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Can the RBA Compete with Bitcoin?

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By Nick Hubble, Friday, 12 April 2024

Inflation is a good reminder that governments and central banks are not in control.

In today’s Fat Tail Daily, Inflation is a good reminder that governments and central banks are not in control. They just pretend to be. But what can you do about it?

Oh-uh.

On Wednesday, inflation in the US came in surprisingly high for the third month in a row. This time, it was outright rising.

That’s not supposed to be happening.

The news sent the market into a spin.

The US is not the only country struggling with rising prices.

Australia is, in my view, worse.

The Australian government is harkening back to the age of the Price Justification Tribunal with its attack on supermarkets.

Supposedly, supermarkets have suddenly become greedier. Just as energy companies did in 2023. And resource companies did before that.

It’s only a matter of time before one of your stocks gets targeted in this game of inflationary whack-a-mole.

The eurozone, despite a prolonged recession, still can’t get inflation down to target. What more will it take?

Even in Japan, inflation is back after decades of deflation. The local news is full of company presidents apologising for the first price increases in decades. And it’s not even their fault. The Bank of Japan has been trying to engineer price increases for decades. Now that it’s happened, everyone is surprised.

All of this is a good reminder that governments and central banks are not in control. They just pretend to be.

And even if they were in control, what would the result be? They muck up everything else. Why should their monopoly on money work out any different?

So it’s no surprise that after years of inflation supposedly being too low, it’s now stuck too high.

The real question is, ‘what to do about it?’

No, not what central bankers and politicians should do. What you should do to protect yourself from their constant stream of mistakes.

Can you really escape the government’s insane monetary system? Of course you can! The real question is how and with how much of your assets.

Gold is telling you all about one option – the traditional one. The price is flying as people clamour to protect themselves from the next monetary disaster.

But there may be a better option that didn’t exist the last time we faced this sort of mess…

Might it be time to consider adding some of the alternatives to your wallet…?

Don’t just accept the price of failure

The alternatives I refer to are, of course, cryptocurrencies. Just as Uber and Airbnb cracked the heavily regulated taxi and hotel industry, bitcoin upended money.

But whenever people first consider buying cryptocurrencies, they always focus on the price. It’s a bit depressing, to be honest. The point of bitcoin was to challenge the financial and monetary system, and not to become a speculative mania.

It did this by becoming a viable alternative that competes. Back in 2009, when it was launched, the reason for this was obvious. Banks were failing and governments were printing money. Some governments even imposed capital controls.

I know one Greek who missed out on a scholarship at an Ivy League university because he couldn’t pay the bills. The Greek government prevented his money from leaving the country’s banking system.

People wanted an alternative form of money. One the government didn’t control and which wasn’t at the mercy of the banking system.

And bitcoin gave it to them.

Today, with inflation dominating the news, we have the corollary reason for bitcoin. Instead of bank failures and capital controls, we have rising prices.

But bitcoin’s value rises, unlike the currency we use. That’s because the supply of bitcoin is capped. Central banks explicitly target inflation, which is devaluation, of their currency.

The differences couldn’t be starker. That’s why it’s time to take action. To make your move and take advantage of the options and opportunities which the return of currency competition has created.

You could sit around and wait for the Aussie dollar’s failure to get so bad that you positively need to buy bitcoin. Or you could act now.

Option three is to wait for the quadrennial event which has preceded a surging bitcoin price three times in the past. It’s due this week…

Until next time,

Nick Hubble Signature

Nick Hubble,
Editor, Strategic Intelligence Australia

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

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Nick Hubble

Nick Hubble found us at Fat Tail Investment Research in 2010 after a stint inside Wall Street’s most notorious bank, Goldman Sachs, during the 2008 GFC. That’s where he saw the true nature of the investment banking business. Since then, he’s been the editor of the Daily Reckoning Australia and the UK-based Fortune & Freedom and Gold Stock Fortunes.

He’s delighted to work as Investment Director and Editor for Jim Rickards’ Strategic Intelligence Australia. Here he helps turn Jim’s big-picture views into specific actionable advice and ideas for Australian investors.

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All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

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