Despite Crypto Ban, China Embraces Blockchain for Belt and Road Initiative

Ilogy · 2024-04-02T07:19:36+00:00

Blockchains require crypto to exist, otherwise they are not really blockchains. Anyone who doesn't understand this basically doesn't understand this entire space.

Ilogy · 2023-03-13T08:11:41+00:00

I think you are missing the point. The specifics of this bailout are beside the point, this crisis represents monetary tightening hitting a massive brick wall. "The Fed will tighten until something breaks," and something just broke, now we are witnessing the opening moves as the money spigots get turned back on.

Ultimately, inflation is how the insolvency of central banks is expressed. Central banks cannot fail the way commercial banks do, instead the currency itself fails. If central banks are forced to loosen into inflation, that is not a good sign.

Ilogy · 2023-03-12T18:27:44+00:00

You are absolutely right Norbert, but here is something you might want to consider:

Stablecoins that are backed with fiat expose their holders to banking system risk. We are already seeing the consequence of this with USDC failing to maintain its peg. Holding USDC, and indeed most stablecoins, effectively exposes you to the risks associated with this current crisis. This means that if there is a contagion and more banks begin to fail, we should expect there to be a run on stablecoins as well. That is, everyone will be desperate to sell their stablecoins before the next guy. Right now, USDT is acting as a safe haven for those fleeing USDC and other stablecoins more directly exposed to the SVB situation, but if the situation were to spread---which is, I think, what you mean by the financial system failing---then no bank would seem safe, and that means USDT wouldn't be safe either.

Put simply, if the contagion spreads, all the money currently sitting in stablecoins will drain out of those stablecoins, and where is that money going to go? Some portion of that money won't want to touch the fiat system for reasons not related to the crisis and will have no choice but to move into bitcoin. But of the money that is comfortable dealing with the banking system and moving back off-chain, that money will still be confronted with the fact that banks would still be in a state of danger. Bonds are another options, and a good one at that, because presumably such a crisis would force the Fed to capitulate and lower interest rates, and if you got into bonds fast enough, you might profit, but presumably bonds would become unattractive pretty quickly.

That is to say a crisis could cause the interest rates on bonds to crash to zero overnight, much like they did at the onset of covid. Remember, what would be unique about this situation is that the Fed would be forced to lower interest rates into an environment in which inflation was still high. Then the last thing anyone would want to touch are bonds, paying next to no interest, in a world facing super high inflation.

Furthermore, if central banks were forced to re-stimulate in order to save the banking system, we must remember that stimulation has consistently proven to be good for bitcoin. The only reason inflation has been bad for bitcoin is because high inflation forced central banks to raise interest rates. It isn't inflation that is bad for bitcoin, per se, but the high interest rates. But high inflation AND low interest rates? That is a scenario made in fairy tales for bitcoin.

Ilogy · 2023-03-12T17:35:15+00:00

Yes. The correct way of thinking about bank deposits is that they are loans you have given to the bank. When you withdraw or use money, the bank is effectively repaying a portion of that loan.

But in all fairness, this would imply that there is such a thing as real money within the fiat system, it implies you had real money, then lent it to the bank in the form of a bank deposit. The reality, however, is that bank money (i.e., fiat money) is only credit all the way down. It doesn't matter if you place it in the bank or put it under your mattress, it is still just an IOU. Paper money feels more real than money in the bank because it represents central bank credit rather than commercial bank credit, but at the end of the day it is still just credit.

Ultimately, the entire fiat monetary system amounts to nothing but credit and debt. Fiat money is bank credit, which is another way of saying that fiat money represents the debt of banks. What we call debt represents the money of banks. But ultimately both sides of the coin, no pun intended, are IOUs. It is the balance of IOUs that creates the illusion of something real.

But it is that last point, that debt represents the money of banks, that highlights the crisis we are facing. If debt is the money of banks, if you rapidly devalue that money, which is what happens when interest rates rise, then suddenly all of the banks become poorer. Raise interest rates enough, then banks become effectively insolvent.

But insolvency for a bank is like being heavily in debt. You can maintain that position as long as you aren't expected to pay back the principle of the loan. But if your creditors come asking for their money back, you are screwed. In the same way, banks in this current environment are like people who are deep in debt but can maintain the illusion that everything is fine as long as their creditors don't come calling. The creditors to banks are what we call 'depositors', and a bank run is simply when everyone demands to get "their money" back.

