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1  Economy / Economics / Re: How to protect from inflation? on: June 14, 2021, 01:34:47 AM
Since we are in a Bitcoin forum, it is normal to think that the best protection against inflation is Bitcoin. And it is not that it is (only) a distorted thought, the (short) history of the Bitcoin proves it to us.

Then there are other things that are debatable. Gold today is not bad, but if most of the money that is invested in gold goes to Bitcoin, it will not serve to protect much. That's what has happened this past year.

NASDAQ 100, OK. I prefer the S&P 500 which is more diversified in sectors. The NASDAQ 100 has been more profitable than the S&P 500 in recent years but that can change at any time.

Then I also miss good, well-located, Real State on that list.


The short history of bitcoin definitely does not prove it's a good hedge against inflation.  Bitcoin is down nearly 50% since the beginning of May.  When was the last time the dollar was down 50% in a matter of weeks?  Never.  You can't hedge 2% inflation losses with an assets that routinely swings 20% or more in a single day.
2  Economy / Economics / Amateur Traders Cause Bubbles on: June 14, 2021, 01:19:41 AM
A study done by the New York Fed suggests that when trading in an asset becomes dominated by amateur traders, it tends to form asset bubbles.  The study further noted that amateur traders do not aggregate private information well and show lower levels of strategic sophistication than professional traders.  It pretty well explains the volatility that dominates the Bitcoin market without being a study about Bitcoin.

Fed Report:  https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr939.pdf
3  Economy / Economics / Re: MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’ on: June 13, 2021, 10:08:10 PM
What's most interesting to me is that they need to offer more than 6% interest on these debt instruments to entice investors into buying, whereas the earlier offerings were extremely low or no interest instruments.  This indicates to me that Microstrategy has to offer the higher interest rates because the risk of the bonds is increasing in the eyes of investors.  Very interesting change to the earlier offerings.
--
No need to be surprised as the two offerings seem to be different from the announcement. Those earlier ones were "Convertible senior notes". Buyers are eligible to convert them to MSTR stocks. (with some complicated terms that I did not try to understand). These present ones are "Senior Secured Notes". The interest is their selling point.

Right, it would be interesting to know if MSTR was not able to gin up interest in the bonds with convertible securities or if they didn't want to offer convertible notes of their own choosing.  It the former, it further illustrates that debt investors are weary of MSTR's reliance on bitcoin and just want their guaranteed interest payments.


Oh my jaysabi.  I don't want to be patronizing, but you are nearly asking for it.

My post, right below your above-referenced The Pharmacist post largely responds to the concerns raised by The Pharmacist and also you jaysabi, seem to be reiterating The Pharmacists points without even attempting to account for the ideas contained my response.
--snip--
By the way, this post is not meant as a personal attack, even though i use strong language.. I am talking about the ideas contained in your post, not you specifically.

Yeah, I didn't address your post because there was nothing in there worth responding to.
You probably are refusing to address JJGs post because the communication got personal.  Undecided

Talking about the "Hedge", it is all good to take the academic definition in account like you said. Still, Bitcoin's long term hedge against "inflation" or "dollar" can't just be based on contemporary understanding of economics. When countries and companies start adopting, it also becomes about not being left behind. This has been one of the fundamental strengths of Bitcoin that if one group wants to regulate or ban it, there maybe another group more interested in benefiting from it. We are at that inflexion point where IMF and BIS are actually taking cryptocurrencies into view.

Now if the small MERCOSUR countries, island nations like Tonga choose to differ, who is to say that the decentralized future won't continue to be promising. If it remains promising, then Bitcoin is your hedge. If you feel that it doesn't stand any chance against centralized policy, well then why are we even discussing this.

That, I believe, is the line of thought JJG is trying to push through, though in that typical non-endearing way that maximalists have. So, lets chill out and not let personal differences cloud over the end goal of a larger, well-functioning Bitcoin economy.



He pontificates in every post and his posts are usually idiotic, so I don't respond to him anymore because I've learned it's a waste of time.

