This is opinion editor Mickey Koss, a West Point graduate with a degree in economics. He spent four years in the infantry before transferring to the Finance Corps.
Always on top, you always have to add more to keep up. I felt that the American dream was slowly fading away every year. We paid our bills decently, contributed to retirement accounts, invested prudently, and yet each year we felt like things got a little tougher. It’s a little harder to give us what we need. Bitcoin gave us hope when we found it.
“Hitting is mutual suffering. Chicken game. Bitcoin has changed the game. This made the shot valuable for the attacker.”
– Matt Hill on “Bitcoin Audible,” episode 75
Now my wife and I are on vacation, as are probably many of you reading this post. In 2020, when the money printing presses began to rumble after the start of the COVID-19 lockdowns, I felt a deep sense that the world would never be the same again. With such indifference to cause and effect, ungodly money was mentioned on news stations. Finally, the results speak for themselves:
We need better critics
One of the most cited criticisms I’ve heard from seemingly sophisticated investors and economics PhDs alike is that Bitcoin is a Ponzi scheme: a game of bigger fools than a fraudulent huckster as previous investors dump their bags on new ones.
The LinkedIn post that inspired this article was accessed on November 27 but has since been removed
The post above nicely illustrated the complete lack of understanding, let alone critical thinking, surrounding this particular line of FUD. The lack of intellectual curiosity is surprising, but not surprising given that I have recently worked in academia:
“It all depends on more people parting with their savings…“
Isn’t that true of the stock market? Housing market? Commodity market? By this logic, any market with fluidity of prices based on supply and demand is a Ponzi scheme. Do I think it’s time to go back to the barter economy? Or does the stock market go up on its own with no buyers or demand?
In fact, it seems to me that even after accounting for inflation, prices have been rising faster than earnings since about 1980:
Source
The image above depicts the Shiller PE ratio for the S&P 500. This is the price-to-earnings ratio for the stock market, but adjusted for inflation. Can someone say “Cantillon effect”?
Fiat is a Ponzi
Crypto is a symptom, not the main problem. Years of dormant nihilism have turned into a get-rich-quick pump and dump while the world seems to be falling apart around us. It’s not hard to see why. But Bitcoin is not crypto, and crypto is not Bitcoin.
Federal Reserve economic data: S&P 500 vs. M2 money supply
Now, in what feels like the blink of an eye, trillions of dollars have been created to prevent the system from imploding. Suddenly, the stock market, which looked like everything was falling apart, soared. I don’t even blame central bankers. They responded to his encouragement and did what was necessary, but the effects were dire. If you’re not already invested, you’ve made big losses, making it harder to make your dollars work for you, avoid inflation, and ultimately escape the rat race.
One of the most striking illustrations for me is the graphic below. This shows that you need to buy a house, any house, it doesn’t matter. Because if you don’t already own a home, if you choose to save instead, you’ll never actually be able to afford one. It doesn’t take much empathy to understand the financial desperation felt by many today.
Economic data from the Federal Reserve: Housing price index against M2 money supply
Now, I admit I’m not a professional statistician, but the graphs seem to have some significant correlations. Perhaps CPI inflation may not be the only problem. Perhaps asset price inflation could force depositors to become part-time investors. Supply and demand affects the price of bitcoin, yes, but doesn’t the exchange require new money to support prices?
Bitcoin is Savings
Savings: Money deposited when income exceeds expenses.
-Merriam-Webster
So why can’t we save money anymore? The FRED charts included here explain it all. Unless you’re an investor, you’ll never keep up. That is, until now.
Bitcoin is our savings in a world devoid of things worth investing in. Even if it reaches $1 million tomorrow, we don’t sell. What would we sell it for? to diversify? For what? A stock market totally dependent on money printing? An investment property where our tenants don’t have to pay rent at the stroke of a politician’s pen? A shiny rock with “intrinsic value”?
Do you see how Bitcoin can be a Ponzi when bitcoiners don’t even want your dollars? What you don’t understand is that we are playing a different game now. What you don’t understand is that we are trying to build something new; a better future for our children and grandchildren.
So if you think bitcoin is doomed to crash and burn, short it. Try to profit from our deaths, although I don’t think you will.
We’re just going to keep buying and holding, we’re going to keep pre-empting you, Wall Street, and anyone else who refuses to even try to understand Bitcoin. We have no anger or hatred towards you. We don’t want to eat the rich or burn the system; we don’t want to play by your rules anymore. If we go down with the ship, at least we’ll lose it all fighting for something we believe in.
This is a guest post by Mickey Koss. The views expressed are entirely their own and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.