Just what exactly does the word “economy“ represent? It represents the efficient use of resources in any given endeavor, be it manufacturing, trade, etc.
Wall Street, central banks, governments, and companies have gone too far in taking the resources of today with the promise of paying for them tomorrow. This is shown in intricate financial instruments that create value out of abstract or stupid ideas, like subprime mortgages and other dubious loans with zero to none chance of succeeding. Or how governments and central banks all over the world have decided to print up more money and increase our debt.
“The world’s debt rose by $3 trillion in the first quarter of 2019 — an almost unprecedented borrowing binge that brought total global debt to $246.5 trillion.” — Axios.com
Now we’re coming to a realization that we won’t be able to pay for it tomorrow, we actually never were. We just keep riding the bull and we’ll get knocked down eventually. This has to have consequences, that either we cannot see, or can but are ignorant enough to turn a blind eye. Debt is going up, prices are going down, debt is increased even more.
Let’s take car manufacturing in the US as an example.
If 1000 cars are built, then the materials used must be accounted for by an equivalent return in another form of value. Currently, this form of value (money) is being corrupted to the ground, as shown by increased debts and by printing more money into the system. The materials used have value, but just because we printed up some money, doesn’t mean we can write off the debt. The debt is towards the universe and the Earth. Things are way out of balance. Who do you think is paying for these cars? You and I certainly don’t have the money for it.
Don’t believe me? We have two prime examples already:
- In the last 10 years, Argentina increased the money supply by 1,170% “printing money for the people” to finance bloated government spending with highest tax wedge in the region, what happened is that the value of the Argentinian Peso fell by more than 50%.
- We see the horrifying results in Venezuela as well, whose currency has depreciated tremendously, leading to hyperinflation of their money, rendering it useless in trade and consequently causing an uproar of all kinds of chaos. An economic collapse.
We’re all to blame here, our immediate survival is more important than the preservation of our legacy and further advancement of civilization. Simply put, our financial system is primitive, simple and prone to the many exploits of humankind. Our highly irresponsible behavior in how we treat Earth’s limited resources is transparent in every avenue of our life. Fossil fuels, global warming, global debt increasing. All of these take at the expense of tomorrow’s well being.
Ways of improving the economic model
Loose monetary policies are central banks’ way of saying that they do not have a solution and the only thing they can and know how to do is printing more money. Simple maths tells us that this is not sustainable. How is value created if we’re going further into debt every time? Who do we owe the money to and how are we ever going to repay it?
Think of it this way, If we don’t have the resources to pay for manufacturing tons of luxury cars today and you don’t have the money to afford it; then how are we able to build and own them anyway? Surely these resources are available to us, otherwise, we wouldn’t be able to build anything, so what’s the problem?
The catch is in front of your eyes
As resources are expended without accountability, their value is used and destroyed. It is economically unproductive to continue going this way as sooner or later we WILL run out of resources and have nothing to show for. We’re headed towards zero and destroying everything in our path without accountability. As an advancing civilization this kind of reckless spending with limited resources is showing how stupid our actions are.
So what can we do about it?
Increasing liquidity indefinitely is not a sustainable model, especially if rates continue to hack away at the wealth you have accumulated. The crisis is a serious one and it is at the systemic level. There was no sign of improvement, no solution in sight, but finally, the solution has presented itself in the form of Bitcoin’s blockchain and Ethereum’s smart contract composability. Digital tokens can represent any form of value and by storing it in the decentralized ledger it is accounted for. Its value is derived from there.
The case for buying and holding cryptocurrency is to stimulate the rise of the new economy. As our old one turns to dust and we approach hyperinflation, fiat money will become more obsolete as financial and economical activity shifts onto crypto with a verifiable ledger of transactions. Economies will be accounted for and all value shifts will be tracked and accounted for. There will be no leaks, no corruption, no stealing.
This is the trajectory that we’re on. And unless we’re some masochistic race that is driven by self-destruction, we will look for a solution, and do it fast.
There are thousands of people already building upon the Ethereum ecosystem and hundreds of thousands more participating in it. Currently, there is a myriad of beneficial services, like the No-Loss lottery or 3 steps of interest generation. The underlying financial composability demonstrated by the powerful technological breakthrough on the Ethereum’s Smart Contract platform is a sign that we can break this vicious cycle forever and improve the quality of life on our planet tremendously.
⏪Our Economy Is Out Of Date by sanneh_si for The Startup
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