In response to your post, my point was that bitcoin's value as a "long term hedge" is undefinable because bitcoin has an extremely limited operating history and therefore a "long term track record" has never been established because it hasn't been around long enough to have one.  What we do know unequivocally is that bitcoin's volatility is many magnitudes greater than the dollar's and that makes it a poor hedge.  You can't hedge the volatility of an asset by moving into an asset with higher volatility, that defeats the purpose of the hedge.  If you want to argue that eventually bitoin will prove to be less volatile than the dollar, fine, but I'm not interested in that speculation because it's unknowable. So like I originally said, bitcoin won't be an effective hedge until the dollar's volatility is greater than bitcoin's, which would likely not be until the dollar experiences hyperinflation.
4  Economy / Economics / Re: Trump regrets not banning twitter as he hails Nigerian government for doing so on: June 13, 2021, 06:21:08 AM
Donald Trump supported hydroxychloroquine as the most affordable, easiest to obtain and most effective treatment for COVID-19 for a very long time.

There may have been a significant shift where Trump threw hydroxychloroquine under a bus. In favor of remdesivir, regeneron, vaccines and other COVID drugs which are significantly more expensive and questionable as to whether they're as effective as hydroxychloroquine. That may be one of the best indicators of Trump abandoning policies that were in the best interest of americans. In favor of policies which are in the best favor of special interests.

I'm not a big fan of the state having the power to lawfully nationalise or ban private enterprise. I don't think its a policy people should support. Banning twitter, social media or big tech isn't a solution to any of our perceived problems.

Hydroxychloroquine is not effective against covid and was stopped being used by real doctors (not the sycophants trump surrounds himself with) because all indications are it does far more harm than good. Vaccines have proven effective, HCQ never did. Trying to spin a narrative about dumping ineffective HCQ in favor of medicines that actually do work into a conspiracy theory is not only factually wrong, it’s deranged.
5  Economy / Economics / Re: Preparing for a capital gains tax increase (US) on: June 13, 2021, 06:13:07 AM
I don't se this tax gain getting passed in the Senate, to me it is just to make noise because of the campaign promises he made during election campaign.
I don't know what it takes to pass laws like this (I never paid attention in high school to whatever subject covered that), but somehow I suspect this will come to fruition for Biden.  My understanding is that this capital gains tax law is designed to tax the rich, but to me it's double taxation.  I earn money on which I pay taxes, and then I invest that money in an asset that grows in value--but I don't sell it.  I'm supposed to pay tax on unrealized gains?  That's fucking bullshit.
When you invest money in a stock, and the stock appreciates in value prior to you selling the stock, you will pay taxes on the gain in value you realized. Your cost basis (the price you paid) is not indexed to inflation, so if you hold onto a stock for a long time, your cost basis in terms of buying power could be much lower than it actually is.

Changes to fiscal laws (laws that change government spending and/or tax receipts) only need a simple majority to pass each chamber (assuming the President will sign the law, otherwise it will need a 2/3 majority to override a presidential veto), but there are limitations as to how many of these laws can pass each year. For the tax increase being discussed in the OP (or anything similar to it), all democrats would need to vote in favor of it, including moderate democrats, and those that are in Red leaning states. The changes to tax laws being discussed in the OP are part of the "infrastructure" bill being negotiated among various elected officials. I can't see Republicans signing onto anything this radical.

The government in the US is taxing its citizens to death while simultaneously printing money like there's no tomorrow, which all but guarantees out-of-control inflation at some point. 
The purpose of the tax increases being discussed in the OP is intended to punish the successful. It is as simple as that.

Maybe you don’t know what the word “punish” means or maybe you just too easily post in anger, but the tax is very obviously not intended to punish the successful. You can be against the proposal but ranting in hyperbole doesn’t make your point look reasonable.
6  Economy / Economics / Re: Xi Jinping Beats Crypto, Bitcoin Mine Closes on: June 13, 2021, 06:05:48 AM
China's crackdown on cryptocurrency (crypto) trading is getting worse. This week, authorities in China's northwestern Qinghai province and a district in Xinjiang ordered cryptocurrency mining projects to close. According to Reuters, the Qinghai office of China's Ministry of Industry and Information Technology ordered a ban on new cryptomining projects and ordered existing ones to be closed in the province by Wednesday (9/6/2021) if this continues to see if prices will weaken again. ...

