The enormous depreciation of money during the corona crisis leads to hyperinflation: is bitcoin the solution?

Filed in NEWS ANALYZES by on 13 May 2020 22 Comments

source: chello.nl

"Fiat money" or "fiduciary money" is money that does not derive its value from the material from which it is made (such as gold and silver coins), but from the confidence that it can be used to buy goods and services. The value is therefore not based on a certain weight and content of precious metal, but on the confidence that economic operators place in the value of the currency.

Where you had gold or silver coins long ago, that value was linked to how quickly and how much gold or silver could be mined. With the introduction of paper money, the printing press could be turned on. With 'numbers on a computer' money, the OPEC dollar standard and the link to oil production had to provide coverage. All those standards were thrown overboard during the corona crisis.

Central banks print unlimited money. They do this because the demand for money is increasing. How else can you, as a government, offer all those aid packages with which you deposit the people in an amount to survive?

Why is money coverage so important?

When you still had silver and gold coins, the demand for that currency grew as the population grew and as trade increased. That meant you had to have more coins to do barter. I buy your product and in return give you a number of gold coins with a certain value. You can buy what you need from those gold coins.

Because you knew at that time that it was a labor-intensive process to extract silver or gold from the ground, you also knew that more coins would be added, but that the need for more coins did not mean that that coin would suddenly appear within a week. had halved in value. After all, it took time and effort to extract that material from the ground and melt it into coins. So you could safely keep your money for a while to buy something next week, without fear that a gold coin was worth half as much.

When those heavy coins were replaced by paper money, it became a lot easier. Paper is easy to print. For that, central banks only had to turn on the printing press. That still took time and effort, but it is already simpler. This paper was therefore linked to gold mining. That became the gold standard. For example, the printing of money remained linked to the speed at which gold mines could mine gold, so you prevented a rapid decline in value.

As the need for money increased as the world's population and trade grew, this gold standard was abandoned at some point. That is how OPEC was founded. This oil organization had to link money production to oil production. So worldwide agreements were made about the amount of barrels of oil that could be produced by countries. The dollar was linked to the production of oil, so if you wanted to print dollars, you could only do that according to the amount of oil pumped up.

That oil standard has also long since been released and now there is no longer any coverage. At the moment, central banks are therefore creating 'fiat money'. This means that they have no restrictions whatsoever to print money and because there is no guarantee that this is related to the speed with which gold or oil can be extracted from the ground, the depreciation of money is not inhibited. You can experience a huge monetary depreciation within 1 week.

What does unsecured fiat money mean in practice?

In practice, this means that money quickly degenerates. Hundreds of billions of dollars and euros were printed during the corona crisis. That means those dollars and euros are simply worth less. Sooner or later, this will affect the prices in the stores.

Now central banks have come up with tricks to mask that depreciation of money. For example, if you as a multinational company borrow money from a large bank, that large bank has borrowed that money from a central bank. Those central banks then print even more money (well, they don't actually print it, they increase the number in their computer systems) to buy back the debt securities (bonds, proof of debt) from those multinationals.

So suppose a company has 100 million debt. If the ECB now buys debt securities from that company, then that company actually received 100 million free of charge. That company can buy back its own shares from the money or buy over falling competitors.

In this way you ensure that the masses think that the economy is still in good shape. In practice, however, you immediately caused 100 million in monetary depreciation. Now a hundred million out of a few hundred billion is only a small percentage, so if you make the mountain of debt high enough, the depreciation effect seems to decrease in percentage terms. Central banks therefore seem to believe that the higher they make the mountain, the smaller the devaluation effect as a percentage.

That's what we see in the US now, and that's what we see in Europe too. The mountain of debt is inflated enormously. However, all financial experts worldwide agree that a gigantic monetary depreciation is lurking.

Compare that to that gold coin. That gold coin you got last week when you sold a bag of potatoes is worth almost as much this week, because gold cannot be mined so quickly. However, the euro in your bank account is rapidly losing value because so much money is printed so quickly that the value plummets very quickly.

