The crisis of the modern monetary system
The existing global economic model is crumbling before our eyes. One of the most striking indicators is inflation. In the United States, for example, since October 2020, the cost of living has risen by 6.2%, a record in the past three decades. The price of gasoline in the United States increased by more than 50% over the year. Chinese construction giant Evergrande is near collapse. Due to the pandemic, travel companies, cinema chains, cafes and restaurants are being ruined. And only the cryptocurrency market and tech companies are showing growth amid the ongoing chaos.
Causes of the crisis
It is naive to attribute all modern economic problems to a pandemic. The existing monetary system is crumbling for a number of main reasons. The pandemic factor is certainly important, but very convenient for distracting from more complex causes. The pandemic is a great opportunity for a “Great reset”, says Professor Klaus Schwab, founder of the World Economic Forum.
Anyway, let’s look at the reasons for this crisis.
Excess fiat money
In the aftermath of the Nixon shock when the fiat currency was finally decoupled from the gold standard, the Fed and other central banks were tempted to print money out of control. Every time the printing press fires, the public debt ceiling continues to rise in an attempt to mitigate the situation. On October 14, 2021, President Joe Biden raised the public debt ceiling to $ 480 billion, which is expected to be reached on December 3, 2021. The more money is printed, the less valuable your paper savings will be.
The over-indebtedness of population
The 2008 crisis was closely linked to mortgage lending, but student and consumer loans drove the population into an even deeper debt trap. Over the past two decades, loans have been issued as uncontrollably as money was printed.
Difficulty of expansion
Almost the entire planet has been mastered, but the conquest of space and oceans is too expensive. Even building cities from scratch on free plots of the Earth is expensive and not fast. The introduction of new technologies and the construction of innovative cities will require tens of more resources and money than in the last century.
Digital control
With the advancement of Big Data technologies and the widespread use of cashless payments, the power of supervisory authorities will grow. It will be easier to track transactions as well as impose fines. All this forces businesses to look for more liberal platforms and jurisdictions where they can conduct their business more freely.
Redistribution of power
Big tech companies are starting to have more power over people’s opinions than governments and traditional financial institutions. Google, Facebook (now Meta), Yandex, Sberbank consider themselves broader than just a highly specialized service, now these are ecosystems that take on various functions — these are search engines, social networks, money transfers, etc. The more transactions are carried out in ecosystems, the more their developers earn.
Trust deficit
Perhaps the most important reason is the lack of trust in modern financial institutions such as banks and international financial institutions (e.g. WEF). The alternative in the form of cryptocurrencies and DeFi emerged precisely as a system that could exist without the need to trust intermediaries who are clearly abusing their monopoly.
Summarizing
We are on the verge of a new economic order and at the beginning the process of transition and initial adaptation of a person to changes will be difficult. Relying solely on traditional financial institutions is now quite dangerous, one should keep up with the times. Blockchain, DeFi. NFTs are all technologies that will become widespread in a new era — for the next 50–100 years. Moreover, economic relations will no longer need a monetary intermediary — they will be replaced by automated smart contract protocols.
We at Barter Smartplace soberly assess the trends of the future and are ready to meet them fully armed. For our part, we offer our clients to plunge into the world of decentralized commerce of the future, where you can exchange currencies, goods and barter services and digital assets. Join the fast growing barterian community to learn more about the barter economy.
Barter Wallet bot http://t.me/barterwalletbot
Twitter https://twitter.com/barterteam
Instagram https://instagram.com/bartersmartplace
