BodhiSATtva on Nostr: The trajectory we're on has been unsustainable for a long time. The Federal Reserve's ...
The trajectory we're on has been unsustainable for a long time. The Federal Reserve's policy of printing money to stimulate the economy has created what's known as the "everything bubble."
When the banking system nearly collapsed in 2008, the natural market response would have been to let failing banks fail, leading to a severe but potentially corrective recession. However, due to political pressures and the Fed's ability to create money at will, they opted for an unprecedented monetary experiment. They tripled the money supply in just two years, flooding the system with cash, which commercial banks then used to further expand credit.
By signaling that interest rates would remain at zero for an extended period, the Fed pushed banks into high-risk investments to generate returns. This forced money into speculative markets, inflating asset bubbles. Investment banks and hedge funds capitalized on this environment, buying up companies with borrowed money, often to flip them for quick profits, which diluted the currency's value over time.
Meanwhile, the government took advantage of low interest rates to fund massive expenditures, like the Iraq War, which cost about $80,000 per household. Had this been funded through direct taxation or bond issuance with clear costs, public outcry would have been significant. Instead, the burden was shifted to future generations through inflation.
This monetary policy has kept the economy from crashing by maintaining a constant flow of credit, but it's a precarious balance. Real estate, for example, has become overvalued as people use it not just for living but as an investment, with platforms like Airbnb further inflating prices. This has made homeownership a dual-income necessity, particularly challenging for single-parent families, normalizing a lifestyle where two incomes are needed just to afford a basic home.
Home equity has become the primary savings vehicle, with massive debts becoming the norm, where people are essentially working to pay interest rather than building wealth.
The geopolitical implications of U.S. monetary policy became evident when sanctions were imposed on Russian reserves during the Russia-Ukraine conflict, showing that even sovereign assets could be at risk. This move has led to a decline in foreign demand for U.S. Treasuries, as countries like Russia and China have been diversifying into gold. This signals a broader mistrust in U.S. debt as a safe haven.
To address these issues and move towards a sound monetary system, a strategic approach could be:
Revaluation of Gold Reserves: The Federal Reserve could revalue its gold certificates to current market prices, providing a significant one-time revenue boost to the Treasury without needing Congressional approval for tax increases.
Strategic Bitcoin Reserve:
Initial Acquisition: Use the revenue from gold revaluation to purchase Bitcoin through OTC markets, mitigating market impact.
Tax Policy: Advocate for a phased reduction or temporary suspension of capital gains tax on Bitcoin to encourage its use as a currency, rather than an outright elimination which might face political resistance. This could be marketed as fostering innovation in financial technology. At a minimum remove capital gains on transactions smaller than $200 So that Bitcoin can be used as a medium of exchange and we can increase financial innovation within our borders. Allow citizens to pay taxes using Bitcoin, providing a revenue stream of Bitcoin denominated value to the government, Voluntarily.
Gold-Backed Bonds: Issue bonds with a small portion of the principal or interest payable in gold, appealing to investors looking for inflation protection. Use the proceeds to incrementally buy Bitcoin, showcasing a commitment to digital currencies while maintaining a link to traditional value.
State-Level Adoption: Encourage states to invest in Bitcoin, providing a testing ground for federal policy. This could be incentivized through federal grants or matching funds for states that take steps towards Bitcoin as a reserve asset, thus building political support from the ground up.
Sustainable Bitcoin Mining Grants: Issue grants to businesses interested in Bitcoin mining who can demonstrate they are using sustainable energy sources. This initiative would not only promote Bitcoin adoption but also drive innovation in sustainable energy, particularly in areas like methane mitigation. Companies could receive subsidies or tax credits for using surplus renewable energy or for capturing and utilizing methane from sources like landfills or agricultural waste, turning environmental challenges into economic opportunities.
This approach could have profound global effects, countering the strategic gold accumulation by nations like China and Russia, and potentially positioning the U.S. as a leader in both the digital economy and sustainable energy technologies. By integrating Bitcoin into the national reserve, we could promote economic equality, enhance personal financial sovereignty, and reduce the effectiveness of capital controls by authoritarian regimes.
Bitcoin's growth follows a clear mathematical pattern known as a "power law", suggesting its rise is not just probable but inevitable. The U.S. can either lead this transition with smart, phased policies or risk economic instability as the traditional system faces its unsustainable debt levels.
