The day advanced as if to light some work of mine Thoreau, Walden submitted by
This is my thirty-eighth portfolio update. I complete this update monthly to check my progress against my goal. Portfolio goal
My objective is to reach a portfolio of $2 180 000 by 1 July 2021. This would produce a real annual income of about $87 000 (in 2020 dollars).
This portfolio objective is based on an expected average real return of 3.99 per cent, or a nominal return of 6.49 per cent. Portfolio summary
Vanguard Lifestrategy High Growth Fund – $813 282
Vanguard Lifestrategy Growth Fund – $45 802
Vanguard Lifestrategy Balanced Fund – $83 162
Vanguard Diversified Bonds Fund – $110 472
Vanguard Australian Shares ETF (VAS) – $178 121
Vanguard International Shares ETF (VGS) – $34 965
Betashares Australia 200 ETF (A200) – $272 399
Telstra shares (TLS) – $2 046
Insurance Australia Group shares (IAG) – $8 970
NIB Holdings shares (NHF) – $6 492
Gold ETF (GOLD.ASX) – $106 701
Secured physical gold – $17 252
Ratesetter (P2P lending) – $14 755
Bitcoin – $153 530
Raiz app (Aggressive portfolio) – $18 365
Spaceship Voyager app (Index portfolio) – $2 534
BrickX (P2P rental real estate) – $4 477 Total portfolio value: $1 873 325 (+$94 067) Asset allocation
Australian shares – 42.8% (2.2% under)
Global shares – 22.6%
Emerging markets shares – 2.4%
International small companies – 3.1%
Total international shares – 28.1% (1.9% under) Total shares – 70.9% (4.1% under)
Total property securities – 0.2% (0.2% over)
Australian bonds – 4.5%
International bonds – 9.5% Total bonds – 14.0% (1.0% under)
Gold – 6.6%
Bitcoin – 8.2% Gold and alternatives – 14.8% (4.8% over)
Presented visually, below is a high-level view of the current asset allocation of the portfolio. Comments
This month saw exceptional growth in the portfolio, with a net increase of $94 000 after a small fall last month. [Chart]
This is the fastest growth in the past half year. It is also the second largest absolute increase in over three years of measurement. [Chart]
As the histogram below - which counts the frequency of occurrences in a specified range of monthly value changes (with red denoting losses) - makes clear, this is one of the most positive outcomes in the three year record. [Chart]
The sources of portfolio growth were generally buoyant global and Australian share markets. Just under half of the growth was also due to an increase in the price of both gold securities and Bitcoin. In addition, even bond holdings increased in value over the period.
Distribution payments from the Vanguard retail funds, as well as the exchange-traded funds VAS, VGS and A200 were made through this month.
These totalled around $14 000 and have begun to be gradually fed back into the portfolio. This is a process which will occur through to June - with new investments twice per month. So far this has led to additional purchases in Vanguard's Australian shares exchange-traded fund (VAS) to maintain the target allocation of Australian equities making up 60 per cent of all equity holdings.
The bond allocation of the portfolio continues to be notionally under its target, but has not yet reached a position where further balancing investments are warranted. Fully excluding the value of Bitcoin, for example, it still sits on its target allocation of 15 per cent of the portfolio.
If the same calculation is done for equities, they sit just above their target, at 77 per cent, and have drifted higher since early last year. Over the past months my position has been to take no portfolio balancing actions based purely on the volatile value of Bitcoin over time, and this remains my approach.
There is no perfect answer to this issue - assigning no value to Bitcoin and ignoring it for asset allocation purposes is inconsistent with its role in the portfolio. Pushing either equity or bond allocations sharply out of target boundaries merely due to short-term Bitcoin movements is also not warranted. Taking a backcast 'moving average' approach might be one statistical solution, but I am not yet convinced it would do more than moderate the appearance of the issue.
While expenditure has been higher over the holiday period, on average the gap between the rolling three-year average of distributions and credit card expenditure continues to close, and sits at just over a $300 per month gap at present. Flags of convenience - estimating hedging in the portfolio
This month, out of a curiosity carried over from my recent review of my bond holdings, I have found the time to review of the overall currency hedging position of the portfolio.
