Does it feel like your money is worth less and less each year, well that's because it is
Every year, your dollar looses purchasing power, to the tune of about 2% on average.
That number can vary year by year but that is the target set forth by the almighty Federal Reserve.
2% pay not sound like a big deal, but over time it adds up, which basically disincentivizes savings and encourages spending.
And that's how the economy goes round.
"If we can force people to keep their money moving then we can keep the economy growing and expanding forever!"
-Said the almighty Federal Reserve as they followed the above statement with an evil muahahahaha...
In theory it actually doesn't sound like that bad of an idea, but in practically it leads to problems down the road. Specifically, the idea that you can never have boom and busts in a free market economy.
The real problems started long ago...
The FED was created in 1913 but the real problems didn't actually begin until about 1971.
Does that year sound familiar to you?
Well it should, it's the year that the United States decided to move off of the gold standard, move off of having their money backed by a commodity and instead backed by the "full faith and credit of the United States Government".
This is officially when you started to become "poorer".
Check out what happened to the wage growth compared to real GDP starting at that time:
For basically the first time in history they started to diverge.
Asset prices kept going up while wages stagnated, which means you became poorer for the first time in history.
As you can see, this trend has been present ever since and the divergence has been growing wider and wider basically every year.
This is why bitcoin matters...
People tend to think that it has only been people that held their cash in the bank or under a mattress that have gotten obliterated.
Nope, it's basically everyone who has had a job over this period as well.
Things keep going up but wages have not kept pace.
This obviously cannot go on forever so to counter the problem of debt fueled growth, the FED decided on more debt fueled growth!
Enter QE1, QE2, QE3, QE4 and whatever number we are on nowadays...
However, instead of actually stimulating real economic growth, much of that money has continued to poor into financial assets, bidding up their prices even more while real economic growth continues to lag.
There is no end in sight to this line of thinking and that is why bitcoin matters.
People holding bitcoin continue to beat asset price inflation.
In fact, bitcoin is the only asset over the last decade that has outperformed the rate of increase of central bank balance sheets on almost any time horizon going back 10 years.
No other asset can make that claim.
Given that backdrop, it makes bitcoin look a lot more valuable than just as a 1% allocation hedging vehicle.
Don't you think?
Stay informed my friends.
-Doc
Posted Using LeoFinance
You are absolutely right about Bitcoin's advantage. If the heads of state did not hinder the development of cryptocurrency, then everything would not be so sad. I watched the development of the Kin token, it's sad to see what came of it. I really liked your post. Thanks you.
Yea that was pretty terrible. The SEC far overstepped their boundaries on that one in my opinion. How can they make judgements for other countries as well, they are US regulators only...
Thank you for responding to my comment. Experts predict 12-15 years for the cryptocurrency to be approved. This is what the world means. Have a good evening.
12-15 years? Many of these people will no longer be alive by then...
Maybe you're right. This is what the experts say. Maybe they will come up with a law that will accelerate the development of cryptocurrency.
12-15 years? Many of these people will not be alive then...
And you look from dollar perspective, which is in good position because it's a currency used in international trade, and perform really good. For many other national currencies inflation can be much worse what makes bitcoin even more attractive alternative
Yes, very good point. I am looking at a currency that has been one of the "least bad" over the last half century. There are many many worse examples.
Absolutely and especially in developing nations it's far worse, our inflation makes money like a hot potato and its just a spiral as the money is worth less it needs more to service their dollar debt and so we continue to see the currency die and your wealth evaporate
Yep, that is very true. I am sorry to hear that you are going through that btw.