A lot to agree with here but the last example is preposterous. If I have provided 100 h of labour and accepted fiat in exchange, and then that fiat is hyper-inflated away, I have obviously been robbed. So while I can obviously still charge an inflation-adjusted price for my labour today, that does not mean that inflation hasn't had a detrimental effect and this is what anti-fiat/crypto people are mainly talking about.
Well in this system where money supply grows at the same rate of gdp, as long as gdp grows you can expect your fiat to devalue. Therefore you must invest to store that labour long term.
@@abhiJI3045 Yes. And the disparity there is that the labour was provided risk-free (assuming that the person who paid in fiat confirmed the quality of the work before paying, which is normally the case), but the acceptor of fiat is forced to take risk in the form of investments in order to maintain their fiat's purchasing power into the future.
Depends on how you look at things. What % of people could afford a computer 60 years ago? What % of people could afford a cell phone 30 years ago? What % of people could afford to fly on an airplane 60 years ago? What % of people could afford to have a different outfit for every day of the week 100 years ago?
@@w12p67 There are way more people on earth today than 100 years ago. Your viewpoint is likely tainted by the fact that your local geography is prosperous, while many populous parts of the world are not. We have made progress, and flying is cheaper today because it is possible whereas 100 years ago it was impossible. Computers did not exist, and clothes were made manually. All of your examples are due to technology advancing, but not necessarily being able to afford more steaks.
@@zelllersI would argue that steaks are more plentiful and cheaper today than 100 years ago. A higher percentage of the population lives a more luxurious life than 100 years ago. Hell, I would argue that a lower middle-class person today lives a better life than a rich person did 100 years ago.
So, from this video I learned that inflation is my fault. Central banks and governments controls everything in our lives, but this is good since they are always trying to help me, not harm. I also learned that there is no problem for the prices of everything going to the moon, because this is not the right perspective to look into it. It's just a trade off. There is something I didn't get tough, what I'm supposed to do with 10 years of saved (and invested) money? Maybe it's my fault that I wasn't good enough to invest in something to beat the inflation on housing costs, for example, right? Well, thank God this is not my case, because I invested 80% of my net worth in bitcoin, and I'm not selling it for your precious fiat with intrinsic value.
The errors in this we pretty amazing. He blames gold for wealth concentration in his history lesson and then blames the truck driver for getting poorer while his assets inflate concentrating the wealth in our current system. Was increddible!!
By our own metric, one hour of labor buys way less housing than it did in 1980 in Canada. If you say the labor is not as valuable, then are you saying the median wagies income is less valuable today than it was in 1980, even though productivity has increased (gdp per capita generally has got better over time)? Its low interest rates, QE, and debt that has sky rocketted the price of assets (especially housing, especially in Canada).
I'm pretty sure the final point is more of a generality. You can't really apply it perfectly to a specific industry/market without including other variables. Interest rates alone aren't causing high housing costs (although certainly a factor, I'm sure). There are a LOT of factors going into that.
I like this point, but there are a lot more factors involved. Housing and land is scarce and immigration has been at high levels for a while now, so that is also something to consider.
@@jacobnotte3699 yes that's exactly my point. Economics is extremely complicated, there are hundreds of different factors. It's not as simple as saying "your labor is less valuable therefore you are poor" as this guy is saying. Many people read basic economic theory and take it as fact with no exceptions. Economics is a soft science, and human behavior and interactions are complex.
So, you're treating it as if certain finite things should remain static in value. Demand and scarcity may make home prices increase in value faster than wages are able to keep up. That's just one asset class and doesn't mean the entire system is shit. I'll give you a great example: In 2007 I bought myself a Pioneer Kuro plasma TV as a doctoral school graduation gift to myself. I paid about $5500 US for it at the time. It was a 55" TV. NOW I could get about 11 BETTER TVs than I did then for the same amount of money. Another example, Super NES games were on average 69.99 a pop back in 1995. Care to take a gander at what that would cost in today's dollars? People freak out at having to pay $15 for a game on Steam and think they're getting robbed lol.
I think his point is that the majority of people work underpaid and underskilled jobs that have direct relation to their skillset. Even though productivity has gone higher, it has majorly gone higher for those with more skill and to those who own the means of production as this productivity comes from advances in technology in production lines
They can force you to pay tax in usd, but they can’t force you to store your wealth in usd. That why we have to invest to survive in this system. You either invest to store your wealth or it will wash away by inflation.
yeah I'm sure fort knox still has all the gold..... mhmmm the level of cope to believe the dollar is still backed by gold or these so called "assets" and not just our military power.
With respect to "devaluing your labour" you fail to mention storing the value of your labour longer term. Devaluing the currency devalues your past labour, incentivizing short term spending, instead of long-term saving and larger investments which is what grows capital in an economy.
Damn, you’re right dude. There exists no asset class to combat inflation. I never realized that I can only put my paycheck into either a savings account or in Bitcoin. Nothing else. Damn.
@@diamondwave100 Many of those other investments create market asymmetries, such as the overpriced and empty homes we see in western countries, caused by the rich buying up property to store wealth.
@13:15 Not a big crypto proponent, but I think you got fractional reserve banking wrong. I.e. fractional reserve banking is based on 10% of deposits against withdrawals. If they take on more risk, that percentage goes down not up. Also, currently both the US and Canada have zero for their reserve ratio (which is worse than the pre-central banking era!). Doesn't feel like much control to me. I don't know if crypto is the answer, but I think there are valid questions.
If assets back the dollar implicitly then why do assets not back bitcoin if adopted as legal tender? It’s a completely circular argument. The monetary system is and has always been based on human psychology and effectively agreed upon mass delusion. The medium of the system is intrinsically arbitrary and the utility can judged based upon the real application and mechanics.
@@DU715 agree, we have to have a medium to trade globally, we are not going to trade the state of new york for grains and oil , just don't make sense. When we lose electricity my bank account does not go to zero. If they wanted to send an EMP to disable the blockchain they would have to EMP the whole globe... Nothing is perfect, a country can come in and take new york with force. Quantum computers may steal everything from your bank account and/or the blockchain... Life ain't perfect... The dollar is the global currency and is losing value fast VERY fast we need a solution... The world is digital these days , digital assets have value whether or not people accept it ... rant over I hear you @du715 100% hear you , the world is changing
Fiat currency is a good medium for exchange but not an ideal store of value. As you mentioned, it increases by about 6% per year, which highlights its failure as a reliable store of value.
It doesn't though. On average it is like 2.5% per year. I guarantee you that you don't want an economy based on gold or bitcoin as a reserve backing dollars. We stopped doing that for a reason. It was a crap system. The system we currently have is the least crap system. It's not great and nobody pretends it is. Nobody likes it. It's the best system we have found so far though. Use your dollars to purchase appreciating assets and stop complaining about dollars.
It compounds too. Anyone who fails to comprehend that dilution of money is a bad thing can't be taken seriously. The only good in the economy where you don't want more of its supply increasing is money because doing so makes every other good scarce and non-abundant.
@@ThatonedudeCR12956 'Use your dollars to purchase appreciating assets and stop complaining about dollars.' So I choose to use my dollars to buy BTC, the asset with the highest annual return historically.😊
Mark your videos are great and many things u say are true. Im a crypto investor and i live in Argentina. I started looking at crypto because in my country our politicians robbed us the value of our money printing it in the central bank to finance the giant deficit the state had because of the corruption and the misspending of the existing funds. Everything you said is true in USA and a handful of other countrys, but thats not the reality of the majority of the world. The real problem of the existing system imo is the centralization because in countrys with near 0 real institutions having the posibility of printing money is a big problem. For you to have an idea since 1935 (year of the creation of the central bank in Argentina) we had 398.403.051.570.851.000,00% of inflation and counting
Just echoing what previous commenters wrote. Devaluing previous labor degenerates to a continued need for labor; staving off retirement. Inflation, to my understanding, is one of the bigger negatives in the current tradeoff with fiat. That being said, I think a future with both a global cyrptocurrency and national tangible asset-backed currencies is preferable. I'm still educating myself, but I wanted to thank you Mark for being a voice of reason
Mark, I’m sorry, but you are also giving wrong information. An increase in money supply does provide a boost in the standard of living, but temporarily. You forgot the word “temporarily.” You don’t shed light on the after-effects of an increase in money supply, such as distortion in the economy, boom-bust cycles due to an increase in money supply, and misalignment with long-term growth.
Temporarily? Where do you get that? Distortion in the economy? Where do you get that? I’m going to need evidence of that. The increase in the standards of living are easy to demonstrate. Are you confusing money supply with regulation? With government subsidies?
@ Mark, the temporary boost in living standards due to an increase in money supply is well-documented in monetary economics. The after-effects, such as economic distortions, asset bubbles, and boom-bust cycles, are closely tied to excessive liquidity chasing limited assets, as outlined by economists like Milton Friedman and Hayek. For evidence, take the housing bubble of 2008 - excess money supply fueled over-leveraging, leading to a catastrophic collapse. The issue isn’t just about regulation or subsidies; it’s about the long-term misallocation of resources caused by artificial monetary expansion.
I know it is pretty funny Wealth concentration of the Gold standard was bad. Wealth Concentration now is the truckers Fault for not making enough money to buy assets. lol
Had lost track of our favourite professor since 2019, when I passed the CFA program. Happy to see other interesting content apart from the CFA curriculum.
all your arguments here literally have been debunked atleast 2 halving cycles (8 years ago). unreal to hear this directly from you from someone very experienced in tradfi. so many other metrics you left out and overlooked. this video itself will make so many people sidelined.
