| Bitcoin and fiat currencies (such as the dollar and the euro) are very different types of assets. Traditional currencies are backed by a government in which people trust–they are legal tender. Therefore, it is a legal obligation to accept them as a means of payment–which is not the case for any private crypto-currency. The main difference is that bitcoins are “private money” introduced by the private sector. Therefore, the supply, governance and control of the two assets are different. On the other hand, Gold has been an asset that holds value over long periods and is used to hedge against market downturns. |
The Coming Monetary Reset and Trump's Impact on Gold and the Dollar
At $1.1 trillion, annualized interest on the US federal debt
is now the second-largest budget item
—and is on track to become the largest.
by Doug Casey**
Starting in the 1960s, a growing number of people noticed the size of the debt and annual deficits. Even back then—when numbers were trivial compared to current levels—it was said this can only end up one of two ways: Either runaway inflation, where the dollar loses all value, or catastrophic deflation caused by massive defaults in debt.
It occurred to me, in the 1980s, that it could wind up with both happening, either in sequence or simultaneously in different sectors of the economy. While you couldn't rule out a soft landing, the most likely eventual result would be financial and economic chaos.
Massive money printing and debt accumulation have gone on for something like 80 years, and the system has held together. Why should it end now? Maybe they can wring one more cycle out of the corrupt Keynesian system. That said, I think we have finally reached the actual crisis point. Although 
this certainly isn't the first time the inevitable seemed imminent…
What's genuinely different this time is Trump. For whatever reasons—yes, I know what the party line is—he and Elon are radically reforming the government and may yet change the downward trajectory of America. At least they're throwing sand on the slippery slope.
I thoroughly approve of his massive firings of employees, disbanding agencies, and cutting the budget by hundreds of billions. The risk is that he might bring on a deflationary collapse. Many of the government grifters and their pals, who are getting rich through the likes of USAID, will have to radically reduce their spending. Many could wind up in bankruptcy, defaulting on their mortgages and other debt. That's how a deflationary credit collapse could start.
Trump's very familiar with bankruptcy proceedings. Having bankrupted numerous entities, he sees the dangers of bankruptcy. Will that scare him away from making more radical moves? I don't think so. He sees a chance to both carve his name in stone and save what's left of America. Plus, he sees what he's doing as a path to personally bankrupt some of his enemies and hurt all of them. He has plenty of reason to be righteously vindictive.
He's going for a full reset of the system. It's risky because he has no philosophical core, just gut feelings. And no grasp of economics, just business experience (which is different). But something had to be done to keep the US from turning into a socialist cesspool like all the countries in Europe.
Along with massive deregulation, I expect he'll do something with the monetary system. 
The cuts that DOGE is making are spectacular and wonderful. If they can eliminate the deficit, then the government won't have to print money. But not printing increasing amounts of dollars could easily set off a credit collapse, the deflation alternative.
On the other hand, Trump seems to have lots of spending schemes up his sleeve, which will need massive amounts of money. Like taking over Gaza, buying Greenland, and buying back the Panama Canal, among others. We're talking many hundreds of billions. The unwinding of old distortions, only to replace them with new distortions and different government interventions.
The biggest reset in history occurred in 1933 when Roosevelt confiscated gold from US citizens at $20.50 per ounce before revaluing it to $35. That was a massive criminal theft, and it was done by executive order, not even an act of Congress.
The next reset was in 1964, when Johnson took all the silver out of US dimes, quarters, and half dollars, and fraudulently replacing it with pot metal that looked like silver to the casual observer.
The next big reset was in 1971 when Nixon ceased redeeming gold to foreign governments, much as Roosevelt had denied redeemability to American citizens.
Smaller monetary frauds were committed over the years, such as in 1982, when copper was taken out of the penny. It was replaced with zinc with a copper coating to make it look the same. But even using zinc, which trades for about $1.50 a pound, it costs about 3.7 cents to mint a penny.
Copper trades for about $4.50, which means old copper pennies are now worth about 10 cents in metal. Since it costs about 13 cents to mint a nickel, we can expect that they'll soon be made of steel, like the Canadian nickel, or eliminated, as pennies soon will be.
The most recent monetary upset was the creation of Bitcoin, which was created as an alternative to the dollar. It's a step towards obviating the role of government in the money business. I believe it will succeed.
I'd say the acceptance of Bitcoin belongs on a scale with these other events. Why? Because Bitcoin has caused the dollar to be recognized as a fiat currency in the popular jargon. Before Bitcoin, the word "fiat" was viewed as pedantic. Something only gold bugs cared about. Now, most everybody sees the dollar as just paper, a fiat currency.
The big monetary question is, when the system resets, what will gold have to do with it?
My guess is that gold is going to play a major role in the reset.
** Doug Casey is a best-selling author, world-renowned speculator, and libertarian philosopher who advocates free trade. He is a provider of subscription financial analysis about markets through his "International Man" blog.