When your different belongings bloat, Bitcoin can shield your financial savings

The following is from the latest monthly report from Deep Dive, Bitcoin Magazine’s premium markets newsletter. To be among the first to get this insight and other Bitcoin market research delivered to your inbox, sign up now.

A rising stock market is now a national security issue in the United States. This is a very unrecognized reality of the current economic system, but it is the truth.

As a result of the Bretton Woods Agreement, which introduced the US dollar as a world reserve currency back in 1944, and the 1971 Nixon shock, which led the world economy to free-flowing fiat currencies, the United States is in a rather precarious position.

source

Because of the Triffin Dilemma (briefly covered in The Daily Dive # 041), the United States has served as a rare case study of a twin deficit nation (both a trade deficit and a budget deficit).

Source: Yardeni

Source: Yardeni

The economist Robert Triffin outlined the reasons for this as early as 1960:

“If the United States stopped running deficits, the international community would lose its greatest source of reserves. The resulting shortage of liquidity could pull the global economy into a spiral of contraction and lead to instability.

“If US deficits continued, a steady stream of dollars would continue to fuel global economic growth. However, excessive US deficits (dollar glut) would undermine confidence in the value of the US dollar. Without trust in the dollar, it would no longer be accepted as a world reserve currency. The system of fixed exchange rates could collapse and lead to instability. ”- The International Monetary Fund

Source: Knoema

Source: Knoema

In just two decades, the United States has gone from being a leading global trading company to being completely overthrown by the burgeoning nation-state superpower, China. As it turns out, Triffin’s concerns have been shown to be justified, and the U.S. is on two different paths:

Option 1: Reverse course and “defend the dollar” by getting the Federal Reserve to raise interest rates and curb asset purchases, plunging the world economy into an unprecedented depression while driving an already polarized society further apart. as unemployment skyrockets, assets decline, and real debt costs skyrocket.

or

Option 2: Continue the dollar’s devaluation as stocks, real estate, and other asset classes continue to melt in nominal terms as the U.S. seeks to land the manufacturing industry that has left its borders in the past two decades while keeping the social unrest on one Minimum.

Source: Yardeni

Source: Yardeni

It is not a mistake that the market continues to melt higher with minimal volatility; it is entirely by design. Market participants know that the talking heads of the Federal Reserve and political power have no choice but to devalue the currency.

Source: Holger Zschaepitz

Source: Holger Zschaepitz

As former credit market trader Greg Foss likes to say:

“In a debt / GDP spiral, the fiat currency is the term for error. This is pure math. It is a spiral into which there is no mathematical escape. ”

This is not a new phenomenon, and in fact, debt cycles similar to those going on today – not just in the US but around the world – have happened many times (just not on this scale in a tech-connected world).

All of the debt crises examined throughout history have ended in a similar fashion:

“Printing money / debt monetization and government guarantees are inevitable in depressions where rate cuts don’t work, although these tools are of little value in countries that are restricted from printing or have and cannot have assets to support printing.” Redistribution of the debt burden is not easy to negotiate. All of the deleveraging we examined (most of the past hundred years) eventually resulted in large waves of money, budget deficits, and currency devaluations (versus gold, commodities, and stocks). ”- Ray Dalio,” Principles for Coping with Major Debt Crises “

Our proposed solution to this problem is clear: Bitcoin. The reasons why we highlighted the fundamental supply and demand dynamics of the Bitcoin currency network at the beginning of this report is why it is the solution to great money inflation.

“Investing during hyperinflation has a number of basic principles: sell the currency short, do whatever it takes to get your money out of the country, buy commodities, and invest in commodity industries (like gold, coal, and metals). Buying stocks is a mixed bag: investing in the stock market becomes a losing business as inflation turns into hyperinflation.

“Instead of a high correlation between the exchange rate and the share price, there is an increasing divergence between the share price and the exchange rate. So at this time, gold is becoming the asset of choice, stocks are a disaster, even though they are rising in local currency, and bonds are ruined. ”- Ray Dalio,” Principles for Coping with Major Debt Crises “

The solution is simple:

  • Get your money out of the country and store it in the immutable Bitcoin money web.
  • Shorten the currency (i.e. borrow dollars depending on the term, collateral and interest rate) and acquire hard assets at a cost of production.

The reason gold has always been the asset of choice during debt crises is not because of the shiny metallic nature of the metal or its industrial uses, but rather because of the unadulterated preciousness of the asset. A marginal gold unit was / is more difficult to produce in relation to the outstanding supply than any other fungible commodity.

With Bitcoin, we have a monetary asset with 24/7/365 liquidity in every jurisdiction and market on the planet, with a limited supply, with a direct economic incentive to sell any / all excess energy to the network in order to use it strengthen the process while increasing marginal piece production costs (due to difficulty adjustment as described above).

unnamed (8)

Bitcoin is not just an asset to hold in times of unprecedented economic turmoil.

Bitcoin is clearly the safest asset on the planet, and unlike gold during the debt crises of the past, bitcoin is in the process of monetization today, leading us to believe that an upward trend of 10,000% in the next decade is just not possible , but likely is.

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