US dollar in circulation: a huge pile of money that serves no purpose
This is a short follow-up to our article on DGems use cases published yesterday. Several of our long-term followers claimed that the US monetary supply is healthy enough and the US dollar is under no risk. We dare to say the opposite: everything is much worse than we carefully hinted.
Below is an extended chart that compares the United States M2 monetary supply and its annual GDP starting from late 1950s. For three decades their proportion was stable (and, in our view, completely sane). Early 1990s resulted in this rate going down which, again, looked reasonable: money is a means of circulation and economic turnover, and with faster remittance services and more electronic payments available same amount of economic activity would need less amount of “economic blood” a.k.a. money.
And then something went wrong… the US economy needed rescue, and the country’s monetary authorities were eager to help with QE-1 followed by QE-2. The rate quickly renewed its historical highs and propelled to its current levels which are 1.5x higher than two decades ago.
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Most of this money went to bank vaults rather than to producers and consumers. We are making no news here at all reminding that $6.6 trillion of that pile sit in foreign central banks’ reserves, according to the latest reporting.
Please read into that figure again: $6.6 trln of $14.4 trln USD M2, or 45% are not employed by the US economy. This money is not employed by other economies as well (at least not for GDP generation purposes). In terms of backing/collateral, these dollars are not supported by any underlying asset, on the contrary, they vaguely support currencies of holders of these reserves.
We refuse to speculate on the US debt and its manageability (which is number one argument for every US Financial Apocalypse cult follower). We simply state that the US dollar emission went out of control long time ago and this gennie would be difficult, if not impossible, to fit back into the bottle.
Conclusion
We believe that US dollar bears significant risks. No matter if these risks materialize at all, and if this materialization comes anytime soon, it is mathematically proven that using USD is like dancing on the minefield.
DGems calls for valuable alternatives, and our solution will act like a proper one:
- Fiat free, bank free and Fed free
- Completely asset backed, transparent and affordable
- Tough to crack — just like diamonds that collateralize it.
We anticipate that there will be other stablecoins and tokenized assets — silver, platinum, rare earth metals, and more — that will face demand. Our choice of diamonds is logically and economically explained, and we are sure that DGems stable coin will help both the diamonds market and the market of crypto currencies and digital assets.
About DGems
DGems is a new generation fully fiat free stablecoin 100% backed by the most liquid class diamonds. The token uses a highly secure and fully transparent emission mechanism based on top level disclosure and audit.
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