The USA - Bitcoin - China war of 2020!

The USA - Bitcoin - China war of 2020!

The world is splitting up in two factions. A USA and Chinese faction. What does it mean for Bitcoin?

The Western alliance. (USA, EU, Great Brittain, Canada, Australia, Japan)

Since 1944, the USA has been the world's empire, backed by a currency, the US dollar, which is itself backed by the US Military and the control of the currency of the global oil trade. This is the reason for the US presence in the Middle East. It is not so much the oil, it is the ability to make the world use the US dollar, by forcing countries to pay for oil in USD!

How did we get there?

In 1944 the US dollar became the global reserve currency, after the allies (Europe, Japan, Canada, and Australia), agreed to the terms of the Bretton Woods Agreement. Within the terms of the agreement, the US dollar supply was limited by a gold exchange standard, making the dollar as good as gold. This guarantee convinced the allies and they agreed. The world needed stability.

Unfortunately, extra US dollar currency was created to fund the empire's war against Vietnam. The creation of that extra currency, which wasn't backed by the gold exchange standard (there wasn't enough gold), meant that the USA broke its promise. After pressure from France, president Nixon left the gold exchange standard limitations and the US dollar became a fiat currency, or a currency only backed by the government's word. Fiat also means that there is no limitation as to how much currency can be created.

In practice this was what happened: all the partners of the agreement wanted US dollars. They would offer a lot of labor in return for US dollars, which were held as a reserve asset. So one side has a printing press, the other side jobs, and labor. This does not mean that the USA didn't have jobs and productivity growth. Of course, they did, but it does look like a good deal!

When Nixon left the gold exchange standard, the trust in the US dollar took a heavy blow and they needed to come up with a plan, and a good one. This gave birth to the 1970ties petrodollar deal. Now things got even better: how?

If you can make the whole world pay for oil in US dollars, the demand for that currency will be huge, since all countries need oil. This, of course, means you have to convince the oil-producing countries to sell their oil for US dollars. Having a military presence in the Middle East can help with that. In fact, without a strong military presence, no country would sell its commodities for the currency of another country.

One of America's most loyal oil-partners is Saudi Arabia. But since the birth of the petrodollar, the USA has taken control of many countries in the area. Sadly this came after often horrible conflicts that led to many casualties.

Iran is the last country that doesn't want to live up to the terms of the petrodollar. In fact, it looks like Iran wants to be part of the Chinese alliance.

The Chinese alliance. (China, Brazil, Russia, India, South Africa, Iran)

After 9-11, the USA was focussed on expanding the petrodollar and wanted to further spread out its use. Trillions of US dollars have been used to finance the wars in the Middle East, and country after country suffered Uncle Sam's reign. The USA succeeded in its plot to overtake the region but it came at a high price.

Whilst the USA was busy the Chinese were so smart to use capitalism at their advantage by luring the western greedy crony corporate CEOs into mainland China by promising them huge profits, access to cheap labor as well as their huge consumer market. The CEOs took the bait and what followed was the biggest wealth transfer we have witnessed in human history: American middle-class wealth was transferred to Chinese middle-class since jobs went from West to East. The first president to openly fight this trend is Donald Trump.

China was able to build its empire on the back of American technology but it didn't stop there. Often blamed for stealing western technology, China unleashed its army of engineers on western tech and made many technological improvements and is now a pioneer in many future technologies. What started as the production of toys and t-shirts has now evolved in 5G, AI, machine learning and lots more.

By hoarding gold and Bitcoin and holding joined military naval exercises in the Gulf of Oman, it looks like China is preparing to create its own monetary system, based on a digital yuan, which has already been announced by China.

Can we stop this?

The answer is simple: NO!

China is now a global leader in technology! Just to make a point: the USA has Silicon Valley, China has the city of Shenzen. 1.4 billion Chinese citizens have been working hard and have accomplished what is nothing less than an economic miracle and they did it in 20 years.

Of course, they demand a bigger global use for their currency and they can not be stopped. Anyone who thinks otherwise hasn't paid attention during history classes or is stupid.

They already have a strong foundation: productivity growth. And they are working hard towards creating an alliance that WILL adopt the Chinese yuan. Part of that alliance are the BRICS countries. These countries have 3x the amount of people than the western alliance.

The fight for the new gold standard is coming!

Have you noticed that saving money in a bank doesn't offer you any interest anymore and that inflation is further eroding your purchasing power? If you live in Europa, you have. If you live in the US, you have. It is clear to most economists that the monetary system and money itself is close to the end of its cycle.

This is by no means abnormal, monetary systems come and go, ask the Brittish. Currencies also come and go or change shape, resulting in wealth transfers. Before this is over, many people will lose their wealth due to hyperinflation. This happens when central banks become so desperate that they offer the people helicopter money. Why not, modern economic theory says we can!

All around the world, central banks are printing extra money, for bailouts or other reasons, but the result is the same: inflation is the destruction of middle-class wealth by governments. The banking world is now so scared that they won't allow any recessions anymore. A reason can be found in the inability of central banks to offer some relief for when a recession happens. They can not cut rates. If they do, they need to go negative, which will be disastrous. We would have massive bank runs. One of the reasons they want to go cashless. Bitcoin (BTC) was no accident. Neither was Ripple (XRP).

In 2008 we got an appetizer for what is, unfortunately, and I wish I wasn't right, coming towards us. The unraveling of our current monetary system, a system that was controlled by the West and gave the West relative peace and prosperity. That's why China is entering the Middle East, they are not our friends but our enemy. They are laying the foundation for their system.

Is there a solution?

The answer is simple: NO!

Most countries created too much debt and some are even struggling with paying the outstanding interest! I think that the debt-bubble will eventually implode.

And one day China will announce how much gold they have in reserve and back their new digital yuan. They have to. If they come out with another fiat currency, digital or not, they'll never convince anyone, not in the least their own allies.

How to preserve your wealth? Look for precious metals and Bitcoin.

If you truly understand the machinery behind the stock markets of today, and you understand 'sound money', then it is clear that gold and Bitcoin are the way to go. Central Banks can keep printing money and even throw it out of helicopters (so-called helicopter money), eventually, the bubble implodes and most paper assets or inflatable assets will collapse. This, for example, means your EURO will continue to lose purchasing power and your real estate will correct.

I expect nothing else than a DOW 50000 one day, but those US dollars will be worth a lot less than today. So don't look at the price of stocks, they are now completely artificially propped up by cheap money. In fact, this printing press has now created zombie-companies, companies led by CEOs that would under normal circumstances not even dare to think of doing a start-up. Many of them have failed business models and can't even pay the interest on their outstanding debt. An estimated 15% of S&P companies have this problem.

Some advice:

Even though I am not a financial adviser I suggest you take a look at gold and Bitcoin. Both are assets outside the control and manipulation of governments and might help you to survive the coming collapse.

Or you don't and bet that history won't repeat itself this time.

Bonus article: In this article, ,you can read why the Chinese yuan is one of my top 10 cryptocurrencies for 2020.



Specialized in monetary economics and history, gold standards and cryptocurrencies' potential for a new financial system, I offer a much needed background for investors.


In this blog I will offer insights in the history of central banking, the goldstandard, fiat currencies, blockchain, Bitcoin and lots more, all in an effort to explain these subjects in a for normal people understandable language.

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