This time, it is the first time that a world with Bitcoin has completely experienced a financial crisis.
On Monday, the radio reported that the Federal Reserve, the Bank of England, the Bank of Canada, the Bank of Japan, the European Central Bank, and the Swiss National Bank reached an agreement to increase the US dollar liquidity swap ceilings, and the swap frequency soared from once a week to once a day.
The so-called dollar liquidity swap means that younger brothers use their own currency to exchange fresh dollars from the big brother, the Federal Reserve, to alleviate the country's dollar hunger.
For example, take the Bank of Japan as an example. The Bank of Japan gives a batch of yen to the Federal Reserve, and the Fed records this batch of yen as "assets" on the asset side of its balance sheet, and then can openly on the liability side print a lot of fresh dollars and give them to the Bank of Japan.
Where did the Bank of Japan get the yen for the Fed? It was printed by the Bank of Japan!
Just like the U.S. Treasury Department printing treasury bonds and printing dollars on the Fed’s balance sheet, and the BTFP rescue plan, putting the non-performing assets of U.S. commercial banks on the Fed’s balance sheet and printing U.S. dollars is the same, putting the currencies of vassal countries, put it on the Fed's balance sheet, still print dollars.
When the Fed buys the treasury bonds and prints dollars, they say that the U.S. treasury debt ceiling is limited by Congress, so they won't print too much.
When BTFP plans to let the Federal Reserve act as a receiver to recover bad assets and print dollars, they said that there are cost restrictions and window restrictions, so they will not print too much.
When the Federal Reserve allows the little brother to print its own currency at will as an "asset" in exchange for the Fed printing dollars, they say, ...
These shitty words they say, full of illusions about the printing of the Federal Reserve, are stupid and self-deceiving!
A few years ago, an article on the Liu Jiaolian official account pointed out that, according to the modern MMT theory, on the premise of equating inflation and CPI, printing money will not directly lead to inflation.
Shortages cause inflation, printing money does not. The reason is simple: a person can only eat 9 steamed buns a day, three in the morning, three at the noon, and three in the evening. When there are enough steamed buns, the price of steamed buns has nothing to do with whether you have 1 million or 10 billion in your pocket. If Jack Ma and you go to eat a bowl of ramen for 30 yuan, Jack Ma will not be willing to pay 3 million yuan for this bowl of ramen just because his wealth is 100,000 times that of yours.
The point is to print money to release water (liquidity), and let the flood enter the reservoir. The rich is one of the reservoirs. The rich have amassed a large amount of money, which is equivalent to locking up currency in disguise, and keeping most people in a state of poverty, prices will not soar. China real estate, US stocks, and Bitcoin can all serve as this reservoir.
Reservoirs are absolutely not allowed to appear in the CPI statistics. In this way, the CPI figures are very beautiful. The assets that act as a reservoir have skyrocketed due to flooding, but they have nothing to do with the CPI.
The accounting skills of the Federal Reserve’s balance sheet mentioned in the previous paragraph, together with the statistical skills of the CPI here, can almost solve most economic problems.
The Federal Reserve and the Bureau of Statistics are top magicians.
In the million-dollar bet between Balaji and Medlock (Liu Jiaolian 2023.3.19), please note that Balaji gave his definition of "hyperinflation", not soaring prices, but "hyperbitcoinization".
What is "hyperbitcoinization"?
Daniel Krawisz’s definition of “hyperbitcoinization” in 2014 was shared in the article “Hyperbitcoinization” on January 28, 2023 on Liujiaolian’s public account. Hyperbitcoinization is not hyperinflation (in the CPI sense). Although both are the rapid decline in the relative value of a certain currency, the relative references are different.
Hyperinflation is the rapid devaluation of that currency relative to everyday goods, manifested as a spike in the price of everyday goods.
Hyperbitcoinization, on the other hand, simply means a rapid depreciation of the currency relative to Bitcoin, manifested as a surge in the price of Bitcoin.
Just like the US stocks in the past 70 years, or the China real estate in the past 20 years, the legal currency of the country where they are located has experienced rapid depreciation relative to them, but the CPI price index has maintained a moderate rise in the same period.
As Daniel Krawisz puts it, “hyperbitcoinization is a voluntary transition from inferior money to superior money, and its adoption is a series of individual entrepreneurship.”
This is what Mises called "flight into real goods" (Flucht in die Sachwerte). ("Human Behavior" Chapter 17 Section 8)
Satoshi Nakamoto’s moment of Bitcoin epiphany coincided with the beginning of the 2007-2008 financial crisis.
In 2008, the financial crisis broke out in full swing. Satoshi Nakamoto wrote down the code of Bitcoin and published the white paper.
In 2009, the crisis bottomed out and repaired. Bitcoin goes live.
Bitcoin started at the end of the last financial crisis, that is to say, it has not encountered another financial storm in the past 14 years.
In the first paragraph of the first story of the first chapter of the book "Bitcoin History" written by Liu Jiaolian, it is clearly written:
"On January 3, 2009, Bitcoin was launched on a host in Helsinki, Finland. The history of human civilization has since been divided into two periods: the 'prehistoric age' before Bitcoin appeared, and the period after Bitcoin came to the world 'New Era.'"
According to Liu Jiaolian’s dating method, the 2007-2008 financial crisis can be described as the last financial crisis in the “prehistoric age”.
And in 2023, at this moment, when the sea is calm and the undercurrent is surging, we are experiencing a big storm that may be more violent than the last financial crisis.
This time, the world has a "new variable": Bitcoin.
This time, it is the first financial storm and crisis moment of the "new era".
This time, it is the first time that a world with Bitcoin has completely experienced a financial crisis.
This time, it is an actual test of Satoshi Nakamoto's genesis prophecy.
Crisis the word in Chinese, is both a crisis, and an opportunity; some people's crisis, others' opportunity.
On the day when the overwhelming flood comes, those who stay in place are at risk; those who board Noah's Ark are towards opportunity.
When Noah's Ark sets sail, each of us will witness the spectacular moment of hyper-bitcoinization.
As Balaji said, this is not a bet, but a self-salvation.
Extra: The full book of "History of Bitcoin" has been released on leanpub https://leanpub.com/history-of-bitcoin , and opensea https://opensea.io/assets/ethereum/0x495f947276749ce646f68ac8c248420045cb7b5e/105485037225361479373965289160919783096944397316814880893051094763402285810664
nostr: npub1dlwqsauewd56dekrnuxh8xukvg7pgeelwp39qah8ts5x28tmf7pqp5tcp3 twitter: https://twitter.com/liujiaolian discord: https://discord.gg/9pGpRgUYPp substack: https://blockcoach.substack.com/
(Disclaimer: The content of this article does not constitute any investment advice. Cryptocurrency is a very high-risk product, and there is a risk of going zero at any time. Please participate carefully and be responsible for yourself.)