The next decade will be very interesting to watch.
We are going to see technological progress like never before. At the same time, the massive debt that is being held around the world, especially by governments, is going to cause major problems.
While many are watching the money printing that is taking place, the real challenge is the debt levels that exist. For a country like the United States, this is less of an issue since it can keep printing the world's reserve currency. That could create a problem except other countries are also expanding their currency.
The situation is really bad for all those entities that do not own a printing press or ones that do not play on the world stage. This includes countries within the EU, developing countries, and states/provinces. These areas are holding trillions of dollars in debt that is going to be very difficult to service in the future.
Governments have two ways of generating money. They can engage in the various forms of taxation (including all their fees) or take on debt. This is the means by which all government entities are funded.
The challenge with raising taxes is that it harms overall productivity. Under these scenarios, the highest incomes earners end up leaving. They are the most mobile so they take the wealth elsewhere. Rush Limbaugh waged this battle with New York a number of years ago. Ultimately, he took his $33 million annual salary, moved his show to Florida, and saved himself the New York State income tax.
It is a situation that gets even worse in a digital age. In an era where entire companies can be run on servers, the idea of being in a particular geographic location becomes less important. Companies can set up their businesses anywhere in the world, likely opting for the ones with the lowest tax implications.
When the tax base erodes, this leaves only debt. Here we see the challenge of who is going to buy it. The next decade is going to be marked by a loss in confidence in government. We are already seeing some of the early signs. This means that investors are not likely to blindly keep buying the government debt that is issued. Thus, the entities will have to offer higher rates to get investors to take it on, making it more expensive to operate.
Ultimately, this feeds into greater inequality since it pushes more people into equities. A lack of confidence in government means that bonds take a hit. The flow of capital is easy to follow in this situation. When it moves out of one, the other benefits.
Until now.
We are seeing a third alternative emerging that, with growth, could be viable. In terms of the ability to close the wealth gap, cryptocurrency fills this need. By operating outside the system, it created a distribution mechanism that allows those who were on the outside of the present system to partake. Anyone can get involved in cryptocurrency and start to accumulate tokens. At present, there are many ways to do this, something that only will keep growing.
As we saw back in March, when the crapola hits the proverbial fan, people flee for safety. Capital flows into what investors feel confident in. This is really going to take on new meaning when some major countries start defaulting on their debt. When the likes of Germany, Japan, and the UK enter that realm, it is a totally different world.
Bitcoin introduced a revolutionary concept to the masses. For the first time, we had a legitimate currency that had no owner, was controlled by nobody, and operated, for the most part, completely autonomously. In fact, Bitcoin could be considered the first, major DAO. It is a network that is run completely by computers, located all over the world. Each day, the system operates without a hitch regardless of what is taking place.
Over the past decade, other cryptocurrencies followed this same path.
We are going to enter the next decade nearing a point where we see the collapse of government. Here again, cryptocurrency ecosystems stand to benefit. By experimenting with different governance models, we can see alternatives forming as the present system is collapsing upon itself.
The debt levels are unsustainable and central banks are printing money simply to buy some time. To a certain degree, they might be successful on this end. However, the underlying animal, debt, does not just go away. Servicing debt only works for so long if one is accumulating more of it. When things are expanding, it is possible to prop things up. When they turn the other way, watch out.
Bear in mind, this is going to be a drawn out process. There will be a lot of backlash from politicians and bureaucrats who try to defend what is already in place. To a degree, desperation is already setting in. Their goal is always control and, as the coronavirus shows, they are willing to go to any lengths to achieve this. Of course, as the global protests/riots are showing, people can only be bottled up for so long.
We can see how far the entire cryptocurrency industry came in just the past 5 years. The next decade will see a great deal more progress as we see more players entering the market. Networks are developing all over the place, offering people an option.
It is ironic but the Great Reset they are talking about might actually be that digital currency that the general public brushed aside for so many years.
As the old debt-based system starts to default, cryptocurrency is going to be there to step in.
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