This is an opinion editorial by Mickey Koss, a West Point graduate with a degree in economics. He spent four years in the infantry before transitioning to the Finance Corps.
“First they ignore you, then they laugh at you, then they fight you, then you win”
At the time of writing, the US Senate had just introduced the Digital Assets Anti-Money Laundering Act of 2022. The bill contains many threatening aspects, such as KYC laws for self-custody wallets and requirements money transmitter license.
This bill also comes hand in hand with the recent proposal of the European Central Bank (ECB) revelation that Bitcoin is on an “artificially induced last gasp before the road to irrelevance.” About a week later, a bank official announced that he was considering a Bitcoin and cryptocurrency ban in order to mitigate environmental damage.
But as the energy crisis deepens in Europedon’t you think the European regulators have bigger fish to fry, like The growing use of coal power in Germany? Or maybe politicians and officials are beginning to understand Bitcoin and how it tips the balance of power? On second thought, maybe not.
The following is a Level39 thread showing testimony from the recent Senate Banking Committee hearing.
I think this is just the beginning of the “then they fight you” stage and it will only get worse in 2023. Stay on your toes this year. While a ban and much of the regulation would be comically impossible to enforce, it would serve as a significant obstacle to widespread adoption. I would keep an eye (and probably Bitcoin Twitter) for situations that could be influenced by a sea of calls to their elected government representatives, just as happened with the infrastructure bill in 2021.
The Debt Spiral… Spirals
Fortunately, I think more and more people will start to wake up from the Matrix and realize just how bad the situation really is. The fact is, it’s getting pretty hard to hide at this point.
The graphic above is essentially my new favorite image. When people ask me lately about Bitcoin, all I do is show them this chart and they quickly understand the magnitude of money creation during the COVID-19 era of 2020. What they still don’t fully understand is that it’s going to continue, and probably at increasing rates and intervals.
The federal government of the United States is already projected to run a $1 trillion deficit by 2023 (that’s 12 zeros, folks). Even if the US government shut down the entire military and eliminated the Department of Defense projected budget of $800 billionthe budget would still be projected to be in the red by 2023. The real trick is that the deficit is likely to be much larger, meaning more debt will have to be issued, and that would be in a period of rising interest rates. interest due to the tightening of the Federal Reserve.
He Congressional Budget Office is projecting that negative GDP growth is almost as likely as lower-than-expected positive growth. Combine that with an expected rise in unemployment, and you get yourself a fiscal double whammy. First, unemployment and negative GDP growth mean less tax revenue for the federal government, which means a potentially larger deficit—that is, more debt. Add in the fact that debt is being issued at a significantly higher rate and you have the ingredients for an accelerating debt spiral.
Even if everything goes completely according to plan, a trillion dollar deficit is certainly nothing to celebrate. I think the numbers speak for themselves. The people I work with and am friends with are really starting to notice and care; people who had never been interested in economics before.
And when all the proverbial things kick into gear, you can bet the Federal Reserve will immediately step in with more money printing. Add a trillion dollars or so to the debt in 5% interest? I don’t think it’s going to happen. I bet interest rates won’t be much higher for much longer. Quantitative Easing Three is dead. Long live infinite quantitative easing.
Coincidentally, while writing this article, I received the above article in an email from bitcoin layer. It seems they agree with me. Rate hikes can’t go much higher than they already have. They are basically out of the way.
Bitcoin Rekindles Pioneering Spirit
Once upon a time, in a place called America, people used to take responsibility for their actions and travel in search of adventure and opportunity in the West. The namesake of the Oklahoma Sooners comes from the Oklahoma land rush of 1889where nearly 50,000 Americans lined the edge of the “Unallocated Lands” to compete and claim their shares in the undeveloped wilderness that became Oklahoma.
Like the occupation in the 19th century, Bitcoin is as much a team sport as it is a race. It’s a race in the sense that if you don’t take responsibility for claiming your share of cyberspace before someone else, you may have missed the opportunity of a lifetime. It is a team sport in the sense that the successful adoption of Bitcoin in your life will likely require a degree of help from others.
How many BTC Sessions videos did you watch before setting up your first hardware wallet? How long after that did you send UTXO to your self custody address? How long was it before you knew what a UTXO is?
Bitcoin is the new frontier, the digitization of Unallocated Land in the American Old West. The journey is fraught with danger and pitfalls, but the reward is an opportunity we may never see again in our lifetimes. Everyone gets bitcoins at the price they deserve, yes, but that doesn’t mean you can’t help them speed up the learning process.
Let’s make 2023 the year we exhaust trades; auditing them for paper bitcoins via blunt force trauma. I challenge you to try to embody the pioneering spirit of the occupation to help make it happen; to help your friends and family understand this phenomenon and this opportunity. To help them take self-custody and preserve their wealth in a sovereign way. It helps lead the horse to the water, so to speak. You can’t save everyone, but you can at least try to help them see what’s coming and claim their right to the new Wild West in cyberspace.
This is a guest post by Mickey Koss. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
