debt

Cash Crisis: National Currencies Plunge in the Wake of Coronavirus

24/03/2020 by Idelto Editor

Cash Crisis: National Currencies Plunge up to 25% in the Wake of Coronavirus

Fiat currencies across the globe have experienced sharp declines in the wake of the coronavirus panic, with the Norwegian Krone falling over 30% lately last week. The Mexican peso and Australian dollar trailed close behind over the same period, with multiple fiat currencies also taking a nosedive. Though USD remains strong, some speculate this is due to flight from other markets, and that the bastion of fiat strength might not be able to withstand endless printing and reckless credit creation of QE much longer.

Also read: The Multi Trillion-Dollar Stimulus Package: These Are the US Corporations Begging for Bailouts

‘Unlimited Money’

Announcing an open-ended QE program Monday for unprecedented asset purchasing, the U.S. Federal Reserve has pledged to purchase assets “in the amounts needed,” signaling the beginning of a virtually unlimited easing effort which will include moving into corporate bonds for the first time.

As lockdown orders, enforced business closures and travel bans continue to wreck economies, world currencies are reeling from the massive shock spiked by coronavirus panic and containment measures. The Fed and other central banks of the world may have their eyes on unlimited support, but many fiat currencies are telling a different story.

Norwegian Krone and Others Knocked Down by Virus-Plagued Markets

The Norwegian krone has now hit a record low against the U.S. dollar, falling 25% from the end of December, and over 20% in just under two weeks from March 9 to 20. Other currencies have taken the same trajectory in that 11-day time frame, with the Mexican peso and Australian dollar falling 17% and 13% respectively.

In the last two weeks, some major currencies tanked by as much as 20% against the dollar. And currencies have historically had fairly low volatility. British Pound hit the lowest level since 1985. The imported products are going to suddenly get a lot more expensive pic.twitter.com/th91nL0YKm

— Larry Cermak (@lawmaster) March 23, 2020

NZD, GBP, SEK, and other fiat currencies aren’t doing a whole lot better. The British pound has tumbled downward past levels not seen since 1985, falling against the euro.

Quoted in a March 19 report by Bloomberg, European head of currency strategy at Toronto-Dominion Bank, Ned Rumpeltin, opined:

At a minimum, we think there is a strong impulse to liquidate what you can — before you can’t — as London’s trading floors are probably about to be slammed shut before too long.

Fears of circuit breakers and trading suspensions aren’t unwarranted. March has seen stock exchanges across the globe tighten restrictions and adjust trading rules, with a temporary suspension of all trading in the Philippines on March 17, and the NYSE opening yesterday for the first time in 228 years to an empty floor.

But What About the US Dollar?

Amidst all the chaos the U.S. dollar is surging against other world currencies. While the dollar remains strong for now, some are not certain the situation can continue, especially with the unadulterated market intervention happening currently, and talk of humongous stimulus packages. U.S. Democratic Senator Chuck Schumer described his plan for “unemployment on steroids” Sunday:

You lose your job because of this crisis or any other reason, the federal government will pay you your full salary for 4 to 6 months.

[email protected] on Dems’ Coronavirus “stimulus”: “You lose your job because of this crisis OR ANY OTHER REASON, the federal government will pay you your full salary for 4 to 6 months.” pic.twitter.com/pcdr4I6CQY

— Tom Elliott (@tomselliott) March 21, 2020

While many imagine hyperinflation to be a freak economic phenomenon reserved only for non-U.S. countries, An Art Cashin piece from October 15, 2011 notes that “Hyperinflation requires a central bank to willingly commit economic suicide.”

Though Cashin thought this was unlikely for the U.S. almost a decade ago, his descriptions of the hyperinflation in Germany’s Weimar Republic now sound eerily familiar to some:

Things did not go badly instantly. Yes, the deficit soared but much of it was borne by foreign and domestic bond buyers … that means foreign bond buyers said – ‘Hey this is a great nation and this is probably just a speed bump in the economy.’

