Categories
Real Estate

Act 22 Puerto Rico

In this article we will learn about the Act 20 and Act 22 Puerto Rico tax haven. Also, we will discuss how the U.S. Territory of Puerto Rico has become a tax shelter for some Americans. In addition, we’ll talk about the pros and cons of moving and retiring to Puerto Rico.

Puerto Rico Income Tax

In general, Puerto Rican citizens are taxed similarly to the US. In fact, many citizens pay a social security tax.  However, in Puerto Rico, citizens are exempt from paying taxes to the IRS in the United States, which is part of the reason it is known as the Act 22 Puerto Rico tax haven. Instead, Puerto Rico has its own taxing agency like the IRS that collects taxes from citizens.

About the Act 22 Puerto Rico Tax Haven

The Act 22 Puerto Rico tax haven is not part of the 50 American states. Instead, Puerto Rico is a U.S. Territory. Its government is very similar to the United States. Like the US, it has 3 branches of government. Puerto Rico has executive, judicial and legislative branches. First, Puerto Rico has a government made up of a House of Representatives and a Senate. It has an elected Governor who governs the island as the executive power. Leaders in the House, Senate and Governor’s Office are elected every 4 years.

Spanish is the official language in Puerto Rico. And although Puerto Ricans share some commonalities with Americans, they have established their own culture and ethnicity.

Taxes in Puerto Rico?

As previously stated, since Puerto Rico is not one of the 50 states of the United States, its citizens are exempt from paying income tax to the U.S. IRS. In addition, corporations based in Puerto Rico are not generally subject to corporate taxes levied in the United States. Finally, if you are a US Citizen who becomes a permanent resident of Puerto Rico, you are exempt from paying US income taxes.

What created the Act 22 Puerto Rico tax haven? Well, in 2008 Puerto Rico passed legislation to encourage individuals and businesses to conduct business in Puerto Rico. As a result, two new laws were enacted into legislation:

  • Act 20: The Export Services Act and;
  • Act 22: The Individual Investor Act

As of 2020, these acts have now been consolidated into Act 60. Thus, the Act 22 Puerto Rico tax haven was created and people began migrating to Puerto Rico to save money on their taxes.

Act 20: The Export Services Act

Pay Taxes of 0-4% for Service Industry Businesses

This act can be utilized by any citizen of any country. It allows businesses and individuals to reduce their corporate taxes to only 4%. In addition, the act allows dividends to be paid at 0%. Yes, you read that correctly – 0% tax rate!

Essentially how this works is quite simple. Let’s say you are an American business owner and you want to pay lower taxes. You simply incorporate a business in Puerto Rico which provides a service. The service can be provided to anyone, either inside or outside of Puerto Rico. Your tax rate then falls to 4%. Poof! You are now in the Act 22 Puerto Rico tax haven!

Examples of types of businesses that are considered “service” businesses may include consulting, internet services, software engineer, legal services, etc. In addition, by following the Puerto Rico tax rules, you do not pay any US taxes.

Act 22: The Individual Investor Act

Pay Taxes as Low as 0% for Investment Income

This act allows for US Investors who normally pay capital gains taxes on investments to take advantage of lower tax rates of 0%. For example, if you buy and sell equities such as stocks you can re-locate to Puerto Rico and be considered exempt from the capital gains taxes. In addition, cryptocurrency trading is also exempt from tax assessment.

One of the small requirements of Act 22 is that you donate $5,000 – $10,000 to official charities of Puerto Rico. In addition, you are required to purchase a residence in Puerto Rico. This is one example of how you have to spend some money to take advantage of the Act 22 Puerto Rico tax haven status.

In addition, both Act 20 and 22 require an annual filing fee that has recently increased from $300 to $5,000. However, it’s still considered a great deal for anyone with a significant income from the services industry or investments. The tax savings alone more than cover the expense in most cases.

Retiring in Puerto Rico

If you expect to have significant gains on investments during retirement, Puerto Rico may be a good fit for you. Resident retirees in Puerto Rico can enjoy potentially tax-free benefits from investment income.

