We have arrived at this critical state via a monetary system that is “addicted to printing money and issuing credit,” Brown says, and it seems clear that an alternative is needed. He believes that Bitcoin is the solution, because it has a fixed supply and regulated output.
He calls the $243 trillion a “debt bomb”. No wonder; it is “three-times the world’s total gross domestic product (GDP) and it’s three times larger than the value of all products and services on the planet.” Who is running up the most debt? The USA with a national debt of $22 trillion, and a non-financial corporate debt that is reaching the pre-2008 crisis high once again.
Governments, businesses and individuals borrow to fund everything from economic development to property purchases. However, if that amount borrowed doesn’t deliver the amount of growth needed, then governments and businesses simply borrow more. John Maudlin, writing for Forbes said: ““This is classic addiction behavior. You have to keep raising the dose to get the same high… Central banks enable debt because they think it will generate economic growth. Sometimes it does. The problem is they create debt with little regard for how it will be used.”
Brown believes Bitcoin is the antidote to central banks’ addiction to printing money and encouraging the use of credit. BTC has a limited supply of 21 million, and the supply cannot be manipulated or increased according to the whims of any one government or bank. Erik Voorhees, CEO of Shapeshift believes that when the rising debt mountain implodes, people will turn to cryptocurrencis: “When the next global financial crisis occurs, and the world realizes organizations with $20 trillion in debt can’t possibly ever pay it back, and thus must print it instead, and thus fiat is doomed… watch what happens to crypto.”
There would be no use of quantitative easing — that’s the name of creating money out of nothing. As Brown writes, “This has the effect of introducing more money into supply, lowering the purchasing power of your money, and encouraging low-cost lending.” And, when one country does it, then they all do it: “It creates a race to the bottom where every country is flooding its economy with cheap money to stay competitive.”
The case for a new monetary system is compelling in a world living with a mountain of debt.