supply is strictly capped at 21 million.
Bitcoin is an immutable magic bullet for perverse monetary incentive structures, socialized losses, debasement, debt suppression, and savers rewards. Bitcoin is a fair system for all, it serves both a billionaire and a minimum wage worker.
Bitcoin is an accountability scorecard in an unaccountable world. Bitcoin is a hope for those planning a future. Bitcoin is life insurance for multiple generations.
Ultimately, Bitcoin is worth the time to understand.