Big Debt Crisis, Inflation, Blockchain, Cryptocurrency, Bitcoin, Digital Currencies, Digital Economy
The traditional financial system is going through an unprecedented overhaul in the next 2–3 years. Coronavirus and the covid induced economic recession and depression that may follow are and will continue to globally cause record levels of debt, stimulus payments potentially leading towards universal basic income being adopted throughout many countries.
However, these solutions are a short-term bandaid and they imply the collapse of our monetary systems in their current form globally. Central Banks cannot print unlimited money forever without causing inflation or currency debasement. For example, if the Federal Reserve keeps stimulus money flowing, unfortunately the US dollar will debase, inflate or lose value.
Recently in the US, Joe Biden nominated Janet Yellen to serve as the Treasury Secretary in his new administration and given her track record in the past as the Chair of the Federal Reserve with monetary stimulus and Quantitative Easing, she is likely to continue QE and inflation ultimately to get us out of the situation we currently are in.
Although there is a contentious argument about the stimulus and monetary policy brewing, central bankers are probably only going to inflate the debt bubble we are already drowning in by printing massive amounts of money because of the scope of the crisis we are already facing and the immediacy of the problems we are dealing with (Because we are in a very tough spot as a prolonged Coronavirus Pandemic, Poor Response and Coordination in curbing covid19 in the US, High Unemployment, and many bankruptcies as well as soaring levels of income inequality are creating conditions for a financial collapse that is not only worse than the 2008–2009 financial crisis or Great Recession but may actually be comparable to the Great Depression of the 1930s) and that will undoubtedly cause the demonetization or debasement of the US Dollar because of hyperinflation.
Many are advocating for bitcoin as a store of value that even replaces gold. These factors and the massive uncertainty and disruption that we are collectively facing as a result of all these factors are already causing the beginnings of what may be not just a spike but a massive bull run for Bitcoin and other cryptocurrencies as well. Recently the crypto market cap broke the $1.8 Trillion mark and Bitcoin itself edged above a $1 Trillion Market Cap with a price of $55,000/BTC, which may be a great sign for cryptocurrency holders, but an ominous sign for the traditional banking system and type of financial crisis we may be facing ahead.
Since the Federal Reserve, Central Banks globally and Central Bankers have no option near-term in the next few years but to continue inflating debt-cycles, they are already planning on transitioning to a new system of Central Bank Digital Currencies (CBDCs). This won’t happen all at once, but this marks a shift to a cashless society from even the traditional banking system itself. And the People’s Bank of China is moving fast with advancing its Digital Yuan.
We were already moving towards more and more P2P (Peer-to-Peer) options in fintech as we saw with the rise of cryptocurrencies such as Bitcoin, mobile payment options such as Square, Venmo, Paypal, CashApp.
However, what was once thought of just as the fantasies of Cryptocurrency or Gold Libertarians, with the potential coming debasement of the US Dollar and the rise of value of reserve assets or digital assets such as Gold, and Bitcoin are now entering the mainstream of thought in finance and technology circles and what will soon enter the mainstream of thought in general as these ideas pick up steam and permeate the narrative of the coming shifts in global macroeconomics, finance, technology, commerce, business and society as debt-weary big banks, corporations, big investors, retail investors and younger generations such as Millennials look to a store of value or reserve assets as a hedge against inflation. Traditional Finance and Central Banks may even be disintermediated because of Bitcoin and Blockchain Technology as People start to favor Decentralization and DeFi (Decentralized Finance).
Alibaba and Ant Group Founder and CEO Jack Ma has said that the traditional banking system needs overhaul and innovation and that fintech and P2P value such as Cryptocurrencies are the future for tech-savvy younger generations and a key to a prosperous financial future. His critical remarks about state-controlled banks triggered a retaliation from President Xi Jinping who would start a crackdown on Jack Ma’s Alibaba and cancel Ant Group’s IPO (His Ecommerce and FinTech Conglomerates which have brought unprecedented wealth and innovation to China and which epitomize the success of a Free-Market Capitalist Mindset and Internet or P2P Entrepreneurs and Companies in China).