Remarkable statistic

[Hornblower]

My point here is that quoting countries that have experienced hyperinflation as examples of where bitcoin would have been better than fiat is a flawed argument. I don't think it provides any evidence that most governments will either want to, or be forced to, adopt bitcoin.

I think you are wrong. You're almost saying that the underlying economy has no connection to what the government does with its currency. This is demonstrably false. That there are multiple countries (such as Zimbabwe & El Salvador) that adopted the US dollar as their currency after their own failed should show you that. The economics Prof Steve Hanke (no fan of Bitcoin) is always proposing that countries adopt a dollar standard to stop runaway inflation.

Forgive me, haven't you just 'cancelled' your own argument?

Did you actually read my post?

I think so... My point was you are quoting somebody recommending a fiat currency (the US dollar) as a solution to serious inflation problems. But seem at the same time to be claiming that cryptos can save us from the risks of inflation caused by governments and fiat currencies.

Of course you may not agree with Prof Hanke. But then it seems strange that you quote him as part of the argument for cryptos.

I obviously think he's wrong as now we see the high inflation in $ & other fiats thanks to the monetary policy. He's advocating replacing a currency with high inflation with another currency with high inflation. Like rescuing someone from a sinking boat in your own sinking boat.

H

[Itsallaguess]

My argument was about fiat and it's abuse, not a claim that bitcoin is best.

And my position on some of the comparators being used on this thread was that those comparators listed will hopefully be sensibly seen as relatively rare outliers in a much larger field of more generally balanced systems, so a very small percentage of rather extreme failures, whereas I was pointing out that 100% of the BitCoin 'superior solution' has lost 50% of it's value in the past three months...

If BitCoin hadn't lost 50% of it's value in the past three months, and less extreme comparators were being discussed, then that would be a different story, but people wanting to dismiss that 50% BitCoin price drop as 'expected volatility' seem unhappy to accept the currently high COVID-induced inflation that we're seeing as also being 'expected volatility'', and are choosing to use the current high-inflation issues as pro-BitCoin arguments.

It all seems a little too 'cake and eat it' for me, I'm sorry...

Cheers,

Itsallaguess

[XFool]

Of course you may not agree with Prof Hanke. But then it seems strange that you quote him as part of the argument for cryptos.

I obviously think he's wrong as now we see the high inflation in $ & other fiats thanks to the monetary policy. He's advocating replacing a currency with high inflation with another currency with high inflation. Like rescuing someone from a sinking boat in your own sinking boat.

Ah. I think I see now where this is going...

You think: "Freedom for the people(?) in the new paradigm of a Libertarian society freed finally from the confiscating tyranny of centralised banks and 'socialist leaning' big governments."

OK. Indeed I can see the attractions of that - for your average crypto millionaires/billionaires etc.

But what about the little people - those who are definitely NOT crypto millionaires/billionaires? How exactly will they share in this supposed Nirvana?

[Urbandreamer]

My argument was about fiat and it's abuse, not a claim that bitcoin is best.

And my position on some of the comparators being used on this thread was that those comparators listed will hopefully be sensibly seen as relatively rare outliers in a much larger field of more generally balanced systems, so a very small percentage of rather extreme failures, whereas I was pointing out that 100% of the BitCoin 'superior solution' has lost 50% of it's value in the past three months...

I have left your comment about the fall in bitcoin in as I believe that many will feel that you have a point, though I believe that it's just volatility.

The rest!

Sorry, but problems are not rare at all.
https://en.wikipedia.org/wiki/List_of_s ... ebt_crises
Just look at how many problems are listed, and that is just HARD defaults. Soft defaults through revaluing the currency and inflation are not in that list.

Consider the Greek debt crisis as just one example.
https://en.wikipedia.org/wiki/Greek_gov ... ebt_crisis
Oh, that article ends in 2017, presumably it's over.
Ooops, no it's not. It's mentioned in this article about Italy's current debt crisis.
https://www.ft.com/content/f63b8aa4-9dd ... 4e828a44e9

I suspect that what you mean is that it hasn't happened "here" (in generations). Though some would argue that the fact that the UK once had currency controls similar to Eritrea does not reflect well.
Simply paying attention to the news will inform you that the problems are NOT rare.

The title of this thread is "Remarkable Statistic", but it started about bitcoin.

I'd like to draw your attention to another remarkable statistic, the increase in the money supply.
https://www.spectator.co.uk/article/mer ... -inflation

Sorry but I don't accept that I shouldn't use examples of countries where money printing was rife to argue about the dangers of money printing.