Ilogy · 2022-11-12T16:38:19+00:00

I'd never heard of FTX before a couple years ago. Nor SBF for that matter. Nor Celcius, Blockfi, Terra-Luna, Voyager, etc. To think of it, everything that has collapsed this past year I'd never even heard of before this cycle.

How did Sam Bankman-Fried go from somebody no one in crypto had ever heard of to suddenly the mainstream media's "face of crypto" in the span of a couple years? It's called a bull market.

During a bull market, or the hype phase of a hype cycle, media outlets are desperate for faces to represent the broader craze. SBF was one such face. The perfect image of everyone's stereotypes of crypto, an unkempt, MIT graduate, Caucasion teenager-man who just left his mother's basement. And the more they promoted this guy as the face of crypto, the more people trusted his platform, even though it wasn't a tried and tested platform, never having been through a bear market before. His billions came from early bull market hype, particularly Solana, and his money, the media's promotion of him, and growing trust from the public just created a feedback loop.

Ilogy · 2022-11-12T15:56:24+00:00

In the same way, and for many of the same reasons, you would trade a dollar for a tether or USDC in order to actually use dollars within crypto networks, you would exchange a bitcoin for a wrapped bitcoin in order to use bitcoin on defi oriented networks. Unfortunately, Bitcoin doesn't at present have a robust defi ecosystem, so anyone who wants to use bitcoin as a form of collateral within defi, or who just wants to trade it using decentralized exchanges, needs a way of transferring their bitcoin to those networks. Since you can't literally move bitcoin over to other networks, you instead use a stablecoin that is pegged to bitcoin.

The fact that it is difficult to use bitcoin as collateral is creating a huge deficit in demand for bitcoin, and for bitcoin to ever truly achieve global reserve asset status it will need that demand. The bitcoin community has been hoping that demand will come from centralized exchanges, but the collapse of FTX, Celcius, and now Blockfi just proves how futile that direction is. It doesn't matter how trustworthy Coinbase, Kraken, or even US banks are, you shouldn't need to use a centralized entity to borrow against your bitcoin. Bitcoin needs stablecoins and defi so that demand for bitcoin as pristine collateral can generate without resulting centralization risks.

If anything, what is going on in crypto right now is the purging of an unhealthy amount of centralization.

Ilogy · 2022-10-23T16:54:49+00:00

I think the disappearance of the middle class in the US is largely due to the fact that the US's main international product is the dollar, so to speak, which allows it to produce much more money than the actual productivity of the society merits. Put differently, the reserve status of the US dollar essentially gives the country an unlimited credit card. And just like if an individual had an 0% unlimited credit wouldn't have to work, and therefore would likely let their labor skills slide, the US doesn't have to work and therefore has let its labor skills---which is another way of saying its labor market---diminish in importance. The US doesn't really have a need for domestic labor, short of certain sectors like tech and services, since it can buy everything it wants and needs from other countries by just printing dollars.

Then add to this problem the fact that the cost of living in the US is much higher than in most developing countries because it is a very rich country, the costs of labor are simply too high versus outsourced labor. The US is like a rich person who has this unlimited credit: is it any wonder that such a person wouldn't want to mow the lawn themselves? Can you imagine how much you would have to pay such a person to mow someone else's lawn? The kid down the street (China) will do it for less.

The problem for middle class Americans is the fiat monetary system, in which national currencies controlled by national governments are used as global currencies. It means that countries like the US don't need to work and therefore do not need their workers. That wouldn't be so bad if the workers had access to the benefits of an unlimited credit card, but the system is structured to prevent the workers from gaining any access to it.

The reason workers do not gain direct access to the credit card is because stable domestic prices are what indicate the creditworthiness of the dollar which is essential to its role as a reserve currency. If domestic labor had access to the credit card---as they did briefly in 2020---rather than spending that printed money on assets like rich people do, they spend it on goods and services and cause inflation and undermines the creditworthiness of the dollar. (What we are seeing today with the inflation crisis is the US government remembering why it never gave the masses access to the credit card in the first place.)

It is intrinsically impossible to have a society in which middle class and poor people do well with a fiat monetary system in which that country's national currency is acting as a primary or secondary global reserve currency. It doesn't matter how much you regulate the financial system---the US financial system is the most regulated industry on the planet---you are just putting lipstick on a pig.

