Bitcoin in the PP?

General Discussion on the Permanent Portfolio Strategy

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Libertarian666
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Re: Bitcoin in the PP?

Post by Libertarian666 » Fri Mar 27, 2020 7:50 am

bitcoininthevp wrote:
Fri Mar 27, 2020 7:46 am
Libertarian666 wrote:
Thu Mar 26, 2020 1:16 pm
I'd rather add Beanie Babies to the PP.
Still waiting for an intellectual criticism from you.

Every thread on Bitcoin you spin the wheel-of-bitcoin-attempted-insults-from-2013 and pull out tulips or beanie babies or some nonsense without adding any value to the thread.

Reminds me of close-minded Boglers trying to insult gold as a useless shiny rock without ever trying to understand it.

And I would add you are also devaluing any of the contributions you make elsewhere on the forum doing this.
I understand bitcoin just fine. Blockchain in general has the potential of revolutionizing commerce, but that doesn't mean that bitcoin is worth anything as an investment.

As soon as bitcoin as an investment has 10th of the length of the track record of gold, I'll consider it as an investment.

In the meantime, feel free to ignore my messages on this topic, as I generally ignore yours.
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Re: Bitcoin in the PP?

Post by bitcoininthevp » Fri Mar 27, 2020 8:21 am

feel free to ignore my messages on this topic
Ill ignore what has no value. Like your one line beanie baby posts that are a waste of electrons. I dont mind criticisms, discussions, or arguments as perhaps one of us learns something.
Blockchain in general has the potential of revolutionizing commerce
Ok, the blockchain not Bitcoin argument. Help me understand in what context blockchain has or can be applied that is a better context than being applied to money (Bitcoin)?

Blockchain, to me, only makes sense in a censorship resistant context. For Bitcoin (money), that means central banks inflating the money supply against the will of the users, censoring/preventing transactions of users, or confiscating/freezing funds of users. Bitcoin and blockchain "solve" these issues in the money context. (I use "solve" in quotes as I fully and humbly realize Bitcoin is a web of incentives for humans and that at some point those incentives could break down in some way)

In your example, what commerce is being censored that a blockchain will help solve? What comes to my mind are things like black market transactions where the government says you cant sell drugs or something of the sort. But with Bitcoin, as outlined above, can help get around censored transactions.

So help me understand then the context where blockchain can be applied, that isnt money, having to do with commerce being revolutionized?
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Re: Bitcoin in the PP?

Post by Medolark Lemon » Fri Mar 27, 2020 1:57 pm

bitcoininthevp wrote:
Fri Mar 27, 2020 8:21 am
feel free to ignore my messages on this topic
Ill ignore what has no value. Like your one line beanie baby posts that are a waste of electrons. I dont mind criticisms, discussions, or arguments as perhaps one of us learns something.
Blockchain in general has the potential of revolutionizing commerce
Ok, the blockchain not Bitcoin argument. Help me understand in what context blockchain has or can be applied that is a better context than being applied to money (Bitcoin)?

Blockchain, to me, only makes sense in a censorship resistant context. For Bitcoin (money), that means central banks inflating the money supply against the will of the users, censoring/preventing transactions of users, or confiscating/freezing funds of users. Bitcoin and blockchain "solve" these issues in the money context. (I use "solve" in quotes as I fully and humbly realize Bitcoin is a web of incentives for humans and that at some point those incentives could break down in some way)

In your example, what commerce is being censored that a blockchain will help solve? What comes to my mind are things like black market transactions where the government says you cant sell drugs or something of the sort. But with Bitcoin, as outlined above, can help get around censored transactions.

So help me understand then the context where blockchain can be applied, that isnt money, having to do with commerce being revolutionized?
Yeah I tend to be of the same thought process. From what I can tell a blockchain is rather inefficient, a centralized third party would probably be better for most online commerce options, but when you need an extremely secure digital ledger like money a blockchain seems useful. Also when it comes to a blockchain you literally need a token/item/money to incentivize security of the network by rewarding the miners with it so the idea of a blockchain that isn't specifically designed towards being a money doesn't make much sense to me.

I like that idea of 24/24/24/24/4.
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Re: Bitcoin in the PP?