Bitcoin as the new gold standard

The anonymous creator of bitcoin has come up with a very smart solution that is reminiscent of mining gold.

We should be a bit skeptical about such a crypto coin, because it offers the possibility to make every transaction traceable. Also the fact that Microsoft in 2019 patent 2020-060606 filed is an indication that cryptocurrency can be linked to 'the internet of things'; in which we ourselves can become one of those 'things'.

Yet we are already in the era of traceable digital money. After all, it is money that you can access via your app or bank card. With the forthcoming abolition of paper money, we are therefore already in the traceable digital web. The additional problem with that money, at the moment, is that it is also devaluing enormously quickly.

Satoshi Nakamoto is the pseudonym of an unknown person or group who designed the cryptocurrency Bitcoin and founded the first blockchain database. We might wonder if the current financial system crash is not simply planned to drive us towards bitcoin as a new standard. With that you might wonder if Satoshi Nakamoto is not just from the same elite power group.

Mining

However, the bitcoin system is very cleverly conceived and is actually based on the principle of gold mining. In order to market an amount of bitcoin, bitcoins must be mined. That is not possible with spatulas and shovels in the ground, such as with gold, but that with many fast computers that have a high purchase price and that consume a lot of fuel (power). This ensures that not everyone can just produce bitcoins.

The process of producing bitcoins is called 'mining', which is actually reminiscent of mining gold from a mine. This mining process means that the computers have to solve a mathematical formula that is so complex that it can take days to find the solution. However, the complexity of the formula increases as there are more computers on the network. The more people who start mining, the harder it is to calculate the solution.

Every time such a computer has solved the formula, 1 bitcoin is created. As a thank you for this calculation, the miner gets part of that bitcoin as a reward.

halving

To further complicate the game, the reward is cut in half every four years. That halving happened by chance this week. On May 12 to be exact. So if you managed to mine 12 bitcoin before May 1, you got x% for that. After May 12, that amount is cut in half. This means that some miners cannot buy new "spatulas" and "shovels" to do their digging work. They can no longer pay the electricity bills or can no longer purchase the fastest computers to mine. They fall over.

monopolization

If you hear it that way, you may immediately think: That leads to monopolization. That means that the richer companies will once again become the biggest miners and so you will soon have a central point where all that mining takes place. The story is, however, that with the loss of a number of computers in the network, the calculation formula also decreases proportionately. This in turn stimulates new miners to pick up the spatulas and start the shovels.

However you turn or turn it, you will also see an increase in scale here and there is a risk.

Nevertheless, more and more large investors are interested in the principle of operation of bitcoin, precisely because of this mining process. After all, it is reminiscent of the complexity with which you extract gold from the ground and so it is comparable to those gold coins of the past and the associated certainty of 'the brake on depreciation'. That is why you see that there are now several hundred billions in bitcoin trading.

So Bitcoin has the potential to form the new gold standard. It could, as it were, provide that brake on monetary depreciation that we lack with the current fiat system.

Link currencies to bitcoin

In the call for direct democracy I yesterday published, I talked about linking money to bitcoin as a “gold standard”. You can say that money must be linked to something. You could also go back to real physical gold as standard, but then you have to keep digging gold out of the ground and that is not exactly environmentally friendly. The power-hungry computers are also not so good for the environment, but we see more and more technology emerging, which can generate electricity more environmentally friendly and so you could say that the preference should be for a bitcoin “gold standard”.

It is clear that there will have to be a kind of "gold standard" again. Otherwise we will have to deal with a hyper monetary depreciation. That is exactly what is going on during the corona crisis. A reset to a new gold standard should therefore be accompanied by a reset in the power pyramid. Where now the lines run up and more and more power goes to a small wealthier group, the power should come into the hands of the people.

