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Bitcoin As a Societal Safety Avalanche

#inflation #federalreserve #neofeudalism #bitcoin

[Opinion Post] If you manage to cut through all the noise on the internet, the virtue signaling, the cancel culture, the tribal democrat vs republican proxy wars, you will realize that brewing under the surface is a once-in-a-millenia socioeconomic schism. Income inequality is growing at an accelerating rate as new data from the Fed shows that the top 1% of U.S. households hold 15x more wealth than the bottom 50%. Meanwhile the Fed is further exasberating the crisis by purchasing the debt of junk companies while simultaneously printing new money at an alarming rate. The decline in purchasing power among the bottom 50% of the population will amplify the existing tension and lead to the emergence of a neo-feudal state.

Michael Saylor, CEO of MicroStrategy, will tell you “the road to serfdom consists of working exponentially harder in order to earn a currency growing exponentially weaker.” The paranthetical “American Dream” — this notion that if you work hard enough you can afford a nice home in a suburban neighborhood and send your kids to college so that they can have a better future than you — has become unattainablefor the masses. For the first time since the rise of the industrial revolution, the youngest generation alive is predicted to make less than their parents. The reality as Saylor puts it, is that no matter how hard you work, or how much risk you take, you will never be able to grow faster than the rate at which the rich are getting richer. Similarly, no matter how hard you work, you will never be able to grow faster than the rate at which the Fed prints money. The money being printing ($4T in 2020!) serves to diminish the purchasing power of most Americans in two ways: 1. It is generating a real inflation rate of 10–15% per year (the CPI inflation numbers are the biggest lie in modern history) and 2. It disproportionately benefits a wealthy minority that own shares of the zombie companies being propped up by the Fed’s bond buying programs. These zombie companies whose business models became obsolete in a pandemic world (travel, hospitality, big oil, banks with high debt) are unable to raise capital through public markets because they no longer have economically viable businesses.

uU.S. Wealth Distribution 1989–2020 source: Federal Reserve

Looking beyond the income inequality problem, the unprecedented U.S. money supply growth has diminished trust in the U.S. dollar as the global reserve currency. All of these factors combined serve as the catalyst for what Ray Dalio calls a paradigm shift.

The world now finds itself at a familiar inflection point which throughout history has served as the great filter to human advancement. From the Sumerian revolt in 2380 BC to the Roman Revolution in 510 BC; from the French Revolution in 1789 to the Bolshevik Uprising in 1917, as societal wealth becomes concentrated amongst a ruling minority, the economically oppressed majority have historically revolted to overthrow their oppressors. However, without a plan to amend the underlying drivers of inequality, most revolutions simply result in a transfer of power and wealth from one ruling minority to another. Throughout human history this viscous cycle has not only led to the loss of life, but also the loss of knowledge, technology, art etc — all of these factors have prevented humanity from tapping into its collective evolutionary potential.

So how do you fix extreme wealth inequality? It starts by replacing our centralized fiat financial infrastructure with a global decentralized version that cannot be controlled or manipulated by a single entity or government — a leveling of the playing field. Both the wealthy and poor stand to benefit from this type of proactive financial system revamp, especially considering the alternative is lingering in history’s shadow. Centralized government planning and decision making led to the extreme economic imbalance we see today, and as such, the solution to the problems we face must arise from some version of the inverse of centralized government planning. As Albert Einstein said “We cannot solve our problems with the same thinking we used when we created them.”

Bitcoin by definition is a finite and decentralized digital currency. It is not owned or controlled by any single entity and thus transcends all physical and geopolitical borders. It is open-sourced, offering complete accounting transparency through unrestricted access to the blockchain ledger. Bitcoin’s decentralized nature makes it the most viable candidate for financial system course correction. As a means of intervention, Bitcoin is to the rising socioeconomic tension as a safety avalanches is to the ski slopes after heavy snowfall— Bitcoin is the dynamite that triggers a deliberate and controlled shock to our system before the real economic avalanche forces us to repeat history. Bitcoin on its own is not the panacea, but it provides the framework by which we can start to build a more perfect union for all members of society. No one knows if it will work, but it’s the best [and only] option on the table, so I say it’s worth a try.

The million Bitcoin question still remains — who is this benevolent genius that had the foresight, resources, motive and intellect to create the concept of bitcoin as a means of avoiding an inevitable societal reset (again)? It’s anyone’s guess, mine is here.

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