As the total debt of the US federal government surpassed it’s an all time high record with $19,659,460,647,160.83. Bitcoin is proving to be one of the very few alternatives for financial protection.
The US economy is found on an entirely debt-based monetary system, which is presumed to surpass $20 trillion in debt by 2017. The outstanding debt of the US federal government is covered by the Federal Reserve’s quantitative easing process, in which billions of Dollars are printed out to be distributed amongst top-tier commercial banks, corporations, and the Federal Reserve bank.
Bloated US economy
In theory, the purpose of quantitative easing is to restore a struggling economy by increasing the market value of virtually every asset of a country. When billions of Dollars created by the Federal Reserve for instance, the US economy becomes significantly bloated, leading to a bubble of the central bank, assets, bonds, and any other asset that are based on the performance of the US economy.
Quantitative easing had worked quite in the past, as citizens and residents of the US were properly compensated through the rising interest rates. If the Fed decided to print $4 Billion dollars and the economy was presumed to inflate by 2% as a direct result, bank consumers and cash holders saw a 2% increase in their cash holdings.
Bubble of bonds, stocks
The real issue with the US debt-based economy and the flawed monetary systems began to surface when central banks as well as several commercial banks began to implement negative interest rates on cash holdings. That meant, instead of being compensated for storing money in a bank, consumers are required to pay a certain percentage of their cash holdings as a fee to the banks.
Even in a case in which a central bank prints billions of Dollars with the name of quantitative easing, consumers and businesses would have to cover the rising inflation rate with personal wealth. Such corrupt monetary system creates an inevitable bubble of bonds, stocks, banks, and the US Dollars, which will inevitably burst as the significantly overvalued US Dollars gradually steps down to its original market value.
When this happens, stock markets, hedge funds, and high profile investors will see billions of Dollars in losses, as seen in the underwhelming performance of the world’s largest hedge fund, Lansdowne Partners.
Lansdowne Partners recently reported a $1.8 billion loss as a result from their investment in Lloyds Banking Group and major miner Glencore.
With assets, bonds, stocks, and US Dollars all becoming inflationary, bloated, and unreliable forms of investment, one of the very few markets demand-based currency is Bitcoin, which is rising in demand in regions like China and South Korea as alternatives to mainstream investments.