Cryptocurrency: Here To Save The Global Economy

in LeoFinance3 months ago

The global economy is in horrific shape. This is not due to the pandemic although that did hot help things. In fact, the global economy was only sputtering along since the Great Recession happened more than a decade ago. In the United States, during the Obama years, the recovery was historically low. Things got a bit better under Trump but still below the historical trend.

In short, the world is affected by a terrible growth rate.

Politicians and bankers all over the world decided to replace production with stimulus. This is a model they followed, basically, for the last 4 decades. While there was a burst in innovation during the 1990s as we transformed into the information age, the results, overall, are lackluster.


The problem with this model is the fact that stimulus is actually debt. Central banks all over the world compensated for this by reducing interest rates to record lows. Today, more than 1/3 the global debt is actually negative. This means people effectively pay to hold the debt. According the Keynesian theory, the idea of negative interest rates acts as a stimulant, pushing people to spend money instead of saving it.

Of course, when we look at the velocity of money, the time a unit of currency will go through the economy in a given period of time, we see a different story.

fredgraph 4.png

This is going in the opposite direction of how the chart should look. If the central bank policies were working, we would see the velocity accelerating, not decelerating. Notice how this is a long term trend, far pre-dating COVID-19.

The challenge is that stimulus is actually debt. Ultimately, as more debt is printed, more money is required to service said debt. This fact ends up suffocating the economy since money is taking away from productive opportunities and, instead, used to pay the interest accrued. It is a fact that is taking place despite the record low interest rates.

Now consider what the situation will look like if interest rates start to increase. Even if the economy does get some traction, interest rates will jump, requiring more of the economic pie to head towards debt servicing, eventually sabotaging the economy again.


Here is where we see cryptocurrency offering the opportunity to save the global economy.

Using the line of thinking laid out here, the biggest advantage to cryptocurrency is that it is not debt. Many attack crypto saying it has no intrinsic value. Leaving that debate aside, since electricity usage powering computation does have value, at least, under this thinking, we can put crypto at zero. Fiat currency is actually less than zero since it is debt. Thus, for every unit "printed" there is interest owed.

Here we see how the ability to fund production without the pie being eroded due to debt servicing is possible. The totality of funds available can increase production as opposed to just making the rent seekers richer.

At the same time, this entire industry is technological in nature. It exists in the digital world. Therefore, we see the ability to innovate in ways that were not present the last few decades. The physical world is hindered by physics. In the digital world, most of those limitations are removed.

We are now in an environment where the only cap is electricity and computation. Fortunately, both of those seem to be increasing at an exponential rate.


Few are aware of how powerful the peer-to-peer concept truly is. This is a way to finance debt that is really going to alter the entire economic model.

Obviously, not all debt is bad. When debt is used for productive purposes, i.e. expand a business or build a new plant, that offers a larger payout as production increases. The challenge we have now is that much of the debt that is created is parasitic. Whether it is corporate "welfare" that ends up keeping zombie companies alive or rent seekers who bilk the system providing very little value, we see that most of the debt creation does not equate into an increase in productivity.

Peer-to-peer lending is going to alter that. When people have the individual choice as to what they will fund, the parasites are ended up with nothing. Under this scenario, people are likely to only be drawn to those opportunities that truly increase production. In other words, they want a return.

Of course, we saw the downside to this already with the yield farming games that took place over the past year. However, in spite of those hiccups, a true financial platform is forming. Over the next few years, we will see lending applications created that truly fund innovative projects, not just putting out together massive token payouts with nothing behind them.


The other major difference with cryptocurrency is the number of people involved. Fewer people are taking part in the benefits of the global economy. In other words, it is not working for the majority of the people. They are effectively falling further behind.

However, with crypto, we are going to have 7.5 billion partaking by the middle of this decade. It is a fact that will allow the funding of projects both globally and locally. This is a much different situation than what we presently see.

The ability to create money is a powerful mechanism. Governments and central banks know this. Unfortunately, they abused it for their own means. Now, anyone in the world with an internet connection can create their own currency. This is important for those areas that were excluded from the present system.

As the crypto industry gets larger, the ability to radically increase the global growth rate will expand. We see an industry that is roughly $1.5 trillion in terms of its market cap. When that number hits $10 trillion, we are going to see a much different world. The ability to innovate and increase production sans debt will be astounding.

Ultimately, it will be what saves the global economy and reverses the decades long trend that it is on.

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Very well said, the created debt is not equaling the increase in production (and productivity if I may add). This parasitic debt is just to sustain people that don't produce.

And yes, crypto can bring the good debt as it shall land where it is needed. All people can benefit from it, with a little crypto education.

Crypto is what the Bretton Woods monetary system was in the Golden Age of the 50, but more sustainable.

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Crypto is going to open doors that few people thought possible. As we embark upon the path into the Metaverse, we see where this is going. Governments, ultimately, will have little part in it since they are dependent upon us operating in a physical world.

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Agree, governments will lose massively in here!

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Power behind what blockchain can achieve is what is driving people to rethink FinTech, everyone is suddenly realizing the value in this technology.

