Waking Up From the Great Truman Show
Holding Bitcoin and gold is an insurance policy against an Orwellian future.
Nothing that results in human progress is achieved with unanimous consent. Those that are enlightened before the others are condemned to pursue that light in spite of the others - Christopher Columbus.
In the 90s a new economy emerged, one built on bits and globalization that created the illusion that Thomas Friedman coined, the idea that the world was flat. In less than a second, a person in New York was connected with another in Hong Kong. This illusion ended with the great dot com bubble, which although was a wave of progress, it also led to central banks creating a great illusion as well, a great Truman Show.
I refer to the film whose protagonist, Truman Burbank (Jim Carrey), is in front of the cameras from the day he was born, without him being aware of this fact. His life is filmed through hidden cameras, 24 hours a day and broadcast live. Producer Christof seeks to capture the raw, real emotion of human behavior as Truman’s hometown of Seahaven is a set built under a dome so large that it includes an artificial sun, sky and sea. This set is populated by actors from the series and a team, allowing Christof to control every aspect of Truman's life, including the weather and the length of days.
Source: Bloomberg
Alan Greenspan began the era of great moderation after the collapse of Long Term Capital Management. A fund created by the Nobel Prize winners of Economics, Merton and Scholes. In the aftermath of the derivatives implosion, he decided to inject tons of liquidity into the system. With the foundation of another illusion, real estate was the safest investment, and the best strategy to create wealth and growth for the American people.
This illusion was punctured with the collapse of 2008. Like Christof in the Truman Show, the world's central banks would play all their cards to maintain the great illusion, Bernanke and his equivalents filled the world with liquidity, saving business models that made no sense and annihilating the capacity to self-purify capitalism.
The idea of technological development and infinite progress that we feel on the internet is contrasted with the truth that influenza and disease is the true enemy of humanity, and shows our lack of technological development in many areas, especially medical science.
The world changes, but we use the same tools to control its effects. So, as the coronavirus progresses and the great lockdowns create a massive disruption in the global economy, central banks use the old method economically: inject liquidity. This time they are not alone in their objectives. Governments of today aren’t concerned about their mounting piles of debt due to more and more fiscal spending. They work with the central banks in order to maintain the illusion of growth and increased consumption at all costs.
Ilusion 1 - The New Economy
Ilusion 2 - The Great Moderation
Ilusion 3 - The Great Stagnation
The illusion is increasingly difficult to sustain. The world is not flat, just as we aren’t in an era of progress either. Disease continues to be the factor that defines our history.
Since the Cold War, innovations in humanity have been anemic. The smartphone, with which we have the feeling of technological development, is nothing more than an incremental innovation of the technological disruptions of the Cold War.
When the world of atoms is full of zombie companies, the world turns to the world of bits in search of growth, but the problems in the world of atoms continues to escalate. Sustaining the world of corporate zombies will create great social tension, geopolitical conflicts and ideological sigmas are going to give birth to new ways to organize our society.
Source: Pantera Capital.
Many will question whether it is worthwhile for the Christof’s of the world (central banks) to have that power. Their voice will be seen in the valuation of an asset that the establishment looks upon with skepticism: BITCOIN.
There is a new emerging digital society rising on the internet, one without a state. It’s currency is Bitcoin. While the world of atoms is ruled by states and governments, the world of bits is beyond them. By not being part of any nation state, it could coexist with other nation states' currencies.
There are companies native to the world of bits, there are workers native to the world of bits, and different blockchains will define the geography of the new internet.
The world of atoms is in trouble and the only way to sustain the illusion of growth is by printing money and increasing debt. However, at one point the ilusion will be over and the only way to promote productivity is by connecting the world of bits with the world of atoms. Smart cities, automation and 5G are critical developments essential for a more sustainable humanity.
Sincerely,
Guillermo Valencia
Co-founder, Macrowise
Brazil 28 June 2020