Post by bitcoininthevp » Sat Mar 28, 2020 5:13 am

I agree with your points. And welcome to the forum! (sorry the others gave such a harsh welcome)

Blockchains are terribly inefficient. The only time youd use one is if the decentralization/censorship resistance that you require absolutely necessitate it.

A group of companies working together can form a (centralized, technologically-efficient) consortium/federation instead. If they largely trust each other.

If there is a question of being able to prove something, there are also cryptographic tools like hashes that can help with that even with a traditional database without needing a blockchain. Such techniques have been around for decades.
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Re: Bitcoin in the PP?

Post by I Shrugged » Sat Aug 21, 2021 7:03 am

annalonco wrote:
Sat Aug 21, 2021 5:31 am
I have never heard of such a strategy, but after your post, I will watch a couple of videos on YouTube about this topic, you have seriously interested me in this. In general, I have developed my own strategy for buying cryptocurrency. I do not buy an expensive cryptocurrency like bitcoin and so on. I believe that it is necessary to buy such a cryptocurrency as dogecoin or Vaffa Token, which currently costs a small amount of money, but in the future, I assure you, this cryptocurrency will bring me a lot of money. I was advised to do this by several businessmen who have been investing for a long time.

That’s hilarious in the overall context of the last two pages.
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Re: Bitcoin in the PP?

Post by vnatale » Sun Aug 22, 2021 12:15 pm

I Shrugged wrote:
Sat Aug 21, 2021 7:03 am

annalonco wrote:
Sat Aug 21, 2021 5:31 am

I have never heard of such a strategy, but after your post, I will watch a couple of videos on YouTube about this topic, you have seriously interested me in this. In general, I have developed my own strategy for buying cryptocurrency. I do not buy an expensive cryptocurrency like bitcoin and so on. I believe that it is necessary to buy such a cryptocurrency as dogecoin or Vaffa Token, which currently costs a small amount of money, but in the future, I assure you, this cryptocurrency will bring me a lot of money. I was advised to do this by several businessmen who have been investing for a long time.



That’s hilarious in the overall context of the last two pages.


I am assuming that annalonco is no longer with us?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Bitcoin in the PP?

Post by Xan » Sun Aug 22, 2021 1:17 pm

vincent_c wrote:
Sun Aug 22, 2021 12:23 pm
When was that post? I wonder if they managed to hold onto doge.
It was yesterday, from a spammer, pushing some particular e-coin. The link gives it away (I redacted the destination).
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Re: Bitcoin in the PP?

Post by Kbg » Mon Jun 13, 2022 12:16 pm

Down almost 66% since November 2021...
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Re: Bitcoin in the PP?

Post by Arthur Boe Nansa » Tue Jun 14, 2022 5:55 am

Kbg wrote:
Mon Jun 13, 2022 12:16 pm
Down almost 66% since November 2021...
kbg don't you know that dollar valuation is just an illusion? There's only 21 million Bitcoin and 1 sat = 1 sat, so Bitcoin's value remains immutable. The repricing of everything around it is the fault of mismanaged financialization. The purity of Bitcoin is everlasting, it is the only constant in a dynamic world.
In the words of his holiness Michael Saylor: "#Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy."

If you don't understand this, you do not understand economics, psychology, philosophy, and everything that defines the future of humanity. You are, as the kids say, Not Gonna Make It.
Few understand this.


Joking aside: I've said it before and i'll say it again. Sans utility, Bitcoin can be anything you want it to be. It has been called a monetary network, a unit of account, a store of value, a beacon of hope for the disenfranchised[1], the one stop shop for all things web5[2], etc. It has little to no proof of being literally any of those things, but BTC'ers will convince you "it's only a matter of time. It's inevitable." Those of us who actually believe in using cryptocurrencies for doing good, and creating real change, have moved on to other projects. They're not perfect, but they're actually trying to deliver a use case.

