Bitcoin turns eight years ago today . It was created in wake of the 2008 financial crisis to compete with central bank currency. In the case of the united states its federal reserve notes aka the dollar. In response to the crisis central banks around the world bailed out the system by creating trillion of dollars of fiat (government money) . The trillions of dollars wanted into things like buying bad debts in other words a ” bail out” or stimulus like the stimulus checks or the bush /Obama stimulus packages.
We were told this was for the greater good to save the economy. Well has it? Yes if your holding assets like stocks or real estate. If your working for that fiat . You will have to work money to earn the same amount you did eight years ago. The central bank of the united state was created for the very same reason to prevent when happened in 2008.
In 1913 , the federal reserve was created. As a result of bank panic of 1907. Everyone was put into this false hope of a crash will never happened. This lead to the decade of the roaring 20s. The first world war had just ended . During the decade people began using credit to just buy cars than estate then stocks. They were parting it was 1929.
Then in 1929 the party was over. In October the marker crashed. Before the stock market crash the was a real estate market crash. Doesn’t this remind you of 2008? The crash began what is know as a run on the banks. Meaning the people want to take there money out of the banks. Back then it meant they have gold on demand for depositors. The banking system was shut down and the American people were forced to turn in their gold. Prior 1933 the dollar was gold in paper form.
In 1934 the dollar was then back only by the central bank (the fed). From then on it was federal reserve note. Americans were not allowed to redeem for gold as well as gold ownership was illegal in up until 1971 but foreigners debt holders were allowed to redeem for gold until 1971.
In ’71 there was a run on the central bank (the fed) as other countries wanted there gold and the gold reserves were declining. Then 1971 the gold standard had ended and the dollar became nothing but fiat currency ( government decided its value).
Now back the fed. If the fed was created to prevent financial panics and depressions, why haven’t done what there say they were going to do? What happens during the next recession or major crisis? Will people lose faith in central bank money?
This is occurring as we speak in countries like India , china and Venezuela. The first event like this happened in Cyprus in 2013 . The Cyprus event let to bitcoin reaching its then all time high. Cyprus is just some small island state. Just imagine what will happened to the value of bitcoin if the people of major countries lose faith in their currency?