Nowadays, capitalism is a contentious topic. Many people today point the finger of blame at capitalism for societal issues. What these crusaders who proudly identify as “anti-capitalists” fail to understand is that the current global fiat economy is not actually capitalism.
Unfortunately, this system has been severely disturbed as the unilateral judgments of a small number of bureaucrats have replaced the decentralised judgments made by millions of independent participants in a free market. Money itself is governed by a small group of unelected economists and bankers under the fiat monetary system. It’s all about free markets in capitalism. When it comes to our money itself, bureaucrats instead than markets select the currencies used, their availability, and interest rates. It’s not capitalism here.
People with money engage in businesses and endeavours they think have potential and will likely yield rewards under capitalism in its purest form. Investors must take on the risk of significant loss and make challenging sensible decisions. Their capital, when used to start a profitable company, enables the production of goods, services, and jobs that satisfy consumer demand, making the profits received by successful investors fair. The cash necessary for deserving initiatives to start or grow a prosperous firm can be obtained through investors in a free market, hence extending prosperity across society in a meritocratic way.
Therefore, savvy capital allocators must closely monitor and anticipate the actions of central banks, whose directives have the power to tip entire economies into bull or bear runs. Instead of devoting all of their considerable analytical resources to examining potential business ventures and market needs. An old saying on Wall Street goes, “Don’t fight the Fed,” which refers to the notion that successful investments must be in line with the Federal Reserve’s current monetary policies. The activities of unelected, unaccountable, powerful centralised actors like the Chair of the Federal Reserve, Jerome Powell, must therefore be followed and theorised around by investors.
Additionally, under the fiat system, designated legal currencies like the dollar are always experiencing inflation. Because of this inflation, regular individuals who want to save money are forced to invest their money at risk or watch as their purchasing power slowly depreciates. As a result, those who are not investors and lack the knowledge and motivation to risk their money on business endeavours are compelled to do so. Hardworking average folks invest their money in mutual funds and indexes when they don’t have a business they believe in. Due to their inclusion in these indices, “zombie companies,” or economically unviable businesses that rely on investments to fund their operations while failing to provide the market with enough goods and services to cover their costs, can endure for lengthy periods of time. These “zombie enterprises” are funded passively by regular people who don’t understand business basics but are compelled to invest in mutual funds and indexes in order to protect their savings from ongoing fiat inflation.
This results in wasted effort and a significant misallocation of resources because the capital made accessible to value-generating enterprises is greatly influenced by Powell’s words, whose actions these businesses are powerless to influence. For instance, Powell’s statement on August 26, 2022, caused the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite to decline by 3.03%, 3.37%, and 3.94%, respectively. This was a startling decrease for just one day. Smart investors must base their selections on Powell’s comments rather than a firm’ value, which significantly inhibits the meritocratic value generation of capitalism.
Bitcoin would offer hard money that doesn’t lose value over time if it were to become widely used. As a result, common people might save money using Bitcoin rather than stake their retirement on businesses they haven’t independently analysed using mutual funds and indexes. Furthermore, rather than being governed by strong central bankers, Bitcoin’s monetary policy is openly written into its programming. Investors would once again be able to focus solely on discovering worthwhile enterprises rather than adhering to every word the Fed said in a world where Bitcoin prevailed over fiat. This would mainly reinstate capitalism, our least worst economic system, as the engine of wealth.
- Capitalism Is Broken by Fiat It’s Fixed by Bitcoin
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