Why would prices weaken because a mine closes? It doesn’t have anything to do with supply or demand so closing a mine in China shouldn’t have any effect on the price. People keep scapegoating this to divert from the fact that bitcoin is weak because it’s value is arbitrary and it’s going to swing back and forth because that’s what arbitrarily priced assets do.
7  Economy / Economics / Re: Fiat and cryptocurrency on: June 13, 2021, 06:03:08 AM
I think that society must first of all understand that cryptocurrency will give them independence in the first place, unlike fiat money. If over the next 10 years, the capitalization of bitcoin increases by an average of 10 - 20 times, then this will provide an opportunity to get a stable price of bitcoin and then we will be able to see the real advantages of cryptocurrency over fiat funds. It is then that people will begin to actively leave Fiat and switch to Bitcoin, since stable Bitcoin is not only a reliable asset or means of payment, but also a safe storage

There’s nothing special about cryptocurrency that gives people financial independence. Any asset that appreciates 10-20 times has the potential to give someone financial independence, it’s not magic because it’s bitcoin that does it. Bitcoin has risen this far and still doesn’t have a stable value. There’s no reason to think that another 10-20x and it magically will start.
8  Economy / Economics / Re: Do you think Elon is manipulating the market? on: June 13, 2021, 05:55:47 AM
I don't think, I'm sure bro  Grin he's shorting all the time, by that's not smart.

Downgrading Bitcoin for environmental issues was a bad decision by him. Bitcoin will recover but everyone is now aware of his non - environmental friendly businesses.

His presence is now unnoticed by the crypto community, this is what happens when you talk too much, you become invaluable and value less.
I am having this believe that Elon musk tweet has to do more than what we were thinking otherwise I don't think a sane man would want to do something stupid that will bring down his investments. I know he's a billionaire but the ones I know still want to get richer.
He's just somebody that is related to McAfee in altitude  Grin

Elon’s presence is definitely NOT unnoticed by the crypto community. Here we all are still talking about the guy, he’s still very relevant to the conversation, just like he wants.

McAfee is a straight greedy dude and he’s committed fraud to further his own fortunes. As much as I don’t like Elon, there’s definitely no comparison. McAfee has committed rape and murder and what, Elon tweets too much?
9  Economy / Economics / Re: MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’ on: June 13, 2021, 05:07:49 AM
The investment is serving as a hedge to the dollar so the investment would be serving that purpose whether it is in profits or at a loss.
Say what?  Bitcoin isn't much of a hedge against the dollar if it drops below the dollar value you bought it at--does that make sense or am I missing something?  

No, this would be my argument too. The value as a hedge is directly inversely proportional to the volatility. At the point the volatility drops the asset below your cost basis in USD terms, you can no longer argue it's an effective hedge because it hasn't protected the value.  It could be that bitcoin hasn't had a long enough track record to establish itself, but currently nothing in its history suggests to me it's ever going to be stable enough to be a hedge to the dollar unless the dollar starts experiencing hyperinflation.

Oh my jaysabi.  I don't want to be patronizing, but you are nearly asking for it.

My post, right below your above-referenced The Pharmacist post largely responds to the concerns raised by The Pharmacist and also you jaysabi, seem to be reiterating The Pharmacists points without even attempting to account for the ideas contained my response.

I surely am not claiming to be any kind of genius on the topic, and also it could be that I have not made my points very well, but it still seems that you should attempt to account for the points of my post before just ill-informedly reiterating and even almost amplifying a kind of dumb that suggests that a hedge (such as bitcoin) has to be completely oppositely correlated (to the dollar in this case)  - even on a short-term basis, in order to serve as a hedge.  