______________

For those who want to read my observations:

[1] Consider what i'll call the Fictitious Freedom Paradox. Isn't it strange that most of the the states/countries adopting Bitcoin are economically weak, relatively underdeveloped and have had checkered governmental histories? These are the places ushering the new age of personal freedoms? You'd think a country dedicated to the prosperity of it's people would lower barriers to entry and provide sensible opportunities while still keeping an eye on growing systemic changes (you know, what governments are supposed to do) and allowing the citizens to decide freely. Instead, you have politicians lavishly broadcasting their acceptance of Bitcoin using a top down approach that feels almost too convenient. It's as though the governmental adoption is primary, with the potential improvement to its citizens' lives merely an afterthought...
So these governments who have been providing underwhelming results are now the real agents of human progress? You'd have to bake in many assumptions to argue that point convincingly and I think Occam's razor applies here. They simply have little to lose and much to gain (this dynamic is often true of "new paradigms", especially when the earlier you are, the more you stand to gain). So to sum up the Fictitious Freedom Paradox, those that score lowest in promoting the rights and freedoms of their citizens are somehow the greatest proponents of Bitcoin and the free utopia it enables.
Even if you wanted to ignore all that, you can very clearly see the deteriorating situation of El Salvador. Not only has their Bitcoin adoption been controversial, but their federal holdings are at a serious loss and their Bitcoin Bonds have been delayed twice (despite claiming to be oversubscribed), all while the internal state of affairs (gang violence, crime, etc.) has only grown more chaotic. BTC'ers would have you believe that Bitcoin solves these problems, but the evidence shows otherwise.

[2] I won't go into it too much detail, but Jack Dorsey, cofounder and previous CEO of Twitter, has announced an initiative to bring "web5" to Bitcoin. The idea is to build the future of the internet over "the rails" of the Bitcoin blockchain. It is meant to be an end all be all solution to dwarf all the hundreds of projects and companies that have spawned over the last few years in the tech and crypto industry. Jack, after having decided that he does not want to associate with the common VC's of Silicon Valley, is biting his thumb at the industry that put him where he is. He was CEO for years and yet somehow asleep at the wheel, not providing much shareholder value despite golden opportunities to advance the success of Twitter as both a company and platform. And now only half a year since stepping down, Dorsey has considered being part of Elon Musk's plan to take Twitter private. Musk cites much of the issues plaguing Twitter and vocally explained the importance of preserving "the de facto public town square", a company Dorsey was in charge of FOR YEARS. And yet somehow Musk directs the blame at its current management? All this is to say that while I think Dorsey's intentions are well meaning, they are wholly misguided and rest on somewhat hypocritical foundations.

A final note: Lyn Alden has been the queen of macro finance, providing illuminating insight and charts relating to where we are and where we're going. Yet one of the most interesting trends she has conveniently kept away from the spotlight- that BTC's correlation to the SP500 has been reaches new all time highs. An asset that is somehow supposed to be a ballast against inflation, lax monetary policy, and economic uncertainty is increasingly becoming a more volatile proxy for equities. She is a great commentator, but not without her faults and biases. Had she been more objective she'd report it much the same as everything else she does, but she's awaiting approval of "what's the current narrative?" from the influential people in the BTC community before posting to her audience information that might hurt the overall message. A user here (whose name escapes me) asked me to explain my comments i've made about her in the past. This is another glaring example. The user has since deleted their posts/account, but I get the feeling they still lurk in the forums from time to time. If they are reading this...hope all is well! :)
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Re: Bitcoin in the PP?

Post by Kbg » Tue Jun 14, 2022 8:47 am

Arthur Boe Nansa wrote:
Tue Jun 14, 2022 5:55 am
Joking aside: I've said it before and i'll say it again. Sans utility, Bitcoin can be anything you want it to be. It has been called a monetary network, a unit of account, a store of value, a beacon of hope for the disenfranchised[1], the one stop shop for all things web5[2], etc. It has little to no proof of being literally any of those things, but BTC'ers will convince you "it's only a matter of time. It's inevitable." Those of us who actually believe in using cryptocurrencies for doing good, and creating real change, have moved on to other projects. They're not perfect, but they're actually trying to deliver a use case.
By no means would I ever claim any expertise in this area, but I will claim just a small amount of financial expertise and as an investment or a monetary instrument cryptocoin of any kind is and always has been essentially a massive scam and/or criminal enterprise. If one understands anything about "money" how it works, who controls it and what its operating principles are they know the following: Crypto isn't going to survive as "money." As an "investment" it has zero redeeming qualities to it. It produces nothing and returns nothing. Its "scarcity" lasts until it gets forked which can happen when the controlling technical entities decide to make a change.

