The right wing media is furious though. Social media is flooded with posts pointing out how everyone else deserves a break too, poor people need more help than anyone making $125,000 per year, and it’s unfair to treat people who willingly took on loans as victims. As is always the case in American media, everyone is talking about the wrong things, which is distracting from the real issues and therefore enabling them, guarantying the problem will continue.
Everyone knows the price of college tuition skyrockets every year for no other reason than colleges can get away with extorting their customers. One of the main reasons they get away with this is they know it doesn’t matter if their students can afford tuition. As long as students can get a loan, the school will get their money, and whatever happens after that isn’t the their problem.
Imagine if the government came out and said, “We realize you need a car to get to work, and the price of cars has risen 1,000% in your lifetime. So we’re going to give everyone who currently has a car loan $1,000. You’re welcome.” Anyone with a car note would say, “Sure, I guess. Thanks for barely nothing.” Anyone without a loan would say, “Fuck you too.” They would both be right, but arguing about the details misses the point. The real issue is the extortionate increase in the price of cars. If the government simply stopped car companies from being able to overcharge their customers, they could fix the problem for free.
The second half of the real problem is the interest rates on student loans. Imagine if you bought a car for $10,000 because you needed it to get to work. Then you paid $100 every month for a year, and at the end of the year your loan balance was $10,000. Then the president of the United States comes out and says, “Don’t worry. I’ll save you by making tax payers give your predatory lender $100!”
An actual person’s student loan balance
Millennials wouldn’t be crippled by a lifetime of student loan debt if the interest rate was zero, and since student loans are the only debt that can’t be eliminated by filing for bankruptcy, I believe that would be a fair trade.
Anyone who is pissed off that it’s unfair for college debtors to get free relief shouldn’t be focusing their arguments on that one myopic point. They should be pointing out that the government could give students more help for free by simply eliminating interest rates, or at least cutting them in half. The only people who lose in that scenario are the ultra rich assholes who created the problem.
If we’re going to scream about how something is unfair, we should be screaming about the fact that the government’s only solution to students being exploited by financial institutions is to give huge lump sums of free tax payer money to the exact same bankers who created the problem to begin with. This is exactly how the government dealt with the 2008 housing market crash:
Step 1: Financial institutions bankrupt consumers by overcharging them. Step 2: Consumers can’t pay off their loans, which means the banks become in danger of going bankrupt. Step 3: The government gives the banks free tax payer money. Step 4: The CEOs of those companies buy mansions, yachts, cocaine, and hookers with that money. Step 5: The consumer never stops living paycheck to paycheck.
So, yes, I’m completely against giving those vultures more money. I want students to have debt relief, but I want them to get it at no cost to the tax payer by simply preventing colleges and lending institutions from gouging their customers.
One of my readers recently asked me to write a blog about reducing America’s deficit. So, here you go.
Right now, America’s total debt is about $18 trillion. That numbers is calculated by adding the government’s promise to pay social security, government pensions, military pensions, health insurance trust funds, savings bonds, and a few other debt vehicles. You could spend a lifetime micromanaging all the details of the national debt. For the sake of simplicity, I’m going to focus on ways to reduce the cost of the biggest programs America is borrowing all this money to pay for.
The graph below is a little old, but the percentages haven’t changed much. It paints a clear picture of where the federal government spends the most money:
The Big Five Expenses
Medicare and Health
Healthcare is the biggest expense for the federal government as well as the leading cause of bankruptcy for individuals. I’ve already written a blog about My Theories On How To Fix Healthcare in America. In summary, they are:
Make price gouging illegal.
Nationalize the healthcare industry.
Eliminate or nationalize the health insurance industry.
Regulate and Subsidize healthcare.
If hospitals and insurance companies didn’t gouge their customers, there would be no need for the government to pay the difference between what they charge and what customers can afford. You can accomplish this one of four ways: Pass laws telling private companies what they can charge. Make the healthcare industry a branch of the government and set prices for what they charge. Nationalize the health insurance industry so the government can set what they’re willing to pay for medical procedures and put all the profit from insurance into the public coffers.
If you feel those first three options are too oppressive, you could pass laws saying what private companies can charge, and give them a small kickback from the government to make sure they still make enough profit to thrive. It sounds odd, but it would be cheaper than paying unregulated prices and insurance markups. New Zealand has had pretty good results using this system.
Another way to lower medical costs in America without touching the healthcare industry is to raise the quality standards of food and beverages to prevent health problems in the general public. If Americans stopped consuming processed food full of carcinogenic additives, soft drinks full of processed sugar, and factory farmed foods full of pesticides and hormones, then fewer people would spend their golden years in hospitals.
Social Security
For the past 60 years, Baby Boomers have been paying their parents’ and grandparents’ social security. Now, Gen X and the Millennials are paying their parents’ and grandparents’. However, young people’s low wages can’t keep up with the size of the Baby Boomer generation.
