Many people simply do not understand economics; and why should they - it's Foooooking complex.
I hear and read, all the time. Bitcoin solves inflation - without any real sound logic as to why or how...
When you travel back in time, the monetary systems have changed and evolved but are moving further and further away from the "gold" standard. Now as a crypto maxi, you might see this as a good thing. However, it also has it's drawdowns. The reason Gold and silver has been used for thousands of years is that it cannot be made and holds a rare earth material (Value) this is not as simple as saying "a store of value" and this I feel is where the confusion comes in.
So let's explain how the governments use quantitative easing to cheat the public.
In simple terms this is a policy in which the central bank's try to increase the liquidity in its financial system, in order to inject money into the economy to expand economic activity. Or so we are told.
If you look at this chart going back to 1965.
You will see the QE levels of rapid supply of money - with nothing under pinning it. This is where the Gold standard is lost. However, the story does not end there for Gold & Silver.
Take a look at this;
This is the Qualitative economic impact of the quantitative easing. This shows, the asset price increases and then falls off a cliff. All whilst the Money (paper money) flattens out. So with the injection into the economy (wink wink) the demand increases, the price increases and with a slight of hand - we have more borrowed dollars, less tangible assets to support it.
This isn't just a US problem, nor a European issue - it's a global, corrupt government issue. This is why the rich get richer and the poor get poorer.
Take a look at countries such as Australia;
These curves are parabolic.
How's about Russia - could get even worse after this war;
In summary it can help an economy out of recession, but it can drive an economy to recessions also.
So why or how does Gold and Silver fit in? Well, as the value of money (cash) drops down, spending power is robbed, pensions depleted and costs sky rocket. The Dollars in circulation can buy less "store of value assets" - thus driving the price of said assets up. This is where many people get confused with the adoption of Bitcoin. They assume that with Bitcoin being decentralised (kinda) - you have to remember the rules and regulations imposed on money in and out of the system (KYC & AML) - on an immutable ledger; this is optimal for taxation, identification and traceability by the way. The main issue is the store of value is only driven by what's in circulation, how much demand and how accessible the supply. It is already stated that 91% of all of the BTC in existence is in the hands of the Elite. The value per coin is only the supply vs demand battle, it's similarities to gold means it can be lost, stolen or stored.
But it's the underpinning method the governments use to increase the value of gold - that makes it likely to remain "THE WAY" for the foreseeable future. If I am honest I see Bitcoin or another crypto taking over the cash/payment system - more than I see it as a digital gold.
Anyways - have a great weekend, I thought this would be an interesting topic for discussion.
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Fun fact: all the gold in circulation is extra-terrestrial. ;-) When the earth formed, since gold is very heavy, it all moved to the core. So the only gold we have access to mine, is from asteroids.
The "gold standard" didn't really happen until the 1800's, so not really thousands of years. And even then, currencies were rarely fully backed by physical gold. Gold as currency came into use by mercenaries who needed a fungible store of value, sort of a method of foreign exchange.
The first gold coins to be widely used were in the Roman Empire. But they did reformulations, where citizens would turn their money in, to get re-pressed. The value was the coin with the Emperor's head stamped on it, not the underlying metal. Looking at old coins, seems like most were bronze.
Anyway, this is a fun post! Warren Buffet says "don't hold cash". The value of the dollar will definitely shrink, so not a great store of value for the long term for sure, buy stocks! :-)
mogues
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Worrying times ahead with inflation on the rise around the world. Stay safe people
Thanks for this post mate
Cutter710
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Gold. The one true asset because one thing is certainly promised: failure.
ControlAltCoins
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I like to say it's all fib levels 😂 but swift shutting Russia out might add some decentralization fuel to the pump 👨🚀
florasora
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I'm not sure what you're trying to say. But the charts certainly look interesting. The way I see it, even if you're correct about Bitcoin never surpassing gold as a store of value via its market cap (which it certainly will with time, given how accessible it is compared to gold), I don't think that that's a narrative that the general public will be buying into any time soon. Something fundamental will have to fail about Bitcoin that will make it clearly inferior to gold. But... because the ledger is immutable, and even in the case of a solar flare (which we will have several days of warning before), even if the internet is wiped out, we still have the data stored on our hard drives and will be able to reach a block consensus eventually. Gold and Bitcoin, as far as I understand, both are centralized in SOME way, either because of existing (expensive) infrastructure that normal people cannot buy or understand, or with its biggest holders (obviously) being the richest people on earth (makes sense to me, non?) Anyways, I'm always up for a challenge when it comes to crypto. The more we get people questioning it, reading the source code, judging the whitepaper by S.N., integrating it, talking about it, the more the space can grow as a whole. Hope to see more thoughtful content like this in the space, though I admit we need clearer conclusions and introductions so we can talk specifics and actually debate.