The United States printed more money in June 2020 than in the first two centuries after its founding. Last month the U.S. budget deficit — $864 billion — was larger than the total debt incurred from 1776 through the end of 1979.

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For the sticklers out there with the knee-jerk counter-argument:

“Hey, you need to use constant dollars — take into account inflation!”

The answer is:

That’s EXACTLY why one should get out of paper money and into bitcoin. It isn’t being inflated away. One bitcoin is a constant fraction of the total 21 million that will ever exist. There is no need for inflation-adjusted numbers — because there is no inflation/hyper-inflation.

As an aside, you don’t do inflation-adjusted gold. An ounce of gold is an almost constant share of all the above-ground gold on Earth. There’s no coincidence gold recently hit an all-time high. Or, said another way, paper money hit a low vs. non-quantitatively-easible money like gold and bitcoin.

With that first trillion we defeated British imperialists, bought Alaska and the Louisiana Purchase (13 states’ worth of territory), defeated fascism, ended the Great Depression, built the Interstate Highway System, went to the Moon, and some other stuff.

Not all deficits are created equal. In August we’ll share some thoughts on the efficacy of current spending. In the meantime, we wanted to reinforce our view from April:

Stay long crypto until schools/daycare open. Until then the economy won’t function and money will be continuously printed.

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We’ve talked about the vision of an open financial system, commonly referred to as decentralized finance (DeFi). This subsector of the blockchain industry has emerged as one of the dominant use cases beyond store-of-value and speculation (on future use cases).

What’s really exciting is the amount of value that’s been flooding into DeFi protocols over these past few months. Over $3.5 billion in value is locked in DeFi protocols at the moment. People are beginning to experiment with non-centralized finance, particularly with borrowing and lending crypto-assets to generate yield.

This is an inflection point for open finance. Below is a chart of total value locked in DeFi exploding upward.

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Data Source: DeFi Pulse

What Is Decentralized Finance?

Similar to how the internet was the underpinning of a new information infrastructure, blockchain tech and cryptocurrency are the underpinnings of a new financial infrastructure. The internet not only revolutionized access to content but it also democratized the creation of that content. We believe that blockchain tech and cryptocurrency will do the same but with financial markets — and this is what is referred to as decentralized finance.

The vision is that anyone, anywhere in the world, as long as they have a smartphone or a computer, can freely create or participate in new financial markets at very low cost. Initially this might sound like a wacky idea, but imagine if someone told you at the early stages of the internet (say 1995) that encyclopedias would go away — in fact, there would be online versions that were edited by thousands of people around the world and that they would actually be more accurate than Encyclopedia Britannica. That would have been viewed as a pretty crazy notion. But a similar type of revolution is beginning to happen now with finance.

You could think of Bitcoin as the first DeFi project (we don’t technically classify it as such in our portfolio, but hear us out). Bitcoin is digital gold — it’s money you can send globally. You can do transactions at no limit and at relatively low fees. That’s what Bitcoin provides. But outside of moving value around, it doesn’t let you do anything else in finance. Sending money is really important, but the financial system is a lot more complex than just that. There are thousands of different types of financial agreements that people enter into on a daily basis. So, if you take the efficiencies of Bitcoin (low cost, frictionless transactions, borderless, etc.) and apply it to other aspects of finance like lending/borrowing, exchange infrastructure, margin, etc. — that’s a very exciting concept. We’re just in the early innings of this now….