By focusing on these steps, I believe we can move towards a system where currency is backed by energy and trust, not just by the ability to print money.
#bitcoin
#nostr
#currency
#markets
When the banking system nearly collapsed in 2008, the natural market response would have been to let failing banks fail, leading to a severe but potentially corrective recession. However, due to political pressures and the Fed's ability to create money at will, they opted for an unprecedented monetary experiment. They tripled the money supply in just two years, flooding the system with cash, which commercial banks then used to further expand credit.
By signaling that interest rates would remain at zero for an extended period, the Fed pushed banks into high-risk investments to generate returns. This forced money into speculative markets, inflating asset bubbles. Investment banks and hedge funds capitalized on this environment, buying up companies with borrowed money, often to flip them for quick profits, which diluted the currency's value over time.
Meanwhile, the government took advantage of low interest rates to fund massive expenditures, like the Iraq War, which cost about $80,000 per household. Had this been funded through direct taxation or bond issuance with clear costs, public outcry would have been significant. Instead, the burden was shifted to future generations through inflation.
This monetary policy has kept the economy from crashing by maintaining a constant flow of credit, but it's a precarious balance. Real estate, for example, has become overvalued as people use it not just for living but as an investment, with platforms like Airbnb further inflating prices. This has made homeownership a dual-income necessity, particularly challenging for single-parent families, normalizing a lifestyle where two incomes are needed just to afford a basic home.
Home equity has become the primary savings vehicle, with massive debts becoming the norm, where people are essentially working to pay interest rather than building wealth.
The geopolitical implications of U.S. monetary policy became evident when sanctions were imposed on Russian reserves during the Russia-Ukraine conflict, showing that even sovereign assets could be at risk. This move has led to a decline in foreign demand for U.S. Treasuries, as countries like Russia and China have been diversifying into gold. This signals a broader mistrust in U.S. debt as a safe haven.
To address these issues and move towards a sound monetary system, a strategic approach could be:
Revaluation of Gold Reserves: The Federal Reserve could revalue its gold certificates to current market prices, providing a significant one-time revenue boost to the Treasury without needing Congressional approval for tax increases.
Strategic Bitcoin Reserve:
Initial Acquisition: Use the revenue from gold revaluation to purchase Bitcoin through OTC markets, mitigating market impact.
Tax Policy: Advocate for a phased reduction or temporary suspension of capital gains tax on Bitcoin to encourage its use as a currency, rather than an outright elimination which might face political resistance. This could be marketed as fostering innovation in financial technology. At a minimum remove capital gains on transactions smaller than $200 So that Bitcoin can be used as a medium of exchange and we can increase financial innovation within our borders. Allow citizens to pay taxes using Bitcoin, providing a revenue stream of Bitcoin denominated value to the government, Voluntarily.
Gold-Backed Bonds: Issue bonds with a small portion of the principal or interest payable in gold, appealing to investors looking for inflation protection. Use the proceeds to incrementally buy Bitcoin, showcasing a commitment to digital currencies while maintaining a link to traditional value.
State-Level Adoption: Encourage states to invest in Bitcoin, providing a testing ground for federal policy. This could be incentivized through federal grants or matching funds for states that take steps towards Bitcoin as a reserve asset, thus building political support from the ground up.
Sustainable Bitcoin Mining Grants: Issue grants to businesses interested in Bitcoin mining who can demonstrate they are using sustainable energy sources. This initiative would not only promote Bitcoin adoption but also drive innovation in sustainable energy, particularly in areas like methane mitigation. Companies could receive subsidies or tax credits for using surplus renewable energy or for capturing and utilizing methane from sources like landfills or agricultural waste, turning environmental challenges into economic opportunities.
This approach could have profound global effects, countering the strategic gold accumulation by nations like China and Russia, and potentially positioning the U.S. as a leader in both the digital economy and sustainable energy technologies. By integrating Bitcoin into the national reserve, we could promote economic equality, enhance personal financial sovereignty, and reduce the effectiveness of capital controls by authoritarian regimes.
Bitcoin's growth follows a clear mathematical pattern known as a "power law", suggesting its rise is not just probable but inevitable. The U.S. can either lead this transition with smart, phased policies or risk economic instability as the traditional system faces its unsustainable debt levels.
By focusing on these steps, I believe we can move towards a system where currency is backed by energy and trust, not just by the ability to print money.
#bitcoin
#nostr
#currency
#markets