Thread by @PrestonPysh

Some thoughts on the dollar's reserve status.

A quote from the book, Big Debt Crises, by Ray Dalio:

"Can reserve-currency countries that don't have significant foreign-currency debt have inflationary depressions? While they are much less likely to have inflationary...1/

contractions that are as severe, they CAN have inflationary DEPRESSIONS, though they emerge more slowly and later in the deleveraging process, after a sustained and repeated overuse of stimulation to reverse deflationary deleveraging. Any country, including one with a ... 2/

reserve currency, can experience some movement out of its currency, which changes the severity of the trade-off between inflation and growth described earlier. If a reserve-currency country permits much higher inflation in order to keep growth stronger by printing lots of ...3/

money, it can further undermine demand for its currency, erode its reserve currency status (e.g., make investors view it as less of a store hold of wealth), and turn its deleveraging into an inflationary one." //Break// ...4/

So what do you do? Well, Ray writes a little more about that later in the book: "Buying equities is a mixed bag: investing in the stock market becomes a losing proposition as inflation transitions to hyperinflation. Instead of there being a high correlation between the ... 5/

exchange rate and the price of shares, there is an increasing divergence between share prices and the exchange rate. So during this time gold becomes the preferred asset to hold (my words - due to it's scarcity), shares are a disaster even though they rise in local ... 6/

currency terms, and bonds are WIPED OUT." Here's a chart of the S&P500's performance if measured in gold since the fall time-frame in 2018. Down - 24%

Here's the S&P 500 measured in Bitcoin over the last 4 years (4 years was used because the protocol has a 4 year halving cycle to execute fiat)...pick any range of 4 years and you'll get similar results. Down -89.30%.

In 2020 alone, the S&P is down -26% in Bitcoin terms.

When people say the market is up, they might want to start thinking about Ray's important notes. Is it up in nominal fiat terms or in buying power terms?

Your success moving forward will likely depend on your understanding of this critical aspect. How do scarce, hard monies perform relative to other financial assets during a fiat currency crisis.

Some books to learn more:

Big Debt Crises by @RayDalio
The Price of Tomorrow by @JeffBooth
This Time is Different by @carmenmreinhart
& @krogoff
The Rise and Fall of Great Powers by Paul Kennedy
When Money Dies by Adam Fergusson
The Bitcoin Standard by @saifedean

Enjoy.