Inflation is the Problem and Dogecoin is the Cure
Inflation is the Problem and Dogecoin is the Cure
Hey everyone,
Inflation is eroding the wealth of individuals and businesses across the country.
While the dollar loses purchasing power, the US government is exploring ways to increase taxation to pay for new spending.
With supply chain shortages and growing unemployment, the short-term economic forecast looks grim.
Despite appearances, all is not lost.
Dogecoin is a cheap, scarce dollar alternative powered by memes and positive vibes.
These characteristics position it to thrive in spite of hyperinflation and aggressive taxation.
Let’s take a look at how Doge offers answers to some of our economy’s most pressing questions.
Global financial system on the ropes
Last Friday, Twitter CEO Jack Dorsey kicked the hornet's nest by claiming that imminent hyperinflation of the dollar could trigger fiat currency debasement across the world
The topic of inflation has, historically, been an off-limits topic for public figures. The corporate media commentariat chirped Jack for using the word "hyperinflation," claiming his tweet was motivated by a mix of ideology and greed.
The backlash to Jack's tweet suggests that some institutions don't want people talking about inflation.
The reason is because inflation is a meme. Like other memes, it is self-reinforcing and cyclical, feeding off its own virality.
The more the inflation meme is shared, the more it shapes the global hive-mind's perception of the dollar as weak.
Widespread perception of a weak dollar is likely to weaken the dollar further, which in turn makes even more people aware of the meme. Perception becomes reality become perception in a repeating cycle.
Prices of consumer goods have been rising quickly in 2021, but so far, public discourse hasn't caught up. If the inflation meme goes viral, that could change quickly.
Consumer Price Index, an official measure of inflation that measures cost of living, hit 5.4% in September, the highest it's been in 30 years and more than double the Federal Reserve's 2% target.
The main driver has been unprecedented money printing as part of the Fed's efforts to prevent an economic downturn at the start of the pandemic.
The situation is captured by the viral meme 'money printer go Brrr.' Each new dollar that's printed dilutes the purchasing power of the existing stock of dollars, though the Fed seems blithely unaware of these negative consequences.
Federal Reserve chairman Jerome Powell has maintained that inflation is real but "transitory."
Billionaire hedge fund manager Paul Tudor Jones recently stated that the dollar's nosedive represents a major threat to markets and society in general, and that inflation is "here to stay."
Inflation is a problem because it creates more inequality. It is especially harmful to the bottom 50% of Americans who, as a group, hold most of their wealth in cash.
If inflation gets bad enough, it could trigger an exodus from the legacy financial system into the alternative crypto-based economy.
Since money printing kicked into gear after March 2020's market crash, Bitcoin advocates have been touting its transparent, programmatic supply as a way for regular people to protect themselves from the consequences of government money printing.
MicroStrategy CEO Michael Saylor responded to Jack's original tweet by claiming that Bitcoin is the "solution" to inflation.
It might not be the only one.
*In Dogecoin
Elon Musk has vaulted to the top of the world's wealthiest people, amassing a total net worth of over $250 billion, most of it in Tesla stock.
With Tesla reaching a trillion dollar market cap this week, analysts are now predicting Elon will eventually become the world's first trillionaire.
By some measures, he might've already made it.
Dogecoin has been trading around twenty-five cents for most of October.
Elon is worth a quarter trillion in USD, which equates to one trillion Ð.
The only problem is that, unlike dollars, there aren't one trillion Dogecoins in existance.
Dogecoin has circulating supply of 131 billion, with another 5.5 billion added each year.
Even if one person held all the Dogecoins in the world, it won't be possible to own a trillion Doge until sometime around the year 2180.
By comparison, there's no limit to the number of dollars that can be printed.
A few decades from now, there may be a dozen USD trillionaires, but it will still be impossible for even one Doge Trillionaire to exist.
By dubbing himself the first Dogecoin Trillionaire, Elon may be highlighting Doge's fixed supply as an answer to inflation.
Corporate wealth in crosshairs
Inflation hurts businesses as much as individuals.
Tesla generated $47 billion in revenue over the last year, meaning 5% inflation cost it over two billion dollars worth of purchasing power.
Following Jack's comments, Elon confirmed that the weakening dollar was on his radar.
Inflation isn't the only factor in the destruction of corporate wealth.
At the same time that the Fed is diluting wealth through money printing, Treasury Secretary Janet Yellen has been openly pushing for a tax on unrealized capital gains.
Such as tax could force shareholders to sell stock each time its price goes up.
Forced liquidations could have disastrous consequences for successful businesses, driving stock price down, discouraging investors, and pushing founders to sell their stake in the companies they created.
