Hyperinflation

People in various countries around the world have seen hyperinflation numerous times only to see their savings wiped out. African and South American countries have been plagued by hyperinflation numerous times.

Countries such as Argentina have seen catastrophic collapses of their currency. Most recently, it experienced hyperinflation in 2016. The month I was there in early 2016, the value of my U.S. dollars soared about 30% against the Argentinian peso.

Cash Unavailable

It was also difficult to get money out of ATMs. We landed on a Sunday evening at the major airport in Buenos Aires only to find all three ATMs completely empty. We had no cash on us so a young security guard of all people lent us enough money to get a taxi to get to our AirBnB. We were both touched at his kind gesture, and not only paid him back but took him and his wife to dinner.

Hyperinflation in Venezuela

Most recently, hyperinflation in Venezuela is once again skyrocketing:

Other countries such as Argentina convert their currency to U.S. dollars as a safe haven when hyperinflation takes hold. Venezuela, on the other hand, does not have access to enough U.S. dollars to support their economy so is looking to alternative currencies such as bitcoin. In tandem, a growing number of businesses in Venezuela are now accepting bitcoin as an alternative means to counter the debilitating effects of hyperinflation. Since bitcoin is borderless, transactions via bitcoin are seamless.

History of Bitcoin Use in Venezuela

Between 2014 and 2016, the number of users on just one Venezuelan bitcoin exchange skyrocketed from just several hundred to over 85,000 users. Many bought goods through online marketplaces such as Amazon.com through gift cards bought with bitcoin.

Bitcoin was seen as a way of rebelling against the system and protecting one's capital. Consequently, bitcoin’s popularity in Venezuela continued to grow to where it became the country’s leading parallel currency. Some businesses began to accept bitcoin due to weakness in the bolivar. Since electricity was cheap, bitcoin mining operations flourished.

Venezuelan Government Cracks Down

As a result, the Venezuelan government began to crack down on bitcoin and bitcoin mining claiming it was undermining the country’s economy. In the largest raid, two miners were caught with 11,000 mining computers and were charged with cybercrime, electricity theft, exchange fraud, and funding terrorism.

Bitcoin Demonized Again

Such outlandish claims against the cryptocurrency are nothing new, but further fuels the motivation to achieve Satoshi's original intention with bitcoin- to minimize governments. In time, more countries may become "bitcoinized" especially given the massive levels of debt that plagues the planet.

Fed Chair Yellen Remains Clueless

Federal Reserve Chairwoman Janet Yellen remains clueless about why inflation remains persistently low, under their 2% target. Meanwhile, since last December, the U.S. dollar has been in its steepest downward trajectory since 2010, and is so far showing the weakest performance since 1985.

The Mother of All Bubbles

This money creation since 2009 has spawned the largest QE sovereign debt bubble ever, both in size and scope. The U.S. stock market is a direct beneficiary of this as it continues to push on a string into new highs as it has many times over the past few years. This artificial environment created by the Federal Reserve and global central banks by keeping interest rates at record low levels "will not end well," according to former Fed chair Alan Greenspan. Yellen can perpetuate the lie of a recovering economy because the Fed simply continues to artificially inflate the stock market which is then used as evidence. This has been ongoing now for several years.

As a consequence, central banks are now the majority shareholders in major stocks. The money they have created is used to buy bonds and now stocks directly. The central banks also loan the money to the big banks who loan to the corporations who, in turn, buy back stock instead of investing in their businesses. It's the largest "legal" Ponzi scheme ever.

How much longer before other currencies start to falter? The steep fall in the U.S. dollar this year is perhaps a clue. And perhaps that paves the way for bitcoin to eventually become the world's main fiat currency.

(͡:B ͜ʖ ͡:B)

Image credits:

http://money.cnn.com/2017/07/28/news/economy/venezuela-cash-crisis/index.html
http://www.zerohedge.com/news/2017-09-24/insiders-view-bitcoinization-venezuela

About Dr. Chris Kacher

Dr. Chris Kacher has appeared on major television, radio, and print programs and is the bestselling author of "How We Made 18,000% in the Stock Market". He founded Creative Trading Ltd, a company aimed at helping others invest in cryptocurrencies. He is currently launching a pro bono cryptocurrency platform and has been an investor in various cryptocurrencies starting in 2013 including STEEMIT when it was founded in 2016. He is the co-founder of http://www.virtueofselfishinvesting.com and has co-authored several books in investments as well as over 100 scientific journal articles in the nuclear sciences. He helped to discover element 110 on the Periodic Table of Elements as well as confirm the discovery of element 106 which his team named Seaborgium after his UC Berkeley Ph.D. thesis advisor Professor Glenn Seaborg. His music has also charted on the iTunes music charts twice.
http://en.wikipedia.org/wiki/Chris_Kacher