First off let me start by saying I do hold dollars. It may be a shitty measurement, but it is FAR better than any other fiat currency, especially compared to my local currency the Rand. I guess the pound and the Euro are relatively okay as the big three sitting on top of a burning pile of worthless paper and fake numbers. The more I learn and read what's going on, the more I am convinced that fiat money as a whole as we know it today begins to die.
At the beginning of the crisis, we saw the dollar rally as people looked to get out of assets and into the dollar thinking they needed cash to be ready for anything this pushed down asset prices like stonks and homes (even though it hasn't reflected yet, banks have already started not to report housing price index numbers, because they know it will drive fear in the market.)
To ensure the asset bubble created does not bring down the broader economy, the fed has pumped multiple Trillions into the economy to drive rampant speculation and asset increases in nominal value due to inflation.
One trick pony
There was a time where central banks had several tools at their disposal, they could:
- Lower interest rates
- Increase interest rates
- Quantitative easing
- Quantitative tightening
Now since they've got almost nowhere to go with cutting interest rates with it near zero, its only quantitive easing left to keep this circus going. Sure they can head into negative territory but this only delays the inevitable.
Fundamentals don't matter
In an ideal situation, what the central banks would need to do is collapse the economy by raising interest rates, giving people a reason to hold bonds and begin to clear out all the misallocation of capital. This would lead to far more significant job losses in the short term but bring about a recovery much faster on a stable footing going forward.
This will, however, result in chaos which is why the banks are trying to avoid it and printing the dollar and other fiat currencies to extinction. If the currency dies, at least it's not their direct fault, its seen as a necessary fatality to maintain the status quo.
Hyperinflation won't be pretty either, but it's all we have left.
Finding balance is not an option
At this point, I can't see central banks making any other moves but to print the dollar into oblivion. This means we will see de-dollarisation continue since there's no additional fiat money that can stand up to the dollar we'll have to look at new sound money alternatives.
This is the main reason I am so bullish on Bitcoin and cryptocurrency as a whole as well as precious metals. The dollar had its time, it's been abused, misused and created prosperity for the world but also created a lot of pain too.
It's time to find a balance, a slow transition from the dollar to other assets will allow the world a chance to reset. If we have a life raft, we can allow people to get on, and then allow central banks to make the tough monetary and fiscal decisions to get their fiat currencies back on track.
In my view, Bitcoin and gold could be used to give fiat money a second chance, but I don't think central banks are willing to lose their power and give people ideas of holding their own money.
I think the CBDC will be their next option as they desperately try to cling on to a system that has eaten itself from the inside.
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."
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