The deflationary aspects of a free market avalanche of investment capital into cryptocurrencies is terrifying, especially for a world that is drowning in debt represented by existing national currencies.
Here's the frightening scenario : you owe several hundred thousand dollars or yen or euro on your mortgage and other debt. Your employer is pretty hip and they start paying you in this new cryptocurrency because they see the currency rising so they have transferred all the company's cash assets including payroll into a cryptocurrency. They hope the transfer will lead to increased bottom line earnings for the company, since the cryptocurrency keeps rising and that means the company may enjoy a currency arbitrage profit as their former currency not in crypto keeps rising and providing profits.
For you, the new payments in crypto are great, because by the time you finish paying your bills each month your paycheck has risen in value...so its like getting a bonus with every paycheck ! What's even better, you easily transfer enough cryptocurrency each month into dollars because the mortgage servicer who you sends your mortgage to specified in the mortgage agreement that your payments will be in dollars. So too did the credit card companies. So you translate some of your crypto paycheck into dollars and pay your debt bills.
When banks reduce their appetites for making loans, economies slow down and suffer. The gain that indebted consumers made from the cryptocurrency translation resulted in offsetting losses for banks. Since there are a lot fewer banks than borrowers, the gains for each individual borrower are a lot smaller than the huge losses that the banks will take in receiving loan payments in a currency that is in free fall because of the supply-demand equation for the more favored crypto. What you then have is a mortgage crisis like in 2007, magnified several times over. In the mortgage crisis, individuals received small benefits by living in homes without paying mortgages, while banks and holders of mortgage backed security liabilities died a death of a million slashes as they absorbed all of the defaults. This time it will be far far far worse.
What makes this scenario even more catastrophic is that in order to stay in business, the banks will need massive capital infusions from governments, just like last time. But since governments cannot mine cryptocurrency like they could print currency, whatever infusions of liquidity they make to the banks to save them will simply serve to push the value of cryptocurrencies higher, causing this entire process to multiply to the point of runaway reaction. Cryptocurrency mining procedures are just too small and difficult and time consuming to be useful in a liquidity starved world.
The solution, of course, is to pull the cryptocurrency plug once the problem appears. But as we see time and again in financial crises, by the time the problem appears its way too late to take corrective action that would avert a catastrophe.
Noah Reyes
So that's where the world unwittingly is going, and because governments have lost so much trust in their constituencies, and also because they have shown an incredible set of blind eyes to work on fixing problems, this deflationary firestorm will occur and destroy the world's financial system. There is a huge amount of money to be made on all of this, just think about who gets hurt if the major banks really fail and the governments are unable to save them. Bank stocks, industrial stocks, home builders, home furnishers...basically everyone. This is the one scenario in which the stock market could not even be saved by the government printing press...what an interesting idea !
So from an investment standpoint, the growing wave into cryptocurrency will provide the investment opportunity of a lifetime. Its the perfect storm...it combines the seemingly universal dislike of government intervention to prop up highly overvalued stock markets so the rich get richer while the working person cannot get a decent raise, with the also seemingly universal desire to keep the internet free and beyond the clutches of government regulation. It gets rid of these dastardly Central Banks that have done nothing to help anyone but that same wealthy one percent that benefits from zero percent interest rates, and individuals love the perceived strength that a currency freed from government entanglement means to a free world. Everyone sees the nirvana, but hardly anyone understands the devastation that deflation has on a world so over-leveraged on debt.
Benjamin Green
Interestingly, the winnings from this deflation have nothing to do with whether you decide to put a few thousand dollars into Bitcoin so you can look cool to your kids and co-workers. No, the profits in this one will be in the old school avenues, assets denominated in the old currencies that crypto is looking to replace. Imagine shorting Goldman's stock and actually seeing it drop and stay down. Or seeing Berkshire Hathaway put that old man who has been a beneficiary of his time sink into oblivion and turn the old wizard into an old fool.
The most interesting times in the financial world occur when the world moves from one age to another. Think of agrarian to industrial, industrial to government/military, and now government/military to information age. At all of these interfaces, the seams were sharp enough to cause a terrible rip in the fabric of the world economy, and winter came in the form of global depressions to wipe away the old leaves and dead wood. Cryptocurrency will be the death knell of the government/military age, because it takes government out of controlling the money. There will be a new money with millions of new overseers and a free market that replaces the dominance of small cabals of government bureaucrats who dictate the terms of commerce in the world.