There are some excellent online research papers (pdf) and blog pieces, such as this one from Passive Investing Australia, for those interested in learning more about some of the associated issues.
Currency risks have never previously been an object of much detailed thought on the journey. Rather, I had tracked a basic measure of broader exposure to foreign assets (including foreign equities, property securities, gold and more recently Bitcoin).
The additional issue of whether my exposure to these assets was unhedged (meaning exposure to gains and losses from the relative movement in the Australian dollar and the foreign currencies) or hedged was not really front of mind.
I suppose I had a dim awareness that some elements of the Vanguard retail funds that have until recently dominated the portfolio were hedged (for example, around 30 per cent of the Vanguard High Growth Diversified funds equity position is currency hedged), and judged that there was likely a well-considered rationale behind the amount of this hedging.
The first step to understanding where any exposures exist is to understand and measure the current state of affairs. As of today, this is broadly as set out below:
- Around 35 per cent of all portfolio assets are effectively unhedged - This includes Bitcoin, unhedged gold holdings, and unhedged international equities and bonds. All other things being equal, if the Australian dollar falls, the value of this part of the portfolio rises in relative terms.
- The remaining 65 per cent of assets are either hedged or Australian-held assets - This includes Australian equities, Australian bonds, as well as international equities and bonds hedged back to the Australian dollar.
- International equities are partially hedged - The portfolio has around $525 000 in international equities currently. Of this, around $140 000 is hedged back into Australian dollars - a hedging position of 27 per cent.
- International bonds are nearly fully hedged - consistent with their portfolio role and discussed here.
The decision to invest in Vanguard's International Shares ETF (VGS), which is unhedged, is a significant event in this regard.
The chart below shows the overall level of currency hedging in the international equity portfolio. Investments in VGS commenced from July 2019, and have started to affect the level of hedging. [Chart]
As future contributions flow into VGS - absent any other action - a historically quite stable level of hedging will continue to fall. So far this is just a trend I am monitoring, until I have completed more research and thinking on the best approach in this area.
There are many complicated, and some unknowable, issues to consider and balance in hedging decisions, such as the likely denomination of future costs, and the historical and future relationships between domestic currencies and equity markets. None avail themselves of short or easy answers. Until I have thought my way through them more fully, I remain hesitant to make any definitive decisions. Progress
Progress against the objective, and the additional measures I have reached is set out below. Measure Portfolio All Assets
Portfolio Objective – $2 180 000 (or $87 000 pa) 85.2% 115.9%
Credit card purchases – $71 000 pa 103.9% 141.4%
Total expenses – $89 000 pa 83.3% 113.3% Summary
This month has seen rapid progress, propelling the portfolio closer to both old and new goals. The portfolio gains this month have already closed nearly half of the additional distance created by increasing my portfolio target at the beginning of the year.
The psychological forward push from distributions performance across 2019 (including, pleasingly, seeing it recognised here) has added to this sense of momentum. Additionally, this month I have also crossed the threshold to the target portfolio size needed to achieve 'credit card FI', a long-standing measure I have tracked.
The long summer break that has just ended in some ways seemed like a foretaste of what some versions of financial independence could feel like. With the minimum of planning there was time to read, rest, exercise and write largely as I pleased.
Returning to work following this has been infused with an unusual sense of being a temporary visitor in a new workplace. There is a greater philosophical detachment, in observing its rituals and rhythms, and less of a desire to seek to shape or resist its minutiae. Rather, what I have focused on is seeking to more deliberately make use of the freedoms it does not constrain, and pursue the best and most interesting use of the time that is outside of work hours.
Through these recent strong Australian and US equity markets, this article has been a useful reminder of the 'survivorship' risks of focusing a FI target too narrowly on past performance.
This excellent recent piece from Aussie HIFIRE has also, from another direction, usefully focused on separating out the decisions that do, and do not, materially matter in planning and executing on a passive indexing strategy over the long-term. For a challenging and entirely heterodox view on the potential long-term movement of equity markets upwards from here, this article has been thought-provoking.
Finally, this month I have been discovering the Jolly Swagman podcast, which has long and fascinating interviews with the ex-head of the Reserve Bank of Australia, and Nobel Prize winning US economist Robert Shiller speaking on bubbles and narrative economics.
