If Bitcoin and Ether didn’t exist and hadn’t already reached a combined market cap of $1.5 trillion,
If a global pandemic hadn’t struck and governments around the world, including Republicans and Democrats who never came up with a plan that leveraged scientists and private industry standards, hadn’t shut down their economies and local businesses and then had gone crazy stimulating the economy with targeted tax tricks, printing money, buying bonds and sending trillions to the United States as well,
If the US hadn’t been waging endless wars with endless deficits at ever lower rates that may have stayed artificially low for at least a decade or two because every country in the world rushed to devalue their currency –
Then, the odds of Bitcoin/ether actually supplanting the US dollar as the world’s reserve currency and possibly creating a distributed global currency, anytime in the next few years or even sooner, would be astronomical.
Instead, all of these things happened.
If and when bitcoin/ether reaches a market capitalization equivalent to the US economy and/or the amount of money supply in the US economy, does the US dollar lose and all fiat currency regimes collapse ? Then again, maybe Bitcoin has already reached that status and we don’t all know it yet.
Since I started buying bitcoin at $100 each in 2013, I’ve explained that the main reasons to own it are because it’s global, it’s secure via the blockchain, and it’s likely to function as a store of value, especially for people in countries where the fiat currency has been repeatedly destroyed by runaway inflation. The United States and other developed economies around the world have fiat currencies that allow endless deficits, targeted tax tricks and endless corporate welfare, but in other countries it’s even worse. As I explained when I was begging you all to buy $100 bitcoin in 2013:
“How crazy is it to own some bitcoin as an alternative currency and hedge against your dollars or euros or whatever? Well, let me put it this way – Would you rather own:
- Bitcoin $ BTC?
- Dinars from Iraq?
- $GLD (not gold, but a paper promise of gold from corrupt TBTF banks), $SLV (see $GLD)?
- Or the #Venezuelan Bolivar?
I no longer buy bitcoins, but I already want $BTC and I wouldn’t want to own the others long term, that’s for sure.
Let’s put those trillion-dollar market valuations for Bitcoin and Ether into perspective.
The entire US economy is about $22 trillion a year. The amount of silver, as measured by M1, in the economy has typically been a small fraction, perhaps 10% to 20% of total annual economic output. M1 is the money supply made up of physical money and coins, demand deposits and other verifiable deposits. M1 includes the most liquid parts of the money supply because it contains currencies and assets that are or can be quickly converted into cash.
The total amount of M1 rose from $4 trillion to $16 trillion last year and continues to grow rapidly after the Fed’s latest 0% rates, bond buying sprees and the endless relaunch. pinjected into the economy by the government. The numbers have gotten so out of control in the M1 data that the Fed says it will no longer release that dataset.
So before the Republicans and Democrats take over the targeted fiscal tricks and central bank fiat currency game to its ultimate conclusion, as shown in the above peak of the long-term money supply chart, the total “market capitalization” of money in the US economy was only about $3-4 trillion. Bitcoin and Ether already account for nearly half of that number.
I often talk about how my theory that Kurtzweil’s rate of change means that innovation always leads to more innovation, disruption and chaos in global markets and that we have to plan and embrace such chaos:
“Mescalero Apache dancers always dance in a clockwise circle around the bonfires. The men, as you will see here, are the elders. They are respected and constantly have rhythmic dances.
The small children in the middle painted white without the crowns – these children are chaos. They represent chaos and they have no set patterns. In the middle of the event, one of the kids started doing one of those modern dance moves. I don’t even know what the modern dance move was, but Lariat Geronimo sitting next to me was explaining this whole concept about chaos and these kids and just then this kid started doing this modern dance.
Such modern dance movement had no place in this beautiful, ancient party tradition, and Lariat tells me, “It’s so beautiful because it’s chaos. It is change. You can’t control the children. These children could change the world. “
And that’s true ! In today’s society, it’s true in the stock market, it’s true in the economy.
