November 21, 2019
I hope you listened in last night…
It was fantastic to hear Dr. Ron Paul and Eric Wade’s thoughts on the Federal Reserve, global currencies, and what is likely to happen next for the economy and the market.
Congressman Paul was up front that he didn’t know a whole lot about bitcoin, cryptocurrencies, or the blockchain… but he caught on immediately. As he said a few minutes into the broadcast:
Just think of what the telegraph did for distributing information… This is just another step. It’s in its infancy as far as I can see. So I think it’s very exciting – what’s happening right now – and I think that I’m fascinated tonight because I want to know more about it and how it’s going to work.
And of course, Eric gave away the name of a small crypto that he thinks will be the “next bitcoin.”
So if you’re interested in learning more about how blockchain technology and cryptocurrencies can change the world… as well as how to potentially make significant gains… click here to watch an exclusive video replay.
Today, we’re also featuring an interesting “macro perspective” essay from Eric’s analyst Fred Marion. I think you’ll find it illuminating…
The War to End All Wars
By Fred Marion
Bitcoin has the operators of our monetary printing presses running scared…
People think I’m crazy. Barely a decade old, the cryptocurrency has only captured a miniscule percentage of global financial transactions. Most “serious” investors won’t touch it. It’s hard to use… and even harder to understand.
But I believe the world’s central bankers see the threat bitcoin represents to the current system of paper money. They’re preparing to wage a war to protect the power they hold over money.
Like I said, you can call me crazy… but I’m not the only one who sees this…
“The central bank is like Hitler in the bunker!” broadcaster Max Keiser growled into a microphone at a Cleveland bar last month.
Keiser was firing up the crowd at the Cleveland Bitcoin Bash – a free educational event hosted by bitcoin wallet company DropBit. The event also served as the launch party for DropBit’s Lightning Network integration. Here’s a picture of Keiser speaking at the event…
“They’re surrounded… and they’re trying to fight this awesome power called bitcoin!”
The longer he talked, the louder he shouted. When everyone in the crowd was worked up, he reached into his wallet.
“Take out your paper money right now,” he yelled, “and enjoy the catharsis of ripping this [stuff] up! Understand this is slave money! Just rip it up!”
The crowd slammed down their drinks. They reached into their wallets and purses. They ripped up their fiat currency until the bar floor was littered with it.
Everyone who tore up money in that bar has a similar conviction… that tomorrow’s monetary system will look a lot different from today’s. They believe – as I do – that bitcoin could one day overtake the U.S. dollar as the world’s most important currency.
Before we go any further, let’s dive into a lesson from history…
The U.S. dollar is, of course, the world’s reserve currency. Central banks around the world hold more than $7 trillion in reserves, and it serves as the basis for almost all international trade.
But nowhere is it set in stone that the dollar must play that role. If the past 570 years of history are any indication, the dollar’s days as the global standard may be numbered…
Since the world stopped using ancient Roman currencies around 1450, every subsequent shake-up in the global economic order has been caused by excessive debt. And by any possible metric, our debt in the U.S. is unprecedented…
Even when it’s measured as a percentage of U.S. gross domestic product (“GDP”), our debt hasn’t been this high since World War II… when we were fighting a massive war on two fronts that were oceans apart.
Today, governments around the world are addicted to cheap money… And any bit of bad economic news gives them reason to print more money to “stimulate” the economy.
The inevitable result of having so much paper money flooding the global economy is runaway inflation. It’s what brought down every other experiment with paper money… and it will be the dollar’s undoing as well.
But for the first time in history, we won’t have to start the whole paper-money regime over again with some other government’s currency. Because today, we have a form of digital money that’s provably scarce.
It doesn’t require us to trust a government, bank, or corporation. It just requires us to trust math and cryptography.
Bitcoin… with its fixed supply of 21 million coins… could free us from the 570-year cycle of collapsing currencies.
There’s a Secret War Underway
No guns have been fired. No drones have left their hangars. But the stakes are just as high.
What we’re witnessing is an arms race for the future of money… It’s a war for control of the world’s next reserve currency. But to understand how the sides line up in this war, you first need to understand one thing – not all digital currencies are “decentralized” – meaning no single organization can control or manipulate them… In fact, most aren’t.
Digital currencies are every bureaucrat’s dream… at least as long as the government controls the currency. Thanks to blockchain, digital currencies are faster, impossible to counterfeit, and cheaper to issue.
But they also give governments unprecedented control…
They’re the gateway to the dystopian future that science-fiction writers have warned us about for decades. Governments could use digital currencies to monitor our every financial transaction… or worse, lock us out of the system altogether.