Sadly, this means there are only three possible ways to fund the Baby Boomers’ social security:
A pandemic kills enough Boomers to reduce the cost drastically.
The government finds a shady way to not pay the Boomers what they’re owed.
The government borrows trillions of dollars and passes the debt to the next generation.
None of these solutions are good, but one of them has to happen. America has already painted itself into a corner on this issue. Moving forward, there are a few things we can do to ensure we don’t get into this mess again.
First, we would need to lower the amount individuals can pay into the system so the next generation doesn’t have to pay out so much. However, this would require lowering the cost of living to ensure social security checks are enough to survive comfortably on.
The two biggest expenses for the elderly are healthcare and housing. I already discussed a few ways to lower the cost of healthcare, and I wrote another blog entitled, The Housing Market is a Crime Against Humanity.
The cost of housing is artificially inflated by the government and lending institutions through fees, interest, and taxes so that over the course of a thirty-year mortgage, the price of a property is doubled. If we fixed that system, then people could afford to own their own homes.
Another way property prices are artificially increased is by allowing individuals to buy dozens, even hundreds of rental units, creating a false scarcity that leads to housing bubbles. By limiting the amount of property people can own, we can increase the supply to poor people. If we reduce property taxes on top of that, it should be easy to afford to keep a roof over your head when you’re too old to work.
Military Spending
America spends more money on its military than the next eight biggest militaries in the world combined, and all those countries are America’s allies. So, it’s difficult to justify our military budget on the basis of national security.
An easy way to lower military spending is to simply slash its budget and let the D.O.D. figure out how to manage its resources. The first thing they’d have to do is decrease their staff size, which would have the long-term benefit of reducing the number of pensions it has to pay.
One of the main reasons the military budget is so high is because America has so many bases. I’ve had a hard time finding an exact number, but Wikipedia says there are about 5,000 total, with over 600 overseas. That figure is close enough to get the point across. The overall mission of the U.S. military isn’t to protect American land. It’s to maintain global military superiority.
I’m not implying the military is trying to take over the world. They’re just maintaining the status quo. Some would argue this is a good and necessary mission, but it’s bankrupting America, and what good is global supremacy when millions of Americans are living below the poverty line? Many Americans would benefit from changing the military’s mission to just defending against imminent attacks. There’s even a school of thought that argues America would be less likely to get attacked if its military wasn’t all over the world intimidating other countries.
Another logical place to cut military funding inside the U.S. is eliminating V.A. hospitals. I’m not suggesting we should deny veterans healthcare. I’m pointing out that the V.A. is a notoriously inefficient system. I seriously believe most of the veterans who kill themselves, reach that level of hopelessness by fighting with the V.A. in a futile attempt to get the help they need. If America fixed its regular healthcare system, we could just move all the veterans to it and subsidize their treatment cheaper than going through the V.A.
There are countless little ways the military hemorrhages money through internal fraud, waste, and abuse. Those cracks are worth filling, but they pale in comparison to the amount of money the government pays to private contracting companies for supplies and research and development. America spent over $300 billion designing the F-35 fighter jet that can barely do its job. In order to justify these costs, America will have to use its overpriced equipment, which means finding another war to fight even if one doesn’t exist. Ending, or at least, heavily regulating the military-industrial complex is an essential step the government must take to reign in military spending.
Unemployment and Poverty Assistance
According to the graph at the top of this page, poverty assistance programs make up the fourth largest slice of government expenses. I’ve seen other figures that count it as the largest expense. Some people would argue that either way, this is evidence we need to cut funding to the poor.
The best solution to poverty isn’t to let the poor suffer and die. It’s to reduce the cost of living to make assistance less necessary. It’s tragic that people will complain about spending ten cents out of every tax dollar to help the poor, but they’ll give their landlord one third of their paycheck every month without blinking an eye.
Fixing healthcare and the housing market alone will reduce the need for poverty assistance. Reducing unemployment will take more drastic measures, but it is possible. One step that would help is creating a single national job board that every business must post vacancies and hire through. This would eliminate a lot of the excuses people make for not finding work, and it would streamline employment assistance programs.
Finding a job is only part of the problem though. A bigger issue is getting to work and having access to childcare while you’re there. If we hadn’t designed our cities to require driving long distances to get anywhere, then every job would be within everyone’s reach. Fixing this would require redesigning cities, which is almost impossible, but that’s the solution. Don’t shoot the messenger. If city infrastructure were efficiently spaced and accessible, then it would be cheap and easy to transport children to daycare facilities. If those were run by able-bodied retirees, then they could make a little extra income without having to charge nosebleed prices, and everyone could get on with their lives.
All that aside, we wouldn’t have to spend tax money to subsidize workers who live below the poverty line if their employers paid them a living wage and businesses didn’t gouge their customers to maximize profits. But that will never happen as long as the rich write the news that people base their perception of reality on.
