3 sats \ 2 replies \ @cryptocoin OP 17 Mar 2022 \ parent \ on: Energy Cancelled | Arthur Hayes bitcoin
If you have a bunch of dollars, and by “a bunch,” I mean billions and trillions of dollars, there are very few markets liquid enough to handle your flows. As Beyonce said: “I don’t think you’re ready for this jelly.”
The largest ten [Current Account Surplus] countries in total must invest approximately $1 trillion of savings each year.
The largest ten [Current Account Deficit] countries in total must finance approximately $900 billion worth of purchases each year. The US is by far and away the biggest deficit country, which is only possible because it is both the largest economy globally and issues the global reserve currency. If the US had to finance its deficit like ordinary flags, then the US 10-year treasury would certainly not yield only a meagre 2%.
You might think you have a net worth of $100, but if the bank or government for whatever reason decides you can no longer access the digital network, your net worth becomes $0.
Remember this, you own nothing, you merely “rent” your net worth both as an individual or sovereign from the entity that operates the centralised, permissioned fiat digital monetary network.
If you save in dollars, America controls the network. If you save in Euros, the EU controls the network. If you save in renminbi, China controls the network. Capisce?
Because everyone trades with China, many central banks hold some of their reserves in CNY. Therefore, it is effectively the only developing country fiat currency that is held in large quantities by other central banks.
Why should any central bank “save” in any Western fiat currency, when their savings can be expropriated arbitrarily and unilaterally by the operators of the digital fiat monetary networks?
Even the Western establishment financial news puppets completely understand what occurred and predict as I do that rational countries with a capital account surplus must now save in another currency.
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3 sats \ 1 reply \ @cryptocoin OP 17 Mar 2022
I began my career as an equities trader in emerging markets. One of the lessons you learn quickly is that it is always a big door in, and a small door out.
Over time, these countries like China will have the “hardest” fiat currencies due to the asset composition of their reserves. Deficit countries globally, but particularly in the West, will have the weakest currencies as gold and commodities flow from West to East.
This is a medium to long-term play (over the next decade); in the short-term, expect slow, creeping appreciation coupled with bouts of extreme downside volatility.
Bitcoin is currently tied at the hip with big tech risk assets. If we believe nominal rates will go higher and cause an equities bear market and an economic recession, Bitcoin will follow big tech into the latrine. The only way to break this correlation is a narrative shift on what makes Bitcoin valuable. A rip roaring bull market in gold in the face of rising nominal rates and global stagflation will break this relationship.
As gold marches its way above $10,000, Bitcoin will march its way to $1,000,000. The bear market in fiat currencies will trigger the largest wealth transfer the world has ever seen.
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4 sats \ 0 replies \ @cryptocoin OP 17 Mar 2022
Politicians will resort to their easy button, villinaising producers, implementing energy subsidies for consumers, and in the worst case, using price controls. The summation of these popular quick fixes for inflation will be increased government spending.
The central bank will be called upon once more to explicitly or implicitly finance the government through bond purchases funded by “money printer go brrr.”
Currently they call this “Modern Monetary Theory,” although it used to be called money printing. Same sauce, different packaging.
I hope you understand after reading this essay [that] the value of inside money has drastically declined in the past few weeks.
I am fully confident that over time some central banks may tire of shipping gold around the world to pay for things. They would rather conduct a small but rising amount of trade in a digital currency, which would naturally be Bitcoin.
If you believe you should spend fiat and save gold, the mental leap towards spending fiat and saving Bitcoin is minuscule.
On a medium-term basis, it is time to back up the John Deere excavator and scoop up as much gold and Bitcoin as you can afford. This is it, the start of a monetary regime change. Nothing lasts forever, and the days of Petro / Eurodollar supremacy are over. The phase shift will be chaotic, it will be volatile, it will morph, but it will 100% be MASSIVELY inflationary in fiat currency terms.
Don’t let anyone paint you as a stark raving Cassandra for taking drastic action to protect your standard of living by saving using different types of monetary hard assets. You cannot cancel the largest energy producer from a monetary system without massive repercussions.
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