Money For Nothing-The Ill-Conceived Notion That Bitcoin Will Shore Up the Failing US Dollar

Photo Credit: Screenshot at approx. 2:18 ‘Money for Nothing’ by Dire Straits via YouTube

By Stan Szymanski

“No currency can compare, either by a direct or an indirect relationship, real or imagined, with gold” (DeGaulle’s 1965 ‘Criterion Speech’)

…As the west bets on Bitcoin to shore up their failing currencies…

Image Credit: @SenLoomis and Forbes

Forbes reported this week that ‘Nation States Turn to Bitcoin as a Strategic Asset’ claiming that …’bitcoin is no longer just a niche investment but a geopolitical asset’…

Of course we know that President-elect Trump made headlines last summer when he attended the Bitcoin conference in Nashville, TN.:

…’In his keynote address at a bitcoinconference in Nashville, Tennessee, the Republican presidential nominee promised to make the United States the “crypto capital of the planet” and create a bitcoin “strategic reserve” using the currency that the government currently holds.’…(AP News)

President Trump is acting ‘as if’ Bitcoin is a commodity that can underpin the economy of a nation. And other nations are beginning to follow suit:

…’Switzerland is also contemplating a similar move. Known for its neutrality and financial expertise, the Swiss National Bank is considering adding bitcoin to its reserves alongside gold. A public referendum could soon make Switzerland the first nation to officially hold bitcoin as a reserve asset.’…(Forbes)

The reserve currency of the world has historically been based on and supported by a commodity-gold. More recently it had been oil in the case of the Petrodollar-Circa 1973-2023. This agreement ended when the Saudi Arabian government did not renew this accord with America in June of 2023.

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Countries who have ‘owned’ the reserve currency of the day throughout history always run into problems when they have to finance a war. Whether is was the Romans in 60 A.D. or Germany trying to pay its reparations related to World War I, they each found out that they had to debase the currency by ‘watering down (removing some of)’ the precious metals content of their currency. In the case of the Weimar Republic they just printed a lot of paper until they returned to a gold standard in 1924.

The US ran into trouble trying to finance the Vietnam war in the mid 1960’s. So it removed almost all of the silver content from its coin currency starting with the 1965 coinage and accelerated its money printing to underwrite the war. This helped to spur on ‘The Great Inflation’ in the U.S. after 1965.

Starting with the aftermath of the GFC (Great Financial Crisis), the BRICS Countries (and have since greatly accelerated) their purchase of much of the commercially available gold and silver. In fact, China is consuming large amounts of raw (impure) silver (known as ‘Dore’) directly from producers in South America for further refinement in China-and paying above market prices for the Dore. These purchases do not appear in the official numbers of precious metals purchases around the world.

It is quite obvious that the rest of the world became sick of having their financial fates tied inextricably to the US Dollar (especially the copious money printing) in light of the turmoil that ensued surrounding the GFC. That is why the first BRICS meeting took place in 2009.

To borrow a term from Dr. E.M. Burlingame from a recent interview on ‘A Coffee and a Mike’ with Mike Ferris-The BRICS are now bringing down a financial ‘reverse Iron Curtain’ and are walling off the West. The BRICS are building a financial system where they demand:

…’that developing economies have a "greater voice and representation in international financial institutions, and their heads and senior leadership should be appointed through an open, transparent and merit-based selection process."…(DW)

Of course this applies to the bigger players like Russia, India and China-just in a bigger way. The BRICS countries are using Bitcoin, but they have not spent 15 years accumulating precious metals to play nice with the west. They decided not to eat crap any longer; not to give American unfettered hegemony based upon its US pension for the use of an unbacked monetary printing press.

The BRICS have developed and functionally tested a ‘blockchain backbone’ for their system-it is operational. Please be aware that a ‘blockchain’ is an accounting mechanism. A blockchain is NOT Bitcoin, although Bitcoin does operate an a (multiple) blockchain(s). Please understand that BRICS are -not- standardizing on a cryptocurrency (like Bitcoin or XRP), they are using blockchain as the rails to run their new system on.

