Darling we have to talk

Darling, we have to talk…

Everybody that has ever been into a long term relationship knows that when you hear those words you are dead. Maybe you don’t know exactly which is your sin, but you know you are gonna pay for it. 

Ok sweetheart, what do you want to talk about?

Oh, really!! you don’t know??

At this point, a cold freeze is running behind your back, and you are trying to recompose your last movements to find your mistakes. Financial market is talking clearly and loudly, as a sensible and rational wife. We have a problem. And we have to talk.

9th consecutive weeks in red for BTC, Nasdaq has fallen 23%. 7 consecutive weeks in red, only seen three times in history (1970, 1980 and 2001). You know something is wrong, but you know the rule, don’t recognize anything before knowing the charges, or you could be confessing something you shouldn’t.

Really? When was the last time you went to the supermarket? Inflation in the EU is at 8.1%, countries like Estonia are at 20% or Greece at 11%, it’s unsustainable. Wheat prices have risen by 40%, field fertilizers by 70%, farmers’ energy costs have multiplied x 7, gas costs x4. Do you know what a loaf of bread is worth now?

I do not know…

And when I took the car, surprise, surprise, you left the car’s tank empty again, as always. Everytime a take the car I have to fill the gas. You know how much it costs? fill a tank it’s like sending a son to the university. But you don’t care. I’ve been telling you for years that we have to look for alternatives, our economy is too dependent, and now look, we’re screwed. We could boost public transport, renew energies, … but not, always looking to the short term, looking for a fancy car. And the cooper…

What’s up with the cooper?

Cooper price it’s rising like a bird, and you know, it’s a basic element for so many industries like energy transition.

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You are right darling, we are fucked.

We said “no more than 2%” of inflation, and we are at 8,1%, the highest difference in history. I’ve been telling you for months. You told me “it’s temporary” darling don’t worry, and it’s not. It’s the biggest difference between goals and reality, and you led the interest rates in negative? Really? Only for this someone should have resigned.

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But darling, it was the Covid crisis, remember, we were afraid, we had to do something to avoid the total destruction of our economy. We are Europe, we are a prudent economy. We did the same as your British or American cousin. We thought that if we didn’t look the problem in the face it could disappear.

I know, I know. I don’t want reproaches. I want you to learn the lesson. 

What lesson?

You don’t have to print money as there’s no tomorrow every time you are afraid, money you won’t be able to pay back. “Al andar se hace el camino,  y al volver la vista atrás  se ve la senda que nunca  se ha de volver a pisar”

But there was no alternative, no solution, that was the only way we knew. 

Yes, there’s a solution. If you have to promise me you’ll study it and you’ll be prepared so for the next crisis you’ll have more tools than the printing money machine.

I promise you darling. 

First of all, you have to realize that there’s a new alternative to money. It’s called Bitcoin, it’s deflationary. There will be only 21 Million of those in the world, forever. This means no one will ever print one more of it. Never. And for every halving, “printing” a Bitcoin costs the double. 

But Bitcoin has fallen to 30k?

So what? It doesn’t matter. Don’t lose perspective. Again you are only looking to the short term. It has fallen, and can fall again, I don’t care, because when the next halving comes, price will rise again, it’s mathematical.

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And the price will fall or rise with whales’ permission. Institutions and social adoption it’s growing fast, so we better be ready. 

You mean now we have a competitor to our money that won’t let us do it again?

Exactly. So better start thinking about what we really can do.

And what can we do?

First of all, you have to realize one important thing. When you print a 500 euros banknote, where does it go?

To banks and governments, and then they send it to companies and citizens, well, mostly to big companies.

Yes, to the traditional bank system. And they multiply it. For every dollar you give them, they use 10 more, so the problem grows and grows. And countries are clearly over debt.

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And the new money they have received they give it to big companies, because those are the only ones with capacity to absorb those quantities. The usual ones. Lobbies, corruption, stakes, … Only a very small part of it goes to the citizens in need. Europe needs months, if not years, to set up a new program for unemployed youth, for example. Believe me, I know it well. Costs of getting one euro into a citizen pocket as aid are enormous.

The solution:

With blockchain and DLT technology, Europe could send money directly to citizens in need. Without bank intermediation. Without commissions. Direct money to do specific things,  like buying a tractor or buying food. Because that’s the beauty of this technology. With smart contracts you can set up specific goals so when those are achieved by citizens, money is transferred automatically. 

I see.

In Spain, it took months for thousands of workers to get their temporary unemployment aid during the covid crisis. The official structure of social security was not ready to manage this new aid. No income for months in a country where working was forbidden. They had to take bank loans to buy food because they were starving while money was flowing in thousands of millions to the same banks, thanks to the EU Central Bank. Indecent.

But countries will not let the EU create direct aid to citizens without them.

No, you are right, that’s the biggest challenge. The EU is a club of countries, not a government for europeans. That’s why we should start today to create the basis so in the next crisis all these instruments are ready to be in place. We should be creating pilot projects and testing the technology. It’s urgent. 

Conclusion:

We will have to swallow this crisis, but we can start working to avoid the next one.

Yours in crypto.

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