The digital confetti is raining down. Coinbase Bitcoin’s breaking fresh highs for the first time since early April, trading around $87,200 at the moment. Gold is shining at an all-time high of $3,382 an ounce. Champagne is popping in some backrooms of the internet. This jubilee is fueled by an incredible story of freedom from the chains imposed by central banking. Before you join the party, ask yourself: is this a genuine celebration of financial freedom, or are we witnessing the prelude to something far more unsettling?
Freedom From What, Exactly?
Trump's renewed attacks on Jerome Powell and the Federal Reserve, culminating in whispers of Powell's potential removal, have acted as a booster rocket for Bitcoin. The U.S. Dollar Index (DXY) is crashing, tumbling to three-year lows. The logic is simple: if the Fed's independence is compromised, then the dollar's stability is threatened, then alternative assets like Bitcoin become more attractive as a hedge against uncertainty.
Freedom from a distant centralized control may be very attractive when you perceive the cards are stacked against you in the current system. Freedom minus responsibility equals anarchy. How are you truly free if your savings are at risk of being wiped out by the whims of the volatile market? That market is usually subject to tweets and manipulation.
The dreamy idealization of a decentralized utopia conveniently ignores the guardrails that the Fed, for all its flaws, offers. Regulatory oversight, deposit insurance, and the ability to act as a lender of last resort are important guardrails. Most of all, they stop setbacks and financial hiccups from snowballing into full-blown crises. Bitcoin offers none of that.
Geopolitics: Are We Playing With Fire?
Its implications reach well beyond your investment portfolio. A only marginally slower pace of Federal Reserve interest rate increases would translate into a much more disrupted world. And it weakens America’s economic competitiveness on the world stage. It opens the door for our adversaries to test our supremacy.
Think about it this way: if the world loses faith in the dollar as the reserve currency, what fills the void? Will it be the Euro? The Yuan? Or, will we see a new dawn of financial integration? In this latter situation, geopolitical tensions might be ratcheted up by currency wars and rivalries played out through digital assets.
We are seeing the markets react. Hedge funds are dumping the dollar. Futures linked to the S&P 500 and Nasdaq composite are in the red. This isn’t just Musk buying Bitcoin, or Warren Buffet selling, this is a realization that there has been a fundamental change in investor confidence. And when confidence erodes, fear takes over.
What if that fear becomes a self-fulfilling prophecy? When the dollar declines quickly, it can set off a chain reaction of other disastrous economic effects. It’s worth emphasizing that these effects don’t only affect those who own Bitcoin.
Whose Needs Are Being Served?
Many Bitcoin advocates will gladly tell you about the technology’s promise to help the unbanked and underserved. And that's a noble goal. And yet, the reality photo is just as shocking. A widely held misconception is that 1% of Bitcoin addresses control 99% of the supply.
The vast majority of Americans need a stable currency to pay their bills, save for retirement, and plan for the future. And most importantly, they need a financial system that supports their work, that’s predictable and reliable. They deserve a government that looks out for the needs of the many over the speculative desires of the few.
And while understandable as immediate attempts to prop up the economy, Trump’s actions endanger the underlying tenets of our entire financial system. He’s making a dangerous gamble with the nation’s long-term economic stability for shallow political expediency. Are you willing to wager your future on that flip of the coin?
Judging from past experience, Chicago Fed president Austan Goolsbee is correct to raise alarm about threats to the Fed’s credibility. Because once lost, credibility is more than just fleetingly difficult to regain. Without that credibility, fear and uncertainty will be the order of the day.
The rally for Bitcoin and gold is not a win for liberty. It simply functions in the other direction as a blaring caution signal. It's a symptom of a deeper malaise: a growing distrust in institutions, a fear of economic instability, and a yearning for alternatives.
The truth is, we can’t avoid addressing those underlying issues head-on. Rather than continue this failed approach, let’s fix and improve the system we have to make it work for all Americans. That takes responsible governance, sound fiscal and monetary policy and a serious commitment to long-term economic stability.
Don’t let the promise of convenient, fast returns fool you into ignoring the risks that come along for the ride. The search for freedom should not occur at the expense of the great majority’s needs. Isn’t true freedom about creating a world in which everyone has the chance to succeed?
