Hey yo, what’s the sneak with my people, those who don’t miss an episode, the Chico
Army but if you're new, you haven’t earned your stripes, you’re just a viewer of the
tube.
My name’s Tyler, the host of the crypto channel whose motto is, you can run, but you
can’t hide.
You know how we hide in go peek..it’s time for Chico Crypto!
Bitcoin, the world cannot hide from it for much longer...as those in power of the global
reserve currency, are going bonkers which could lead up to an apocalyptic type scenario
against the dollar.
This is called hyperinflation...and throughout history, of when it hits, there are usually
5 stages.
Number 1) Steady Inflation Hits the Currency Number 2) Steady Deflation Hits
Number 3) Deep Inflation Hits Number 4) Deep Deflation Hits
And finally 5) You Reach HyperInflation
This could really happen to the US and their stronghold dollar?
A hyperinflation cycle??
Ya it could, because it already happened once within the United States, with the countires
1st try at a currency.
The continental dollar.
This cycle went down over the course of the continentals creation in 1775 to it’s apocalyptic
collapse, where it became worthless by 1785 and people just stopped accepting them for
good or trade.
Why did this happen?
Well it came down to this, the government was given the power to emit paper money, with
no backing.
That is why in 1787, the constitutional convention, explicitly voted to remove the power to emit
paper money, from the list of congressional powers provided by the constitution.
That is why, we have this in Article 1, Sections 10, clause 10 of the constitution.
“No state shall coin money, emit bills of credit, or make anything but gold and silver
tender in payment of debts.
This was added, so something like the continental wouldn’t happen again.
Our currency, was backed by gold and silver, for a reason....but as we know, that started
to fall apart around the time of the great depression, and was completely abandoned in
1971 by Nixon.
The government once again had power to print unbacked money.
So why didn’t our currency completely collapse by 1981?
Took 10 years, with the continental for a full hyperinflation cycle to obliterate it...its
been nearly 50 years since we have been of the gold standard, and the dollar’s still
here??
Well things are much different than back when the US was a brand new country...we were at
the whim of other countries and their monetary policies which had been shaped over centuries,
but ended up backed by precious metals.
Did you know before the constitution, 2 years before it was written, 1785, Congress accepted
the Spanish dollar as the official unit of value for the United States and determined
that all foreign coin would be evaluated in terms of the Spanish dollar??
But by 1971, the dollar had grown into it’s own beast, and the globe's reserve currency,
thus this hyperinflation experiment, might take a bit more time, than a brand new, small
currency.
But in reality, that cycle almost happened, as you can see, from the chart of inflation
during that time.
First steady inflation, deflation, then deep inflation, deep deflation and we almost hit
hyperinflation in the 80s, but something saved it.
The FED raised their interest rates, they made it expensive for people to borrow the
printed money, and pushed away the demand.
The rate almost hit 20 percent in 1981.
This was a brutal hit to the economy, but to save the currency from a hyperinflation
cycle.
And as we can see since there has been cycles of raising and lowering the FEDs Fund rate,
which has kept inflation in check, we have been below 6 and haven’t jumped back towards
that since the 80s...but as we can see with the feds fund rate, the cycles of lowering
and rasing are a series of higher lows, and within the past 10 years, they have been basically
dropped to zilch.
With the current target rate between 0 percent and .25 percent.
Now pulling out this inflation chart, you can see from the history of US currency, we
began with cycles of inflation, and deflation...it wasn’t until after the great depression,
and going off the gold standard, did we have a truly inflationary currency.
As we have stayed above, positive the entire time.
Now, I wan’t to zoom into that time, when we officially abandoned the gold standard.
In the first chart it looked like we almost completed the 5 stage cycle in 10 years, but
when you zoom out, you see the cycle is actually over the course of these past 65 years.
After our last dip into actually deflation, around 1955...we went through stage 1, steady
inflation until 1959, then steady deflation took over until Nixon, later 60s and then
deep inflation….which went on until 1980...after that, we have gone into the cycle of deep
deflation, where we are almost to that 0 mark...and into deflation?