“When things began to disintegrate, no one dared to take away the punchbowl,” Cashin continues. “They feared shutting off the monetary heroin would lead to riots, civil war, and, worst of all communism. So, realizing that what they were doing was destructive, they kept doing it out of fear that stopping would be even more destructive.”

Cash Crisis: National Currencies Plunge in the Wake of Coronavirus — At the height of the German hyperinflation in November 1923, 1 USD was worth roughly 4,200,000,000,000 German marks.

Future of Fiat Uncertain, as Governments Stave Off Painful Economic Realities

While it’s yet uncertain if such a fate awaits the USD, it is interesting to note the similarities. The Weimar Republic was a product of the first World War’s ravaging, prolonged effects on Germany.

With a war-torn economy that was unable to produce, the answer was to just print more money. Looking at U.S. President Donald Trump’s recent proclamation that he is a “wartime president” and that fighting the Covid-19 virus is now “a war — a different kind of war than we’ve ever had,” it raises suspicion about the forced shutdown of economies currently witnessed. Unemployment rates are expected to skyrocket in coming months. There’s no worries according to the U.S. leader, however, who maintains:

First of all, you never have to default because you print the money, I hate to tell you, OK?

As astute economists are quick to point out, you can print money infinitely, but you cannot print the scarce assets, resources, labor and expertise the money is meant to represent. This is one reason some now are moving value to perceived safer, hard-capped supply assets such as bitcoins or physical gold.

What do you think about the decline of national currencies being witnessed now? Let us know in the comments section below.

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IIF Report Predicts Global Debt Will Reach New All-Time High of $257T in 2020

15/01/2020 by Idelto Editor

Global debt records were broken in 2019, but that likely won’t be the end of such ominous economic milestones, the Institute of International Finance (IIF) predicts. The number could reach $257 trillion sometime in Q1 2020, according to a recent report by the group. Economies worldwide are struggling to address pressing issues such as stimulation near or below the zero bound, liquidity crisis, and the effects of negative rates on banks and their customers. Some experts believe the world may in fact be gearing up for a financial crisis of frightening proportions.

Also Read: Fed Officials Ponder Funding Hedge Funds and Private Brokers Directly

Global Debt Could Hit $257T Says IIF

According to the IIF, “The global debt-to-GDP ratio hit a new all-time high of over 322% in Q3 2019, with total debt reaching close to $253 trillion.” The pronounced trajectory into the red seems to be continuing unabated. It also appears to the IIF ready to set new records in early 2020, with the institute asserting:

Global debt is set to grow faster in 2020 and is estimated to exceed $257 trillion by the end of Q1 2020, driven mainly by non-financial sector debt.

https://edition.cnn.com/2020/01/13/economy/global-debt-record/index.html

According to the IIF’s Global Debt Monitor report, China leads the way in leverage, racking up the IOUs with a 310% debt-to-GDP ratio. Developed markets such as the U.S., Europe and Japan contribute to over half of the massive global minus sign, though emerging markets have shown a rapid acceleration in recent years. The report notes that most of the debt is non-financial sector in nature, with global government debt on path to pierce $70 trillion itself. As Reuters’ Marc Jones points out in a recent report:

The amount works out at around $32,500 for each of the 7.7 billion people on planet and more than 3.2 times the world’s annual economic output…

“Spurred by low interest rates and loose financial conditions, we estimate that total global debt will exceed $257 trillion in Q1 2020,” the IIF report asserts. It further notes that household debt-to-GDP is reaching record highs in multiple countries, largely in the EU, and that government debt-to-GDP has hit record highs in the U.S. and Australia.

Negative Rates and Unending Stimulation Result in Fewer Remedial Options

As news.Bitcoin.com’s Jamie Redman recently reported, concerns about a global economic bubble are growing, with some predicting a downturn of unprecedented proportions in light of exhausted options. Raphael Bostic, Federal Reserve Bank of Atlanta President, stated this week that “There’s not a lot that we have left to do to stimulate.” U.S. interest rates were chopped three times in the latter part of 2019, and massive printing of new money characterizes an ongoing Hail Mary-type bid to stimulate the economy.