Returning power to the people would of course be a historic event. That has never happened in history. Yet the same technology on which bitcoin is based, namely the blockchain, offers the opportunity to give the people direct decision-making powers. You do not have to overhaul the entire structure of society, but you do have to change management.

For example, you could have ministries led by ministers who have been nominated by the people and who report to the people. Instead of swearing allegiance to the crown, they now swear allegiance to the people. This should also apply to the entire civil service and all professions that now swear allegiance to the throne (judges, lawyers, police, inspectors, enforcers, etc.).

Of course you cannot report everything and present it to the people, so a simplification step has to take place. The question is whether the masses can be motivated for such a revolution or whether we will once again wait until we are convinced by one of the billionaires like Elon Musk and Bill Gates, whereby we run the risk that the link with the blockchain will be accompanied by the linking our brain to that system or linking such a system with a vaccine certificate.

If there is an opportunity to initiate the change, it is now. We should not miss that opportunity. However, for that we need to get moving ourselves.

Revolution?

If we want change we can do two things. Or we wait until the problem of fiat money is so great and inflation hits so hard that the same bulwark of power offers us the new "gold standard" as a solution. Or we take charge ourselves.

Are we waiting for inflation to be so high and for us to be in such a totalitarian control web of the power pyramid that there is no turning back? Then we have a guarantee of technocratic governance. That is to say, we will be linked in every way to a system that uses technology to make us digital slaves.

If we choose to take over the reins ourselves, we can put the brakes on and still benefit from the useful side of this technological development. Then we can put the brakes on the free development of AI and we can put the brakes on the centralization of power.

The question is, therefore, whether the opportunity now available is sufficient to motivate you. The question is whether the chance that there is light is enough to motivate hundreds of thousands of compatriots.

That's where human psychology comes into play, and that's where the challenge comes for a real shift in the mindset of many. In any case, I want to be able to look at myself in the mirror and know that I have done my best. The opportunity is there, the possibilities are there. We just have to pick it up and do it. It does not require pitchforks and balls. It only takes a revolution in your mindset.

With an online direct voting system, we can install new leaders who report to the people, make legislation clearer and simpler, abolish the fiat money system and link a new currency to bitcoin. We can either dismiss it as unfeasible or we can hit enter and let the petition go viral. Are you in?

direct democracy now

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  1. Martin Vrijland wrote:

    Find out here why the bitcoin mining principle turns out to be pretty solid:

  2. Benzo Wakker wrote:

    Petition signed, too bad there are so few people who have done this.

    • Martin Vrijland wrote:

      It turns out in practice that people like to complain and like to hear what goes wrong, but they don't want to make an effort to initiate the change. Walking to the ballot box every four years and putting a cross is exciting enough, let alone having to activate yourself to really do anything - although in this case, that's not much more than signing a petition to to get movement going.

      So people don't believe in change and apparently prefer to let it get over them. Most people who say they are awake do nothing in practice.

      From 'with a bag of chips in hand' to DWDD, to 'with a bag of chips in hand' looking at Jensen is the only change that is visible 😉

  3. Sun wrote:

    Well, cynical maybe or realistic on my part. I don't expect anything from the slaves. They certainly don't want change just more money. Slaves are good at slaves. How peaceful it was when the slaves did not take to the street for fear of 'corona'. I miss all that rest now, but she doesn't care about morals and what's right. Madurodam is not the country of change and revolutions. That is the nature of the slaves and the merchant mentality here.
    The slaves are still just fine, at least the advantages of being a slave outweigh the disadvantages. Also, don't forget the selfishness and drowsiness of the slaves.
    Martin, you are a hero, you try your best to pull a dead horse ..

  4. SandinG wrote:

    My experience is that there is more exercise in a bag of potatoes.

    • Martin Vrijland wrote:

      Potatoes have the positive characteristic that they sprout naturally. If you put that bag of potatoes in the ground, you have a whole cart full of potatoes a few weeks later. I think you should be more positive about a bag of potatoes. A dead horse is a different story 😉

      • SandinG wrote:

        exactly my point, the honor nothing wrong with…

      • Sun wrote:

        A dead horse is another story. Apologies if I come across too crude.

