2020 Bank Crush Has An Antidote: Gold-Pegged Digital Assets

The scale and severity of the crisis are directly proportional to the monetary loosening preceding it. The only question of that proportionality is if it is linear or exponential. When the delayed zombie defaults start to catch up, the entire equity capital of the Euro-zone banking system will be burned up in a matter of months. The resulting deflationary spiral could turn out to be as severe as the 1929 contraction of the world economy. No sector, country, industry or region will stay above the resulting deluge. The deflationary pressure will force the banks to open the floodgates of money printing in a way never seen before and thus trigger a hyper-inflationary scenario in combination with hundreds of thousands of failing companies. This will create a new kind of animal: The super-stagflation.

For these reasons, the so-called “War on Cash” isn’t just a conspiracy theory. It’s an open agenda. It’s being driven by an alignment of interests among bankers, central bankers, politicians, and Silicon Valley moguls who stand to benefit from an all-digital economy, in order to limit the risk of actually falling into the predicted 2020 economic crisis. A cashless society is the end of a long road to monetary ruin that began many decades ago with the abandonment of sound money backed by gold and silver. With fiat currencies, there is heavy centralization of power with governments, especially when they have unbridled power to print money and to unilaterally decide whether to peg or unpeg any currency to gold. When currencies were pegged to gold, these were problems that could be avoided to a larger extent, since gold has an international value on the marketplace and a limited supply.

Virtual currencies began as an alternative private system of payments independent of the traditional financial system. As would be familiar to many by now, Bitcoin began as the first fully functional mode of peer-to-peer (p2p) payments on the blockchain. More importantly, it presented a decentralized system governed using a consensus algorithm, thus ensuring that all transactions on the blockchain are accurately recorded, and no double-spending can occur. The message on the genesis block of Bitcoin also seems to reference the current fiat system: “03/Jan/2009 Chancellor on brink of second bailout for banks,” pointing to the perils of having a central bank exercising their control of fractional reserves to bail out too-big-to-fail banks. With the advent of Bitcoin, we then had a new p2p transactional system that stores information in a public, decentralized and immutable system. This began as the premise for other virtual currencies to emerge in the space that we see today.

However, the huge speculative bubble in virtual currencies has led to immense volatility. A double-edged sword, volatility creates the potential for huge returns in a short period, while also presenting the possibility of having entire fortunes wiped out at the same time.

Gold-backed tokens can serve as a stablecoin variety. However, given that usual stablecoins represent the equivalent of USD 1 in a digital format that is freely tradeable, gold-backed tokens — in stark contrast — veer away from the conventional stablecoin narrative. While a gold-backed token may act like a stablecoin, as gold markets are stable relative to other asset markets, gold itself can be considered to have appreciation value in its own right as an investment asset, making digital gold an attractive option to hold.