In the EU the zero lower bound (ZLB) on interest rates has long since been broken, but the European Central Bank faces a similar lack of options. While associated publications suggest that as long as there’s confidence in the system, rates can continually go lower and lower, this type of economic “faith” has been broken many times, historically.

The advent of central bank digital currencies further presents the potential for central banks like the ECB to pin negative rates directly to currencies, making it impossible for small-time savers to preserve value by moving money out of banks.

Some interpret the current Shiller PE Ratio to signal a far overvalued stock market, with the ratio climbing back up into dot-com bubble territory. Source: https://www.multpl.com/shiller-pe

The Potential New Bubble and Bitcoin

If current alarming factors such as a potentially overvalued stock market, newly increased limits on home loans, low to negative interest rates, ongoing printing of new money and a soaring global debt continue unabated, a new recession could be on the way.

Economist Robert Shiller recently attributed market confidence to contempt for traditional economic wisdom, writing in a New York Times article: “High animal spirits in the stock market are often associated with the disparagement of traditional authority and expert opinion.” Shiller cited the “Make America Great Again” narrative of the Donald Trump presidency and its contribution to current fearlessness, writing:

The rise of an explicit belief in irrationality like this one is troubling on many levels.

With all this in view, the recurring narrative of decentralized, permissionless cryptocurrencies as hedge against economic uncertainty emerges powerfully once again, even in mainstream media.

I bought #Bitcoin because I don’t want all my savings in dollars. What if my government prints lots of dollars and they become worth… pennies?

But is owning bitcoin really a good idea? @NaomiBrockwell and @PeterSchiff debate: pic.twitter.com/TwEaGiiGSJ

— John Stossel (@JohnStossel) December 15, 2019

With the first month of 2020 already half over, and crypto markets moving dynamically against the uneasy backdrop of a debt-addled world economy, coming months promise to be eventful, if largely uncertain.

What do you think about the current global debt and the state of the global economy? Can bitcoin help people avoid the negative effects of a potential crisis? Let us know in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Low Interest Rates Provide Precarious Protection Against Crisis, World Bank Warns

10/01/2020 by Idelto Editor

The latest global debt wave is the largest in the past five decades, the World Bank has acknowledged in a new report. The international institution notes that previous waves of broad-based debt accumulation lead to widespread financial crises. Historically low interest rates this time might not be sufficient to avoid the next meltdown.

Also read: Another Bank Run Highlights China’s Brewing Financial Crisis

Largest, Fastest, Broadest Debt Wave

The risk of a new global financial crisis is one of the focal points in the January edition of the World Bank’s Global Economic Prospects report. There have been four waves of debt accumulation in the last 50 years, the institution remarks, but the one that started in 2010 represents the largest, fastest, and most broad-based increase in debt so far.

The bank warns that while current interest rate levels, which have reached historic lows in many countries around the world, are mitigating some of the risks associated with high debt, previous waves of debt accumulation have ended with widespread financial crises. Undoubtedly a warning for governments and central banks that other anti-crisis measures are needed.

While the crypto space maintains significantly higher interest rates than the fiat world, and platforms like Cred allow individuals to earn up to 10% on BTC and BCH holdings, many developed nations have continued to lower their benchmark rates. More than 20 European countries now have 0% interest rates and a few, such as Denmark and Switzerland, have been in negative territory for around five years.

“Policy options to reduce the likelihood of crises and lessen their impact should they materialize include building resilient monetary and fiscal frameworks, instituting robust supervisory and regulatory regimes, and following transparent debt management practices,” the authors of the report insist. World Bank Prospects Group Director Ayhan Kose elaborated:

Low global interest rates provide only a precarious protection against financial crises. The history of past waves of debt accumulation shows that these waves tend to have unhappy endings. In a fragile global environment, policy improvements are critical to minimize the risks associated with the current debt wave.