Looking at the value of an hour of labor in e.g. loaves of bread is an interesting metric. But can't both things be true - your labor is decreasing in value (depending on your job), AND the value (purchasing power) of a dollar is also decreasing? My other question is about the dollar being "backed" by something. (Side note: "backed" is very imprecise, it needs a definition to have a real discussion). In 1971, the US Dollar went off the gold standard under Nixon. If the dollar is backed by all this other stuff today, then why did it need to be backed by gold up until 1971, but not after 1971?
fiat currency, the pinnacle of human ingenuity a marvel that transcends the primitive boundaries of intrinsic value! What could be more comforting than knowing that a group of unelected economists with their all-powerful money printers are independently deciding the fate of the economy? Pure democracy in action! The dollar as a global reserve currency? Sublime! It's like the world unanimously agreeing that Monopoly money is the real deal because we said so. GDP? Oh, the sheer brilliance! A metric that values a trillion-dollar oil spill cleanup as much as building a hospital. Genius. Production up? Good! Production down? Still good, as long as someone spends enough digging holes and filling them back up! But let's not stop there! What we need is maximum fiat accelerationism. Picture this: an infinite money spigot raining down dollars for anyone doing government-approved tasks. And inflation? Hah! What even is that? Some crypto-bro fever dream, no doubt. The more money we print, the more wealth we create! It's common sense. If a loaf of bread costs $10 today and $10,000 tomorrow, you’re not poorer, you’re just playing a bigger, sexier game of capitalism! And those crypto evangelist with their finite supply nonsense... Limited resources? Boooring. Fiat thrives on infinite possibilities.
Haha I know right. Mark is so deep into fiat he has lost all common sense. If constant increase of the money supply was actually a good thing then no one would be poor. To even utter the statement that more money printed equates to a thriving/bumbly economy is to say that pumping more poison into your system leads to a longer and healthier life lol
@forkack6595 the analogy is just untrue, and if you hate the fiat so much just abandon it. Also bitcoin with its limited supply will create concentration of bitcoins in the hands of a few who had alot of fiat who in turn purchased bitcoin with that fiat,, so when you would need bitcoin, the interest charged would keep getting higher and higher due to greed
@@forkack6595 so true, this is why I love Zimbabwe and Venezuela. They've printed so much and have broken the quantum realm of wealth now every one in Zimbabwe is a trillionaire. Who doesn't want that 😊
The USD is the world's reserve currency, and moreso by choice, rather than force. Go travel, especially to 3rd world nations, to understand how intrinsic USD is to global commerce. The true value of USD on the global scale is not the US gov or the "petrodollar" (a half myth). It is the payment & banking infrastructure built on it that goes many levels beyond a tourist paying for a hotel room or buying a coffee.
Dr.mark would request you to make a seperate video on the comments of this video...to get more clarity... Though i also have some doubts regarding devalue of currency and labour ...
Oof, you missed the forest for the trees on this one Mark. As someone who usually explores nuance, you chose the empty low hanging fruit (hopefully not on purpose). The framing is simple: 1. Store of value, not currency. There's a gazillion technical infrastructure reasons why it's bad currency before even getting into the monetary ones. 2. Study history, and you quickly learn currencies are anything but anti-fragile. Decentralizing it is *probably* a good idea.
1) What makes you think that USD is not decentralized by a certain degree? Did you know that most of the USD generated is done outside the Federal Reserve system? 2) What makes you think that crypto is actually decentralized? Have you looked at the distribution of BTC, ETH and other cryptos? Seems highly reminiscent of what Mark actually talks about in regards to fixed currency supplies.
FIAT currencies are anti-fragile for the people that creates them. The more you use their fiat currency the more fragile you became and more anti-fragile they become.
Hi Mark, I am a L3 candidate, subscriber along with the applied options. Can we please resume the updates on X/Twitter/Instagram when you add a new video to the applied level? It gets hard to find a new video without an update and where to find it. Thanks!
1.) The banking system also revolves entirely on the power grid as dollars are simply digits on a computer ledger 2.) My CFA textbook says verbatim that QE is money printing 😂 3.) An overwhelming majority of the “bitcoin bros” don’t see it as a medium of exchange. 4.)You are missing the forest for the trees
@@michaelmorris5758in case you're serious, they don't have that much physical cash, and you can't print cash without electricity, also they couldn't even check your balance etc.
Hey @Mark Meldrum, really respect you as a teacher. Great content on CFA. I plan to buy your applied level course. It would be great if you could do more research on Bitcoin and how it works to understand its intrinsic value before making videos on such topics. Videos from renown computer scientists such as aantonop could help. Keep up with the good content on CFA. Cheers!
All the research on the technology of beta over VHS would not have helped. All the research on the higher productivity of alternative keyboards to QWERTY did not help. All the research you could have done for DOS over Apple in the 1980s did not help. It’s not how great all the experts think the technology is - it’s the use cases. For crypto they are too few, too narrow, too small to make the leap to mass market. They offer really elegant solutions to problems most people simply do not have. Maybe you can make the case that some of the solutions are better than what we currently have, but in the real world, good enough is good enough. After 14 years and thousands of cryptos this technology has not found its way into my life in even an insignificant way. Other than just speculating on the coins, I am sure that is true of you and most of your family and friends as well. The crypto story is an old play called Waiting for Godot.
The biggest use case as of today is the store of value. It has been preserving the purchasing power for those who held it over 4 years. It has a rules based monetary policy (fixed supply) hard coded into its network. Think of it as a decentralised bank that can hold value for you without the need of any middle men/banks.
Do you believe taht any digital asset is worthless due to its digital nature? also do you think all crypto protocols are basiclly useless and have not value or utility?
I care about the purchasing power of my hard-earned dollars across time. So do your listeners. Most of whom cannot scale their income to compensate for rampant inflation. You don’t have to like it, but that’s the way it is.
Rampant inflation? Do you mean the rampant wage inflation we have seen over the last 3 years? The one where the lower income cohort saw wage gains at the fastest rate of any other cohort? www.atlantafed.org/chcs/wage-growth-tracker
Grossly insufficient. And pointing the finger at the value of labour is not an answer, it’s an evasion. Fix the problem, not the blame. At the very least, bitcoin has sought to do that.
@@MarkMeldrumhow about my savings, should it go to zero because I can work tomorrow? 10 years ago 1 million naira could buy me 2 houses now 100 million naira buys me a house. Imagine how my parents feel after locking in money for 10 years
You have completely ignored how savers are robbed with fiat. You have completely ignored inflation especially in countries such as Argentina. You have completely ignored the ease of counterfeiting. And let me ask you: if fiat is so good then why is gold and real estate used to hedge against inflation (of fiat)? You have not addressed the ease of transfer of crypto without use of middlemen who take their cut or prevent transfers.
As he mentioned, inflation is a desired feature of currency. Gold and real estate are not currencies. Bitcoin has transaction fees and can only process a small fraction of the transactions that credit card companies can. Preventing a transfer is most likely to work in your favor, not against you. I've never had any financial transaction prevented other than suspected fraud which I appreciate and can easily notify the bank/card company that it is not in fact fraud and get it to go through. What kind of financial transactions are you making where you're worried about prevention of transfer?
Your idea about 1h of labor excludes the many situations where the state uses magic (eventually outdated) currency values for various situations. Like pensions, fines, tax brackets etc.. In my home country of Austria this has lead to the silly situation where politicians claim that they have lowered taxes every 3 years when in reality they have barely adjusted the tax brackets to inflation.
The average US house has gone from 50,000 btc in 2012 to 4 btc today. I would rather have btc tbh. If you think a world wide power outage is probable may i suggest investing in ammunition rather than btc and houses.
5:48 The case about blackout is flawed. There are physical wallets for crypto where its inside indefinitely. Those dollars in your bank account though completely dissapear alongside the blackout. Once the bank servers go back online then sure we’re back, but meanwhile crypto wallet transactions could be done. (Also physical cash of course - why its more valuable than money in bank account).
What backs Bitcoin is the network effect both physical and virtual(number of people that use it). Do you think the internet has Value? what happens if the power goes out. Does that mean it has no value? All of our FIAT has been digitizes so if the power went out you wouldn't have access to your fiat except what paper you have in your wallet.
Bro, the middle class isn't being squeezed into serfdom because of the price of Wonder Bread. It's due to the fact that productivity and median compensation have been unmoored since the 1970s and the price of real assets that people actually need to live have gone up in price at 10+% a year. Housing, healthcare, and education have all increased substantially while median wages for most people involved in the actual physical economy have been relatively stagnant. Even Canada is feeling some of the pain that the American middle class has been enduring. Why do you think we're romanticizing a murderer? Guys like you are out of touch with the base economic reality faced by most people. When even the salaries of the average physician hasn't kept up with inflation in recent decades you know that the current system is mostly about value extraction and not creating real physical value for real people. I guess you are like Bob Kiyosaki who called physicians losers right before the pandemic. The water is rising and since the elites have garrisoned the commanding heights most normal people are just searching for an ark.
About the point you made at 11:50 I’d appreciate if someone could elaborate on why it is now not the case? Because in current system today, those who are better at competing and exploiting financial markets for their benefit, gain ever more and more money. Now its the same 1% problem. Moreover, the money created very often does not end up increasing living standarts for society.
Depends on the crypto. If one agrees that human capital is real and has value, if one believes code is real and has value, if one believes energy is real and has value then there’s something backing crypto and that’s w/ disregard to any utility that may or may not have value
For the last topic with labor... the issue here is that productivity skyrocketed in the past 50 years, but the purchasing power of the money you get for your work stagnated... Investors and international businessmen profited hugely from the debasement of the USD. Which is not fair. The 3 richest people hold more wealth than the bottom 50% in the US. And this is in a developed country.
One of the things i love about finance and investing is, at the end of the day you can measure who was right. Put the trade on and you either make money or lose money. The debates are fun because its a subject we are all interested in and passionate about, but pointless in the end.
