In a highly leveraged global economy, innovative technology is being implemented into every component of our collective lives, lowering manufacturing costs, time to market, and labor. All factors, not long ago, that were significant production challenges to any large-scale company. Adoption of new technology will result in massive price deflation resulting in widespread unemployment.
Is this inevitable? Does the US government's control over inflation levels play a supporting role in this outcome? Can Bitcoin's acceptance and transactional use solve this problem?
Jeff Booth, the author of 'The Price of Tomorrow,' believes that "Technology is deflationary, [and] we are entering into an age of deflation unlike any the world has ever seen." The result, he concludes, will be massive, widespread unemployment. "What if, instead of trying to stop deflation at all costs, we embrace it? Deflation becomes something celebrated because it means that we are getting more for less. We allow ourselves to accept abundance. As technology removes jobs and fewer overall jobs are needed, prices will keep falling, allowing those who lose jobs a way to share in the benefit of technology abundance without massive transfers of wealth."
In 2000, the world's cumulative debt was $62 trillion, almost twice its collective GDP of $34 trillion. In early 2020 the numbers rose to $247 trillion and $80 trillion, respectively, so debt is now three times GDP. It took $185 trillion of debt to produce $46 trillion of GDP growth in those two decades.
In the 2008 financial crisis, policymakers had a stark choice. They could bail out the banks and aggravate moral hazard, or they could risk a worldwide depression, as trust in the financial system broke down, and markets stopped functioning. According to Booth, it was inevitable that they took the former option. However, he fears it "changed capitalism by gifting many of the engineers of the chaos with risk-free returns at the taxpayers' expense."
Four strategies exist to bring debt and service levels down, austerity, debt defaults, printing more money, and high taxation. Debt combined with deflation is a dangerous and toxic combination.
Bitcoin is currently gaining widespread approval in its use as a store of value, similar to gold. The next step is to embrace technology and allow bitcoin as a form of currency on a transactional basis.
Suppose our government's choice in front of them is to either adopt bitcoin or adhere to its existing plan to protect itself. In that case, it is much easier to predict the next step government will take to maintain the status quo of power and authority above its citizens. They will do whatever they can to 'legally' restrict bitcoin from ever gaining widespread acceptance.
Will the more significant market adopt bitcoin despite this?
As a startup, Bitcoin started by focusing on a niche in the market, only capitalizing on the opportunity to create a vehicle for stored value as a hedge against gold. In the beginning, it was dismissed and ignored. But now, it has surpassed that point and is on its way to the next tier of acceptance, transactional use. Bitcoin developed a 10X advantage in a small but strong market, a great launchpad to broaden its ambitions.
This is akin to some well-known companies today, initially introducing themselves to the marketplace focusing on something small. Tesla, the roadster, Amazon, books, Google, search. Had any of these companies come out originally with broad ambitions, they would have easily been crushed by the incumbents. That is how innovation generally works. More prominent players often ignore a portion of the market because they cannot profit. A technology is developed, capturing the missed part of the market, bringing the cost of doing business way down. The new technology can take over the ignored part of the market and gives it the ability to attack from the bottom up to dominate the rest of the market. That is what is happening with bitcoin. Bitcoin has proven itself as the best store of value in history. Step 1 is complete, and as a result, can now progress into the next phase, transactional use.
As bitcoin becomes more adopted, it will run up the price, and overall sentiment will no longer be, 'bitcoin, what is that'? It will be 'how can you not have bitcoin as a hedge in your portfolio'?
Continue reading on the Decentralized nature of bitcoin
Sources
Podcast: We Study Billionaires Episode 330: Bitcoin & A Deflationary World
The Price of Tomorrow by Jeff Booth
Khan Academy Video: Induction to Inflation
Forbes Article: Bitcoin vs Inflation by Roger Huang
コメント