Bitcoin Letter to a Politician 2023

I try to occasionally share my thoughts with politicians that represent me. Who knows how much they take heed of what we say? We all have our own pet projects that interest us and perhaps these don’t interest our politicians. I also try to share my thoughts with others through this blog and in person, in hopes that it will influence them to also come around to my way of thinking. That all being said, below is an email I recently sent to an Iowa state representative about Bitcoin. The history is this person is a Democrat. We have had a couple previous emails about Bitcoin and they were concerned about the environmental impacts of Bitcoin.

Dear Representative – 

Quick thoughts for the night. I really hope you will continue to learn about bitcoin. It is a  very important tool for protecting individuals’ wealth in the future. It is also helping people in developing countries today.

Perhaps you’ve seen this article sent to the US Congress by Human Rights leaders asking them to learn about how bitcoin is helping the poorest in the world.

The next article and video are complimentary. 

Bitcoin helps people in developing countries. 

The other point about bitcoin mining specifically is it helps reduce emissions.  It does not add emissions.  It uses the cheapest waste power. Most miners have load sharing agreements to turn off when excess power is needed. This is good for grid stability and for emissions reduction. 

There is a bitcoin mining company in town partnering with Cedar Falls Utilities. I urge you to talk to both CFU and the miner about their agreement.

Bitcoin mining reduces Emissions

Bitcoin mining is also able to help subsidize grid build out in developing nations.

Finally,  the US military paid for Jason Lowery to attend MIT for 2 years to learn about bitcoin and its national security implications.  He released his thesis on this and I have read it and you can too.

Softwar: A Novel Theory on Power Projection and the National Strategic Significance of Bitcoin – By Jason Lowery

Please consider the points I have presented here.

Of note,  I voted for Joe Biden in 2020 as we could not have another Trump.  I have already decided I will not be voting for Biden again as he has proposed a 30% tax on bitcoin mining.  This shows me he has no understanding of bitcoin. Or he knows it’s threatening to the USD and the government is fighting tooth and nail to ban it. Either way, I prefer freedom.  I do not like the government devaluing my money every day with the $1T +deficit. I didn’t like it under, George Bush,  under Obama, under Trump or under bBiden. 

Please watch this very short video on this (30 seconds).

I hope others will consider writing to their local politicians to inform them of the good that Bitcoin does. They also need to know that they will not be getting votes if they are against something we are for. This applies to everything. It would be good for more people to write their politicians on all topics. Let this be an inspiration to you. If you want you could even copy this one and send it to your local politician.

Gold, Silver, Debt To GDP, Wealth Preservation

“I think if everyone was to hold a little gold and silver (say 1%) it would send a message to the government that we are tired of inflation. Part of the goal of the FED raising interest rates is to get people to stop spending money and to invest it in bonds. I propose that instead of putting all your cash in bonds, what if many people considered buying just a $100 or $1,000 or $5,000 of physical gold or silver?”

The USA has ever increasing national debt. You’ve probably heard about it recently due to the silliness around raising the debt ceiling. Republicans always make a huge stink about it when they are in control of either the House or the Senate and there is a Democratic president but make no mention of deficits when a Republican is president. Anyway.

Regardless of which side of the aisle you sit on, every increasing debt is an issue because it is related to inflation. The government continually funding operations with printed money leads to inflation which reduces your purchasing power. In extreme cases this can lead to currency collapse as we have seen in Argentina, Sri Lanka and Lebanon recently. 

When this happens, locals basically lose all savings they have in cash. 

There are a few things to do to maintain purchasing power. One is to invest in the stock market. This has historically been a good place to hold money to maintain purchasing power over the long term. Holding German stocks after WWII, in Germany, even kept you mostly ahead of inflation!

Historically, gold and silver have been money. But in the Roman empire silver coins were subject to debasement as emperors melted down existing coins and made 2 coins with the silver previously used for 1 coin and continued for 200 years until they completely destroyed the value of their currency. 