Political dissidents, tax cheats, or even someone who forgot to settle a parking fine could find themselves unable to pay the rent or buy a carton of milk at the corner store.
Predictably, governments around the world are experimenting with how they can use digital currencies to maintain their positions of power.
Tunisia, for example, is considering moving some of its national currency onto the blockchain… And the Bahamas will soon launch a fiat-based digital currency.
These countries aren’t likely to move the global economy, of course. But China is another story…
Three weeks ago, Chinese President Xi Jinping announced the country’s intention to dominate the blockchain – the technology underlying bitcoin and other crypto assets. The country must “gain an edge in the… emerging field,” he said. To that end, China plans to dramatically increase its investments and research in the sector.
A few days later, China even banned any online comments calling blockchain technology a scam.
And earlier this month, news service Reuters got its hands on a draft document from the European Union. The memorandum urged members of the monetary union to develop a regulatory framework for cryptos and assess the launch of its own digital currency.
Bureaucrats may spout words like “blockchain” and “digital currency,” but what they’re really after is control.
On the other side of this battle are truly decentralized cryptocurrencies, notably bitcoin…
And remember, bitcoin is a digital asset that isn’t controlled by governments and operates outside of the traditional banking system.
The beauty of bitcoin is how the number in existence is limited and kept track of by blockchain technology. You can think of blockchain as a virtual ledger book… essentially a database secured by cryptography and maintained by a network of computers.
The key to bitcoin’s future is that it strips control away from governments and central banks…
It’s the “money of the people”… money that exists beyond the control of any one person, corporation, or government. It operates under the laws of mathematics. It’s “permission-less”… meaning anyone, anywhere can use it… and it will eventually have zero inflation.
We forget that cash – the actual paper bills in your wallet or purse – are the ultimate form of financial freedom. You can walk into any store in the country and buy just about anything you want with it. The merchant won’t ask for your name or ID. The transaction is entirely anonymous.
Bitcoin represents a way to maintain that anonymity. And as humankind rushes toward a digital future, that anonymity is at the very heart of this currency war.
No matter how this war plays out… Crypto Capital editor Eric Wade and I believe truly decentralized cryptos, like bitcoin, will eventually win in the end.
Despite the efforts of world governments to hang on to control of our money, the launch of their digital currencies will ironically pave the way for the dominance of truly decentralized cryptos…
Their digital currencies will help the world grow more comfortable with digital money. And over time, they’ll come to see bitcoin’s benefits.
Eric has gone on record saying he believes bitcoin will hit $1 million per coin in our lifetimes…
That’s because bitcoin is already on a path to becoming the global reserve currency. We’ll soon see governments, central banks, corporations, and individuals buy it, trade it, and hold it much like they do with gold, bonds, and stocks today.
In countries suffering from hyperinflation, bitcoin could render the local currencies worthless. That may happen country-by-country as entire economies shift from fiat currencies to bitcoin. And even if that doesn’t happen in countries with relatively stable currencies, we still believe bitcoin will capture a quarter of the world’s wealth.
That would be roughly $21 trillion (or about 25% of the world’s more than $80 trillion “broad money” supply). If that happens, each bitcoin will hit $1 million. Everyone will want a piece of it, and there won’t be enough to go around.
It’s hard to fathom. But so is this…
Eric sees a huge investment opportunity on the horizon. It’s a crypto that he believes could be even bigger than buying bitcoin at five cents back in 2010.
And you can still hear the details about this opportunity before the video replay goes offline tomorrow. Click here to learn more.
Now here are some of the stories we’re reading…
Consider a billionaire with a $1,000 investment who earns a 6% return, or $60, received as a capital gain, dividend or interest. If all of Ms. Warren’s taxes are implemented, he could owe 58.2% of that, or $35 in federal tax. Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60. The result: taxes as high as $95 on income of $60 for a combined tax rate of 158%.
While railcar enthusiasts sometimes go solo, the big allure is group excursions – typically involving a dozen to two dozen cars – with owners usually accompanied by spouses, relatives and/or friends. These outings can run from a long day to sojourns that cover hundreds of miles over four days or more.
A hundred miles per hour in third gear feels like you’re in a sidecar strapped to the Space Shuttle and you’re not even halfway to top speed. The guys who ran these things down the Mulsanne Straight at 210 mph, at night, on 1966-spec tires, after driving for four hours straight, must’ve been brave. Or crazy. Or a heady mixture of both.
And let us know what you’re reading at [email protected].
Publisher, American Consequences
With P.J. O’Rourke and the Editorial Staff
November 21, 2019