Lipstick
Daily Ramble
There’s a sense that we know what’s coming. Perhaps it’s my projection on the world, but I walk around and see a sense of foreboding amongst the general populace. Whether that is in the faces of people I see on the streets or the comments I read online. I can best describe it is as a collective sense that things are beyond screwed up and that there’s a shoe about to drop.
I don’t happen to know what that shoe is, but I’ve read enough monetary history to have found certainty that our relationship with money itself is beneath this foreboding. It’s a cycle that’s played itself out over and over again: a rise of an empire, a golden age, then a decline. The Romans, the Spanish and Portuguese colonizers of 1400 to 1500s, the English of 1600 to 1800s, and, today, the American empire. All went through a similar process. Behind each of these, and I’m sure there are countless others, the societies grew on the back of a strong monetary source—namely gold and silver—but as they matured, their governments managed to take hold of the minting and diluted the money. Sometimes, to the year it started.
Will history be different this time for the latest world power, the Americans? 1971 was the year the US empire went off the gold standard. An excellent website called WTF Happened in 1971 shows how an absurd number of metrics in US society began to unravel in 1971. Coincidentally, the end of the gold standard was just a few short years after JFK’s assassination and the peak of the Vietnam war — the end of the age of innocence for the United States. Many have written about this time period, but few have linked it to the money supply in a way that has captured the public.
The US was forced off the gold standard by France, whose currency was pegged to the dollar. The French began returning their dollars in exchange for gold at the Federal Reserve in New York, picking it up on a warship. Their last pickup was in August 1971. In September, Nixon announced the ending of the gold standard. While not expressly stated at the time, it was clear in hindsight that there wasn’t enough gold to meet the needs of all those who may decide to follow France’s lead in cashing in their dollars for gold. Nixon’s hand was forced and he ended the gold standard.
The chart above inspired my Ramble today — it’s the best graphic I’ve seen that demonstrates the insane amount of debt the US has taken to back the hyperactive money printing. I don’t believe there’s a better graphic representing a society in decline. It really doesn’t matter the color of the political team in office. The debt has ballooned as the government in the US has lost its tie to physical reality—gold. So it’s not a surprise to me that as the US digs itself deeper into debt, the society running on top of the weakening dollar is also starting to spiral.
At the risk of putting lipstick on a pig by sounding a positive note at the end of an otherwise dreary Ramble, but I’m doing it anyway: while I hope the US can right itself in these stormy waters, life will go on even if the US in its current form cannot. Different does not mean worse. The golden age of American dominance may be ending, but when a door closes, a window opens.
Rad Things on the Interwebs
Bitcoin Price Prediction
Yesterday: $31.4k - $35k
Today: $31.4k - $35k
Weekend: $28k - $36k
Today is crucial for Bitcoin’s price to show some bullish strength. At the moment, it’s trading at $33.5k, where it is attempting to pivot and move up. It’s traded in this area most of the last 24 hours which mean the fight for control of the price movement is a wrestling match. Trading below $34k has introduced substantial downward pressure. A break below $32k will lead quickly to $31k, where the bulls will have to make a final stand or the market risks leveling down into the $20k - $30k region. On the bullish side, the price needs to clear $34k to achieve some breathing room. All in all, today’s price action will be crucial going into the weekend. If we see either $34k or $32k broken, it’s likely to lead to some increasing volatility over the weekend.
Bitcoin Q & A
Q: Are there decentralized finance applications being built using Bitcoin?
A: Yes.
Decentralized finance is the idea that basic financial tools like trading, lending, and borrowing can be done without a centralized third party. Today, we primarily use banks and brokers for these services.
Sovryn and Stacks are two projects utilizing the security and decentralization of Bitcoin to build finance applications. Though early, their efforts are attracting significant attention and capital.
Thanks for reading,
Kent
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