Stimulus Checks Exchanged for Bitcoin Show a Loss of Confidence in the U.S. Dollar
More and more Americans no longer believe in the U.S. dollar.
During the month of March 2020, the U.S. government and the U.S. Congress agreed on a $2 trillion stimulus package. At the heart of this unprecedented plan is a $1,200 check sent to all Americans.
The purpose of this stimulus check is twofold in my opinion:
- Supporting U.S. companies by trying to boost American consumption.
- Calm the vindictiveness of a people who find it increasingly difficult to understand why all the money injected into the monetary and financial system only goes to the banks and big companies.
Americans are asking themselves more and more questions
The hashtag #BailoutHumans, which is gaining momentum on Twitter, perfectly symbolizes this growing questioning among the American population.
Many find it hard to understand why they have to foot the bill for the abuse of a minority. I think the bottom line is right here in my view. The coronavirus pandemic was the trigger for the economic crisis that was starting, but the monetary and financial system was already on the brink of collapse.
All that was missing was a spark that would cause the financial markets to collapse. The coronavirus was.
These financial markets had been artificially inflated for years by the quantitative easing policies of central banks. Worse still, many companies have carried out massive share buyback programmes in recent years instead of building up the cash flow that would have helped them in the midst of the crisis we are going through.
This infinite growth drive of the financial markets is a good example of the flaws of the monetary and financial system.
The main problem is that when the system is on the verge of imploding, citizens are asked to foot the bill.
In the present situation, the citizens will pay in two stages:
- The trillions of dollars injected into the system will cause a major currency devaluation that will drastically reduce their purchasing power.
- The $2 trillion stimulus package is being financed by public debt. This same public debt now exceeds $24 trillion in the United States, or more than 110% of GDP.
Problems are not solved, but just put off until later
Rather than tackling the root causes of the problem behind these economic crises that recur about every ten years, governments and central bankers are simply putting off the problem until later.
To do that, they are injecting a lot of money into the fiat system.
It works, but only for a time, as we can see today. Indeed, the 2020 crisis has its roots in the 2008 crisis, which has not really been resolved.
What is worrying is that with each new crisis, the amounts that need to be injected increase exponentially.
In 2008, hundreds of billions of dollars were enough to postpone the risk of an explosion of the monetary and financial system. In 2020, nothing is totally resolved, but we are already reaching the ten trillion dollars injected into the system.
In future crises, we will surely have to move to the next higher unit: the quadrillion.
All this is frightening. More and more citizens are becoming aware of the failures of the fiat system. A real social crisis is emerging with a crucial question in the background:
Does Your Fiat Money Still Have Any Value?
The answer is individual. However, I have the impression that the beginning of answers is being given to us by a growing number of American citizens.
The $1,200 stimulus check is exchanged for Bitcoin
Since the arrival of the first $1,200 stimulus checks, we have seen a movement that is indicative of a loss of confidence in the U.S. dollar. More and more Americans are using their stimulus check to buy Bitcoin.
Last week, Brian Armstrong, the CEO of Coinbase, shared in a tweet a graph showing an increase in trades of exactly $1,200 on his platform.
A spokesperson for Binance US also confirmed that the other big trading platform has seen a spike in deposits of exactly $1,200 recently:
“People do seem to have deposited exactly $1,200 into Binance US in the past couple of days.”
— Binance US
Many of the Americans who use their stimulus check to buy Bitcoin are disappointed in the monetary and financial system. They want to try another way.
Bitcoin is the best existing alternative to the fiat system.
In fact, now is the perfect time to buy Bitcoin with fiat money that is magically given to you. Indeed, the third Bitcoin Halving is scheduled to happen in less than 20 days from now.
This Bitcoin Halving will cause a real shock on the Bitcoin supply which will highlight the virtues of quantitative hardening. In contrast to the quantitative easing practiced by the Fed and other central banks, quantitative hardening strengthens the value of yours Bitcoins over time.
Combined with an increase in demand, this supply shock will cause a very strong bull market in the Bitcoin price in the coming months.
Exchanging this stimulus check for Bitcoin is therefore a totally justified choice. This choice is all the more justified because by keeping this $1,200, you are guaranteed that it will be worth much less in the future.
With Bitcoin, it’s totally different.
Of course, you are not certain that the Bitcoin price will rise in the future, but at least it is a possibility that exists to a large extent. With the U.S. dollar, that possibility has not existed for a long time.
Exchanging U.S. dollar for Bitcoin is based on a simple idea
The idea behind the fact of exchanging U.S. dollar for Bitcoin is actually quite simple:
Exchanging an inflationary currency, while it still has some value, for a deflationary currency, in order to preserve your wealth.
This movement could become even more significant in the coming months as Bitcoin’s post-Halving bull market begins to take off.
Indeed, members of the U.S. Congress have just introduced the Emergency Money for the People Act. If passed, a monthly payment of $2,000 would be given to all eligible Americans for up to 12 months.
Such a monetary stimulus over such a long period of time could well see a huge number of Americans buying Bitcoin on a regular basis over the coming months.
A new sign of mistrust towards the U.S. dollar would further strengthen Bitcoin and its position as the only credible alternative to the current monetary and financial system.
This trend will therefore have to be followed closely in the coming months.