Education
Coming in a distant 5th place in the cost of running society, is education. The federal government only spends a fraction of their budget on this cost, but state governments spend ten to twenty percent on it. If we could lower the price of education, then that money could be used to cover other costs of living.
The cheapest way to provide unlimited education to the masses is through online learning. You could theoretically close all brick and mortar schools and home-school every student through self-paced online courses with pre-recorded videos. Then you wouldn’t even need nearly as many teachers or faculty.
I’m not actually arguing we go to that extreme, but I would like to see one free online school that offers every course from kindergarten through college that anyone can attend as an alternative to standardized schools so if you happen to live in an underfunded district where you school is little more than a day care center for gang members run by 23 year old teachers, then you could have access to a reliable source of education.
It’s no secret that the cost of higher education has skyrocketed unjustifiably high in the past thirty years. The reason isn’t because it’s more expensive to run a school. It’s just that colleges have been forcing students to take government grants and student loans solely for the sake of increasing profit. The government could put a stop to this by not giving colleges free money and making it illegal to gouge students. Duh.
Three Other Solutions
Lower the debt ceiling.
If you hate all my ideas on how to lower the deficit, here’s one you might agree with. Lower the amount of money politicians are allowed to borrow and force them to figure out solutions other than passing the problem on to the next generation.
Before we can do that though, we need politicians who are competent and virtuous enough to make rational decisions that are in the best interest of the tax payer. To that end, we’d need to have higher competency standards for politicians and close the cracks in the political system that invite corruption. Specifically, we’d need to stop allowing lobbyists and special interest groups to legally bribe politicians with campaign finance and kick backs.
Raise taxes on the rich and close tax loopholes
We could keep spending at the same rate we’re at if we raise taxes to cover the costs. If we raised taxes on people who already rely on poverty assistance programs, that would force them to rely more heavily on assistance. If we raised taxes on people who can afford to spend a thousand dollars per day for the rest of their lives without ever having to downsize their mansion or yachts, then nobody would have to suffer. And frankly, those rich people wouldn’t lose any money they weren’t ever going to spend anyway.
We don’t even have to raise taxes on the rich. We could just close all the tax loopholes they use to avoid paying their share and collect that.
Nationalize the Banking/Lending Industries
Every time you use a debit or credit card, the company that processes the transaction takes a small fee, just PayPal. That’s why gasoline is often cheaper if you pay with cash. Every time you take out a loan, a bank collects interest. All of those transactions add up to billions, if not trillions, of dollars each year that end up sitting in an account or buying a rich guy his third mega yacht. If the government nationalized the banking/lending industry, then it could set reasonable interest rates and keep all the profit to use for the common good.
If you liked this blog, you’ll probably like these:
It’s common knowledge that healthcare in America is unaffordable, and politicians are always talking about ways to fix that. Unfortunately, their plans are always confusing and often misleading. The problems isn’t that complicated though, and there are some relatively simple solutions that deserve to be discussed.
The root of the problem (that politicians almost never mention) is that hospitals price gouge their customers. This is the only reason health insurance is necessary. If prices weren’t inflated beyond affordability, there would be no reason to pay insurance companies to protect you from them.
The reason politicians never promise to simply make price gouging illegal is because hospitals would immediately point out that they have to pay ludicrous prices for medical equipment, and doctors have to pay unreasonable prices for medical school. This raises the point that medical equipment and medical schools are also price gouging their customers.
If we passed a law that prevented those businesses from price gouging, they would point out that the businesses they depend on are price gouging them. If we follow the rabbit hole all the way down, we’ll have to admit that the entire economy revolves around businesses gouging their customers.
You could take this as evidence that humans are inherently greedy and evil, or you could take it as evidence that the standard business model is inherently flawed.
The purpose of owning a business is to make a profit, and the formula for profit is “revenue minus costs.” So to make the most amount of money, you have to provide your customer with the cheapest goods and services possible while charging them as much as possible. And we justify gouging customers for cheap goods and services by saying that the value of goods and services is equal to whatever a person is willing to pay for them.
This is easily true when determining the price of bananas or a piece of modern art, but it becomes a recipe for exploitation when determining the price of cancer treatment.
If you need a good or service in order to survive, then of course you’re going to pay whatever you have to. But if you have to pay $3,000 for insulin that costs $50 to produce, and you don’t have $3,000, you’re going to die because your ability to pay didn’t meet your provider’s ability to exploit your need. The value of insulin wasn’t really $3,000. That was just the value your provider could get away with exploiting you.
Fixing this problem would require putting profit caps on businesses or income limits on business owners, but that’s never going to happen in my lifetime because predatory businesses have the money to legally bride politicians with campaign donations and lobbying to prevent comprehensive anti-price gouging laws from getting passed.
Ultimately, profit/income caps are the truest solution to the root of the problem of unaffordable healthcare. Short of that, there are other second-tier solutions.