I disagree - you can be lucky with timing and make money, but have a losing investment thesis. For example, I wouldn’t consider someone with a winning lottery ticket to be “right” for buying it, I’d consider them lucky. But I wouldn’t consider all the other millions with a losing ticket to be unlucky, I’d consider them to be wrong
@jc23242 thats an interesting point. I agree with what you said. In this case, the point i was making is that you can have sound rhetorical arguments that are compelling and still be on the wrong side of the trade. You see people all the time make a bear case with data and great arguements that the sky is going to fall, yet they dont ever make money except once every other decade. Not accusing MM of being in that camp obviously, but just popular voices i see In the bitcoin case, would you rather be right that bitcoin is backed by nothing and its stupid or ride it from $10->100k Your comment (and this video) made me think tho, thanks
Yeah for sure, and like you said, many times folks with better data and more accurate analysis can still lose value if they’re not on the winning side of a trade. They might be “right” but it doesn’t end up being profitable. I would say though that what I’ve found is that those who have greater insight and experience, over time, tend to have a higher long-term return. But yeah, those who held bitcoin at 10K and still have it at 100K probably feel pretty good rn lol
Money is like a score board. All the effort it takes to make a basket, goal, a touchdown etc. is represented by the score board. Now imagine if a team got to the finals and all of a sudden someone was allowed to change the score and all of a sudden that team is no longer on the finals. All their effort destroyed by the person that arbitrarily changed the score. That’s what the government is doing when they debase the money. You save all your life to buy a $200k house, then when you’re ready to buy the house costs $500k or the cost of living goes from $10k a year to $40k a year and you’re no longer able to retire. That is why the Bitcoin way should have at least a seat at the table when it comes to solving the debasement crisis. It is an un changeable scoreboard.
Yes, fiat is backed by things and power, but fiat inflation is not neutral; it enriches some sectors while impoverishes other participants in the economy relatively, basically a transfer of wealth, which could promote growth indeed, yet it could also lead to malinvestments.
It enriches those close to the printing machine. Those that control it grow richer. It always an mal-investment and sometimes promote growth but not in the most efficient and effective ways.
They can force you to pay tax in usd, but they can’t force you to store your wealth in usd. That why we have to invest to survive in this system. You either invest to store your wealth or it will wash away by inflation.
Your contrarian thoughts are a perfect illustration of the necessity of freedom of speech. Though, I may disagree with a few perspectives, other perspectives shine light on darkened areas in the crypto community. Keep up the great content.
Inflation is the expansion of the money supply. There is no other definition for this finance terminology. It only has to do with money, there's no such thing as wage inflation or food inflation thats makes no sense. Mark is ignoring the fact that fiat currencies all loose purchasing power and are 99% likely to collapse as we've seen with 100s of fiat currencies in history. He clearly doesn't subscribe to the Austrian Economic theory.
17:00 The intrinsic value of Bitcoin is the past cost of computing the chain. Hardware + electricity, as miners pay to mine the blocks, rewarded in Bitcoin and sell to the market for a profit above their real out of pocket cost. Blockchain ledgers are a historical record made immutable with cryptography. The intrinsic value of blockchains are having digital records/ledgers, that solve the double spend problem. The assumption perhaps you make, is trust, you assume that bookkeeping is honest, and the existing systems are accurate by the hand of man. Besides that, I don't entirely disagree with what you have said here.
The “value of labour” theory only holds merit if everyone was exactly the same. That is both physically and mentally, everyone started in life with the same opportunities, could change careers on the flip of a dime and no one ever aged.
Nothing physically backs fiat or bitcoin. The question should be what gives each value. What you describe gives fiat value equally gives bitcoin value. Being a legally traded commodity gives bitcoin the token, Bitcoin the network and all those working and investing in the space the same protections and value you wrongly claim as “backing” for fiat. The work done and the electricity use to create bitcoin is no less valuable than any “backing” you claim for fiat and many times more secure and predictable.
"turn off the power" means anarchy mean your cash nor your house are worth anything. It's like saying dont use the internet because you might be scammed or dont cross the road because you might get into an accident, or more extreme don't leave your house because an asteroid might fall on you.
What happens when the balance sheet fails or confidence in the balance sheet fails? I think most people view Bitcoin's biggest solution is a store of value because you can continue to have those negatives and positives you mentioned but reduce the risk of a failed balance sheet. Bitcoin can thrive when FIAT is still used. If you live by the balance sheet, you die by the balance sheet.
While I agree that increasing the value of one's labor is an important focus, the argument comparing the price of bread to an hour of labor is overly simplistic and overlooks broader economic realities. Minimum wage, for example, has not increased since 2009, remaining at $7.25/hour. In 2009, the average loaf of bread cost $1.50, whereas in 2024, it costs $2.50. A young person entering the workforce today on minimum wage is at a significant disadvantage compared to someone in 2009. Sure, some goods like bread or technology have become more affordable relative to wages for those who have worked/increased their value, but what about the cost of housing, rent, healthcare, or education? These are major expenses that have far outpaced wage growth for a majority of workers (since 2010 home prices increased 74%, while wages increased 54%). To truly assess economic fairness, we need to evaluate the entire system and calculate a weighted average that accounts for all essential categories. These systems are undeniably complex, and a simplistic comparison like bread-to-labor doesn't reflect the reality most people face. Regarding central bank actions, increasing reserves has a net effect that is essentially equivalent to the euphemism of "printing money." This expansion of liquidity erodes purchasing power over time, as more dollars chase the same amount of goods, contributing to inflationary pressures. As for Bitcoin, its value is supported by human self-interest. Miners, who are fundamental to the network, are unlikely to vote for hard or soft forks that increase the supply, as doing so would reduce the value of each block they mine. This dynamic creates a strong incentive to maintain Bitcoin’s cap of 21 million. If there is limitless reserve creation/increase in money supply, this number will inevitably and programmatically increase due to incentive structures. Finally, the concept of "intrinsic value" can sometimes miss the point. Must something take a physical form to have worth? Consider the time value of money or the ability to store billions of dollars securely using a seed phrase and transport that wealth anywhere in the world. These attributes have immense value, even if they don't fit traditional notions of "intrinsic value" tied to physical assets.
I don't get something about MSTR: you said in previus videos that the shareholders are the beneficiaries of the pyramid scheme at the expense of the bondholders, because every time they issue debt and buy bitcoins, the previous shareholders owns more percentage of the pile of bitcoins, correct? But you also said that the bondholders are the beneficieries at the expnese of the shareholders, which are the operating asset of the company. What am I missing here?
Second one is correct, not the first one. The first one only works IF the bond holders convert their bonds into shares (effectively losing a bunch of money by losing their ownership of the assets). The way he explained that was mainly to show you how MSTR keep saying under FULLY DILUTED case to uninform you into the horde. After that, he explains that the bond holders in this case WILL NEVER convert, if the game ends, they will request their money back (it is a bond, you have to repay the principal and interest). The game continues to the point where the new shareholders no longer buy into the above fallacy. May still be a long while to go.
I understand if we are using bread as a measure to the minimum wages for an hour of labour however when taking into consideration house prices, electricity, fuel and entertainment the cost of living is actually much higher compared to the hour of labour. We cannot just compare to bread but all necessities.
Mark, when you say that "Central Banks dont print money but reserves"... isnt that pretty much one of the core arguments MMT is built around? I highlight this because I know you are very much anti MMT...
This is the same guy who claimed that convertible debt is a ponzi scheme because it gets less asset value per investment when it’s converted 😭😭 people like this are the reason why you can still make money trading in financial markets😭
Crypto is a category that covers a wide range of technologies applied to different industries. Most crypto, and I would even argue almost ALL crypto isn't trying to be money. That claim is pretty much reserved for Bitcoin specifically or some would argue XRP. So when you say nothing is backing crypto, that's true, the same way there is nothing "backing" most companies with a service or a product other than dollars. But who cares, because That's not the point of most cryptos. Most of them are projects that tackle specific niches in digital technology, most of them aren't trying to be money.
"if there is a global power outage" would also mean my fiat is rendered useless. Literally my only non-digital fiat payment is the guy cleaning my windows. 99% of my expenses wouldn't accept bills. Yes I'd still have my house, I'd also still have my house if I paid for it with a bitcoin based mortgage. A problem in your thesis is that a central bank poses solutions to regulate criminal behaviour of banks who want to issue more bills out of greed, with bitcoin there is no bank. Everyone can take custody of fheir own digital asset. This is not possible with digital fiat. If a global power outage is what will devalue my savings I'm more than willing to take that risk over just slowly waiting for my fiat to be worthless because of a 6% annual devaluation. But well, that's just my opinion man
Christopher Leonard: The Lords of Easy Money: how the federal reserve broke the American economy PG.26 "The primary dealers have special bank vaults at the Fed, called reserve accounts. To execute quantitative easing, a trader at the NY fed would call up one of the primary dealers, like JPMorgan Chase, and offer to buy $8 billion worth of Treasury bonds from the bank. JPM would sell the Treasury bonds to the fed tradeer. Then the Fed trader would hit s few keys and tell the Morgan banker to look inside their reserve account. VOILA, the Fed had instantly created $8 billion out of thin air, in the reserve account, to complete the purchase. Morgan could, in turn use this money to buy assests in the wider marektplace. THIS IS HOW THE FED CREATES MONEY - it buys things from the primary dealers, and it does so by SIMPLY creating money inside their reserve accounts.
OK OK, so if the economy is producing X (=1) and the money in the system is Y (=1), the central bank prints more money, so Y*0.99, you now have X (=1) and Y (=0.99). The economy did not change, the money supply did. So workers now produce less Value (Y = 0.99) for the same amount of effort (X = 1) The US GDP moved in a very narrow range of -5% to +10% since the depression, and reverts within this range always due to Federal Reserve actions. Money Supply long term Growth Rate is 6.87% and compounds annually. This is like flying a kite with an infinite amount of string, where the worker is standing on the ground holding the string and affordability is the kite. I have never seen someone put so much effort into being wrong.
