Can you afford the status quo?

It is now clear, to anyone who has eyes to see, that the financial system of the West is fast approaching a critical point and that wide-ranging systemic change is already under way. Most major economies now have debt levels close to, or more than 100% of GDP.

We should remember though, has Dalio has been saying for years, these changes have happened many times before, and will happen again.

The crisis of 2008 resulted in huge private debt (mostly bank liabilities) being transferred to their nation states. Then in 2020, to this already unsustainable borrowing, governments added the vast costs of pandemic response policies. And now we find ourselves in 2024 in what looks very much like a debt spiral.

And these debts do NOT even include the huge future liabilities such as healthcare and pension entitlements that a mostly unsuspecting ageing population believe they will receive. Since 2008, governments around the world have used money printing and inflation as the way to manage the debt ocean in which they are swimming.

However, the debts continue to get bigger and the ability of our institutions to manage it through policy, or even through slight of hand, gets weaker. Quantitative easing (QE) and accelerating devaluation of currencies will remain the tactic, but more and more people can see what’s happening and are looking for safety nets that central banks and governments cannot dilute, control, or seize. Perhaps the best explainer I have read about QE has come from Dr Saifedean Ammous.

In August 1914, at the outset of WW1, a time when all bank notes were convertible to gold, large crowds of fearful people queued outside the Bank of England to demand their paper money (￡5 notes) be redeemed for the gold they thought they owned. But the bank didn’t have their gold because they had printed more notes that the gold they held. Oops.

In this tricky situation, and with a war to fund, Britain sought to raise funds by issuing war bonds. However, the Brits didn’t want / trust these bonds and the take up was disappointing. In an act that Keynes described as a ‘masterly manipulation’, the Bank of England printed money to fund the accounts of two private individuals who then purchased the balance of the unwanted bonds. The bond sale was then trumpeted as a great success and vote of confidence in the government. This was the first act of QE. (This was only discovered when long-secret documents were published in 2017).

Today, governments and central banks continue to devalue and dilute currency as quickly as their reputation management allow.

And yet one look at assets that are hard to dilute will show you what has been happening over the last century. Why does a house on Miami beach that cost $140,000 100 years ago now cost over $30m? The house and the land it sits on has not changed much at all. But the currency used to purchase it has become much weaker. And that’s what inflation does. It moves the aspirations of ordinary people further and further out of the their reach. Inflation still funds wars and political agendas, it’s just that now the politicians and central bankers don’t even pretend that anything is backing their issued notes.

Just a few weeks ago, the government of Malawi devalued its currency by 44%. Those that were fortunate to have savings saw their savings reduced by 44%, through an act of sabotage inflicted upon them by the leaders they elected (with the help of the IMF...)

I, along with increasing millions of others, have chosen Bitcoin as an un-dilutable asset in which to save. While anyone has been free to buy and hold Bitcoin for 15 years, in approving a Bitcoin ETF, the SEC has effectively made it much easier for large institutions to now hold it too. And billions of dollars every week have been flowing into the asset as Wall Street wealth looks for a place where it will be preserved.

There is no CEO or central bank for Bitcoin. There will never be more than 21million coins. Its monetary policy is written in immutable code controlled by a global network of independent nodes. No government or central bank can change or control this.

I am not ‘talking my book’, or shilling the latest meme coin. I am committed to sharing the first, decentralised, fully global, fully digitised store of value that will preserve the savings of the poor, the working and middle classes, as well of course, as the wealth of those who have much more.

Reach out to me to find out more. You can’t afford the status quo.

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