During the long restful hours of summer break, the day has advanced. Though clouds may come in time, as the year starts - at least - the way forward looks bright. The post, links and full charts can be seen here.
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Friday, 25th May 2018
→ DOJ’s Bitcoin Price Manipulation Probe a ‘Good Thing’: Mike Novogratz
Billionaire investor Mike Novogratz is optimistic that the US DOJ's recently-launched probe into allegations of bitcoin price manipulation will contribute to the LT health of the crypto market.
→ Revolut App Adds XRP, Bitcoin Cash to Crypto Options - CoinDesk
Mobile banking app Revolut now lets users buy, sell and hold Ripple's XRP and bitcoin cash, in addition to bitcoin, litecoin and ether.
→ Singapore Warns 8 Exchanges Over Unregistered Securities Trading - CoinDesk
Singapore's central bank has warned eight digital token exchanges and an ICO issuer to stop trading tokens deemed unauthorized securities.
→ Ontology And NEO Announce New Huge Partnership
Yesterday afternoon, we saw reports of a huge partnership between Ontology and NEO hit the headlines. Daily Performance https://preview.redd.it/u52izib4f0011.png?width=1024&format=png&auto=webp&s=90e65d617691193aef057ac2e1b13ae9531a79c7 Market 25-05-2018
Over the past several days the market has softened up significantly, losing about USD50 billion from the beginning of the week, stabilising today at USD340 billion. However, the down move has been an orderly one, and there has been no clear catalyst for the sell-off, other than the typical uncertainties and noise surrounding regulation. There has been no noticeable pick up in volumes, which remain light at around USD20 billion. Option volatility have not budged from the high 70%s despite the sharp down move, and high correlation across cryptos still indicates that the entire market is moving up and down in tandem with BTC. There simply seems to be a clear lack of conviction in terms of market direction. The above parameters continues to show a consolidative range trade for the near term.
Thursday, 24th May 2018
→ CFTC Opens the Door to More Cryptocurrency Derivatives with New Advisory
The U.S. CFTC has issued a new advisory according to a May 21 announcement, which exchanges and clearinghouses planning to list cryptocurrencies derivatives must adhere.
→ Singapore Proposes Regulatory Boost for Decentralized Exchanges
The Monetary Authority of Singapore (MAS), is proposing changes to existing regulations that would ease market entry for blockchain-based decentralised exchanges.
→ Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
A malicious miner successfully executed a double spend attack on the Bitcoin Gold network last week, making BTG at least the third altcoin to succumb to a network attack during that timespan. Daily Performance https://preview.redd.it/3d3ie1cha0011.png?width=908&format=png&auto=webp&s=23070ca6793ed9607772740b6e26ee46df6d092b TECHNICAL ANALYSIS BTC
- BTC price failed to hold the $8'100 support and declined sharply. It's is trading around $7'717 as of 08:20 GMT, down more than 4% over the last 24h.
- There is a major bearish trend line formed with resistance at $8'300 on the hourly chart of the BTC/USD pair.
- ETH price has broken below the support level at $680. It's is trading around $603 as of 08:20 GMT, down more than 5% over the last 24h.
- Ripple price failed to hold the major support level of $0.65 and declined against the US dollar. It's trading around $0.65.
- There is a crucial bearish trend line forming with resistance at $0.62 on the hourly chart.
Wednesday, 23rd May 2018
→ PAYPAL: WE’LL ‘DEFINITELY SUPPORT’ BITCOIN IF IT BECOMES ‘BETTER CURRENCY’
The CFO of PayPal defended the case for fiat merchant settlements Monday, telling mainstream media the company could nonetheless “definitely support” Bitcoin in the future.
→ Nobel Prize Economist Says That Crypto the Latest in a Pattern of Alternative Currencies’
In a May 21 article
entitled “The Old Allure of New Money,” the 2013 Nobel laureate of Economics Robert Shiller calls crypto the newest iteration of alternative currency ideas.
→ Taiwan: Legislators Launch Parliamentary Blockchain Alliance to Promote Industry Growth
Taiwanese legislators have formed a parliamentary blockchain group to promote the development of the industry.
