Willful Blindness, Societal Rift & Death Of The Dollar

 

The Consequence: Fear of Dollars

As if rising wealth inequality and social rift are not costs worthy of economists’ considerations, there is another problem with reckless monetary policy that is just starting to rear its ugly head. People are increasingly looking for ways to protect their wealth. They are looking to divest from the dollar.

The day after David Brook’s editorial, the New York Times published the following: Investment Mania: From Crypto Art to Trading Cards.

Author Erin Griffith states:

“These seemingly singular events were all connected, part of a series of manias that have gripped the financial world. For months, professional and everyday investors have pushed up the prices of stocks and real estate. Now the frenzy has spilled over into the riskiest — and in some cases, wackiest — assets, including digital ephemera and media, cryptocurrencies, collectibles like trading cards and even sneakers.”

She specifically mentions a piece of digital art by Beeple, which sold as a Non-Fungible Token (NFT) for $69.3 million.

“With NFTs, the hysteria escalated quickly. Last month, an NFT GIF of Nyan Cat, which shows an animated flying cat with a Pop-Tart body, sold for roughly $580,000. Other artists, including Grimes and Steve Aoki, began reaping millions of dollars from their digital artwork. Then on Thursday, Beeple, whose real name is Mike Winkelmann, sold his “Everydays — The First 5000 Days” NFT for a stunning $69.3 million.”

Her article highlights exorbitant prices being paid in fringe asset classes. It’s not just GIFs of flying cats and other “wacky” assets sucking in money; it’s hard assets like land and real-estate. The graph below shows the urgency of some home buyers. In December, over 60% of home buyers bid for a house without seeing it in person.

dollar, Willful Blindness, Societal Rift & Death of the Dollar

Fiat money, such as U.S. dollars, are worthless pieces of paper. Their value comes from individuals’ trust in the ability for the dollar to retain value over time. Recent trends in digital assets, real estate, and other assets are clear signs that some people believe the dollar’s value is eroding. They would rather own something else, anything else.

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