Landon Bell
That seam is going to be greater than most in the past, because of the magnitude of what is being replaced and the terribly ripe condition that exists to be replaced. The interface will be epic, the transition states along the way will be horrific. Remember what Brad Pitt cautioned in The Big Short :"...for every one point rise in the unemployment rate, 40,000 people die". That relationship will rise when this nightmare takes hold.
It’s so interesting how a development led by young people - the advent and expansionary use of cryptocurrency - still will be subject to the old rules of society. The axiom "may you live in interesting times" - originally intended to be a cautionary advisory - along with the caution to "be careful what you wish for as it might come true" both ring in my ears as I contemplate how cryptocurrency will be the bleach that washes away the excesses of a dying age in favor of the birth of a new one.
Aiden Lopez
Economic depressions are magnificent social colonics, as they wash away all of the filth that accumulated in the prior age. Every bad thing that you saw on display in the lead up and psot script of the financial crisis is about to be gutted and burned. Yet the world will enter its new economic age hamstrung by the pains of paying a severe penance for its foolishness of the age it is putting to rest. The best thing about economic depressions is that the greatest transfers of wealth - usually from the haves to the have nots - occur in these times.
So if you really believe that cryptocurrency is here to stay and the next big thing of the future, then take precautions now and get yourself in position to be one of these beneficiaries of the transferring wealth. Have your plan ready, you will know when its time to execute. Fortunately for the foolishness of the Gods of the old world, they have put up the prices of assets so high that you will have plenty of time to get onboard when the train starts heading down the mountainside.
Enjoy the ride !
Kevin Howard
High IQ post. Summerfags to busy wasting their BTC into pumped shitcoins so don't expect any replies.
Lincoln Parker
Didn't read, but crypto isn't a proper currency. A currency shouldn't increase in value because more people have to use it. A currency should hold the same value no matter how much demand comes in.
Austin Thomas
>DB derivative exposure 30tt USD >crypto market cap global fx trade 3tt USD / day
Don't get me wrong, I LOVE the idea of the government and banking cabal getting gutted - they deserve nothing less after the fuckfest that was '08 - but I think we have a long way to go. That said, it would be glorious to see Boomers have the entire system they've constructed by fucking over the next generation(s) skullfucked into nothingness by crypto.
What a time to be alive.
Also, great post OP.
James Turner
Excellent posts. I don't know how much will come true but I can promise you a lot of shitty second and third world countries that have people oppressed by their government will be becoming more and more interested in crypto. And we will see BTC lose it's dominance yet still continue upwards in price, the gold of the crypto world.
Glad we are riding this market together.
Liam Hughes
>tfw the worst case scenario is me being a billionaire >tfw the best case scenario is billions of humans being culled >tfw helping push you shitstains off the face earth by buying memecoins
FINALLY
Brody Jackson
Same. Can't wait to privately fund the RWDS after the collapse of financial institutions.
Jaxson Roberts
The financial system is collapsing under its own weight with massive leverage and over indebtedness. Crypto simply provides a store of value to take your money out of a dying system.
Matthew Smith
First of all, great topic of discussion. I'm a macroeconomics student this semester and this is really speaking to me. >Since there are a lot fewer banks than borrowers, the gains for each individual borrower are a lot smaller I do not totally agree with this. I mean, you're 100% right, but you say that like it's a bad thing. People like to save their money. Banks like to borrow money, since it's one of their biggest ways to turn a profit. Turn that away from the banks, they won't need your deposits. If they don't need your deposits, you'll either live with your monetary units under the couch or you'll want to make it grow. No more deposits - what can you do?
Interest rates go down. Investment is more appealing. But what can you invest in? Here's my cannundrum - with no banks to mediate relations between investor and investee (?), what will happen? I mean, how can an 80yo lady understand how a business running on ETH enough to invest in it? Banks will always be needed. But hey - there's no ""cash"". What can they actually do?
My guess is - banks will adapt. They'll start introducing btc and eth on your dashboard. Then they'll slowly start to remove ""normal"" monetary units. Interest rates will flow. Debt will flow. Inflation will flow. But we'll lose a big part of the Gov power - Monetary Policy.
What will this mean to the world? Monetary policy has been one of the ways the gov uses to keep inflation, interest rates, exchange rates, etc under control. Does this mean that Fiscal Policy will be much more used? How can that be? As y'all know, the Central Bank is basically an independent authority. You can't vote on the people that work there. They do wtv the fuck they want. Fiscal policy tends to take a little more time, you have to get it through the legal places.
What's the future of Government?
>usually from the haves to the have nots Isn't this usually the opposite? I mean, oil crisis, 9/11, 2008 - isn't the 1% richer?
