BITCOIN

User232002

Reaper said:

darren232002 said:

Hike rates to kill inflation. Seriously, just hike by like 8% tomorrow - we are told this has worked in the past and will work now. So, why isn't this being done?

Your post was too long to respond to everything so I just picked out this question for now. Raising rates discourages borrowing & spending, which can take the edge off inflation BUT that doesn't work if inflation isn't being caused by overheated debt-fuelled demand. If people are already spending less because petrol, gas, grain etc are going up due to supply shortages (eg war and sanctions) then raising interest rates just makes people and companies poorer for no benefit and leads to recession, maybe even the dreaded stagflation.

(1) Household debt at record highs. Debt/GDP at levels not seen since WWII. Credit card debt increased by something preposterous like 20% in April IIRC. The argument that debt isn't an issue seems to not fit the data.

(2) If your argument is that raising rates won't do anything to quell inflation, then why are they being raised? Doesn't make sense.

(3) Arguing that war and sanctions have anything to do with current inflation levels is beyond stupid. Inflation was at 7.5% in January BEFORE Putin invaded Ukraine. Its a convenient narrative that doesn't fit the data at all. This is an absolute gaslighting of the public - this mess has been caused by government and central bank policy.

Hiking rates seemed to work just fine for Russia's CB, as the Ruble is now outperforming the USD. But of course, their economy isn't over indebted, its energy self sufficient and it has hard money reserves.

mooneysaver

darren232002 said:

(2) If your argument is that raising rates won't do anything to quell inflation, then why are they being raised? Doesn't make sense.

'It must be right because we are doing it and because we are doing it, it is right.'

Lucky this guy was on hand to point out when arguments make sense right folks? 

Reaper

darren232002 said:

(1) Household debt at record highs. Debt/GDP at levels not seen since WWII. Credit card debt increased by something preposterous like 20% in April IIRC. The argument that debt isn't an issue seems to not fit the data.

(2) If your argument is that raising rates won't do anything to quell inflation, then why are they being raised? Doesn't make sense.

(3) Arguing that war and sanctions have anything to do with current inflation levels is beyond stupid. Inflation was at 7.5% in January BEFORE Putin invaded Ukraine. Its a convenient narrative that doesn't fit the data at all. This is an absolute gaslighting of the public - this mess has been caused by government and central bank policy.

Hiking rates seemed to work just fine for Russia's CB, as the Ruble is now outperforming the USD. But of course, their economy isn't over indebted, its energy self sufficient and it has hard money reserves.

1) Debt IS a problem. Ultra low interest rates encouraged borrowing, and on top of that people are now using it to maintain their standard of living as prices rise.

2) To discourage debt rates are being raised cautiously to see what the effect will be. It is quite possible it will just make people poorer without solving anything. You asked why rates aren't immediately put up to 8% which is what I was responding to.

3) See the response to 1. Past QE may also be having an effect on inflation. So far QE unwinding has been very weak (just not re-investing bonds when they mature), it will be interesting to see if it starts in earnest now. Again I suspect they will be very cautious fearing recession if they do.

As for Russia, in principle yes - raising interest rates strengthens a country's currency, but since that makes exports more expensive that is not always a desirable thing. Many countries prefer to keep their low. I don't think the UK particularly wants sterling to be stronger.

User232002

Reaper said:

You asked why rates aren't immediately put up to 8% which is what I was responding to.

If it wasn't obvious, this was very much a tongue in cheek point. 4%, 5%, 8% - whatever.

My point is whether you do it in one hike or you spend two years being gentle with 0.5% hikes; something breaks before you want it to. Western economies can't support anything close to normal interest rates because of incompetent monetary policy over the last two decades.

Reaper said:

3) See the response to 1. Past QE may also be having an effect on inflation. So far QE unwinding has been very weak (just not re-investing bonds when they mature), it will be interesting to see if it starts in earnest now. Again I suspect they will be very cautious fearing recession if they do.

'May' - Sure thing... Could be anything I guess and absolutely nothing to do with the 40% increase in the money supply.

Recession inevitable. That's the point. And when it comes they will eventually relent and Bitcoin will go back up as I said, and each time this occurs more people question and decide to flee the fiat system.

