After so much uncertainty on the traditional government currency markets, perhaps it’s time for you to look seriously at alternative currencies.
Post-election drama aside, the non-fake news is about money. The recent highs of Bitcoin and the continued performance of gold point to something that we may soon need to explore: competing currencies. The quiet, free market response to exploding government debt is the historical one: move on to something better. Specifically, abandoning the use of bad money. The ride will be unstable, with lots of ups and downs, but humanity, and America, has been here before.
We are currently indoctrinated to think that the Federal Reserve Note, aka the US dollar, is money. Paper guaranteed by nothing except the promise that the government can print or steal it anytime it needs more. Via monetary inflation, the government is stealing more from you than just taxes. Forget the fake CPI, inflation is real: food (smaller bag, same price!), electricity, name it. Yet an egg is an egg. A one-pound chicken feeds the same number of people. Things are not getting more expensive or more valuable, the Fed’s currency is getting more worthless. With no end in sight.
Enter competing currencies. Using the Internet’s worldwide backbone of instantaneous communication, we can buy things and pay people with grams of gold (Bitcoin too, we’ll get there in a moment). This does not mean we start carrying bags of coins a la Robin Hood, but have curated ownership of real metal stored in vaults all over the world. You pay by digitally liquidating grams or ounces into the local government currency or—even better—transferring ownership directly to someone else.
With multiple currencies to use as payment, we can rediscover the fine art of haggling. Merchants will have to accommodate their prices to the money people wish to use. Will this become confusing? Absolutely at first, but you will have more real choice than you do now. If one kind of money buys more, retains or increases its value, which will you keep? USD, EUR, Gold, Bitcoin?
Yes, Bitcoin is already scary to most people. The adjustment will take a bit more time as the apps to use it improve. As I discussed in my last article, Bitcoin has intrinsic scarcity, and it also has a big head start. Because of this and its unique ability to provide assured private transactions immediately across the planet, it remains a currently viable alternative currency. Will it go up and down, even drastically? Absolutely. Will there be others coming along? No doubt. Right now, the whole world is watching and learning. Remember to hold your hands up to feel the rush.
History teaches that things will change, and the future is amazingly unpredictable. Currency options could grow beyond metals and math. Anything that has real value can be owned in fractions. How about agricultural land parcels or NFL team ownership? These kinds of money could be even less stable, but might perhaps pay dividends.
OK, I’ll get back to Earth. We want our money, at the very least, to not lose value, so let’s focus on the problem at hand.
Many fear buying into an alternate money because we think that its value goes up and down, in comparison to the price of the US dollar. Really, the opposite is true! The volatility we see is the market (us) discovering value, taking chances, and making mistakes. We are trying to pin values against a moving ghost of a target. If the dollar meant something real, the price of gold would not change. Like before the Fed was spawned.
The fact is, an ounce of gold is still an ounce of gold. The dollar (and the euro, etc.) is nothing. The only way to save the dollar is to get rid of the Federal Reserve, void the fraudulent trillions of banker bailout reserves, and fix it to a known value of exchangeable gold. Then actually prove that no one will be cheated, like Nixon did in 1971.
If you want to explore alternate currencies, try this: buy a small amount and spend it immediately, just to get used to it. Try the apps out. Buy a pizza. If you are concerned about large-scale fluctuations, just don’t keep much. Transfer a larger amount and use it on a site like overstock.com (I get no commission from them, darn it). Pay for local and web-based services priced only in gold or Bitcoin. Keep looking for vendors who accept it. Start demanding they do. If you have your own business, try accepting some payments. Of course, only do this in a way that makes you feel comfortable. I’m not offering any specific advice, but this is the process I used.
I just spent time in Europe expanding this idea. Instead of getting ripped off by a currency exchange outfit at the airport, I chose to use gold. Every other day, I sold a few grams of gold for euros and pulled them out of the nearest ATM using a debit card. Did the price of gold change during that time? Probably, but I still saved around 10% in currency exchange fees. I did all this fancy arbitrage with my iPhone. You can do the same thing with Bitcoin.
This may not be really real to some until we are allowed to pay taxes with another currency. There is a petition to start the ball rolling on treating (again) gold and silver on a level playing field with Fed notes. It is certainly the right idea, but the world is not waiting around.
So before your savings are stolen by hyperinflation or an “emergency” bank bail-in, try practicing with money that cannot be stolen or devalued by a government. You may like the exhilarating feeling.
It is time to ride the roller coaster, even if it is the kiddie one.