[Bubblesofearth]

[

I'd like to draw your attention to another remarkable statistic, the increase in the money supply.
https://www.spectator.co.uk/article/mer ... -inflation

Sorry but I don't accept that I shouldn't use examples of countries where money printing was rife to argue about the dangers of money printing.

Sure, there are dangers to money printing but the major Global economies have been here plenty of times before and not gone back onto the gold standard or equivalent. The simple fact is that these governments do not want to relinquish control of the money supply. It doesn't matter how much the Austrian school of economics rail against this I just can't see it happening. And without major economies adopting Bitcoin it's just another volatile asset with no backing apart from that of speculation and economic fantasising.

boE

[Urbandreamer]

Sure, there are dangers to money printing but the major Global economies have been here plenty of times before and not gone back onto the gold standard or equivalent. The simple fact is that these governments do not want to relinquish control of the money supply. It doesn't matter how much the Austrian school of economics rail against this I just can't see it happening. And without major economies adopting Bitcoin it's just another volatile asset with no backing apart from that of speculation and economic fantasising.

boE

Many would agree with your opinion. Even many who hold bitcoin. However note the word OPINION. Facts have ways of getting in the way of opinions. We know of two countries that have adopted bitcoin and another that is flrting with gold.

Sorry, apparently we need to ignore these facts as some here dislike such countries being mentioned.

I'll tell you what, instead of listing countries that are considering a move to a hard currency we could list countries who officially use some other countries fiat.
Some of which have actually chosen rather than be forced to do what you claim that they won't, and abandon control of their money supply.

Independent countries that use the US $.
Puerto Rico, Ecuador, Guam, The Virgin Islands, Democratic Republic of Timor-Leste, Bonaire, Federated States of Micronesia, Republic of Palau, Marshall Islands, Panama, Turks and Caicos, Oh and two that I shouldn't mention Zimbabwe and El Salvador.

Then we have Chad, Gabon Cameroon, Rebublic of Congo, Equatorial Guinea and the Central African republic who use the Central African franc (pegged to the Euro). Again failing to comply with your opinion.

Some would say that we could also include the countries in the European Union.

As I said, facts unfortunately don't always agree with opinion (or theory).

[GoSeigen]

[

I'd like to draw your attention to another remarkable statistic, the increase in the money supply.
https://www.spectator.co.uk/article/mer ... -inflation

Sorry but I don't accept that I shouldn't use examples of countries where money printing was rife to argue about the dangers of money printing.

There's no data in that link about the growth in money supply. Here's a chart of UK money supply growth:



Where's the remarkable increase please?


Let's not just parrot nonsense from the Spectator, guys.

GS

[Itsallaguess]

Oh and two that I shouldn't mention Zimbabwe and El Salvador.

Sticking with El Salvador for a minute though, it seems that the recent take-up of BitCoin as the national currency is being used as some sort of step-change signal that BitCoin is going to be a game-changer in global currencies over the long-term, but looking at the fiscal history of El Salvador seems to suggest that, like many of the other recent 'monetary solutions' that they've tried, and that went on to fail simply due to the chronic fiscal irresponsibility of the ES government and the relatively unsophisticated fiscal ill-discipline of the general population, and the question might then be asked as to why this El Salvador BitCoin venture is not likely to be just another of those 'failed fiscal solutions', just like all the other ones in the countries recent history?

To some here, the take up of BitCoin by El Salvador as their national currency seems to be some sort of 'Star of Bethlehem', but surely it's just another roll of the fiscal dice by El Salvador, on a brand new casino game that they've not tried yet, and which can be used to camouflage the very real and enduring fiscal indiscipline that chronically affects the country?

Why, when we can plainly see the recent fiscal history of El Salvador, littered as it is with other failed 'economic solutions', is this BitCoin experiment likely to be 'the one' to fix that?

Whilst economic basket cases might have used fiat money really poorly in the past, to live the life they chose to live and think they could get away with, then why would they seriously be expected to change their fiscal tunes just because they've discovered a new instrument that they can perhaps play equally as badly?


Salvadoran economist Rommel Rodríguez said he doubts that Bukele planned all along to appeal to Bitcoiners to help solve El Salvador’s economic troubles.

Rather, he believes the solution appeared to him along the way.

“The characteristic of this government has been improvisation when it comes to economics,” he said.

https://restofworld.org/2022/el-salvador-bitcoin/


El Salvador’s $425 million bitcoin experiment isn’t saving the country’s finances

“In terms of their financial situation, El Salvador is in a very difficult place. They have a lot of bonds that are trading severely discounted,” continued Sobrado.

