By Bodhi P. Break on The Capital
Have you learned something from this article series? I sure hope so.
As any series of informative articles should end, I conclude with some predictions for the next 10 years. Let me be clear that I am not “happily cheering” for the arrival of all the events and conditions that I predict but rather have tried to use history as a guide — when possible — for what is most likely to come.
1. By 2030, the U.S. government will have made paper cash illegal and will pay its citizens in digital dollars to turn in their paper money. This will be similar to Executive Order 6102 in 1933 that made it illegal for citizens to own gold.
2. The U.S. will continue to see internal fighting and social unrest for several years, up to a decade. This social and political unrest will occur alongside of economic unrest and the widening economic gap between the have’s and have not’s is actually a root cause of the other types of unrest.
3. The U.S. Federal Reserve’s printing of money and quantitative easing toolkit (buying corporate junk bonds, buying ETFs, economic liquidity injections into capital markets, repo market injections, etc) will continue in perpetuity. Markets will get addicted to this risk-free money very quickly and people won’t have the political will to take their foot off the risk-free government gas pedal.
4. Our current debt bubble will burst leading to failures of hundreds of over-leveraged billion-dollar businesses. The U.S. government has no choice but to eventually default on its $26 trillion+ debt. U.S. “leaders” will have smooth-sounding reasons as to why default is rational and acceptable and the waterfall of corporate bankruptcies is normal.
5. The U.S. Federal Reserve will begin buying private equities (private company stock) by August 2022.
6. The U.S. economy — and the global economy — will see the worst economic reckoning in human history as the U.S. dollar is challenged as the global reserve currency. During this period we will not see a single asset bubble pop as we have in the past — we will instead witness a cascade of bubble pops in close timing to each other.
7. A global war will emerge between the U.S. and China (and both countries’ allies). The war will be about global reserve currency status, being the top superpower in the world, and having the most technological advantages through innovation — but of course, leaders of both countries will find other reasons to convince its citizens they are at war. Both countries will try to provoke the other into taking the first military action, similar to the U.S. strategy for provoking Japan into the Pearl Harbor attack. If Trump is re-elected in 2020, the war will begin in 2027. If he is not re-elected, the war will begin in 2032. Regardless of what political party is running the U.S., a world war will emerge.
8. Before the global war between superpowers occurs, many economic sanctions and failed negotiations over trade, technology, and innovation will continue taking place between the U.S. and China. Those activities — and their failures — are antecedents to the impending war.
9. The U.S. will use its greatest asset — its military — to try to preserve the dollar as the global reserve currency. It will force its citizens to take sides, causing internal strife and a potential civil war.
10. Before hyperinflation occurs — which is a 50%+ drop in the value of a currency within 1 month — the U.S. economy will first experience deflation and then stagflation. Stagflation is the two-headed serpent of simultaneous high unemployment and high inflation.
11. In the following chart, we are currently (as of July 2, 2020) in the “disbelief” phase of the next crypto market cycle.
12. Governments could continue with strategies to derail cryptocurrencies (like bitcoin) until they realize they can’t be stopped (and instead should be regulated and taxed). Traditional tools historically used by governments to stop innovation include:
–False narratives: “Crypto only supports criminals and terrorists…”
–China controls it: Using the age old “fear of foreigners” argument
–Regulatory elasticity: Create regulations that are either too loose or too tight leading to an underwhelming environment for technical innovation, thereby stifling investments into the space
–Capitulation through legislation: Similar to the Red Flag Laws in the UK that we discussed in the WHAT bitcoin article. This is where laws make it impossible for a technology to fulfill its core purpose
–Legislate crypto “on ramps” out of existence: While an option, this would be very difficult because many of those companies now have billion-dollar market caps (i.e., Coinbase, Kraken, Gemini) and are considering going public through IPOs
–Retail ban: Make it illegal for businesses to accept crypto payments
–Resource rationing: Limit the amount of electricity bitcoin miners can access
–Illegal: Make it illegal to buy, hold, own, or sell crypto, similar to Executive Order 6102 for owning gold in 1933
–The Triple Holy Grail: The three phrases that create strong feelings (belonging, fear) in most people: being a patriot (supporting U.S. dollars), being a traitor (supporting crypto), being a threat to national security (supporting crypto)
–Violence: Using legal violence to force citizens to choose economic sides
13. We are living through the beginning of a “phase transition” to a new form of money. Millennials and Generation Z are very comfortable with digital products (including money) and will have no choice but to improve upon the debt-ridden financial system they are inheriting from the baby boomer generation.
