Famous words are so for a reason. They resonate with people. They are pieces of wisdom that we unfortunately don't pay enough attention to. But with what has been happening in the past couple of years people are starting to remember these word: "Never let a good crisis go to waste". But when Winston Churchill said that he was not referring to anything bad but an opportunity. But over time this famous quote also took another meaning. It refers to people in power or the government who use crisis in order to further their agenda and grab hold of more power. It might sound ridiculous right now but there was a time in 1933 when the government put forth executive order 6102 with which it would strictly: “forbid the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.”
Now, many years later the US and most other countries in the world are facing an unprecedent crisis as inflation rises, gas prices soar and possible food shortages are on the horizon. And as we saw with what happened in Canada just a little while ago, governments and people in power will not hesitate to grab more power by declaring that they only do so because it is a crisis. We already saw attempts of controlling crypto wallet companies in the name of "sanctioning Russia". In fact this crisis has a lot to do with sanctioning Russia a move which will affect regular Russian citizens but do little, as we've seen to stop their military command or president Putin's ambitions. In fact is beginning to look more and more like a funded war for nefarious reason by NATO or other forces involved. Of course nobody is saying that Putin and his cronies should not be punished by are we really going on the correct route or just giving some people with greedy agendas an excuse to fuel the flames.
National digital currencies as a response to crypto?
So now that governments around the world have an excuse to either dismiss crypto or work against it some of them are planning to implement their own national digital currency or they have already implemented such as the case with Nigeria, the Bahamas, Eastern Caribbean and others. But this makes people sigh and scratch their heads in confusion. How is this a response to crypto? Cryptocurrencies work with the blockchain technology, meaning they function on a decentralized system where people in power, banks, governments can't take the money away from people because of an "emergency" or "crisis". How will a digital version of fiat currency be any different from the physical one aside from the fact that you use it online? But we can already do that. We can already pay online for almost everything with the national currencies.
What this basically means is the initial phase of eliminating cash as a means of payment. But it is by no means a response to crypto. Officials that tout this new central bank digital currency (CBDC) put emphasis on the fact that it is stable and not at all volatile like crypto. To which the answer is: of course that's the case, it is after all issued by the central bank and still controlled by a central authority. But no matter what strengths they think this "new" form of money will bring like easier to change between banks and it will have lower maintenance cost it doesn't change the fact that it also brings all of the weaknesses of a currency issued by a central authority such as: it is out of the people's control, can be blocked by either the bank or the government or even taken away. So, no, to all those that praise CBDC as the answer to crypto and at the same time much better, this form of money will not change much and cryptocurrencies will forever remain a superior form of money thanks to blockchain technology which lets crypto operate on a decentralized system.
It is nevertheless an interesting move from countries all over the world trying to adopt a CBDC. 9 countries already have it while 15 others are in the pilot program phase of introducing it and 90 more are considering it. Among those 15 maybe to nobody's surprise you can already see China and Russia. The Chinese government cannot by any means necessary loose control of the people by having them handle their own money in cryptocurrencies so their response to this is to appease the masses with a let's call it "fake crypto". And although Russia could benefit from cryptocurrencies right now in order to alleviate some of the sanctions this also means that the ruble would go further downhill so of course Putin would make a move to create a CBDC version of the ruble.
How will the growing inflation affect the future of crypto?
But the reality remains that a lot of us are facing a growing inflation which greatly affects our livelihoods and this because people in power couldn't get a good crisis go to waste without grabbing more power, blaming everything on the war in Ukraine and making it sound like it is our moral duty to suffer for and because of the war. Meanwhile the government can apparently now do anything they want with tax payers money because of the crisis in a country on another continent. Now don't get me wrong, the war there is horrible, all wars are like that and nobody wishes them upon any country but wars happen all the time, they are just not important enough or profitable enough to be made into 24 hour news all over the world.
But moving away from this how will the current inflation crisis affect crypto? The easy answer is that crypto will obviously benefit from this, but the real answer is more complex. That's because as we previously said, people in power will use the current crisis to further their personal agendas. This means that there will be those that heavily oppose crypto because it can be used by the bad guys. Just like everything else in the world that can be used both by good and bad people. Should we get rid of all guns because occasionally bad people also use them? How about we shut down the internet because most bad people use it!
