The Perfect Storm: Why Bitcoin May Be the Ultimate Safe Haven Against Currency Debasement
A popular narrative among cryptocurrency enthusiasts is that Bitcoin is the perfect life raft against currency debasement. With the Federal Reserve printing more money to save the economy, Greg Foss and James Lavish envision a massive run on Bitcoin, resulting in a price increase. They argue that the depreciation of fiat currencies makes Bitcoin a valuable asset, particularly during times of economic uncertainty.
Foss and Lavish discuss how the US seizure of Russia's assets would make other countries reconsider holding treasuries, particularly if they are in legal limbo with the US. They argue that if countries such as China, Saudi Arabia, and Iran join the new currency created by Brazil, Russia, India, China, and South Africa, the US Treasury will suffer. According to Foss, Putin is already planning to price oil and natural gas in Bitcoin because all fiat currencies are debasing.
According to Foss, Bitcoin is the solution to the problem of depreciating fiat currencies. He claims that selling oil and natural gas at Bitcoin prices creates a closed loop in which digital energy is exchanged for natural resource energy. He compares this to a closed system in physics, claiming that open systems, such as fiat currencies, do not work because they are leaky hydraulic systems where more money can be printed. According to Foss, banks in North America are typically leveraged at 20 to 25 times their equity base, while banks in Europe are leveraged at 30 to 40 times their equity base, making them highly vulnerable to even minor asset losses.
According to Foss, global debt is four times that of global GDP, and banks bringing off-balance-sheet assets into the equation exacerbates the situation. He claims that a few small cracks here and there cause the entire system to collapse, as seen with Credit Suisse. He claims that a credit crisis could occur at any time and that all roads lead to Bitcoin.
According to Foss and Lavish, all fiat currencies have the same problem as the US dollar: they have borrowed too much money and must print money just to pay the interest on the debt. This means that the debt is growing organically simply because of the debt's coupon, making all fiat currencies vulnerable to debasement. Because there is no tax revenue to pay the existing debt burden, the burden of debt explodes even faster, forcing the government to print more money, and causing Bitcoin's value to rise relative to a depreciating US dollar.
Finally, the vulnerability of fiat currencies and the significance of Bitcoin as a store of value during economic uncertainty. While some may question Bitcoin's viability, its popularity among cryptocurrency enthusiasts as a hedge against inflation and currency debasement is growing. To make informed investment decisions, it's critical to stay up to date on the latest developments in the crypto industry.
Source:
Let's Talk Crypto, 12 April 2023, "Greg Foss Bitcoin's PERFECT STORM Is Brewing! Next Shoe To DROP?",