Thread by @KeithMukai

1/Why #bitcoin matters now.

Trump wants to look good for 2020. No surprise there. Strong economic numbers--especially GDP--are crucial.

So: trade war! Force a huge economy (China) to buy more of our products. Cranks up GDP. Yay us, right?!

Except China's fighting back.

2/China is devaluing their currency. Sounds bad for them, ya? So counter-intuitive.

A weaker Yuan makes it harder for China to import goods (they can't afford to buy other countries' stuff).

But also makes it cheaper for others to buy Chinese goods (our bucks go further).

3/But China is primarily an export economy. So they're happy to juice the trade flow out and disadvantage the flow in.

The $USD is already expensive relative to everyone else's currency. So what can Trump do? He *needs* to increase our exports... but we're expensive to buy from.

4/He needs to devalue our currency, too.

How? By increasing inflation. Inflation is a weakening of the buying power of USD. So just as with China, our goods get a little cheaper for others to buy.

So how can he increase inflation*?

4.b./ *(beyond the inflation he's already caused. Tariffs on China increase the prices WE pay. But the Chinese also face higher prices from the tariffs THEY put on US. So it's a zero-sum offset to trade. The only losers are the consumers and businesses in both countries)

5/By cajoling the Fed to lower interest rates. What's the connection? Low interest rates make it pointless to save money (e.g. savings accounts that yield 1% interest).

So instead it encourages spending. And flooding the economy with more money increases inflation. Why?

6/Basic supply and demand. When cash is being tightly held and is illiquid, anyone looking to get $USD (via commerce, loans, etc) will have to pay a premium.

But as cash flows more freely, that premium disappears. Easier cash = lower $USD value = higher prices = inflation.

7/This is inflation-as-economic-stimulus. But it comes at a price: the value of your dollars.

Your wealth is literally being traded for gov't short-term gains. And it's never restored. Gov'ts will never be incentivized to reverse inflation enough to recoup your buying power.

8/Meanwhile the trade war spooks the hell out of the stock market. We're a global economy. And by "we" I mean humanity, not just the US. We're all interdependent on each other. If there's increased friction between major trade partners, everyone suffers.

marketwatch.com/story/dow-open…

9/So if you're in the stock market, you're facing risk from political forces that are out of your control and only seem destined to get worse (remember: Trump 2020).

Plus how long can the stock market run continue if our middle class isn't thriving? No buyers = no business.

10/Or if you're sitting on the sidelines in cash, your buying power is being bled away and, likely, at an ever-increasing rate (see above, re: Trump 2020).

$1000 of buying power today will be about $600 in 15 years. If you sit still, you're getting poorer.

11/Where can you put your wealth that isn't subject to these risks?

It has to be an asset that exists **outside** the realm of government control, can't be used as a weapon against trade partners, can't be devalued by gov't decree.

12/Real estate? Maybe, assuming you have a big enough stash to even participate.

But the US real estate market is correlated to the US economy. Where one goes, the other follows.

marketwatch.com/story/trumps-t…

13/Gold, other precious metals? Sure.

But the people with the least stable gov'ts facing the worst inflation (see: Venezuela) won't turn to gold. They need to escape to a different *currency*. Something more interchangeable, storable, transportable than gold. They need utility.

14/So #bitcoin. A store of value that has more utility than gold.

Can't be confiscated by a nat'l bank (bitcoin doesn't even need banks!). Easily transportable across borders. Exchangeable enough (it's sufficiently currency-like, though not optimized for that use case).

15/Meanwhile for us #bitcoin is a hedge against global instability caused by selfish political protectionism, currency manipulation, trade wars, inflation.

It exists completely outside the realm of *all* gov'ts.

It cannot be controlled by any of them.

cointelegraph.com/news/bitcoin-a…

16/And more and more people around the world are starting to realize this.

"some experts argue it's shielded from some of the geopolitical news that moves other markets."

markets.businessinsider.com/currencies/new…

17/And the more #bitcoin is the solution to these problems, the more valuable it'll get.

It's a safe haven that sidesteps political turmoil, an escape route across the globe from mismanaged fiat, AND a damn compelling investmuuummm... I mean "I'm not a financial advisor." #dyor.

18/But what about #bitcoin's own volatility?

Yep, it's a thing. The swings are big. But zoom out and focus on the long term trend.

Also think about future global instability. Is more turmoil ahead or less? Will safe political hedges be more or less important?

19/I'm only at a super-basic Econ 101-level understanding. What did I get right? What am I misunderstanding?

Eager to learn more.

But #tldr: I'm definitely #longbitcoin.