History Shows Mounting Debt Leads to Crises

Another report published by the World Bank this past December, titled “Global Waves of Debt: Causes and Consequences,” indicated that debt in emerging and developing economies has climbed to a record $55 trillion in 2018. The document contained a study of the four major debt accumulation periods since 1970 and concluded that the debt-to-GDP ratio of developing nations has climbed 54 percentage points since the start of the latest debt buildup a decade ago.

Around half of the national episodes of rapid debt growth in developing countries, which have totaled over 500 since 1970, were accompanied by financial crises that significantly weakened per-capita income and investment, the World Bank noted. “History shows that large debt surges often coincide with financial crises in developing countries, at great cost to the population. Policymakers should act promptly to enhance debt sustainability and reduce exposure to economic shocks,” commented Ceyla Pazarbasioglu, the World Bank Group’s Vice President for Equitable Growth, Finance, and Institutions.

The latest debt wave differs from the previous three, however, in several aspects. The World Bank points out that it involves a simultaneous accumulation in both public and private debt and it’s not limited to one or two regions. Debt is quite high in developing countries; it is twice the nominal level reached in 2007, the institution emphasizes.

A considerable portion of the debt increase has been driven by China. The debt-to-GDP ratio of the People’s Republic has risen 72 points to 255% since 2010. In the past months and years, a liquidity crisis has been brewing as well. The government in Beijing had to bail out several banks due to a credit crunch in the interbank lending market while also trying hard to stimulate lending for its slowing economy and ensure liquidity in its troubled banking sector.

Despite persisting downward risks, the global economy is expected to grow up to 2.5% in 2020. But according to the World Bank, this is likely to happen only if global investment and trade gradually recover from the weak levels observed in 2019. Although growth in emerging and developing economies is projected to reach 4.1% this year, growth among advanced economies is probably going to slow down to 1.4%.

What are your forecasts for the global economic and financial system in 2020? Share your expectations in the comments section below.

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Stablecoins and Exchange Coins – What’s the Difference From the Ol’ Corporate Bond?

09/09/2019 by Idelto Editor

A new weekly record was set last week in global corporate bond sales, with investors grabbing hold of around $140 billion in new bonds according to data from Dealogic. This occurs against a backdrop of negative yielding debt, and the meteoric rise in popularity of stablecoins and exchange-native tokens across the crypto space. The near ubiquitous presence of coins like USDT on major exchanges, and the still nascent wave of exchange tokens like Binance’s BNB, signal a new era of cryptocurrency trading and investment. What remains unclear, however, is what separates these coins from traditional, legacy systems of investment such as their corporate bond cousins, and what all the hubbub is really about.

Also Read: Venezuelans Fighting Economic Hardship Discover Crypto’s True Potential

The Good Ol’ Corporate Bond

Corporate bonds are a debt security a lot like government bonds, but with generally higher interest rates due to higher risk. An investor buys a corporate bond, receives regular interest payments until the bond matures, and at that time can claim the face value of the agreement. In short, it’s another way of financing debt, bonding the corporation to voluntary debt holders until bond maturity, when the par value must be paid to the investor.

Last week’s record investment spree in companies like Apple, Disney, and Coca-Cola is notable because companies are refinancing debt thanks to a surge in investment brought on by dismal corporate yields elsewhere, especially Japan and Europe. This is the first time Apple has borrowed through the bond market since 2017. In essence, they’re riding the waves created by sinking debt ships overseas. The situation with government bonds in many countries is also extremely bleak, with record negative yields being hit in some European countries.

Should a business fall flat on its face and default, bondholders are left holding the debt temporarily, or may take a hit if the company files bankruptcy and issues newer, less valuable bonds to pay back the bag holders. Further, if the economies where these negative yielding fixed income instruments are issued recover, investors in the current low interest market could take a big hit.

