The dollar derailment is real and Bitcoin may be an "oasis"

The US dollar, the biggest gain in history, could not prevent its rupture despite its longevity.

Many claim that the dollar has lost its status as a global reserve. Most people still wonder when this will happen, but in fact,The falling dollar as global savings quietly happened before us.But most people don't know it. And I will study if the loss of money is happening and how we can protect ourselves from this wave.

Since 1700, we have seen 750 different currencies around the world, of which only 20% remains. All the benefits are devalued.This means the same-price perks are lower than buying today than they were before, and US Money is no exception.

Why is the coin dying?

According to Ray Dalio, founder of Bridgewater, the world's largest investor, when the country owed too much, its profits were lost.The country now has 4 different options.

austerity

Debt default and restructuring (eg bankruptcy).

redistribution of wealth (eg increase in taxes).

Advertising and devaluation

Of all these options, the government always chooses to announce additional benefits. Because it is the "easiest" way.They don't have to cut spending, harass borrowers, or make the rich richer, but that's why profits have started to plummet. Let me explain the historical example.

How Income Became a Global Value

When World War I broke out in 1914, many European countries abandoned the gold standard and used paper money instead of gold to pay for their military service. The United States has been the preferred lender in many countries until:In 1919, the dollar was illegally changing the pound according to new world standards.

During World War II, the United States served exclusively during the war. The United States sells ammunition, weapons, and other items to its allies in exchange for gold.Finally, the United States has collected two-thirds of the world's gold.

When countries joined the Bretton Woods agreements, they saw the need for a global financial system pegged to gold. Because the United States has most of the world's capital and is backed by the Bretton Woods Agreement.Since then, the US dollar has declared his status as the richest man in the world.

Most people think that the GBP to USD conversion happened when the exchange was signed, but in fact there was a 30 year exchange rate.The real beginnings date back to 1914. This time I started borrowing money in the United States.

So when people ask me what's the next change, I say, “We are changing. "The world has already received the dollar, and there are signs of it..

loss of dollars

According to the International Monetary Fund (IMF), the US dollar is depreciated.In 2017, the dollar represented 64% of world reserves. Today it has fallen to 59%.

Another specification is the US Dollar Index (DXY), which is down 10% this year alone.

Of course, transmission played a part in all of this, and important news has been tipped off.

But there is a big problem here. The above indicators only show part of the story. Because it compares the dollar to a basket of other currencies.That is, you can only compare fiduciary results.

Instead, we need to focus on the situation and the actual budget. Purchases and services, that is, we need to look at the purchasing power of the dollar.If you compare gold to US currency over the long haul, you can see that at the start of the 20th century, an ounce of gold cost $ 20. In 1933 it went down to $ 35 an ounce, then after 1971 he was depressed.

ounce todaykubThe price is over $ 1800. Does it sound like a dollar controlling its purchasing power? But I am not of that opinion.

What about accommodation? How do dollars handle purchases versus real estate? You might think that rents are skyrocketing and peaking all the time. But is real estate going up or is the dollar just depreciating?

The graph below shows the decline in the purchase of US dollars versus real estate.In fact, the main reason for home prices rising is that you need more money to buy a home.

we can also seeThe day. Its value is like gold, so is it profitable or is this another sign that the dollar is slowly losing its purchasing power?

Of course, you have to compare it to one of the most popular assets around, Bitcoin.The figure below compares the prices of Bitcoin and the US dollar.

Is history meant to repeat itself?

Now let's compare our current situation with historical data (Weimar Republic / Germany at the beginning of the 20th century).It will often cause your mind to go back in time.

In 1922, Germany was condemned for its First World War. In order to get the money, France and Belgium occupied Germany's trading post, the Ruhr Valley.

In response to the strike, the German government ordered all workers to stay home and not to work.This "passive resistance" marks the beginning of the fall of the Weimar Republic.

The country is in debt, but it is still trying to find ways to raise funds to pay its staff. So what are they doing? Then,They started printing money (the fourth option we talked about earlier).

Let’s look at them now.What Happens to the Consumer Price Index (CPI)?The CPI measures the rate of change between consumers who pay for goods and services (also called inflation).

How does this work? The price of bread in 1914 was $ 0.13. Two years later, in 1916, the same bread cost $ 0.19. By 1919 the price had doubled to $ 0.26, in 1920 it was $ 1.20, and in 1922 it was $ 3.50.

When money started printing in 1922, the same bread went from $ 3.5 million to $ 100 million ($ 100 billion!) In December 1923. That's when Deutsche Mark officially went bankrupt.

Until then, you will need to use a wheelchair. Finally, when silver isn't like wood, it burns the foil in your hand to keep it warm.

In fact, the price of bread gradually increased at the beginning. But most people back then didn't know what happened until it was too late. A very simple environment is often dangerous, like a frog in hot water.

Similar between the United States and the Weimar Republic

We can never go back and change it. But we can look at the historical data and compare it to the current reality, so that we don't repeat the same mistake.

The first link between the United States and the Weimar Republic was the advertising campaign.M1 and M2 in the figure below are the key symbols for funding. M2 is also an important market indicator used to estimate inflation.

It goes without saying that the similarity between this measure and the German CPI matters.

The third type of denominator we can derive from the Weimar Republic is a huge expense.Incorrect numbers are the first "dominoes" that show other events. The US budget deficit in 2021 reached a record high of $ 1.7 trillion in the first half of the fiscal year. This means the United States is spending more than it earns, which is more than last year.

Therefore

The reason for this information is to give you a better perspective. In Adam Ferguson's book "When Money Dies" it is said that most Germans cannot see the truth. A lot of people think they are really profiting from it because they think their wealth is increasing.

But now you know that's not true. It was the Deutsche Mark that lost its purchasing power.So they put money in the bank and started selling their assets to convert them into cash. So they end up with a lot of unnecessary information.

Now what would you do if you were in the Weimar Republic at the time?

The image above shows the price of gold from 1915 to 1935. If you bought gold around 1920 and held it until 1935, it would be one of the best stocks in ten years. However, it is possible to reverse the increase in this time only by seeing the macro. However, having gold in a treasury is a very difficult decision at this time. Because it is a very unstable time.

If so, where are the current assets stored? Some cash in and trade assets like real estate, gold, bitcoin, and even commodities for cash.

If we continue to take on debt and print money, the dollar will continue to lose its value and its status as a global currency.If the price of bread goes up, but you don't want to end up with a bunch of cash, it's not worth it.

My advice is to prevent inflation, to find assets that increase with inflation.Most importantly, don't wait for the state of the fire to happen, you need to decide now. Currency conversion is already here before your eyes.