@tipu curate

Very true. That is a lot going on that will be developed over the next few years. We will see a foundation in place that is completely different from what we are seeing now.

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Let's hope something saves the economy--and that crypto is that thing. !WINE

My problem is with the banks. They almost always earn profit and when things go bad, they are the first to be bailed out with our tax dollars. While normal citizens are stuck holding the bags as they either pay for it in taxes and may be stuck holding the huge amount as debt. With crypto, we can cut out the banks as the middle-man and do direct transparent transactions. Thus the less control the banks and governments have, the better it is for us.

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People fail to realize the banks, for the most part, are getting crushed. They operate in a physical world, with branches. They are shutting them down as quickly as they can since they are not needed. We saw 20 years of fintech take its toll on the banking system. Now, with crypto, they face another attack.

It is all adding up to their demise. Some will survive, most will collapse like newspapers did.

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I was going to say stimulus is funded by debt and not the smartest option as it has to bite at some point in the future. Wealth should be spread far and wide with crypto as there are so many more privately held wallets sharing in the new digital finance. This was an area for only elite firms and investment houses now the "masses" or general public are sharing in. I am sad in a way many sold their bitcoin but this was required to take crypto mainstream.

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Everything the government does, US at least, is funded by debt. They pull in very little revenue and what they do is mostly wasted.

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This actually makes things worse as all they are doing is digging a deeper hole for everyone. Never trust a politician as they spin you stories making themselves look good, but at the end of the day we all suffer for what is ultimately bad business and poor decisions.

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Peer-to-peer lending is going to alter that. When people have the individual choice as to what they will fund, the parasites are ended up with nothing.

Cryptocurrencies enabled us take the place of banks as individuals. Nobody likes to have a middleman in a transaction and the future of banking cannot stay the same after crypto mass-adoption.

Under these circumstances, I'm not in favor of spending cryptocurrencies while we have fiat currencies to be used in exchange (As they also lose their purchasing power day by day 😑)

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As they also lose their purchasing power day by day

Dont buy into this myth.

The velocity of money is telling a completely different story.

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Fiat currency is debt since its majorly printed out of thin air, these people can't begin to say crypto doesn't have intrinsic value, it's a two way thing, the governments are hypocrites, they have the power to print money and all this pressure have consequences. Crypto is the future, sadly most government can't seem to get the maths.

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Fiat currency is debt since its majorly printed out of thin air,

Crypto is printed out of thin air. Fiat is debt not because of that but because it is debt. Interest has to be paid on it.

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Cryptocurrency doesn't solve the MIND-CONTROL problem that we have. If people remain ignorant they will continue to be fleeced.

No that is true. They need to wake up. Turning off the mainstream news is a good starting point.

Oh and believing the Democrats are somehow different from the Republicans.

Or that they are the ones actually running the show.

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European and USA economies are at risk right now because debt, regulations, bad decisions and central banks.

Since I joined crypto, it feels amazing to be part of a free, self driven economy.

I cannot agree more, cryptocurrencies appeared in a very crucial moment and can save us from a catastrophy. We have good examples in some African contries and South American.

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The tide is just starting to turn. We need to keep pushing the value of currencies like Leo and Hive. That is where the future lies.

The governments money is being abused and destroyed. Confidence is waning which is going to make life very tough for them.

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internet will be abundant thanks to spaceX's flying internet thingies and crypto will be abundant because crypto, sounds like fun to me :)

At the same time, this entire industry is technological in nature. It exists in the digital world. Therefore, we see the ability to innovate in ways that were not present the last few decades. The physical world is hindered by physics. In the digital world, most of those limitations are removed.

The problem I see here is that we can and do innovate at a rapid pace in the digital world. But at the same time, the physical world, the one where we live in, lags behind because of all the real problems you described above and on other occasions.

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No doubt @gadrian, there will be a clash. That said, the physical world is becoming more digital by the day. We have 3D mapping which is starting to place a digital layer over our entire physical planet.

Eventually, it all will be one. The problem is those institutions that operate in the physical like governments. They still want to maintain control yet there is no place for them.

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It is precisely this dying economy that leads us to be an active part of this economic, technological and social disruption.
Everything is changing and those of us who can be part of that change within our possibilities, having vision we can be victorious.

The worst of all this is that many think it is something temporary and that everything will return to "normality"

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This is the normal. All that COVID did was speed up what was already taking place. We are now at the point where it is obvious where things are going. Automation is coming full tilt and few are prepared for it, either individually or collectively.

There is no "going back".

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Governments and central banks know this. Unfortunately, they abused it for their own means.

Corruption is the biggest problem. If governments and central banks work as they should, there are no corruption the economy will go right. In fact, banks , governments and corruption are parts of the cause of economic crisis causes

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Fact: The global economy will have to apologize (on its knees) when it is saved by cryptocurrencies.

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During the problem of COVID-19, all businesses of the world got shut down. But the online businesses were running perfectly during the whole session. People started trading in cryptocurrencies. For this, they need a secure crypto trading platform for trading and exchanging. Altrady company provides a secure crypto trading platform for all businessmen.