→ $363 Million Funding Round Puts Robinhood on Fast-Track to Build ‘Largest Crypto Platform’
Though best known for its commission-free stock brokerage platform, Robinhood has also begun rolling out bitcoin and Ethereum trading, with more coins expected to be added in the future.
ICO of the Week: TV-TWO Source: https://icoholder.com/ Daily Performance https://preview.redd.it/opimwm8080011.png?width=1344&format=png&auto=webp&s=3c94e5015ba1c51d291a1b2d6a6c43f4369a85af Market 23-05-2018
Over the past 24 hours, the valuation of the cryptocurrency market has dropped from $390 to $353 billion, by more than $37 billion. The bitcoin price dipped below $7'940 and the value of Ether, dropped to $643. However, the current price still shows a 30 percent premium over bitcoin's lowest point this year at $5,947 seen on 5th Feb.Indeed, almost all of the top 100 assets by market cap are showing 10 to 20 percent declines at press time. According to CoinMarketCap, among the world's largest five cryptocurrencies, both Ripple and Bitcoin Cash are trading at a one-month low at $0.63 and $1,120 respectively.
Tuesday, 22nd of May 2018
→ No Investors Affected, Hard to Charge Cryptocurrency Exchange UPbit
Experts in the cryptocurrencies of South Korea have stated that it will be difficult for the government and local financial authorities to file charges against UPbit, given that no investors were affected.
→ Bank of England Issues Working Paper on Central Bank Digital Currencies
The Bank of England released a staff working paper, laying out various scenarios of possible risks and financial stability issues of central bank digital currencies (CBDCs). Daily Performance Market 22-05-2018
The cryptocurrencies' market continued to consolidate at current levels, with today seeing a small pull back across the board. Volumes continue to be on the low side with only 16B USD changing hands over the last 24 hours. ETH/BTC spread seems to stabilise at around the 0.083 level for the past week, which shows there are no strong forces in play. High correlation across large cap names all moving up in tandem also indicate a lack of news and conviction in terms of market direction.Also, realised volatility on BTC has dropped further, with implied vols softening up further (ATM< 80%). Both correlation and volatility indicate that for the short term, the overall market is subdued but is likely to drift towards the path of last resistance, which is higher. Having said that, quiet low volume environments are vulnerable to sudden external shocks - be wary of sudden large gaps in market movement! TECHNICAL ANALYSIS BTC
- After last year’s massive rally, Bitcoin is currently consolidating the gains inside a large range of $6,505-$10,044.
- The ETH/USD pair is looking strong because it has been consolidating close to the overhead resistance for the past few days. We believe that a breakout above $746 with a minor resistance at $820.
- Ripple would resume a downtrend and trade below the two moving averages with an RSI around 40 levels, which is a negative sign. A drop below the support level of $ 0.63 is probable.
Monday, 21st May 2018
→ Switzerland is the Number 1 blockchain-friendly country in Europe
Switzerland has been named the most blockchain-friendly country in Europe by the Blockchain Conference Europe 2018.
→ Why Gibraltar’s crypto gambling regulation is important and what to expect from it?
At the beginning of 2018 when many countries were tightening regulations around ICOs and cryptocurrency, Gibraltar was taking a different route.
→ Save the date: AIRPOD's pre-sale prepares for launch
The long-awaited AirPod ICO is finally taking off! The team has announced that its pre-sale is going to start on May 29, 2018. Daily Performance https://preview.redd.it/kdj1ayag8zz01.png?width=1804&format=png&auto=webp&s=3c12299866329c7dc4eba73c6784a3f2ea71217c Daily Gainer vs. Looser https://preview.redd.it/ifunb7lo8zz01.png?width=844&format=png&auto=webp&s=5fb37450d977ec90fed029a909c505d9b3e370fa TECHNICAL ANALYSIS BTC
- Bitcoin is up around 3.5% in 24 hours to press time, currently trading at $8,555
- Ethereum seems to have a better relative strength than Bitcoin.
https://preview.redd.it/v6zypz879zz01.png?width=1344&format=png&auto=webp&s=11c15aad63e548fec117f4b3ff65a8a253d12846 Disclaimer: Insider aims to provide our community with updates and information regarding financial markets and the blockchain world.This is our way of communicating with our community. It is meant to be used for informational purposes not to be mistaken for financial advice.Our opinion, when shared, is just that, it may not apply directly to your individual situation. Any information gleaned here is to be used at the readers' own risk, SwissBorg does not accept any responsibility for individual decisions made based on reading our daily blog. Any information we provide on our daily blog is accurate and true to the best of our knowledge, there may be omissions, errors or mistakes. Copyright © 2018 SwissBorg, All rights reserved.
