Crypto Is the Prescription for the Approaching Money Apocalypse
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| By Juan Villaverde |
Remember the stimulus checks? America's one-off policy prescription that became a two-off during the COVID-19 pandemic?
Feels like ages ago, doesn't it?
The problem is, while those checks have come and been spent — or saved, as the millions of Americans put that money straight into their bank accounts — the impact is still being felt.
See, once we got free money like that, we could never go back. That's just how governments work.
If politicians try something in an emergency that seems to work, they'll do it again. And again. And not stop, until something forces them to.
Want proof?
Consider quantitative easing (QE), the one-off policy prescription from the Great Financial Crisis of 2008. Since then, the Federal Reserve has gone back to the QE well so many times that its balance sheet today is four times what it was then.
Moreover, it's not going to stop — no matter how much Fed officials insist otherwise. That's because policymakers say, "To hell with the consequences!" For politicians, anything further away than the next election cycle simply doesn't exist.
Fast forward to today — 12 years and one pandemic later. Free money is about to start flowing to the John and Jane Does of the world.
Consider this: Sanctions against Russia have isolated the world's largest commodity producer from the West. Russia is now demanding payment in rubles for its oil and gas. The West refuses, and oil prices hit $100 a barrel.
On top of that, Ukraine and Russia are collectively the world's largest exporters of wheat and other agricultural commodities. So, a shooting war between them obviously translates into a lot less food for the rest of the world.
Prices are responding accordingly. You see this every day. Indeed, inflation was already approaching 40-year highs before the Ukraine War even broke out.
Now, we've surpassed that shocking threshold.
So, you can readily see why the politicians are starting to panic. The average Joe is substantially poorer today than he was in 2019. That makes him angry.
And angry, hungry voters are a politician's worst nightmare. Something must be done!
So, here we go again. And that brings us back to stimulus checks.
Like QE, the stimulus checks produced the desired outcome: They prevented food riots and kept politicians in office. And that's how reckless money printing morphs into standard operating procedure.
Europe already began subsidizing high energy prices some weeks back. Though not through anything as direct as handing out checks to people … yet. First, they'll try stuff like capping electric bills and rolling back energy taxes.
Eurozone nations have funded similar subsidies in the past by selling bonds to the European Central Bank (ECB). And when they have, the ECB simply borrows however many euros it needs to buy these bonds — which it knows will never be repaid.
This has been going on for over a decade.
It's really not much different in America. A so-called gas stimulus check bill is already making the rounds in the House of Representatives.
Whether it'll pass is unimportant. One way or another, direct government payments to households in Western countries are going to become routine. In time, they'll get larger in size and scope.
Whenever a nation starts giving free money to the masses to placate them, it's only a few short years away from utterly destroying the purchasing power of the currency.
Your dollars will be like an ice sculpture under the summer sun.
Next up: price controls, which will lead to shortages and, potentially, riots. That will lead to bigger and bigger direct stimulus payments. And on it will go ... until the dollars and euros in your pocket aren't worth the paper they're printed on.
As an investor, the only financial defense against this impending calamity is to overweight hard assets in your portfolio.
And in this category, crypto is by far the most undervalued. Recently, crypto has been heavily correlated to risk-on tech stocks. That's because institutional investors still don't understand that crypto isn't a tech asset to be sold when times get tricky — it's a hedge against the traditional financial market.
And once that's understood, the sky's the limit for the crypto market.
We're still in a NEUTRAL market at the moment. So, while short-term capital gains are likely off the table, loading up on quality cryptos you intend to hold long term at a discount is certainly one good strategy.
You can also look for yield opportunities, like the ones Chris Coney has talked about in his Weiss Crypto Sunday Special.
But if you're looking for a little more guidance in how to get in and make the most out of this moment in crypto history, I suggest looking into my Weiss Crypto Investor newsletter. In it, I use a long-term strategy to get you leveraged to the best cryptos and crypto-related stocks using specific "Buy" and "Sell" targets.
And keep an eye on your inbox for even more opportunities coming your way soon.
Best,
Juan