Adding more regulations to private insurance is not one of those solutions. Insurance companies are required by the law of supply and demand to provide the least amount of benefit to their customers while simultaneously charging the highest prices people are willing to pay to survive. So they will always try as hard as possible to do what’s in their best interest, which is inherently in the worst interest of their customers.
If health insurance must exist, the best course of action is to nationalize the insurance industry completely. In other words, the government is the only insurance company, and they only have one plan that everyone can afford. They don’t need to make a profit, and whatever profit they do make can go directly into the government coffers to be spent on public services. You could even just roll the cost into basic taxes so you don’t even have to apply for it or have an insurance card.
In America, this is basically “Medicare for all.” Granted, I don’t trust the American government to implement this system as simply and efficiently as it could be. Having said that, you should be asking, “If you don’t trust the government to do this right, then why trust the government to do it at all?” My reply would be that I trust private predatory insurance companies (whose profit margin depends on providing life-threateningly poor service) even less.
In a perfect world, we would just nationalize the entire medical industry and take away the need for health-related businesses to make extravagant profits. But we live in a bureaucratic world where egos, careers, and paperwork are more important.
Most Americans don’t know this, but New Zealand found a decent compromise. They don’t have “socialized healthcare” per se. They have “subsidized healthcare.” This means doesn’t totally control the healthcare industry. You pay a little extra in taxes, and the government uses that to cover the costs of the inevitable markups doctors and hospitals are going to charge. In practice, this means seeing a doctor always costs $30-$50, and your prescriptions always cost $5-$15. Healthcare providers always make a profit, but they never eat you alive.
In New Zealand, you can still buy private insurance and see more expensive providers, but due to how the whole subsidized medicare system works, millionaires in New Zealand aren’t going to get as good of healthcare as millionaires in America, and New Zealand medical centers don’t make as many medical research breakthroughs as America’s over-funded hospitals because even though most of America’s healthcare funds get funneled into hospital owners’/investors yachts, a lot of that money still manages to find its way to research.
So if we have to make the most of a broken system that favors the rich, then perhaps the best course of action is to admit and embrace the fact that we have a classist system.
People who make less than $70k per year need reliable access to basic healthcare. So give them (which includes me) nationalized, socialized, or subsidized access to relatively shitty healthcare with (possibly) long wait times that guarantees we get can at least get something we can afford, and then make overpriced first-class hospitals mandatory for rich people where they don’t have to be inconvenienced with the presence of the poor. That would be a better and more honest system than America has now.
This isn’t the solution I want, but it’s one I’m willing to accept if we have to balance the needs of the many (surviving) with the needs of the few (profit). But I’d rather use this compromise to point out the absurdity of having to balance the needs of the many with the needs of the few.
I prefer watching educational videos on YouTube more than watching television, but it’s tedious digging for good content, and I’ve already seen most of the good stuff while searching for videos to put in my blogs. In case anyone else is looking for entertaining educational videos on YouTube, I made a series of posts with all the ones I’ve used on The Wise Sloth, organized by topic, with links to the posts they appear in. You’re bound to be enlightentained, and if you need help exploring the 600+ essays on The Wise Sloth, these video lists offer a quick overview that practically summarize my philosophies.
I prefer watching educational videos on YouTube more than watching television, but it’s tedious digging for good content, and I’ve already seen most of the good stuff while searching for videos to put in my blogs. In case anyone else is looking for entertaining educational videos on YouTube, I made a series of posts with all the ones I’ve used on The Wise Sloth, organized by topic, with links to the posts they appear in. You’re bound to be enlightentained, and if you need help exploring the 600+ essays on The Wise Sloth, these video lists offer a quick overview that practically summarize my philosophies.
I prefer watching educational videos on YouTube more than watching television, but it’s tedious digging for good content, and I’ve already seen most of the good stuff while searching for videos to put in my blogs. In case anyone else is looking for entertaining educational videos on YouTube, I made a series of posts with all the ones I’ve used on The Wise Sloth, organized by topic, with links to the posts they appear in. You’re bound to be enlightentained, and if you need help exploring the 600+ essays on The Wise Sloth, these video lists offer a quick overview that practically summarize my philosophies.
This list comes from my essays on economics and focuses on the housing market, taxes, and crypto currency.
Note 1: I wrote this guide on January 7, 2018. At that time, most of what I had to say about cryptocurrency was pessimistic, but I believed at least one of them would last forever, but we had to wait for the market to decide which one it wanted. I’m no longer have any confidence in the cryptocurrency market at all, but I’m leaving this post up for posterity. Look, 99% of of cryptocurrencies are scams, and I believe the 1% that aren’t will be replaced by some kind of new block chain that will solve all the old cryptocurrencies’ problems and make them obsolete. I don’t know what this hypothetical “Bitcoin 3.0” will be or who will make it, but in order for it to be accepted by mainstream businesses, it must have a stable price. So it will just be a medium of exchange, not an investment vehicle. Anyone holding old crypto coins when “Bitcoin 3.0” is invented and released, will be holding a wallet full of digital beanie babies. That’s my opinion. I could be wrong, but at this point I wouldn’t advise “investing” in cryptocurrency because I believe every existing coin will be worthless in a few years.
