The end of the fiat system and its consequences

Zero-sum thinking and scapegoats

We are in a very important time in history. The fiat system is crumbling. Inflation was not transitory and central banks around the world raised rates to control inflation. But they can’t raise interest rates without causing some havoc. In Japan, the country that is in the worst position, is doing YCC, causing the Yen to fall at historic levels compared to other currencies. The Bank of England had to save its pension funds.

The only domino that hasn’t fallen yet is the US. But we will see what happens in the next few years. I don’t think that the FED can keep interest rates high for too long. The FED will have to lower interest rates again, else we will see the debt bubble pop. It is not only government debt that is the problem, but also corporate debt. So the FED will have to pivot, and reduce interest rates. Soon enough, interest rates will go down to 0 and QE will come back.

That means that inflation will keep high. There is a scenario that hyperinflation happens if countries don’t control their spending. If hyperinflation happens again, it will cause a lot of zero-sum thinking. We’ve seen the consequences of hyperinflation. It is not pretty. Humans are tribal and when zero-sum mentality arrives, they tend to find scapegoats. Just look at what is happening in this bear market in crypto: tribalism.

But the worst consequence of zero-sum thinking is that people tend to look for scapegoats. It is human nature, unfortunately. Instead of blaming scapegoats, we should help people exit the system. Bitcoin and crypto offer an alternative to this. Whatever happens, I think that technology can help prevent an undesirable path. I’m hoping for a bright future!