Every day, I come across people who say the dollar will be eventually replaced by bitcoin. They say bitcoin is “the new gold” and it is the wave of the future. Will this happen? No one can say for sure, but what if it does? Will the world change as we know it?
Bitcoin As The Reserve Currency?
There is talk that bitcoin could go much higher. J.P. Morgan recently came out and predicted a price target of $146,000 per bitcoin. People get really excited about that prospect, but we must dig a little deeper.
If bitcoin becomes the new reserve currency, this is what I think about:
Will the U.S. be able to print money? One of the reasons we got off the gold standard was so the FED could print money at will. if we go BACK to having a currency backed by something (bitcoin) how will that affect the economy? Will this mean we can not print money anymore? If we can’t print anymore money, that means no more stimulus checks.
What will happen to the trade deficit? Each year, the U.S. runs huge trade deficits. It basically spends more money than it brings in, to the tune of billions of dollars per year. If the country can’t print money, it will have to find other ways to balance the budget. This means the government will have some drastic moves to make:
- Cut government spending. Programs that could be affected are military spending, government wages, and government programs such as Medicare, food stamps, Supplemental Security Income (SSI), and Emergency Food Assistance. This will have an immediate impact on millions of people.
- Raise taxes. In order to raise money, the country may have to raise taxes. This will have a direct impact on how much people can spend, which means more taken by taxes and less available to spend on goods and services. The end result could affect the economy and a person’s standard of living.
How will banks be affected? Could a currency backed by bitcoin play a role on bank lending practices, or will it have zero impact? Would interest rates be higher for those wanting to buy a home or car? What about credit card interest rates?
These are the types of questions I have as we move towards this uncertain future. When you look at it this way, it doesn’t matter if we use gold or bitcoin to back the dollar. The results will be the same.
Time To Be Defensive!
No one knows for sure what will happen in the future, or when it will happen. The key is to be a forward thinker and start preparing now. There are several things a person can do to prepare:
- Invest in cryptocurrencies. Bitcoin, eretheum, and other cryptocurrencies are outside the existing monetary system. These assets could retain their value in case the stock market crashes, there’s a currency reset, or the dollar is backed by an asset like bitcoin.
- Start a business. if you have a business, that means you are a “producer” and can generate your own revenue and income. As a bonus, you can raise your prices to keep up with inflation, and charge for your services in whatever new currency there is. That means you could accept payment in dollars, bitcoin, gold, etc. in the future.
- Buy revenue generating assets. Passive income never gets old. Instead of spending your money on items that lose value, consider investing in assets that retain their value, and if possible, can generate a monthly income. A great example is rental property, laundromats, vending machines and fast food franchises.
- Buy precious metals. Like cryptocurrencies, gold and silver are outside of the current monetary system. Precious metals have been used as money for thousands of years. Many people don’t realize the U.S. dollar was backed by gold up until 1971, which was only 50 years ago. Both gold and silver are often used as protection against a weak dollar. In other words, if the dollar loses its value, gold and silver tend to retain their value. People think the metals are rising in price and getting more expensive, but that’s not the case: In realty the purchasing power of the dollar is actually decreasing.
Start Preparing NOW
Unfortunately, this type of information is not discussed in mainstream news. People are obsessed with the price of bitcoin, but few think about what happens after the big runup. I feel the world as we know it would be changed forever.
Will the world turn to bitcoin? I do not think so, but that doesn’t mean we can’t prepare for the unexpected.
This is the time to start doing your own research and thinking for yourself. These are my opinions, and I could be wrong about everything. But what if I’m not? Will you be prepared for the next great reset?
As the world changes, we must be ready, willing, and able to change along with it. It’s critical you don’t rest on your laurels and continue learning about the economy and stay abreast of current events that pertain to money and the economy. Start now before its too late!
Get more great tips in my book Invest For Success: Winning Wealth Strategies Not Taught in School. Available on Amazon.
Teach your kids about money and business as well. They will have to live in this world as well. Many of the most important topics on business and entrepreneurship are not taught in school. Pick up a copy of Planting Seeds: The Children’s Guide to Entrepreneurship today. We owe it to our kids to give them the best opportunities to excel. This book is available on Amazon in English, French and Spanish.