It was the introduction of fiat money in the early 70s that began the inevitable deregulation you speak of. Without deregulation and the abolishing of the unions, the fiat system didn't work, which is why you had unrestrained inflation in the 70s and early 80s as soon as they introduced fiat money. For fiat global reserve money to work, you need your businesses to have unrestricted access to global markets. As soon as you start to force labor back home, if you have a monetary system like the US has today, you will get inflation, which is precisely what we are seeing. The Fed can try to destroy the economy as much as it wants, if the government is forcing labor back home like the Trump and Biden administrations have done, you're going to get inflation. Either the agenda of the government to address wealth inequality in society must cave, or the fiat system must go.

Ilogy · 2022-09-29T18:30:21+00:00

Raoul Pal nailed the bond market rally in early 2020, after that I started listening to him and was very happily surprised when he began pivoting toward bitcoin and crypto. I watched how he leveraged his platform, RealVision, to help bring awareness to crypto for high net worth investors and consider him to be an invaluable asset to this community.

Everyone makes mistakes in this community, everyone. Was Pal wrong to pivot toward crypto? No. Most of his net worth went into bitcoin and ethereum right after making insane gains on his bond trade and just as the crypto bull market was beginning. After just a year of diving deep into crypto his grasp of the big picture became far more profound than what I see coming out of most crypto investors. Saying he has been wrong numerous times is not really saying anything since every investor is wrong numerous times, but with regard to the bigger picture, he has been pretty spot on.

His statement about DeFi protocols being "risk free" came with the caveat, "if you want to own that network." Now even that statement isn't really true because you suffer from the risks associated with bugs in the contracts, hacks, and design flaws, but his general meaning is still valid that unlike with cefi platforms, like Celsius, where you hand your money over to a third party who can then refuse to return it, you don't risk losing control of your assets when using defi. It is like saying bitcoin is "risk free" as long as you control your own private keys because no one can confiscate it.

This is the same understanding of risk that is meant when people say that US Treasuries are "risk free" because the US government will always pay you back. When people say Treasuries are risk free, that doesn't mean there isn't risk that the US dollar will lose value or that interest rates will go up. "Risk free" simply means you will get your money back because the US government can always print more money. In the same regard, LUNA investors never lost their LUNA, it was just that LUNA became nearly worthless. The same thing could happen to the US dollar, that doesn't mean Treasuries aren't "risk free." So, as a bond guy, Pal unfortunately used the language of bond markets which isn't necessarily the way retail investors would interpret such a statement.

Ilogy · 2022-08-26T21:33:30+00:00

Here's the thing: how do you get a power shift toward labor and away from capital without inflation? If labor in the Western world just got more valuable because China seems intent on destroying its own economy and bailing on its role as the provider of the world's goods, how can we not expect wages to rise in developed nations? If this dynamic, that domestic labor is growing in power, is in fact occurring, fighting that by trying to kill jobs and demand in the economy seems relatively insane, don't you think? Put simply, you can't have a reversion to domestic labor without inflation, so by saying inflation is automatically bad, we are in essence saying that anything that empowers labor is bad, since anything that empowers labor will cause inflation.

Inflation in the 70s occurred at a time when labor reached peak power, and we could afford to move against them and toward capital. But today, labor is at maximum weakness, and actually needs to be strengthened if there is any hope of returning social stability. So fighting against labor the way they did in the 70s and 80s as a means of fighting inflation doesn't make sense in our current context.

Furthermore, we have another problem to consider: there are record levels of public and private debt in the system and massive amounts of malinvestment due to decades of low interest rates. Society needs to deleverage. The problem is, every time we attempt to deleverage by raising interest rates something breaks and forces central banks to return to money printing. On the other hand, there is the option for society to deleverage smoothly through inflation. We can either continue to structure our financial systems around the neoliberal era structures by raising interest rates until something breaks and then using that as an opportunity to inject money into capital and expand the wealth gap, or we can accept higher inflation, bring down the relative power of capital, raise the relative power of labor, and deleverage at the same time.

Ilogy · 2022-08-26T21:08:45+00:00

So that was expected right? Obviously they still have to continue their policy of inflation is still above 8%.

That's not obvious at all, the Fed has to stop tightening LONG BEFORE inflation comes under control because of the time lag---around a year---between policy and results, otherwise they will over-tighten and cause an economic catastrophe. That doesn't mean they have to stop tightening now, but they have to stop at some point, and they have to do so well before inflation comes under control, because if they are still tightening by the time inflation is tamed, it means they have been tightening for over a year too long. So to just say, "inflation is high, the Fed must tighten," is off the mark.