Luis Sanders
>A currency shouldn't increase in value because more people have to use it that's literally how all currency works
USD is more valuable than it would be if it weren't the reserve currency of the world
Christian Davis
>When banks reduce their appetites for making loans, economies slow down and suffer.
I'll just start a loan agency with my mad crypto gains.
You small minded fool.
Jaxson Sanders
TL;DR No company in its right mind would pay salaries in a currency that can make 10% or more value swings in hours. Just fucking think about it. Cmon.
Aiden Robinson
1BTC is one lambo in 2020 but its already half 2017 gone
so tell me how would it be possible?
Dylan Brown
Basically venezuelans are using bitcoins, because local currency value is eaten by inflation.
The fed still keeps usd stable against other currencies. You don't see massive deflation because the fed prints it away.
Camden Baker
>The fed still keeps usd stable against other currencies. No they don't, the very idea is absurd as there are more than two currencies
you just don't notice currency fluctuations because you're thinking in your base currency and the money supply is so large that movements are comparatively small
a $20 trillion crypto would also move slowly
Matthew Russell
So Zimbabwe printing money didn't devalue it against other currencies?
Joshua Morris
That 2008 crisis was a debacle because those companies weren't allowed to fail and were instead bailed out by the establishment. Most of those companies did nothing but provide union jobs for 80 years old boomers who retired at 50 with a pension, so fuck them. They drive up the cost of cars and homes and basically priced the USA out of the market for car production based off of worker wages. It's all bullshit.
Joshua Powell
>fiat is supernaturally stable vs other fiat currencies! just look at the ZWD!!!! you wat mate
Aiden Bailey
Interesting take. What's your view on pensions? What will happen to them if the world truly goes towards crypto?
Juan Anderson
Here's an example of Venezuela printing money leading to its currency devaluing. The fed printing money lowers the value of the currency.
You are quite literally arguing against yourself >A currency should hold the same value no matter how much demand comes in. >A currency should hold the same value no matter how much demand comes in. >A currency should hold the same value no matter how much demand comes in.
Levi Clark
This is actually really valid, and I am wondering what happens when we start seeing loan systems via Smart Contracts over Crypto.
OP, do you think there will be another dot com boom with smart contracts?
>Fat old investors on wall street barely understand how a crypto works >No idea wtf a smart contract is >Its making tonnes of money though, lets dump trillions into it >Suddenly a year later people realize 90% of these smart contracts are shitty pajeet coins that don't do anything so they try pulling out >Trillions of dollars suddenly pull out of crypto market and all the ICOs collapse, even the good ones because these wall street geezers can't tell the real ones apart from the pajeets >World economy flatlines for a year as the crypto market suddenly dies off for a few months and all the normies panic
Ethan Long
nice blog faggot
John Scott
>A currency should hold the same value no matter how much demand comes in That's the idea. When demand for the currency rises its value, the gov can print to offset the rise. Not hard to understand.
Brandon Reyes
The fed's role is price stability. Not letting the currency run away with deflation.
Noah Davis
It would stabalize by that time, numbnuts.
Ayden Ward
Calling all smartfags.
So what happens to the value of a given cryptocurrency of fixed quantity (say bitcoin), in a world of n--> infinity competing blockhains?
Adrian Johnson
Does your name begin with a B?
Hunter Price
>A bunch of autists try to by an overpriced car using space terminology are going to be the new rulers of the world
Landon Richardson
bump this thread
Jacob Jones
banks were good in an age of sound money they are kiked-out turbousury awaiting their much belated deaths and the vampires feeding on them or benefiting from them today eurosocialism will die, also a welcome breath of fresh air enter globally balkanized ancapistan of the future
Ayden Hughes
Bump for interest.
Jason Campbell
why do we even use USD anymore
Mason Parker
This fucking thread... This is Lovecraftian Horror level mindfuckery.
So spending an hour grocking this, it seems like the biggest challenge to the growth of the blockchain economy will be conflict with the government. Goverment wanting their taxes, government shutting down exchanges, etc... Once the deflation becomes truly apparent we may even see governments seizing cryptoassets claiming it to be tied to crime or funding terrorism or some such moral panic bullshit. This could really setback the adoption of crypto. The best solution to this problem I see is trying to partner with government and get them to adopt crypto instead. Can you imagine a US state investing in crypto early on? Within a decade they wouldn't have to tax their citizens ever again. They would have more money than they could ever dream of from taxes. Maybe in a year or two once we are all crypt lords, we should run for public office and try to favorably influence the opinion of the governments towards crypto?