The United States did this in 3 steps. In 1930 there was Executive Order 6102 which essentially forced Americans and “gold hoarders” to turn in their gold to the US government for a set price, $20.67 (equivalent to $433 in 2021) per troy ounce. The order also permitted any person to hold up to $100 in gold coins, a face value equivalent to 5 troy ounces (160 g) of gold valued at approximately $10,000 in 2020. The 1934 Gold Reserve Act subsequently changed the statutory gold content of the U.S. Dollar from $20.67 to $35 an ounce.

So, the Government basically paid people $20.67 for their gold, then said, you can’t buy it back, but if you could it would cost you $35/oz. Seems pretty crazy!

Step 2 of United States Currency debasement happened in 1964. Up to this time half dollars, quarters and dimes were made of 90% silver. After 1964 they were made mostly of cheaper copper. 

The final straw that broke the dollar’s link with gold was in August 1971 Nixon ended the convertibility of US dollars to gold on the international market. Up until this time, while much of international trade was done in US dollars, technically, anytime any nation holding US dollars could ask the USA for the equivalent value of gold. Because the USA had been printing money for years it would have been impossible to redeem all the US dollars that existed for gold, so we basically said, “you can’t”. It was technically a type of default on the US dollar!

All the above context is just for historic purposes to get around to the point below and to mention why gold and silver are not used as money today. Governments always print more money than they can pay back. It happened in Rome, it happened in America, and it will likely happen again hundreds of years in the future (unless Bitcoin takes over as hard money, but that is a topic for a different post!)

Back to government debt, “Since 1800, 51 out of 52 countries with gross government debt greater than 130% have defaulted, either through restructuring, devaluation, high inflation or outright default. The IMF expects US government (USG) debt to GDP to be a record

141% by year-end 2020.” – Hirschmann Capital 

This was partially due to the reduced GDP from Covid but also due to increased gov spending. In 2023 you can see Debt to GDP is “down” to only 120%. 

So, what is the average person to do? As mentioned above, holding stocks is a good option. I personally do hold most of my wealth in stocks. Real Estate is another option that many people use. Bitcoin is also something I personally hold. I think Bitcoin has many long term benefits for wealth preservation. You can also hold bonds. But if you are holding a bond paying 5% and inflation continues up to 10% or 100%, like Argeintia, that won’t preserve your wealth. But this post is about physical Gold and Silver. I think holding physical gold and silver probably provides a little of a long term hedge against long term inflation. In the short term it certainly can be very volatile. But holding cash is always destined to go down over time. While over time, gold and silver are destined to go up, especially gold. 

You can see the declining value of the dollar here

While you can see the value of gold rising over time below. 

Silver chart, can be toggled to be inflation adjusted

Gold chart, can be toggled to be inflation adjusted

If you want to learn some more about the history of gold as currency this was a great video I watched/listened to. 

If you want to learn about buying physical gold and silver there are plenty of great youtube videos. Here is a video about buying silver I listened to recently. 

Here is another good channel – SpegTacular

I am only allocating a small percentage of my net worth towards physical gold and silver about 1% of total net worth, for now. In the grand scheme of things, I think this might not be very impactful. Some data says that “12% Of All Americans Own Gold, 14.7% Own Silver” .

I think if everyone was to hold a little gold and silver (say 1%) it would send a message to the government that we are tired of inflation. Part of the goal of the FED raising interest rates is to get people to stop spending money and to invest it in bonds. I propose that instead of putting all your cash in bonds, what if many people considered buying just $100 or $1,000 or $5,000 of physical gold or silver? Buying gold and silver would achieve the same end goal the government wants of removing money from the system, but then people would end up holding something of value, physical gold and silver, instead of bonds, which are currently returning 5% while inflation is at 7% or more yet. You are losing money holding bonds.

To be absolutely clear, I don’t think everyone should go sell all their stocks and put 100% into physical gold. But I think allocating 1% smartly for the reasons above is a pretty good idea. 

I don’t have time here to review why I have been specifically saying “physical gold and silver” so many times. But this has been reviewed in many places.

Here is a good video and here is a good article about why physical gold or silver over paper gold and silver. 

Personally I have used to buy gold and silver online and always check their deals page.  I get no commission off this, just sharing my experience.
This guy also made a ranking of many of the online bullion dealers.