By the way, this post is not meant as a personal attack, even though i use strong language.. I am talking about the ideas contained in your post, not you specifically.

Yeah, I didn't address your post because there was nothing in there worth responding to.


first is to clarify that the first two debt instruments caused MSTR to receive $650million and $1.05 billion respectively?

Exactly: if you see I was astute enough to link those two instruments to two particular buys, as they used the proceeds of the bond sale, net to a few hundreds basis points (a few %age points in value), to buy bitcoins.

second, is MSTR issuing two additional debt instruments for $500 million each on June 14?  I had thought that they were issuing only one, but from your chart, it appears that they are going to get double the amount of dollars  (and therefore double the amount of bitcoin) than I had previously thought that they were going to be getting.

Well, honestly that puzzled me a bit. The reality is that the SAME 500 million DOLLARS will be split into two issues, the same issue will be traded with to different ISIN codes, and then different prices and yields. This has been done to segment domestic investors from unregulated, suspicious traders on smaller bets.
This means that the first two rows are actually only one, and the proceeds amount coming from these sales cannot be summed.


Regulation S is an offering to sell securities to foreign investors, and a Rule 144A offering is to domestic investors, so you're right that they're offering a total of $500m split between offerings targeting two different investor bases.  Not sure what you mean about  segregating domestic investors from "unregulated, suspicious traders on smaller bets."

What's most interesting to me is that they need to offer more than 6% interest on these debt instruments to entice investors into buying, whereas the earlier offerings were extremely low or no interest instruments.  This indicates to me that Microstrategy has to offer the higher interest rates because the risk of the bonds is increasing in the eyes of investors.  Very interesting change to the earlier offerings.  Also interesting that they have to target foreign investors for the debt now, suggesting they can't find enough domestic support for the bonds to raise as much as they want.
10  Economy / Economics / Re: Are some too blind to see? on: June 12, 2021, 07:35:23 PM
If you’re realizing that now, then I’m sorry to say that you’re late lol. I have been saying that for a long time that all those billionaires just wants to take advantage of cryptocurrency’s volatile nature and use it as a means to get even more rich and nothing else.

It’s just like when I saw a tweet that motivated Elon Musk to invest in Bitcoin, it was coming from one of his fellow billionaires (someone posted it here once) and he was telling Elon Musk that he can increase his money within a short time by investing in cryptocurrency and he also asked to meet him to share his portfolio. So that means he already planned all these things before investing. They are all about just making more and nothing else, they don’t care about cryptocurrency.

That's because Michael Saylor is a legitimate hack. He only became interested in bitcoin because he realized it could make him rich. Hyping bitcoin is by far the most productive thing he's ever done. Elon is obviously different in that he only cares about his companies, not actually about being rich, although he is quite the attention whore as well and you could make a real strong case that the only reason he has a Twitter account is for the attention he so desperately craves.
11  Economy / Economics / Re: Preparing for a capital gains tax increase (US) on: June 12, 2021, 07:30:45 PM
Quote from: jaysabi
[...]
.. By filling out your tax return, you yourself can deduct the amount that was spent on charity [1] But this amount cannot be more than 30% or 50% of your annual income, (% depends on the type of organization to which donations are addressed). As far as works of art are concerned, if my memory serves me, tax breaks are valid only if you decide to choose this type of donation, (in the sense that you can also enter the equivalent of the value of the paintings or other items of value you donated on your tax return). In short, it all comes down to expediency ... to donate money to charity, thereby pleasing your "amour-propre", or to pay taxes ..

My point was that donating money to a charity is not a tax dodge because there is no financial benefit to you in giving your money away.  Tax dodging is hiding income or under reporting your assets with the intention of keeping that money and not paying tax on it.  The difference is whether or not you keep the money.
12  Economy / Economics / Re: Crypto vs Fiat on: June 12, 2021, 07:28:15 PM
It's so sad that inflation has eaten up everything we have in the name of making some shit income from banks that has been milking us dry since the 70s and 80s.
I don't even know exactly what they have had into people. Saving, just an ordinary interest rate that are insignificant to our life.
Your pictures speak of of just a single solution, invest in cryptocurrency now or wait after 10 years and see your $1000 becomes $10. Such an irony.  Cry
The problem with the inflation is that it couldn't really hurt the people if in parallel with the growth of inflation, the wages for the workers are growing which isn't the case because the government is far too corrupt to give workers a leeway.

