Why are crypto currencies and Bitcoin the solution to the economy| The dollar is dying?
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This is a special publication, some time ago I wanted to write about this, about how the "dollar" from certain events in the past, began to die and how "United States" began to abuse its status as issuer of the world reserve currency. I must make something clear, this publication does not intend to blame any nation, or anything like that, I will only base it on the facts and actions that changed the economy forever and that from that point to the present has led to the bankruptcy of one of the most prosperous nations in the world, in my personal opinion.
Of course, these are facts that are in history and I will write them down so that anyone who does not know them, will take into account the current state of the economy and how the facts that changed everything happened. On the other hand, and turning everything around, this also benefits all "Cryptocurrencies" enthusiasts to a great extent and as they are, they are the solution to all our problems, especially "Bitcoin" which is a digital currency that meets all the requirements to be a world reserve currency, where no third party has control of its issuance, making it a deflationary asset and a refuge of value, in short, thanks to these people will be able to obtain true freedom, which is not available since governments put it above the population and the free market.
The Beginning of Economic Change | The Broken Bretton Woods Agreement
Before the dollar was the world's reserve currency, before "Bretton Woods", all central banks had their own "Gold" reserves and each currency was backed by it. After World War II, the "United States" was the country that had the most gold in the world, this was because their production was like the best in the world, which made them the richest creditors globally. Therefore, when they met to design the new world economic order at Bretton Woods, decidió́ it was clear that all currencies would be backed by the dollar, and the dollar in turn would be backed by gold. In that sense "the US" was really rich (not like now), así́ that the other countries accepted this agreement.
But at the time when the world decidió́ trusted the dollar, they really started abusing it, particularly in the 1960's when the government had huge deficits due to the Vietnam War, the war against poverty, the mission and the mission to the moon. The creditors became suspicious. Wait a minute, the US is creating all this money and it's not possible that they have enough gold to back it up! Then some creditors, France in particular, began to exchange dollars for gold, and then on the verge of bankruptcy because the US gold reserves were disappearing, Nixon abandoned the gold standard, instead of doing the right thing (which was to cut government spending, devalue the dollar, and así́ prevent gold from continuing to escape), Nixon almost destroyed the dollar, which led him to violate the Bretton Woods agreement.
The United States experienced one of the worst inflation rates in its history
After Richard Nixon broke the Bretton Woods agreement and stopped exchanging dollars for gold, the US experienced one of the worst inflation in its history. The dollar lost two-thirds of its value against other currencies, but lost even more value against gold. Somehow, the dollar managed to survive, even though there was no longer any gold backing its issue. At that point, the "United States" really did comenzó́ abuse its privileged status as an issuer of the world's reserve currency; and that abuse brings us to the present: More than 26 Billion in public debt, never-before-seen budget and trade deficits, and massive printing of Fed money.
What will happen to "United States", Gold and Cryptocurrencies
The dollar will collapse (along with the rest of the currencies) and the world volverá́ to a gold standard or it could be in this case very different and that is that the Bitcoin has become gold 2.0, so it has great potential as a reserve currency of value. The rest of the countries will discover one day that the US is broke, that the Federal Reserve will never be able to raise interest rates to normal levels without that causing a massive bankruptcy, and that what was a temporary and extraordinary measure, Quantitative Expansion (meaning in short "massive money printing") has become a permanent and necessary measure to keep the stock market and the bond market standing.
The only reason the US can pay its debt is because the interest is around 1%. Greece also paid its debt when the interest was low. But when the creditors discovered its problems and demanded higher interest, Greece collapsed, the same thing happened to Argentina, and the same thing will happen to the US. Interest rates will rise and the US will only have 2 options:
- Default on its debt
- Print money to pay for it, cause hyperinflation and kill the dollar.
Conclusions | Conclusiones
This is what I really think about how things are with the current economy, sincerely the "Cryptocurrencies" have come to change all this world full of power and corruption, these digital currencies based on what is the Blockchain technology, empower people, gives them true freedom, such is the case of my home country "Venezuela", The vast majority of the population is protecting their holdings in cryptocurrencies, especially Bitcoin, they see it as a reserve of value, besides, thanks to the crisis in the country, we have not become the nation that more Bitcoins are bought and sold globally through P2P exchange platforms such as "Localbitcoins".
This has changed my life, this project called LeoFinance, which is the community for which I write these lines and all my knowledge is changing the way we can all work and converge in the same community with the same ideals. One of my goals is to expand LeoFinance to as many people as possible mainly in the Spanish speaking world, to make them understand that this is a powerful project that they can tackle as a real job and that together we can make it even bigger.
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Great insights.
I believe that the dollar is likely to maintain its status as a global reserve currency. There are lack of options.
Having said that, diversification to gold, cryptocurrencies is happening at a faster pace.
The dollar will continue to lose value against hard assets. People will increasingly look at other alternatives for money serving the function of being a "store of value."
I am bullish on the cryptocurrency space for the next decade.
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You are absolutely right my friend, I totally agree with you. The change is happening little by little, we will see how all this ends as time goes by.
Financial Markets Analyst
@lenonmc21
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New new things are leading the world according to the trend.
Honesty and innovation will win.
If one wins, the other will lose in a World competition.
If the most people all over the world will use Cryptocurrencies or Bitcoin, USD $ Or Paper printed Money will gradually be abandoned.
Thank you for Currency Knowledge sharing!
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Thank you very much for your comment, I agree. Through the people who are slowly acquiring knowledge of cryptomonies, they will realize their incredible potential.
Financial Markets Analyst
@lenonmc21
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Bitcoin the future
Dollar the past
The world is preparing for the future in the present
If the world and the financial institutions are seeing Bitcoin as an active refuge with a very good return, this is great.
Financial Markets Analyst
@lenonmc21
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dollar has big reputation in the world, and bitcoin is losing its value in common or low trader, because of price down and up with out any time limit, so bitcoin has risk threat in trading bussiness and dollar has no risk, so i do not believe that dollar will go down but bitcoin price will rise in next few month but dollar is dollar,
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Thank you very much for your comment my friend, but I disagree on several points that I comment.
The dollar does have a reputation, although those who really know how the economy works, you will be surprised to know where they have their investments even though they need the dollar at the moment to be able to acquire goods and/or services.
On the other hand, I don't think you're well informed about the Bitcoin trade, it's been growing strongly and it's not because its price is currently rising, it's because the interest in a strong currency with the characteristics that Bitcoin has is changing very strongly.
And another thing I disagree with, which is totally false and not just me, but anyone who knows how the economy works, the dollar has a tremendous risk and has lowered its value and purchasing power in many years and only the bubble will continue to grow. I think we should inform ourselves much better.
Financial Markets Analyst
@lenonmc21
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