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This week, the Federal Reserve's balance sheet officially crossed $7 trillion. Total assets on its books amount to an unfathomable sum, and that's just one central bank in one country, propping-up the world's most prosperous economy. Whatever the rationale or excuse, consensus is growing that such interventionist policies cannot be sustained without grave and permanent economic damage. By contrast, Bitcoin Cash (BCH) is potentially the world's first sound, hard money for the digital age. It's both a medium of exchange and a store of value, stateless, peer-to-peer, and uncensorable. As such, it can be in position to offer a viable alternative when those holding traditional government fiat sober from a long drunken party fueled by politicians' loose credit, soft money wreckage. A fortified, scalable BCH infrastructure can be a global hangover cure, and it might be needed a lot sooner than anyone can predict.
Alarmism is an easy and favored way to manipulate folks into adapting certain behaviors. The problem is, as Aesop’s #210 fable, The Boy Who Cried Wolf, illustrated, going too far in making such claims runs the risk of not being believed at all.
It’s right to warn against over-playing one's hand in such matters, but do not forget: there was a wolf. In the end, a wolf did really appear.
That’s exactly the case with regard to predicting a coming crisis, sure that it is just around the corner. Catastrophists and doom peddlers use anecdotal happenings at the expense of all else, and exploit humanity's hard-earned naturally selected rational anxiety.
Again, eventually there was a wolf.
What to do? What can a person hope for when it comes to filtering out hysteria from clear evidence? History helps. Data helps. Checking our emotions helps. Most of all, preparing for catastrophe in prudent ways ensures two things: peace of mind through proactive readying, and understanding how risk is a significant part of life.
Traditionally, the financial hedge for currency dilution, an answer to mass printing by governments over-extending themselves throughout otherwise freer markets, is to seek refuge in precious metals like gold. And while that's an option, unfortunately it is legacy systems controlling the barbarous relic's fate: gold is the central bankers' plaything -- governments hold the vast majority of it at any one time. Safety sought in gold forces those fleeing political money right back into the same arms.
The point hit home recently when the US Department of Justice, in conjunction with the FBI and regulator CFTC, announced JPMorgan Chase & Co. agreed to a $920 million settlement in connection with defrauding safe havens like precious metals. Those perhaps unfamiliar with JPMorgan should know it's the leading US bank and ranks among the globe's financial titans (the top four belong to one country).
JPMorgan "between approximately March 2008 and August 2016, numerous traders and sales personnel on JPMorgan’s precious metals desk [...] engaged in a scheme to defraud in connection with the purchase and sale of gold, silver, platinum, and palladium futures contracts [....]" the DOJ settlement noted. "In tens of thousands of instances, traders on the precious metals desk placed orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution, including in an attempt to profit by deceiving other market participants through injecting false and misleading information concerning the existence of genuine supply and demand for precious metals futures contracts. In addition, on certain occasions, traders on the precious metals desk engaged in trading activity that was intended to deliberately trigger or defend barrier options held by JPMorgan and thereby avoid losses."
Dilution Takes Many Forms
That's right. The gold so many sound money, hard money advocates yammer-on about is easily manipulated, schemed because it's in the same basic hands as its fiat counterparts. The point isn't to discourage gold hedging, it's more to point out how inadequate gold ultimately is when someone holding wealth in fiat is looking to strike at the problem's root.
Let data and evidence be a principal guide, not emotion or theory that no longer holds to basic, real-world scrutiny.
Evidence continues to compound as it relates to a potential global monetary meltdown led by the US. The M2 money stock (a key US metric for inflation hawks), displayed by Federal Reserve Economic Data (FRED) published at the Federal Reserve Bank of St. Louis, shows a crazy trend ongoing for decades and then rather suddenly bursting out this year in the wake of COVID-19 measures, of course.
M2 includes cash, checking and savings deposits, money market and mutual funds, timed instruments popular with regular people, and as a broader measure has been a reliable way to literally see wealth being watered down. These are not my crazy conspiracy, Boy Who Cried Wolf numbers ... these are government data with an eye toward always putting best feet forward (in other words, chances are it's even worse than we know).
The wolf could very well already be here. I'd say you would not be irrational for thinking so and acting accordingly.
Moving from the US dollar and to a favored European fiat, Asian fiat, is likely to be a quick, liquid-friendly option. It's important to note all of those systems are fraught with even worse politics (depending on your outlook) and, you guessed it, are undergirded by the US dollar the smarter set will be attempting to avoid.
I'd be remiss if I didn't least mention a new-ish alternative theory rolling around, making its way through popular culture, capturing the attention of even aging rap stars like Ice Cube. It's Modern Monetary Theory (MMT), and it is among the most seductive of notions. It is also very hard to blame anyone for at least wanting to believe in it. As Cube stressed, "America loves to cry broke. But in America money does grow on trees." Yep. MMT advocates believe talk about scarcity and inflation is so much puffery, fiction. Governments can print to their hearts' content under the right circumstances and pull wealth out of thin air. If you're part of this camp, I wish you well.
Between MMT fever dreams and government monopoly money (both of which pin hope upon politicians), where does that leave those who are beginning to sober from the drunken monetary party? Governments have liquored us up on consequence-free economic policies, promising the moon and stars, and we were just drunk enough to believe them for a while.
But the sun's coming up, the music stopped, and our fiscal temples are beginning to throb. The traditional cure of downing some precious metals and sitting a spell on the couch until we 'get it together' is gone. Global financial arrangements are such that there is no magic escape hatch to avoid the US dollar's shrapnel, its disastrously long shadow.
For over a decade now, however, pockets of fringe financial kooks experimented with something they call a peer-to-peer electronic cash system. It proved its worth, growing from modest beginnings into a curiosity and then a full-fledged phenomenon. As Cornell computer scientist Emin Gün Sirer explained during a recent podcast, crypto is poised to "eat the world."
The project has since taken many forms, thousands of variations, but continues its foundational goal of being sound, hard money for the world as Bitcoin Cash. BCH users' experiences have been nothing short of incredible, but don't believe me. Download a wallet, snag a few satoshis, and see for yourself.
For example, leading crypto payments service provider BitPay shared results of a study conducted by research and advisory firm Forrester Consulting, The Total Economic Impact of Accepting Bitcoin Using BitPay. Findings include interviews with four merchants that accept BCH and other digital assets, and insist up to 40% of customers who pay with crypto are new to the merchant.
Something about using cryptos like BCH draws customers in, and not just for the novelty factor. Purchase amounts are twice that of credit cards, according to the study. Merchants are also incentivized to incorporate BCH because it is less expensive to use than traditional credit cards and there are no fraud-related chargebacks (a giant concern for merchants).
The point isn't to boost BitPay necessarily, but to show just how powerful Bitcoin Cash could be if given a chance to thrive, if more people understood its potential based on legitimate evidence.
The good news is the BCH roadmap is gearing to be a substantive alternative to the above monetary problems. Bitcoin Cash has a dedicated team tending to its base protocol layer, fending off all manner of attacks, battle tested and ready to take advantage of what will surely come in terms of being able to provide a viable option in the wake of a global money crisis.
Bitcoin Cash is laser-focused on being that, and being that right away. Sound, hard money is all the project has ever wanted to be, in fact, as other crypto projects look to act as mere banking settlement layers or mostly-exotic derivative financial instruments. BCH also has a inventive, brave proposal to lift itself into the gap left by crypto coins who've abandoned the medium of exchange + store of value emphasis, shoring up its code and fortifying Bitcoin Cash to scale as seemingly inevitable demand seeks it out.
The wolf is here. The hangover is beginning. There's an answer available to us.