Does the incoming Trump administration really think that in establishing a ‘Strategic Bitcoin Reserve’ that they can snake their way out of the $37 Trillion in debt (and growing)? It is my opinion that it is a pipe dream rooted in the same manic mindset the fueled the Dutch ‘Tulip Bulb Mania’ of the 17th Century:

…’People began buying tulips with leverage, (purchasing bulbs on credit) using margined derivatives contracts to buy more than they could afford. But confidence was dashed as quickly as the run-up began. Prices began to fall by the end of 1637 and they never recovered.’…(Investopedia and Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age by Anne Goldgar)

What will the US government be buying the Bitcoin with? As Dire Straits once so aptly put it: ‘Money for Nothing’-They will be using the free money that comes off of their printing press. This printing of the US currency to buy Bitcoin further weakens the the US Dollar that they purport to be holding up by buying said Bitcoin. Every sovereign nation that plans on using its own national currency to buy Bitcoin is leveraging the purchasing power of its domestic medium of exchange to purchase the cryptocurrency. That is a guaranteed watering down of the local money.

What happens to the Western currencies that bet on a National Bitcoin Reserve and Bitcoin goes down and stays down for an extended period of time? What happens when the same country debases its currency two fold when the money printing and the Bitcoin purchases are in the toilet? What happens when the above happens -and- they are in the middle of a war? Could the strategic selling of Bitcoin by an adversary (they can use leverage -or all those extra US Dollars floating around- and short Bitcoin) be used to devastate the countries of the West who hitched their wagon to the deflating Bitcoin balloon?

Even if Bitcoin goes up, it is not a ‘strategic’ asset. It is not gold. Bitcoin may be a store of value but it is indeed a tenuous store of value.

With the backdrop of a Bitcoin bullish Trump family, and a vocal Senator Loomus-Three weeks ago Wall Street behemoth BlackRock incredulously stated in a video:

…’There is no guarantee that bitcoin’s 21 million supply cap will not be changed.‘…(Protos)

If Bitcoin’s supply cap is changed to be permitted to rise above 21 million coins-it is simply a ‘$hitcoin (please forgive the reference but that is what cryptos that are basically crap are called)’. The Bitcoin mavens always point out the ‘finite supply’ of the coin. It once shot up to over 184 million coins before being ‘corrected’. Perhaps that was in the plan all along…

By promoting a ‘Bitcoin Strategic Reserve’ The incoming US administration is basically stating that they want ‘Money for Nothing’. It is an ill conceived notion. The United States has racked up more debt than can be paid back. Interest costs (of the US budget) are on track to become the largest category of spending in the federal budget-above defense and social services. The creation of fiat money can only accelerate from here just like a a snowball rolling down a hill that turns into something that can destroy the town at the bottom of the mountain. The money printing machine in Washington D.C. will run like never before. Inflation that ravages the savings and purchasing power of all Americans will become overwhelming. What can one do?

This is not personal or financial advice for anyone. A monetary reset is coming. How this exactly plays out is anyone’s guess. But there are some common sense things to consider. If it were me-I would make sure that I had food, water and medicine to get me through 6 months or more (some think 3 1/2 years is a good number). Do you have some form of alternate energy like a solar generator? Do you have a ‘country cousin’ who will let you come to their place if things become untenable in the major cities? What about alternative communication like Ham or GMRS (please check into getting the appropriate licenses during non-emergency times). If you do not have your spiritual house in order-knowing Jesus Christ as your Lord and Savior is the best deal in all of eternity. If you do not know Him-read the Gospel of John and see if He is who He said He was and if so, ask Him to be your Lord and Savior and abide in His Word now while you still have the opportunity to do so.

Financially (again-this is not personal financial advice), one may seriously consider the role that physical (not paper) precious metals play in one’s portfolio. Remember the quote from DeGualle: “No currency can compare, either by a direct or an indirect relationship, real or imagined, with gold”. Trump would do well to revisit DeGualle’s rationale. Gold and silver have been money for 5,000 years or so. The BRICS nations know this. Do you?

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Stan Szymanski (or Encouraging Angels) is not a medical doctor. This is not medical advice. In all matters pertaining to the health and care of a human being consult a medical doctor. This is not legal, financial or personal advice. Consult appropriate professionals in those fields for that type of advice. For informational purposes only.