To become a resident, you must simply move to Puerto Rico and set up a permanent residence. You are required to live in Puerto Rico a minimum of 183 days per year (slightly more than half a year). Americans could potentially share time between Puerto Rico and still visit family and friends at home in the United States with no issues. Retiring to the island territory can help you take advantage of the Act 22 Puerto Rico tax haven opportunity.

Traveling and Moving Puerto Rico

How Puerto Rico is Different from the United States: Cultural and Geographical Differences

In many ways, Puerto Rico is much like visiting another country if you are a native of the United States. You can expect to eat different foods, speak a different language and experience what it’s like to live on an island. Life is different from the United States in Puerto Rico. As a result, we recommend visiting the island several times first before making the permanent move.

Additionally, Puerto Rico has special concerns that should be considered. For example, as an island in the middle of the ocean, Puerto Rico experiences hurricanes and tropical storms regularly. For example, in September 2017, Hurricane Maria, a Category 5 storm struck Puerto Rico with deadly force, killing almost 3,000 people and shutting off power for weeks. Hurricane Maria was one of the worst storms to ever strike the islands, costing the island an estimated $91 Billion in damage.

Power outages and utility outages are a common problem in Puerto Rico. The island has an aging infrastructure that frequently has problems and needs upgrading. In addition, political corruption has been a problem for Puerto Rico for decades. As a result, much needed infrastructure repair and other improvements have not occurred. Clearly, the Act 22 Puerto Rico tax haven is not always a paradise.

Puerto Rico’s Financial Crisis

For years, Puerto Rico has struggled with mounting debt problems. In 2012, the territory suffered a credit downgrade, which makes it more difficult to borrow money to finance infrastructure improvements or even function as a government. Second, Puerto Rico has an aging population that requires government services such as medical care and retirement pensions. Finally, in 2016 the United States approved Puerto Rico’s request to move toward bankruptcy with the new “Promesa” law. The bankruptcy proceedings are an ongoing issue for Puerto Rico.

A Note About Tax Savings in Puerto Rico

Given the changing and volatile political climate in the United States, it is unclear for how long the tax savings of Act 20 and 22 will last. There is clearly a growing populist movement in the United States that wants to increase taxes on investors and business owners. This is not a big surprise to any student of history. Populism movements have played out many times in the past. Venezuelan politics under the Hugo Chavez was one example of this.

Even if you are not prepared to move to Puerto Rico, you may seriously consider beginning the application process for Act 20 and/or Act 22. Getting your “foot in the door” with an application may be a smart move if US legislators move to block US Citizens from these juicy tax incentives. As a result, the Act 22 Puerto Rico tax haven may only exist for a limited time.

Find More Help on the Act 22 Puerto Rico Tax Haven

One fantastic resource for getting more answers regarding the Act 22 Puerto Rico tax haven relating to Act 20 and 22 can be found at Sovereign Man. Simon Black, founder of Sovereign Man is an investor and entrepreneur who helps people make more money, keep more money and increase their freedom. He has a great weekly newsletter that provides smart, actionable intelligence on how to get ahead financially.

In summary, the Act 22 Puerto Rico tax haven may not be for everyone. There are clear examples of how certain businesses and individuals can benefit from the low tax laws. Puerto Rico’s Act 20 and 22 have created a great opportunity for people to pay limited taxes while enjoying the island life.

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Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We do not endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.

In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, to help you make the best choice for you.

Categories
Economy

Crack Up Boom

In this article we discuss the concept of a Crack Up Boom, inflation and hyperinflation. In addition, we talk about how the crack up boom applies to our current economy and provide some solutions regarding things you can do to fight back against inflation.

What is a Crack Up Boom?

One of the most famous economists of the 1920s, Ludwig von Mises, came up with the term. Mises witnessed the events that occurred in Weimar Germany in the early 20th century, including hyperinflation and the destruction of the economy. Mises was a member of the Austrian School of Economics.