On the positive...I've no objection to speculation and it has been a massively good speculation in both directions if you are good at timing its moves and the technology genuinely appears to have superior qualities as an accounting technology.
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Re: Bitcoin in the PP?

Post by bitcoininthevp » Tue Jun 14, 2022 10:50 am

Arthur Boe Nansa wrote:
Tue Jun 14, 2022 5:55 am
[1] Consider what i'll call the Fictitious Freedom Paradox. Isn't it strange that most of the the states/countries adopting Bitcoin are economically weak, relatively underdeveloped and have had checkered governmental histories? These are the places ushering the new age of personal freedoms? You'd think a country dedicated to the prosperity of it's people would lower barriers to entry and provide sensible opportunities while still keeping an eye on growing systemic changes (you know, what governments are supposed to do) and allowing the citizens to decide freely. Instead, you have politicians lavishly broadcasting their acceptance of Bitcoin using a top down approach that feels almost too convenient. It's as though the governmental adoption is primary, with the potential improvement to its citizens' lives merely an afterthought...
So these governments who have been providing underwhelming results are now the real agents of human progress? You'd have to bake in many assumptions to argue that point convincingly and I think Occam's razor applies here. They simply have little to lose and much to gain (this dynamic is often true of "new paradigms", especially when the earlier you are, the more you stand to gain). So to sum up the Fictitious Freedom Paradox, those that score lowest in promoting the rights and freedoms of their citizens are somehow the greatest proponents of Bitcoin and the free utopia it enables.
Even if you wanted to ignore all that, you can very clearly see the deteriorating situation of El Salvador. Not only has their Bitcoin adoption been controversial, but their federal holdings are at a serious loss and their Bitcoin Bonds have been delayed twice (despite claiming to be oversubscribed), all while the internal state of affairs (gang violence, crime, etc.) has only grown more chaotic. BTC'ers would have you believe that Bitcoin solves these problems, but the evidence shows otherwise.
Doesn’t seem that paradoxical to me. Any country that can print their own currency is not likely to adopt BTC. So you are left with non-printing countries as more likely BTC adopters. Of those non-printers, the ones closest/friendliest/under-the-thumb of the US (or other money printers) are the least likely to adopt as well. So you’re left with these el salvador-types (dont have their own currency, not tight with USG or others) as the most likely adopters. That seems logical to me. I dont personally agree with the legal force requiring adoption and I think the president "buying the dip" and acting hot shot on twitter isnt great (but popcorn-level enjoyable).

I dont really have any thoughts on your @Jack takes. Seems like a good guy, seems like hes trying help bitcoin and build services around it.
Arthur Boe Nansa wrote:
Tue Jun 14, 2022 5:55 am
...Yet one of the most interesting trends she has conveniently kept away from the spotlight- that BTC's correlation to the SP500 has been reaches new all time highs. An asset that is somehow supposed to be a ballast against inflation, lax monetary policy, and economic uncertainty is increasingly becoming a more volatile proxy for equities.
Bitcoin was actually a pretty great monetary inflation hedge (went up a lot during money "printing" in the last years), and not a good CPI hedge, esp during tight money.

As it seems the monetary inflation has stopped and we are in tightening money mode it makes sense to me that BTC would be punished accordingly. Pain is likely to be strong for BTC, and exacerbated by the crypto worlds nuances like leverage/LUNA, until whatever we expect the Fed pivot event to be.

In terms of tracking S&P500/Nasdaq, "correlations go to 1" when there is a rush to the exits and whatnot.
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Re: Bitcoin in the PP?

Post by glennds » Tue Jun 14, 2022 11:26 am

bitcoininthevp wrote:
Tue Jun 14, 2022 10:50 am

Bitcoin was actually a pretty great monetary inflation hedge (went up a lot during money "printing" in the last years),
I'm still wondering if this was causation or random correlation.