You just did. AO = AE = AI. If the economy is producing 1, and M = 1, V = 1. If M increases to 1.1, with V=1, output increases to 1.1. The real increase depends on productivity. If productivity is greater than zero, all else equal, real output increases faster than price. If productivity increases at the rate on the increase in M, all growth is real, and rGDP = nGDP. I will be kinder than you by not saying you are wrong, but rather you are right in the way you repeated what you were misinformed by.
plenty of cryptocurrencies are also inflationary, were just able to track/execute more sophisticated metrics bc our money can also execute code instead of just being a number in a chase bank database somewhere
Sigh... no appreciation of bitcoin vs cryptocurrencies. No understanding of store of value vs fiat. No technical argument against what is backing bitcoin other than to say it's "not backed by anything" with a hard pivot to how fiat is backed by government with a 30 min deluge into TradFi economics. We're left to assume the lack of any real technical argument about what backs bitcoin is due to no knowledge of cryptography, power generation, decentralization, electrical engineering, software engineering, store of value, portability of assets, etc. If bitcoin's store of value is indeed understood and accepted - literally this entire video is rendered mute.
The fallacy I have that I would love for you to address is, I believe if everyone in the world set aside 5% of their wealth to buy bitcoin, thereby creating an infinite perpetual bid and increase in price, that this would be beneficial for all society. My belief is that at this level the volatility would go away substantially and people could feel assured that they are truly putting money aside for retirement. This level of adoption to me would be like us selecting the best outcome for all in the prisoner’s dilemma. Would love to hear your analysis on whether this could play out in a favorable way.
As a subscriber and a cryptocurrency fanboy (don’t know how many in this comment section could say both) I’m a bit underwhelmed. This conversation could probably be hours and hours long. You are a very down to earth person that would be able to highlight the “realism” of some fanatic statements (that hold truth to some extent) made in this community by personalities like Saylor & others
99% correct. Think of a crypto-coin not as currency, but as a vault or as an armored car (depending on how close you need your analogy to be) You wouldn't value a bank vault based on the amount of gold that can be stored in it. At best you'd value it based on it's ability to protect the gold better than the next best vault. In the case of a crypto-coin, what goes in is what determines the value- so you have fiat currency going in and coming out you have heat production (from the $6bn in energy consumed), hashing mining management ($5bn extracted beyond the cost of electricity) and some small amount of market exchanges. So right now you have about $11-12bn backing bitcoin based on the output. Now, most of that is useless output unless you need heat or unless you need to pay mining management finance costs. It's almost certainly a self-licking ice cream cone. but there's still something backing it.
it does not replace gold and/or fiat , if people want to trade services for tomatoes than they can do so. If I want to trade you 10 shares of nvidia for services I can do so. If I want to trade you 1 btc for services I can do that. Why does gold have value? I cant eat it, I cant shelter with it, I could but would be dumb , but I cant drive or wear it. Why does gold have value? especially more value than wheat , oil, grains which have ALOT of use? I really don't know but the truth is , because people says it has value. But it serves no other purpose... back to trading land to china for grains and oil, we cant / wont trade the state of new york lol so we need mediums we can trade..... Why do you think other countries are making BRICS? lol because they say it has value and will trade and accept it as a form of payment for goods and/or services
Your idea of printing money for growth cant be proven. Maybe all banks did fractional reserve but the banks in richer areas did it more hence having larger booms and burst. Hence more noticeable
Mark your thoughts on banks creating money by lending isn't exactly the mechanism today. Banks lending is nascent now, the FOMC credits the US Treasury and the US Treasury then buys goods and services and pays its payroll, this is the new majority monetary mechanism in my opinion. This is why the govt is running massive deficits and this is transferring trillions of dollars, this on top of the interest payments the US treasury is transferring to the private sector as well. If you look at M2 it never falls, this is the real problem...you have a major incentive toward syphoning capital to assets and who holds all the assets? the top 90% more so the top 1%.
And on your house vs 5 bitcoin example... in case you have to flee the area where the house is, what would you rather have ? An illiquid asset that cannot be moved or a super liquid asset you can transport at any time anywhere in your mind by remembering 12 words ? The point is, you are comparing apples and oranges. These are both assets, one for the physical and analog world, the other for the digital world.
This is why bitcoin is more commonly compared to gold and not fiat. The purpose of crypto is to not replace fiat but to function as digital gold. Which the fundamentals make a strong case for behaving like digital gold, even better (ie. fixed supply (deflationary), store of value fundamentals, decentralized, and low cost to move and store.)
“I’m not going to inform an uninformed crowd because their lack of information is my opportunity” is an amazing quote. That’s the vast majority of crypto bros right there.
This guy says says "Don't believe or buy crypto" while he himself says at the beginning of the video that he bought MSTR and IBIT because he is betting on the "religion" of it. Really? Please study Austrian and Keynesian economics and stop misleading people on purpose so you can stack Sats at other people's expense. You "labor" would be far better spent studying Bitcoin than making misleading videos.
Hey Mark, love the video. Started watching you after Atrioc recommended your Microstrategy video. Question: since the “hr of labor” is the unit of analysis, and central banks create reserves, could I reverse the second fallacy to, “central banks creating reserves devalues the value of labor,” and that is a problem because it makes people afford less as the reserves are increased? Regardless of whether this is an “acceptable tradeoff” or not. Thanks!
I'm afraid I have to disagree that ' the correct unit of analysis is 1 hr of my labor'. The value of 1 hr of my labor is not a constant variable. I could gain or lose marketable skills; it's even less reliable measurement than currency
If you create money when you don't have sufficient assets for it, then if everyone comes to claim the assets, there won't be enough. You're essentially creating artificial leverage on your actual asset value. This is like taking out a loan against assets not worth the value of the loan but without needing to pay it back. This devalues the currency. There is no free lunch. You could end the banks if you tried to retrieve all funds in all accounts. Crypto as a whole isn't aligned on what they want. Ripple WANTS more regulation. They want it to be fair and clear though.
The labor claim doesn't hold either. Looking at the growth rates of various life necessities and the rising standard of living and quality of life gives a clearer picture. The proposed value of many assets from food to real estate and many others has grown at a rate outpacing an expected growth per inflation or per the rate of wage growth (which has comparatively stagnated so that part of your argument is true). There are a multitude of factors contributing to this phenomenon but you are right that banks alone are not solely responsible for this outcome. I'd even argue that they are much less responsible than some other actors in the various assets of relevance.
1. you dont need to substitute fiat with bitcoin. in fact you cant do this. you can however envision a future where bitcoin replaces gold as a reserve asset. 2. "fiat is backed by the us government, bitcoin is backed by nothing". I dont even agree with this statement but its not even relevant. the value of both fiat and bitcoin does not derive from what its backed by but other things like the total amount of people that accept it as a currency (network effect), the ease of payment, the divisiability of the currency. in other words the value of the money stems from its applicational use as a money technology and its adoption. bitcoin is growing in adoption and its application as a money storage of value is superior to gold, fiat etc.
A lot to agree with here but the last example is preposterous. If I have provided 100 h of labour and accepted fiat in exchange, and then that fiat is hyper-inflated away, I have obviously been robbed. So while I can obviously still charge an inflation-adjusted price for my labour today, that does not mean that inflation hasn't had a detrimental effect and this is what anti-fiat/crypto people are mainly talking about.
holding fiat pays interest
@@sergioperez1543 Below true inflation rate
Well in this system where money supply grows at the same rate of gdp, as long as gdp grows you can expect your fiat to devalue. Therefore you must invest to store that labour long term.
@@sergioperez1543 Huh what are you talking about? What interest?
@@abhiJI3045 Yes. And the disparity there is that the labour was provided risk-free (assuming that the person who paid in fiat confirmed the quality of the work before paying, which is normally the case), but the acceptor of fiat is forced to take risk in the form of investments in order to maintain their fiat's purchasing power into the future.
Ignoring purchasing power is my favorite pastime too
Worry about the Value of your Labor, bud.
Depends on how you look at things. What % of people could afford a computer 60 years ago? What % of people could afford a cell phone 30 years ago? What % of people could afford to fly on an airplane 60 years ago? What % of people could afford to have a different outfit for every day of the week 100 years ago?
@@w12p67 There are way more people on earth today than 100 years ago. Your viewpoint is likely tainted by the fact that your local geography is prosperous, while many populous parts of the world are not. We have made progress, and flying is cheaper today because it is possible whereas 100 years ago it was impossible. Computers did not exist, and clothes were made manually. All of your examples are due to technology advancing, but not necessarily being able to afford more steaks.
@@zelllersI would argue that steaks are more plentiful and cheaper today than 100 years ago. A higher percentage of the population lives a more luxurious life than 100 years ago. Hell, I would argue that a lower middle-class person today lives a better life than a rich person did 100 years ago.
@@zelllers you cooked so well
So, from this video I learned that inflation is my fault. Central banks and governments controls everything in our lives, but this is good since they are always trying to help me, not harm. I also learned that there is no problem for the prices of everything going to the moon, because this is not the right perspective to look into it. It's just a trade off. There is something I didn't get tough, what I'm supposed to do with 10 years of saved (and invested) money? Maybe it's my fault that I wasn't good enough to invest in something to beat the inflation on housing costs, for example, right? Well, thank God this is not my case, because I invested 80% of my net worth in bitcoin, and I'm not selling it for your precious fiat with intrinsic value.
The errors in this we pretty amazing. He blames gold for wealth concentration in his history lesson and then blames the truck driver for getting poorer while his assets inflate concentrating the wealth in our current system. Was increddible!!
He is an idiot, plain and simple, probably paid by Trudeau himself to spew this BS.
You should put your life savings mainly in a mutual fund
So you bet everything on Bitcoin becoming currency? It's all or nothung for you.
@@doomdrake123 Correct. It's a moral mandate. If Bitcoin fails, then there is no hope against this rigged system.
By our own metric, one hour of labor buys way less housing than it did in 1980 in Canada.
