A Tale of Bubbles
Everywhere I look, people are punting the idea of the bitcoin bubble. It’s almost as if the word bubble has become the new buzzword compared to bitcoin. Of course most of these sources are controlled by the elite – Bloomberg, CNBC, CNN, Central Banks and so on. This strikes me as a classic case of psychological projection. What this basically boils down to is those that are always blaming others / pointing fingers are usually the worst offenders.
A Visual Overview of Bubbles
Visual Capitalist provides a great overview of the world’s money supply. What this illustrates is that cryptocurrency is ridiculously small compared to other financial vehicles. Between 2008 and 2014 the Federal Reserve printed $3.5 trillion out of thin air!! This is not isolated to the US and governments around the world have been printing paper money hand over fist to cover their bad financial practices, pay off debt, bail out corporations and essentially steal money from the population. Head on over to the glossary to get an idea of how they do this through inflation.
We are living through the greatest bubble ever created by man, and it’s called the paper money bubble. This has played out throughout history as countries have destroyed their currencies through money printing. A great free book on the subject is Fiat Money Inflation in France which highlights one of the multiple instances of Governments around the world destroying their money. All paper money eventually reverts to 0. It’s just a matter of time.
Turning back to bitcoin, we can surely understand why the price has skyrocketed in recent years and now hovers around the $8 500 mark as I write this. Value is created through scarcity, this is why gold and in particular bitcoin have such high prices, because they are limited in supply. Make no mistake, the price of bitcoin and a number of other cryptocurrencies are going to go ALOT higher in the coming years. They have to.
I was on a trip recently to Europe and I noticed the ridiculously high prices of properties. Considering that interest rates in many parts of the world have been near 0, for years now Governments have been enticing people to borrow money basically for free, creating the reckless environment we find ourselves in. Bubbles are popping up everywhere. This sea of cash is now finding it’s way into tangible stores of value: gold, property, art, wine and you guessed it, bitcoin.