Today is a big milestone, Bitcoin officially crossed $100k.
Even though bitcoin is now the seventh largest asset in the world in terms of market cap, so many concerns swirl around it. What value does it hold? What’s the utility? How is this even money? Yet bitcoin continually keeps rising and rising.
if you look at the markets right now, equities all-time highs, gold near all-time highs, real estate all-time highs. Essentially all hard assets are at all-time highs because Fiat based system is doing its job of debasing currencies and keeping the populous feeling like all is well. These inflation breakouts are symptoms of Fiat basement.
No one wants to hold on to bonds and they are one of the largest assets classes in the world. Money is and will continue to flow out of bonds because in real terms the bonds are not gonna hold value. What is the alternative? You throw fast debasing money into hard assets which people believe will hold value.
how can the rise of these hard assets stop? Fiscal and monetary responsibility from all of the treasuries and central banks of the world. Easy right? Do you think any politician will do what Argentina or El Salvador were able to accomplish? That’s a treacherous road for most of them, congrats to Argentina and El Salvador for pulling it off. El Salvador went a step further and adopted Bitcoin and wow just have a look at their treasury measured in dollar terms.
The easier path has always been to print, at least for the last 50+ years since the world moved to the petrodollar system. We moved to the petrodollar system because we printed too many IOUs on top of the worlds gold we were holding and when the world came asking for their gold, we told them oops sorry we don’t have it. Well we didn’t say it in that form but we said we are going to “defend the dollar”, sounds much nicer when you have to justify oncoming inflation to your population. But essentially, at this point, we reneged on our commitment of dollar gold convertibility to the rest of the world
Market is clearly telling you where the money is going and it’s not into the US bonds. US bonds is how the government funds itself because we run a massive deficit.
All the hard assets are telling you the same thing, we are hurtling towards system reset where the reserve asset becomes something other than the US treasury bonds. How then will the US government find itself?
If you look at what Janet yelling has been doing, all of the new debt has been Issued at the front end of the curve. This is done because if they tried to issue so much debt at the long end, the long end interest rates would blow out, and essentially the US treasury market would fail.
US cannot cut budgets because that would be politics suicide (social security & Defense). The only release valve is inflation and that is what we are seeing even while we are told that inflation is down and manageable.
Welcome to the new normal where you really must understand how the world is structured. It’s all about power at the end of the day and all these mechanisms are a form of power that the US has over the rest of the world through the US dollar and the US treasury bonds as the reserve asset.