A crack up boom is when an economy or government begins a financial melt down because of excessive money printing and rising prices. There are two key features of a crackup boom: excessive money printing by a government and continually rising prices that lead to inflation or hyperinflation. As prices of goods rise, people realize that the cash they hold is losing value quickly. The result is that citizens suffer the consequences of hyperinflation, being unable to buy normal items because of spiraling prices. As a result, hyperinflation in the crack up boom causes people to get rid of cash as quickly as possible. Furthermore, this feeds the hyperinflation cycle as people flee cash and seek out assets, which hold value.

Mises Institute: Crack Up Boom

“If once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities and services will not cease to rise, everybody becomes eager to buy as much as possible and to restrict his cash holding to a minimum size. For under these circumstances the regular costs incurred by holding cash are increased by the losses caused by the progressive fall in purchasing power. The advantages of holding cash must be paid for by sacrifices which are deemed unreasonably burdensome. This phenomenon was, in the great European inflations of the ‘twenties, called flight into real goods (Flucht in die Sachwerte) or crack-up boom (Katastrophenhausse).” – Hyperinflation, Money Demand and The Crack Up Boom, Mises Institute

What is inflation?

“Inflation is the decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time. The rise in the general level of prices, often expressed as a percentage means that a unit of currency effectively buys less than it did in prior periods.” –Investopedia

Could a Crack Up Boom Happen in the US?

Well, hyperinflation has famously happened in other places in the world in the recent past. For example, hyperinflation famously struck Weimar Germany in the 1920s. Hyperinflation has also occurred in Zimbabwe, Argentina and Venezuela. Furthermore, hyperinflation has occurred quite a lot throughout history. As a result, all of the aforementioned places experienced a crack up boom.

You have probably heard famous stories of citizens pushing wheelbarrows full of cash to the bakery to buy a loaf of bread.

Hyperinflation in Argentina

Argentina is frequently studied as a case history for inflation problems. Since Argentina became an independent country in 1816, it has defaulted on its debt nine times over the years. Many of these defaults lead to hyperinflation and economic destruction for Argentinians. Furthermore, the debt defaults have caused currency devaluations (money becomes worth less). In addition, inflation in the country has reached levels as high as 5,000%!

Argentina was known as the Switzerland of South America throughout the 20th century. It is a large, independent country with significant natural resources, a delightful climate and strong historical economic growth. However, beginning in the 1980s, increased debt and import issues caused the country to see excessive inflation of the currency. Later, Argentina staked the Argentine Peso to the US Dollar in hopes of economic recovery. However, a recession led to a default on debt and inflation hit again.

As the currency in a country like Argentina loses buying power, more currency is required to pay for the same things. For example, one day groceries may cost $50; however, during hyperinflation, you might return to the grocery store the following day and spend $100 to buy the same groceries that cost only $50 the day before. This behavior ultimately led to a crack up boom in the Argentine economy.

What is Hyperinflation?

“Hyperinflation is a term to describe rapid, excessive, and out-of-control general price increases in an economy. While inflation is a measure of the pace of rising prices for goods and services, hyperinflation is rapidly rising inflation, typically measuring more than 50% per month.” –Investopedia

Currency Inflation

One thing that significantly affects inflation and purchasing power is money printing. When the US Treasury and the Federal Reserve Bank coordinate to print large amounts of money, it causes inflation. Inflation is simply an increase in the money supply. The bigger the money supply, the less the money in your wallet is worth. Moreover, inflation is a hidden tax. As a result, money you have in your bank account loses purchasing power when money is printed by the government.

On March 23, 2020, it was announced that the US Government would be giving out stimulus checks to Americans. In addition, they planned to give money and loans to businesses hurt by the COVID-19 epidemic. Almost overnight, approximately $2 Trillion in loans and grants were printed out of thin air. As a result, the internet went viral in creating money printing memes. One of those memes was the now infamous “money printer go brrrr” meme. Additionally, this could be the start of hyperinflation and a crack up boom in the United States.