If the government magically waved a wand and mandated everyone magically get a 3% raise to account for inflation, do you know what that would do to the inflation rate?  Raise it above 3%.  You artificially increase the amount of money everyone has, inflation goes up.
13  Economy / Economics / Re: Do you think Elon is manipulating the market? on: June 12, 2021, 07:22:00 PM
I think he knows that and that's why he always do some sort of promotion for some crypto for better or for worse so in a way, he pretty much manipulates the market where he wants it to be.
He seemed to be able to do everything and one of them manipulated the market,
with that a lot of people hate Elon Musk,
I don't know what the real goal is but seeing this it seems like he's doing everything to make a profit for himself
This dude is a very different person than any other person I have seen. Dude only cares about attention personally, business wise he cares about profit only that is true but personally he cares about attention, that is why he is doing stuff like electric cars and spaceships whatever as a business as well, sure it is mainly profit but spacex basically took out government loans after government loans and sure they paid it back and so forth but nobody else would get THAT much money, and they are given contracts constantly as well.

Long story short this dude wanted to be talked and that is what he did, now he is talked all day every day, without missing an hour. That is why he will keep doing this, he will keep talking about crypto like there is no tomorrow because he knows he will get attention.

I don't think he even cares about profit so much. He cares about his companies, Tesla and SpaceX.  Besides those, his main motivation is doing things for public attention, that's basically 100% of the motivation behind his Twitter posts.  I sometimes wonder if he only cares about Tesla and SpaceX because they have the potential to drastically reshape society, which would bring him even more attention.  Maybe attention is the only thing he cares about at all and his companies are just a way to achieve that end.
14  Economy / Economics / Re: Crypto is our last hope for financial independence - John McAfee on: June 12, 2021, 07:17:52 PM
On March 5, 2021, the U.S. Attorney's Office for the Southern District of New York announced that they had formally indicted McAfee and an executive adviser for allegedly fraudulently promoting certain cryptocurrencies and performing pump and dump schemes. McAfee is currently incarcerated in Spain, pending extradition to the United States.
https://en.wikipedia.org/wiki/John_McAfee#Legal_issues

Sad

Not sad, McAfee has been a known piece of garbage for a long time, it's just that the laws he has broken have finally caught up with him. Tax evasion and fraud are likely some of the tamer crimes he's committed over the years.  He's also been accused of rape and murder. Guy belongs in prison.
15  Economy / Economics / Re: MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’ on: June 12, 2021, 06:55:50 PM

Eventually, MSRT one day will sell (part of) their bitcoin, it's inevitable, the important thing is not creating (temporary) imbalances.

It is inevitable that there will be times when MSTR will sell the BTC they have held.  So far what I have seen from the spreadsheet that you have created, they have bought BTC for an average price of 24,450 USD and per price of 37k alone they have achieved an unrealized gain of 1 T USD. 

No, not even close.

The investment is serving as a hedge to the dollar so the investment would be serving that purpose whether it is in profits or at a loss.
Say what?  Bitcoin isn't much of a hedge against the dollar if it drops below the dollar value you bought it at--does that make sense or am I missing something? 

No, this would be my argument too. The value as a hedge is directly inversely proportional to the volatility. At the point the volatility drops the asset below your cost basis in USD terms, you can no longer argue it's an effective hedge because it hasn't protected the value.  It could be that bitcoin hasn't had a long enough track record to establish itself, but currently nothing in its history suggests to me it's ever going to be stable enough to be a hedge to the dollar unless the dollar starts experiencing hyperinflation.
16  Economy / Economics / Re: Why is bitcoin (crypto) worth anything at all?? on: June 12, 2021, 06:45:17 PM
The world isn't strange, it's rational. Economics is essentially understanding how individuals or groups of people respond to incentives, and the rest of it is just understanding supply and demand.  The anecdote about bottled water is just a failure to understand that markets develop and new products develop to satisfy new demand.

