Financial, Economic and Social Mood Update (July 1, 2021)
The record high price for a Bitcoin BTC Internet domain name reached USD $11,020,500.00 as of June 2, 2021. The cryptocurrency crash in effect since April 14, 2021 reduced total cryptocurrency market capitalization by 44.99 percent by July 1, 2021. This engineered crash is serving to scare off retail investors (small investors and new investors) and add to the holdings of large investors – institutions, governments, billionaires, millionaires and whales. Wealth is being transferred into ever fewer hands, and the global wealth gap is widening. The middle class is disappearing, old industries / families / companies are dying out, and the fewer wealthy younger people will be heavily concentrated in high technology, biotechnology, nanotechnology, the Blockchain and cryptocurrency. The top 9 holders of cryptocurrencies own or manage 71 percent of all cryptocurrency market value worldwide. The other factor is that Bitcoin BTC and other currencies are coming under worldwide governmental regulation. Once this phase passes, their values will soar. There is finally a ranking of sovereign countries likely to accept cryptocurrency as legal tender: https://coinmarketcap.com/legal-tender-countries/.
El Salvador has become the very first country to adopt Bitcoin BTC as legal tender no different from how El Salvador accepts the US Dollar. They have been followed by Paraguay and Panama. Every country should do this, but most national governments are leaning in the direction of launching their own CBDC (Central Bank Digital Currency). A CBDC differs from Bitcoin BTC and more than 10,732 privately-launched cryptocurrencies in that it will be controlled by a sovereign government, which more than likely will want to control how, when, where and how much its citizens will spend. Such control is not good – it takes away individual liberty, it tends to be very inflationary by nature (example: the digital Yuan in China has a time limit on it – in other words, people must spend their digital currency by a certain date because after that date the currency becomes worthless). After the expiration date, a government creates yet more digital currency, which leads to still more inflation. Inflation is the most brutal and invisible form of taxation in human history, being especially brutal toward the middle class. More than one dozen countries have already launched digital currencies.
To this I will repeat what late US President Ronald Wilson Reagan said (1911-2004): “government is the problem.” More often than not, government control of anything and everything hams the economy, harms the people, takes away their liberty and lowers the overall standard of living. Too much government control leads to socialism, which has never worked in the past, which does not work today and which will never succeed in the future. Very many countries around the world today enjoy a much lower standard of living compared to what they had decades ago. I can list a number of valid examples I have seen in person, including the Philippines in Asia a number of countries in Latin America including Mexico, Brazil, Uruguay and Argentina. The same sad history is now being repeated in the USA, and to a lesser extent in both Europe and Japan (these are the parts of the world where governments are now “printing” the most money out of thin air and backed by absolutely nothing). The government of Singapore is doing the opposite (they tend to be the most advanced in Asia) – they are subsidizing research into the global Blockchain, of which all cryptocurrencies and Bitcoin BTC are an important part.
On June 6, 2021 Bloomberg News reported that US Treasury Secretary Janet Yellen commented that higher interest rates would be good for both the US economy and for the Federal Reserve banking system. Of course, interest rates only move up and down in response to the free market. The government (through its reckless spending) and the Federal Reserve System (through its reckless & unlimited “printing” of ever more fiat paper money backed by absolutely nothing) poison the otherwise free market. It is for this reason that both stock prices and real estate prices have gone in one direction for more than 3 decades: UP. Not having “crashes” is not normal. Any free market when left to its own devices will always go up and down in waves. Ms. Yellen’s comments tells me that the velocity of money is already zero or negative – in other words, the unlimited new printed fiat currency is having no net positive effect to stimulate consumer spending. In short, consumers are exhausted – their resources have been spent and they have no energy left to advance. What does this mean in simple layman’s terms? We are likely on the cusp of a very long overdue deflationary collapse where most asset prices will fall to near zero – notably the prices of corporate stocks and of real property. The paper fiat currencies and the entire traditional banking system are on the verge of death.
The real estate boom has already peaked. Unsold inventory is rising, mortgage applications have declined, and developers will soon realize that they have committed to build too much. Many wealthy homeowners decided to move during the pandemic, purchasing homes in other states sooner than originally planned. This demand is now spent and housing demand is falling back to more normal levels. Lumber prices are finally falling back: https://www.youtube.com/watch?v=yeWzdN0AJ0o&t=787s.
We are witnessing two very important things happening. The deflationary collapse is commencing with respect to tangible items – big ticket items such as homes and cars and other physical goods. Hyperinflation is setting in with respect to services – the nontangible part of the economy which comprises roughly 70 percent of GDP. This is a very ugly combination. Cryptocurrency will a limited volume (such as Bitcoin BTC which is now the number one store of wealth even more so than gold) will eventually swallow the entire global economy. We must remember that Bitcoin BTC is much rarer compared to gold and that it has technology which gold does not have at all.