Consumer Price Index

According to the US Bureau of Labor Statistics, the consumer price index has increased 1.3% in the past 12 months (before seasonal adjustment).

“The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available.”

-The US Bureau of Labor Statistics, Definition of Consumer Price Index (CPI)

A consumer price index value of 1.3% seems reasonable for 2019-2020. If inflation or the CPI were only 1% per year, that means that in 100 years one US Dollar would lose about half its purchasing power. For example, $100 in 1920 would only purchase $50 worth of goods in 2020. However, real inflation for items we buy every day is much higher. In addition, we’ll soon see what the real inflation values are, and they are not pretty. As a result, this may be the beginning of hyperinflation in the United States.

The United States Federal Reserve Bank Aims For 2% Inflation

The Federal Reserve Bank believes that we must have inflation to promote stability and predictability in the economy. Their goal is to have 2% inflation each year.

The Federal Open Market Committee (FOMC) judges that inflation of 2 percent over the longer run, as measured by the annual change in the price index for personal consumption expenditures, is most consistent with the Federal Reserve’s mandate for maximum employment and price stability. When households and businesses can reasonably expect inflation to remain low and stable, they are able to make sound decisions regarding saving, borrowing, and investment, which contributes to a well-functioning economy. – Federal Reserve Website

However, despite the inflation values touted by the Federal Reserve Bank, real inflation is likely much higher. Consumers are aware of the difference when buying groceries, paying for items or buying a car. Prices are clearly increasing significantly each year. But is this the start of hyperinflation and a crack up boom in the United States?

The Federal Reserve’s Tools of Inflation: Money Printing and Interest Rates

The Federal Reserve Bank’s most powerful tool for creating inflation is a two-pronged approach. First, they have the power to raise and lower interest rates. Increasing or decreasing interest rates has the effect of accelerating or decelerating the American economy. If they raise interest rates, people tend to borrow less and it becomes more expensive to do business. As a result, there is a chilling effect on the economy; however, if the Federal Reserve lowers interest rates, individuals (and businesses) find it easier to get capital to do business, and the economic machine is powered up, so to speak.

The other powerful tool that the Federal Reserve has is to print money. Typically, when they print more money, there is more money in the economy. The velocity of money increases and people tend to have more money. With more money in the system, the economy is stimulated. As a result, policies that involve greater and greater money printing can easily cause hyperinflation in the United States. As you can see, the scene is set for a crack up boom here in the United States.

Inflation Calculator

The US Dollar Has Declined in Purchasing Power Since 1913; The Stated CPI Does Not Reflect Real Price Increases

In addition, the US Bureau of Labor Statistics provides a handy Inflation Calculator. Using their calculator, you can estimate what purchasing power (based upon inflation) is today compared with years past. For example, $10 in 1960 is equal to $88.71 today. That means that in the 60 years prior to 2020, the dollar has suffered 887% inflation over time.

Since the Federal Reserve Bank was formed in 1913, the dollar has been in steady decline. The dollar’s purchasing power has decreased dramatically since 1913. Using the US Bureau of Labor Statistics CPI calculator, the US Dollar has lost approximately 96% of its purchasing power since 1913. This is an alarming statistic that may be a harbinger of hyperinflation in the United States.

How Inflation is Measured by You

Sometimes when we think about inflation, we think of what can be purchased directly with our national currency. For example, we might notice that last week fuel cost only $3/gallon, whereas, this week a gallon of fuel increased to $3.50. This is how consumers most often notice inflation. However, don’t get too caught up in measuring inflation by just using currency.

How to Survive a Crack Up Boom in the United States

Seek Shelter in Deflationary Assets Such as Gold, Silver, Bitcoin and Real Estate.

There are some investments and things that you can own that hedge against inflation and hyperinflation in the United States. For example, for hundreds of years, owning gold and silver has been a method for how to survive inflation. Gold and silver both have a long history of maintaining their value when currencies became inflated.

