We are living in unprecedented times. Well, not exactly. I think we're all well aware that power corrupts absolutely and the cyclical nature of the world is that empires rise and fall.
We are in the eye of the storm of this happening to the global financial system. In a post-COVID world where trillions in value was created from quantitative easing and then subsequently removed, even the banks are struggling to keep up. Let alone your local grocery store or restaurant.
From a subjective experience, I've seen many local businesses crumble during COVID. I would say - without any real data outside of experience - that about 20% or more of the local businesses in my area are now out of business or changed hands to new ownership since the beginning of COVID.
Local governments, the federal government and the federal reserve did unimaginable damage to local and global economies. We're still experiencing the fallout of everything they did from shutting down small businesses to masks to straight up lies to printing billions of free dollars and raining it upon us.
America's Banks Are Missing Billions of Dollars
Balaji is making a lot of noise about this, post-SVB collapse. We've seen 5 banks collapse so far and many people think that there are a whole lot more collapses on the horizon.
"The odd thing is that deposits in American banks are nevertheless falling. Over the past year those in commercial banks have sunk by half a trillion dollars, a fall of nearly 3%. This makes the financial system more fragile, since banks must shrink to repay their deposits. Where is the money going?"
-The Economist "America’s banks are missing hundreds of billions of dollars"
As people who are into crypto, we've heard a lot of different banking terms. I've heard in the past that one of the many lessons and values of being in crypto is the "economic degree" that you get from being in this industry. From my perspective, I have learned so much about economics since I first got into this industry... it's wild.
In this industry we've also heard "unbank yourself" and "bank the unbanked". A lot of "bank" getting thrown around. The ironic thing is that the general sentiment around crypto is to do away with banks. Either entirely or at least a %.
I have touted this as well - why hold all your money at a bank? I just don't think that makes sense. I think it makes a whole lot more sense to hold some money at multiple banks and then also some money in the crypto ecosystem.
Look, either crypto is all going to 0 or it is going to change the world and everyone is going to use it like the internet some day. That's one helluva asymmetric bet.
The tide has gone out since covid and now we see a ton of small to mid-sized banks with their pants down. Interest rates are still on the rise (unless the FED decides to pause hikes in the meeting they're having in 3 hours) and the banks are holding some bad debt on their balance sheets.
Crypto is Still a Scam - Uncle Sam
Somehow - between the crumbling global economy and banks on the verge of shuttering their doors - the U.S. Government is still finding time to call Crypto a scam.
It's pretty ironic. The government calling something a scam that promises to remove so much reliance on banks meanwhile those same banks are shuttering their doors because they scammed clients out of deposits and literally don't have enough $$ on their balance sheet to cover withdrawals.
Look, I'm no government anarchist but I do believe in having more individualism when it comes to finance.
I have long been a believer in unbanking some % of your net worth. As I said above, my advice to friends and family is always to use multiple banks + have some crypto. I don't say to all-in to crypto... I say multiple banks + some crypto.
I'm not one of the maximalists that will tell you the whole system is going to shit on some Mad Max type of level. I'm a pragmatic person and I have pragmatic beliefs about how you should manage money and be in both systems. I think there is a value in both.
Bitcoin promises us a future where we can have at least some % of our net worth "outside the system". I firmly believe in that future.
No, maxis, I don't buy-in to the future that the USD is going to $0 and we're all going to use BTC as the world's reserve currency and buy all of our groceries with it.
Instead, I think we'll use BTC to store wealth outside the system. Tap into that wealth when we need it - like a long-term savings account - and it will be the centerpiece of a digital ecosystem. That's what BTC is to day. It's doing all of these things already. I just think it has a lot more room to scale up.
Long Bitcoin, Short Banks
Longing BTC is shorting the banks. Like I said, I don't think you need to completely remove yourself from either system. A healthy mix of the two will take you to the place you need to go which is individualism and self-reliance.
I wrote two quick Threadstorms today. One talked about the FED from an ELI5 perspective. The other talked about HBD and how it can be utilized as a really powerful storehold of wealth, especially with the 20% savings rate on-chain.
If you know me, then you know that my whole mission in life is to democratize financial knowledge and access. I believe in a future where everyone is more financially literate. That's what LeoFinance is all about.
Read these two threadstorms if you want to up your literacy in the next 5 minutes:
- On The FED: https://alpha.leofinance.io/threads/view/khaleelkazi/re-leothreads-2eqmrfabe
- On HBD: https://alpha.leofinance.io/threads/view/khaleelkazi/re-leothreads-2oc8pdmd9
About LeoFinance
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Our mission is to democratize financial knowledge and access with Web3.
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