Libertarians and Tea Partiers, bitcoiners and gold bugs, have been the subject of ridicule in the political establishment and mainstream media and have been harshly accused of being paranoid and conspiratorial. The anti-government crowd has long foretold of a crash in the United States dollar, an economic collapse because of enormous debt levels and a political crisis that would see a dramatic expansion of the size and scope of the federal government.
Hogwash, says some financial experts and pundits who argue that everything is fine in the U.S. today.
In an article published in the Financial Times on Sunday entitled “Bitcoin bound for ‘guns and gold crowd,'” John Rekenthaler, vice president of new product development for Morningstar, said bitcoin is marketed as “a doomsday asset.”
“There is clearly a segment out there in the market that listens to talk radio and thinks the dollar is going down the toilet and the US is going down and so forth, and they would argue that Bitcoin is like owning guns and gold: it is prudent because you should not have all your assets in mainstream dollar-denominated investments or standard currencies, which may fall apart,” said Rekentaler.
It can be argued that it is an American’s second amendment right to own a gun as well as being a form of protection. Maintaining a percentage of your portfolio in gold could be considered a wise investment choice and protects the value of your net wealth against inflation. Owning bitcoin can be described as perhaps another financial tool.
Indeed, the digital currency has fallen in value over the past several months because of a variety of reasons – security breaches, exchange shutdowns and central bank and governmental warnings. However, a lot of other stocks, bonds, mutual funds and various assets have experienced the ups and downs of the market too.
At the height of the Great Recession, the beacons of Wall Street, Goldman Sachs and Merrill Lynch, were hammered in the market and required a bailout from the taxpayers.
On the S&P 500, Cliffs Natural Resources, J.C. Penney and Teradata Corporation were some of the worst performers last year.
The U.S. dollar itself has lost nearly 90 percent of its value since the inception of the Federal Reserve System (PDF). The expansion of the money supply since the financial downturn has transpired to new levels, while price inflation has increased exponentially. It has been said that once China, Japan and other countries stop purchasing U.S. debt then the dollar will go “down the toilet” and thus leave Americans with a severely devalued currency.
Whether or not bitcoin survives or is succeeded by a superior form of currency or electronic payments system remains to be seen. However, it appears that the bitcoin community has yet to be swayed by any of this so-called analysis by Wall Street experts who have yet to bring about a legitimate argument about not investing in bitcoin.
Perhaps if one analyst pontificated that bitcoin would become a terrible investment when Visa, MasterCard and other similar companies use the power of the state to squash the rise of bitcoin then their concerns could very well be justifiable.
