Saving the Savers. Why I believe Blockchain and DeFi can be a real solution to one of our greatest structural economic problems.

Years ago when I left my career in finance, I felt that there was a massive structural problem that had burrowed deep into the very foundation of our economic system. As a young university student studying global economics, there were certain economic "theories" that were often taught as factual within our courses. If you wanted to receive high marks in your courses (I wanted and did graduate Suma Cum Laude), then you could question principles but only to a certain point before you would need to adhere to whatever mainstream point of view the professor was trying to push onto the students. You walk a fine line between having your own innovative analysis and solution for problems, and speaking to the talking points of the quackademic (to steal a term from the late John Anthony West). When it came to Fiat monetary policy, we could debate over the effectiveness of stimulus, moving interest rates, fractional reserve banking, and inflationary policies, but we could never demand that the system be changed, for that would be some kind of blasphemy.

When I first entered the crypto space, I was attracted by the rhetoric of so many people here, angry at the Federal Reserve Banking system and Fiat Inflationary Monetary policy. I found thousands of kindred spirits who recognized that something was wrong with our system and had been attracted by a modern, practical solution to such a massive theoretical problem. And while I think much of the Crypto space is filled with savages resembling the old trading floors of my former stomping grounds on Wall Street, there are a group of us here who genuinely believe that Decentralized Currencies and Protocols are the future of the entire economic system.

I mentioned above that when I left my old Wall Street job that I felt there was a massive structural problem. In its simplest form, I hated that we lived in a world where people were punished for saving. This extends far beyond our Fiat banking system, it is an issue of mentality. There are two problems at the very heart of our economic system, one is that we derive value from scarcity, and the second is that we are on a quest for constant growth and innovation. In a world where you value things that are finite, there is not a possibility to grow infinitely without gaming the system and manipulating the policies to discourage certain behaviors. It is through that lens that we can understand Fed Banking policies around the world.

Ironically, when the Bretton Woods institutions had shaped the modern Dollar centric financial system, the USD was supposed to be back by Gold. Something stable and valuable that would ensure that we would not have massive inflation, but US Government and Industries overleveraged themselves in less than 30 years, and the Bretton Woods institutions collapsed and we moved to a Fiat Monetary policy where the Federal Reserve and Treasury would have the power to create money out of thin air. But with each dollar printed, there is a secondary consequence, a leaching of the value driven by inevitable inflation, and while they continue to keep interest rates far below the inflationary threshold, there is little place for someone to put the fruits of their labor. So what do we do? We BUY STUFF! Cars, Houses, Toys, Gadgets, Food, Restaurants... That will keep our growth perpetual right? To me, it's felt like an ever expanding bubble that one day is bound to explode bringing an entire global order to its knees. History does not have many good examples of what comes next....

Enter Blockchain and Crypto. The reason I believe this is a real solution to the inevitable explosion of the Fiat system is not because "Bitcoin is like Gold". In fact, I don't even believe it is necessary for there to be a Finite amount of tokens. What I love is that DeFi and decentralized protocols reward different types of behavior: saving. Savers are no longer at the whim of the Federal Reserve and Banking system, there is not an entire industry of people who play with your money and skim out all of the profits. For the first time in my lifetime, there is an actual incentive to save. And I believe that this is just the tip of the iceberg in terms of what is possible. Soon it will not just be Computing power and financial resources that we are saving and "lending" to someone else.

What happens when we start to use it in other sectors, like Electricity? Imagine the possibilities! Climate change threatens our very way of life and our energy consumption is a big contributing factor. Now enter a system that could potentially reward those who produce electricity, store it on their own section of a grid and then sell it to someone else. By simply implementing a reward system at the individual level, we could encourage the necessary behavior needed to change the world for the better. This wouldn't require massive market manipulation and intervention, just a better system of economics and governance.

What I'd love to hear from all of you here is what other sectors and solutions will we see transformed by blockchain and DAOs? I don't need to mention what HIVE can do to media. There are so many fledgling ideas out there right now, I can't research them all. Would love to hear what some of your favorites are and why?

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