The Primary Force Behind Financial Inequality
It's Time to Escape Debt Slavery
While politicians come up with a whole host of reasons for the increased financial inequality in the United States (US) — some of which are legitimate — they don’t often mention that the primary driver of inequality in the US is the US Federal Reserve.
The chart above illustrates the divide between the net worth of the bottom 50% of the US population and the top 0.1% of it.
As you can see in the chart, the increase in M2 — the Fed’s measure of money supply including cash, checking and savings deposits and non-cash assets than can quickly be converted into cash (e.g., CDs), according to Investopedia — is directly correlated with the increased wealth of the top 0.1%.
The point: The more money the Fed prints, the greater the financial divide between the top 0.1% and the bottom 50%.
And the Fed in conjunction with the US Treasury is creating new money at a breakneck pace.
(For context the initial bailout during the Great Financial Crisis of 2008 was US$800 billion, according to NPR.)
In my humble opinion, we’re not just heading for a recession, but a massive collapse in markets that will trigger the Fed to print more money than our brains can comprehend. But we’ll get to that in a moment.
We Are All Debt Slaves, with Raoul Pal
Before we discuss the bottom falling out, I highly recommend you watch this video.
I know that many like myself in the Bitcoin community have mixed feelings about Raoul Pal because of how he’s pivoted from bitcoin to crypto more broadly, but his macroeconomic analysis in this video is on point.
In the video, he starts by describing how the Fed and other central banks will continue printing money to support what he terms the “Boomer Retirement Industrial Complex” (love the phrase). Essentially, he describes how the Fed will keep propping up the increasingly fragile financial system at the expense of the value of the US dollar so that Baby Boomers can retire with the wealth that’s accrued to them thanks to money printing.
He then explains why crypto is the biggest investment opportunity in human history and the best chance that anyone has to preserve their wealth in this era of corrupted monetary and financial systems.
The only caveat I’d make to his point is that bitcoin is the true opportunity, not crypto more broadly.
Also, remember that you technically don’t own bitcoin until you hold the private keys to it. And on that note…
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So, while I agree with most of Raoul’s analysis, I also think we see a massive crash in both bitcoin/crypto and traditional markets before 2024 is out, which is why I don’t think now is the best time to shovel all of your cash into bitcoin. (That’s my perspective, not financial advice.)
As I’ve said many times in this newsletter, I think we’re in the middle of a melt-up that started about a year ago.
David Hunter and the Melt-up
The melt-up theory comes from David Hunter, a market analyst with 50 years of experience, who appeared on Natalie Brunell’s show this week.
In Brunell’s interview with Hunter, Hunter describes how he believes we’ll see the S&P 500 reach between 6,000 and 7,000 before crashing about 80% — all before summer is out.
While Hunter has been wrong in regards to timelines, what he’s predicted would play out over the course of the past four years has been mostly correct.
I highly recommend watching the video.
And on that note…
Take Responsibility for Yourself
I share a lot of resources in this newsletter. It’s your responsibility to engage with them if you’d like to learn more.
Without learning more in efforts to make more informed investment decisions, you’ll never develop conviction. Without conviction, you’ll probably panic sell when markets drop instead of having some cash on the sidelines to buy in at such points.
The more you study bitcoin, the more you learn it isn’t a get rich quick scheme. Instead, it’s a financial life raft that can help you survive these turbulent financial and economic times.
So, later today after you’ve said to yourself “I don’t have time to watch these videos or do my own research” and you find yourself scrolling on Facebook or watching reality TV, keep in mind that you’ve made a choice. You’ve decided to numb your mind instead of expanding it. You’ve made an excuse instead of taking responsibility.
If you’ve found this edition of the newsletter helpful and you’d like to leave me a tip, you can do so over the Bitcoin Lightning Network using the QR code or LNURL below.
Thank you for reading, and have a lovely week!
Best,
Frank
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