I keep reading things from BTC aficionados that the price cycles have a lot to do with "halvings" and adoption. I don't claim to fully understand the phenomenon, but I don't think it has any relationship to inflation, monetary or price.
So if you're right, they're wrong and vice versa, or you're both wrong. Maybe there is no rational answer for Bitcoin's movements.
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Re: Bitcoin in the PP?

Post by Arthur Boe Nansa » Tue Jun 14, 2022 11:48 am

bitcoininthevp wrote:
Tue Jun 14, 2022 10:50 am
Doesn’t seem that paradoxical to me. Any country that can print their own currency is not likely to adopt BTC. So you are left with non-printing countries as more likely BTC adopters. Of those non-printers, the ones closest/friendliest/under-the-thumb of the US (or other money printers) are the least likely to adopt as well. So you’re left with these el salvador-types (dont have their own currency, not tight with USG or others) as the most likely adopters. That seems logical to me. I dont personally agree with the legal force requiring adoption and I think the president "buying the dip" and acting hot shot on twitter isnt great (but popcorn-level enjoyable).

I dont really have any thoughts on your @Jack takes. Seems like a good guy, seems like hes trying help bitcoin and build services around it.


Bitcoin was actually a pretty great monetary inflation hedge (went up a lot during money "printing" in the last years), and not a good CPI hedge, esp during tight money.

As it seems the monetary inflation has stopped and we are in tightening money mode it makes sense to me that BTC would be punished accordingly. Pain is likely to be strong for BTC, and exacerbated by the crypto worlds nuances like leverage/LUNA, until whatever we expect the Fed pivot event to be.

In terms of tracking S&P500/Nasdaq, "correlations go to 1" when there is a rush to the exits and whatnot.
BinVP I appreciate that we can disagree civilly. I don't mean to bash you, simply consider me the antithesis in the BTC discussions here. Much of my frustration is less with the individualist BTC maximalists, more the general direction of the project and its profiteers.

I understand the point you're making. I considered adding that caveat (the monetary hedgemony of the dollar/euro as pressure against these countries) and refuting it, but that would've made my post very long. To rebut quickly: what you're saying "has legs", but they're very weak. No one is stopping anyone from printing money at will. You and I can do it too. It's the economic engine behind those monies that give them any strength beyond glorified toilet paper.
Did the US decide to become friendly with other countries simply because it liked them or because they have natural / man made resources and output that make their allyship attractive to the US? In the (semi) free markets of geopolitics, the countries closest/friendliest/under-the-thumb of the US aren't random. You can even argue, despite many a failings of the US, that the government has mainly stuck by its allyship with other countries even when it was fairly disadvantageous to do so.
So it's not just a question of perpetual unfairness against these countries. They simply aren't proving themselves especially valuable. And they want an easy out.

Regarding Jack, he does seem like a good guy. That doesn't absolve him of his hypocrisies. We'll see how web5 does.

Bitcoin was actually a pretty great monetary hedge during the monetary printing? What asset class wasn't? Free money beget stupid spending.
For the finance geeks, research suggests risk on equities is actually a fine strategy for long term inflation. So long as it doesn't hyperinflate, quality assets producing consumables provide a return meant to partly offset inflation losses. When you'd expect a store of value to actually provide buffer is now...when there's an economic slowdown, inflation is impacting everyday life and the constant investment and career risk puts an individual's financial future in question. BTC's laughing at shitcoins that have gone down 80% when BTC has gone down 65% is hardly the "own" they think it is.
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Re: Bitcoin in the PP?

Post by Kbg » Wed Jun 15, 2022 9:09 am

bitcoininthevp wrote:
Tue Jun 14, 2022 10:50 am
Bitcoin was actually a pretty great monetary inflation hedge (went up a lot during money "printing" in the last years), and not a good CPI hedge, esp during tight money.

As it seems the monetary inflation has stopped and we are in tightening money mode it makes sense to me that BTC would be punished accordingly. Pain is likely to be strong for BTC, and exacerbated by the crypto worlds nuances like leverage/LUNA, until whatever we expect the Fed pivot event to be.
BC,

It was a great inflationary hedge during the money printing in the last years...except there was no inflation. So wrong.

It seems the monetary inflation has stopped and we are in tightening money mode...except there is significant inflation. So wrong x2.