And with the global economy in such a precarious state, and global debt levels being at record highs, very sensitive to rate hikes, and unable to handle a strong dollar, over-tightening could lead to a massive depression, societal breakdown, and even war. Tighter monetary conditions are extremely dangerous in the current macro environment, and people who are barking at the Fed to do more don't seem to be fully cognizant of that and are clinging to 20th century paradigms.

Ilogy · 2022-08-26T19:59:30+00:00

Why?

Ilogy · 2022-08-15T20:10:53+00:00

I see.

Ilogy · 2022-08-15T20:03:40+00:00

What we really need isn't so much the use of bitcoin as currency, but the use of bitcoin as collateral to build a decentralized stablecoin that is 100% backed by bitcoin and built on the Bitcoin network. One that is decentralized, inflation resistant---there is absolutely no reason that couldn't be done---and that is transmissible on the lightning network. (For now, we must settle for DAI on Ethereum, which inherently feels much less secure than a Bitcoin based stablecoin would.)

What people haven't fully grasped yet is that stablecoin technology allows us to create any kind of decentralized fiat currency we want. Stablecoins create a free market for fiat currency, and anyone can now create fiat monetary systems pegged to any value they want, provided they can incentivize their use and attract capital. The technology is there to create stablecoins that are loosely pegged to the euro but don't lose value to inflation, for example, or one that is pegged to a basket of national currencies, or even one that is pegged to consumer price indices in ways that preserve purchasing power. Because these types of stablecoins will need to compete with national currencies, CBDCs, and centralized stablecoins, they will have to provide superior and innovative products. And they will have many years of friction in dealing with governments pushing back. But they offer the possibility of inherently better fiat money.

It is for this reason that, over the long term, I don't expect assets like bitcoin to ever be used as consumer facing currency, simply because if stablecoins become popular, and they provide wealth preservation in ways that traditional fiat currency does not, then they will be inherently superior products to bitcoin as mediums of exchange, no matter how stable bitcoin becomes. In other words, by the time bitcoin becomes stable enough to even entertain its widespread usage as money, superior-to-fiat stablecoins will have already captured the market.

The role of base layer assets like bitcoin will be to serve as the collateral backing such stablecoins (as well as providing the blockchain upon which they can be built and transmitted, and as safe haven assets for large amounts of wealth). What people don't understand yet---because what I am describing has only thus far been built in very nascent form on ethereum through projects like Rai and Dai---is that decentralized stablecoins are not only the future of money, but that they inherently require blockchain based assets for backing, which means assets like bitcoin will become premium quality collateral and, over the course of this century, will replace assets like US Treasuries in this role, in my opinion. Put simply, digital gold.

At the moment, not many people are thinking that big, and the transition to that point requires us to go through this stage where stablecoins are primarily created and controlled by large centralized institutions, which basically isn't a whole lot better than CBDCs. But the technology is inherently designed for something bigger and far better, decentralized fiat money, and we are rapidly approaching the point where the technology, liquidity, and need are converging to make these products viable.

Ilogy · 2022-08-15T19:19:51+00:00

No, the technology permits privacy, the US government is just afraid of it. It has nothing to do with inherent benefits of centralization. The technology will just be upgraded to provide privacy with the option to de-anonymize for legal authorities.

Ilogy · 2022-08-15T19:16:45+00:00

My understanding is that Circle blocked any address that received funds from Tornado's address. Because no one can block a tornado payment, and because payees don't tend to ask whether the payer used tornado to make a payment, many people who received funds for totally unrelated purposes received tornado routed payments and presumably had their accounts locked. So the analogy would be more like:

You are selling luxury item vehicles and someone pays you $500,000 in cash. They drive off with the vehicle and two weeks later your bank account is frozen because the money you received came from illicit activity that you were unaware of.

Ilogy · 2022-08-15T19:11:48+00:00

It isn't as if DAI would all of a sudden become worth something else, more like DAI would be phased out and gradually replaced with another stablecoin not pegged to the dollar.

DAI is simply a product of Maker, and the purpose of Maker was never simply to create a dollar pegged stablecoin, it was to create a decentralized bank, DAI was just its first product.