Either burn it all down and get back to actual responsible monetary policy, or Bitcoin takes over. I'm cool with either scenario.

Mvpharos

Darren numbers is beyond doubt my favourite poster on this thread. Exceptional amount of words to say next to nothing. Slight RSI issue with scrolling past his interminably long and dull posts but 10/10 for word count

fwor

And when he's not using lots of words to say next to nothing, he's saying things like "and decide to flee the fiat system" which, frankly, is nonsensical.

How can anyone "flee the fiat system" when your employer will only pay you in fiat, your government will only accept your tax payments in fiat, your local shop will only let you pay for your shopping in fiat?

He says repeatedly (fourteen times, apparently) that Bitcoin is not a currency. So what do you use as currency when you "flee the fiat system"?

Mvpharos

fwor said:

And when he's not using lots of words to say next to nothing, he's saying things like "and decide to flee the fiat system" which, frankly, is nonsensical.

How can anyone "flee the fiat system" when your employer will only pay you in fiat, your government will only accept your tax payments in fiat, your local shop will only let you pay for your shopping in fiat?

He says repeatedly (fourteen times, apparently) that Bitcoin is not a currency. So what do you use as currency when you "flee the fiat system"?

Good lord, do you actually read his posts? I'm impressed, I didn't realise that was even possible.

Frequentlyhere

@darren232002 I'm curious, how financially invested are you in bitcoin? Despite everything you say in support of it, I somehow feel you fight for it more as a concept rather than going all in on it - or am I wrong?

Also, as you clearly saw inflation coming a mile off and presumably the associated changes in monetary policy, did you change your allocation to bitcoin at least temporarily perhaps as a result?

I did write a rambling reply to your long post, but in short whilst I agree with how you see things panning out in the near term for the economy, I basically see this as 'situation normal' for the current global picture.

We'll have a big recession, inflation will ease, and we'll go from there. I very very much doubt we'll need to reinvent the global monetary wheel. Even if we did, then Governments and their armies aren't going to cede it to a cadre of bitcoin billionaires. In my view.

ZeroSum

lozzy1965 said:

I hadn't looked at the price since last Thursday and wow!  I remember pages and pages back some talk of whether the price would hit £100K or £20K first, I think the price was around £25-30K.  It took a while but the £20K bet has one that one!

I'm sure there was a post claiming It would never drop below $40k. It's now about half that 

Frequentlyhere

Reflecting more on this, the problem for people who really believe that Bitcoin is somewhere we'd all somehow flee is that they seem to be ignoring the practical reality on the ground of what's happened so far with it.

I would hope Darren & co would acknowledge that alongside the libertarian crusaders, the scene in general is chockful of shysters, fraudsters, highly unstable exchanges and 'innovations' (e.g. Terra/Luna). All of it screams for the need for more regulation, but that goes against the grain of the whole idea.

People need safety and regulation. My dad is hesitant about investing in FSCS savings account that aren't a big name, and that's not uncommon. Do you think he and his kind are going to be learning up on cold storage and private/public keys against the will of their Govt to keep their BTC safe? Or are we to await an exchange that's actually safe to keep this stuff on? But how safe would anyone consider it if it never has the backing of the Govt, or (as now) are they are explicitly warning against it?

Meanwhile, whilst Darren says he's sanguine about the value of BTC, whether we actually use it as money or not I don't see how it can be of no consequence that BTC is now worth 70% less than a few months ago to his ideals.

 I think we're all agreed we're not going to be seeing mainstream goods priced in BTC instead of £, so to be of value BTC has by definition to hold its value against those currencies. But it's not. At the first sight of interest rates rising, it's collapsing. Perhaps that will reverse, but why would we want to swap out of an inflating fiat currency to one that's also suffering from inflation by virtue of being valued against those fiat currencies, and is down hugely to boot?

Put more plainly, if I really believed BTC was the one true money and converted any earnings I had to BTC immediately as a matter of course, I'd be S***ting it right now, wouldn't you? It's down 70% in 7 months, and 35% in the last 2 weeks alone. That's not money.