Note 2: There are about 115 cryptocurrencies listed on this page. These are all the coins that have sold over $1 million dollars as of January 7, 2018. It doesn’t include tokens. Any coin not listed on this page isn’t strong enough to raise $1 million. So betting on them to become the next Bitcoin is like betting on an ant to eat an elephant.
These sites specialize in trading cryptocurrencies. So if you want to access the newest, cheapest coins, you’ll need to buy some Bitcoin, Etherium, or Litecoin from one of the sites above and transfer them to one of the sites below.
These are more sites where you can sell cryptocurrency for cash. Regardless of where you bought or traded your cryptocurrency, you can transfer it between any of the sites listed on this page in a few clicks.
If you plan on holding onto your cryptocurrency for a long time without daytrading, you should keep it in a wallet instead of letting it sit in your account on one of the trading sites because if the government ever shuts those sites down or they get hacked, you’ll lose all your assets.
These sites allow you to look up prices in real time, find information on coins, and set up portfolios that show the current price of the coins you own.
You can “print” your own cryptocurrency coins by dowloading software from the links below and running it on your computer. It will take a long time to make a significant amount, but you won’t lose any money other than the electricity it takes to keep your computer on.
The only factor that gives a cryptocurrency real value is merchants accepting it as payment for real-world goods and services. The most widely used currency, and the only one accepted by major businesses, is Bitcoin. So Bitcoin is the only cryptocurrency that truly deserves to be called a legitimate currency… for now.
Bitcoin became the leading cryptocurrency because it was the first, and still is, the most widely used cryptocurrency on the darknet, which if you don’t know, is a collection of encrypted websites where you can buy illegal products like guns, drugs, child pornography, and much more. The stores on the darknet were the first businesses to accept Bitcoin as payment for real-world goods and services, which is how Bitcoin proved itself as a real-world currency. As long as the darknet exists, there will always be a need for cryptocurrency. So the first rule of investing in cryptocurrency is, you’re gambling with your money if you buy coins that can’t be traded for child porn.
After Bitcoin, the only other cryptocurrencies you can spend on the darknet are ZCash, Dash, Monero, and Ethereum. The reason blackmarket merchants adopted these in addition to Bitcoin, is because Bitcoin leaves a digital trail that can be traced. There are ways to cover your tracks, but the whole reason the darknet started using Bitcoin in the first place, is because it was more anonymous than a bank transfer. ZCash, Dash, and Monero were designed specifically to be anonymous and untraceable. Ethereum wasn’t, but it has smartcontract technology that allows you to use digital wallets that can cover your tracks.
Merchants on the darknet probably still accept Bitcoin even though Monero fits their need better because Bitcoin is accepted by the most legitimate businesses. There’s no point selling heroin for money that can only be spent on more heroin. If Amazon starts accepting Monero or Ethereum, there would be no reason for black market merchants to risk accepting Bitcoin anymore. If they stop accepting it, then Bitcoin will lose its safety net. But if Amazon accepts Bitcoin, it won’t need the darknet to survive.
Monero is the most secure cryptocurrency, which means it’s in the best position to become the next king of the darknet, but legal companies like Amazon don’t need to hide the identity of their customers. Ethereum’s versatility fits the needs of legal businesses much better. If a nerd can use Ethereum’s smart contracts to build the ultimate anonymous digital wallet, it would make Monero obsolete.
Below is a list of other cryptocurrencies that claim to be designed with security in mind. They would be a solid investment if the black market merchants started accepting them, but that need has already been filled. If these coins’ home pages are any indication of the quality of their product, they’ll never be accepted by anyone. The only coins on this list I find remotely interesting are Komodo, Storj, and Maidsafe due to their versatility, but why bet on a latecomer that hasn’t proven itself yet if you already know you can win by betting on one of the big 5?
Below is a list of other currency-centric coins that aren’t security-based. To the best of my knowledge, none of these do anything better than the big 5 established cryptocurrencies. Even if they did, they’re still missing the only factor that really matters. No major businesses accept them as payment or are even talking about considering them. If they’re not on big business’s radar, then they shouldn’t be on yours.
Before you buy any of the cryptocurrencies listed above, be aware that they all share a fundamental flaw. The only thing that gives a currency value is that it’s accepted by merchants as payment. However, consumers are motivated to not spend their cryptocurrency in the hopes it will increase in value 200,000% in two years. If consumers don’t spend their money, then merchants will stop accepting it. If the currency can’t be spent, it loses all its value.
There is definitely a need for a decentralized cryptocurrency, but in order for it to be useful for merchants, its price must be stable, which means “The Next Bitcoin” can’t be an investment vehicle. It’ll just be the medium of exchange. When the need for that kind of cryptocurrency is filled, then all the currencies that behave like stocks will become obsolete… and anyone who invested in those currencies will lose their money. Think about that.
