Why Your Company's Equity Is Tied to a Failing Monetary Standard

Equity is a monetary derivative. Your company's valuation is priced in a fiat currency, whose purchasing power is systematically eroded by central bank policy. This makes your equity a long-term short on the stability of the dollar.

The standard is failing. The dollar's velocity decay is structural, driven by debt monetization and reserve currency status. This creates hidden dilution for all assets denominated in it, including your stock options.

Crypto is the exit. Protocols like MakerDAO and Frax Finance are building non-sovereign monetary systems. Your equity's future value depends on its ability to migrate to a harder standard, like those underpinning Ethereum or Solana.

Evidence: The M2 money supply increased by 40% from 2020-2022. During the same period, the S&P 500's real (inflation-adjusted) return was negative, demonstrating the nominal illusion of fiat-denominated gains.

Equity is a dollar derivative. Your cap table, valuations, and runway are denominated in a fiat unit whose supply is expanded by central banks to manage sovereign debt. This creates a systemic valuation lag where your company's real productive value grows slower than the currency used to price it.

Inflation is a stealth dilution. A 2% annual inflation target mandated by the Federal Reserve acts as a guaranteed equity tax, silently transferring value from shareholders to debtors. This distorts capital allocation, favoring asset speculation over productive R&D.

Bitcoin fixes this. As a non-sovereign unit of account with verifiably scarce issuance, Bitcoin provides a neutral accounting layer. Companies like MicroStrategy and public protocols (e.g., Solana treasury) are adopting Bitcoin as a primary reserve asset to escape this flaw.

Evidence: The US M2 money supply increased by 40% from 2020-2022. During the same period, the real purchasing power of cash-denominated venture capital declined proportionally, forcing funds into higher-risk, lower-conviction investments.

Equity is a monetary derivative. Your company's valuation is not a pure measure of productivity. It is a function of the discount rate, which is set by the Federal Reserve's monetary policy. This policy directly manipulates the cost of capital, making equity prices a function of central bank decisions, not just business fundamentals.

Capital misallocation is systemic. Near-zero interest rates for a decade created a hunt for yield that inflated asset prices across venture capital and public markets. This distorts investment signals, funding unviable projects while starving productive ones, a process documented by Hayek's calculation problem in a command economy.

Evidence: The ZIRP Decade. From 2009-2021, the S&P 500's P/E ratio expanded by over 150% while median wage growth stagnated. This divergence reveals capital flowing into financial assets, not productive capacity. Your cap table is a direct artifact of this distortion.

Stocks are fiat derivatives. Their price is a function of discounted future cash flows, which are measured in dollars or euros. The intrinsic value is tied to a currency whose supply central banks expand at will.

Real assets depreciate against scarcity. Compare a company's dilutable equity to a fixed-supply asset like Bitcoin. Monetary inflation acts as a hidden tax on equity's future earnings, transferring value to the currency issuer.

Evidence: The S&P 500's nominal gains since 1971 (when the gold standard ended) are 80% inflation. Real returns are far lower, demonstrating how fiat devaluation distorts asset performance metrics.

Equity is a fiat liability. Your company's valuation is a promise of future cash flows priced in a currency the Federal Reserve targets to inflate at 2% annually. This creates a structural headwind for long-term equity value.

Crypto is a monetary escape hatch. Assets like Bitcoin and Ethereum are bearer instruments with no counterparty risk, operating on a global settlement layer outside the traditional banking system. They are the antithesis of fiat-denominated promises.

The hedge is non-correlated. During periods of monetary debasement or banking stress, crypto assets historically decouple from traditional equity indices. This provides a genuine portfolio hedge that gold or bonds no longer reliably offer.

Evidence: During the 2023 regional banking crisis, Bitcoin's price increased 40% while the KBW Bank Index fell 25%. This demonstrates its role as a sovereign-grade collateral outside the system.