14. Bitcoin’s volatility will continue to stabilize over time as more liquidity enters the market, infrastructure is built for institutions to invest, and the mainstream economy adopts it.
15. By January 11, 2030, a single bitcoin will be worth $500,000. What a dollar will be worth, I can’t predict — but it will be at least 20% less than what a dollar is worth today.
16. Prior to the 2024 halving, the next bitcoin All-Time High (ATH) will involve a single bitcoin worth between $111,000 and $283,000 reached between November 2022 and May 2023. After reaching this peak the price will drop dramatically (up to 75%), similar to what occurred after the first two crypto market cycles.
HOPE AND OPTIMISM
1. I hope I am wrong on the predictions related to unrest and violence. Unfortunately, history suggests I will be correct. Even if the world does enter another period of world war, as long as we don’t annihilate our entire species with nuclear, biological, or chemical weapons, the humans that make it through the mayhem will build more resilient systems. And hopefully, these systems benefit more people around the entire globe.
2. I am a strong believer in the resiliency of human beings and that when challenged (especially out of necessity), we innovate amazing tools, systems, products, and ideas.
3. Humans are dreamers and achievers and will keep moving forward despite poor leadership at a national level.
4. I believe in the human spirit and its dogmatic pursuit of innovation, truth-seeking, scientific rigor, and the need to go beyond.
5. Humans are habitual problem starters and solvers. We will prevail.
Once bitcoin is consistently trading at $100,000 or more per bitcoin, the avalanche of self-described “subject matter experts” claiming they told you this would happen will grow exponentially. Lots of snake oil salesmen will emerge. The phrases “I told you so” and “Called it” will be the themes of popular memes. The general public will eventually realize the benefits of bitcoin, the same benefits that have been there the whole time, but incremental expansion is how technology adoption cycles unfold. Most people begin to trust, use, and value new products in the “early majority” and “late majority” phases in the following model.
Our financial atmosphere is going to have a paradigm shift. This shift has started to gradually occur and will then will feel like it happened suddenly, and many people will be left without financial oxygen to breathe. Their spirit and sense of purpose will atrophy from economic asphyxiation.
History teaches us that the forms of money have transitioned many times over the years. In the next decade, we are going to witness a transition in global reserve currencies and it is going to be a spectacle.
Wu Tang Financial best captures the monetary spirit of the last hundred years, “Cash rules everything around me: CREAM. Get the money, dollar dollar bill, y’all…you need to diversify yo bonds.”
The next hundred years will be different. Cash won’t be king. Traditional asset diversification won’t be enough.
So prepare yourself mentally, financially, and emotionally for the 100-year money storm because it is approaching. Build your ark.
Float well, my friends.
1. I own a small amount of bitcoin.
2. I own small amounts of other digital assets.
3. This series of articles is for education, it is not financial advice.
4. We can always enhance our knowledge — this ties to the bitcoin ethos of self-sufficiency and DYOR (do your own research).
5. My goal is to give readers information to help you make choices that align with your life goals. You spend your time and money as you see fit and I’ll do the same. That’s the American way.
6. Make decisions from positions of knowledge, not fear.
7. Enjoy the journey.
Cash Illegal: http://swing-trading-strategies.com/make-cash-illegal-the-solution-to-ending-boom-and-bust/
U.S. & China Boxing Gloves: https://www.fairobserver.com/economics/david-petraeus-interview-us-china-relations-economy-news-14251/
Market Cycles: https://cryptopotato.com/what-are-crypto-market-cycles/
Technology Adoption Lifecycle: https://medium.com/@shivayogiks/what-is-technology-adoption-life-cycle-and-chasm-e07084e7991f