Unrealized capital gains tax would be bad news for crypto too, pushing some investors to sell their holdings against their will.
While it would initially be directed toward the billionaires, the practice of taxing unrealized gains could spread over time.
These policies are being messaged as targeting only the richest Americans, but the reality is that they're not good for business in general.
Rather than bear the brunt of additional taxes, businesses will inevitably seek to pass costs onto consumers.
There has to be another way.
Dogeflation
At a time when the country is facing supply shortages and increasing unemployment, excessive money printing and increased taxes could push many US companies to the brink.
If the situation keeps getting worse, businesses could seek out crypto to hedge against dollar depreciation.
Hedging with a soft deflationary currency like Doge is a logical strategy for protecting wealth from government destruction.
Tesla has already experimented with crypto. Earlier this year, it began accumulating Bitcoin, buying $1.5 million worth and accepting it for vehicle purchases.
In May, Elon suspended crypto payments until Bitcoin mining energy becomes majority renewable "with positive future trend."
Recently, Tesla filed paperwork with the SEC stating that it may start accepting crypto in the future.
Bitcoin had its best day ever the first time Tesla announced payments.
Next time around, Tesla could announce both Bitcoin and Doge.
If it does, it would instantly become the largest Doge merchant in the world, possibly launching it to a dollar or more.
As with the inflating dollar, public perception influences Doge's value.
The more people treat Doge as being worth a dollar, the greater interest it will generate among consumers and businesses.
Tesla-induced virality could generate a self-reinforcing positive loop, pushing price up even further as more people opt out of fiat and into Doge.
Will Tesla ignite Dogeflation?
Dog-dollar alternative
There is growing debate over the role of money printing and inflation in the global economy.
As a cheap, scarce, meme-powered alternative to the dollar, Dogecoin is uniquely positioned to thrive in the current economy.
Elon is already the world's only trillionaire *In Doge. He may be starting a trend of denominating USD wealth in Dogecoin as a strategy for surviving inflation.
Right now, Dogecoin is still a speculative monetary technology, but it could get a trial as a medium of exchange with Tesla, the world's leading EV/AI/battery company.
If Doge succeeds as a dollar-alternative, it could give individuals and corporations alike an escape hatch from the depreciating fiat system and go down as one of the most powerful memes of all time.
Dogey Treats: News Bites
420 BTFD: El Salvador buys Bitcoin dip after borrowing from IMF.
Robinhood's crypto revenue dropped 78% in Q3.
Disney NFTs are coming.
GameStop is hiring NFT specialists.
Tungsten Cubes and Island boys are powerful memes on Twitter and YouTube.
Tesla reached a $1 trillion valuation in 18 years, faster than both Google and Amazon. It also announced a deal with Hertz for 100k vehicles, half of which will be used for Uber drivers. Hertz put out an EV commercial featuring Tom Brady.
Elon has been extremely active on Dogecoin Twitter, proposing a scamtransaction, liking a cat tax meme, explaining his support for "the people's crypto," distancing himself from the Dogecoin Foundaton, reiterating his vision for first and second layer blockchain protocols, and confirming that he holds no Shib or Floki.
Shiba Inu coin overtook Doge on Thursday in total market cap.
Crypto exchange FTX purchased a Super Bowl commercial.
After throwing his 600th touchdown pass, Tom Brady gave a Bitcoin to a fan who returned the ball.
Citibank is building infrastructure to accept crypto payments.
Mastercard preparing to offer crypto services for banks and merchants
Banking regulators are exploring how banks could hold Bitcoin and other crypto assets, according to the FDIC chair.
Rand Paul: Bitcoin could become global reserve currency as people across the world lose trust in governments.
Memes of the week
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Disclaimer: This is not financial advice and I am not a financial advisor. The article above references an opinion for entertainment purposes only and it is not investment advice. Do your own research and consult with a licensed financial adviser before making any investment decision. Do not treat any opinion expressed in this newsletter as a specific inducement to make a particular investment. Content, news, research, tools, and securities symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or cryptocurrency or to engage in any particular investment strategy. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, are not guaranteed for accuracy or completeness, do not reflect actual investment results and are not guarantees of future results. All investments involve risk, losses may exceed the principal invested, and the past performance of a security, industry, sector, market, cryptocurrency, or financial product does not guarantee future results or returns. Dogecoin is a speculative and highly volatile asset susceptible to pump-and-dump schemes.
Disclosure: I currently own some Dogecoin, Bitcoin, and Ethereum. At the time of publication, Dogecoin is around $0.33 per coin.