But as things go, and our purchasing power getting lower every year with fiat money how will people resist the temptation of crypto? Sure it might be volatile but overall it has only increased in value and the decrease doesn't even come close to how inflation is and will affect us. Among the people that believe inflation and how it is being handled will lead to crypto stabilizing and growing is Economist Mohamed El-Erian. El-Erian is the president of Queens’ College, Cambridge University as well as also Chief Economic Advisor at Allianz, the corporate parent of PIMCO, one of the largest investment managers, where he was CEO and co-chief investment officer. He noted that there has been a concern among crypto enthusiasts that it has not grown enough when inflation hit or at least not as much as predicted. The famed economist explained that this is due to liquidity still being valued higher a trend which is slowly but surely dying out. “We are just adjusting to a paradigm in which liquidity is no longer abundant, and is no longer predictable,” he added. What this means that we are now in a period of crypto stabilizing itself as people see that liquidity is not the easiest path to take. Not to mention that like any other asset that is in the physical world, gold can also be taken from people or limited by using a convenient crisis.
Is hyperinflation coming and are we heading for a recession?
The famous author who wrote the best-selling book Rich Dad Poor Dad, Robert Kiyosaki warns people that hyperinflation and recession are already here. He, thus, advices people to buy gold silver and crypto. Kiyosaki also gives a dire warning that the biggest bubble bust is coming where pensions will be stolen and trillions of "fake" money will be printed and spend by the government in an absurd plan to stifle the growing inflation. He is not the only one to believe this either. JPMorgan Chase CEO, Jamie Dimon, also warns us that the risk of the Federal Reserve tipping the U.S. economy into recession is rising.
Former Treasury Secretary Larry Summers was another voice that mentioned this explaining how a recession is “the most likely” outcome for the U.S. economy, not a soft landing. And for those of us thinking that this won't affect us since we don't live in the US, think again. The fall of the US economy and the value of dollar respectively will have massive repercussions on the entire global economy. Jack Dorsey, former Twitter CEO also predicted that hyperinflation is coming to the US soon and recently Mexico's third-richest billionaire, Ricardo Salinas Pliego cautioned about severe dollar inflation and advised people to get into crypto. But will all this talk about hyperinflation, what exactly is it? And how does it come about?
Hyperinflation always starts with money being printed in excess. And from there we just follow a simple logic. What happens to the value of something when there is too much of that certain something. The value, naturally goes down. This is also how inflation works with money and why you hear horror but true stories of people going to the store with suitcases full of money just to buy some groceries in countries suffering from hyperinflation like Venezuela. Now, it is beside us to make grand statements like the one made by Kevin O'Leary the shark tank star also known as Mr. Wonderful who recently noted that crypto mining will "save the world" but we do share a similar sentiment.
Seeing how we might be facing a recession soon, it might not be such a bad idea to either get into crypto mining or at least hold some assets in crypto "just to be safe". With gas prices, electricity and heating going up every day, food prices also soar by 20% in the past 2 weeks with some food items like oil actually doubling in price. Meanwhile people look with wonder and disgust as military aid worth hundreds of millions of dollars is being thrown at a war that by all intent and purposes should not concern them. At least to the point where they should have to cripple themselves in order to, what? Virtue signal? Prove something to the world? Speaking of the effects of recessions, they can vary from country to country but are never good news.
It is also a vicious cycle which can become worse and worse as time goes by if nothing is being done. Of course printing more money is not the something that needs done, that will actually exacerbate the problem. The question is how long will people endure before they have had enough. And also how long until they completely turn from fiat and go into crypto since now it does seem like a more sensible solution. Of course gold and silver are still a valuable investment but it requires more effort, higher security and is overall much more inconvenient. It offsets all that with the value which will mostly only go up and remain very stable but in the age of online transactions where everything needs to be done at the speed of light people look more for convenience and accessibility. Crypto is all that and more as it is also highly secure and best of all it cannot be taken from you by another "crisis" real or not from which people in power or the government can profit and extend their reach.
So do you also believe that governments around the world are using crisis as a go to term and event in order to further their power and overreach? Do you believe that it is the duty of most of the entire world to sacrifice the livelihoods of their citizens in order to fuel a war in Ukraine in which they can't interfere directly and will most likely not change the outcome of? What happens when Russia eventually wins the war and all of the effort done by everyone, all of the sacrifices, everything will amount to nothing? Well, we can't say they it changed nothing, it brought inflation and maybe a recession upon us but aside from that it just fueled a pointless war making it last longer and thus indirectly becoming responsible for the loss of more Ukrainian lives. But we are not clairvoyant so we don't know what the future holds. But, we can learn from the past, learn from history and prepare ourselves for the worst. Hopefully it will not get there but meanwhile maybe consider crypto and gold just to on the safer side.