Gold and Silver: Assets That Hedge Against Inflation

Real money assets are resistant to inflationary forces and maintain a value that is based on demand. First, silver and gold have a long history of maintaining their value against the currency of the day. No matter what the value of a dollar is, a one-ounce silver coin is always equal in value to one ounce of silver. In addition, silver and gold maintain a special balance with the value of gold, which fluctuates.

Silver and gold are real money, which is tangible and is backed by something of value. Moreover, you can hold it in your hand. Silver and gold cannot be taken from your bank account, like cash. In addition, hackers cannot steal silver from your computer, like Bitcoin. Finally, silver and gold can be kept safely and privately in a secure location. In many cases, real assets are a true defense against a crack up boom.

Bitcoin

Another alternative to gold and silver that many consider inflation-proof is Bitcoin. In the past few years, many have begun to use bitcoin like gold – a store of value. In fact, Bitcoin has many of the positive properties that gold has. It is a store of value, it can be a medium of exchange, it can be a unit of account, there’s a limited supply, it is uniform, acceptable, divisible and portable, etc. As a result, Bitcoin may be a great way for how to survive inflation.

Both Bitcoin and gold have a finite, limited supply. As a result, this means that they cannot be subject to inflation. If there is only so much gold, silver and bitcoin, it is by definition, deflationary. Being deflationary means that as the supply of the commodity dwindles, the value and demand for each increase. This is not true of currencies like the US Dollar.

Real Estate

Even something like real estate can have a deflationary affect when compared to US Dollars. Real estate has a long history of maintaining its value over time as compared to the Dollar. However, choose wisely; many believe that there is currently a bubble in the United States real estate market. Prices for real estate in many cities today are considered to be over-priced and inflated. Owning real estate is a great way for how to survive inflation. Furthermore, it can be a source of passive income for you.

Equities Market

This may be counterintuitive, but owning equities such as stocks can be a way on how to survive inflation. With the current trend in the United States of printing money and handing it out to individuals through stimulus checks, obviously inflation is rising. Many people are spending the stimulus money quickly. Furthermore, some people are taking their money and buying stocks or trading equities. As a result, the stock market has been trending higher. However, note that the rising stock market trend cannot last forever. In addition, when the market reverses, it may be ugly. At this point, a smart investor will move their money out of the stock market and into safer assets that can weather the storm.

Other Assets

There are many other examples of assets that can be a method for how to survive inflation. For example, owning art, vintage cars, collectibles, and high demand items that serve a purpose can all be hedges against inflation. When buying assets, stick to what you know. Furthermore, if you know a lot about vintage baseball cards, then buy those with currency. In addition, try to own assets that have liquidity, meaning you can buy and sell them on the market easily. An example of an illiquid asset would be buying a Picasso painting. A Picasso may be a good store of value over time, but you may have to wait for years until you can sell it in a special auction.

Final Thoughts on Inflation and a Crack Up Boom in the United States

As you can see, inflation and hyperinflation are real phenomenon that can affect your personal finances. Additionally, the seeds have been sewn for a potential crack up boom. Currently, inflation is quietly stealing money from your savings. In addition, if hyperinflation occurs, significant destruction of the economy can occur. As a result, it is important to have a plan to address inflation and a place to invest to fight back against the types of inflation.

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Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.

In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, to help you make the best choice for you.

Categories
Cryptocurrency

Fedcoin Will Replace The US Dollar

In this article we will learn about how Fedcoin will replace the us dollar. In addition, a new Federal Reserve digital dollar wallet is to be created. Finally, we will see how the new digital currency is different from Bitcoin and how the wallet may be used as tool for social engineering.

“Banks, credit card companies and digital payments processors are nervously watching the push to create an electronic alternative to the paper bills Americans carry in their wallets, or what some call a digital dollar and others call a Fedcoin. As soon as July, officials at the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology, which have been developing prototypes for a digital dollar platform, plan to unveil their research, said James Cunha, who leads the project for the Boston Fed.” – Bloomberg News Article, March 22, 2021

Although the Federal Reserve and MIT are planning on revealing their research later this summer, rollout of the Fedcoin electronic currency may take years. In addition, if Fedcoin will replace the us dollar, US Legislators may be involved.