There are currently a few cryptocurrencies that are designed to be pegged to the U.S. dollar, U.S. penny. I’m sure every month, more cryptocurrencies will come out that are pegged to other paper currencies. The more stable currencies there are, the more demand there will be for one standardized coin. It may be the best coin standing, or the American government may create and enforce its own official coin.
The point is, the world is changing fast, and we don’t know where it’s going. Nothing is predictable. Bitcoin might not be worth a penny five years from now, and Dogecoin could be accepted on Mars. Frankly, it might be more secure to gamble your money on a marijuana mutual fund than cryptocurrency.
The other 3 most popular cryptocurrencies:
Litecoin (LTC) is sold everywhere Bitcoin is, and it does everything Bitcoin does a little bit better. It also costs a fraction of the price, but almost nobody accepts it as payment. Until they do, it will be effectively worthless. There are a few niche shops that take Litecoins, but none that are big enough to count, and I haven’t heard any of those express any interest in adding Litecoin as a payment method. If you simply have to bet on an underdog, this is the only one running with the big dogs.
Dogecoin (DOGE) is one of the oldest, most recognizable coins. Despite the fact that it freely admits it serves no purpose, its value is still going up. There are even a few gaming and gambling sites that accept it as payment, which makes it more usable than 99% of cryptocurrencies. I wouldn’t be surprised if Dogecoin hits $1 by 2019. Feel free to gamble on that prediction, but don’t bet more than you can afford to lose, because Dogecoin will never truly be worth a penny.
The problem with Dogecoin is that there are already almost 1 trillion coins in circulation, and its blockchain will continue to produce 5 billion more every year forever. The whole premise of a currency is it has a finite supply, and Dogecoin is infinite. Demand can never outpace supply, and all of its value will be lost to inflation eventually. So the only way to make money off Dogecoin is to buy a ton, wait for idiots to drive up the price, and sell before the bubble pops.
Ripple (XRP) has been getting a lot of media attention lately, and a lot of people are buying into it, pushing the price up. I even bought some and sold it at a profit. I didn’t hold onto it for three reasons. First, it’s not decentralized. It’s servers are all owned and operated by a private business in San Francisco. If the government decides to shut it down or the owner decides to run off to the Bahamas, Ripple will disappear. Nobody can shut down Bitcoin because its technology is spread all around the world on private individual’s computers and mining rigs.
Ripple’s second red flag is it’s designed to destroy a fraction of itself every time it’s spent. This makes it look good on paper because scarcity raises value, but it will just eat itself from the other direction. When there’s not enough left to spend, nobody can or will buy it. This could take a thousand years, but it’s still a scammy feature I’m not comfortable investing in.
My third problem with Ripple also applies to every other coin listed below. Ripple isn’t just a currency. It’s also a business platform. A lot of other coins also have a business baked into them like digital wallets, cloud storage, web hosting, virtual real estate, or insurance document management. So basically, these are businesses that are unofficially selling stocks in their company and calling it “cryptocurrency,” but it may be more accurate to call them “fraudulent stocks.”
This is even more true for the ones that had an initial coin offering (ICO). They’re raising investment capital and selling shares on a cryptocurrency exchange, sidestepping the laws they would have to follow to launch an initial public offering (IPO) to sell shares on a stock exchange. Technically they’re not breaking the law, but the government could reinterpret, rewrite, or ignore those laws and shut down these fraudulent stock issuers at any time. This is my biggest fear about investing in Ethereum, becuase they had an ICO, but some major banks, including JP Morgan Chase, have endorsed Ethereum, and banks always get what they want, even if it’s illegal.
Cryptocurrencies that have sold over $1 million in coins, and may have exciting products, but act like companies issuing fraudulent stock:
Some of these fake-stock coins might survive, and they might have really cool products, but before you buy their coins, ask yourself honestly, can you see Walmart ever accepting it as payment? If not, consider investing in one you can.
Sooner rather than later, the American government is going to shut down all the weakest cryptocurrencies and make it much more difficult to create new ones. There are already almost 1,400 coins, and more are on the way. Right now, the best way to get rich quick from cryptocurrency isn’t by investing in the next Bitcoin, but by creating and selling the next shit coin like Bitbean (BITB). Look at the screenshot of Bitbean’s home page below. There’s nothing behind this “currency” except a couple of guys on cocaine… who are getting rich.
Bitbean isn’t even the worst or most useless. SmurfCoin (SMF) uses a copyrighted image for its logo. I’ve found shit coins that don’t have home pages or their home page is broken. One of them said they were mentioned in several major newspapers, but when you click the links, it just takes you to the newspaper’s home page. Half the shit coins’ home pages are just boiler rooms that use flashing numbers, bright letters, and frantic language to excite or scare you into buying their coin now. Half the companies that offer a new and exciting product or improvement to blockchain technology don’t have a working product yet. It’s “coming soon” or “in development.” If they do have a product, like a groundbreaking crypto wallet, it looks and works just like a hundred other wallets that were probably made from the same code they all downloaded off of Github. There are at least 300 shit coins with home pages that look so similar, I’m convinced they were made by the same person cycling through six templates. Some of these ultra scammy sites have sold over $100 million in coins. So, don’t assume a cryptocurrency’s market cap is always evidence of strength, and always look at its home page before buying.
