This is my personal view of the US economy/USD, vs the crypto economy and why I’m glad I got into crypto:
A lot of misinformed people saying Bitcoin is “In a bubble” and eventually everyone will lose their money…
When actually it is the USD that is in a bubble right now. The US Federal income is around $3.3 Trillion. The current US federal debt is now over $20 Trillion.
The current projected estimated payments of interest alone on that $20 Trillion is over $500 billion this year.
That means that about 18% of the total Federal income is now being dedicated just to interest, is over 2X what was being paid in interest in 2015. This is not sustainable…
The reason why this is allowed to happen is because the federal reserve continues to print money out of thin air, which is then bought up through reserve notes by the banks of the world, most of which are owned by the federal reserve and USA banks. Over half of the federal debt is owned by USA banks. Why does this matter?
Well the reason US banks can afford the over $10 Trillion in reserve notes is because of fractional reserve banking. For every $1 a bank has from it’s account holders in savings, checking, etc, they are able to loan out or purchase other assets at 10-30X the amount. So for every $1 of your money in a bank account somewhere, they can loan or spend $10-30.
So to finance the $10 Trillion in US reserve note debt owned by USA banks the only need about $350 billion to a maximum of $1 Trillion in their accounts. This is severely problematic for many reasons, but the biggest is what happens if the US government can no longer afford to pay the interest payments on it’s debt?
Well the notes begin to default causing all of the note holders to begin to lose value on their notes. This causes a potential crash of the banking system because if the amount of money the banks had was only 1/10 or 1/30 of the amount invested, they would only need to lose about 3-10% of the total note value, to then lose their entire actual reserve amount.
The only way all of this keeps up is by the fed printing money out of thin air, and the banks doing fractional reserve banking out of thin air.
And yet many banks are the ones saying that Crypto currency is completely speculative, in a bubble, and has no real value 😂
You can imagine why many bank CEOs have said this (though many leaders have now changed their public opinion of blockchain technology and crypto currency and recognize it’s value). But they were trying to protect their own “Bubble” of fake USD digital currency they currently are operating in.
This current USD Bubble is unsustainable at it’s current debt to income growth, and without massive changes will evenutally pop, and it will affect every American citizen if it does. Life savings could be lost in a day as banks go bankrupt as their total loans far exceed the amount of capital they have and with the US governemnt having no one to buy reserve notes, they can no longer print money and cannot bail out any banks or companies now on the verge of bankruptcy, resulting in the average American suffering extreme losses and the value of the USD tanking to pennies of what it is worth now.
Now I hope and pray that the government is able to remedy this problem and stop incurring more debt and printing more money… But so far nothing substantial is changing this, and in just 3 years the interest payments on that debt has doubled to over $500 billion a year.
So if we want to talk about bubbles right now… The USD is in possibly the greatest bubble it has ever been in, and if it pops will affect every person in the USA in some way. If the US debt problem is not fixed it will also affect every country in the world since the USD is the global reserve currency, and many other countries will suffer massively from a potential global economic collapse, or at the very least, shakening.
Meanwhile crypto currency has a total market investment of less than $600 billion with a potential upside of $10-100 trillion long term. So the total amount of potential gains vs potential risk of loss is almost “astronomical.”
Could share more but if you read this far… Feel free to do your own research and look into these things yourself.
Just wanted to encourage my fellow crypto HODLers that this market is crazy in it’s potential reward vs risk, and that the true bubbles right now are the ones backed by governments, not by the people.