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Cryptocurrency Has Fallen 70% – When It Should Be Going Up. I Think.
Since “President” Biden “won” the last “election”, the economy has had some difficulties. Inflation is running rampant. It’s listed at around 8.5%, but the real cost of living for most people has gone up quite a bit more than that. With cash losing its value, you might expect people to invest their money in the stock market, hoping to keep up with inflation. This injection of cash would presumably inflate the value of the stock market. But the stock market has been dropping quickly, with the NASDAQ losing around 30% of its value so far this year. This has led many Democrats to criticize “President” Biden’s handling of the economy. And to demand more government spending. Simultaneously. Mysterious are the thoughts of Democrats…
I’ve never quite understood cryptocurrency, and have not invested in it. But one aspect of it that made sense to me was to protect oneself from the vagrancies of the fiscal policies of misguided politicians. The value of the dollar is at least partially dependent on the fiscal responsibility of whoever is in power in the American government at the time. If all your money is in dollars, and then Democrats are elected to office, your dollars will lose value.
Bored Ape Yacht Club
But crypto is free from such concerns. It doesn’t matter how much money the government prints – the value of cryptocurrency is not affected by political winds the way national currencies are. And as more and more people become concerned about our economy, they would run to invest in crypto, which would then continue its remarkable increase in value over the past 10 years. Except that crypto has suddenly lost around 70% of its value so far this year. Which seems counter-intuitive.
So inflation is reducing the value of the dollar (at this rate, the value of your dollars will be cut in half in about 8 years – possibly much faster if the real inflation rate is higher than the reported inflation rate). As the dollar falls, people invest to try to keep up with inflation. But the stock market is falling. So people flee conventional markets and invest in crypto. But crypto is falling even faster. All at the same time.
I don’t understand.
I’m not a financial guy, and my understanding of all this is obviously extremely rudimentary. Although I suspect I may have a better understanding of finance (and perhaps a few other things) than some “Presidents”.
But still, I feel like I’m missing something big, here. I just don’t understand how these trends fit together.
Can any of our financial gurus here explain this to a novice like myself?
Published in General
Junk silver is great. I don’t see any downside. I still think it’s pretty easy to figure out if you have a fake silver round. A lot of people get the ones with the fancy government mint etc. imprimatur, but I just don’t see it.
At most, the Fed should do two things. Back up the financial system in a punitive way and maybe control (keep it flat) inflation / deflation. Everything else is communism.
cEntRal pLAnNing MakEs oUr liVEs beTTEr
cEntRal pLAnNing MakEs oUr liVEs beTTEr
This is 1000% must watch.
Having said that, you need to hear Mike Green explain why we have to have political money. Unfortunately, geopolitics has a vote .
Follow the GOSPLAN Comrades!
This is one of the best things you will read in a long time.
This is beautiful. lol
Sheesh. Stupidity or malice?
Yes.
Central planning begets more central planning until everything collapses. It happens every single time.
43 doing the stupid “ownership society” thing at the White House with ACORN.
Now we are doing it all over again.
Inflationism.
This is a very ordinary Republican economist, not some angry libertarian hedge fund guy.
Government Is How We Steal From Each Other™
LOL
Do people buy super nice tablets and then hang them up on the wall? lol
Listen to what he says about comparing a commodity backed trade currency with gold. Start at 15:40. Gold does the same thing with less volatility. It’s pretty interesting because the volatility of gold is much worse than the CPI so you have to hold it for many years but you can’t really beat it, technically.
We have hundreds of billionaires in this country and none of them got rich on gold, so yes, you can beat gold.
The obvious theme of this discussion is hard money not what you are talking about.
I think DonG’s comment was perfectly relevant to your point, which appeared to be strictly about investing in gold, to the exclusion of using gold as money.
Here I use investing in gold to mean “trading a marginal quantity of money for a marginal quantity of gold with the intention of making a profit in the future by making the reverse exchange.
By using gold as money I mean “trading present real goods and services for gold as a medium of exchange”.
Did you watch the video?
Rufus, [EDIT: sorry for earlier typo]
No. I wasn’t commenting on the video, but replying to your criticism of DonG’s comment.
Everybody knows you have to convert gold or crypto into fiat when you want to use it. There are a few exceptions in tiny parts of the world. That is what I’m talking about. Trying to use stocks, bonds, and commodities in this way is so tricky you can’t consider them money.
It is true that you can’t spend gold or crypto, with rare exceptions, and that you can sell either one and thus have more money. Which you can spend.
So except for a confusing usage of conversion, your statement is correct.
In other words, neither good serves as money today, though gold did in the past and could in the future, and some cryptocurrency could in the future even though none has so far.
The semantic confusion:
By referring to an exchange of either good for money as conversion, you suggest (in ordinary English) that it is money. We commonly speak of converting US Dollars–a money–to Euros–another money.
It is important to correct this imprecise language (or “avoid this metaphor”, if you prefer) in this case because so many people think incorrectly that gold or especially crypto-currency really is “money” or “currency” in the usual sense.
I have finally figured this out. You are always talking from a theoretical, blackboard, book type of conversation about these things and I never am. None of the people I follow talk like that unless there is a real purpose in it. The Misies guys never talk like that, unless there is an actual reason.
If you want to get theoretical about what we are actually doing here, here it is. Unless you are totally destitute, a person is forced into something called the investment frontier. We are talking about what to do about the cash end of that, particularly in an era with suppressed interest rates and a criminal government- financial system.
In my last reply, I wrote
Your response was this:
Regardless of what you may have meant by that Comment (if anything) and regardless of whether it’s true (assuming that you meant anything) do you agree with my Comment?
You are the only person that puts this extra layer on these conversations. If you think it’s constructive, have at it.
Rufus,
You don’t realize it, but every time you write about economics you are promoting your theories.
It is not a bad thing to theorize, either! On Ricochet when you and others share their theories, others read them apply their own theoretical and critical thinking skills to them, and then respond, everyone comes out a winner.
There is a bigger benefit if we disagree initially, and there is a debate that leads to a winning result: both agree at the end about which answer to the question is true and which is false or meaningless.
But even in the worst case, where you present one of your theories about, say, Fed money creation, and I merely say I have thought critically about it and think your theory is right, we both experience a small benefit from the Conversation.
You aren’t judicious and selective enough about it in my opinion. Also your delivery is like a cross between F. Lee Bailey and philosophy professor quote-bashing Human Action to the guy on the stand. It makes the jury’s eyes glaze over.