If you say the labor is not as valuable, then are you saying the median wagies income is less valuable today than it was in 1980, even though productivity has increased (gdp per capita generally has got better over time)?
Its low interest rates, QE, and debt that has sky rocketted the price of assets (especially housing, especially in Canada).
I'm pretty sure the final point is more of a generality. You can't really apply it perfectly to a specific industry/market without including other variables. Interest rates alone aren't causing high housing costs (although certainly a factor, I'm sure). There are a LOT of factors going into that.
I like this point, but there are a lot more factors involved. Housing and land is scarce and immigration has been at high levels for a while now, so that is also something to consider.
@@jacobnotte3699 yes that's exactly my point. Economics is extremely complicated, there are hundreds of different factors. It's not as simple as saying "your labor is less valuable therefore you are poor" as this guy is saying.
Many people read basic economic theory and take it as fact with no exceptions. Economics is a soft science, and human behavior and interactions are complex.
So, you're treating it as if certain finite things should remain static in value. Demand and scarcity may make home prices increase in value faster than wages are able to keep up. That's just one asset class and doesn't mean the entire system is shit. I'll give you a great example: In 2007 I bought myself a Pioneer Kuro plasma TV as a doctoral school graduation gift to myself. I paid about $5500 US for it at the time. It was a 55" TV. NOW I could get about 11 BETTER TVs than I did then for the same amount of money. Another example, Super NES games were on average 69.99 a pop back in 1995. Care to take a gander at what that would cost in today's dollars? People freak out at having to pay $15 for a game on Steam and think they're getting robbed lol.
I think his point is that the majority of people work underpaid and underskilled jobs that have direct relation to their skillset. Even though productivity has gone higher, it has majorly gone higher for those with more skill and to those who own the means of production as this productivity comes from advances in technology in production lines
You forgot guns. The fiat currency is backed by a lot of weapons.
They can force you to pay tax in usd, but they can’t force you to store your wealth in usd. That why we have to invest to survive in this system. You either invest to store your wealth or it will wash away by inflation.
And debt
@@SKSoda if people with guns show up and say pay us or go to jail I promise you it doesn't matter were your money is stored.
@@JacobBellinger that's why I live in a place that makes that extremely difficult to happen
yeah I'm sure fort knox still has all the gold..... mhmmm the level of cope to believe the dollar is still backed by gold or these so called "assets" and not just our military power.
Never seen someone so right and wrong at the same time.
😂 so true
Genuinly elaborate on wrong part?
With respect to "devaluing your labour" you fail to mention storing the value of your labour longer term. Devaluing the currency devalues your past labour, incentivizing short term spending, instead of long-term saving and larger investments which is what grows capital in an economy.
store it in SPX, done
Bitcoin has been around for 15 years and cryptobros are yet to discover T-bills lol
Damn, you’re right dude. There exists no asset class to combat inflation.
I never realized that I can only put my paycheck into either a savings account or in Bitcoin. Nothing else. Damn.
@@diamondwave100 Many of those other investments create market asymmetries, such as the overpriced and empty homes we see in western countries, caused by the rich buying up property to store wealth.
@@jake9674 Does there exist no other asset class besides real estate and cryptocurrency that behaves as an inflation hedge?
World wide blackout, checkmate bitcoiners - that is one of the dumbest argument that nocoiners came up with.
Haha agreed.
How would you be able to use Bitcoin in a blackout? Fiat would just go back to paper bookkeeping transactions might take longer but that’s it
@@lambolj good luck getting those bills when everyone else is going to the bank at the same time to withdraw their bills too
yeah im sure with a blackout and no power a bunch of people will want my house an asset that is literally non functional or utilitarian. lol
@@Ajajaj157 unless they ran out of materials or the printer machines are broken that doesn’t seem like a big problem
@13:15 Not a big crypto proponent, but I think you got fractional reserve banking wrong.
I.e. fractional reserve banking is based on 10% of deposits against withdrawals. If they take on more risk, that percentage goes down not up.
Also, currently both the US and Canada have zero for their reserve ratio (which is worse than the pre-central banking era!). Doesn't feel like much control to me.
I don't know if crypto is the answer, but I think there are valid questions.
In terms of the value of labor diminishing, how do retired people tackle this issue?
If assets back the dollar implicitly then why do assets not back bitcoin if adopted as legal tender? It’s a completely circular argument. The monetary system is and has always been based on human psychology and effectively agreed upon mass delusion. The medium of the system is intrinsically arbitrary and the utility can judged based upon the real application and mechanics.
I stopped at “what happens when you turn off electricity”, although most things made OK sense up to that point.
agree as my post ten spots down or so say, do you lose your money when your home power or the bank power goes out? the answer to that is no
Nothing makes sense in the video.
@@vande012 What's the value of your house, once your country is invaded by a totalitarian regime?
@@DU715 agree, we have to have a medium to trade globally, we are not going to trade the state of new york for grains and oil , just don't make sense. When we lose electricity my bank account does not go to zero. If they wanted to send an EMP to disable the blockchain they would have to EMP the whole globe... Nothing is perfect, a country can come in and take new york with force. Quantum computers may steal everything from your bank account and/or the blockchain... Life ain't perfect... The dollar is the global currency and is losing value fast VERY fast we need a solution... The world is digital these days , digital assets have value whether or not people accept it ... rant over I hear you @du715 100% hear you , the world is changing
Fiat currency is a good medium for exchange but not an ideal store of value. As you mentioned, it increases by about 6% per year, which highlights its failure as a reliable store of value.
It doesn't though. On average it is like 2.5% per year. I guarantee you that you don't want an economy based on gold or bitcoin as a reserve backing dollars. We stopped doing that for a reason. It was a crap system. The system we currently have is the least crap system. It's not great and nobody pretends it is. Nobody likes it. It's the best system we have found so far though. Use your dollars to purchase appreciating assets and stop complaining about dollars.
True
It compounds too. Anyone who fails to comprehend that dilution of money is a bad thing can't be taken seriously. The only good in the economy where you don't want more of its supply increasing is money because doing so makes every other good scarce and non-abundant.
not 6% but also yes just invest it
@@ThatonedudeCR12956 'Use your dollars to purchase appreciating assets and stop complaining about dollars.'
So I choose to use my dollars to buy BTC, the asset with the highest annual return historically.😊
Mark your videos are great and many things u say are true. Im a crypto investor and i live in Argentina. I started looking at crypto because in my country our politicians robbed us the value of our money printing it in the central bank to finance the giant deficit the state had because of the corruption and the misspending of the existing funds. Everything you said is true in USA and a handful of other countrys, but thats not the reality of the majority of the world. The real problem of the existing system imo is the centralization because in countrys with near 0 real institutions having the posibility of printing money is a big problem. For you to have an idea since 1935 (year of the creation of the central bank in Argentina) we had 398.403.051.570.851.000,00% of inflation and counting
Just echoing what previous commenters wrote. Devaluing previous labor degenerates to a continued need for labor; staving off retirement. Inflation, to my understanding, is one of the bigger negatives in the current tradeoff with fiat. That being said, I think a future with both a global cyrptocurrency and national tangible asset-backed currencies is preferable. I'm still educating myself, but I wanted to thank you Mark for being a voice of reason
Mark, I’m sorry, but you are also giving wrong information. An increase in money supply does provide a boost in the standard of living, but temporarily. You forgot the word “temporarily.” You don’t shed light on the after-effects of an increase in money supply, such as distortion in the economy, boom-bust cycles due to an increase in money supply, and misalignment with long-term growth.
Temporarily? Where do you get that? Distortion in the economy? Where do you get that? I’m going to need evidence of that. The increase in the standards of living are easy to demonstrate. Are you confusing money supply with regulation? With government subsidies?
@ Mark, the temporary boost in living standards due to an increase in money supply is well-documented in monetary economics. The after-effects, such as economic distortions, asset bubbles, and boom-bust cycles, are closely tied to excessive liquidity chasing limited assets, as outlined by economists like Milton Friedman and Hayek. For evidence, take the housing bubble of 2008 - excess money supply fueled over-leveraging, leading to a catastrophic collapse. The issue isn’t just about regulation or subsidies; it’s about the long-term misallocation of resources caused by artificial monetary expansion.
@@har_d_rocks9987finally, someone who have read Mises, Hayek, Rothbard
We are still very early
Funny how we actually live all the negatives of both worlds he is talking about . What a load of bull crap .
I know it is pretty funny Wealth concentration of the Gold standard was bad. Wealth Concentration now is the truckers Fault for not making enough money to buy assets. lol
Had lost track of our favourite professor since 2019, when I passed the CFA program. Happy to see other interesting content apart from the CFA curriculum.
all your arguments here literally have been debunked atleast 2 halving cycles (8 years ago). unreal to hear this directly from you from someone very experienced in tradfi. so many other metrics you left out and overlooked. this video itself will make so many people sidelined.
Looking at the value of an hour of labor in e.g. loaves of bread is an interesting metric. But can't both things be true - your labor is decreasing in value (depending on your job), AND the value (purchasing power) of a dollar is also decreasing? My other question is about the dollar being "backed" by something. (Side note: "backed" is very imprecise, it needs a definition to have a real discussion). In 1971, the US Dollar went off the gold standard under Nixon. If the dollar is backed by all this other stuff today, then why did it need to be backed by gold up until 1971, but not after 1971?
@@speedbrake he contradicted himself
fiat currency, the pinnacle of human ingenuity a marvel that transcends the primitive boundaries of intrinsic value! What could be more comforting than knowing that a group of unelected economists with their all-powerful money printers are independently deciding the fate of the economy? Pure democracy in action!
The dollar as a global reserve currency? Sublime! It's like the world unanimously agreeing that Monopoly money is the real deal because we said so.
GDP? Oh, the sheer brilliance! A metric that values a trillion-dollar oil spill cleanup as much as building a hospital. Genius. Production up? Good! Production down? Still good, as long as someone spends enough digging holes and filling them back up!