- Ripple would likely resume an uptrend but we suggest waiting until the XRP/USD pair becomes stronger before initiating any long positions.
My dad asked me how I reconciled Bitcoin's fixed supply with the Keynesian model of supply. I understand that most people around here don't hold much stock in what Paul Krugman has to say. But much of the real world actually does, what with his Nobel prize and all. So I put some serious consideration into what he had to say about deflation, how it relates to Bitcoin, and other vague currency questions. What follows is my email back to my pa. Many of these ideas have come from my time spent in this forum, so feel free to chop it up, edit, and distribute away if you find any of it worthwhile. Thoughts from a liberal after reading Paul Krugman's 2010 NYT piece: Why is Deflation Bad? Krugman and Bitcoin and Me
Krugman's argument against deflation is built with a dependency: that there is a central authority which controls the money supply. So in a sense he has two core points.
(1) Krugman prefers that a centralized authority control the currency supply in order to manipulate the economy.
I'll allow that this tool can be a good, stabilizing force. But if that's the case, I want to be able to vet that institution from the bottom up before handing them the keys to the kingdom. And I want that institution to unequivocally work for society, not for Goldman Sachs
. If I thought the current system worked well, I wouldn't be exploring other options in the first place.
(2) Krugman prefers that that centralized authority manipulate the economy such that it encourages spending and lending. In other words, manipulate toward small inflation.
This could be a good thing. And maybe the economy it creates is more fluid than a deflationary one. But when you bake into the system incentives to spend now
and borrow from the future now
, you get exactly the problems that you'd expect: over-consumption and a society largely ridden in debt.
Control of the supply of the currency carries tremendous power. It can be used to smooth natural economic cycles and encourage specific consumer and producer behavior. This supply-manipulative ability is not in and of itself a bad thing. The question is whether it is necessary- because with Bitcoin (as it stands) it is impossible. Within the theoretical bounds of crypto-currency, the abilities for algorithmic, "smart" money-supply, one that rests on mathematics rather than the banking elite, are endless. There are truly exciting developments to come in this space. A First Consideration on Currency
Think, for a moment, of the unit of currency as sort of a creditor's note. It is an IOU from society; a placeholder for some unit of production. It says, "I produced something valuable (for someone else who takes part in this system). In return I got this note. I have reasonable assurance that one day I can cash this IOU in for something that I'll need in the future."
The unit of currency acts as a placeholder for its owner. Under this system, people trade their current productivity for the placeholder, and later (given the system still has integrity) they can trade that placeholder for something that raises their standard of living. It allows us to "time-shift" our production with respect to our consumption.
But don't forget!: A unit of currency as "just a thing". It only carries value if it is actually valued by somebody else you want to do business with. The dollar, the gold bar, the Bitcoin. the Euro, all work the same way: they are nothing but numbers or paper or metal. They are just atoms arranged in a way that make them valuable to a group of people only because they trust in the future of their common system.
Currencies are a subset of commodities. Commodities are things (oil, clothing, food, televisions) that are valuable to humans because they have useful properties. Like we said above, a currency's use is to "time-shift" production and consumption. The properties of the object that afford this advantage are usually a combination of irreproducibility, fungibility, scarcity, ease of transport, and securability. Why is Deflation Bad?
In his 2010 NYT piece
, Krugman argues that deflation hurts the economy due to three factors:
(1) People become less willing to spend, because sitting on money becomes an investment. Your dollar tomorrow will buy you more than what it can today, so why spend today? Therefore, spending goes down.
(2) Those in debt get into serious trouble awfully quickly, because the nominal amount-owed appreciates in value. As a result, they spend significantly less. At the same time, creditors have been shown to not spend enough such that it make up for this difference. Therefore, borrowing (and spending) goes down.