Technical point...inflation is not more money in circulation, inflation is the prices of actual goods going up. As Japan has proved going on three decades now a lot of money in circulation does not equal inflation.

Whatever BTC is, it is not an inflationary hedge statistically. Let's call it for what it is...a speculation that went up a lot due to extremely easy money. Now that there are actually interest rates again (though hugely negative right now), you can buy a treasury that pays ~3% and you get your principal back plus interest or you can buy BTC, receive no interest and have its value change at multiples of 3% in a couple of hours or days.

What are the rational people who actually want to make money going to do? (Hint: Exactly what we are seeing reflected in BTC's price.)

We are witnessing a new generation learn what mine did during the dotcom bubble...only real tech companies actually produce something unlike doggie and cat coins which can be stable except they aren't.
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Re: Bitcoin in the PP?

Post by Jack Jones » Wed Jun 15, 2022 9:37 am

What are the rational people who actually want to make money going to do? (Hint: Exactly what we are seeing reflected in BTC's price.)
Personally, I wish I was more rational with the Bitcoin I bought in 2014. I would have made a lot of money.
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Re: Bitcoin in the PP?

Post by Kbg » Wed Jun 15, 2022 4:38 pm

Me too!

And of course I would have sold last year.

I’ve never been a hater of it as a speculative venture. I’ve said that repeatedly. Obviously I’m skeptical of the rationale behind its “value” and I don’t see much of a future for what it has been promoted as.
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Re: Bitcoin in the PP?

Post by Matthew19 » Thu Jun 16, 2022 12:27 am

Kbg wrote:
Wed Jun 15, 2022 9:09 am

Technical point...inflation is not more money in circulation, inflation is the prices of actual goods going up. As Japan has proved going on three decades now a lot of money in circulation does not equal inflation.
Inflation is an expansion of the money supply. It can show itself in asset price increases(2012-2021), commodity price increase (2022) etc..But the strict definition of inflation is always monetary increase.
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Re: Bitcoin in the PP?

Post by mathjak107 » Thu Jun 16, 2022 4:50 am

I disagree .. the strict definition is an over all increase in prices .

Shortages and supply and demand issues don’t have to be monetary .

All the adjusting of the money supply can’t make more auto chips or produce more oil in the Mid East
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Re: Bitcoin in the PP?

Post by glennds » Thu Jun 16, 2022 8:36 am

A Keynesian and a Monetarist walk into a bar....
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Re: Bitcoin in the PP?

Post by glennds » Thu Jun 16, 2022 11:12 am

The Keynesian vs Monetarist disagreement is about the root causes of inflation which is basically what is happening in the comments above. To some degree there's also a demand-pull vs. cost-push question, which your linked article talks about.

https://www.investopedia.com/articles/p ... lation.asp

There was a lot of discussion during Powell's comments about core vs headline inflation. https://www.investopedia.com/terms/h/he ... lation.asp
My take away from the Fed address is that there are many complicated contributing factors. One would think the pandemic related supply chain dislocations would resolve themselves over time.
But the global contributors such as the Ukraine war and China's lockdowns illustrate just how fragile the global economy is by its very nature. Like the Butterfly Effect in chaos theory. Powell is clearly saying he can't impact supply. There are numerous ways to punch down demand. The dilemma is knowing which will be least destructive.
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Re: Bitcoin in the PP?

Post by Matthew19 » Thu Jun 16, 2022 11:28 am

glennds wrote:
Thu Jun 16, 2022 8:36 am
A Keynesian and a Monetarist walk into a bar....
Naa, Austrian.

"The Austrian school believes any increase in the money supply not supported by an increase in the production of goods and services leads to an increase in prices, but the prices of all goods do not increase simultaneously."

Aggregate prices can't rise without money printing. Otherwise, something has to fall in price in order for something else to increase.
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Re: Bitcoin in the PP?

Post by D1984 » Thu Jun 16, 2022 9:39 pm

Matthew19 wrote:
Thu Jun 16, 2022 11:28 am
glennds wrote:
Thu Jun 16, 2022 8:36 am
A Keynesian and a Monetarist walk into a bar....
Naa, Austrian.

