Capitalism does not work. The economy is at a standstill
Have you heard the news ? Total global debt by the end of 2019 could exceed $ 255 trillion. You did not hear, it was $ 255 trillion.
Hearing such news, it is immediately concluded that the global debt bubble is simply obligated to burst, which means that markets will collapse and win those who transfer their funds to defensive assets in time.
We suggest discussing what is happening in the economy, will it be a financial crisis or something much more serious and, say, even dangerous for the whole of humanity, as, for example, one of the richest people in the world considers a billionaire Ray Dalio And in conclusion, let's try to figure out whether cryptocurrency supporters should rejoice and whether demand for bitcoin will increase?
The collapse of capitalism
What is wrong with the modern economy? According to billionaire Ray Dalio, whose assets are valued at $ 19 billion, the world simply went crazy with easy money. Every day, the gap between the rich and the poor is growing, and the financial crisis is just the least of evils. According to the opinion of the billionaire, things can go so far that people simply begin to kill each other.
Capitalism has outlived itself, and the current financial system is doomed to failure. Inflation and negative interest rates have made it impossible to just have money and consider yourself rich. You cannot keep them under your pillow or keep them in your bank account, because every day and even every hour you will become poorer.
The only way out is investment. And those who have money are gradually starting to go crazy in the pursuit of profitable investments, they are ready to give money to anyone and the business is forced to take it, otherwise competitors will receive additional financing.
Why do these states? Because they simply do not have money, such a paradox. This is not about those states that forgive the world debts and love to organize the most expensive olympiads in the world.
We are talking about countries where even the level of social benefits can be relatively decent living, as a result of which many people have decided that in general it is now possible not to work. Therefore, the middle class disappears as a species and replenishes the ranks of the poor, but they also want to eat. And, therefore, they need to be fed, increasing social spending, and then where to get the money? That's right, they need to be printed, thereby increasing the money supply, and, first of all, it hits the poor, because they have nowhere to get poorer.
Economy of consumption
A brief history of money sounds something like this. At first, people exchanged goods, then they came up with expressing the value in gold, then, to simplify the calculations, they issued paper money backed by gold. But then it turned out that for the continuous development of the economy, limited gold reserves are not enough, and to get more money, the provision of gold was replaced with state guarantees. So there were national currencies that we know.
Initially, the system worked in such a way that the state issued money, that is, printed. And it lends them to banks at a certain percentage, which is the key rate. Banks lent this money to business and people at an even higher percentage, and left the difference to themselves. But the trick is that before you repay the debt to the state, banks need to first borrow more, because there is simply not enough money in circulation. And so this debt grew and grew, until we received the very $ 255 trillion.
In addition, negative rates can weaken the national currency, which is also a plus for the state.
We agree, it sounds strange, why should a country make its currency weaker? But tell China about this, where to counter the trade war, the United States devalued the yuan to a historic low. Or Japan, where deflation has long been observed and with the help of negative rates trying to solve this problem.
And the root cause is that capitalism is a consumer economy. To produce more, a business must sell more. And the buyers are you and I, due to inflation, that is, the depreciation of money, we are told to buy today, or tomorrow you will have to pay more for the same product. But if you imagine that the opposite is true, and money does not become cheaper every day, but becomes more expensive, this is called deflation.
Then it makes sense not to spend money, because they are becoming more expensive, therefore, goods are becoming cheaper in relation to them, and it is economically advantageous to postpone the purchase for as long as possible. But this is not beneficial for business, because demand is falling, and they have to produce fewer products, and as a result, lower wages, reduce production, pay less taxes and so on.
Therefore, to stimulate economic growth, developed countries have lowered key rates to a minimum or even made them negative. That is, a stream of cheap money rushed into the market. But at the same time, it became unprofitable to keep money in banks, because now you are not paid a percentage of the deposit, but rather, the bank takes away part of your money. That is, he brought $ 100 to the bank, and a year later took $ 95. How do you like such earnings on deposits?
And since it is unprofitable to keep money in the bank, and inflation eats it up under your pillow, there is only one way - to invest. So it turned out that on stock , corporate and real estate markets, bubbles of extraordinary size were inflated.
The New Economy
It is obvious that Ray Dalio is right. Capitalism has outlived itself and the consumption economy should be at least restarted. But what can be taken as its basis if inflation makes people poor and deflation slows production?
Maybe the solution is in the middle, and all we need is to switch to payments in an asset that has limited emissions and that cannot be manipulated to please the economic or political situation?
I am sure you guessed that we were hinting at bitcoin . Moreover, we somehow made a prediction about the future of the first cryptocurrency in five years and in this video we recalled the so-called letter from the future:
In this letter, bitcoin really won, and Ray Dalio was right. After all, those who had cryptocurrencies formed a new financial elite, but all the rest did not come up with anything better than to take these bitcoins by force.
It's not about violence, but about the fact that we definitely need to rebuild the existing financial system and move from a consumer economy to an economy of supply and demand, when the value of the goods will be determined by the market without manual control by states. And for this we will need a new world currency, which has transparent emissions, is trusted by people and is not controlled by states.
Bitcoin will gradually penetrate the lives of all people without exception, first as a business investment, then bank capital, and then as a reserve of the Central Banks, and only then it will become the world currency.