Dear Member,
Nothing demonstrates the need for cryptocurrency better than the current financial world.
The absurdly low interest rates. The piles and piles of debt. The continued growth of that debt.
It’s a monetary system with no check on government recklessness. Central banks (like the Fed) can create money out of thin air and mess around with the price of money (interest rates) at will.
Imagine how difficult it must have been to run a deficit under the gold standard. For every dollar the government borrowed, it had to part with some of its gold reserves. The gold standard had built-in monetary discipline.
Naturally, government deficits were a rarity back then.
The situation has devolved since. It started in the 1930s when then-President Franklin Roosevelt severed the connection between the dollar and gold domestically in an effort to get the country out of the Great Depression. The situation worsened after the government spent too much on the war with Vietnam, forcing then-President Richard Nixon to cut the connection between the dollar and gold internationally in 1971.
The fiat system we have today was born then. Annual budget deficits became a regular occurrence, and debt began to pile up. By 2009, we had almost $10 trillion in debt. And we’ve more than doubled it in the last decade to $21 trillion. And U.S. federal government debt is rising by about $1 trillion per year.
The interest payments on that debt are around $500 million total, and $330 million if you exclude intergovernmental debt (money the government owes itself in one form or another).
It’s madness. But the debt party has been going strong for decades, and I don’t expect us to fix it now. The system will eventually collapse under its own weight (debt).
When it does, the world will need an alternative financial system. Gold and silver may play a role again, eventually. But I believe our next form of money needs to be decentralized (out of government’s control) and transferrable electronically.
Bitcoin and crypto is the beginning of that. It’s sound (limited) money, hence “digital gold.”
We do believe this is a buyer’s market. So we’re looking for the best pure cryptocurrency plays we can find to add to the portfolio. This is a tough bear market, so we’re being extremely selective and looking to move only into positions that are near-perfect setups (as best we can tell).
This is not a time to “back up the truck” just because it’s fallen a lot. It’s a time to hold and take only carefully calculated shots. If you wish to, use dollar-cost averaging (buying the same asset regularly over time).
There’s also a chance here to pick up some incredible bargains on great coins. My current favorites from our portfolio remain nano, decred and XHV. They are all weathering the storm well compared with their peers, and the downturn doesn’t appear to have affected their community’s enthusiasm. They’re making rapid progress despite market conditions. The other coins are chugging along, but to me, these three stand out.
The world doesn’t quite understand what crypto is yet. That’s okay, and to be expected. Eventually, people will catch on and we’ll be off to the races.
Good investing,
Adam