Начало Useful Governments Paralyzed by Pandemic and Politics Are Bullish for Crypto


Governments Paralyzed by Pandemic and Politics Are Bullish for Crypto

Forced lockdowns around the world are exposing fatal flaws in the monetary and financial regimes that have reigned since 1971 — when President Nixon cut the US dollar loose from gold.

Freedom from any restraint from the yellow metal is basically what gave central banks de-facto license to print money up the wazoo.

And that’s exactly what they did over the decades that followed — and especially since 2008. Since then …

Central Banks Have Become Primary Shapers of Economic Policy Across the Western World

Central bankers are broadly insulated from the politicking that customarily takes place in parliaments, congresses or even the courts.

They are also largely unconstrained by the comings and goings of elected officials.

That basically leaves them free to pursue almost any policy they deem appropriate. And here, their policy response to the 2008 global financial crisis looms large:

Massive monetary interventions in the form of near-zero interest rates and wholesale money-printing.

Of course, it could be argued that, without these monetary excesses, the global financial system would have collapsed in 2008.

With gold, higher prices soon lead to expanding supply. For example, higher gold prices mean miners can profitably mine lower-grade ore that was previously uneconomic to produce. And such supply increases naturally work against sharply rising gold prices.

Bitcoin, however, doesn’t work that way. There’s a hard ceiling on supply, defined and fixed by the blockchain. No more than 21 million BTC can (or ever will) be created — no matter what prices or market conditions may be.

So, what happens when surging investment demand collides with fixed supply? Prices go ballistic. That’s Economics 101.

This also explains why crypto markets are prone to go into exponential parabolic uptrends … only to crash back down, recover, then shoot for the stars again.



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