You cannot eat gold or bitcoin. The “hoarders” at some point will want to consume be it a pizza or a lambo.
Then there’s those who invest in ways to get more... what for it.. gold or bitcoin so they go out and purchase picks and shovels.
Crazy stuff, extremely complicated when I write it as such. Btw, the FED made a trivial recession into a “great” one back in 1929.
The FED did cause the great depression and a lot of it had to do with currency being tied too closely to a deflationary token (gold).
>You cannot eat gold or bitcoin.
That is precisely the problem. The economy can get into a bad equilibrium where hoarding intrinsically valueless tokens displaces investing in productive assets. This state can persist because the firsts to invest in productive things are at a disadvantage to the token hoarders (at least for some time).
>The “hoarders” at some point will want to consume be it a pizza or a lambo.
Yes, then it becomes a game of "catch the peak" because when people realize all these tokens are sitting on the sideline but production has declined and there isn't much to purchase with the tokens, and that if they want to buy something at a good price they better be quick, the cycle can reverse explosively.
It's important for aggregate savings to be (at least indirectly) tied to things you "can eat" or the production thereof.
Furthermore, to describe descriptions good/bad to a market is against the definition of a market. It is what it is. A high price signal lets others that they should come in and get involved and thus bring the price down one way or another.
Being humble is a good thing. I cannot understand how certain ideologies or peoples always proclaim to know whats best for a stranger.
Someone should make a crypto Friedman coin based on this. Of course this would remove the ponzi, get-rich-quick aspect, so most wouldn't care for it.
I always find it weird when a group purports to know what the price of cacao should be halfway across the world when they’ve never stepped on to a finca in Ecuador.
I think a good deal of the hate Bitcoin gets is due to people not having much to go on when trying to think about currency generally. Without anything to stand on but the status quo, feelings seem to take over, and they are generally negative, motivating quickly thought up objections, in the mean, anyway.
On the other hand, it's far more likely the fed will stick with fiat currency. You'll still get paid in USD, pay your taxes in USD but bitcoin will exist as an alternative store of value like gold. There is around ~$11 trillion worth of gold above ground. Bitcoin has some properties that could make it a better store of value and much easier to transact with than gold. If it eats into gold's primary use case it will probably be a lot more valuable than it is right now.
However, I think of bitcoin as more of an inflationary hedge (even if we don't actually get inflation) or check on central bank monetary policy. So it's ultimately just an alternative asset. It also has some pretty amazing potential as a global settlement network but more so when it's volatility goes down.
Think of how many people’s retirement account owns Apple shares directly / indirectly. With Apple having $100b in cash, some portion of their valuation reflects that fact.
So perhaps, Apple would be worth N% less if it just distributed all the cash tomorrow back to shareholders, correct?
The point I’m making is that, the owners of the shares now own more valuable shares and thus benefit. The guy who is 95 leaves on his will that his favorite charity should get his Apple shares.
Now there’s a very real example that counters your “hoarding” claims on the assumption that no one benefits from their savings.
Not only that, Apple doesn’t keep the cash in a basement with dragons. But you’ve thought that one out I’m auree
There is a growing market for loans using crypto as collateral.
Using crypto to transact frees up the added financial costs required for charities, non profits , and regular businesses to thrive.
Well this is why I said it's dangerous if this becomes a trend. Gold has been tamed. After disastrous episodes, people have learned the lesson and businesses don't keep too much on their balance sheet. As far as I know, Tesla doesn't own 1.5 billions in gold. If they did, and this became a trend, gold might become dangerous to the economy too.
You have a source for that?
> When people, businesses and banks start hording tokens instead of investing in building and maintaining the production capacity of consumables
Central banks are pumping money into the economy at an incredible rate. There's no shortage of credit or liquidity anywhere.
You have a source for that?
https://en.wikipedia.org/wiki/Great_Depression#The_gold_stan...
I mean it wasn't strictly gold hoarding it was gold tied currencies hoarding.
> gold hoarding caused the economy to collapse in 1929
This makes it sound like gold caused the economy to collapse.
But your quote is referring to the Great Depression spreading world wide, so it's quite different. Don't think there is any definite and agree-upon source of what caused the Great Depression, many things interacting together for sure. You can't say that gold hoarding caused the economy to collapse though.
"We buy newly-produced goods with money. A Keynesian recession is an excess supply of newly-produced goods, and a deficiency of Aggregate Demand. In a monetary exchange economy, a deficiency of Aggregate Demand, and an excess supply of goods, is an excess demand for money. Money is what we demand goods with."
https://worthwhile.typepad.com/worthwhile_canadian_initi/201...
I would argue that an excess demand for crypto tokens is quite similar, especially if it gets to the point where companies are stockpiling them.
The international gold standard did not collapse during the 1930’s because of its inner contradictions — as schools inculcate the idea into all students. The truth is that the victorious powers inadvertently caused the collapse of the gold standard (with a 13-year lag) by disallowing its clearing system, the international bill market, to reopen for business after the cessation of hostilities in 1918. [1]
[1] https://professorfekete.com/articles/AEFNewAustrianSchoolOfE...
This makes sense if you study the functioning of the bill of exchange, which is a form of commercial credit that solves the problem of workers wanting weekly wages for producing a consumer good that takes months to sell: https://professorfekete.com/articles/AEFMonEcon101Lecture5.p...
You state this is if it was a fact, but it's not. There are some theories that puts the blame on the gold standard, but there are many others and there's no consensus in the economic community on which is more correct.
uh...reports is a very generous word for speculative guesses
If btc was definitely going to 100K by EOY, it would already be worth at least 90k today
Moving away from all-or-nothing systems is kind of the point.
Share buybacks. Tech businesses are buying their own shares to pump the stock price (and their options' value) rather than investing in building stuff.
But when too many people's savings are in the form of promises and everybody owe each other their savings, do people really have much savings?
A deflationary currency system of any kind, if it absorbs a significant amount of the world economy's assets, is going to be a disaster and at this point all we can do is hope it won't happen.
When people, businesses and banks start hording tokens instead of investing in building and maintaining the production capacity of consumables, the ratio of value of tokens meant to buy consumables vs the actual production of consumables gets out of wack.
When the music stops, people realize that others are sitting on tons of seemingly valuable tokens but stuff to buy with them is getting scarce because capacity is not being maintained, they reverse their trade, prices of stuff go up, volatility ensues in an incredibly destructive cycle.
Too much savings being tied to tokens instead of assets that create real value is an economy wide coordination failure, a terrible Nash equilibrium. It can be hard to solve because it's a prisoner's dilemma where the first people to invest in real production are disadvantaged so everyone hoards tokens instead.
This is what central banks are designed to prevent. We don't want cryptocoins to cause another great depression like gold tied currencies did almost a hundred years ago.