For the average Joe and Jane the current speed of currency debasement is going to have a major impact on their current and future wealth and savings, unless they do something about it. Could an investment into Bitcoin save them?
The fiat experiment is coming to an end
Much of the world’s population very likely still lives in complete blissful ignorance of the path countries’ economies are following. Debt is being piled on top of debt, and the only way out is for the respective central banks of these countries to print and print more currency in order to service these debts.
The fiat currency experiment is coming to an end, and it has been a failure on the most colossal scale imaginable. The idea of all countries just following the lead of the U.S. Federal Reserve, and printing paper currency that has absolutely no backing behind it, with hardly any restraints, has led the entire world to the brink of bankruptcy.
15% per year is the minimum needed to stay above water
If one adds yearly inflation to the rate of currency debasement, a figure of around 15% is probably the hurdle rate that the average Joe and Jane needs to make, over and above their salaries, in order to keep their purchasing power at the same level each year.
Now, everyone knows that this is a feat beyond even most Wall Street investors, let alone the average Joe and Jane. Which assets would bring a yearly yield of at least 15%? There aren’t many.
The sinking ship of government bonds
Bonds have been a sinking ship for the last few years as institutional investors and other countries are demanding ever higher bond yields in order to even think about taking on such risks. Even if they are prepared to do so, most are only buying short term bonds out to a year or two, with a future beyond this extremely difficult to predict.
Gold and silver outperform fiat but …
The sound monies of gold and silver will very likely outperform all fiat currencies, but the banks have generally managed to suppress the price of both over several decades, with the help of the paper derivatives market. That said, both gold and silver are starting to rise, but as yet, neither are reaching that magic figure of 15% per year.
Picking a stock market winner
For the average investor there remains the stock market. If one is able to lay money on the right horse there is the possibility of far more than 15% per year. However, the big investors who consistently outperform the average stock market gains are few and far between. For those new to investing, picking a stock that is making these kinds of yearly gains is like picking a needle out of a haystack.
The one asset that consistently outperforms
So we come to the one asset that has the potential to save those who invest in it. This is Bitcoin. Bitcoin is currently up just over 500% year to date, and it is in the last stretch of its bull market, where it might be expected to add even more to these gains.
In fact, Bitcoin has outperformed every other asset on the planet in most years since its birth in early January 2009. That said, there is one thing to remember. Until now, Bitcoin has had a series of 4-year cycles. In each cycle Bitcoin has generally gone up for roughly 3 years of a bull market, and then down for 1 year of a bear market.
Even though the bull markets have brought extraordinary gains to holders, the bear markets have been quite grim. The last two bear markets of 2018 and 2022 registered a -73% and -64% dip respectively.
It therefore needs to be said that investing into Bitcoin is a longer term commitment, of at least four or five years, and probably more.
Think of Bitcoin as a place to put your savings, where over the long term, they are going to increase, instead of decrease, as fiat currency savings certainly do.
The choice needs to be made now
Bitcoin is the liferaft that can save you. Yes, there are probably certain companies in the stock market that can bring big returns that might surpass that 15% hurdle rate, but finding them, and knowing when to cycle out of them, is likely beyond the knowledge of most investors.
Finally, it must be borne in mind that Bitcoin is a very volatile asset. Much more than most. Upward surges and downward dips of $10,000 and more in one day are quite possible.
Also, any asset has the potential to fail. Even Bitcoin could fail one day for a variety of reasons. However, remaining with your fiat currency in the bank or savings account is most definitely not going to end well.
If you have woken up to the perils that are descending upon you, you still have time to make the choice. The financial decisions you take now will very likely have huge consequences for your future.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