Stablecoins and Exchange Tokens

Stablecoins are designed to bring an element of security to cryptocurrency. They can be backed with fiat currencies, commodities, or other crypto tokens. The name itself says it all. Where other assets like bitcoin, ether, and monero experience significant volatility, these assets remain relatively stable as they are pegged to less tempestuous currencies or commodities. Coinbase’s USDC (U.S. Dollar Coin) is a model example. According to Coinbase:

Our mission is to build an open financial system for the world. As part of this mission, we want everyone to enjoy the stability of the world’s fiat currency, the US dollar. USD Coin allows unbanked and under-banked individuals in any country to hold a US dollar–backed asset with nothing more than a mobile phone.

Exchange tokens, on the other hand, are assets created by exchanges which afford their holders some exclusive in-house benefits. In the case of Binance’s BNB Coin, whose ICO helped to finance the creation of the Binance exchange itself, users get discounts when they use BNB to pay fees and can trade the token for other assets on the exchange. There are also buy back programs set up to occur periodically at which times holders can sell the coins back to Binance. Supply will be limited to 100 million BNB after buybacks and burning are complete.

Some of the major stablecoins dominating the market today include Tether (USDT), Trueusd (TUSD), Paxos (PAX), USD Coin (USDC), and Dai (DAI). Leading exchange tokens include Binance (BNB), Huobi (HT), and Kucoin (KCS).

So What’s the Difference?

Like corporate bonds, both stablecoins and exchange coins have a value dependent on the success of some external entity or asset. For example, should Binance run into major trouble, and become insolvent, the value of BNB will suffer right along with the company. Should the U.S. dollar plunge farther and farther into inflated devaluation, a USDC peg to the currency won’t provide as much security. For those paying attention to the global economy, these scenarios are not difficult to imagine.

With non-pegged, non-exchange assets like bitcoin, there is volatility. However, this volatility is more loosely correlated with external deterministic factor than these others. In this sense, a free market setting is ideal for something like bitcoin, as liquidity and supply and demand factors find their balance in such an environment not via mandate, but through organic transaction.

In an open market setting, tying an emergent asset to a pre-established asset might be foolish, as it could weigh down the potential for the new asset to develop, grow, and unfold as a useful, sound currency. Under the current monopolistic paradigm, however, where force is leveraged to ensure fiat such as the USD is used exclusively as a world reserve currency, stablecoins and pegged assets remain secure, resting on that very same artificial monopoly. In a nutshell, most stablecoins, exchange tokens and corporate bonds are tied to the devaluation trajectory of the world reserve currency, the U.S. dollar.

Questionable Intent

Returning to the above quoted statement from Coinbase’s USDC webpage, marketing stablecoins and exchange tokens as means by which to allow “unbanked and under-banked individuals in any country to hold a US dollar–backed asset with nothing more than a mobile phone” seems more than a bit deceptive.

For example, if an impoverished and unbanked family in India wishes to gain access to this “open financial system for the world” they may have to come up with “certain personal information including, but not limited to, your name, address, telephone number, email address, date of birth, taxpayer identification number, government identification number, information regarding your bank account … network status, customer type, customer role, billing type, mobile device identifiers,” as per the Coinbase’s user agreement. The unbanked are somehow assumed have TINs, home addresses, government IDs and, yes, even bank accounts.

Further, although stablecoins like USDT are said to be backed by fiat reserves, there has been serious controversy calling these claims into question. Tether was put in the hot seat after the website was discovered silently replacing “Every tether is always backed 1-to-1 by traditional currency held in our reserves … 1 USDT is always equivalent to 1 USD,” with the claim that the reserves now consist of “traditional currency and cash equivalents and … other assets and receivables from loans made by Tether to third parties.” When asked last week about this, co-founder William Quigley told Bloomberg:

Whether or not Tether was backed by a dollar or not, actually wouldn’t matter if everybody agreed to take Tether and to value it at a dollar themselves.

