May 1, 2021
I’ve been writing about the administration and the Fed overspending for months now. It’s just not sustainable.
Someone or something has to reign it in — perhaps the markets themselves — because, as of now, Washington’s mortgaging the economic future of our children for its political standing in the present.
And another cold truth is that with inflation already here, you as an investor should take advantage of the opportunities provided — but tread lightly. The best ways to hedge your bets and capture this fleeting market magic? Hard assets, real estate, gold, and of course, bitcoin.
On the American Consequences podcast this week, I spoke with Gregg Foss, Executive Director at Validus Power, who explains how sovereign currencies like the U.S. dollar have been obsolete and unsustainable for years — and that crypto is their inevitable financial successor.
Give Bitcoin Some Credit
As a former bond trader, Greg urges investors to view the market and the state of fiat currency through a credit lens. He quips that credit is the dog and equity markets are the tail in the economy — the latter gets flung around like a rag doll when the credit market gets sick. And right now, America is feverish economically speaking.
Greg claims that credit is the most crucial financial litmus test throughout history (and particularly since 1987’s Black Monday). He says that if people bothered looking at the numbers, they’d worry about credit distress or default for entire countries — signaling a possible death knell for international currencies.
Bitcoin’s like fire insurance — and the economy’s ablaze right now.
He says if you imagine a credit default swap market of sovereign nations, bitcoin could provide default protection on a basket of fiat currencies, from the U.S. dollar to the Swiss Franc.
Pretend that the Fed now is Lehman Brothers circa 2008… When a financial entity’s about to default, transfer that leverage somewhere safer. And in 2021, instead of the government bailing out Big Banks, bitcoin can bail out millions of Americans.
For any skeptics of bitcoin’s intrinsic value, he argues that the crypto has everything going for it that sovereign currencies do not — decentralized security and scarcity: the ideal anti-fiat.
Cryptos: The Anti-Fiat
Listen, I’m just as worried about Biden and company overspending right now. And Greg paints a dire image of what could happen with this endless printing press from the Fed and beyond.
For global GDP to keep pace — to reconcile that gap between the tax base and organic debt — it has to grow steadily at 12% per annum. That’s not going to happen. Sovereign currencies will continue overprinting until debased, leading to a fiat exodus and the world seeking haven with a new reserve asset: bitcoin.
Many Americans keep demanding more and more from our government with a seemingly never-ending litany of demands. That’s why today, it’s critical to understand how these changes will affect you and your money. Get the full story here.
“But what about gold?” you may ask.
Shiny versus invisible. Heavy versus weightless. Finite versus not so finite?
The gold versus bitcoin battle rages on but note that the crypto is capped at 21 million coins while there are currently 21 million pounds of gold swimming in the ocean right now… So the precious metal isn’t quite as finite as you might think.
According to Greg, bitcoin ultimately wins all of the property-of-money battles with gold (portability, divisibility, scarcity) and claims that the markets undervalue the crypto right now. He projects the price to be at least $110,000 to $160,00 per bitcoin.
Bitcoin is so cheap right now that its current valuation is a rounding error.
But that’s just scraping the blockchain surface value-wise.
If you were to take all global financial assets — gold, fine art, government debt, corporate debt, real estate, everything — you’d court nearly 900 trillion U.S. dollars (nearing the fictional-sounding quadrillion).
And that leads us to this potential bitcoin equation. If the crypto ends up backing 5% of global assets, that’s $45 trillion divided by 21 million bitcoin, equaling $2 million a coin.
Yes, someday, one bitcoin could be worth millions… So you should get in now while you still can.
Bitcoin: An Energy Sector Game-changer
But here’s a more shocking crypto leap… the unexpected connection between bitcoin and the energy sector.
As evidenced this year by the Texas blackouts, it’s clear that America has gaping vulnerabilities in something we all take for granted: our power grid (essential infrastructure, Mr. President).
There are tons of stranded power assets in the world, including our less-than-perfect electric grid. Gregg says that the designers of the American grid built it for redundancy with stretches of peak demand — hot summer nights when the AC’s running or brutal cold snaps when you jack up the thermostat.
It’s a bandwidth of capacity the grid can reliably supply — the turbines are constantly turning, and you don’t power down a nuclear facility based on demand. But what about when there’s an unexpected surge?
He thinks bitcoin could be America’s backup generator (along with MicroStrategy CEO Michael Saylor), converting power dams, nuclear reactors, wind farms to produce power when there’s a need.
How is that even possible?
With Greg’s engineering background, he’s familiar with thermodynamics and the conservation of energy theory. He simplified the concept with the following… Bitcoin is digital energy (and on an existential level, all money is energy).
Essentially, when you mine bitcoin, you’re running electricity or power through computers so the machine can solve math problems — allowing you to mine blocks of data.
Mining the digital coins gives off energy, in short.
So, in theory, when you’re sifting for crypto, you could rechannel all that electric juice, powering and stabilizing America’s grid along the way.
If your head just exploded, I’ll give you a minute to collect yourself…
Forget green energy, and welcome to the idea of digital energy. Cheaper than wind. Cleaner than nuclear. More reliable than solar. Learn more about how bitcoin mining could save America’s electrical grid.
The One Thing America Can Agree On: Blockchain
Okay, so bitcoin’s value is somewhere closer to $2 million a coin, looks to become gold’s and fiat’s successor, while also keeping the lights on…
In over three decades of financial market risk management, Gregg says bitcoin is the best return trade in his life. He claims the riskiest move as an investor is not owning it, insisting that 5% of your portfolio comprises the crypto.
So, what’s the best way to buy?
He recommends the Coinbase Wallet. And that once you have bitcoin, you should keep a little of it on your phone but transfer most of it to cold storage – a digital platform not connected to the Internet. He also endorses using digital asset management companies for help, such as LA-based ARCA.
Greg claims his bitcoin ledger is inside a safe in his house — the 2021 version of cash in the mattress.
And remember, no matter where you’re sending bitcoin, from Baltimore to Beijing and beyond, it settles in ten minutes or less with any transaction.
Money has always been a technology for storing the value of your work, time, or energy — expended today for consumption later. And if money’s technology, bitcoin’s the best tech for storing your value.
Listen, I hope the U.S. never defaults, but it’s not inconceivable. The future of the U.S. dollar has never seemed less certain. And with all the political divisiveness, pandemic fatigue, and America’s precarious economic landscape, it appears bitcoin may be the one thing this country can agree on.
And check out bitcoin guru Eric Wade’s free video here, which includes details on his Special Report “How to Buy Your First Bitcoin.”
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Publisher, American Consequences
With Editorial Staff
April 29, 2021