        • Martin Vrijland wrote:

          Perfectly understandable. Thanks for your appreciation by the way.
          I must confess that I am getting pretty frustrated with the discovery that there is little movement in humanity, but nevertheless I am going to continue in the hope that there will be a tipping point.

          I am especially surprised that people don't even bother to fill in a petition and press a button. That's really only 30 seconds of work. Is disbelief or fear so great? Even of all those thousands of followers a day? Or is it really just chips and beer entertainment.

          • Analyze wrote:

            Few understand the implications of the current state of affairs. Seeing connections and consequences of certain actions still requires a certain EQ / IQ and I'm not just talking about the indoctrinated slaves with a 'title' before the name.

            A Helicopter view is therefore a requirement, putting off blinkers is not easy. So I'm not talking about physical blinders 😉

          • Sun wrote:

            I think many don't want to disclose their name and address details. Afraid of their employer, 'career', security service AIVD etc etc. luckily we live in a constitutional state. Cough. Heroes on socks. After all, there should not be any risk for the slaves. Imagine.

          • Martin Vrijland wrote:

            I once had a “friend” (acquaintance) who was unemployed at home for years. It specialist. Side specialty: linking and filtering data from databases.
            At some point he was able to get back to work after a refresher course.
            Profile description: woman and childless with house for sale.

            When I asked him if it was better - with all the knowledge he has of how governments spy on the people - to settle in a shack on the moor instead of taking a job that actually helps build the big brother (big data analyzes) system, was his answer: “It is nice that I can possibly change from the inside. And I almost lost my house. Now I can just live here and keep driving my car ”.

            That change from the inside is still not visible 😉

            Where are the heroes? They are in their houses and can continue to drive their car.

          • SalmonInClick wrote:

            Isn't this an excellent example of someone who is shortsighted and does not realize that he is building the bars of the prison in which he is locking himself digitally?

  5. SalmonInClick wrote:

    Where in Germany and France the Kampfgeist is still somewhat alive, Madurodam is literally and figuratively stationary. With the word Resistance one thinks of a diversion ..

  6. Martin Vrijland wrote:

    The bubbles will burst, and austerity will follow

    https://www.rt.com/op-ed/488540-covid-19-rishi-sunak-scheme/

  7. mec wrote:

    That sick leftover in the world that has power over us has a big problem if you throw your smartphone away or stop using that thing, they lose their NWO control over you. Without your shit-ass pocket spyphone, they will no longer be able to monitor you 24/7 and their digital bubble money is at risk where they are pushing everyone.
    So stop that junkie addict behavior on your smartphone

  8. Analyze wrote:

    Part of corona support threatens to have to be repaid: 'Big mistake'
    https://www.rtlz.nl/algemeen/politiek/artikel/5120746/grote-fout-now-regeling-deel-steun-moet-mogelijk-terugbetaald

    Well I think this is not a big mistake, but it fits exactly in the Bilderberg agenda to destroy the entire middle class and hand it over to the government, so more mitarbeiters.

    From 33:10 Rutte: “I believe in a strong state. This country needs a strong state. ” 34:23 "We are a country that is deeply socialist at its core."
    https://www.npostart.nl/nieuwsuur/11-05-2020/VPWON_1310794

    usual suspect Stiglitz is taken out of the stable to explain a few things, so more centralization. Socialism is the gateway to (technocratic) Communism You have been warned!

  9. Future wrote:

    It is going very fast now. The prototype of the new Mac. Including what you have to do, what you have to touch to order (read everyone is with their hands on that order board, mistake) take into account laughter and where you are, and how you behave. Under the all-seeing and all-embracing one-eye symbol. What is also one eye, a eye read AI. Of course disguised as a wink.

    https://youtu.be/kfkgm2HAfVk

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