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in money •  last month 

As a cryptocurrency enthusiast, we're always looking at the price of crypto compared to the almighty US dollar; it's been the worlds reserve currency for some time. It is an advocate for how buying power is measured around the world. Even though it has been losing value like any other fiat currency, it's done so at a slower pace due to the artificial demand of being the world reserve currency.

This leverage gives the US far more rope when it comes to money printing and with an ability like that, it was only time before greed would encourage abuse of this system and abuse it they have. But eventually, you can only beat a mule for so long before its back gives out and could this back be ready to snap?

It's starting to look increasingly likely.

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Negative Interest rates

The fiat experiment is failing all over the world with Japan and Europe in negative interest rate territory, and somehow the Donald is keen on pushing the fed into negative interest rates too. It seems like a monkey sees monkey do approach, and because those countries economies haven't collapsed, it looks like negative interest rates can work.

Politicians are desperate to try and prop up the economy, the stock market and Trump is no different; I mean, he needs this if he is to be re-elected. He sees negative interest rates as a way to compete with other economies but if you're competing to lose money faster than other countries, why would you want to compete in the first place?

International demand

The funny thing is one of the reasons the dollar has been so strong is because they still have favourable yielding interest rates and its a robust first-world economy that is politically stable. So investors in Europe and Japan looking for yield are buying US treasures and Dollars to buy US debt as it pays them to hold it.

If the US starts to go negative, what would be the point of buying dollars to buy US treasuries?

Printing to kingdom come

To get the US to move into negative interest rates, the Federal Reserve will need to open up the printing press on full blast and print money like they've never done before with quantitative easing. We won't know how many trillions they would need to flood the market with to reduce into negative interest rates but we're talking 10s of trillions here, this is not a small amount of money.

If the supply of dollars goes up, its value goes down through inflation and couple that with negative interest rates there will be less motivation to buy US debt by other nations reducing the demand for dollars when the supply is higher than ever before. In some cases, the holders of US bonds will even sell their debt and their dollars further increasing the quantity on the bond market and FX market.

Dollar collapse

Economics 101 time here folks, what happens to something when the supply keeps going up while the demand decreases?

So who the hell is going to buy these bonds that the Europeans and Japanse would be selling? Well, the Federal Reserve would need to take it onto their balance sheet, by yes you guessed it Printing more money.

At this point, the USD will be in free fall.

So my question is? How long will we still be measuring cryptocurrency in USD? How relevant will it be if this becomes the case? Should we not be measuring fiat in Satoshis?

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Since fiat has not been backed by gold the systems have all gone haywire. Excellent question is why everything is now referred and measured against the USD, this was not the case in the 1970's and 1980's when each country used their local currency to purchase across borders.

Hopefully things will change with new FinTech ideas looming.

@tipu curate

Indeed and they try to make it more complex so people don’t question it but functional economics has long been thrown out the window

I guess fin tech will really need to take on a lot more importance than they bargained for if this all comes crashing down

Goal posts are being moved all the time with fiat currencies, not many are eager to learn new technology prefer to trust the powers that be!

Procedures will need to be ironed out finding more balanced approach in markets, just keep a weary eye on fiat currencies....

Upvoted 👌 (Mana: 10/15 - need recharge?)

You paint a dire picture haha. Fiat, unbacked by anything anymore, is really worth nothing. Real value lies in land, energy, food and water. Everything else is built around this stuff, which are scarce and finite resources. When they start to run out, the societies with the strongest military will simply move in and take the resources from militarily weaker societies. That's the unfortunate order of things.

Lol yes I do tend to get carried away and sound all doomsday prepper but I’m just calling out this crazy banking system like I see it and hope people realize that it has gotten completely out of control

fiat is only backed by guns that’s for sure !

One day I am sure crypto will stand on it's own measurement.

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I wonder how long it will take before we reach those levels or what it will take, sure is going to be a roller coaster that’s for sure

One huge roller coaster for sure 🤪

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