Panos

S&P 500 and Dow Jones Industrial Average hit all time high and suddenly everybody forgot what is going on beyond the US stock market bull run. Does this mean that the economy is booming as well? Let's look at the numbers:

In the first half of 2019, world debt added $7.5 trillion and is sitting at $250 trillion at the moment and it is going to surpass $255 trillion by end of the year. That’s a whopping 330% of the world’s GDP!

The US National Debt is also ballooning while the economic growth is slowing down not only in US but in all the top economies and it is set to decline even more in 2020.

So, what's all the fuss about a short-term boost in the stock market? Is the market overreacting? Is this a bubble that will burst sooner or later? Is the market overinflated? The answer is: Most probably, yes. And don't forget... the 93.2% of the stock market is owned by the top 10%.

Fed's balance sheet has been growing again and has increased by over $261 billion in just 2 months, surpassing $4 trillion.
The “not QE” QE is on.

“What has transpired is private sector banks that used to create money supply by leveraging their deposits by ever-increasing multiples have been restricted from creating money using fractional banking leverage so now the Fed has to do this magic itself. This is good and bad news. The good news is that we no longer need to trust the private sector to not abuse the money supply system to the point of collapse as per 2007, but the bad news is that rather than let the market define the demand and supply of money, it is now down to a small committee of humans at the Federal Reserve to get the balance right. Committees have, over time, been shown to be a fragile system for navigating complex economic matters, so a distributed flawed system has now been replaced by a centralized flawed system. What could go wrong?”

Despite trade-war fears, a yield curve inversion and declining forward earnings forecasts, the stock market is booming.

With Central Banks resuming QE, lowering interest rates and the intervention of the Fed in the repo market, does this mean that liquidity is drying up?

Before the 2007 crisis, regulators could trust that banks had enough liquidity to remain solvent; however, following the financial crisis and failure of several banks like Lehman, that ceased to be the case. The new regulations mandated banks to hold pre-funded accounts, or existing pools of liquidity, to move paper currencies between banks in disparate countries. This creates a problem, because there is a huge amount of trapped liquidity ( trillions of dollars) that could be freed up and used most productively to help boost the world economy. How?

An example of a company that wants to disrupt and upgrade the entire financial system is Ripple. Ripple is focused on making value move like information moves today. And with the help of the digital asset XRP, to solve the liquidity problem and make pre-funded accounts unnecessary.

But what is XRP? XRP is a digital asset native to the XRP Ledger and mainly designed to bridge the many different currencies in use worldwide. It is the digital asset with the biggest utility and adoption at the moment and is already being used by companies and Financial Institutions like Moneygram. We could say that it is Bitcoin 2.0. Faster, cheaper transaction costs, more secure, more decentralized and a better, more efficient and eco-friendly system, unlike Proof of Work.

On-Demand Liquidity solution which leverages XRP, has the potential not only to provide instant liquidity in cross-border payments but in other markets as well. For example, the repo market which now faces liquidity shortage. With tools like this and with XRP's speed, low costs, transparency and security, we could help improve the global liquidity problem and upgrade the financial system, preventing probably a recession and a future liquidity shortage.

Price stability has become the main concern of central banks around the world. Both, inflation and deflation, are considered bad outcomes. On the one hand, we see countries like Venezuela and Argentina with big inflation and their currencies losing value and purchasing power day by day and people's wealth devaluating. On the other hand, we see the EU and the US trying to avoid deflation (also known as ‘Japanification') which would make economic recovery a lot more difficult should things go downhill.

Furthermore, we are seeing mass protests around the globe demanding that national leaders step down. Beyond Bolivia, people are rising up against their governments in places as varied as Chile, Lebanon, Ecuador, Argentina, Hong Kong (which now has entered its first recession for a decade), Iraq and Britain.

What is actually happening? Is this about socioeconomic inequality? Is this about corruption? Climate crisis? Political freedom? Or... a little bit of everything? Are the masses waking up and not tolerating all these anymore? Has a revolution started? And... what's the solution? Could blockchain and digital assets help? Is de-dollarization the solution? Should we get out of fiat currencies?

****What we can do now
****We see that in countries like Venezuela, Argentina and more, the use of digital assets have skyrocketed because they are a great hedge against their hyperinflated currencies. But this doesn't mean that we have to live in countries like Argentina or Venezuela to start using digital assets. All fiat currencies lose value and purchasing power year by year. USD has lost more than 97% of its value and purchasing power since 1900. Some currencies may lose more, some less, but all lose value which mainly affects (devaluates) people's wealth and there is nothing that can be done about that. This is how the system was created. So, what's the solution? Should we all abandon fiat currencies once and for all? No, because this would create huge problems as well, but we should be free to choose whatever currency we want and like, without facing any problem by any government. The solution lies somewhere in between. With the use of blockchain technology and having the freedom to use both fiat currencies and digital assets, it could help improve the current broken system. Connecting fiat currencies with digital assets would be a great boost to the world economy. And to do that, countries all over the world should first create the right regulatory frameworks around blockchain and digital assets... and the masses could help to achieve that by putting pressure to their governments with many ways. They would panic if they saw that people are leaving their fiat currencies for digital assets.

*The Ultimate Goal*
As we all may know, blockchain technology is a revolutionary technology and with the help of other emerging technologies, they could help decentralize the world and especially governments, by making them more transparent and reduce corruption, manipulation and control. Imagine a world in which real democracy exists and every citizen is a member of the country's network and can vote for any matter. It may sound crazy and utopian but this could be the ultimate goal and it is not something that will happen any time soon. We still have a long way to go. We can start small and see where it gets us. But how could we ever force the governments to implement this? Don't forget that the masses have the power and as we saw above, people have started waking up.

****The next economic crisis will introduce digital assets to the masses
****That's right. The upcoming recession (whenever it may come) will most probably be the catalyst for mass adoption of digital assets and not only. People will be buying and holding digital assets against fiat currencies and this will be a warning sign to the governments. They must and will adapt. There is no other choice. The system is broken. Everybody knows that, even if some people don't want to accept it. The world leaders know that and they are trying to save something that can't be saved. Another recession will be the signal to reform the system and build it on top of the new emerging technologies. People will and must fight for freedom, decentralization, more transparency and less corruption. It will be the start of a new digital era. It will be the democratization era.