The irony is that OP ends the post with the same basic misunderstanding he starts the post with. The post starts with "if everyone was given $1m then there would be no poverty" and ends with "if all poor people were just given meme coins and then we pumped them all there would be no poverty."  It seems OP never learned anything from his "naive" days afterall.
17  Economy / Economics / Re: Binance under investigation on: June 12, 2021, 06:38:22 PM
Binance is one of the largest exchanges in the world.  I don't think that binance is doing any evasion.  In the crypto world there are many competitors who might be able to create bad news to bring down their rivals.  The decline in coin prices that he is experiencing in this month is due to a lot of bad news that he gets.  And there are some countries that are against cryptocurrencies.  I personally think.  The decline in coin prices so far is because many are panic selling.  Because they are afraid that their income will decrease.
They might be doing or they might be not but one thing is for sure, this is a move by the elites to try and pressure crypto related businesses to make sure that they are still the boss, this is an old school tactic, lawsuit or investigation to make sure that they will answer to it because the one under investigation has no choice but to comply because the otherwise will make them look guilty.

No it's not a move by the "elites" to try and pressure crypto related businesses. It's a move by law enforcement to ensure that Binance isn't complicit in money laundering. The confidence with which some of you spout off conspiracy theories make the rest of us rational crypto folks look bad.
18  Economy / Economics / Re: Is Bitcoin dangerous for the economy? on: June 12, 2021, 03:25:19 PM
My taughts:
There is little danger to the economy from banks serving as custodians and transfer agents for cryptocurrencies. Nor do I think that investment firms that make investments in cryptocurrencies for their clients is a risk to the economy

Please share yours🙏🙏

There's literally no danger to the economy from banks serving as custodians for cryptocurrencies. Banks already serve as custodians for just about every type of asset imaginable- cash, stocks, alternative investments, real estate, etc. Crypto would be no different from any other type of asset they currently serve as custodian of.
19  Economy / Economics / Re: Human productivity on: June 12, 2021, 03:21:37 PM
In the past, people farmed and exchanged the surplus grain harvested in autumn for rare, unchanging gold. Then give the gold to a trusted person in exchange for his IOU. When you finish eating your own grain, you can exchange the IOU for gold and then exchange for grain.
Now and in the future, we will replace the surplus production with a rare, trustworthy and unchangeable Bitcoin, and it can be quickly exchanged for the product we want in any corner of the world. We no longer have to work hard to carry these gold and IOUs.
 In fact, in a few years, I often imagined how to send money conveniently on the Internet. After thinking of Bitcoin, I found that Bitcoin, which has solved scarcity, trust and immutability, is money itself, and it is digital gold that is easy to use.

Bitcoin's volatility makes it a horrible currency. Imagine an economy where you only know how much money you have for a few minutes at a time because the value changes so quickly. Commerce would be inconsistent, the ability to plan for the future would be completely gone because you would never have a reasonable expectation of how much money you'd have at any stage in your life due to the unpredictability of bitcoin's value.

Sorry, but nothing in bitcoin's history suggests it will ever be a usable currency, especially on a global level.
20  Economy / Economics / Re: Are some too blind to see? on: June 12, 2021, 03:12:51 PM
Tesla, MicroStrategy, Grayscale like any of us invest in bitcoin for profit. The distribution is fair and we give thanks to its creator Satoshi for making bitcoin possible. Because the traditional means of protecting capital from inflation and making a profit is doubtful in many ways. As long as big companies like Tesla win in bitcoin, the better our future and the economy will be.

Grayscale's business isn't investing in bitcoin for profit, it's selling investments in bitcoin to investors so they can charge a management fee.  Grayscale makes money whether bitcoin goes up, down, or sideways, although it's probably easier to sell interests in their funds when the price is rising.
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