The article on Bitcoin in the world-renowned daily periodical, the New York Times, written by Edward Hadas, has all the earmarks of a throw-away entry. Low in content, yet high on opportunity. If anything, the article is a victim of disinterest by the author. Like many things in the United States, the content used to be much better, and of higher value. Now, it seems they accept whatever comes down the pike at the one-time global standard bearer for journalism.
I could go on and on about the upside of Bitcoin, and how much it has accomplished within the last six years, but I’ve done that already. Maybe I should forecast the rest of the decade, based on an extrapolation of recent events both inside and outside of the community? Then, present a rather convincing global currency position that the U.S. Dollar may not be able to match?
Instead, let’s shine light on how the good ‘ole Greenback is doing at it’s primary role as the world’s “Global Reserve Currency”. Let’s do a soft appraisal of its value, and what nations worldwide are doing, or not doing, with the US Dollar. And let’s see what the future holds for the Dollar, and all nations currently dependent on the dollar itself for their very existence in the “First World”, if you will.
US Dollar is a Victim of Avarice
Having spent years myself as a Wall Street banker, I have a level of economic, both domestic, and geopolitical; that may prove useful in assessing the “State of The Dollar” in real-world terms. The most important thing to understand about the US Dollar, or ANY fiat (a currency not backed by an asset; currently any paper money produced anywhere in the world today,) is that the US Dollar is not backed by anything. Hasn’t been since before I was born. Three things in this world give the US Dollar inherent value, and none of them have anything to do with any inert ability the currency can perform for users.
One, it is the world’s “Global Reserve Currency”. What is that, and what does that mean? Every 65-70 years or so, the nations of the world elect a new leading global currency that will be the standard for all international financial transactions. This last happened in 1944, at the Bretton Woods Conference, where the British Pound was replaced by the US Dollar as the global standard for trade and relative value of any currency extant. I’m not going to write a book on the responsibilities and advantages of this much economic global power and faith inherited with such an honor. Suffice to say, the U.S. and their people have benefited mightily from this arrangement. It’s like having an unlimited Black Card from pick a credit card company that gives you Carte Blanche over finance worldwide.
For the first couple of generations, the U.S. was fairly responsible with this privilege, but now it has gone on a classic drunken bender. Absolute power corrupts absolutely, and the U.S. Government has made sure to live down to that idiom over the last twenty years or so. The four volumes of “Quantitative Easing” programs only a few of the recent examples of mismanagement and/or dereliction of fiduciary responsibility, both globally and domestically. National debt has spiraled out of control and has more than tripled over just the last 15 years. Debtors who are starting to realize they are going to be left holding the bag include Japan, China, and we, The People. Any poor sucker, which is potentially destined to become a future Social Security and Medicare recipient (sounds like you and me,) will get something around jack squat, since those programs will be long gone by our retirement. The peasant class will have to suck it up. China has other plans to recoup it’s estimated $1.2 Trillion owed, and it will collect in full, don’t worry about that.
The second reason that the U.S. Dollar has economic power is the American people believe in it’s economic power. This is both staged and ingrained. The U.S. Dollar has never had a collapse in any American’s lifetime. It lost value in the late 70’s, like the Ruble did this past year. Dropped about 50% over a couple of years, but that’s about it. It’s been peaches and cream ever since.
Given the fact that an American wouldn’t know a currency devaluation from a nuclear holocaust. Also that taxes are demanded in dollars only, Americans are fully dependent on the dollar and must believe in it, as they are well-trained to do so. This spell will be broken in the not too distant future, provided you are not a hedge fund manager or alike. If you are, you have probably already left the country and diversified your portfolio against the upcoming economic risk.
Probably the biggest reason the dollar remains on top to this day is the US Military. Recent alleged affronts to “American interests” in Iraq, Afghanistan and Libya, and potential for more in the Ukraine and Iran are all just strategic natural resource grabs. Opium, oil, and natural gas lines have been taken by the U.S., mostly because they can, not out of self-defense. And any foreign regime bold enough, yet small enough, to renounce the US Dollar’s global stronghold (see Libya and Moammar Khadafy looking to move trade from the Dollar to the African Dinar. Khadafy was killed shortly thereafter,) would end up bombed, destroyed, and their government replaced by one of the American’s choosing. I don’t think the U.S. even bothered to come up with a lie as to why Libya was attacked and acquired in about two weeks. Like Nike says, just do it!
Anyway, America maintains military bases in virtually every country in the world, just in case they have the itch to bully a smaller nation and overthrow them for wanting freedom from economic tyranny. Might be a reason when 9-11 took place, there were more cheers than you might have thought abroad. Setting up a house of war in any country you damn well please will gain you plenty of enemies worldwide. Which leads us to the present day changing of the guard.
The U.S. has been fairly consistent about exporting war and inflation worldwide for many years, and heavy hitters like China and Russia are sick and tired of this economic bully pulpit the U.S. stands on so smug. China is owed a fortune by the U.S. and will only get IOU’s back. And Russia and the U.S. have never exactly been bosom buddies. Who have become fast friends are the Russians and the Chinese. They foresee a day when the U.S. doesn’t make the world’s economic rules of engagement, but they do.
While the U.S. plays checkers, jumping any bit player they feel like, on a whim, the new Eastern Bloc partners are master chess players. They are positioning friends, bilateral trade agreements and economic building blocks for the future. (A bilateral trade agreement is when you send goods and service internationally while avoiding using the Global Reserve Currency as a medium of trade value, which happens to be the US Dollar).