(3) Psychologically, people hate nominal wage decreases. With a fixed supply currency, year over year, wages will have to decrease in name. Even if the value of your wage rises, the amount written on the paycheck is lower. Therefore, people freak out.
These are troubling scenarios, though I think the first two are more substantial than the third. I don't mean to underestimate the psychological factor- in economics psychology is everything- but we'll talk about this later.
Krugman presents the first two points as bugs in a deflationary system. I see them as features. "Your dollar will buy you more tomorrow than what it can today."
I think this is natural. We are a rapidly advancing species; through technology we are becoming more efficient, automating crappy tasks, raising the standard of living for less work, of course
a dollar (that placeholder for your unit of production) is going to go further tomorrow than it does today.
Personally, I find this appealing. It provides every incentive to work now
and spend later
. That falls very much in line with good ol' American hard-working values and non-consumptive ethics.
Krugman finds this worrying though. If people have less incentive to spend, their is a crisis in demand. Hello liberals?! When was the last time we complained about lower consumption? In a country wracked with hyper-consumption that has put an unprecedented load on Earth's environment and ignited a climate crisis, I see a drop in demand as a breath of fresh air! Furthermore, you don't have to worry about people never
spending. People will always spend now
- but only on the want/need products, rather than the maybe-want-need-this-now-really-might-as-well-because-my-currency-is-losing-value-and-all-these-things-meet-my-zillion-useless-ephemeral-wants products.
I do believe there are much higher economic principles at work here. The United States is the world's default consumer. The global economy needs us to consume as much as it needs the million child laborers to produce. The economy would come crashing down if we stopped consuming immediately. But if we're trying to aim for a more sustainable economy, one that is compatible with the Earth's environment, let's move slowly and use a deflating currency as an incentive! "Deflation rewards creditors and hurts debtors. Debtors spend less and creditors don't spend more enough to offset."
The impassive Krugman is beating around the bush. There is
a problem when debtors suffer at the expense of creditors, and it's more than just a net loss in consumer spending. If you're concerned about a reduction in spending, see my previous point. But the remaining ethical problem is glaring- a power imbalance already exists in a creditor-debtor relationship, and it seems that deflation only widens this gap, crucifying the debt class on a cross of deflationary coin
There's no doubt that this is a problem. And wealth redistribution may ultimately be easier with an inflationary currency- again, a word on that later. But there is also an incentive here: borrow less. Credit card debt is at an all-time high, up 1200%
in the US since 1980, all while student loans have ballooned
out of control. But neither of these problems even compares to the $7.8 trillion of mortgage debt our country has dug itself into.
Now debt is not a bad thing. The right combination of debt and saving, that is- using both capital previously earned with capital borrowed from future earnings- indicates a healthy economy. I don't want to have to work my entire life only to afford a house at the very end. I want to be able to borrow from my future economic output, buy the house now, and live in it while I work to pay it off. The same goes for student debt, corporate debt-financing, etc. Access to credit is crucial to a healthy middle class.
But ever-increasing debt is not sustainable. Nobody lives- and produces- forever, so you cannot always borrow from your future economic output. In the end, regardless of the money tricks you play, you have to produce enough value to cover your consumption. The world recently found out, in a mild manor, what happens when a currency's incentive and a nation's culture favors borrowing. When given the opportunity to build houses they never could have dreamed of paying off in their lifetime, millions of people took the offer and the biggest lenders took the risk. The echoes of their mass default still burden the global economy 6+ years later.
The point is, if Krugman says "inflation promotes borrowing", I say, "is this debt-ridden wreck what we really want our economy to look like?" "People would freak out when their paycheck goes down."
I say get over it. Other possible proclamations in a deflationary world:
- "Today, this meal costs the most it ever will!"
- "My phone bill will never be this high again!"
- "Filling my car up costs less every day!"
- "Taxes go down every year so I love my life!"
Better yet, this reflects reality! Technology makes everything cheaper every day. You should
be paying lower phone bills tomorrow. Has the infrastructure gotten less efficient?