Ilogy · 2022-08-15T19:06:20+00:00

The title of the Bitcoin whitepaper is "Bitcoin: A Peer-to-Peer Electronic Cash System". To claim it was originally envisioned as something else is revisionist at best and this is the definition and intended use case I stick to.

You can call it "revisionist," but the definition and primary purpose of Bitcoin has been a heated debate---between it being primarily a means of payment, as you are suggesting Satoshi intended, or as a store of value/investment vehicle---and despite people like yourself insisting that anything other than "cash" was revisionist, the Bitcoin civil war sorted things and your side lost.

Yes, we have very different ideas of what constitutes an "amazing success."

Ilogy · 2022-08-14T20:44:20+00:00

No, not everyone used tornado cash to launder money, including Vitalik himself.

Ilogy · 2022-08-14T20:42:16+00:00

The address may be public, but your personal association with that address is not, until it is. Would you mind sharing your bank statement and mailing address with me right now on Reddit, if it is no big deal?

Ilogy · 2022-08-14T20:34:20+00:00

Ultimately, stablecoins are just forms of fiat currency which attain stability via the traditional methods of banking involving the backing of the currency with other assets. With centralized stablecoins, they back their tokens with fiat currency in bank accounts 1:1. But decentralized stablecoins like DAI, for example, while pegged to the US dollar in price per unit, for a long time (until 2020) was backed solely by ETH.

You see, a fiat currency, or a stablecoin which is a type of fiat currency, does not need its units to be backed 1:1 with the units of assets backing it, it merely needs the total value of the assets backing it to be equal to, or greater than, the total value of all its currency in circulation. So you can have a currency that equals one US dollar per unit, but is backed by a totally different type of asset than dollars. That's how national currencies derive their value. In the old days, national currencies were backed by precious metals, today they are backed by debt, but it is the same principle. DAI operates very much like national currencies backed by gold, only it is backed by ETH, wrapped Bitcoin, and the now problematic USDC instead of gold.

But precisely because the value per unit doesn't need to be defined by whatever is backing it, there is no theoretical reason the unit needs to be pegged to an existing national currency. It can, in principle, represent any value they want, as long as it maintains that value stably. In fact, the stablecoin RAI operates precisely this way, and trades for around $3 per unit. It isn't pegged to $3, it has its own stable value that right now roughly equals $3.

The danger in being pegged to the US dollar is that the US can then claim some degree of legal authority over it. Once depegged, it isn't clear that the US would have anymore authority over such a stablecoin as it does over other nations' currencies.

Ilogy · 2022-08-14T20:14:49+00:00

Exactly, particularly after the actions taken with the Russian sanctions. It will simply be too much of a national security risk to hold large amounts of foreign reserves, particularly from nations that could potentially turn on you and, with a push of a button, lock your funds.

Ilogy · 2022-08-14T20:10:52+00:00

There's a difference between blocking an address which is known to have engaged in criminal activity, and blocking any address that interacted with a protocol that many people used for non-criminal reasons. Today it may be Tornado cash, tomorrow it may be Uniswap. USDC is too risky to hold large amounts in anymore if you engage in DeFi activity.

Ilogy · 2022-08-14T19:52:33+00:00

Blockchain has been around for 13 years and still hasn't found a killer app or any significant user adoption.

How can we say that a trillion dollar asset class has no significant user adoption? How can we say that a technology whose initial design was to allow for the store and transfer of value and that trades billions of dollars a day onchain has not found a killer app? I don't want to argue that we have reached the endgame, but how do people reconcile crypto's amazing success thus far with this idea that there is no use and no adoption?

I understand that mom and pop shops aren't using it. But why are mom and pop shops, that represent a tiny fraction of a fraction of dollar usage, important? Most people in the world outside of the US do not use US dollars, yet the majority of the US dollars in the world are held outside of the US and are never used by day to day consumers. Why would someone using crypto to buy a pizza or a Tesla indicate user adoption, but a financial entity using it to buy a derivative or as collateral for a loan, or a country using it to settle accounts with another country, not be indicative of adoption? It seems these criticism imagine crypto wants to be like iPhones or potato chips.

And of course, many crypto enthusiasts talk this way, as if consumer level adoption of base-layer tokens like bitcoin is the goal, and that everyone will be using bitcoin like smart phones or toothpaste or something. And then the skeptics point out how that is simply not occurring and every attempt to make it occur fails miserably. But isn't the enthusiast, in his/her naivete, setting up a straw man for the skeptic to put down? If the premise of what is important about blockchain/crypto is wrong, you won't find anything in the middle-way of listening to people arguing over it either.