The Banking for All Act

During the midst of the COVID-19 crisis in 2020, Congress and the Senate quietly passed “The Banking for All Act.” The new law requires Federal Reserve “member banks to maintain pass-through digital dollar wallets” for Americans.

Fedcoin Will Replace the US Dollar and It Will Have a Fedcoin Digital Dollar Wallet

If the Fedcoin will replace the us dollar, there must be a digital wallet to accompany the Fedcoin.

“Digital Dollar Wallet means a digital wallet or account, maintained by a Federal reserve bank on behalf of any person, for the purpose of holding digital dollar balances.” Website for the United States Congress, S.3571

The new digital dollar wallet is different than traditional banking. For example, interest is paid to the account holder. In addition, there are no minimum account balance requirements or account fees.

The ostensible purpose of the digital dollar wallet is to allow the Federal Reserve Bank to put money into American’s bank accounts. However, instead of collecting your personal banking information, the US Government is creating a new account for you. As a result, the Fedcoin will replace the us dollar in the digital space, negating the use of the paper dollar.

Additionally, during times of crisis (like the COVID-19 Pandemic), governments can provide welfare payments to citizens. Unfortunately, allowing a central government to control your money may not be a good idea.

Some people are concerned that allowing government bureaucrats to control your money via a digital dollar wallet may be giving them too much power. For example, what if the administrators of your digital dollar wallet decide that you are purchasing things that are not acceptable? Perhaps you bought too much beer or cigarettes using your account.

Would the Federal Reserve Bank then freeze your Fedcoin wallet, preventing you from buying anything? If you think this is impossible, it’s not. Governments can easily change citizen’s behavior by controlling money. Furthermore, Fedcoin will replace the us dollar, whether you like it or not.

China’s Social Engineering Experiment

China Limits Citizens Freedom with Social Credit Score

Think governments limiting citizen’s freedoms is a conspiracy theory? Think again. In early 2019, a report stated that China banned more than 20 million people from traveling. This was because their “social credit score” was too low.

“Skipped paying a fine in China? Then forget about buying an airline ticket. Would-be air travelers were blocked from buying tickets 17.5 million times last year for “social credit” offenses including unpaid taxes and fines under a controversial system the ruling Communist Party says will improve public behavior. Others were barred 5.5 million times from buying train tickets, according to the National Public Credit Information Center. In an annual report, it said 128 people were blocked from leaving China due to unpaid taxes.” AP News Article entitled, “China bars millions from travel for ‘social credit score’ offenses” – February 22, 2019 by Joe McDonald

Social Engineering occurs when governments attempt to influence people’s decisions through incentives or disincentives.

“the use of centralized planning in an attempt to manage social change and regulate the future development and behavior of a society.” – Social Engineering defined, Google Dictionary

The Federal Reserve Exploring Distributed Ledger (Block Chain) Technology

For several years, the US Federal Reserve bank has been researching distributed ledger technology. This technology, also known as block chain technology, is part of the building blocks of the cryptocurrency Bitcoin.

“With these important issues in mind, the Federal Reserve is active in conducting research and experimentation related to distributed ledger technologies and the potential use cases for digital currencies.” – Federal Reserve Governor Lael Brainard on August 13, 2020

Distributed Ledger (Block Chain) Technology: Bitcoin vs Fedcoin

The functionality of Bitcoin depends upon miners who contribute to the system. The miners use computers to complete complex calculations which build blocks on the block chain. Miners receive payment subsequent to completion of a block. Without miners, the block chain would cease to operate and transactions would grind to a halt.