If it doesn’t matter whether a dollar-backed stablecoin is backed by a dollar, one is left to wonder about the purpose of even calling it a stablecoin. Some companies issuing corporate bonds have historically made similar questionable claims, and promises with fingers crossed. As with investors in these bad bonds, users of stablecoins and exchange tokens must put their faith in the company’s success and track record, and not in the currency or protocol alone.

Benefits of Bonds, Stablecoins, and Exchange Tokens

In any successful economy, tools like debt securities, pegged assets, and native rewards systems or in-house currencies can serve useful functions for business owners and value holders alike. Much like the SLP universe being built on the BCH blockchain currently, specialized financial tools give their holders unique flexibility and opportunities in moving throughout the ecosystem of their specific economy.

An oversight being made in the crypto space today, however, is to compare things like fiat-pegged stablecoins and exchange tokens in an apples to apples fashion with non-pegged, free market assets like bitcoin. While the USD reserve paradigm affects all markets, the critical difference between non-pegged, permissionless assets and corporate bonds, fiat stablecoins, and exchange-native tokens, is that ultimately the latter three are tied to businesses and pre-existing financial paradigms, where the former are their own entity, free to move and grow even in the absence of legacy banking systems, or a sudden corporate default.

What are your thoughts on the difference between stablecoins/exchange coins and corporate bonds? Let us know in the comments section below.

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The Modern Era of Free Range Slaves: How Bitcoin Breaks the Mold

03/08/2019 by Idelto Editor

In a string of recent Tweets, 2020 Libertarian presidential candidate and fugitive from the law John McAfee has been talking about slavery. Urging people to “wake up” and assuring them that neither compliance with the status quo, nor stacks of riches, can set them free. Indeed, when the current state of the world is examined closely under an economic lens, there is no other rational conclusion save that humanity currently inhabits a gigantic, fiat money plantation, and that the slaveholders are violent and irrevocably unreasonable.

Also Read: Bitcoin Cash 2-Year Anniversary: Celebrating Protocol Development and Achievements

You Are a Slave

Yes, you are a slave. No, that’s not hyperbole. Before launching into this, though, it’s important to define terms. A generally agreeable definition runs like this one, put forth by UNESCO:

As slavery seems to take new forms, it is still, nevertheless, identified by an element of ownership or control over another’s life, coercion and the restriction of movement and by the fact that someone is not free to leave or to change an employer.

In essence, to be a slave is to have no autonomy or freedom concerning one’s body with regard to other human beings. That’s just to say, if you’re not a slave, you can do what you want within the bounds of property, and nobody has a right to force you to be somewhere, or to work for them.

The historic plantation slavery of the southern United States is well-known for its visible, horrific evils wrought on innocent human beings treated as property. Blatant examples of slavery also continue in many places today, in the form of direct “ownership,” human trafficking, sex slavery, and suchlike. But there’s still a form that is so blatant as to be ubiquitous, yet which most do not even protest, let alone recognize: fiat slavery.

In a recent live video uploaded to his Twitter account, maverick anti-politician John McAfee laments: “You think you’re not slaves but you are. The nine-to-five existence of your current lives is structured by the American industrial corporate complex, complicit with our government. You need to free yourselves from this.”

He goes on to state: “This is not what life is. Life is a great mystery. A glorious, unbelievably mysterious, beautiful existence if you are free from those who control you.”

An actual abolitionist from the plantation slavery era in the United States, political philosopher, essayist, and individualist anarchist Lysander Spooner eloquently elaborated:

While some balk at the idea of taxation and fiat money being a form of slavery, there really is no other rational conclusion. According to former IRS agent Sherry Peel Jackson in one of her many compelling speeches, it’s true, and knowledge of economics bears it out:

And let me tell you, that as a black woman I am keenly aware of the history of slavery. But do you understand that we are all slaves to this system? Do you understand that the media and Hollywood play a part keeping the American people so fixated [on movies and TV]…that we don’t take time to read the Creature from Jekyll Island, study the Internal Revenue Code and learn the Constitution?

What Makes You A Slave?