Aggregate prices can't rise without money printing. Otherwise, something has to fall in price in order for something else to increase.
There are two important qualifiers you need to add to this statement; otherwise, it is not 100% correct.

I'll let you (or anyone else who wishes to chime in) take a stab at seeing if you/they can figure out what these two are; if no one comes up with them before tomorrow night I will come back here and post them (I'd post them now myself but I'm rather unfortunately rather busy IRL at the moment) but I'll give you two quick hints:

For the first qualifier, the situation where this can happen DOES indeed have to do with too much money chasing after too few goods and thus leading to a rise in the aggregate price level of the economy as a whole but without any more money in absolute terms (in other words, if the total money supply was, say, $10 trillion beforehand it is still $10 trillion in this situation) being printed/electronically created.

For the second, don't think of money (or paper/bitcoin/gold/etc) at all for the moment; think instead of gold old fashioned lead....consider....which causes more damage and injury: getting hit in the chest by a quarter pound lead wheelweight thrown at 40 mph by a human arm, or getting hit in the chest by a 62 grain (which is about 0.14 ounces so roughly 1/112th of a lb) lead 5.56 mm bullet thrown at 2,200 mph by an AR-15 rifle? The clue here is that sometimes velocity is just as important if not more so than mere quantity.....
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Re: Bitcoin in the PP?

Post by Kbg » Fri Jun 17, 2022 8:06 am

Yep…you can pull up the data at Fred and look at your favorite M measure and compare with V…voila massive $$$ printing with deflation.
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Re: Bitcoin in the PP?

Post by Pointedstick » Fri Jun 17, 2022 9:38 am

Most of us lost faith in "Austrian Economics" when we figured out that it's failed to explain basically anything about the way modern economies and monetary systems work over the past 50 years. So defining inflation to mean "an increase in the money supply" re-defines it into uselessness. I don't care about the size of the money supply, I care about my purchasing power. If you use one as a proxy for the other, you're likely to be wrong a lot of the time, and make bad financial decisions because of it.

Regarding crypto, the problem is always that to be a good asset, something needs more to it than simply, "I think I'll be able to later sell it at a higher price than I paid for it". It needs some kind of real underlying value or collateral to provide a guideline for a reasonable price and preserve investors' faith when that price declines to keep everyone from running to the exits and dropping it to zero. Crypto has never had any of that. Unlike a stock or a corporate bond, there's no underlying productive enterprise that expands the scope of human prosperity that you're investing in. Unlike a government bond or cash, the promises made by crypto issuers are not backed by any kind of legal authority, contract enforcement power, or history of stability. Unlike gold, crypto isn't physical and "off the grid" so it's not really a good SHTF asset. Unlike real estate, there's no physical structure in the real world backstopping its value. And so on.

Rather, crypto is really buying into a digital manifestation of a philosophy. But philosophies don't pay the bills. They're luxuries you can afford to put money into when you have extra. This makes crypto a prosperity-linked asset. But investors already have better prosperity-linked assets: stocks. Except unlike stocks, there is no clear lower bound on the value of a cryprocurrency, so it could (and often does) go to zero and wipe out the people who put money into them.
Last edited by Pointedstick on Fri Jun 17, 2022 3:02 pm, edited 2 times in total.
glennds
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Re: Bitcoin in the PP?

Post by glennds » Fri Jun 17, 2022 11:32 am

Pointedstick wrote:
Fri Jun 17, 2022 9:38 am


Rather, crypto is really buying into a digital manifestation of a philosophy. But philosophies don't bay the bills. They're luxuries you can afford to put money into when you have extra. This makes crypto a prosperity-linked asset. ........ Except unlike stocks, there is no clear lower bound on the value of a cryprocurrency, so it could (and often does) go to zero and wipe out the people who put money into them.
Never heard it put like this but it's really apropos. Also explains why so many crypto fans have a religious like fervor about it. Nobody gets that fervent about an asset, they get fervent about religion, philosophy, ideology.
I'll try to attribute it to you as I go forth and proliferate this quote in the world.

I have my own pithy quote about crypto that I'll share.
If one were to think of their portfolio like a woman's closet, Crypto would be the one slutty dress every woman ought to own. Just one.
If you run into a woman whose closet is full of slutty dresses, it indicates a problem.
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