But let's not stop there! What we need is maximum fiat accelerationism. Picture this: an infinite money spigot raining down dollars for anyone doing government-approved tasks.
And inflation? Hah! What even is that? Some crypto-bro fever dream, no doubt. The more money we print, the more wealth we create! It's common sense. If a loaf of bread costs $10 today and $10,000 tomorrow, you’re not poorer, you’re just playing a bigger, sexier game of capitalism!
And those crypto evangelist with their finite supply nonsense... Limited resources? Boooring. Fiat thrives on infinite possibilities.
Haha I know right. Mark is so deep into fiat he has lost all common sense. If constant increase of the money supply was actually a good thing then no one would be poor. To even utter the statement that more money printed equates to a thriving/bumbly economy is to say that pumping more poison into your system leads to a longer and healthier life lol
@forkack6595 the analogy is just untrue, and if you hate the fiat so much just abandon it. Also bitcoin with its limited supply will create concentration of bitcoins in the hands of a few who had alot of fiat who in turn purchased bitcoin with that fiat,, so when you would need bitcoin, the interest charged would keep getting higher and higher due to greed
@@forkack6595 so true, this is why I love Zimbabwe and Venezuela. They've printed so much and have broken the quantum realm of wealth now every one in Zimbabwe is a trillionaire. Who doesn't want that 😊
@@Anarchistarchitect Yup, every country should strive to be like Zimbabwe and Venezuela lol They are winning too much over there.
The USD is the world's reserve currency, and moreso by choice, rather than force. Go travel, especially to 3rd world nations, to understand how intrinsic USD is to global commerce.
The true value of USD on the global scale is not the US gov or the "petrodollar" (a half myth). It is the payment & banking infrastructure built on it that goes many levels beyond a tourist paying for a hotel room or buying a coffee.
Dr.mark would request you to make a seperate video on the comments of this video...to get more clarity... Though i also have some doubts regarding devalue of currency and labour ...
Oof, you missed the forest for the trees on this one Mark. As someone who usually explores nuance, you chose the empty low hanging fruit (hopefully not on purpose).
The framing is simple:
1. Store of value, not currency. There's a gazillion technical infrastructure reasons why it's bad currency before even getting into the monetary ones.
2. Study history, and you quickly learn currencies are anything but anti-fragile. Decentralizing it is *probably* a good idea.
1) What makes you think that USD is not decentralized by a certain degree? Did you know that most of the USD generated is done outside the Federal Reserve system?
2) What makes you think that crypto is actually decentralized? Have you looked at the distribution of BTC, ETH and other cryptos? Seems highly reminiscent of what Mark actually talks about in regards to fixed currency supplies.
FIAT currencies are anti-fragile for the people that creates them. The more you use their fiat currency the more fragile you became and more anti-fragile they become.
Hi Mark, I am a L3 candidate, subscriber along with the applied options. Can we please resume the updates on X/Twitter/Instagram when you add a new video to the applied level? It gets hard to find a new video without an update and where to find it. Thanks!
I do have a better solution coming. But yes, I do need to do something about updates.
1.) The banking system also revolves entirely on the power grid as dollars are simply digits on a computer ledger
2.) My CFA textbook says verbatim that QE is money printing 😂
3.) An overwhelming majority of the “bitcoin bros” don’t see it as a medium of exchange.
4.)You are missing the forest for the trees
so if electricity is shut down i guess my fiat bank account is gone too isn't it? :D
NO YOU GO IN AND COLLECT YOUR LEGAL TENDER (CASH) FROM THEM
Nuclear armageddon, checkmate crypto fans! Roflmao
@@michaelmorris5758do you think that they have a paper record of your account's balance handy at all times?
@@michaelmorris5758in case you're serious, they don't have that much physical cash, and you can't print cash without electricity, also they couldn't even check your balance etc.
The blockchain lives even without electricity in storage. And can be turned back on with full proof of work. You need to go deeper.
Hey @Mark Meldrum, really respect you as a teacher. Great content on CFA. I plan to buy your applied level course. It would be great if you could do more research on Bitcoin and how it works to understand its intrinsic value before making videos on such topics. Videos from renown computer scientists such as aantonop could help. Keep up with the good content on CFA. Cheers!
All the research on the technology of beta over VHS would not have helped. All the research on the higher productivity of alternative keyboards to QWERTY did not help. All the research you could have done for DOS over Apple in the 1980s did not help. It’s not how great all the experts think the technology is - it’s the use cases. For crypto they are too few, too narrow, too small to make the leap to mass market. They offer really elegant solutions to problems most people simply do not have. Maybe you can make the case that some of the solutions are better than what we currently have, but in the real world, good enough is good enough. After 14 years and thousands of cryptos this technology has not found its way into my life in even an insignificant way. Other than just speculating on the coins, I am sure that is true of you and most of your family and friends as well. The crypto story is an old play called Waiting for Godot.
The biggest use case as of today is the store of value. It has been preserving the purchasing power for those who held it over 4 years. It has a rules based monetary policy (fixed supply) hard coded into its network. Think of it as a decentralised bank that can hold value for you without the need of any middle men/banks.
Do you believe taht any digital asset is worthless due to its digital nature? also do you think all crypto protocols are basiclly useless and have not value or utility?
I care about the purchasing power of my hard-earned dollars across time. So do your listeners. Most of whom cannot scale their income to compensate for rampant inflation. You don’t have to like it, but that’s the way it is.
Rampant inflation? Do you mean the rampant wage inflation we have seen over the last 3 years? The one where the lower income cohort saw wage gains at the fastest rate of any other cohort? www.atlantafed.org/chcs/wage-growth-tracker
I should add, the ECI is still running higher than the PCE. Real wages have been increasing.
Grossly insufficient. And pointing the finger at the value of labour is not an answer, it’s an evasion. Fix the problem, not the blame. At the very least, bitcoin has sought to do that.
@@MarkMeldrumhow about my savings, should it go to zero because I can work tomorrow? 10 years ago 1 million naira could buy me 2 houses now 100 million naira buys me a house. Imagine how my parents feel after locking in money for 10 years
@@MarkMeldrum what about the prices of groceries, homes, and used cars? Has that been keeping up with wages?
You have completely ignored how savers are robbed with fiat. You have completely ignored inflation especially in countries such as Argentina. You have completely ignored the ease of counterfeiting. And let me ask you: if fiat is so good then why is gold and real estate used to hedge against inflation (of fiat)? You have not addressed the ease of transfer of crypto without use of middlemen who take their cut or prevent transfers.
As he mentioned, inflation is a desired feature of currency. Gold and real estate are not currencies. Bitcoin has transaction fees and can only process a small fraction of the transactions that credit card companies can. Preventing a transfer is most likely to work in your favor, not against you. I've never had any financial transaction prevented other than suspected fraud which I appreciate and can easily notify the bank/card company that it is not in fact fraud and get it to go through. What kind of financial transactions are you making where you're worried about prevention of transfer?
@@abanks7663you can't compare a final layer one settlement network to visa (credit card company) which is well above the fiat settlement network
Your idea about 1h of labor excludes the many situations where the state uses magic (eventually outdated) currency values for various situations. Like pensions, fines, tax brackets etc.. In my home country of Austria this has lead to the silly situation where politicians claim that they have lowered taxes every 3 years when in reality they have barely adjusted the tax brackets to inflation.
So if you turn off the power, the crypto ledger is magically swiped clean?
The average US house has gone from 50,000 btc in 2012 to 4 btc today. I would rather have btc tbh. If you think a world wide power outage is probable may i suggest investing in ammunition rather than btc and houses.
The average us house has gone from 1000000 nvidia shares to about 1000 shares though. What does it have to do with anything in retrospect?
@@temporarysuccessdude, you just said it, we all have a single enemy. INFLATION, just get valuable assets.
Loved the video. I never thought that way. Even, considering that I do not have debt and small c card. Thanks.
Yes, commercial bank can lend out money and increase the money supply. But central bank is the largest lender in the system.
5:48 The case about blackout is flawed. There are physical wallets for crypto where its inside indefinitely. Those dollars in your bank account though completely dissapear alongside the blackout. Once the bank servers go back online then sure we’re back, but meanwhile crypto wallet transactions could be done. (Also physical cash of course - why its more valuable than money in bank account).
What backs Bitcoin is the network effect both physical and virtual(number of people that use it). Do you think the internet has Value? what happens if the power goes out. Does that mean it has no value? All of our FIAT has been digitizes so if the power went out you wouldn't have access to your fiat except what paper you have in your wallet.
Bro, the middle class isn't being squeezed into serfdom because of the price of Wonder Bread. It's due to the fact that productivity and median compensation have been unmoored since the 1970s and the price of real assets that people actually need to live have gone up in price at 10+% a year. Housing, healthcare, and education have all increased substantially while median wages for most people involved in the actual physical economy have been relatively stagnant. Even Canada is feeling some of the pain that the American middle class has been enduring. Why do you think we're romanticizing a murderer? Guys like you are out of touch with the base economic reality faced by most people. When even the salaries of the average physician hasn't kept up with inflation in recent decades you know that the current system is mostly about value extraction and not creating real physical value for real people. I guess you are like Bob Kiyosaki who called physicians losers right before the pandemic. The water is rising and since the elites have garrisoned the commanding heights most normal people are just searching for an ark.
About the point you made at 11:50
I’d appreciate if someone could elaborate on why it is now not the case?
Because in current system today, those who are better at competing and exploiting financial markets for their benefit, gain ever more and more money. Now its the same 1% problem.
Moreover, the money created very often does not end up increasing living standarts for society.
Depends on the crypto. If one agrees that human capital is real and has value, if one believes code is real and has value, if one believes energy is real and has value then there’s something backing crypto and that’s w/ disregard to any utility that may or may not have value
For the last topic with labor... the issue here is that productivity skyrocketed in the past 50 years, but the purchasing power of the money you get for your work stagnated... Investors and international businessmen profited hugely from the debasement of the USD.
