As The Debts Pile On, Governments Are Printing Money Out Of Thin Air Like There Is No Tomorrow
Money has long been a medium of exchange for goods and services. We keep hearing that cryptocurrencies are not sound money because it is not backed by anything. However, in reality, it is the very money itself, which is greatly interwoven into the society that has hardly any meaning.
Initially, gold was used as a form of exchange because it was hard to mine them, and they were limited in a way. So when currencies came, they were backed by gold. However, in 1971, the world’s biggest currency, the US Dollar decided to get rid of the gold standard. So what does that mean? The United States can print money out of thin air, as much as it wants, and that is exactly what is happening right now.
Then there’s the other problem: Debt pile. Governments around the world are taking out loans and spending them like there is no tomorrow. It has become so bad that the Global debt is at a whopping $246.5 Trillion right now. That number is 320% of the entire GDP of the world. In other words, it is highly unlikely that the debt can ever be repaid and we are sitting on a ticking nuclear bomb. Governments around the world are also not slowing down their spendings or paying backloans. The concept of modern money fails when these loans cannot be repaid.
Just this week, the United States Federal Reserve (FED) printed nearly $125 billion out of thin air to calm down the markets. Meanwhile, the global economy is heading towards a slowdown and a recession, and this time it could be unlike anything we’ve ever seen before because of the massive debt.
Right now, Bitcoin and other cryptocurrencies seem like more sound money than the fiat currencies. Only a finite number of Bitcoins can ever exist, 21 Million. More Bitcoins cannot be printed at the whims of a government to fuel their unchecked spendings. Bitcoin is backed by the fact that it is ruled by a fixed algorithm, while fiat currencies backed by the trust in humans. Clearly, that has not worked out very well.