If the crypto community won’t self-impose new standards to prevent me from creating and selling Dickpickcoin (DCK), then governments will have to step in. When either of those things happen, all the shit coins will become worthless, and all the coins that include products and services, will have their heads on the chopping block. I don’t know when this will come, but I know it’ll be when the cryptomarket gets out of control, and it already jumped the shark with Trumpcoin (TRUMP).
If you simply must gamble on coins that have a market cap of less than $1 million, it doesn’t matter which one you choose. Their value is only based on how many other people are buying it. You may as well buy Dogecoin or the newest, cheapest shitcoin and wait for more idiots to do the exact same thing. Since it’s completely random which will attract the most fools, your safest bet is to buy 50 knowing enough will skyrocket to mitigate your losses.
…Or you could just give your money to me instead of a Russian hacker.
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Cryptocurrencies are like stocks. None of them have any inherent value. The only reason they’re worth money is because people have enough faith in their percieved value to trade real money for them, which isn’t so crazy, because money has no real inherent value either. Money, stocks, and cryptocurrency are all just tokens we assign a value to on faith.
The value of these tokens is based on two things: scarcity and the reputation of the person issuing them. For example, the U.S. government says, “We’re putting 10 trillion dollars into circulation. You can trade 1,000 of them for a cow. The more stable our economy is, the more our dollars will be worth. Trust us.” IBM says, “We’re putting one billion stocks in circulation. You can trade ten of them for a cow. The more profitable our business is, the more our stock will be worth. Trust us.”
Note: The video above says stocks represent ownership of assets in a company, which isn’t always true.
These promises are worthless until someone actually accepts these tokens as payment for real-world goods. Bitcoin was just an empty promise until people started accepting it as payment. Once other people saw that happening, they said, “Holy cow! This is worth real money!? Let’s buy and sell it too.” The more demand there was for it, the more money people would pay to get it, and the more it became worth, just like stocks. So you can think of Bitcoins like stocks in Bitcoin Incorporated. It’s even sold on cryptocurrency exchanges that work like the stock market.
The difference between cryptocurrencies and stocks is that there is no Bitcoin Incorporated. There’s no head office, CEO or profit margin because there’s no product being sold. Bitcoin is like a stock in a company that doesn’t exist. There are just a bunch of servers all over the world owned by volunteers, which run programs that were originally invented as a way to back up digital files in multiple locations simultaneously and securely.
Hospitals and big businesses used this technology so they could guarantee they’d never lose important records, and those records could never be tampered with. So employees couldn’t go back in and cook the books to cover up their mistakes or hide fraud. The system works sort of like Utorrent. There are a bunch of people all over the world running a program that allows their computers to collaborate with each other to write chains of data. Unlike torrent programs though, the data isn’t copied. Each server just shares the responsibility of creating and hosting a set amount of data.
The value of a Bitcoin isn’t backed by this data. The data is the money. So a Bitcoin mining machine is like a money printing press, but no matter how many mining machines are online, they collectively only create a set amount of data every day, which is distributed between all the printing presses. Ultimately, the Bitcoin printing presses will produce 21 million bitcoins, and then they will stop producing new ones. I’ve heard the number 21 million is supposed to reflect the amount of gold in the world, which is, in theory, should make Bitcoin the gold standard of cryptocurrency. The last bitcoin will be generated sometime around the year 2040. This system makes inflation impossible, but while Bitcoins are still being created, the more miners there are, the less each person gets to keep.
If this sounds ridiculous, think of Bitcoins like digital diamonds. Diamonds have no inherent value either. They’re just common rocks. The only reason they seem scarce is because DeBeers has a monopoly on the diamond supply and only lets out a few at a time. Plus, they’ve hyped up the value of diamonds so much that people believe they’re worth money.
If DeBeers flooded the market with all the diamonds they’ve hoarded, the price of diamonds would plummet, and your warehouse would become full of stupid, worthless rocks. Bitcoin miners can’t flood the market with Bitcoins and crash their value like DeBeers could with diamonds. They can’t split or reverse split a number of Bitcoins it has issued like IBM can. They can’t print 10 trillion more Bitcoins tonight and crash its value like third world countries sometimes do with their money supply. A foreign country can’t overthrow Bitcoin and crash its economy like America did to Iraq. In a crazy, turbulent world, cryptocurrencies like Bitcoin will always be stable… as long as the internet exists. That’s more than most currencies can boast.
