History - Summary of what I've learned with money (crypto/fiat/gold) and government

Bitcoin was designed using the same model of Gold which is finite. The current dollar AKA Fiat currency AKA Petro Dollar is based on confidence which has no ceiling – infinite if confidence is there. So, when someone gives you a $20 you can’t technically say “good as gold” anymore. Technically good as the confidence.

Money is being debased again - remember history repeats itself. Everyone goes through phases in life to learn (teenage phase, early adulthood, mid-life crisis, retirement, etc). We can learn a lot from our history. In the past, Romans started to debase their coins which contributed to the fall of the Romain Empire. Romans needed to make more coins into circulation to pay for goods and so forth such as war. Therefore, by adding less silver into the coins for example, they added base metals to create more silver coins. This is called debasing currency and thus creating more coins with less purity. That’s why you notice that a US pre-1965 quarter are now worth more than a quarter because it has more silver. Silver is known as a precious metal. This is how the old silver stackers (silver collectors) made a lot money by collecting the pre-1965 coins and swapping it out to newer years. This is known as Gresham’s law. The current quarter is no longer using silver and using base metals and therefore the intrinsic value is 0. It’s why there is talks about ridding the penny because it costs more to make even though they took most of the copper out. It was agreed thousands of years ago that Gold and Silver is a store of value due to its scarcity, portability, durability, and divisibility.

USA accumulated a bunch of Gold during the WW2 because it was making all these things for the war in Europe. Therefore at the end of the war, Europe was poor. USA accumulated about 2/3 of the world gold. Prior to the war, it was sterling based gold standard in the UK – then a paradigm shift because of the war. Reserve currency tend to move throughout the decades. After the Brentwood’s act, USA became the reserved currency of the world because of the wealth of gold accumulated after WW2 from the goods it sold to countries involved in the war. After a few wars like Korean war and Vietnam war, France started questioning how it’s being funded and began to demand the paper notes to gold - this is because war is expensive. Think of it as writing checks without any funds in hopes no one cashes it out. There was a gold run on the dollar (cashing out). Therefore, in 1971 Nixon had no alternative but to take us out of the Gold standard because Europe and others started following suite to turn in their dollar notes for Gold. This would have been the demise of the reserve currency but it still remain afloat due to the 3rd world country at the time, Saudi Arabia (who had so much crude oil) – hence the name Petro Dollar. There was some agreement that Saudi Arabia would only accept the US dollar for payment of its crude oil. In turn, Saudi Arabia is now protected with the best US military.

In 2008 the banks started collapsing and what congress did is bring up the printing press to bailout the big banks and not the families. Printing money in 2008 was a new term called Quantitative Easing – if I recall there has been QE 3. This so much sounds like what the Romans and Germany went through. So the folks that were really was affected by this lost their homes were families. The folk’s higher in food chain of the big banks got their bonuses still – do you recall that? So earlier this quarter the Feds announced that they will start off loading their 4.5 trillion dollars back to the market. A couple months ago Chase has announced to the regional banks that if they want to remain solvent, they will need to partner up because they see a deposit drain looming in the 4th quarter this year. If you study bond markets and stocks, you will notice they are cyclical about every 8- 10 years. There is likely to be a major market correction looming. When money begins to lose speed/velocity to exchange hands it decreases the Gross Domestic Product (GDP). For example, if everyone started to save money and only spend what is necessary there would be a fall in vacation traveling, restaurants, movies, retail industry, night clubs, etc. And therefore, if there is not enough demand companies will lose money due to expenses such as staffing, monthly rent, electrical bill, and other liabilities. If you recall Obama saying to spend money to get the economy going again. We needed the velocity of money. When there is Fear, Uncertainty, Doubt (FUD) in the stock market, traders will go to bonds as a safe haven.

In 2009, an anonymous programmer and or group named Satoshi Nakamoto, develop a decentralized currency (Bitcoin) that had a public ledger known as the blockchain. He was against all this printing money and corruption. This currency can’t be fudged or go on a printing press because every transaction is accounted for throughout the world. You will notice that Asia has adopted this (Japan & India), China – looking into this and more to come even Russia are developing their own blockchain. Singapore already tested the smart contract based on blockchain and it passed. Even Fidelity, Microsoft, MasterCard are looking into this and has joined an alliance called Enterprise Ethereum Alliance (EEA) which is blockchain technology.

I don’t mean to sound doom and gloom but I see the writings on the wall from a macro perspective. There’s a euphoric feeling when you’re doing well in the stocks but if you keep a level head you know it’s going to go down at some point. Most people that consider this correction are hedging this with precious metals because precious metals are a hedge against inflation. 1 ounce of Gold can buy you a house in Venezuela because of the hyperinflation (print more money). Remember the 1 ounce gold will always be 1 ounce of gold, it’s the money that goes up and down. This is why you see the current stock market in Venezuela at an all-time high due to hyperinflation. This is a testament of socialism at its finest as we also saw Greece go down due to its socialistic policies. You can’t spend on luxury or any non-essentials while you have a big debt or unfunded liabilities. Folks in Venezuela are now turning into bitcoin/precious metals to hedge against hyperinflation. If you’re grandparents held onto the gold coin they had in the 1930s that was worth $35/ounce around that time you would have about $1,250. If turned it in for fiat paper money, today it would be have debased to about 95% of its value – what can you buy with $35 these days. So people are now looking into cryptocurrency and precious metals to hedge against what will happen soon. Cryptocurrency is having a lot of spotlight these days as only 1% has embraced it. Once people get into it more the network effect will be much greater and therefore why you will see the price skyrocket… It’s getting long so I am going to quit this, you’re welcome to ask any questions you may have and I’ll give you my 2 cents worth… Good luck and be safe.