Socially speaking, there are children, my daughter, your children, you and me, we can change the world. There’s a pattern set there, people have been doing things the same way in our country for so long, they’ve voted Republican or Democrat, they’ve been partisan, they’ve consumed partisan media, they’ve been part of a global corporate takeover.
It doesn’t have to stay that way. There could be chaotic children who will change the world for the better.
Chaos isn’t always bad. These children danced chaotically; they were beautiful.
You embrace chaos. That’s what Lariat was trying to tell me, and that’s the thing to do in society.
You have to do it in the stock market too. If you want to be a Revolution Investor, you need to find chaotic companies that are revolutionizing the world and revolutionizing their industry.
With the economy, you should be aware that there could be chaos ahead that could undermine the bubble bull market or that could undermine corporate earnings growth. This economic expansion could go in the blink of an eye with chaos.
Be ready for it, but don’t be afraid of it.
It is clear that this also applies to the currency markets. This is why we have long been prepared for the currency war with bitcoin and our long-term bubble bull market investments.
But I have to say that I don’t know what the clearer consequences are of the loss of the US dollar as the world’s reserve currency. If governments continue to print and multi-trillion dollar deficits – we know they will, so does Bitcoin keep rising? Are the prices of most assets continuing to inflate? Probably not stocks, I think. Perhaps real estate and bitcoin are the places to be in a world where the race to devalue all fiat currencies is accelerating on its own. Perhaps bonds, including Treasuries, are the worst place to be in such a world.
And sure, maybe the world is starting to try to criminalize cryptocurrencies like bitcoin and so gold and silver become ever more valuable stores of value again. And of course the US Dollar is still, as always, the cleanest shirt in the fiat currency laundry basket, so it will likely remain at least increasingly more valuable than China/Europe/Russia/etc. fiat currencies, as it has always been for the past hundred years.
I hate to quote Lenin, but after studying the Russian Revolution in depth last year, I keep thinking about this quote from Lenin that will eventually apply to all of this, if not today:
“There are decades where nothing happens; and there are weeks where decades happen.
I leave you with something else i wrote in 2013, which reads like I could have written it today. Which is another important thing to remember. We may still be in the decades where nothing is happening to the US dollar monetary reserve economic system. Because trying to time a top in the markets or in an economic system is always very difficult!
“The Federal Reserve and government economic policies are always going to fail in the long run. Every retiree and/or savers I know are desperate to find some sort of return on their money. The Fed can print more money, can allow big banks and giant corporations to borrow money at 0%, can allow banks to fictitiously mark their worthless assets at any price, and the Fed can buy all these worthless assets with yet other printed money, and the fed can enable large banks to anticipate all from the fed own trading in treasury bills and other securities so that they report 100% profitable trading days every quarter. Does any sane person think that all this misallocation of market capital will work out for the best? He’ll keep getting more corrupt and blatant until they can’t push him any further.
You hear all the mainstream media and the talking heads they quote “warning” people of the end of these fed politicians, as if that were a bad thing. Of course, the ongoing stock market, Treasury, and other paper asset bubbles will be crushed at some point when the music stops. So the policies are all designed to keep that music playing for as long as possible.
Whatever the cause of the next Black Swan Crash, you must have taken some precautions to prepare yourself and your family for it. Buy physical gold and silver bars and coins. Buy land in troubled real estate markets near you. To have money. Maybe buy a few bitcoins because if the next Black Swan is bad enough, they could prove to be an extremely profitable investment as the dollar continues to crumble. Remember that the dollar is down 99.5% against gold since the creation of the Federal Reserve in 1913. And as I just explained above, 99% of this dollar collapse by against gold happened before they created all these new ways to devalue the hard-earned dollars in your bank account.
Is the entire global US dollar economic system in danger of collapsing? Yes, as always, and perhaps faster than most people think. Other than that, there are no easy answers, but we have a disciplined, slow-paced playbook that’s designed to help us navigate it all, as always. Be careful, don’t be greedy, be cool.