More than 35% of all U.S. dollars currently in circulation have been printed in the last eighteen months. The US debt has increased over the same period by several trillion dollars and is now close to $29T. There is no doubt that $30T will be reached in the coming months.
America’s public debt to GDP ratio is now between 125% and 130%. The time when having such a ratio above 100% was an exception is over.
To support the current system at all costs, the Fed has been conducting an ultra-accommodating monetary policy since March 2020 which has inflated its balance sheet like never before. It now exceeds $8,500B:
The Fed’s massive asset buyback program of at least $120 billion each month has made it join BlackRock as the world’s largest asset manager. Yet this is not the role of the Fed, which is America’s central bank.
With interest rates lowered to zero, the Fed’s monetary policy has pushed all investors into the equity market in a TINA (“There Is No Alternative”) phenomenon. This has created a bubble in the stock market, concentrated even more strikingly in the shares of tech companies.
Microsoft and Apple now exceed $2 trillion in market cap, while Google and Amazon are not far behind. Behind them, Tesla is the biggest winner of the COVID-19 pandemic with a market cap that now exceeds $1.15T. Founder of Tesla, Elon Musk is now the richest man on the planet with a fortune of over $300 billion. He is more than 100 billion dollars ahead of his closest competitor Jeff Bezos.
The latter has himself benefited greatly from the unlimited printing of fiat money out of thin air that has been practiced since the beginning of the COVID-19 pandemic. Just like all the American billionaires whose fortune has increased by $2.1T in just eighteen months.
Globally, the increase was $4T over the same period.
Meanwhile, the velocity of the U.S. dollar has dropped drastically to a level not seen since the 1940s:
We are dealing with a phenomenon that has been known since the 18th century and that was brought to light at the time by the philosopher and economist Richard Cantillon.
In a book entitled “An Essay on Economic Theory”, Richard Cantillon had already described a version of this phenomenon long ago. His basic theory was that the beneficiaries of the printing of large amounts of money by the state depend on the institutional configuration of that state. In the 18th century, this meant that the closer you were to the king and the rich, the more you benefited. The further away you were, the more you were harmed. Money, in other words, is not neutral. This general observation, that money printing has distributional consequences that feed back into the price system, is known as the Cantillon effect.
In Richard Cantillon’s day, the basis of money was gold. He described what happened when a nation-state discovered a gold mine in its territory. The parallel can be drawn with the current system based on the American dollar. Richard Cantillon concludes that if the money eventually reaches the poorest people, it will be far too late because these people will already have been hit hard by the effects of inflation.
This is exactly what is happening now.
Such an impression of money mechanically devalues the purchasing power of the greatest number. Those who cannot invest to try to beat inflation are therefore condemned to see their purchasing power melt away like snow in the sun. Since 1971 and the introduction of the current system by Richard Nixon, the purchasing power of $1,000 has lost 86%:
It is now only $141, and the situation will only get worse in the months and years to come. The reason for this is simple: no one among the powerful at the head of the current monetary and financial system is determined to change things for the good of the many.
The fact that inflation has been above 5% for several months in America is not something that worries them too much. After denying the obvious for months, before talking about transient inflation, Jerome Powell, the chairman of the Fed, is now talking about contained inflation.
Even if you live in a rich country like America or Europe, you cannot have realized that the current system was flawed and could not be fixed. It suffers from seven deadly sins that will lead to its downfall. The original sin was the absolute power given to central banks to print as much fiat money out of thin air as they deem necessary.
If you want to get out of the circle of generalized impoverishment in which the current system traps you, you have no other alternative than to go towards a system that frees itself from the yoke of a few powerful people who make arbitrary decisions that go against the interest of the greatest number.
As things stand, our best hope for such a system can only be Bitcoin.
Bitcoin is not perfect, of course, but it is an alternative system that has already proven its resilience since its launch in January 2009. Bitcoin has already managed to accomplish something extraordinary when you consider that it was built by the simple willingness of its users to support and develop a system owned by the people. The great strength of Bitcoin is that it is a decentralized monetary system without a leader.
No one can make arbitrary decisions in the Bitcoin world that go against the interests of the many.
The rules of Bitcoin have not changed since its inception, which is pretty amazing in a world that is more uncertain than ever. The biggest guarantee Bitcoin gives you is that 1 BTC today will always equal 1 BTC in 21 million units in 10, 20, or 50 years.
This makes Bitcoin the best savings technology in the world.
There’s no need to invest your money as long as it’s safely placed in the world’s most secure decentralized network. You secure your wealth yourself by taking possession of the private keys to your Bitcoin, then run your full node on the network to become your bank. No one can censor you once you reach this stage of self-sovereignty.
There is no guarantee that the Bitcoin system will succeed in its revolution as an alternative system used by hundreds of millions of people every day. But with each passing day, Bitcoin’s chances of doing so increase. If you want to take back the power and have the freedom to live your life on your terms, you owe it to yourself to help create a better system for the many.
This can be done in many ways. The first is to buy Bitcoin and become a Bitcoin HODLer to drive up the price of Bitcoin (by increasing its scarcity) to get it into a positive feedback loop as an essential marketing campaign.
The important thing is for as many people as possible to discover the Bitcoin opportunity so that they can make an informed decision without having their thoughts clouded by the powerful in the current system who are using a whole bunch of outdated clichés to try to scare people away from coming to discover Bitcoin.
If you are already a Bitcoin HODLer, your best days are ahead in my eyes. If you are not, please tell me what is still keeping you in the current monetary and financial system when its flaws have been exposed more than ever before since the COVID-19 pandemic began.