I want to cover the most popular digital currency in the world, more popular than BTC…

At face value, it has an unlimited market cap, inflationary, isn’t backed by anything & the devs don’t do anything, can you guess which one it is … If you said BTC, ETH, Dogecoin or any other crypto, then you’d be wrong, it’s actually the US Dollar.

If you can print an infinite amount of money, rack up too much debt to pay back & depend on more people to add to the supply to stay afloat, kinda sounds like a debt-based pyramid scheme? If you have time, this article from Investla on how fiat currency is a hybrid ponzi/pyramid scheme is pretty funny and informative, A+ for the memes.

US Dollar $

• There is no supply cap, however, the current supply of US Dollars is approximately 21 Trillion (give or take a few million), this is publically available to be viewed from the Federal Reserve website.
• There is no supply, meaning the government and federal reserve can print an unlimited amount, similar to what was seen over the pandemic where the market was flooded with dollars disguised as stimulus checks.
• In terms of inflationary vs deflationary, it’s definitely inflationary, it has seen incredible inflation over the past few years as the world went through covid, currently, inflation is sitting around 8% monthly which is the highest since the 1980s according to TradingEconomics, although I doubt the calculations show true inflation with all increased costs included such as fuel.
• The US Dollar supply was rising slowly and over the past few years has had a massive increase, below is a list of the USD supply as listed on the Fed Reserve website, I’m using the M2 which is a wider measure of the money supply and taking data from the months of December so to see the end of the year:
  • 2016 @ 13.2
  • 2017 @ 13.8
  • 2018 @ 14.3
  • 2019 @ 15.3
  • 2020 @ 19.1
  • 2021 @ 21.4
  • 2022 @ 21.7

• Here is a clip of the Fed Reserve Chair J-dog, admitting on a recent talk at the European Central Bank Forum about how little they understand about inflation, which is, to say the least, a bit worrying…?

• Since crypto is backed by programmable code, supply caps and/or burning mechanisms it’s good to compare. Usually, fiat currencies are backed by commodities, the most popular being gold like the dollar was until 1971, since then its power has been backed by the threat of violence, war & economic sanctions against other nations as well as debt and the threat of losing your liberty via jail if you don’t pay taxes.
• The US Government & the Federal Reserve have had the freedom to print money as much as they like, which they did with the recent stimulus checks flooding the markets with more supply which is just a short-term solution that leads to shrinking the buying power of the currency.
• In terms of utility, the US Dollar is currently the world reserve currency, a title it has held since 1994 with the Bretton Woods Agreement which helped to establish a post-war international monetary system. This makes it very strong in the international economic landscape, currently, you can use it as the main & most popular international trading asset, a store of value as most currencies align to the US price, it can be staked for a very small return under 1% per annum and as collateral to borrow more money.
• In terms of whales, I would have to say the Federal Reserve since they truly have the centralised power to effect/manipulate the price and supply.
• When it comes to the distribution & concentration of the USD, I am not very educated on this topic so it’s a complete guess, however from knowing that fiat currencies are all based on debt systems, the USD is the global reserve currency & is used to trade oil hence the name petrodollar, then I would have to assume that the main holders would be the nation-states who have a lot of debt to the US and/or are using it as a reserve plus perhaps the oil-rich nations hold a hefty amount.

Touching on economic sanctions…

• However, the US being trigger-happy with economic sanctions is beginning to lead to nation-states valuing & trusting the dollar less. For example Russia can & has turned off the tap for countries holding the US Dollar such as Russia with the recent invasion of Ukraine.
• What these economic/banking sanctions mean is that they limit the countries and banks within said country’s ability to get financing from financial institutions.
• Meaning banning banks from providing financing to Russian state-owned banks, which leads to pressure on their economy as a whole as well as their currency.
• Most of this as I understand is done to cause “capital flight“ causing rich oligarchs to remove their wealth from the affected economy in order to protect it from being frozen or worse, seized - Which hurts the economy & currency even more.
• … However Russia exports mainly crude & refined petrol, so perhaps that’s where the price will continue to increase to make up for whatever losses they continue to make elsewhere due to ongoing sanctions.

So… Buying Bitcoin or Ethereum yet?

Hopefully, this has shown how much of a ponzi scheme the fiat currencies are. This is by no means financial advice, I’m just someone who makes memes & dangerously over-simplifies complex topics.