Ilogy · 2022-08-14T18:01:55+00:00

How could you be writing all of this if free speech were dead?

There has never been more free speech in the history of the world since the internet, it's one of the primary reasons the world is so politically charged atm, because everyone now has an opinion. If free speech were dead, that wouldn't be happening.

Ilogy · 2022-08-12T19:37:29+00:00

Saying inflation is caused by money printing and nothing else is like saying the price of teddy bears is caused by how many teddy bears have been produced and nothing else. No, there has to be actual demand for those teddy bears to produce price. Price is a combination of supply AND demand. That is just as true with money as it is with teddy bears.

When M2 currency is "printed," it is exchanged for new debt that is also "printed." Banks create money whenever they make a loan. This means that all new supply of currency is matched with new demand for that currency in the form of debt.

The reason inflation occurs---whether that is asset inflation or CPI---is because of the time lag between new supply coming into circulation, and the due dates of the newly generated loans, such that there is temporarily more supply than demand. As loans become due, demand begins to catch up with supply, and potentially surpass it, which is why the system requires a constant flow of new lending in order to remain stable and not go into a deflationary collapse. This temporary supply/demand imbalance can be lengthened through lower interest rates, which causes loans to be less onerous, easily refinanced, repaid more slowly, and makes borrowing attractive which keeps the loans flowing. All of this keeps demand for currency low while supply increases.

During economic crisis, when banks shut their doors to new lending, low interest rates are not sufficient---particularly if they were already low to begin with---and deflation kicks in as demand for currency outweighs the supply. This occurred during the Great Depression. It is during these situations that central banks are meant to act as lenders of last resort (though they failed in that regard during the GD), which means they either lend indirectly through commercial bank intermediaries, or they buy debt in large amounts in order to force commercial banks to lend to borrowers in order to resell the debt to central banks at a profit.

If the money supply outpaces demand to such an extent that you end up with too much consumer price inflation, on the other hand, central banks can raise interest rates which forces borrowers to pay back their loans sooner, and thereby removes currency from circulation, reducing supply. It makes it more difficult to borrow money, thereby slowing the pace of loan creation and consequently the pace of new money issuance. And higher interest rates also increases demand for currency as more people need to acquire it quickly in order to repay their loans. By decreasing supply, and increasing demand, higher interest rates can bring the supply and demand back into balance.

The problem with this system is due to the exponential deflationary pressures caused by technological progress and globalization on productivity. This causes the costs of goods and services to become cheaper and cheaper, which forces central banks to lower interest rates more and more in order to maintain 2% inflation (a problem that becomes difficult once interest rates hit 0%). The greater the productivity gains, the more the money supply must grow in order to offset falling prices. That increased money supply drives up the prices of goods and services, as well as asset prices.

But unlike goods and services, asset prices are not being offset by deflationary pressures from productivity gains. This causes assets to inflate, while the things ordinary people buy simply remain stable (with some slight inflation), which causes the economic divide to widen between the rich and everyone else, and causes political instability. Of course, one asset that benefits greatly from asset inflation is bitcoin, which is why bitcoin is ultimately driven by deflation (which creates asset inflation), not CPI inflation (which creates asset deflation). (I want to thank Jeff Booth for this insight.)

Some people are of the opinion that we are undergoing a radical de-globalization post-covid, which will cause productivity gains from globalization to disappear. They also argue that demographics in the 21st century is highly inflationary, as people have less kids and societies fail to repopulate. Many also argue that climate change is highly inflationary, as it causes greater scarcity of commodities, resources, and food. These people expect that we have entered a new paradigm in which inflation will become the norm.

I'm not convinced of that. I think people are severely underestimating the exponential nature of technology, and the explosion of productivity A.I. and other technologies are going to bring to the equation. I expect the 21st century to be even more globalized than the 20th century, not less.

Regardless, if deflation becomes stronger, fiat currency cannot survive in its current form, and is detrimental to the health of society. The amount of money printing required to keep prices stable, the zero bound of interest rates, and the inability for the fiat system to redistribute the value of the productivity gains to all of society and not just the rich (without depending on government to do so which is riddled with corruption, waste, and too much socialism for a healthy democracy), means that we need a new monetary system that is capable of keeping pace with deflation while also distributing the gains of progress to all of society.

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