The Public Drowns in Dollars, while Bitcoin is the Monetary Lifeboat

Meltem Demirors, speaking about money, Bitcoin and technology with Lyn Alden on Real Vision, wondered “How does it shape the way that we as a society use technology in new and novel ways to reshape the world and our sense of reality in the vision that we would like to achieve?”  

And while she didn’t name any single person or institution, those occupying the Eccles Building come to mind when she continued, “All of these forces in this history converging on this one moment against the backdrop of what I think is the most stunning display of government incompetence our world has ever seen makes for a really explosive moment.”

What Coinshares’ Chief Strategy Officer considers explosive, has some Americans hoarding the very paper Ms. Demirors speaks of so dismissively. Julia Carpenter reports for the Wall Street Journal, “Americans are hoarding cash because of fatigue and uncertainty, with little chance the trend will reverse soon.” 

U.S. households have hoarded–Ms. Carpenter’s word–$1.6 billion in the last two years, going as far as calling it “excess savings.” The prudent among us might say there is no such thing.  But, financial advisors, money managers and economists describe people as “too nervous,” and now with Omicron, cash may stay locked down at the nation’s banks, earning nothing nominally, and a healthy loss in real terms.   

“We see a lot of folks sitting on an incredibly high savings amount, and it’s really just a fear factor,” says Nina O’Neal, partner and investment advisor with AIM Advisors. 

Researchers at the New York Fed have determined “people saved more because they weren’t spending as much, not necessarily because they were actively stockpiling money in their reserves.” That’s the kind of keen analysis we receive from the institution employing more PhD economists than any other. 

Cash hoarders are hurt by price inflation, writes Carpenter and damages an economy according to Keynesians, “which consumer spending makes up more than two-thirds of its gross domestic product.” 

While the Fed creates bank reserves and bankers find ways not to make loans, and therefore not create dollar denominated bank deposits, crypto miners are hard at work making Hayek’s competing currency idea a reality. Ms. Demirors clearly has her eyes to the future, telling Alden, “now all of a sudden, people have the ability to exit and trillions of dollars of value is choosing to exit the system and flow into a new system, one that's built on an entirely different set of technologies, but more importantly, an entirely different set of ideological principles, and entirely different set of identity constructs that are still being developed but are so fundamentally different from what we've seen over the past four centuries.”

The world’s fiat money scheme has destroyed the wealth potential for GenXers and Millennials, making housing unaffordable, financing endless wasteful wars, and leaving Millenials with 10 percent of the wealth their parents had at the same stage of life.  

Ms. Alden piped up with some context, “Unbacked pieces of paper have only been around in their current form for maybe 50 years, and then pieces of paper tied to commodity monies, maybe a little bit longer than that, but it's still a pretty new conception.”

“If government approached money cautiously in both its creation and its use, then the community’s response would be conservative,” Max Shapiro wrote in The Penniless Billionaires. “But if the government created money in great volume, then the population would become reckless, would spend more without restraint , would demand a constantly greater amount of it from government, and finally would lose confidence in its purchasing power and in the authority which had permitted purchasing power to erode.” 

In the same vein, Demirors points out that one percent of the world’s adult population are millionaires, 57 million. Not because investments have increased in value but due to the depreciation of the dollar’s value. In a decade or two there will be a million billionaires, making wealth meaningless. 

So,  investing or speculating isn’t to gain wealth, but for entertainment purposes according to Demirors. Gamestop, AMC, Doge coins, just exchange your ever-depreciating dollar tokens and start playing. It’s fun, and maybe you’ll get lucky and win a prize.   

Talking her book, Ms. Demirors calls herself a sh*tcoin minimalist and says Bitcoin is the scarcest hard asset you can own, a currency contraption of mathematics, with only 21 million to ever be created. “I'll say it very simply,” she said, “Bitcoin is an antidote to chaos, political chaos, social chaos, economic chaos. Bitcoin is an antidote to chaos that you can buy in your portfolio.”

In his book The Bitcoin Standard, Saifedean Ammous compared the modern world to an ancient Rome suffering monetary collapse. “The dollar is our aureus, then Satochi Nakamoto is our Constantine, Bitcoin is his solidus, and the Internet is our Constantinople.”   

If Bitcoin is our lifeboat, indeed, as Ms. Demirors emphasizes, “Not owning Bitcoin is now irresponsible.”