Recently I’ve decided to rebalance my investment portfolio but to do it effectively I had to ask myself a hard question: What’s likely to happen in the US economy in 2021 and beyond? This analysis led me to four scenarios with different probabilities of happening: damnation, inflation, reinvention and Japan. The scenario that seems more likely will drive the distribution of my portfolio between risky / high growth assets and safer / low growth ones.
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Bitcoin’s vs FED’s Monetary Policy
In the book “The Bitcoin Standard” written by Saifedean Ammous in 2018, the author claims that Bitcoin is a better store of value than the US dollar because it’s a “harder” currency. The corollary of this claim is that, if you want to save money for the future, you better use a hard currency that’s most likely to preserve (or even increase) its purchasing power over time. According to the author a simple way to analyze the “hardness” of a currency is to calculate its “stock to flow ratio”.