Gresham's Law, the Lindy Effect and Bitcoin

A common belief among BTC advocates is that Gresham's Law and the Lindy Effect will inevitably drive value toward BTC.

I’ve been a libertarian activist for over twenty years. In my senior year of high school (class of 2004), I gave a presentation on the scam of central banking, how controlling the issuance of money gives insiders a headstart that nobody can surmount, and how nations are basically free-range, corporate plantations.

If you’re familiar with early Bitcoin culture, you can see why I was attracted to Bitcoin immediately when I heard about it. If you’re new here, it didn’t used to be all about “number go up,” but it was an activist project designed to disrupt global payments, remittance and banking.

I was convinced the collapse of the dollar was imminent and that a rapid de-dollarization of the world would make holders of gold or similar assets the new ruling class by de facto. But twenty years after my high school presentation on the imminent collapse of the dollar [side note: are my friends going to invite me to my high school reunion?] I have come to realize I was obviously overzealous.

Some background

I am far from the first critic of the U.S. Dollar.

On this day 190 years ago, September 10, 1833, at the end of the “Bank War,” Andrew Jackson announced that the United States would no longer use the Second Bank of the United States.

There was widespread resentment toward the bank in the aftermath of the Panic of 1819. Many… pic.twitter.com/5MCXbWYMBa

— Liam McCollum (@MLiamMcCollum) September 10, 2023

Going back to the founding of the nation and earlier, sound money advocates hated central banks, but the world never had a pure experiment in fiat maximalism until the dollar got 100% off of the gold standard with the dissolution of the Bretton Woods agreement, which was a middle-ground stepping stone used to move the world away from the gold standard over a generation. Thanks, Richard Nixon!

Today is the 50th anniversary of Nixon "temporarily" suspending the dollar's convertibility into #Gold, opening the doors for the unlimited deficit spending and money printing. Today, we draw near to the conclusion of this monetary story arc… pic.twitter.com/RaaHhAa4zD

— Egon von Greyerz (@GoldSwitzerland) August 15, 2021

In the decades following the dissolution of the Bretton Woods agreement in 1971, many financial skeptics have wagered against the dollar, convinced that its collapse was imminent. They saw the dollar’s decoupling from gold, rising national debt and expansionary monetary policies as signs of an impending crisis. Yet, time and again, these doomsayers have been proven wrong. The dollar has not only survived but thrived as the world’s most trusted and liquid currency, underpinning global trade and finance.

Yes, the purchasing power of the dollar has generally trended downward, but wealth and tons of metrics about the spreading of wealth are way up across the globe for every nation that uses the dollar in their economy, and it is up against most competing national currencies.

While criticisms of the dollar and central banking are valid, it is crucial to acknowledge that betting against the dollar has been a losing strategy for nearly half a century. Those who have clung to the belief that the dollar would collapse have missed out on generational wealth that could have been built by investing in companies in the Western Hemisphere that are tied inextricably to the dollar’s power. This wealth could have been accumulated passively by recognizing the dollar’s resilience and its central role in the global economy.

Bitcoin’s rise and the ‘Tetheral Reserve’

Fast-forwarding through a generation of foreign and monetary policy and a few boom-and-bust cycles in which the dollar has continued to come out on top, Bitcoin has often been hailed as a hedge against the collapse of the dollar by advocates, including myself, for a time.

Many in the BTC maximalist community argue that as fiat currencies falter, BTC’s value will soar, providing a safe haven for those looking to preserve their wealth. We haven’t seen this, but the meme persists because of BTC’s general price appreciation despite the fact that the performance tends to mirror risk on tech stocks rather than a trusted hedge. BTC is admittedly the greatest performing chart of all time, but the reality of the underlying mechanisms is more complex, and to date, we have seen no calculable correlations between BTC’s performance and the collapse of the dollar.

BTC’s meteoric rise has not been due to a dollar collapse but rather the result of market manipulation within the crypto bucket shop economy—a manipulation spearheaded by Tether, Inc.

스테이블코인 USDT를 개발한 회사인 Tether는 본질적으로 암호화폐 범죄 세계에서 연방준비은행과 유사점을 만들었습니다. Tether를 인쇄하여

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