In civilized market transactions, the buyer chooses the products or services they’d like to purchase, and the quantity, freely. Common sense. Nobody would frequent a pizza shop, for example, where the workers and owner forced people to buy pizzas under threat of violence. This would not only be absurd – it would be completely immoral.

With government and its fiat (lit. “by decree”) money, though, you don’t have a choice. The services and products—and their quantities—are chosen for you in advance, and you must buy, and work to pay via taxes, or go to jail. If you don’t like the quality of police protection offered to your community, that’s too bad. You must pay for it. If you don’t like any of the politicians running for office to rule your life, that’s too bad. You still have to work and pay for the winner’s policies to be implemented. If you don’t pay, you’ll go to jail. If you try to run away, you’ll almost always be caught. Maybe killed. If you wish to leave the plantation, there’s a fee for that, and your request may be denied. Just to be 100%, crystal clear: your request to move your own body geographically elsewhere may be denied. So, in the end, who owns you? It certainly isn’t you, by the looks of things.

Free Range Tax Cattle

Before 1861, there was no such thing as an “income tax” in America. In fact, the IRS was formed around the same time to collect the nation’s very first income taxes as a “temporary” measure to pay for the Civil War. Of course, “temporary” would turn into perpetual, and the many-tentacled monster of centralized state banking would grow in grotesque, rapid fashion, leading to the current situation. In 1895, the U.S. Supreme Court struck down the income tax as unconstitutional, but it would be later revived as a permanent fixture in 1913, the same year the Federal Reserve was created.

Currency competition was also historically permitted more or less, prior to this time. Until the National Bank Act of 1863, communities, churches, railroads, and virtually anyone could issue their own paper money backed by whatever they saw fit. These days, unless one’s currency is approved by the government, forget about it. This is why the whole issue of Bitcoin and currencies like Facebook’s proposed Libra are causing so much commotion. Never mind that the Fed has just slashed interest rates once again, on July 31. This for the first time since the financial crisis of 2008. The money forced on everyone continues to be systematically devalued and debased. No matter. Use it, or else.

That’s the situation. Forced to work to pay for things for someone else. No safe alternative. Cannot leave. If you leave, you’ll have to pay for your freedom. If you try to run away, you’ll be caged, killed, or fined and returned to the plantation. This is, by definition, slavery.

Bitcoin Breaks the Mold

At the beginning of July the Dementia Society of America announced it would begin accepting Bitcoin and crypto donations:

Why crypto donations? For donors in the United States, the IRS has classified Bitcoin as property for tax purposes. When you donate Bitcoin…you don’t pay capital gains tax and can write off the donation. You can change lives, and honor the memory and legacy of a loved one, in a convenient and tax efficient way.

Even if these tax laws were changed, bitcoin would still have the ability to travel thousands of miles in an instant, for practically zero fees, which means its utility cannot be determined by a state or central bank. From Venezuelan aid to clothes in Canada, crypto’s ability to sustain secure, reliable, and fraud-resistant charity is remarkable.

What really frightens the slaveholder paradigm is the fact that when individual users—and not central banks or governments—hold the private keys to their money, the only way to control it is to attempt a desperate application of force. This has two effects:

Proving that the money is indeed secure and valuable.
Showing the state for what it is: a violent, inhumane, controlling force.

The Keys Must Be Used or the Lock Won’t Open

Bitcoin and crypto are tools that can help trapped humans enjoy a better quality of life and begin to break free from the slave cycle McAfee speaks of. They’ve already begun to do so, giving normal, everyday individuals who couldn’t compete in the status quo of fiat power, an unexpected chance to innovate and be judged by their own merits and the market, instead of an arbitrary set of illogical, violent rules. Perhaps that is why governments are supportive of blockchain in general, but stand against private currencies. That said, in and of themselves, these are not enough.

As McAfee details in his latest video, even if one has all the money (or bitcoin) in the world, without an understanding of the value of freedom, no one can break free.

What do you think about McAfee’s statements? Let us know in the comments section below.

OP-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.

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