The Great Financial Reset: American Capitalism Is In Crisis Again. Crypto Can Save It... If America Is Smart Enough To Embrace It
By Jason Trian
Yes, the great financial reset is happening.
The warning signs are all here. Banks have been insolvent for years. Fiat currencies like the dollar have been losing value for decades, exacerbated by TRILLIONS of money printing in 2020-2021, forcing smart money to invest in assets like securities, digital assets and real estate to maintain their wealth.
First, let's discuss the real inflation currencies are experiencing. The common narrative is that dollar inflation is about 2% per year, meaning that if you were to leave cash in a checking or savings account for one year or any other non interest bearing account your purchasing power would be reduced by 2% ($100 now is worth $98 a year from now).
However, the dirty secret is that documented inflation rates are highly manipulated. I highly suggest you read Brian Schuster's Medium article with supporting data claiming the dollar's actual inflation rate has actually increased to around 7%, BACK IN 2016!; while you can still borrow this same cash for 4% and below. While the 7% inflation rate opens up a discussion for debate, you cannot actually believe we are maintaining a consistent 2% inflation rate with the amount of money we are printing along with the levels of poverty working Americans are facing.
Income inequality is the perfect data point to support this. According to Pew Research, technological advances, globalization, and the decline of unions have contributed the most to income inequality. These three factors impact the wages of these workers a great deal.
On the other hand educated upper middle class individuals have actually seen an increase in wages and personal wealth. These individuals are also more likely to own real estate and other assets. This is why the average worker feels like they are perpetually drowning in this economy.
These individuals have historically relied on savings and pensions for quality of life. These people aren't making enough money to keep up with inflation. Their purchasing power is constantly decreasing, and they have no disposable income to invest.
What does this mean for real estate and other assets? Holding cash is becoming more and more expensive.
However, I do consider real estate and securities outliers in the asset acquisition narrative. Securities in the Nasdaq and S&P have reached their peak valuations and have been leaning toward overbought status for months. Real estate is also highly inflated due to the insane lack of inventory that is producing the feeding frenzy in the real estate market we are currently experiencing.
Home sale inventory is down as much as 80% in some areas.
As a real estate agent, advising clients who are still looking to buy is challenging. It has been even more challenging convincing people to sell, only to compete in this crazy buyers' market. Luckily, we have been fortunate to still find good deals for clients in this market. The property evaluation algorithms I created in the past are becoming more and more valuable by the day for our clients. This is how we have been separating ourselves from other agent teams who are just throwing darts blindfolded at properties hoping for the best.
While purchasing real estate is never a bad idea, it is still important to buy real estate correctly. You make your money on real estate at the point of purchase. Similar to stocks, if you purchase at highly over-inflated prices that is the point of highest risk, where the only place to go is ultimately down. In this case, you still risk losing your capital and ultimately your future purchasing power as you would just holding your cash.
A grounded philosophy…
There is always a level of homeostasis for humans and every system to function optimally. In investment, finding the right balance of risk and reward in environments like this is essential to maintaining this balance and having consistent, positive returns.
So with real estate and stock values overly inflated, what asset class still has great potential for returns?
CRYPTOCURRENCIES ARE HERE IN THE PRESENT AND ARE THE FUTURE
This is the unspoken thesis behind the great financial reset. We are about to experience a new ‘Bretton Woods' moment. For the sake of this lengthy blog, Google this and it will all make sense, but here's some insight.
Since we were taking off of the gold standard by Richard Nixon, the US dollar is now backed by NOTHING. This is the great scam of our financial system perpetuated by the Federal Reserve, which can print unlimited amounts of money to prop up the economy. The FED has openly stated they are able to, and will continue to do whatever they can to ‘support' the economy. By doing this they not only inflate our currency, but also assets like stocks and real estate, as we discussed.
So how does this practice scam you?
The wealthy exclusively benefit from this money printing. When the FED prints money to artificially prop up the economy, wealthy individuals receive the majority of it in the form of company bailouts and tax breaks. On top of that, they leverage this ‘free money', are able to borrow against it from 0%-3% interest, and they continue to hoard assets like securities, real estate, and now digital assets that increase in value, outpacing currency inflation. This is why it is so easy for the rich to continuously amass so much wealth, exponentially.
How can you compete?
The easy answer is to buy assets and limit your liabilities (expenses). The more specific solution is to begin buying digital assets/currencies. Digital assets are still in their infancy, with great value and profits to be had.
However, there is one huge caveat. The learning curve is tremendous to even identify solid projects in this asset class. Then, you need to learn how to store them correctly, and ultimately use these currencies to produce passive income.
This is the real game changer. Decentralized finance is going to change the world and give you more power and control of your wealth than you ever imagined, but you need to understand it first.
You probably have no idea what I'm talking about unless you are in the less than 1% of the world's population who already own digital assets. If this sounds like a foreign language to you; that's expected. In future articles we'll be elaborating more on specifics and I'll be doing my best to bring you up to speed. If you are at ground zero you need to learn some vocabulary.
Research and begin understanding the following terms:
- Blockchain and the different types
- Distributed ledger technology
- Proof of work, proof of stake, consensus protocols
- Decentralized finance
- Smart contracts
Then, research the top 10 crypto currencies on Coinmarketcap or Coingecko and learn what each use case is and how they work.
This is just a start. It took me a year of research and education before I made my first investment in this market, and I'm better for it.
This market is CRAZY! You will get ‘rekt' if you emotionally invest (FOMO buy), and don't know what you are investing in.
Many believe we are on the precipice of the biggest bull run in crypto history. I am a long term bull, but cautious in the short term due to how fragile our markets and economy actually are. Long term, I believe crypto is much more than an investment opportunity.
I believe it is a human rights issue that will finally put us in control of our finances and somewhat free us from the oppressive nature of the state, the banks, their monopoly on our currency, and ultimately our financial freedom.
Do I think the dollar will completely die?
No, absolutely not.
Tanks will roll down Main St. before the U.S. government surrenders it's currency and allows it to totally fail.
On the contrary, a more realistic expectation and strategy for you might be to use this inflated dollar to purchase a digital asset that has a fixed supply, and a strong use case, like some of these cryptos have. Yes, most cryptos are shit and have no use cases, but choosing the right ones might be the solution to your financial freedom in the future.
To be continued….
Benzinga's Related Links:
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- Bitcoin Is A Bubble, 74% Of Bank of America’s Professional Investors Believe
- Is Buying Tesla Stock In Tokens Rather Than Actual Shares The Better Choice?
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