Eli Allen
I think you're absolutely right about the government, and It's why I'm not 200% eager to hop on board. I think you can diversify your portfolio with Crypto, but it's just a bit scary. There could be an opportunity for people to adopt a dual currency system after a crisis, but I don't see the US adopting crypto because it strips them of their power to fuck everyone. I think August and September will have some answers, but I'm talking out my ass here.
Nicholas Jenkins
cool story broh crypto, unlike phisical elements, is subjected to the addition of new alternatives similar and with improved functionality upon the previous ones
it's not fitting the role of world reserve currency, not even PMs are
people are not chasing that, only a minority of smart coincidentaly correctly educated in economics are resilient to the monetary comedy show
by natural laws, with time and increased prosperity savings are rewarded, but in this artificial environment of credit expansion worldwide, it's not even when holding scarce commodities
the trends of bitcoins are due to something else, and that's pure idiotic speculation
Bitcoin is too early to be a proper tool to help sane people avoid the cons of the coming financial crisis
scarcity of btc is a delusion hidden behind hype, it's price and it's true value won't make any sense for decades
Josiah Moore
I just can't get enough of this timeline.
Isaac Kelly
Fuck off plebbit faggot.
Levi Brooks
it's called exponential growth, plus this meme needs to be pushed for when the price surges past an absurd amount like 20k people will begin to think it's possible and buy towards that future projection
Ethan Garcia
High IQ post enjoyed reading.
How do you best recommned we 'position' ourselves to be a beneficiary? i have a lot of money in good crypto's if thats what you mean.
I'm 18 y.o and REALLY want a headstart in life. i come from a very poor family but i know the good life is within my reach.
Jeremiah Reed
The problem with this theory is that all the government has to do is criminalize crypto. They did it to gold in the 30s trying to fight deflationary cycles, they can easily do it again.
Leo Myers
Reading this thread feels like a colonoscopy
Jonathan Turner
>Implying this isn't a copypasta
Eli Rodriguez
and what happened to gold? is still used today, and valuable
I used to think like you but the more I get into crypto the more I realize is highly tied to other aspects of our daily life that are completely irreplaceable in our society, for instance you can ban crypto in the sense that you cannot longer use it to get fiat, but there's no possible way they can ban transactions and trades between people without baning certain aspects of technology or our internet privileges, at least not in first world countries anyway
people should really start focusing on the actual use and implications of cryptocurrency instead of seeing it only as some kind of speculation tool
Isaac James
>and what happened to gold? is still used today, and valuable Only because the government made it legal to own again 40 years after banning it
Josiah Hill
>decides to ignore the rest of the post, and my point
k
Evan Foster
>TFW when you realize WW1 and WW2 were fought over gold vs fiat; and WW3 will be fought over crypto vs fiat.
Kayden Gonzalez
>I'm a macroeconomics student Here is your mistake. You are being brainwashed by the system. Im sure they not teach you cucks about bitcoin and how to save your wealth by holding it while getting rich in the process as the bond market collapses in the next decade.
Adam Taylor
>government Of what country?
There will always be bitcoin friendly countries that profit from doing so, so no global agreement will ever be achieved due simple game theory.
Simply move there and enjoy your wealth.
Julian Ross
Hold 21 BTC, so you are part of the "1 million club". Actually less than 1 million people, since around 2 million BTC are estimated to be lost forever.
Long term you should be rich.
Dylan Cruz
just remember, there isn't even enough BTC in the world for every Australian to own just 1 each.
Always be HODLing, Lambos are just the beginning.
Cameron Turner
I think we can all agree holding at least some Bitcoin in smart long-term. What about ETH, Lite Coin, or Ripple? Are those worthy of long term positions? Personally, ETH is the only thing aside BTC I'm focusing on for long-term holdings. Everything else is in trading territory for now.
Austin Parker
I understand this. However I'm comfy where I am and would prefer to live in my home state my whole life. If need be we could make a ocean colony or even a goddamn space colony if we had to. The genie is out of the bottle.
Wyatt Martinez
Ocean colony is probably more cost effective... hell the Chinese are making islands these days, aren't they?
Adrian Scott
the dream bro
Henry Bailey
How can it be deflationary when cryptocurrencies are easily cloneable and created? Sometimes I wonder if you people like to hear your own voice.
Robert Cooper
This is what I wonder:
Nathaniel Brown
There's a faulty premise that everyone will agree on one cryptocurrency (say Bitcoin) and it will defeat the evil banking cartel as it is immutable and scarce. It is the great deflation reckoning that many preppers dream off. It's like Americans dreaming the USD will remain dominant forever. There's nothing preventing new blockchains from replacing each other until the end of time if economic failure occurs.