How many people accept it as payment for goods and services
There are hundreds of different types of cryptocurrencies, and they each have a gimmick. Some are centralized. Others are decentralized. Some have more transparent histories. Others are more secure and untraceable. DogeCoin is just a generic coin that isn’t backed by anything and has a joke for a name. STEEM is backed by the popularity of its social media platform, which is a cool gimmick, but ultimately won’t determine whether or not STEEM succeeds or fails.
Even if Steemit becomes a great site, people will stop investing in STEEM eventually if they can only spend it on one or two websites. Even if the Steemit admins never make another improvement in the social media platform, if they focus all their energy on getting businesses around the world to accept STEEM as payment, the price will go up and never come down.
Compare STEEM to Bitcoin and Gold. Most of the people who buy Bitcoin probably don’t understand how it works. All they know is that a lot of people accept it as real money. Therefore, it must be real. It’s like gold. Gold is useful in the real world, but most people won’t use gold for anything other than buying things with it. Very few people know why gold is so universally accepted, and they don’t need to. All they need to know is, they can buy anything with it, anywhere in the world.
This leads me to the number one reason I haven’t invested money in buying STEEM yet. Steemit practically forces you to keep your STEEM tokens locked up in Steem power, and it takes months to turn your power into tokens and sell them. The official reason Steem power exists is the admins want to keep timid investors from crashing the price in a panicky sell-off.
This is true, and it works, but it also makes the price of STEEM look stable on paper, which impresses speculative investors. The problem is, if everyone’s STEEM is locked away, then nobody is buying anything with it. The fewer people who spend STEEM, the fewer people will accept it as payment… because they’ll have nowhere to spend it… because nobody else uses it. When intelligent investors realize they can’t use STEEM for hardly anything except selling it to speculators, they’ll probably stop buying it, which will make its price go down until it dies a slow penny stock death.
When it took two years to power down your account, I had zero faith in Steemit, but I knew the program was in its beta phase. So I used it hoping the problems would get fixed. When they lowered the time to three months, it restored some of my faith. However, it’s all for naught if more businesses don’t start accepting STEEM as payment for real-world goods and services. If anyone can share some links to articles of STEEM catching on with merchants, it will make me more of a believer.
You can use this concept to predict the future of other cryptocurrencies too. Dogecoin is doomed to fail, because it’s not based on anything, and nobody is seriously trying to convince businesses to accept it. However, it is popular, and if a profitable business ever accepts it as payment, its value could spike.
There will always be a real-world need for hard-to-trace currencies like Dash and Monero on the darknet, but the value of privacy-centric currencies are likely to stay pegged to the size of the black market. It is possible another Bitcoin could break out of the black market though. So investors should keep an eye on which currencies are growing in popularity there.
The cryptocurrencies with the most potential are ones like Etherium, Zcash and Ripple, because they’re designed with business in mind, and they’re focused like a laser on getting their currency into circulation, unlike Steemit, which is more focused on manipulating the appearance of its value.
That’s harsh, but I’ll be fair, Steemit did take a step in the right direction by lowering the time it takes to power down your account. If they just do a little bit more to improve the circulation of STEEM, I’ll put my money where my faith is.
The world’s problems have many seeds, but most of them wouldn’t have grown into banyan trees without being watered thoroughly with poverty.
It wouldn’t be so important to “get your shit together” as young as possible if the system wasn’t designed to set you up for failure.
When everything costs money, then money is the means to freedom and empowerment. When businesses extort customers and employees, profits become oppression.
The rich terrorize and hurt more poor people every day than the most extreme Jihadist could ever hope to achieve.
Everybody doesn’t have what it takes to make it in a cut-throat economy. So maybe we shouldn’t have a cut-throat economy.
Most poor people aren’t poor because they’re lazy. They’re poor because rich people hoarded all the money and created a false scarcity.
If you think poor people are all lazy and irresponsible, consider that majority of people on Earth are poor. Maybe the problem is systemic.
We should replace the phrase on the American dollar, “In God we trust,” with “God save the poor from the rich.”
Employers and politicians that create poverty, deny people hope and self-worth, which is unnatural, unnecessary and a step below murder.
If your plan to fight poverty involves making the rich, richer, you don’t understand economics.
The poor need a new economic system more than Bill Gates or Warren Buffet need $70 billion.
Poor people don’t need a safety net to land in. They need a firm foundation to stand on.
America isn’t designed to set you up for retirement. It’s designed to set you up for bankruptcy.
Banks are too big to fail. The poor are set up to fail.
Why don’t people in hurricane paths evacuate? Money. If you can’t afford to eat out, you can’t afford to run for your life.
It’s cool that the poor live better than ever before, but getting hung up on that fact ignores that they still live in perpetual fear.
Neither God nor our ancestors would be proud of how our economy is designed to fuck people harder, the poorer they are.
Life won’t get better for the majority until mutually assured protection is more mainstream than mutually assured destruction.
Money should be a luxury, not a necessity.
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The Wise Sloth 