In 1971, the United States made the decision to go off the gold standard. This kicked off the modern economic experiment of debasement while weaponizing the U.S. dollar to artificially stimulate the economy.
Like a mad scientist in a lab, the Federal Reserve pulled levers and twisted knobs in an attempt to achieve its mandate of full employment and stable prices. Often perceived as the smartest guys in the room and speaking in complex financial terminology, the Fed magically avoids tough questioning and still remains at the control panel.
One thing is for certain, the Fed's devalution experiment has destroyed savers and reaped gluttonous rewards for debt seekers.
The velocity of the devaluation has only accelerated in the last 15 years through continued undisciplined monetary policy and a low interest rate environment. Unelected Fed officials have chosen to create asset bubbles and provide bailouts in lieu of letting natural market forces work their magic.
The playbook has been pretty consistent over the past 15 years. A financial crisis occurs, a rescue package is determined, the Fed promises to tighten financial markets once conditions improve, and another financial crisis begins.
Big ideas like this can be humbling to grasp and they take time to comprehend.
And there is no end in sight. On Feb. 1, the U.S. debt passed $30 trillion and the debt has been growing at ~11% annually since 2010. On the same day, the U.S. Treasury announced that it would issue $729 billion in net marketable debt from January ‘22 to March ‘22, a $476 billion increase from the November estimate. This was met with no outrage or protests. While the $475 billion stimulus from the Great Financial Crisis was met with shock and awe.
Inflation is the more commonly discussed phenomenon that results from money printing and debt mania. However, the theft of your time is equally as important. Many of us work for a wage and as that hourly rate is devalued we are required to dedicate more time toward earning a living to maintain relative purchasing power. Many are trapped in this insidious financial purgatory while watching their hopes of a home, family or a comfortable retirement become out of reach.
Meanwhile, the options to invest are becoming increasingly limited or risky. Bonds are yielding negative real rates, CPI is at 7% (over 14% if you use the original calculation from pre-1980s), equity valuations have been stretched, and savings accounts yield no interest.
And this is why we Bitcoin…
Bitcoin is the life raft to store time and value. Bitcoin is the new age version of a no coupon bond issued at a 99% discount with the network effects of a tech company. A simple daily $15 purchase of Bitcoin since January 2020 generated 127% gain (~$11K).
Diving down the Bitcoin rabbit hole can be daunting. It is a complex web of finance, monetary policy, game theory and technology wrapped into a global network that is evolving at a rapid pace. Most people try to understand it from their area of expertise (e.g., technology, finance, policy) but find that fluency in multiple disciplines is optimal to seeing the potential impact.
Big ideas like this can be humbling to grasp and they take time to comprehend. When recently asked about Bitcoin, Lloyd Blankfien responded "I may be skeptical, but I’m also pragmatic about it. And so guess what, I would certainly want to have an oar in that water."
As skeptics are turned into believers, many begin to understand the humanitarian principles Bitcoin represents. Hard money that protects the value of your time is a fundamental right. The transaction ledger is transparent and the supply is hard capped at 21 million.
Bitcoin is an immutable silver bullet to perverse monetary incentive structures, socialized losses, debasement, debt repression, and rewards savers. Bitcoin is an equitable system to all, it serves a billionaire and a minimum wage worker equally.
Bitcoin is an accountability scoreboard in a non-accountable world. Bitcoin is hope to those planning for a future. Bitcoin is life insurance for multiple generations.
Ultimately, Bitcoin is worth the time to understand.