On Twitter, we read things that just don’t make sense. Ideologies are sold that many buy. However, after a certain point, there are narratives that do not fit very well with reality. Many are seduced by these creeds. But there are many blind spots in propaganda. The dollar, for example, is a very controversial topic in Cryptoland. Well, we are talking about the dollar.
For many, the dollar is synonymous with the government of the United States. It is not a secret that the most conservative right in the United States opposes any state intervention in the economy. I am not referring to Republicans per se. I am referring to more radical sectors. In this case, I am talking specifically about libertarians and anarcho-capitalists. These groups are staunch believers in free market fundamentalism, personal liberty, and classical liberalism. Within that group, we have two subgroups: The technophiles and the gold beetles. The first are located in Silicon Valley and in crypto. And the second ones can be found in the gold market and in the rural and red United States.
Keep reading: What does Goldman Sachs tell us about Bitcoin?
Both groups are conservative. And both groups are economically reactionary and politically anti-statist. In these circles, the dollar has become synonymous with the progressive left. That is, socialism vs. the United States of Thomas Jefferson. Keynesianism and the Austrian school. Basically, it is a battle of political ideologies in the style of the 70s and 80s.
How does a radical conservative think? Let’s use an extreme example for analytical clarity. Let’s use as an example the father of Warren Buffett and friend of Murray Rothbard, Howard Buffett. Howard opposed the Truman Doctrine and the Marshall Plan. He was an advocate of the gold standard and limiting the government in inflating the currency. Warren Buffett tells us that his father bought gold. He even bought a farm to support himself as a yeoman farmer in case of a big crisis. Why? Because he was convinced of the imminent collapse of the US economy due to mismanagement by liberals. That is the key to the conservative mind: Fear and pessimism.
Let us remember the children’s book The Wonderful Wizard of Oz. “Oz” stands for gold. We have the golden path. The silver slippers. In the original story, Dorothy’s slippers are silver, not ruby. And we have all social classes. The Tin Man: The industrial worker. The Straw Man: The Peasant. The cowardly lion: The conservative political class. The Witch: The Bad Actors The Wizard of Oz? The indiscriminate printing of money by the State. In other words, a scam. The work was written by Lyman Frank Baum and published in 1900. Well, this debate is not new. Conservatives have been warning us of collapse for centuries.
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Now, how does the intelligent investor think? Historically, optimism is much more profitable than pessimism. That is the difference between Warren Buffett and his father. The conservative believes in saving a hard currency. The investor believes in investing in assets. The investor takes risks in times of prosperity and becomes more cautious in times of uncertainty. It’s about financial cycles. Not conservative-style catastrophic collapses.
The big capitals in the world today have investments. In times of loose monetary policy, liquidity is high and asset prices typically rise in price. What we commonly call bullish cycle. In times of tight monetary policy, the market becomes more cautious and takes less risk. In other words, we generally have a bearish cycle. In good times, the dollar tends to go down. And, on days of uncertainty, the dollar tends to rise. A weak dollar stimulates exports and indebtedness. A strong dollar stimulates imports and increases the risk of defaults.
During the panic of the pandemic in March 2020, the dollar soared creating a crisis at the global level. global. Liquidity was injected at historic levels to stem a deeper plunge. The dollar began its weakening creating a financial boom. The Dow, Nasdaq, The S&P 500, Bitcoin, and most other markets soared through state intervention in the economy. In other words, the nightmare of the conservatives. What did bitcoiners do? Laugh and cry at the same time. The conservative streak criticized the monetary measures. And, on the other hand, the pocket celebrated the price increases.
Finally, the Federal Reserve is preparing to tighten the monetary belt. Indeed, the dollar has recovered quite a bit from its lows. What are we bitcoiners doing? Again. Laugh and cry. But vice versa. The markets fall. And the Federal Reserve will withdraw liquidity. In my case, the matter is simple. I don’t follow dogmas. My pocket hurts me above all. I am neither conservative nor progressive. I am an investor. I study macroeconomics to determine my entry price and my exit price. I am worried about my portfolio. Not the libertarian utopia.
Despite the volatility and a slower pace, I would like to think that there will be growth this year 2022. In other words, I am not yet ready to decree the end of the bullish cycle and the beginning of the downward cycle. In fact, I think that Bitcoin is at an opportunity price. We are on the floor and very close to the floor. We will have a stronger dollar. But hardly a dollar too strong. Because the Federal Reserve has no choice but to move gradually so as not to create a crisis.
Keep reading: Predictions and trends: What will 2022 look like?
Why do markets rally on Powell’s remarks in Congress as he takes up his new term as Federal Reserve chairman? Markets panicked over the December meeting minutes. But everything seems to indicate that it was a misunderstanding. Powell calmed markets with his firm but dovish tone. I mean, it’s good to know they didn’t go crazy on the Reservation. Things are going to happen at the right time. Gradually. The market, apparently, overreacted. Because everything will happen in steps. Good news. Optimism returns. Markets rise.
I assume the dollar will move in a volatile but fairly parallel trend for the rest of the year. I don’t think it will go too low. And I don’t think it will go too high. It will have its fluctuations. Now, there won’t be a recession. But not very aggressive growth either. It would be a huge exaggeration to say that it will be a particularly bullish year for the dollar. Well, let’s hope not.
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