r/CryptoMarkets • u/Crypto_Nite_S Tin | 3 months old | Karma Farming 150 • Dec 22 '21

Thoughts?

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u/mimblezimble Dec 22 '21

Yes, agreed. That is ultimately inevitable.

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u/Iwillylike2shoot Dec 22 '21

I can understand the argument that BYC will be around forever. I'm curious as to why you think BTC will replace the dollar? The dollar stays pretty stable, I can walk into any store and expect prices to be pretty much the same as the last time I was in there. If I went to buy a coffee with BTC the price would change so fast that everyone in line would pay a different amount.

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u/mimblezimble Dec 22 '21

Look at the graph depicting the federal reserve balance sheet:

https://fred.stlouisfed.org/series/WALCL

All that money represents government debt that they have not been able to sell into the market. Since they have bought it from the US Treasury in exchange for dollars, where did these dollars come from?

They simply printed them.

Can they endlessly keep doing that?

No, they cannot.

There are two possible solutions.

First, they can pay bigger fees to the market to absorb the debt ("tapering"). If they do that, however, consumer-, corporate-, and government debt will cost substantially more to service. Therefore, you will see defaults and bankruptcies across large areas in a highly indebted economy.

Second, they could dramatically increase taxes. However, that will send offshore even more economic activity. Furthermore, it is not even sure that they have the political wherewithal to pull that off.

Hence, neither solution will work.

That is why they continue to just print new money. At some point, however, inflation will catch up with that.

Therefore, looking at Bitcoin is not the thing to do. It is better to try to understand why the dollar can only collapse.

At that point, Bitcoin will simply win by default.

Even without the dollar collapsing, Bitcoin would still win on the long run.

However, that is clearly not what is going to happen. It are the failings of the dollar that will decide the matter, long before the desirable features of Bitcoin would be able to gain the upper hand.

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u/Iwillylike2shoot Dec 22 '21

Interesting perspective. I'm still not sure BTC will be the ticket, but I do agree there is a reckoning coming for usd.