What is with all those articles on HN front page about bitcoin?
Is this because BTC price has risen sharply recently?
You don’t have to be genius to understand what is going on: USA printed trillions and gave most of it to already rich people. What are they supposed to do with that money? Only option is buying more real estate, buying stock of their companies, or investing in BTC.
Keep in mind that these trillions hasn’t flow into these assets yet but it will keep flowing and you will see these asset prices increasing.
In essence, if you don’t own any real estate, company stock or BTC then you will essentially own nothing because thieves already sucked all the fiat to its own end.
Exactly. Every time there is any kind of mania there is always a slew of articles on how much people are making on it, there is a remarkable dearth of articles on how much is lost when the mania ends. (Credit to Reddit's Wall Street bets group for breaking that one a little though.)
The $3 trillion+ of money printing behind all this? As you say, completely lost in the wind. But for the record here it is:
You never really own real estate (almost never the land since it remains the property of the government so it's a lease at best, you own buildings and that's it) - and ownership of real estate means being taxed on it forever for the privilege of having it (with increased levels of taxes over time, of course) which is not really compatible with the concept of 'property' - when you buy an object you don't keep paying for it forever.
And don't even get me started on the fact that most countries will steal that property back at death with outrageous taxation levels. That's some kind of a property all right.
Natural rights become a social construct the minute you stop enforcing them yourself. You pay taxes to support the system that maintains the property fiction for you.
Can you describe what it would look like to "own" land in your view? Are you suggesting people should be able to buy land in a community and then sit on it forever without contributing anything back to said community?
> Can you describe what it would look like to "own" land in your view?
Not paying taxes forever on it would be a start to call it "ownership". As far as I know, on about everything else you buy, you never end up paying x years for possessing them.
I think the rise in BTC is also attributable to the fact that the Fed _hasn't_ been buying BTC, and therefore hasn't artificially propped up its price. The same can't be said for stocks, real estate, or anything else available on equity markets. Couple that with the fact that bitcoin has no 'intrinsic value' and therefore isn't capped at the top or bottom, and you've got an asset that:
1) May survive inflation intact.
2) Cannot really be overpriced (or underpriced) since it is not tied to anything except itself.
This makes for a pretty juicy opportunity for those who don't want to invest in assets the fed has been propping up. Of course there are downsides. The lack of intrinsic value means there is no real price cap at the top... or the bottom. Hence volatility. It can also simply be banned from being purchased with fiat currency.
> the Fed _hasn't_ been buying BTC, and therefore hasn't artificially propped up its price. The same can't be said for stocks, real estate, or anything else available on equity markets.
The Fed isn’t buying most equities. The monetary transmission channel for equities is exactly the same as Bitcoin’s.
> The monetary transmission channel for equities is exactly the same as Bitcoin’s.
Can you explain what you mean by this? From my understanding the fed has been buying corporate bonds and ETFs directly. I shouldn't have said the Fed is buying 'anything else available on equity markets'.
> Can you explain what you mean by this? From my understanding the fed has been buying corporate bonds and ETFs directly
The Fed has been buying bond ETFs as a way to buy bonds. (Bonds are illiquid, and a whale like the Fed buying them individually can create artefacts.)
When the Fed buys it puts the asset on its balance sheet and gives the seller money. That money can then be spent or re-invested. Spoiler: it's been getting re-invested. That is the transmission channel from the Fed's buying to other asset prices, e.g. stocks and non-target bonds and Bitcoin and beanie babies.
> You don’t have to be genius to understand what is going on: USA printed trillions and gave most of it to already rich people.
It's also a good time to understand "The Cantillion Effect"
> Namely, when you print money, it causes more pounds to chase fewer goods, pushing up the average cost resulting in inflation. His theory has been dubbed ‘The Cantillion effect’, and is a lesson to us all on the effects of inflation ‘financing the financiers’.
I have heard that technology has a very large deflationary effect on consumables, and you can see the inflationary effects of money printing in the prices of non-consumables like stocks and real estate. For example, check out the nasdaq composite index: https://finance.yahoo.com/quote/%5EIXIC/
Sadly asset inflation is not part of the inflation calculation.