Which is not fair. The 3 richest people hold more wealth than the bottom 50% in the US. And this is in a developed country.
One of the things i love about finance and investing is, at the end of the day you can measure who was right. Put the trade on and you either make money or lose money. The debates are fun because its a subject we are all interested in and passionate about, but pointless in the end.
I disagree - you can be lucky with timing and make money, but have a losing investment thesis. For example, I wouldn’t consider someone with a winning lottery ticket to be “right” for buying it, I’d consider them lucky. But I wouldn’t consider all the other millions with a losing ticket to be unlucky, I’d consider them to be wrong
@jc23242 thats an interesting point. I agree with what you said.
In this case, the point i was making is that you can have sound rhetorical arguments that are compelling and still be on the wrong side of the trade.
You see people all the time make a bear case with data and great arguements that the sky is going to fall, yet they dont ever make money except once every other decade. Not accusing MM of being in that camp obviously, but just popular voices i see
In the bitcoin case, would you rather be right that bitcoin is backed by nothing and its stupid or ride it from $10->100k
Your comment (and this video) made me think tho, thanks
Yeah for sure, and like you said, many times folks with better data and more accurate analysis can still lose value if they’re not on the winning side of a trade. They might be “right” but it doesn’t end up being profitable. I would say though that what I’ve found is that those who have greater insight and experience, over time, tend to have a higher long-term return.
But yeah, those who held bitcoin at 10K and still have it at 100K probably feel pretty good rn lol
Yeah, people thought FartCoin was stupid too but the numbers don’t lie.
Bitcoin is backed by the full faith in the code that prevents malfeasance.
Money is like a score board.
All the effort it takes to make a basket, goal, a touchdown etc. is represented by the score board.
Now imagine if a team got to the finals and all of a sudden someone was allowed to change the score and all of a sudden that team is no longer on the finals. All their effort destroyed by the person that arbitrarily changed the score.
That’s what the government is doing when they debase the money. You save all your life to buy a $200k house, then when you’re ready to buy the house costs $500k or the cost of living goes from $10k a year to $40k a year and you’re no longer able to retire.
That is why the Bitcoin way should have at least a seat at the table when it comes to solving the debasement crisis. It is an un changeable scoreboard.
Yes, fiat is backed by things and power, but fiat inflation is not neutral; it enriches some sectors while impoverishes other participants in the economy relatively, basically a transfer of wealth, which could promote growth indeed, yet it could also lead to malinvestments.
It enriches those close to the printing machine. Those that control it grow richer. It always an mal-investment and sometimes promote growth but not in the most efficient and effective ways.
I buy more bitcoin and MSTR whenever this guy’s videos come up in my feed.
You should debate Saifedean Ammous! Its gonna be fun
Saif would mop the floor with him.
or Saylor
3:55 Are you out of your mind?
I thought you were intelligent
I too get angry when I have no counter argument 😁
They can force you to pay tax in usd, but they can’t force you to store your wealth in usd. That why we have to invest to survive in this system. You either invest to store your wealth or it will wash away by inflation.
Your contrarian thoughts are a perfect illustration of the necessity of freedom of speech. Though, I may disagree with a few perspectives, other perspectives shine light on darkened areas in the crypto community. Keep up the great content.
How does inflation come into this whole money supply increase?
Inflation is the expansion of the money supply. There is no other definition for this finance terminology. It only has to do with money, there's no such thing as wage inflation or food inflation thats makes no sense. Mark is ignoring the fact that fiat currencies all loose purchasing power and are 99% likely to collapse as we've seen with 100s of fiat currencies in history. He clearly doesn't subscribe to the Austrian Economic theory.
17:00 The intrinsic value of Bitcoin is the past cost of computing the chain. Hardware + electricity, as miners pay to mine the blocks, rewarded in Bitcoin and sell to the market for a profit above their real out of pocket cost. Blockchain ledgers are a historical record made immutable with cryptography. The intrinsic value of blockchains are having digital records/ledgers, that solve the double spend problem. The assumption perhaps you make, is trust, you assume that bookkeeping is honest, and the existing systems are accurate by the hand of man. Besides that, I don't entirely disagree with what you have said here.
The “value of labour” theory only holds merit if everyone was exactly the same. That is both physically and mentally, everyone started in life with the same opportunities, could change careers on the flip of a dime and no one ever aged.
@@Mad-Chimmy I agree with you but the point here is that bitcoin is not solving this problem
Lol the fed literally creates more money when it purchases assets for its balance sheet
Nothing physically backs fiat or bitcoin. The question should be what gives each value. What you describe gives fiat value equally gives bitcoin value. Being a legally traded commodity gives bitcoin the token, Bitcoin the network and all those working and investing in the space the same protections and value you wrongly claim as “backing” for fiat. The work done and the electricity use to create bitcoin is no less valuable than any “backing” you claim for fiat and many times more secure and predictable.
If it's fiat, it's not your money.
ahahah so much cleverness in these words. Go to school.
"turn off the power" means anarchy mean your cash nor your house are worth anything. It's like saying dont use the internet because you might be scammed or dont cross the road because you might get into an accident, or more extreme don't leave your house because an asteroid might fall on you.
What happens when the balance sheet fails or confidence in the balance sheet fails? I think most people view Bitcoin's biggest solution is a store of value because you can continue to have those negatives and positives you mentioned but reduce the risk of a failed balance sheet. Bitcoin can thrive when FIAT is still used. If you live by the balance sheet, you die by the balance sheet.
If everyone knew how the system worked, then it would be a level playing field.
Mark, do you have ever read Murray Rothbard?
What are you blabbering about?
While I agree that increasing the value of one's labor is an important focus, the argument comparing the price of bread to an hour of labor is overly simplistic and overlooks broader economic realities. Minimum wage, for example, has not increased since 2009, remaining at $7.25/hour. In 2009, the average loaf of bread cost $1.50, whereas in 2024, it costs $2.50. A young person entering the workforce today on minimum wage is at a significant disadvantage compared to someone in 2009.
Sure, some goods like bread or technology have become more affordable relative to wages for those who have worked/increased their value, but what about the cost of housing, rent, healthcare, or education? These are major expenses that have far outpaced wage growth for a majority of workers (since 2010 home prices increased 74%, while wages increased 54%). To truly assess economic fairness, we need to evaluate the entire system and calculate a weighted average that accounts for all essential categories. These systems are undeniably complex, and a simplistic comparison like bread-to-labor doesn't reflect the reality most people face.
Regarding central bank actions, increasing reserves has a net effect that is essentially equivalent to the euphemism of "printing money." This expansion of liquidity erodes purchasing power over time, as more dollars chase the same amount of goods, contributing to inflationary pressures.
As for Bitcoin, its value is supported by human self-interest. Miners, who are fundamental to the network, are unlikely to vote for hard or soft forks that increase the supply, as doing so would reduce the value of each block they mine. This dynamic creates a strong incentive to maintain Bitcoin’s cap of 21 million. If there is limitless reserve creation/increase in money supply, this number will inevitably and programmatically increase due to incentive structures.
Finally, the concept of "intrinsic value" can sometimes miss the point. Must something take a physical form to have worth? Consider the time value of money or the ability to store billions of dollars securely using a seed phrase and transport that wealth anywhere in the world. These attributes have immense value, even if they don't fit traditional notions of "intrinsic value" tied to physical assets.
I don't get something about MSTR: you said in previus videos that the shareholders are the beneficiaries of the pyramid scheme at the expense of the bondholders, because every time they issue debt and buy bitcoins, the previous shareholders owns more percentage of the pile of bitcoins, correct?
But you also said that the bondholders are the beneficieries at the expnese of the shareholders, which are the operating asset of the company.
What am I missing here?
Second one is correct, not the first one. The first one only works IF the bond holders convert their bonds into shares (effectively losing a bunch of money by losing their ownership of the assets).
The way he explained that was mainly to show you how MSTR keep saying under FULLY DILUTED case to uninform you into the horde.
After that, he explains that the bond holders in this case WILL NEVER convert, if the game ends, they will request their money back (it is a bond, you have to repay the principal and interest).
The game continues to the point where the new shareholders no longer buy into the above fallacy. May still be a long while to go.
I understand if we are using bread as a measure to the minimum wages for an hour of labour however when taking into consideration house prices, electricity, fuel and entertainment the cost of living is actually much higher compared to the hour of labour.
We cannot just compare to bread but all necessities.
Do you not see a difference between Bitcoin and crypto?
would love to see you debate bitcoin university guy.
Mark, when you say that "Central Banks dont print money but reserves"... isnt that pretty much one of the core arguments MMT is built around? I highlight this because I know you are very much anti MMT...
This is the same guy who claimed that convertible debt is a ponzi scheme because it gets less asset value per investment when it’s converted 😭😭 people like this are the reason why you can still make money trading in financial markets😭
What is backing up gold?
Crypto is a category that covers a wide range of technologies applied to different industries. Most crypto, and I would even argue almost ALL crypto isn't trying to be money. That claim is pretty much reserved for Bitcoin specifically or some would argue XRP. So when you say nothing is backing crypto, that's true, the same way there is nothing "backing" most companies with a service or a product other than dollars. But who cares, because
That's not the point of most cryptos. Most of them are projects that tackle specific niches in digital technology, most of them aren't trying to be money.
