The decade from 2010 to 2020 was completely unique in US history. An entire calendar decade without recession has passed for the first time ever. At the end of December, the US economy expanded 126 months in a row.
This growth cycle has reflected the fruits of the Federal Reserve (Fed) after the 2008 crisis in many ways. With massive spending, growing debt, and rising inflation, growth certainly seems a bit artificial.
Economists point to a number of factors that have contributed to the ten-year boom. First, the economy started the decade deep in the hole. Shortly after the 2008 crisis, there was basically nothing but an upward trend.
Second, many economists praise the Fed and its fiscal practices. Most suspect that the Fed’s rapid response to the spreading crisis was largely what averted a major collapse. It has also launched a new surge in fiscal stability that has led to a decade of growth.
Many also suggest that the wound of the last recession has kept growth moderate but constant. The collapse is still fairly fresh in the minds of investors, and only a few are prepared to take major risks.
Bitcoin – born out of necessity
Bitcoin was born at the same time. In response to the bank collapse, it represents the desire for economic change. It protects itself from future changes through “non-governmental” transactions.
Of particular note: Bitcoin emphasizes the differences between a free market and a managed market economy. The managed market relies heavily on the Fed and its fiscal policies, while Bitcoin trusts that the market can move freely.
In a way, the two systems face very different potential future opportunities. Some believe that the expansion can continue. Others are skeptical.
For some, Bitcoin offers the only truly viable economic future. Ultimately, printing money to finance growth poses difficulties. At some point the party is over.
A number of vulnerabilities are being considered, even among the Fed’s believers. First, the fact that debt ratios have exploded is deeply worrying. Student debt, credit card debt and unsecured debt have exploded. Such debts could paralyze spending in the future.
In addition, international uncertainty and political changes could lead to a much feared implosion. No matter whether it is going well or badly – the market has finally created something unique.
Bitcoin’s route could well be the less traveled route.