In Weimar Era, You Buy Gold, In MMT Era, You Buy Crypto
Last Updated on 23 March 2021 by CryptoTips.eu
Few tweets have captured the essence of the 2021 crypto craze as well as the one Zhu Su, CEO of Three Arrows Capital, a Singapore-based hedge fund. Explaining why anyone would still consider buying Bitcoin over $50k (it just crossed $52k today), he stated that during the Weimar era you would buy gold and Picasso’s to protect yourself, and during the MMT era, the solution was crypto.
He also railed against the luddites who were still comparing Bitcoin to Dutch Tulip Bubbles.
There’s a lot to unpack there, so let’s get to it.
MMT economics
For those of you in need of a history lesson, the Weimar era was the period after the first World War until the rise of Hitler in Germany. The German Weimar government tried to print its way out of problems during the onset of the Great Depression in the twenties and the thirties and ended up with Deutschmark bills that had too many zeroes on them.
As people’s savings were wiped out, it was easier for the far-right to win elections given the growing discontent. Zimbabwe and Venezuela have tried similar solutions in recent decades, to no avail.
In Weimar Era you buy picassos and gold
— Su Zhu (@zhusu) February 17, 2021
Movable v immovable new paradigm, big alpha, huge change in who controls wealth
In MMT Era you buy crypto
Digital vs physical new paradigm, big alpha, huge change in who controls wealth
MMT meanwhile stands for Modern Monetary Theory.
It states that monetarily sovereign countries like the US, the UK, Japan, and Canada, which spend, tax, and borrow in a currency they fully control, are unlimited when it comes to federal government spending.
In essence, they can simply turn on the money printers when it’s needed. Because of this some economists feel that the MMT countries have implemented, certainly since the 2007-2008 financial crisis, a monopoly over their citizen’s savings. They decide how much the money in your bank account is worth.
The EU, which does not turn on the printers just as much, turns instead to bond buying via the ECB to resolve this problem, thus propping up failing economies (mostly in the southern states).
If you want to check how much the Trump administration has printed already and how much the Biden administration intends to print, I suggest you look at Forbes enlightened article of last year entitled: Can the US federal reserve print money forever?
Honestly pains me to read Luddites out there still talking about tulips (which lasted three months in a tiny corner of the world) when we stand at the precicipe of multi-millennia transformation after over a decade of accumulated work and progress against all odds
— Su Zhu (@zhusu) February 17, 2021
Given the fact that both the Queen’s Gambit and the last episode of any Big Brother are probably getting more views, not many people read it though.
Other good explanations are to be found in Zeitgeist, the 2008 documentary which explains the monopolies of central banks.
Luddites
As to the Luddites reference, they were the group of people in the 19th century trying to destroy textile machines in the factories as protest against the new age.
Commenters who claim that crypto hasn’t replaced gold yet are right.
Of course, you can still buy gold nowadays, but you would have to store it somewhere, either in a vault or a bank. Crypto storage is much easier, cheaper, and in most cases can earn you a nice interest.
Lastly, for those wondering why bankers are so upset with Bitcoin, remember that Satoshi wrote this in the Genesis block:
The Times 03/Jan/2009 Chancel
lor on brink of second bailout for banks.
For him, the reason for inventing Bitcoin was to end the monopoly of the central banks.
SergeyNivens / Depositphotos.com