As a result, it is unclear how the Federal Reserve Bank will operate Fedcoin and the digital dollar wallets using distributed ledger technology. The new system will likely be a simple, centralized network that does not use the proof of work model of solving equations like Bitcoin. There is no doubt that Fedcoin will replace the us dollar. However, Bitcoin will remain a decentralized store of value.

It is important to understand that there is a critical difference between the cryptocurrency Bitcoin and Fedcoin. The primary difference is that Fedcoin is a centrally controlled, top-down currency. It does not use blockchain technology or a distributed ledger with a proof of work system. Fedcoin is simply numbers on a computer screen put there by a central bank.

Bitcoin (BTC) Explained

The Cryptocurrency Bitcoin is a Peer-to-Peer Cryptocurrency Payment System That Was Founded in January 2009 by Satoshi Nakamoto

Bitcoin is an open-source, block chain-based technology. It was designed as a peer-to-peer payment system. It is designed to be a decentralized electronic payment method. Furthermore, it can be conducted semi-anonymously among individuals. It is intended to be a digital cash.

Using block chain technology to maintain its functionality, Bitcoin miners contribute to the system. In order for users to send and receive bitcoin, the block chain depends on miners. Moreover, computers are used by miners to complete complex calculations which build blocks on the block chain. As a reward, the miners receive Bitcoin as payment when each block is completed.

Bitcoin was introduced to the world in January 2009. It is unknown who invented bitcoin; however, a developer named Satoshi Nakamoto (probably a pseudonym) released a 9-page white paper entitled, “Bitcoin: A Peer-to-Peer Electronic Cash System.” The Bitcoin white paper describes Bitcoin’s purpose and how it works.

American Universal Basic Income

There’s a concern among some that digital dollar wallets will lead to the formation of a welfare state in the United States. Moreover, if the Federal Reserve Bank has the ability to print currency to no end, creating money out of thin air, then why not give some directly to citizens?

“Universal Basic Income (UBI) is a government program in which every adult citizen receives a set amount of money on a regular basis. The goals of a basic income system are to alleviate poverty and replace other need-based social programs that potentially require greater bureaucratic involvement.”  –Investopedia, Universal Basic Income

By creating a special bank account or digital dollar wallet for American Citizens, the Federal Reserve Bank opens the door to the welfare state and to collective control of its citizens. This kind of quid pro quo banking keeps the masses under the thumb of government. As a result, when Fedcoin will replace the us dollar, it will also play an important role in the growing social welfare state.

The New American Socialism: Universal Basic Income

43% of Americans Believe Socialism is a Good Thing

Providing Americans a digital dollar wallet is a form of socialism. Historically, America has been a population that embraced capitalism and entrepreneurship. However, beliefs in the 21st century appear to be changing. In fact, Americans may be approaching a tipping point regarding the adoption of socialism.

According to a 2019 Gallup Poll, 43% of Americans believe that socialism is a good thing. In contrast, only 25% of Americans supported socialism in 1942. Clearly, Americans have shifted to believe that socialism is a positive thing. When Fedcoin will replace the us dollar, it is a way for the state to buy more votes for socialsm.

The socialist idea of a universal basic income has become a mainstream political issue in 2020. Andrew Yang, an American entrepreneur, ran as a presidential candidate in the 2020 Democratic primaries. One of the policies of his political platform was to create a universal basic income for Americans. He called it the “Freedom Dividend” in which every American would receive $1,000 each month. This idea was wildly popular among many younger voters.

Wrap Up: Fedcoin Will Replace the US Dollar

It seems clear that Fedcoin will replace the us dollar. The Federal Reserve, MIT and others in the US government are working hard to bring the plan to fruition. The new digital dollar wallet will be introduced sometime in 2021 by the Federal Reserve Bank and MIT. Sometime later, everyone in the United States have a digital dollar wallet with Fedcoin in it.

“All Federal reserve banks shall, not later than January 1, 2021, make digital wallets available to all residents and citizens of the United States” Website for the United States Congress, S.3571

Are you ready for Fedcoin?

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Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.

In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, to help you make the best choice for you.