Nahh it's called hyperinflation.
You see, after the gold standard was dropped officially the dollar became officially an
inflationary, paper currency, whose destiny is hyperinflation, as governments can control
the need to print.
Gold was able to keep currencies in check, as it’s supply is limited, it supply was
out of the government hands & is a factor of work, proof of work...mining it.
Gold backed currencies in essence were deflationary, and there is a reason it’s standard has
been around for civilization, upon civilization...this currency form is a natural state of man.
And that is why BITCOIN was made by Satoshi, to bring this state back to man.
He made another proof of work currency, one made for the internet & digital landscape
of which governments did not control yet, and whose supply was once again out of the
government's hands.
This second try, second experiment of America building an inflationary paper currency, will
fail & a paradigm shift is coming, which will return us to our natural deflationary currency
state as cryptocurrency takes over.
This means consumerism in America will see a rapid shift as well.
Now before inflationary money perse, it was a battle for companies to get your precious
money, which can be seen in the personal savings rate before the Nixon Shock, and we can see
after nixon, and our inflationary cycle taking over, savings has been going down and down
year after year, as people have less of a reason to hold a currency, that just loses
value.
Thus, consumerism competition is much less.
Companies are able to get your business much easier, the more money in the playing field.
You remember the products from the 1st wave of consumerism pre depression and second wave
after world war 2...timeless washing machines, radios, refrigerators, vacuums & more and
some of these products, 100 to 70 years later, are still freaking working.
While a refrigerator today goes out in 5 to 10 years.
Because of the monetary policy back then, and consumers' natural knack to save, businesses
had to resort to value engineering to stay competitive, which included engineering the
best products possible to make the sale.
That’s exactly why the products last forever.
And this will happen again, with the BITCOIN and cryptos rise into global currency dominance.
Deflationary currencies make you wanna save, but you will spend, I’m testament to that,
and I’m sure many of you are too.
I spend my BTC, I just think about it a whole lot more now, regarding what I’m buying,
and what the product brings in terms of quality to my life.
If the fiat currencies fall, and BITCOIN is in demand, guess what those businesses are
going to want your BTC, and they only way to get it out of your hands, is to make freaking
awesome products.
This shift in thinking, will bring brand new business models, which we never thought could
be possible, as they weren’t with inflationary currencies.
Imagine your next phone purchase.
Instead of these payment plans, of 60 to 100 dollar per month, paying down your phone as
you go, you will put down the entire amount in Bitcoin or whatever deflationary currency
you want.
And then, they provide a free phone upgrade in 2 years or they pay the entire amount of
the cell service for the life of the phone.
They will have to provide clever deals, to get people to spend “now” and share the
deflationary benefits of increased buying power from the asset, with their consumers
at a future date.
Bitcoins TVM, or time value of money should only increasingly get positive, each bitcoin
acquired today, should be worth less than a bitcoin acquired in the future.
But these consumerism and business model shifts won’t only be limited to BTC.
Ethereum, and it’s DeFi powerhouse, brings in crazy new models too.
No loss of lotteries, those are already a thing on ethereum, with pool together, which
rewards people for saving their dai, in pools, which pool togethers smart contract, takes
that pooled dai, and uses if for lending on compound, and the winner takes home the interest
earned.
Insane lottery and saving model, but this could be implemented by other’s this pooling
technology.
Like the tech businesses of today...Think of it, Netflix instead of charging you 9 bucks
a month for their service, give it to you for free, if you give them the total for the
year, 108 bucks in DAI and promise to lock it up with them for that year.
Which you could withdraw at the end of the year, or lock it up again.
By pooling together, the mass amounts of DAI received, and using it in DeFi.. they could
possibly offer their streaming service for free, just for using their customers collateral
and still make a buck themselves, possibly more with how they use the collateral.
So Netflix...or Netflix’s future competitor, if your watching, take the idea and run with
it.
Cheers I’ll see you next time!