BITCOIN #40: FAST VS SLOW CURRENCY FAILURE

What would it look like to you?  

Today's inflation number came in at 8%.  That number is heavily maufactured.  

Bitcoin inflation rate currently sitting at 1.7%, continues to follow its preprogrammed, fully predictable downwards trajectory. The Fiat inflation rate is now 8% if you follow fuzzy math. 1980 math says it is 17.5%
The average person isn’t smart enough to be scared enough to understand the implications of this lit fuse.

Global inflation rates:

🇺🇸 - 7.9%

🇷🇺 - 9.2%

🇧🇷 - 10.4%

🇦🇷 - 50.7%

🇹🇷 - 54.4%

🇻🇪 - 472% 

Bitcoin is the escape hatch.

THE SLOW CHANGE

Implications?

I expect a de-dollarization event sooner than most think. Some believe this is already happening in slow motion because the Federal Reserve can support the bid on treasuries all day long. They can buy all assets back and adding them to their balance sheet. Those who talk about kicking the can down the road while hoping for a long-drawn-out economic reset believe this scenario is playing out presently in markets in slow motion already.  Black Rock and Vanguard are doing the Fed's dirty work now buying up assets.  

THE KT EVENT FOR CURRENCY:  RAPID CHANGE

What would it look like?

But what happens if a government like Russia or China become sick and tired of the Fed's action to replace the failed Bretton Woods experiment?

The Fed's Nightmare: The Big One

I'd like to remind you this is not a prediction.  It is just a thought experiment that shows that this outcome has a non-zero chance of occurring.  Moreover, it should be obvious that markets are not always continuous in how things trade.  

Early one-morning news item "x" occurs.

News item 'X' might be:  People's Bank of China has just announced that it has replaced a large percentage of its USD reserves with gold and bitcoins to pay Russia for oil and gas since the BIS has canceled the Russian Central bank's accounts.

Realizing the negative implications the US stock indices are quickly down 4%.  Counterintuitively the 10-year yield is up and bonds are sold.  The dollar goes screaming higher as people look for liquidity.  The Fed open market desk intervenes but is overwhelmed.  Soon stocks are down 7% triggering the first circuit breaker 15-minute pause.

Meanwhile, gold is strongly bid and is up $50 per oz. while Bitcoin records its largest move in months.  The Fed comes on the tape saying it is prepared to provide whatever liquidity is needed including swap lines overseas and will do "whatever it takes".  The market re-opens and is immediately down 15% triggering the second circuit breaker.  Fed is on the tape again mentioning that they will seek authorization to buy stocks as needed, in the hope to calm the market. I believe they will call it the "The Save America's IRA Plan".  75% of people below in the picture do not know or believe their life savings in retirement accounts are now at risk of evaporation.

The market re-opens and is immediately down 20% closing for the balance of the day.   It is now 11 am.  Meanwhile, gold is bid up to $120 per ounce, but there are few sellers.  Bitcoin is now up $40,000 per coin from its daily open.  The bond market continues to sell off as bondholders seek to raise cash with which to buy gold and Bitcoin.    Lots of commentators are on financial TV and media are flummoxed because they never saw the tsunami coming.  Some countries did.  They were initially mocked and now their citizens are laughing at Americans who are becoming more poor than the poorest people in El Salvador every minute.  We call those people: Lamar's tribe.  

These "financial experts" remain confused and seek to calm the masses on mass media.  But it is a long afternoon.   All afternoon bonds are relentlessly sold and gold and Bitcoin are relentlessly bid.  This is the largest wealth transfer in the history of humans happening at the speed limit of the Big Bang.  Those who are in the know understand what this is.  CURRENCY FAILURE.  Full stop.  Every government the USA bombed in the 20th centrury is now in better shape than the USA.  Most of them converted some of their Treasuries to Bitcoin and gold before the USA did. 

No one should hope for this scenario above, it would be very bad even for people holding BTC and gold. Let’s hope for a gradual transition away from fiat. You don’t have wealth if there is nothing left to spend it on.  Peer to peer trade is now the way of the world in most cities.  Some of these cities have been doing it for years now.  

Abject fear is felt by every financial asset holder in the world.  This is for all the marbles and the Fed's credibility is gone.  The emperor is fucking naked and everyone agrees on it and can see it.   Overnight gold trades up $200 per ounce and Bitcoin is up to $100,000 per coin by morning.   The stock markets struggle to open and when they do they immediately plunge 20% and are closed again for the day.  Meanwhile, gold is now up over $400 per ounce at $2,300 and Bitcoin is trading at $200,000 per coin.  

President Biden makes a Presidential address and announces the closing of the financial markets for 10 days.   Gold goes $10,000 bid, $100,000 offer, but none is really available. Gold becomes scarce.  Bitcoin trades through $400,000 per coin on its way to $2,000,000 per coin.  Every 10 minutes another Bitcoin block is produced like clockwork.  Nothing happening in global financial markets is affecting the operation of the Bitcoin network.  Many HODLers are smiling.  

Only foreigners can buy it because the US banking system is closed.  ATMs are down.  Credit cards do not work.  Any commerce that is taking place is done via barter via peer-to-peer networks like Bitcoin.

One too many coins in the fuse box short all financial circuits.  The false assumption that the Fed could always save the system is utterly and completely destroyed.  Bitcoin and Gold have performed their role as "sovereign CDS".

Now you are at a new world order where the people's money sits on the throne as the global reserve currency.  If your network of friends and family have no hard assets they see their life passing before their eyes every day they wake up. 

Millennials prepare to take care of their parents AND children at the same time. Municipal-sized communities band together to help sort out the most immediate needs. New leaders emerge on merit. 10 years later we are moving forward in prosperity.

^^^^^Millennials will be The Hero Generation of this Fourth Turning

Ok, but what comes days after? Full hyperbitcoinization? Confiscation attempt? Volatility for sure follows…Are you ready for it?  Do you have "hope" after this event?

Chaos will reign but those who know from chaos comes order will win.  Soon thereafter, a leader who understands sound money will emerge.  Problems will be solved, order returns and chaos retreats.  Certain environments will experience less chaos then others.  Zipcode will matter deeply.  

The take home: Do not just react emotionally to this event...

Instead quickly feel that emotion, let it go, process and respond.  Those who act properly will limit the chaos they experience.  If you have the wrong people around you during this event they will affect your perception of it.  

You must share your critical thinking skills before, during, and after this event to help you be a leader for your tribe.  Failures allow us to  realize our fullest self, and accomplish our biggest goals.

I'd tell you to compare this event and its failure to being "On Tilt", a poker term which simply means not being able to think clearly after losing a big hand.

And that's really a great analogy and we've all experienced it already, right?

Every time we encounter failures, it's a natural tendency for us not to be in the best mental state.

Because emotions tend to overflow everything in failures.

But, what matters is how soon do we get ourselves recovered and learn from it to not let it happen again.

Those who are most wise will know to file the failure experience away, make it part of our identity, never go down that road again, and get back to what really matters in life.