“The economic policy of the country is essentially magical thinking,” said Frank Muci, a policy fellow at the London School of Economics, who has experience advising governments in Latin America.

https://www.cnbc.com/2022/06/25/el-salvador-bitcoin-experiment-not-saving-countrys-finances.html

So that's really why I think anyone using El Salvador as a basis for a pro-BitCoin discussion is on shaky ground - it's nothing but a fiscal gamble by a country with a long history of other failed fiscal gambles, and who simply don't seem likely to be able to take the proper fiscal medicine necessary to properly fix their chronic and very real underlying financial problems, summed up nicely in the phrase 'magical thinking' in the above linked article...

Cheers,

Itsallaguess

[GrahamPlatt]

[

I'd like to draw your attention to another remarkable statistic, the increase in the money supply.
https://www.spectator.co.uk/article/mer ... -inflation

Sorry but I don't accept that I shouldn't use examples of countries where money printing was rife to argue about the dangers of money printing.

There's no data in that link about the growth in money supply. Here's a chart of UK money supply growth:



Where's the remarkable increase please?

Let's not just parrot nonsense from the Spectator, guys.

GS

Just eyeballing that, it appears that the average growth in supply is about 8% per annum. I’d say that’s … remarkable.

[Urbandreamer]

Oh and two that I shouldn't mention Zimbabwe and El Salvador.

Sticking with El Salvador for a minute though, it seems that the recent take-up of BitCoin as the national currency is being used as some sort of step-change signal that BitCoin is going to be a game-changer in global currencies over the long-term, but l.....
Cheers,

Itsallaguess

I for one don't assume or argue that such a step-change is certain, no matter how much I would desire it.

Indeed, sticking with El Salvador, there are good reasons why their experiment may fail.

For example, many believe that it was forced through by a man who, under the constitution, will soon have to step down.
They also can't access IMF money because of what they have chosen to do.

However, if such a step-change does happen, what country did it start with?

How successful is the experiment so far?
If we come back in another 6 months, 12, 24 we may judge its progress.

How well is it currently working on the ground?

IMHO only idiots will claim that the experiment is finished (working or failed) at this point.

I can understand if those who have no interest in bitcoin just don't care. But can you really expect anyone who does have an interest in bitcoin to ignore El Salvador?

I do feel that it's worth checking how well they are doing every 6 months or so. Currently it's not clear. Some there love it, others hate it. Acceptance is not 100% and there are serious questions about how centralized the bitcoin structure is in the country. It could wind up as an authoritarian CBDC, denominated in bitcoin.

But of course we should ignore all those things and stick with the fundamental of not considering El Salvador at all.

[Hornblower]

Of course you may not agree with Prof Hanke. But then it seems strange that you quote him as part of the argument for cryptos.

I obviously think he's wrong as now we see the high inflation in $ & other fiats thanks to the monetary policy. He's advocating replacing a currency with high inflation with another currency with high inflation. Like rescuing someone from a sinking boat in your own sinking boat.

Ah. I think I see now where this is going...

You think: "Freedom for the people(?) in the new paradigm of a Libertarian society freed finally from the confiscating tyranny of centralised banks and 'socialist leaning' big governments."

OK. Indeed I can see the attractions of that - for your average crypto millionaires/billionaires etc.

But what about the little people - those who are definitely NOT crypto millionaires/billionaires? How exactly will they share in this supposed Nirvana?

I have no idea what your argument is here. You understood my post? That advocating a country move from a highly inflationary currency to a slightly less high inflationary currency is not a long-term solution? Tell me you understand that point, and accept that the dollar, euro, pound are presently experiencing very high inflation. The inflation destitutes the poor, and prevents the middle class saving or investing for the future. It insidiously eats an economy from the inside & incentivises short term behaviours.

How you went from that to libertatarians & socialists I don't know. And then 'crypto' millionaires & billionaires?...I'm baffled. What nirvana are you referring to? I'm making the rather obvious point that a low or zero inflationary currency is better for economic wellbeing than a high inflationary one.

Again, this should be obvious. There seems to be an inability on this thread for people to admit obvious truths, or to any flaws in the current financial system, because if you do it gives the 'crypto bros' (i.e me) an opening.


H

[Hornblower]

... who simply don't seem likely to be able to take the proper fiscal medicine necessary to properly fix their chronic and very real underlying financial problems

An apologist for the IMF & World Bank speaks.

