So I can imagine that this will turn into a big profit for them but the arguments are hilariously weak.
Granted they will get a lot of PR out of it.
The federal government cannot go bankrupt. In theory the government can default on debts, but in reality there is never a situation where the government would be forced to do so (it is always due to political dysfunction) -- as others have stated the US government is able to issue more money whenever it needs to do so, and thus can always satisfy any monetary obligations (though there may be negative consequences to doing so). Even if the government does default on its debts, it would not truly be bankrupt, because bankruptcy means that some higher authority has stepped in to decide what will be repaid and how, but the federal government is the highest authority. Likewise for the states, which cannot issue money but which cannot actually go bankrupt (as they have the authority to decide what obligations to meet or to fail to meet), something which has become relevant due to the enormous cost of dealing with COVID.
I think creating political/fiscal crises is part of the point.
Are you sure they threatened to default of _Treasury_ instruments?
And while the mainstream view is that Ryan/Boehner never really intended to go through with it because they knew the consequences, a sizable contingent of congresspeople & conservative pundits wanted to go through with it just to show that "they meant business".
https://en.wikipedia.org/wiki/United_States_debt-ceiling_cri...
My perspective, when people tell you what they'll do, believe them. It would be economic equivalent to setting off a nuclear bomb in the middle of the country, but :shrug:, it would own the libs.
I don't know. I remember a few years ago when people on reddit would get excited when some cafe in Bratislava or wherever started accepting bitcoin, or when Steam started accepting bitcoin. Now cryptocurrencies seem... boring. I see lots of people talking about "store of value", but actual use of bitcoin for what it was intended seems to be decreasing. And now people who want to gamble can just buy NKLA or SPCE or options on zero-fee brokers, which weren't a thing when bitcoin hit all-time high.
This is just my impression as an outsider, of course.
Don't think you ever would? Opinions can change rapidly when you're struggling to buy food.The article's thesis isn't really that the utility of Bitcoin will increase, it's that the utility of the dollar (its primary competition) will decrease. If your dollars will be worth half tomorrow, it's a no-brainer to get rid of them ASAP and put your money in a currency that isn't being printed rapidly.
In the states, using crypto is a taxable event. Until that is changed, they can only be stores of value, not currency, as I have no interest in recording every transaction with the IRS. I don't see a differentiation within cryptos coming from USG, so the crypto ecosystem can only be one or the other?
If it gets to the point where people will be calling on their Bitcoin reserves, the IRS will no longer be a going concern, at least one that anyone will be paying attention to. It's insurance against the collapse of governments, and so any government regulation other than ones affecting its storage & ownership aren't relevant.
[1] https://www.bloomberg.com/news/articles/2020-07-06/for-zimba...
Pension funds and other financial institutions. These were either locked out or didn't believe in bitcoin. If you were a Pension fund now you're probably keeping an eye on the space to help your returns.
Last bubble they didn't, this time, we will see.
Just to add here, the transaction fees you have to pay are highly variable, see chart fee chart for the last 30 days[1]. As of this posting the market clearing rate for a typical transaction is about 0.000325 BTC[2], or around $3.73. However, a few hours ago it was as low as 0.000005 BTC for a typical transaction, or around ($0.058).
[1] https://i.imgur.com/FYpGpES.png
[2] a random google search says a typical bitcoin transaction 250 bytes. this is a different unit than the one in the linked chart, which uses satoshis (0.00000001 BTC) per byte.
https://coinmetrics.io/charts/#assets=btc,eth_left=FeeTotUSD...
Look at the Ethereum space. That's where most of the action is these days. DeFi (Decentralized Finance) is the current hype. The ETH2 phase 0 is projected to go live later this year (this time for real :-). 60% of Tether is an ERC20 token now. etc.
Oh, and if you are interested in drama and have missed it, look up the Quadriga story. That story is so unbelievable whacky, no screen writer would have been able to come up with it.
Ethereum does have a lot of really interesting things going on that are super cool. But I wouldn't take this to mean that Bitcoin isn't developing or that it has somehow become stodgy or less relevant.
Bitcoin's developments are more the field of payments, decentralization, and privacy. These parts are not flashy, but are absolutely fundamental for its usability as money and store-of-value in the future.
The biggest differentiation though is that Bitcoin has an explicit inflation rate while Ethereum actually has no specific monetary policy at all. It is up to the devs and its scarcity could be undermined.
They're both extremely interesting for different reasons, but for those of us who got into crypto through economic reasoning about the gold standard, scarcity, government control of the money supply, etc. - the things many have seen for a really long time as the problems at hand - Bitcoin is by far more directly addressing them.
It's "boringness" at the moment means these objectives and economic motivations are becoming more agreeable.
No. Look at Bitcoin first.
If Bitcoin fails altcoins will most certainly fail too. There is a reason why Bitcoin does not change that much, it has to be safe and trusted for storing value. It is not a "move fast and break things" project.
> Look at the Ethereum space. That's where most of the action is these days. DeFi (Decentralized Finance) is the current hype.
Bitcoin is DeFi (Decentralized Finance), if anything.
"Finance" is much more than just payments or store of value. Bitcoin is way behind Ethereum in that regard.
Of course, that doesn't matter if you don't think that decentralized finance makes sense to have.
Proof-of-stake replaces this massive electricity waste with game theory. Every validator must put up a deposit (in ETH) to participate. If it cheats, it loses that deposit. The damage it can do to the network is limited to less than the deposit. Therefore, it's never profitable to cheat - and so they won't, or if they do, they will go bankrupt, remove themselves from the network, and self-limit the problem. And transaction validation can now be split among thousands of nodes (instead of having those thousands of nodes all validate the same PoW), which means the network can scale to tens or hundreds of thousands of transactions per second.
