It might be that we are now in the worst economic situation since the 1930s or even since the Tulip mania in 1630s. What has surprised me, is that the cryptocurrencies have not been the safe haven many thought, but rather the opposite. Some say it is the preface to a bull run, but I am not so sure. One thing is sure, we have a very interesting time ahead of us.
In any case, I think that we will have to reconsider many things in the near future as a consequence of the Corona-effect. I will look at some of the ones I see here:
Crypto vs. the General Market
The cryptocurrencies (CC) are, although we may have thought so, not independent on the traditional markets. Of course, the cryptocurrencies don't have the same kind of backing yet, since we have to "sell" them to fiat currencies in order to use them (at least most of the time). It might be that the CC market will become more stable, once it can be used for "regular shopping" of more stable assets, such as land, houses, and non-volatile products.
The question is whether we want the CC to be a stable, trusty and safe investment, or whether we want to make quick, big money on our gambled money? In the first case, I think the critical mass needs to be larger so that the CC becomes an alternative to other investments that are less stable. If we go for the second version, I think we will have to live with the insecurity that has shown its full power in the last weeks. But I think that is a choice we will have to do. Maybe we even have to divide the market in "the safe market place" and "the golddigger market", so that you can choose which one to use.
US$ as a Comparative?
As long as the CC are connected to the US$ there will be a dependency on the fiat currencies in general. So, what is the way out. Well, maybe we need to find some other comparison that is more related to people and less dependent on the market. I somehow liked the general idea of the "BigMac" index, where a MacDonalds BigMac was seen as a comparison for food prices in different countries. Of course we would have to use some other comparison, maybe like the price of Tulip Bulbs??? Oh, wait, that has been tried before, hasn't it?
I have to admit that I don't really know of any good comparison product, apart from gold, but that is something we cannot uphold any longer anyway. So, if anyone has a suggestion for a good product with this property, I am all ears.
What is VALUE?
One problem with both fiat money and CC is that they don't have any value in themselves, but are essentially large heaps of IOU:s. This might not be so evident to start with, but if we tae a look at the US National Dept Clock, it becomes very clear that there is something that is not right.
And this is not because it is the US, since we can see exactly the same thing for most other countries here:
https://www.usdebtclock.org/world-debt-clock.html
The crucial issue here is the definition of "VALUE". What is something really worth? In one sense, the value is what we want to and can pay for something. And, here is the problem, ordinary people cannot do what countries can do, namely print more money. But countries can, although in most cases they shouldn't really.
And this is also one problem with the CC money, to decide what the real value is. And who is going to decide this?
Questions without answers...
I wish I had answers readily available to thes issues, but I don't. Furthermore, I think that there are many more issues like the ones I have posted here that we should start figuring out the answers to. Until we have done so, I would say that the idea of "safe values" may be just as Utopic as, well, why not Utopia itself...
Poooff, and there went all the money invested...
This post will be crossposted at Uptrennd and the MoominDad Blog!