Russia and China swap over $400 Billion in Natural Gas and resources in a bilateral trade agreement, with plans to do much more trade going forward. China does bilateral trade all the time, with over two dozen nations throughout the eastern region. Notice how the U.S. military isn’t so eager to invade China for such transgressions. Quite the opposite. The U.S. needs cheap Chinese goods to maintain their high-on-the-hog standard of living. I’m pretty sure Americans aren’t producing iPads at a price you can afford, or producing “Rare Earth Elements” that are needed to run your smartphone. The U.S. is starting to sell off U.S. mainland swaths of land to the Chinese, just to keep them happy and show good faith that they will pay their massive debts. American land has been collateralized to finance the National Debt. The United States is in hock!
The Chinese are great producers, but need great consumers, which is where the U.S. comes in. They may make the Chinese sick, but they can still swipe a debit card better than a Texan makes an Angus steak. So the Chinese are fine with patting the U.S. on their balding head, and taking their IOU’s, and then plotting with the Russians the next step in their ultimate economic destruction.
These steps have come fast and furiously recently. Last summer, the BRICS Development Bank was created by Russia and China to include India, Brazil, and South Africa. This new entity is designed to replace the IMF/World Bank run by the U.S. for generations. They are international loan sharks that are managed by the Americans who specialize in swallowing countries whole in interest and resources mortgaged to get out of short-term debt, many times manufactured by the West. Now, a bank, which can pool resources among U.S.-hating countries, can form a piggy bank for any rainy day met by members, and other countries are joining soon.
A credit agency to rival Standard and Poors or Moody’s is also in the works, along with the Russian “Double Eagle” international banking program, which Russia claims will be running within six months. This will give countries a way to segue off the SWIFT program and onto a less American-run international bank transfer program. Plus, China has been buying up gold like the U.S. Government has been buying up hallow-point bullets over the past few years. I wonder why?
Here’s why. All of these major initiatives aren’t being fast-tracked because the Russians and Chinese have nothing better to do. The “End Game” is to dethrone the US Dollar as the GRC and introduce a new gold-backed Global Reserve Currency, most likely the yuan or chinese-made for life after the dollar’s timely demise.
A novice will say “Look at the stock market and the low unemployment rate! The dollar value is so strong right now…..You’re crazy!”
If the economy is so strong, why can’t Fed Head Janet Yellin increase interest rates above zero? Why are European countries testing negative interest rates, while staring at 15-30% unemployment? Why has the stock market risen in line with the increased money production in the U.S.? Why did spending last Christmas in the U.S. FALL from the previous year? Why is the U.S. printing trillions of dollars yearly, if it’s so strong?
The U.S. can do all the “shadow banking” moves it wants. They can have the British and the Japanese also increase their debt, so their dollar doesn’t look weak. These are the last ones on the Titanic at this point. Even old American friends like Canada and the United Kingdom are making friends with the Chinese and doing trade agreements with them too. CYA is in full effect as people start eyeing lifeboats. This fiat-U.S.Dollar-based system is running out of time, and there may not be enough lifeboats to go around. And the rest of the world’s nations are looking, praying really, for a day when they can get a divorce from the U.S.’ economic bullying system. Their prayers will soon be answered. It won’t be perfect, and the Russians and Chinese aren’t exactly The Smothers Brothers when it comes to diplomacy. It will be a step up, at least in the short-term.
What Can You do About It?
So what can you do about it? I can tell you what I’m doing about it. I’m making nice with Bitcoin since I’m not wealthy enough for $1000-an-ounce Gold. Plus Bitcoin can buy food, drinks, homes, cars, and pay bills. Gold doesn’t. Bitcoin is not going anywhere. It can’t be uninvented. You can’t wish it away. It’s value may change, but Bitcoin remains. If you think 5-10 years ahead, Bitcoin is a strong play and doesn’t care where you reside. If you want to use Bitcoin as a means to a fast buck, your approach may dictate your results. You need to do more research.
One day, I reckon 2-4 years from now, future President Hillary Clinton will get a phone call from someone very far away. That person will let her know that this whole Dollar ride is over. The next Bretton Woods was held in Beijing, and the U.S. wasn’t invited. There’s a new sheriff in town, and they speak Mandarin. Then you will see a price drop that will make Bitcoin look like price spike
Bitcoin speaks your language, no matter where you are. And it will be there waiting for you when this economic charade called the Dollar is over. There will be plenty of computers, and plenty of people who want fast transfers of wealth to somewhere far, far away from the West. Might like to pay pennies to do it, too.
You know it’s funny. When Bitcoin was growing from less than a penny in 2009 to a couple of hundred dollars in value, the mainstream made sure not to mention it. Now that Bitcoin has dropped from Gold-level prices to $200, “journalists” like Mr. Hadas is quick to say “I told you so!”
So Bitcoin is worth $200. Gee, I can’t recall when a dollar was ever worth $200. The US Dollar has lost 97% of it’s value in the last 100 years. What does that tell you?
It tells me that it will return to its inherent value soon enough. Just ask Robert Kiyosaki, author of “Rich Dad, Poor Dad”:
What do you think the future holds for the US Dollar and Bitcoin? Share above and comment below.
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