The world is at the peak of a broken financial system; in many scenarios, we have seen the private banks being looted by the top notches and those banks taking no substantial actions against the frauds that have played with the money of the other depositors.
Ray Dalio’s concern about the financial system
Ray Dalio, the founder of the Bridgewater Associates, has spoken about how the current financial system is completely failing. He says that private banks are giving out credits without really thinking about the consequences. They might be working under the pressure of central banks, trying hard to be in competition with them. They are doing so in their futile attempts to buy a financial asset in order to take the economy up. Owing to these practices, prices of financial assets have upsurge; however, economic growth is still struggling.
Government deficits are also on the rise. The government is selling more and more debts and the central banks have to print more money to buy up the debt. Countries such as the US, Europe, and Japan which is known as the reserve currency countries would see the acceleration in this process.
Dalio has also raised a concern about pensions and healthcare obligations. He says that the two of them will remain due as the financial crisis would strike so hard that it would be difficult to cover them. He stated: “Since there isn’t enough money to fund these pension and healthcare obligations, there will likely be an ugly battle to determine how much of the gap will be bridged by 1) cutting benefits, 2) raising taxes, and 3) printing money.”
While the huge amount of money can be printed, it comes with a risk that it threatens the ability of the major world reserve currencies to work successfully. Thus, the wealth gap would increase giving only creditworthy access to ask for money. However, those who are not creditworthy would fall into financial despair.
How Bitcoin can help?
As Bitcoin becomes the currency of the world, people would get the control back on the world’s currency rather than the private banks. It has nothing to do with cash printing, it is decentralized from any particular nation, and it is available in good supply.
Bitcoin flourished in 2008 because of the great flaws in the financial systems of the banks. While financial institutions have yet not been allowed by the central banks to agree with Bitcoin transactions, the paradigm might shift if the financial system continues to crumble the same way.