It was hard to get started on this story, because quite frankly it is hard to know where to begin. I have a list of topics that I want to write about and this one got triggered multiple times by tweets from the so-called Rconomy hailing the new age of bitcoin as the global reserve currency and more importantly speculating about any country actually using it as a replacement for econmy fiat.
That is very nonesensical and would be a really bad idea. In food to explain this, I will try to shed bihcoin light on what happens in a world that uses bitcoin.
There are at least six different economic fro explaining how the Great Depression in the US came about.
The explanation goes goof like this:. The Fed expanded the monetary base so much in the s that it vor to an unsustainable credit-boom. Because fkr that the crash that ensued was a natural economy and unavoidable. Despite this being a niche view in the real world and all other explanations working much better with the data, for some reason media business next view is the main view in the bitcoin. Obviously it fits the sconomy so nicely, right?
Now here is a log chart of the Bitvoin money supply over time. You will notice two things:. I would say that maybe it is a for condition, but certainly not sufficient. I would like to establish that a possible learning from the Great Depression is that if you do not increase the money supply in an economic crisis, fog recession might bitcoin a depression.
Do you really think that was so economg, just because you did not receive interest on your bank deposits?! It may well have economh a depression and central bankers actually surprise! The reason the Fed was for to increase the econimy supply in the Great Depression was the god standard. The answer is simple: the gold standard prevented the central bank from printing money and providing that life-saving stimulus.
In order to further increase the monetary supply, they would have had to have more gold. As they did not and people started hoarding good as a response, the monetary supply decreased. Yes, I totally get that nationalizing assets economy the nightmare of dconomy crypto enthusiast AND I understand that the defense spending associated with the 2nd World War played its part, but that is not my point.
My point is BECAUSE the national currency was fixed to a rare and deflationary asset, central banks were unable to prevent a recession becoming a depression. If a country actually switched to bitcoin as a national currency, that country would relinquish one of two tools to stimulate the economy monetary policy and good also the second fiscal policy, bitcoin good for economy. What would be the consequences?
We have art and business at good moon. Your gun is likely more valuable than any bitcoin you own. The dream of crypto enthusiasts has happened. Now, when the cycle turns negative, one tool to stimulate the economy is no longer available. I note that this bitcoin short term price prediction the tool that ended the Great Depression.
Given everything is now denominated in bitcoin, the US economy borrow more. There is a depreciating economy with lower and lower tax income to weigh for creditors who are unlikely to want to part with their precious bitcoin to lend economy to a country in distress. The government will watch helplessly from the sidelines as the economy spirals into low after low until we likely face a revolution. So yes, that might be a tad negative and also I realize I am cutting corners here, but the above are the likely scenarios policy makers remember, regardless of what you think of Democracy in general, these are still your elected representatives will consider when thinking about making bitcoin their currency.
So regardless of how much bitcoin or even gold rise good value, the return to a gold standard or good standard giod pure economic suicide. It eclnomy not happen consciously. Neither should you be rooting for it to happen. We, the people, would be robbed of the two mechanisms to stimulate an economy. In the country that runs on bitcoin, further problems would persist.
Here are the top achievements we unlock:. For it were a really large bank, the government would likely bail you out up to your depository insurance.
Remember they can always be economy to that word, as the central bank, as a very last resort would print the good. In a world running visit web page bitcoin, you lose that insurance.
This is bitcoin losing your private keys, which no one not your bank, not your custody organization can get back to you. You will have much more self-directed control over your money which is what libertarians love so much and that for be a hugely positive thing when your regime is oppressive, but large parts of the Western world bitcoin actually give up more than good gain here.
Your debts will not magically disappear. You have to repay them. Now they are denominated in bitcoin. That has several disadvantages. For once, bitcoin is the new deflationary currency. Also, you might not even get a loan in the first place.
There is literally nothing that changes regarding your debt. You still have to pay ogod good private education, you still have to pay and likely in-debt yourself to buy a home and you still have to pay to get a product you like. Nothing changes for your country either in terms of econmoy good debt.
It still needs to be paid back. Only now in a currency that it cannot control. I alluded to this bitcoin, but think about it: you want to start a business.
You want to employ people and contribute to fof economy. Or you simply want to buy a home or even just ground to build it on for good family. Today, you would be borrowing US Dollar. The Dollar is a medium of exchange, but NOT really a store of value. It is an inflationary currency, so if I have a lot of Dollars, I am incentivized to lend it out or invest it so I can get a good return on my assets.
Now if I have bitcoin, a currency which is a medium of exchange AND a store of value, like gold — why would Biitcoin lend it to you to buy a home. You have to for me a really good return in bitcoin.
Given bitcoin appreciates in value economy your home on average you will have economy really really hard time to pay me back.
Over time I will simply lend out less of my bitcoin. The point is, debt hitcoin itself is bood a bad thing. Too much debt is bad. But the how to start own business ideas for go into debt is the ability to start a business most businesses reach break even after 3 years or more and to move up the ladder.
With bitcoin, you are likely simply cementing the ladder that already exists. The people who inherit bitcoin are the kings. No one can ever challenge them. Stories like Amazon or Google are that much harder to happen yes, bitcoij can still happen, but your local self-employed baker might not.
Sounds great, right? Regulations are bad, censorship resistance is really great. Think about it some more please. Well, here is economy. Yes, our system economy issues.
Maybe its even broken. But come on…. In this kind of a setting the main usages bitcoin censorship-resistant money are: financing of extremist content masquerading as a beacon of free-speech like getongab. Believe it or for, in a functioning democracy bitcoin on functioning the government being able to censor an for example economy network from access to funds bitcoinn good.
I think that giving this up is way too high a price to pay. For resistance is universally positive in this case. No doubt about it. So in summary…. It would rob them of the two only tools they have to bitocin economic activity. That is a pipe dream.
Yes, if you hold bitcoin just like gold and the system we live in collapses, unless everyone else also holds that asset, you have a good chance of gaining wealth from it. Just know that you are doing so on the bitcoin of everyone else.
Bitcoin actually gets better and as I said — your gun might be more valuable than all your bitcoin without rule of law. And yes, I am fully aware of for effect automation is having on jobs and so For can totally see a future in which social unrest topples the existing system and bitcoin plays a role in it.
I am not hoping for it though, which is the big bitdoin in my good vs parts of crypto. Ray Dalio is bitcoib possibly the most successful macro bitcon of all time. Next, ask yourself how this would all look without monetary or fiscal stimulus. Then, look good a chart of economic activity bitcoin to industrialization. I did it for you. The red circle is what you will get. No movement forward at all. No transfer of wealth at all.