The Future of Money, and Wealth Storage
Hoffman discusses two important topics: the economic devastation wrought by the draconian Indian cash ban; and a unique, rapidly unfolding situation in the world of Bitcoin.
In India, generations of citizens have been using precious metals as their primary wealth storage tool. In 2015, when the rupee hit new all-time lows, the Indian government enacted onerous gold and silver tariffs that remain to this day. Indian citizens started a massive black market, resulting in surging demand that unfortunately can no longer be accurately measured, and surging premiums over fraudulent Western spot prices.
Then there’s the Chinese government, which launched draconian capital controls in January, just as the speculatively traded offshore yuan was on the verge of breaking above the key level of 7.0/dollar. Among them were controls on Chinese Bitcoin exchanges, prohibiting all Bitcoin withdrawals. So you can trade Bitcoin, but you can’t withdraw it, which tells you all you need to know of how terrified governments are of it.
The world’s largest US-dollar-traded Bitcoin Exchange in Hong Kong abruptly prohibited US dollar withdrawals two weeks ago, because its principal wire agent, US-based Wells Fargo, said that it was no longer comfortable ‘abetting’ Bitcoin transactions for fear they would be labeled money launderers by the US government. This has turned into a farce in which black markets are setting prices, no matter what the powers-that-be attempt.
As history’s largest, most destructive fiat Ponzi scheme implodes, government attempts to control competing currencies will become progressively more draconian, as has been the case with all such situations throughout history. However, they will all fail, as the future of wealth storage, be it gold, silver, Bitcoin or any competing currency, will migrate out of the system. Which is why the need to own physical assets, rather than exchange or brokerage-held paper assets, is so urgent