I'm pretty excited about Ethereum precisely because they're willing to experiment and rethink everything about their approach. I do suspect that soon after ETH2 is launched we will see a high-profile hack that steals everyone's ETH and requires a complete rollback of the network.
Here's a primer from HN's very own patio11, from back in late 2019 when they had only printed $4B: https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/
They sure write like they do. But they act like gamblers hoping for the next big score.
Sounds like wall street
I would agree that dollars have little downside but the purchasing power degradation of dollars feels like a irremediable tax on savings. And hard money like gold, silver, Bitcoin or Ethereum a quite decent hedge.
Two of these things are not like the others.
Even if you have no confidence in the dollar, doesn't mean Bitcoin or crypto currencies are a good alternative.
>And hard money like gold, silver, Bitcoin or Ethereum a quite decent hedge.
That is a strong statement. There is no evidence that crypto currencies are a 'decent hedge' for anything.
I assume it's "Our advisors can push mutual funds, they will be able to push trusts with the same fee structures and incentives to sell that hold an asset that has 10Xed before."
That alone seems like enough.
Let's say you don't believe BitCoin. If you have worked in finance, or had a financial advisor come to your company, you probably believe in their ability to sell.
People still think financial "advisors" (Series 7/63, CFP) know something / have interests besides pushing mutual funds.
Short of a crystal ball I don’t see how
Unfortunately, my experience working with MSTR has been that the expectation of competence isn't really born out in actual competence at a technical level.
I suppose you can only hope that at a management level it's a different story. They certainly seem to sell their product very well.
We don't see shopping cart inflation because it's countered by the technological cheapening of the production. And the key fact that new money is not being given to people buying groceries.
It is easy to forget that the Fed's mission is to stabilize the value of money, not to conform to some concept of fairness. I would also point out that instability in the value of money disproportionately impacts the poor, who have the least savings available to deal with price shocks (if you are living paycheck to paycheck, then the price of bread suddenly doubling will leave you eating half as much bread).
As for taxes being "precise," that is an interesting claim. The US tax code is not even remotely precise, in fact it is hard to know what you are supposed to pay in taxes for the first paycheck of the year (your bracket could change unexpectedly). Our income taxes are progressive, but the wealthiest Americans pay little in income tax because their "true" income comes from their investments. We have the AMT which is meant to take care of that, but the AMT has not been properly adjusted for inflation and so a bunch of middle class families are stuck paying it, even though those families also pay income tax at a higher bracket than the wealthiest households that AMT was supposed to target. Then there are the countless things a person can get credits for -- children, particular kinds of business income, charitable giving, state and local taxes, etc. -- that result in people with the same income level paying wildly different taxes from their peers. Investment income is taxed, but losses can be carried forward, and some investments are taxed in a totally different way, some can also be carried backward (see Section 1256), etc.
On some level it is "precise," but in practice it is a mess that gets more difficult to work the more "established" you are in life (bought/sold a house? got married? have a new child in your life? finally made enough to contribute to a retirement account? get ready to do a bunch of paperwork to figure out what you are supposed to pay).
As for what the Fed is supposed to do, in practice, the Fed does much more than simply control the amount of money. The responsibility of the Fed is to control monetary policy and to maintain the health of the economy by doing so. Which is why they have such an important role, right now, in preventing the complete collapse of the US economy.
The Fed's activity is what drives the government's ability to pay it's contractors.
If you want to increase the money supply, print some money and give it out.
If you want to fund highway construction, figure out how much it will cost and then raise that amount of tax revenue to pay the builders.
Without sarcasm, given the latest purchases of assets beyond Treasuries and MBS, why do you think the Federal Reserve has purchased assets at market rates?
I'd see the problem if it worked how I've sometimes seen it described, where rich people and banks are just getting free gifts of cash, but that's not accurate.
Congress could give the Fed the power to, rather than just buy bonds (or whatever it is they do) introduce money to the economy simply by giving everyone money.
I understand that it is not exactly true that the rich are getting free money for nothing. But the whole reason we're talking about this here is that someone pointed out that all the new money supply from the Fed is finding its way straight to people and corporations that don't have anything better to do with it than buy assets, the prices of which continue to grow as a result, even while the GDP rate is plummeting.
Lastly, I'm totally open to the idea that someone will come along and explain to me why my idea for how the Fed should give everyone money is just not workable. If that happens, I'll be happy to have learned something useful. But it's definitely not clear to me, a priori, why it wouldn't work if it wouldn't.
Congress has this power, and can always use it. The fed doesn't have this power, and that's because a bunch of unelected bankers aren't supposed to be making political decisions about wealth distribution.
Read up on the difference between fiscal stimulus and monetary stimulus...it's impossible to have an intelligent discussion on this subject without knowing how those things differ.
Monetary stimulus is when the central bank increases the supply of money in the economy to control the value of a unit of currency as measured relative to units of goods and services, which in theory can have similar effects on people's spending behavior.
Either can be done with any degree of fairness or unfairness. And neither necessarily has to be done by the mechanisms through which the world's governments have historically tended to do them.
I agree that I don't want a few unelected central bank officials making decisions about wealth distribution. That doesn't mean that congress can't specify a different mechanism for them to introduce money into the economy.
The job of financing ventures should be done by private parties and the banking industry, not by government, but since they are too preoccupied chasing assets with cheap money they can't be bothered to.
Congress decides how the money is distributed when they're spending it.
For things like stocks, if the increased value is driven by inflation, you get less for your money. So it takes more money to store the same amount of value there.
Isn't that basically what a REIT is? It's also possible to enter into joint ownership of a property. Roommates are also kind of like acquiring a fraction of a house.
Unless you rent, in which case you are acquiring a fraction of the liability without acquiring any house.
Wow.