The 'proper fiscal medicine' that's been advocated by the IMF for 50 years seems to merely make the problems in developing countries worse. I'm not sure there is a SINGLE example of a country 'taking it's medicine' and actually developing and significantly increasing the populations wealth & quality-of-life.

"Don't look at what they say, look at what they do."

I'd argue the evidence shows that the 'medicine' they've pushed for 50 years serves to keep these developing nations weakened & dependent on the US empire (the main sponsors of the IMF).

It's tiresome to have a discussion with people who get their 'opinions' from the mainstream media that push a very definite agenda....while the world is collapsing around their ears.

Sri Lanka has collapsed due to the (insane) chemical fertiliser ban
Massive protests in China due to bank closures
Massive protests in Albania due to massive cost of living increases
Europe is in serious trouble due to gas supply being shut off from Russia (and now Kazakhstan)
Massive supply chain disruptions worldwide ongoing
Meanwhile the Central Banks are holding interests rates down while inflation rages (while pretending they'll raise them)


There are serious cracks appearing in economies around the world (that were predicted by bitcoiners for years), and all we can do here is parrot the propaganda from the media? Come on people. This will leave Lemon's dangerously unprepared.


H

[XFool]

It's tiresome to have a discussion with people who get their 'opinions' from the mainstream media that push a very definite agenda....while the world is collapsing around their ears.

Sri Lanka has collapsed due to the (insane) chemical fertiliser ban
Massive protests in China due to bank closures
Massive protests in Albania due to massive cost of living increases
Europe is in serious trouble due to gas supply being shut off from Russia (and now Kazakhstan)
Massive supply chain disruptions worldwide ongoing
Meanwhile the Central Banks are holding interests rates down while inflation rages (while pretending they'll raise them)

There are serious cracks appearing in economies around the world (that were predicted by bitcoiners for years), and all we can do here is parrot the propaganda from the media? Come on people. This will leave Lemon's dangerously unprepared.

So you are now claiming crypto currency can prevent or solve: bad governance, the effects of a global pandemic, global warming, inflation AND war in Europe?

Wow! You've convinced me: Obviously everyone should be into crypto...

[ursaminortaur]

Oh and two that I shouldn't mention Zimbabwe and El Salvador.

Sticking with El Salvador for a minute though, it seems that the recent take-up of BitCoin as the national currency is being used as some sort of step-change signal that BitCoin is going to be a game-changer in global currencies over the long-term, but l.....
Cheers,

Itsallaguess

I for one don't assume or argue that such a step-change is certain, no matter how much I would desire it.

Indeed, sticking with El Salvador, there are good reasons why their experiment may fail.

For example, many believe that it was forced through by a man who, under the constitution, will soon have to step down.
They also can't access IMF money because of what they have chosen to do.

However, if such a step-change does happen, what country did it start with?

How successful is the experiment so far?
If we come back in another 6 months, 12, 24 we may judge its progress.

How well is it currently working on the ground?

IMHO only idiots will claim that the experiment is finished (working or failed) at this point.

I can understand if those who have no interest in bitcoin just don't care. But can you really expect anyone who does have an interest in bitcoin to ignore El Salvador?

I do feel that it's worth checking how well they are doing every 6 months or so. Currently it's not clear. Some there love it, others hate it. Acceptance is not 100% and there are serious questions about how centralized the bitcoin structure is in the country. It could wind up as an authoritarian CBDC, denominated in bitcoin.

But of course we should ignore all those things and stick with the fundamental of not considering El Salvador at all.

As far as I can see El Salvador's experiment with bitcoin doesn't seem to be going very well at the moment

https://www.nytimes.com/2022/07/05/world/americas/el-salvador-bitcoin-national-currency.html

Bitcoin was meant to transform El Salvador’s economy, catapulting the poor Central American nation into an unlikely harbinger of a financial revolution.

But nearly a year after the country’s president, Nayib Bukele, shocked the financial world by making its most popular digital coin a national currency, his bet appears to be backfiring, highlighting the gap between the utopian promises of cryptocurrency’s proponents and economic realities.

The government’s bitcoin holdings have lost about 60 percent of their presumed value during the recent market plunge. The use of bitcoin among Salvadorans has collapsed and the country is running out of cash after Mr. Bukele failed to raise fresh funds from cryptocurrency investors.


https://www.nber.org/system/files/working_papers/w29968/w29968.pdf

El Salvador’s government provided a big push to incentivize the use of bitcoin. Bitcoin is not only endowed with legal tender status, allowing the currency to be used to pay taxes and debts, but also has to be accepted by any economic agent as a means of payment by law. Moreover, the government provided large incentives to adopt Chivo Wallet, a platform that facilitated transactions in bitcoin without a fee, including a large sign-up bonus and gas discounts.

