There's No Such Thing As A Stable Asset
A lot of people (especially Americans) think that fiat currency is a stable source of value.
Ask them what they think in Venezuela.
If water is scarce, the price of water goes up.
If food is scarce, the price of food goes up.
If currency is scarce...
INSERT RESOURCE HERE
You get the idea.
Fiat
The thing about fiat is that it's never scarce. The people in charge will just print more. They avoid printing too much by raising interest rates. This adds a whole new can of worms to the mix, because it means that more money is owned back to the FED than there is money in existence; a clearly unsustainable economic model.
Well, guess what?
The FED is trying to raise interest rates, and the economy is bucking under the pressure.
https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States
LOL
Are we seeing a pattern here? Every time there was a recession interest rates were peaking and they had to bring them back down to soften the blow.
There is no cushion left.
What do you think is going to happen during the next financial collapse? We literally had interest rates at 0% for seven years because of the last one. There's no place else to go.
This is happening.
All of the signs are here, but most people ignore them or are completely in the dark. The next financial collapse is going to be even worse than the last one. Rome is falling. Finally. The masters of borrowed time are at the end of the rope.
Ten years
If the economy can somehow prop itself back up (negative interest rates?) then we MIGHT make it another ten years, but after that, it's all over. Think about where crypto is going to be ten years from now. We can't even imagine it. It's going to be wild.
The need to develop this superior asset class is going to increase by a hundred fold during the next Depression. It's potential is superior to the old system, and with the old system weak and unable to defend itself crypto will act as the tip of the spear for the killing blow.
Business model
The original reason I wanted to bring this all up was due to stable-coins and retail. I've gone on quite the tangent. In any case, we have to ask ourselves: why are stable-coins so "necessary".
Well, retail operates from razor thin profit margins. Therefore, if they accept the volatility of cryptocurrency they could easily go bankrupt. No one wants to bet the farm on crypto.
However, what if retailers knew that on average Bitcoin always doubles in value ever year. If they had enough money to get through the bad years year then they would no longer have any need for a "stable" asset that loses value every year. Instead, they would be making money hand over foot with crypto.
Nothing is stopping this from happening.
When Bitcoin spiked to $14k, what did we all do? We cheered? Why did we do that?
| Application | Decentralization | Inflation | Speed | Community |
|---|
| 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
|---|---|---|---|---|---|---|
| $100 | $200 | $400 | $800 | $1600 | $3200 | $6400 |
| Jan | Feb | Mar | April | May | June |
|---|---|---|---|---|---|
| $3467 | $3733 | $4000 | $4267 | $4533 | $4800 |
| July | Aug | Sept | Oct | Nov | Dec |
|---|---|---|---|---|---|
| $5067 | $5333 | $5600 | $5867 | $6133 | $6400 |
Even if Bitcoin was doubling in value every year (it is) then its price today should be $5000. Why did we cheer for $13.8k? Because we are greedy bulls. We don't care about stability; we care about profits.
You see, the more people in the community who buy low and sell high, the more stable the asset becomes. Therefore, we can all get straight up paid to keep an asset stable, yet no one is organizing to do this.
Why?
Well, first of all, this is war. Spikes in the value of Bitcoin are not to be celebrated. They are an attack against the network.
The rats aboard the U.S.S economy are taking their bags elsewhere.
If any cryptocurrency created a stable asset that was doubling in value every year, what would happen? Correct: that currency would be bought out by billionaires. If you're dedicated to "selling high" then someone is going to come along and buy you straight out of business and you'll no longer be in control of the project. This is why the price of Bitcoin has to spike up and then crash: untrustworthy rich-ass people are trying to corrupt it.
Conclusion
There's no such thing as stability, especially at this day in age. When the economy collapses and interest rates are at zero and that's not helping because the world is full of rampant corruption, what do you think is going to happen? Hyperinflation. Then we'll all see the world reserve currency spiral out of control. My advice? Watch what the billionaires are doing with there money around that time.
This truly is a crazy time to be alive. The signs are all around us. Change is coming, and with it, chaos. It's up to us to reign it in and create a new order; a better one. Are you financially responsible enough to make it through the bad times? I hope so.
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Ask them what they think in Venezuela.
"If water is scarce, the price of water goes up.
If food is scarce, the price of food goes up.
If currency is scarce...
INSERT RESOURCE HERE"
Venezuelan here champ. We learned the lesson the hard way. Living here in this situation has been quite horrible for our present and some of our past but good for our future. Most Venezuelans must have a PH in economics by now because the thing is really crazy around here. People can profit from almost anything in here you just need to find a way to bring those goods in. Very nice article mate. Regards!
Best of luck to you! I’m thankful to see so many on here from Venezuela. Gives me hope not just the rich will survive this situation!
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You need to build free markets! ;)
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Damn right it’s going to burst like crazy. Housing, student loans, credit cards. One of our friends today just said they are 50k in debt and are thinking of filing for bankruptcy. People have no financial sense!
With the billionaires, it’s tough to know what they’re doing because they don’t just tell people lol watching prices of bitcoin is a decent marker but I would be interested to know what buffet is doing in reality versus what he tells people in public.
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The irony of bankruptcy costing $5000 makes me sick.
My ex did it some years back. I was like... ug.
Me personally? I would rather make them eat it without declaring bankruptcy. My credit rating is in the 400s right now and I'm about to wait out the statute of limitations lol.
Either that, Or I might start talking to the debt collectors.
It would be a great story if I could settle my debt for something crazy like 1-2%.
That would be amazing.
Yeah I know, it’s ridiculous.
Would be awesome to say to them this is all you’re getting, good luck! Lol
This financial system is a ruthless game of Russian roulette; you could be getting shot in the head or you could be unscathed for a little while but they usually get you.
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what a fantastic article bud
very thought out i might say
cheers
What a fantastic
Article bud very thought
Out i might say cheers
- nickgrujic
I'm a bot. I detect haiku.
I think your verb tense is wrong — tried to rather than is trying. Powell has strongly hinted that they’re going to cut by at least 25 basis points soon. Trump’s been whining about the need for a weak dollar, at the same time that he complains about other countries manipulating their currencies.
But, yeah, I wouldn’t put it past them to try negative interest rates which, if you’d mentioned them a few years ago, people would have assumed you were on LSD.
Gold, land, rice/cereal crops, silver...a diverse s basket of things we need or cannot easily make and find are a good hedge, some is easily stored. Others maybe avoid. Also buying foriegn moneys stocks securities and crypto can help shiled against sudden currency changes, especially if you diversify.
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My FoodCoin is a stable asset!
It is worth... it IS one meal. munch munch munch
The only problem is making them ^_^
Another solution is see with cryptos is immediately upon selling the item, the store orders and pays for another. Exchanges can happens throughout the supply chain almost instantly now.
There are a few people working on supply-chain - block-chains being built. And so this is a very real possibility.
There have been not a few papers on "real money" appreciating.
That without an inflationary currency like the dollar, all the improvements in the world make the currency worth more. So a controlled quantity coin would always be worth more in the future.
Shit I forgot to talk about BAIL-INS.
Bail-outs are now illegal folks.
Bail-ins are the new'solution'.
The next financial crisis they are going to haircut money out of your bank account. This is totally legal now. You are an investor in your bank and if the bank goes under your money is forfeit.
Shit I forgot about this aspect, what a pain in the ass. We always get screwed.
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We will now get -4% to -7% interest rates in germany ;)
They want to make buying Gold, for more than 2k€ cash, illegal.