Here it feels like Krugman's grasping for straws. He pounces on people's reaction to their one source of income rather than their many expenses. This point also invokes that ugly liberal side: "The people don't know what's best for them." The Central Authority as a Tool for Wealth Redistribution
Now we're talking. As a Liberal, I consider this to be a most important necessary evil. But let's call it what it is: stealing from the rich to give to the poor. (Unless we reject the modern notion of property- stay tuned...)
In an inflationary economy, value is constantly leaching out of everyone's savings. Those who control the monetary supply have a means of reaching into every dollar, and skimming off a little bit of value. We can choose to do a lot of good with this. Right now the skimmed dollars are "lent" to banks- the theory is that they then have more to lend to the general public and everyone benefits. Lending is good right? It introduces liquidity. But continue this cycle ad infinitum and all the spending in the economy starts in the form of bank debt! It is no coincidence that Americans households are more in debt than ever before.
If wealth redistribution is the only benefit of a central supply authority (which can fall out of trust at any time), this is a weak foundation. We already have a mechanism for wealth redistribution: taxation. Let's be proud of it, call a duck a duck, raise taxes on the wealthy, and introduce that liquidity with massive infrastructural programs, education spending, science spending, etc, rather than in the form of bank loans.
One last point- inflation appears to be a flat tax. That's already bad. It affects every dollar proportionally, rich or poor. Worse, the middle class and poor have a higher percentage of their net worth in USD- so inflation then becomes a regressive tax... given to banks... to be lent out to again to the middle class. All in the name of wealth redistribution?! In the name of kick-starting the economy?! Something's fishy here, and "you wouldn't understand, it's more complicated" doesn't cut it as an answer for these practices. Bitcoin
So. What are we even doing here?
In 2009 a great mind developed a tool
, the first in the history of human civilization, for "minting" a currency according to a fixed and open sourced algorithm. Without the involvement of any third party, you can now send an irreproducible digital object of fixed supply to anyone with an internet connection. The implications
. But the first such currency, Bitcoin, happened to be fixed-supply and ultimately deflationary, which has re-sparked the deflation vs. inflation debate.
This is happenstance. The protocol that gives rise to these digital currencies- the bitcoin protocol (small b)- could easily implement a different supply model. Paul Krugman can start a currency, KrugCoin, with any supply model that he likes! Which begs one last question.
Let's say I'm presented with an option: I may collect my paycheck in a currency that deflates- that is, my paycheck will gain value over time. Or I may collect my paycheck in a currency that inflates- it loses value over time. Why would anyone choose the latter? Must a population be forced into using an inflationary currency? Are we?
The post Bitcoin Will ‘Totally Collapse,” Even if it Takes 100 Years: Nobel Prize Winner appeared first on CCN Nobel laureate Robert Shiller is fairly confident bitcoin will collapse, but he’s not quite sure when that collapse will occur. Shiller, a Yale University professor who won the Nobel Prize for Economics in 2013, told CNBC that bitcoin will likely “totally collapse and be ... This discussion has been archived. No new comments can be posted. Bitcoin Nears $17,000 After Climbing About $4,000 in Less Than a Day More Login Interactive Chart for Bitcoin USD (BTC-USD), analyze all the data with a huge range of indicators. In a recent interview with CNBC, Yale professor of economics and Nobel prize-winner Robert Shiller advocated that Bitcoin will eventually die out. Following the advice of investing guru Philip Fisher Bitcoin Hits $6,000! At the time of the crossing of this important milestone, according to CryptoCompare figures, BTC showed an increase of 2.3% in the last 24 hours, approximately 1.5 times the increase of the total market for crypto coins, which was 1.5%.
In this video we look at a theory put forward by Nobel prize economists on what could be a potential cause for a bitcoin crash. The book I discuss is called Animal Spirits. "Robert Shiller, 2013 Nobel Prize winner in Economics, and an expert in the nature of market excesses, has come down on bitcoin and said that the tremendous jump of the virtual currency was a 100 ... Business Insider senior editor Josh Barro sits down with Paul Krugman, a Nobel Prize-winning economist and distinguished professor of economics at the City University of New York. They start by ... Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube. The Nobel Prize-winning economist joseph stiglitz warned of bitcoin bubble Joseph StiglitzCredit APMark LennihanCharlie May20171129T224540Z•20171129T224540Z•...