Also there's a reason besides the technology's deflationary effect - it's the wealth inequality. If the printed money doesn't end up in the hands of the majority of people (i keep hearing real wages are stagnant), then there won't be inflation in the common goods that make the large chunk of CPI.
I have heard this before. I would like to see some an inflation penetration metric for various economic actions whether those actions come from the Fed or some other group. For example, I think about the 5 billion (or more?) in bond purchases the fed recently made. How does that kind of monetary inflation penetrate into the economy? Groups that don't own stocks won't get those dollars. However, for groups that do own stocks, they will have extra money to spend and therefore push the prices of common goods up.
> if you don’t own any real estate, company stock or BTC then you will essentially own nothing because thieves already sucked all the fiat to its own end.
In all likelihood, if you own none of these you probably don't have much wealth in the first place.
(No offense to anybody, I fall in this category. Aside from my down payment savings fund, I have no wealth to speak of)
1. The exchange rate between USD and other currencies fluctuates about as much as USD/BTC.
2. The exchange rate between BTC and other currencies is relatively stable, or at least uncorrelated to the USD/BTC rate.
But in fact you see neither of these. So either (1) all developed-market currencies are seeing massive fluctuations that are all somehow perfectly correlated with each other, or (2) BTC is the one that's fluctuating, not USD.
Exactly. Bitcoin has been heavily criticized on HN by some, but we're seeing its value proposition come to fruition: an asset that is resistant to artificial government fueled inflation. Perhaps also easier to get into than stocks (no need for a brokerage account, and you can buy in almost arbitrary amounts), and definitely easier than getting into property.
Yeah... I bought about $250 worth of bitcoins two years ago on an exchange. The exchange went bankrupt and the bitcoins are gone. At least with a stock broker your account is insured by the government up to a certain amount.
Yes, I know, run your own wallet, don't leave your bitcoins on the exchange... Except again, with stocks, you don't have to worry about that. I was personally hoping that a bitcoin exchange would have better security and backups than my home PC. As far as I'm concerned, storing bitcoins on your machine, with no insurance, is not much safer than storing gold bullion in your closet.
I'm just happy what I was wise enough not to put more money in bitcoin than I could afford to lose.
It would be wonderful to have a BTC bank account with an insurance policy denominated in BTC, but that doesn't exist yet (AFAIK). Until then... Not your keys not your coins.
Also, you don't need to store them on your PC. There are also paper wallets, hardware wallets, or you could put your wallet files on a flash drive.
> I'm just happy what I was wise enough not to put more money in bitcoin than I could afford to lose.
It is so much easier than stocks. In the US it is relatively easy but in most countries you can't just download an app and start trading. Anyone can buy a bitcoin with a credit card.
If I'm understanding correctly, what you are saying is that Bitcoin is fundamentally different than say a share of Amazon because inflationary activity could actually damage Amazon as a company and therefore lower the price of Amazon shares long term whereas Bitcoin cannot be damaged in such a way because it's value is not based on any real economic activity?
> whereas Bitcoin cannot be damaged in such a way because it is not based on any real economic activity
No, Bitcoin has economic activity from transactions on the Blockchain (peer-peer) and mining activity (system-miner). This activity cannot often by disrupted by another currency minting a lot of other currency.
The dollar printer went crazy in 2020: https://fred.stlouisfed.org/series/M2. This definitely had an effect on stock and property prices, and seemingly some cryptocurrencies as well.
That would be a nice theory, but inflation in terms of producer and consumer goods is lower than in previous years (PPI inflation of 0.8% for the 12 months ending on 31 November, CPI inflation of 1.2% for the same period, compared to an average of more like 2% over the previous few years).
Is this because BTC price has risen sharply recently?
You don’t have to be genius to understand what is going on: USA printed trillions and gave most of it to already rich people. What are they supposed to do with that money? Only option is buying more real estate, buying stock of their companies, or investing in BTC.
Keep in mind that these trillions hasn’t flow into these assets yet but it will keep flowing and you will see these asset prices increasing.
In essence, if you don’t own any real estate, company stock or BTC then you will essentially own nothing because thieves already sucked all the fiat to its own end.