"if there is a global power outage" would also mean my fiat is rendered useless. Literally my only non-digital fiat payment is the guy cleaning my windows. 99% of my expenses wouldn't accept bills. Yes I'd still have my house, I'd also still have my house if I paid for it with a bitcoin based mortgage. A problem in your thesis is that a central bank poses solutions to regulate criminal behaviour of banks who want to issue more bills out of greed, with bitcoin there is no bank. Everyone can take custody of fheir own digital asset. This is not possible with digital fiat. If a global power outage is what will devalue my savings I'm more than willing to take that risk over just slowly waiting for my fiat to be worthless because of a 6% annual devaluation. But well, that's just my opinion man
Christopher Leonard: The Lords of Easy Money: how the federal reserve broke the American economy PG.26 "The primary dealers have special bank vaults at the Fed, called reserve accounts. To execute quantitative easing, a trader at the NY fed would call up one of the primary dealers, like JPMorgan Chase, and offer to buy $8 billion worth of Treasury bonds from the bank. JPM would sell the Treasury bonds to the fed tradeer. Then the Fed trader would hit s few keys and tell the Morgan banker to look inside their reserve account. VOILA, the Fed had instantly created $8 billion out of thin air, in the reserve account, to complete the purchase. Morgan could, in turn use this money to buy assests in the wider marektplace. THIS IS HOW THE FED CREATES MONEY - it buys things from the primary dealers, and it does so by SIMPLY creating money inside their reserve accounts.
OK OK, so if the economy is producing X (=1) and the money in the system is Y (=1), the central bank prints more money, so Y*0.99, you now have X (=1) and Y (=0.99). The economy did not change, the money supply did. So workers now produce less Value (Y = 0.99) for the same amount of effort (X = 1) The US GDP moved in a very narrow range of -5% to +10% since the depression, and reverts within this range always due to Federal Reserve actions. Money Supply long term Growth Rate is 6.87% and compounds annually. This is like flying a kite with an infinite amount of string, where the worker is standing on the ground holding the string and affordability is the kite. I have never seen someone put so much effort into being wrong.
You just did. AO = AE = AI. If the economy is producing 1, and M = 1, V = 1. If M increases to 1.1, with V=1, output increases to 1.1. The real increase depends on productivity. If productivity is greater than zero, all else equal, real output increases faster than price. If productivity increases at the rate on the increase in M, all growth is real, and rGDP = nGDP. I will be kinder than you by not saying you are wrong, but rather you are right in the way you repeated what you were misinformed by.
plenty of cryptocurrencies are also inflationary, were just able to track/execute more sophisticated metrics bc our money can also execute code instead of just being a number in a chase bank database somewhere
Yes, I think he is only talking about bitcoin
Sigh... no appreciation of bitcoin vs cryptocurrencies. No understanding of store of value vs fiat. No technical argument against what is backing bitcoin other than to say it's "not backed by anything" with a hard pivot to how fiat is backed by government with a 30 min deluge into TradFi economics. We're left to assume the lack of any real technical argument about what backs bitcoin is due to no knowledge of cryptography, power generation, decentralization, electrical engineering, software engineering, store of value, portability of assets, etc. If bitcoin's store of value is indeed understood and accepted - literally this entire video is rendered mute.
Poverty, lack of access to food, and broken homes make it nearly impossible to focus on increasing the value of your labor.
100% agree
18:33 Wow, I geniunely never thought about it like that! WOW!!
The fact that you have 200k followers and you can say this kind of stuff shows me how early we are to bitcoin
The fallacy I have that I would love for you to address is, I believe if everyone in the world set aside 5% of their wealth to buy bitcoin, thereby creating an infinite perpetual bid and increase in price, that this would be beneficial for all society. My belief is that at this level the volatility would go away substantially and people could feel assured that they are truly putting money aside for retirement. This level of adoption to me would be like us selecting the best outcome for all in the prisoner’s dilemma.
Would love to hear your analysis on whether this could play out in a favorable way.
As a subscriber and a cryptocurrency fanboy (don’t know how many in this comment section could say both) I’m a bit underwhelmed. This conversation could probably be hours and hours long. You are a very down to earth person that would be able to highlight the “realism” of some fanatic statements (that hold truth to some extent) made in this community by personalities like Saylor & others
Banks loaning money doesn’t increase the money supply it just increases the circulation of money.
Sorry but you are wrong. Type it into ChatGPT.
99% correct. Think of a crypto-coin not as currency, but as a vault or as an armored car (depending on how close you need your analogy to be) You wouldn't value a bank vault based on the amount of gold that can be stored in it. At best you'd value it based on it's ability to protect the gold better than the next best vault. In the case of a crypto-coin, what goes in is what determines the value- so you have fiat currency going in and coming out you have heat production (from the $6bn in energy consumed), hashing mining management ($5bn extracted beyond the cost of electricity) and some small amount of market exchanges. So right now you have about $11-12bn backing bitcoin based on the output. Now, most of that is useless output unless you need heat or unless you need to pay mining management finance costs. It's almost certainly a self-licking ice cream cone. but there's still something backing it.
crypto is a new investment asset , it will live with fiat,gold,wheat,land,missiles,s&p 500
it does not replace gold and/or fiat , if people want to trade services for tomatoes than they can do so. If I want to trade you 10 shares of nvidia for services I can do so. If I want to trade you 1 btc for services I can do that.
Why does gold have value? I cant eat it, I cant shelter with it, I could but would be dumb , but I cant drive or wear it. Why does gold have value? especially more value than wheat , oil, grains which have ALOT of use? I really don't know but the truth is , because people says it has value. But it serves no other purpose... back to trading land to china for grains and oil, we cant / wont trade the state of new york lol so we need mediums we can trade..... Why do you think other countries are making BRICS? lol because they say it has value and will trade and accept it as a form of payment for goods and/or services
Your idea of printing money for growth cant be proven. Maybe all banks did fractional reserve but the banks in richer areas did it more hence having larger booms and burst. Hence more noticeable
Mark your thoughts on banks creating money by lending isn't exactly the mechanism today. Banks lending is nascent now, the FOMC credits the US Treasury and the US Treasury then buys goods and services and pays its payroll, this is the new majority monetary mechanism in my opinion. This is why the govt is running massive deficits and this is transferring trillions of dollars, this on top of the interest payments the US treasury is transferring to the private sector as well. If you look at M2 it never falls, this is the real problem...you have a major incentive toward syphoning capital to assets and who holds all the assets? the top 90% more so the top 1%.
Imagine thinking that gold or stocks are a better store of value than bitcoin? You’d have to be an old FUD.
Bitcoin is be divisible by satoshis. The Bitcoin experiment is still working. When and how will it collapse?
I've not bought anything on credit for 7 years guess I'm not helping the banks inflate yall. It's peaceful this way knowing I owe no one nothing
Isn't Bitcoin backed by multi GW of global energy?
Why is fiat better than crypto -> if you buy a house you have a house.
Aight thanks G
And on your house vs 5 bitcoin example... in case you have to flee the area where the house is, what would you rather have ? An illiquid asset that cannot be moved or a super liquid asset you can transport at any time anywhere in your mind by remembering 12 words ?
The point is, you are comparing apples and oranges. These are both assets, one for the physical and analog world, the other for the digital world.
There's nothing backing bitcoin and there is nothing backing gold -- your point?
This is why bitcoin is more commonly compared to gold and not fiat. The purpose of crypto is to not replace fiat but to function as digital gold. Which the fundamentals make a strong case for behaving like digital gold, even better (ie. fixed supply (deflationary), store of value fundamentals, decentralized, and low cost to move and store.)
“I’m not going to inform an uninformed crowd because their lack of information is my opportunity” is an amazing quote. That’s the vast majority of crypto bros right there.
This guy says says "Don't believe or buy crypto" while he himself says at the beginning of the video that he bought MSTR and IBIT because he is betting on the "religion" of it. Really? Please study Austrian and Keynesian economics and stop misleading people on purpose so you can stack Sats at other people's expense. You "labor" would be far better spent studying Bitcoin than making misleading videos.
Hey Mark, love the video. Started watching you after Atrioc recommended your Microstrategy video.
Question: since the “hr of labor” is the unit of analysis, and central banks create reserves, could I reverse the second fallacy to, “central banks creating reserves devalues the value of labor,” and that is a problem because it makes people afford less as the reserves are increased? Regardless of whether this is an “acceptable tradeoff” or not. Thanks!
I'm afraid I have to disagree that ' the correct unit of analysis is 1 hr of my labor'. The value of 1 hr of my labor is not a constant variable. I could gain or lose marketable skills; it's even less reliable measurement than currency
did they teach you that in your economics class
Claim 1 is at least untrue for XRP which is backed by treasuries and cash equivalents among other assets.
If you create money when you don't have sufficient assets for it, then if everyone comes to claim the assets, there won't be enough. You're essentially creating artificial leverage on your actual asset value. This is like taking out a loan against assets not worth the value of the loan but without needing to pay it back. This devalues the currency. There is no free lunch. You could end the banks if you tried to retrieve all funds in all accounts. Crypto as a whole isn't aligned on what they want. Ripple WANTS more regulation. They want it to be fair and clear though.
The whole discussion reminds me of the tulip market of so many years in the past.
The labor claim doesn't hold either. Looking at the growth rates of various life necessities and the rising standard of living and quality of life gives a clearer picture. The proposed value of many assets from food to real estate and many others has grown at a rate outpacing an expected growth per inflation or per the rate of wage growth (which has comparatively stagnated so that part of your argument is true). There are a multitude of factors contributing to this phenomenon but you are right that banks alone are not solely responsible for this outcome. I'd even argue that they are much less responsible than some other actors in the various assets of relevance.
1. you dont need to substitute fiat with bitcoin. in fact you cant do this. you can however envision a future where bitcoin replaces gold as a reserve asset.
2. "fiat is backed by the us government, bitcoin is backed by nothing". I dont even agree with this statement but its not even relevant. the value of both fiat and bitcoin does not derive from what its backed by but other things like the total amount of people that accept it as a currency (network effect), the ease of payment, the divisiability of the currency. in other words the value of the money stems from its applicational use as a money technology and its adoption. bitcoin is growing in adoption and its application as a money storage of value is superior to gold, fiat etc.