As a Financial Advisor, imagine a world where the U.S. monetary system is governed not by the discretion of central bankers, but by a transparent, rules-based framework. A system where the Federal Reserve no longer manipulates interest rates or expands the money supply based on short-term economic whims, but rather plays a narrow, well-defined role: stepping in only during genuine liquidity crises to stabilize the system—like a fire department responding to a blaze. How would a rules-based monetary system affect or change the Financial Advice we give to our clients?
In today’s structure, the Federal Reserve serves as both arsonist and firefighter. It lowers rates and expands the money supply during downturns, but these same tools create the conditions for asset bubbles, distortions in risk pricing, and long-term currency debasement. Meanwhile, the purchasing power of the U.S. dollar has eroded over 99% since the Fed’s inception in 1913, despite its stated mission to preserve value.
Even worse, there’s no end in sight. With an unimaginably enormous national debt, no politician mentions the debt, and they don’t run on any platforms to pay it off. There is currently no plan. It’s just ignored, or groused about occasionally.
But what if we flipped the script?
A Rules-Based Framework
Let’s say the Fed could no longer use discretion to expand the monetary base. Instead, money supply growth is fixed, perhaps at 2% annually or aligned with real GDP growth. This would resemble the monetary policy discipline of a Bitcoin-like system. No more targeted inflation. No more short-term interventions. Just a rules-based system that lets the economy breathe on its own.
In this system, the Federal Reserve acts only during true liquidity crises—when banks face a sudden loss of confidence and markets freeze. Its role is reactive, not proactive. It has no control over fiscal policy, no regular open-market operations, and no setting of short-term interest rates. It’s the fireman, not the fire starter.
Private Market Solutions and Transparency
Under this model, the deposit insurance system would also evolve. Instead of a government-backed FDIC, depositors could opt into private insurance schemes. Perhaps a firm like Lloyd’s of London underwrites your deposit coverage, like with Bitcoin. It’s available, but you pay the premium with a haircut to the return on your money if you want that safety. You’d pay a small premium based on the risk profile of the bank you choose.
And here’s the important piece: banks would be required to fully disclose their financial risk, balance sheet exposure, and underwriting practices. Just as we have nutritional labels on food, every bank would come with a “risk label.” Unlike prior to the Global Financial Crisis (GFC) in 2008 and beyond, where banks were taking unbelievable risks, which were undisclosed to their depositors.
Imagine a brief hypothetical:
A young couple evaluates where to open a savings account. Bank A offers 4.5% interest but has a Tier 1 capital ratio below industry average and invests heavily in speculative real estate. Bank B offers just 2% but maintains conservative reserves and carries private insurance. Thanks to full disclosure, the couple chooses Bank B. Six months later, Bank A collapses in a liquidity event. But Bank B’s depositors remain secure.
In today’s system, that young couple might never have known the difference. But if a bank fails, and there were undisclosed risks, the couple might still lose their money, but due to the fraud, the personal assets of the bank managers are at risk, not to mention criminal investigations. We’re so used to seeing lack of accountability for obvious bad actors, this would begin inserting some personal accountability, and incentives for full and fair disclosure by banks and their officers.
Fiscal Restraint: Market Forces as Discipline
One of the most profound shifts in this hypothetical system would be the impact on government borrowing. With the Fed no longer buying Treasury bonds or manipulating rates, Congress would need to fund its deficits through open capital markets.
And this is where things get interesting:
- If Congress engages in reckless spending, bond investors would demand higher interest rates to compensate for risk.
- Rising interest costs would naturally crowd out other spending priorities.
- Over time, the political appetite for endless borrowing would diminish—not because of imposed caps, but because of real-world financial consequences.
As one financial advisor might put it: “The market disciplines where Congress refuses to.”
In other words, fiscal restraint becomes enforced by the bond market, not by central planners. Without a Fed to absorb unlimited debt, the Treasury would be forced to live within the economy’s productive means.
The Role of the Fed: A Final Vignette
Picture this final story:
In 2029, a liquidity panic spreads due to a major cyberattack disrupting interbank settlements. The economy screeches to a halt as trust evaporates. Within hours, the Fed steps in—not to stimulate—but to lend solvent institutions the liquidity to stay afloat. Markets stabilize. The fire is extinguished.
No money printing. No moral hazard. Just targeted emergency action.
Conclusion
Am I predicting this scenario becoming a reality? No, I’m predicting this world will never materialize—but as a thought exercise, it highlights a powerful truth: much of what we’ve accepted as normal in monetary policy has produced devastating long-term consequences. A rules-based system, grounded in transparency, market discipline, and targeted central bank intervention, might just be a more stable and honest alternative.
My goal here is simple. I’m hoping for you to see the bigger picture regarding why affluent clients, and their High-end Financial Advisors, are slowly adopting Bitcoin as an allocation, along with the other asset classes, into their portfolios.
I was stunned in late 2024 when BlackRock, the largest asset manager in the world and not known for its vision or courage, issued 2 white-papers for Financial Advisors making the case for a 1-2% Bitcoin allocation. Of course this was after their launch of a large Bitcoin ETF, but I felt their white papers were compelling (If you want those, just let me know, I’ll send them to you).
I’m recommending every Financial Advisor commit to 100-hours studying the Bitcoin network. Not 25 hours, not 50 hours, but to commit the 100 hours required to begin understanding all the Financial Planning opportunities the network offers for the affluent, and anyone who chooses to utilize Bitcoin.
This article is to illustrate, for some clients, why Bitcoin is appealing. Beyond the returns, recognizing that Bitcoin has been the #1 asset class in performance since its inception in 2009, but beyond that, it has the potential for capturing the government’s attention, when it comes to monetary manipulation and lack of fiscal discipline.
There has never been any alternative to the U.S. dollar until now. It may have lost 99% of its value since 1913, but every other currency has done worse. More and more institutions are recognizing that, by not losing any purchasing power through inflation, Bitcoin is a flee-to-quality for investors fleeing the certainty of dilution and decline of value that’s structurally built-into the dollar.
By committing to 100-hours of Bitcoin study, you’ll gain a much better understanding of the big-picture driving the appeal and exponential adoption of Bitcoin. I’ve been a Financial Advisor for more than 40-years, and personally know dozens of skilled money managers. But unfortunately most Money Managers don’t know how to answer this client question: “What is money?” Imagine that, a money who struggles to define money!
In my experience, most affluent Bitcoin owners have a much stronger grasp of macro-economics, and the forces driving up Bitcoin, than most Money Managers. Let’s fix that, and I’m committed to helping Financial Advisors anywhere in the world, better understand Bitcoin, and why affluent clients are adopting it in large numbers around the world.
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