Despite these efforts and the incentive to use contactless payments caused by the COVID-19 pandemic, bitcoin is not widely used as a medium of exchange. While most citizens in El Salvador have a cell phone with internet, less than 60% of them downloaded Chivo Wallet, and 20% continued to use the app after spending their $30 sign-up bonus. Further, 5% of citizens have paid taxes with bitcoin, and despite its legal tender status, only 20% of firms—mostly large ones—accept bitcoin and 11.4% report having positive sales in bitcoin. In the first quarter of 2022, we find almost no new adopters and the share of remittances in bitcoin is at its lowest point since Chivo Wallet’s launch

[GoSeigen]

[

I'd like to draw your attention to another remarkable statistic, the increase in the money supply.
https://www.spectator.co.uk/article/mer ... -inflation

Sorry but I don't accept that I shouldn't use examples of countries where money printing was rife to argue about the dangers of money printing.

There's no data in that link about the growth in money supply. Here's a chart of UK money supply growth:



Where's the remarkable increase please?

Let's not just parrot nonsense from the Spectator, guys.

GS

Just eyeballing that, it appears that the average growth in supply is about 8% per annum. I’d say that’s … remarkable.

Why?

[GrahamPlatt]

Why?

Err, because it’s compound. Doubling every eight or nine years?

[GoSeigen]

Why?

Err, because it’s compound. Doubling every eight or nine years?

So? Why does that make it remarkable? Maybe we each have a different idea of what is remarkable!

GS

[Urbandreamer]

Why?

Err, because it’s compound. Doubling every eight or nine years?

So? Why does that make it remarkable? Maybe we each have a different idea of what is remarkable!

GS

Well, given that some on this board argue that the value of fiat is based upon the productivity (GDP) of a country, it's really quite remarkable that we have managed to doubled GDP in REAL terms every nine years.

Hummmm,

Well the World Bank doesn't seem to think that we have achieved that.
https://data.worldbank.org/indicator/NY ... cations=GB

Note that I have sought a graph showing the rate of change in GDP so that it compares with the rate of increase in money supply provided.

Indeed, given that we measure GDP in money that grows in supply, shouldn't the growth in GDP match the growth in money supply, at least over the long term? Assuming no REAL growth of course.

Remarkable statistics indeed.

Naturally as someone with an Austrian view I see something rotten illuminated by these statistics. Can you argue that instead they shed light on government (Keynesian) success.

To me it looks more like a decline, or value being siphoned off.

[Itsallaguess]

My valuation for such a [Bitcoin] contract has to be zero, so paying anything more than that for it is just gambling that someone else will pay more for it at a later point.

This is not investing, it's gambling.

In 2021, Nassim Taleb wrote a detailed explanation as to why he believed the intrinsic value of BitCoin is zero, having famously changed his mind over his initial earlier view that the technology had some promise -

Bitcoin, Currencies, and Fragility -

A central result (even principle) in the rational expectations and securities pricing literature is that, thanks to the law of iterated expectations, if we expect now that we will expect the price to vary at some point in the future, then by backward induction such a variation must be incorporated in the price now.

When there are no dividends, as with growth companies, there is still an expectation of future earnings, and a future expected reward to stockholders — directly via dividends, or indirectly via reverse dilutions and buybacks. It remains that a stock is a claim on accumulated assets and their residual value.

Earnings-free assets with no residual value are problematic. The implication is that, owing to the absence of any explicit yield benefitting the holder of bitcoin, if we expect that at any point in the future the value will be zero when miners are extinct, the technology becomes obsolete, or future generations get into other such "assets" and bitcoin loses its appeal for them, then the value must be zero now...

https://www.fooledbyrandomness.com/BTC-QF.pdf

The above linked 2021 paper from Nassim Taleb is instructive in the detail it goes into, and should be required reading for anyone interested in this technology.

Cheers,

Itsallaguess

[ReformedCharacter]

A rather sad and salutary article in today's Guardian:

They couldn’t even scream any more. They were just sobbing’: the amateur investors ruined by the crypto crash

https://www.theguardian.com/technology/2022/jul/12/they-couldnt-even-scream-any-more-they-were-just-sobbing-the-amateur-investors-ruined-by-the-crypto-crash

RC