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Bitcoin is The World's Greatest Hedge Against Inflation and American Economic Dominance

by Adebayo Adeniran 8 months ago in bitcoin
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Reports of the imminent demise of this brilliant contraption are a complete nonsense.

Ewan Kennedy via Unsplash

The vast majority of articles on the subject matter of the preeminent cryptocurrency of our time are profoundly nonsensical.

Why?

To understand bitcoin's place in our financial system today, we need to look beyond the its performance in the short to medium term and moves by national governments (China and The United States of America in particular) across the world to rein in its influence. A thorough comprehension of bitcoin requires a high degree of knowledge of the history of money and economics for the last five hundred years and beyond.

The Hyperinflation of the US dollar

Consumer price Index is usually the basis of measuring inflation and has been so for a long time. In the United Kingdom, the preferred method is retail price index, which is often described as RPI.

But the fatal error with the computation of America's inflation lies in its glaring omission of three major sectors:

1.Property Market

2. Student loan

3. External debts: Huge deficits with China and Japan

The American property market is multi trillion enterprise which is almost exclusively funded by debt.

According to CNBC, This is what we know:

Household debt rose $313 billion in the second quarter to nearly $15 trillion.

In dollar terms, that was the fastest growth since the second quarter of 2007, and at 2.1% was the fastest percent increase in seven and a half years.

Over the past four quarters, mortgage originations have totaled close to $4.6 trillion, amounting to 44% of all outstanding home loan balances.

According to nerdwallet.com, student loan debt owed by Americans, as at the 31st of March 2021 comes up to 1.6 trillion dollars. This sum is owed by 43 million Americans.

Of the 1.6 trillion dollars owed by students, 92% belongs to the federal government and the rest to private institutions.

On the subject matter of external debts, America currently runs a huge deficit with a number of countries, of which China and Japan are the largest.

With the People's Republic of China and Japan, the United States of America owes 1.1 and 1.2 trillion dollars respectively.

Added to the list of debtors, it is also worthwhile pointing out that America owes itself in the region of 6.2 trillion dollars. This stems from federal borrowing from Mutual funds, private pension funds, state and local government pension funds.

When we factor into this madness that we have over 40 trillion dollars in world wide circulation, we start to have a slight idea of the degree to which the greenback has been manipulated by the Federal Reserves and successive American governments.

Given the scale of inflation and debt with which future generations must grapple, we must ask ourselves, how did we get here in the very first place and how did we get sucked into the unsound monetary policies and practices?

At the turn of the twentieth century, the manipulation of currencies certainly wasn't an issue when the gold standard was the means by exchange.

For all of its structural flaws, by this, I am referring to the cumbersomeness and expensiveness, the use of the gold standard made for sound monetary policy across the globe.

But once the Austro-Hungarian empire chose to go to war with Serbian separatists, the history and trajectory of money was changed forever.

Once France, Britain, Germany decided to come off the gold standard and began printing fiat currency, not only did this prolong the war, but it also brought about the phenomenon of monetary nationalism, which only sought to exacerbate the mess of fiat (paper) money, with which we must grapple.

Richard Nixon's decision in ending dollar convertibility to gold which enabled the flooding of the world with the greenback (dollars) was the culmination of a hundred years of extraordinarily unsound monetary policy.

And unsound monetary policy by every American government is entirely responsible for the endless wars, famines, economic crises that successive generations of humanity have had to endure since the cessation of world war two in 1945.

Bitcoin: The Biggest Threat To American and Chinese Economic Dominance?

The founders of bitcoin are perhaps the greatest students of the history of money that the world has ever seen.

As pointed out in the previous section of this post, the founders of bitcoin have been careful to ensure that their contraption is everything that the world's preeminent currency isn't: decentralized.

And its rise and acceptance among players in the alternative, shadow economy hasn't gone unnoticed by the big players and their lackeys everywhere, a number of whom operate in this space too, contrary to what you read in the newspapers and elsewhere.

What we have seen and heard from these naysayers and the doomsayers,bitcoin will die a truly horrific death and those who have kept their money will lose big time.

Jamie Dimon, the Chief Executive Officer of JP Morgan, the leading investment bank on wall street has been scathing of bitcoin, stating that it has no intrinsic value.

Dimon also did say the following:

"I don't really care about Bitcoin. I think people waste too much time and breath on it. But it is going to be regulated. Governments regulate just about everything. I don't know if it's an asset. I don't know if it's foreign exchange. I don't know if it's a currency.

But this is a great lie emanating from the financial establishment, which has seen its leverage shrunk in recent times.

Why?

Investment banks such as JP Morgan, Goldman Sachs, Bank of America, Barclays Capital, Morgan Stanley are among the biggest holders of bitcoin at the moment, making huge purchases and using it a hedge against the hyper inflated dollar.

But they will never tell you that.

Instead they continue to gaslight the American public in pushing vast amounts of misinformation to suit their own purposes.

In China, they have opted for an outright ban, clearly recognizing the power of the cryptocurrency to destabilize the polity that the politburo has spent several generations to build.

The Bitcoin Phenomenon: Is Organic money here to stay?

Unlike its predecessor - gold and its current competitor - Ethereum - which are centralized and whose moves are determined by individual players, Bitcoin offers all would be investors the greatest possible advantage in our extraordinarily volatile times.

The advantage of decentralization.

Bitcoin as a homogeneous decentralized currency offers the possibility of a new system, one that we have never seen before in the history of mankind.

What bitcoin has ushered in is what's been called the era of " organic money".

Decentralization in this context means that for any decision to be taken on this currency would require the approval of the million stakeholders - all of whom have equal voting rights.

Which means that once bitcoin gets to the magic number of 21 million minted coins, it is done.

Nicholas Nassim Taleb in his foreword to the magisterial book written by Saifedean Ammous titled: " The Bitcoin Standard", said that bitcoin may fail, but what it offers humanity is the possibility of organic currency.

For countries such as Nigeria, El-Salvador and many others from the orient who have suffered greatly from having pegged their currency to the dollar with its attendant issues of hyper inflation, embracing bitcoin is the least worst economic decision that they could make.

For millions of uneducated citizens of mature democracies, who have never been schooled on the intricacies of high finance, who have always eagerly bought into the lies of their governments, who were left floundering when the banks collapsed in 2008, owning bitcoin is the best step they can take in leaving something behind for the next generation.

The genie is out of the bottle and decentralized organic currency is the way forward. Today it is bitcoin, tomorrow it may be something else.

For the foreseeable future, bitcoin continues to be the greatest hedge against the hyper inflated green back and a far greater threat to American and Chinese economic dominance.

Do yourselves a favour and invest in bitcoin today.

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About the author

Adebayo Adeniran

A lifelong bibliophile, who seeks to unleash his energy on a number of subjects

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