Bitcoin in a hyperbolic bubble

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TIME recently interviewed Michael Saylor on his strategy utilising BTC on the corporate balance sheet to counteract the great monetary supply expansion.

Was that a response to my comments?

You understand that there is a difference between converting cash piles (treasury reserves) into BTC, and keeping receivables in BTC when you have outgoings in a different currency? This isn't really anything to do with BTC, it is cash management. Would you advise a company with its outgoings in USD to decide to receive its cash payment in INR as good?

However, my point was that given Teslas outgoings are in USD and they are choosing to hold received payments in BTC it opens up to Wall Street to manage those currency conversions to mitigate the volatility and price risk.
 
As Square CFO Amrita Ahuja put it yesterday, "there's absolutely a case for every balance sheet to have bitcoin on it". Regardless of this current bull run, we're still incredibly early in the adoption curve. Tesla taking no more than 1-3% of revenue in bitcoin provides an organic way for the company to build its holding organically with no effect on its day to day commitments.

Speaking of balance sheets, kudos to Jay Powell for managing to expand the Fed balance sheet with an additional $3.5 trillion. It took them 6 years to print off the last additional $3.5 trillion so they're obviously getting much better at this.
 
TIME recently interviewed Michael Saylor on his strategy utilising BTC on the corporate balance sheet to counteract the great monetary supply expansion.
So Saylor has looked at the monetary aggregates and reckons we are in for 15% p.a. inflation. Well I have a much better way for him to cash in on that insight and it is not rocket science. US 10 year Treasury nominal yields are 1.77%. Inflation linked yields are -.67%. In other words the Wall Street consensus is that 10 year inflation will be around 2.44% p.a. If Saylor is right he has himself a way of printing money. Short the nominal yields and long the index yields. Much much more certain way of cashing in on his inflation hunch, after all it is not impossible that he will be right about inflation and yet the bitcoin bubble will still burst.
 
So Saylor has looked at the monetary aggregates and reckons we are in for 15% p.a. inflation.
Here's how I've understood this. When he says this he's not talking about the official CPI inflation rate, and he's actually saying it's already happening in things that are scarce, desirable and don't get cheaper due to economies of scale - bitcoin, healthcare, real estate in prime areas, ivy league educations etc.

It suggests that there's a difference between CPI inflation and the rate at which the dollar is losing value, because of how CPI inflation is measured.
 
Found something from the horse's mouth in a podcast transcription here: https://learn.saylor.org/mod/page/view.php?id=30724&forceview=1
 
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Saylor said:
But in fact, CPI is an arbitrary measure where you cherry pick a market basket of things that are not going to go up in cost, if you like, and then you call that CPI.
That explains two things. First why he would not consider the Long/Short Index Linked/Nominal bond yields.
But more significantly we see a typical attitude of the crypto cult. CPI is all a big con job - cherry picked goods that are destined not to increase. Though he is probably right that as inequality increases the prices of yachts and fine art will increase at a faster rate than the CPI which has been tailored to suit the average punter. Saylor is more interested in yachts and fine art, I guess, and somehow has convinced himself that bitcoin will underpin his future requirements on that front.
 
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Holding BTC on the balance sheet as a Treasury reserve and accepting payments in BTC whilst outgoings are in USD are two entirely separate topics. I am not sure why they are being confused in this topic.

Tesla accepting BTC as payment and holding it in BTC whilst having outgoings down the line in USD opens up the possibility for further adoption by Wall Street. This is entirely independent of companies deciding to invest spare cash in BTC. That should be obvious.
 
If he offered his staff an option to have their salary denominated in btc I wonder how many takers he would have. Same goes for Saylor.
 
If he offered his staff an option to have their salary denominated in btc I wonder how many takers he would have. Same goes for Saylor.

At this point Saylor won't because he is holding BTC as a Treasury Asset / Reserve.

Tesla is more likely given his stance on accepting BTC as a payment and thus having BTC as 'working' capital for day to day business management. I guess it depends on what the offer is... paid in amount of BTC equivalent to your USD salary or just paid in a set amount of BTC irrespective of the dollar equivalent. To be true to the vision of BTC it should be the latter but given that BTC is not used as a currency I can't really see it working. It does bring up an interesting point, if a firm was to pay in BTC, how would they value the salary in BTC terms.

I think Tesla employees are more concerned with the share price and their stock options than they would be trying to get rich from BTC.
 
blockchain.info used to be an entirely btc company as far as I know, all income and all salaries etc were in bitcoin, this was years ago, not sure if they still are.
 
But more significantly we see a typical attitude of the crypto cult.
Here's your cult!
Ah, yes - yachts and fine art, Dukey. That's why the CPI excludes food and energy, is it!? And the average punter doesn't aspire to have a roof over their head so lets not consider house prices either.

Duke of Marmalade said:
If he offered his staff an option to have their salary denominated in btc I wonder how many takers he would have. Same goes for Saylor.
You know perfectly well that this sovereign money world is one we all inherited. Therefore, it's not realistic to have people switch to a 100% crypto payment scenario. That said, I'm aware of quite a few folk who do get paid in crypto. I've been paid myself in crypto on occasion. And in the meantime, the bridges between those two worlds continue to be built. Any crypto I possess today - I can spend in crypto or I can spend in fiat via a plethora of visa/mastercards. Yesterday, visa announced that they will accept crypto payment to settle payments on their network. Later today, Paypal will facilitate US account holders to spend crypto at millions of online merchants.
 
Ah, yes - yachts and fine art, Dukey. That's why the CPI excludes food and energy, is it!? And the average punter doesn't aspire to have a roof over their head so lets not consider house prices either.

Food, Housing, Electricity and Gas.
So the cult believes that these are excluded and that anything we see on official websites is fake news. Okay, you think I'm nigh eve to believe this stuff.
 
I don't think it's fake, I just think it's a bad measure of the rate at which money is losing value in real terms - compared to holding valuable assets.

I don't think that the rate of CPI inflation and the rate at which money loses value are the same thing. Maybe it depends which of those two things you care more about, which may be related to how wealthy you are. Saylor isn't going to care if the price of milk goes up 5%.
 
Saylor isn't going to care if the price of milk goes up 5%.
Saylor has spoken extensively over the course of the past year about the CPI not being a true measure of inflation in real terms. He has repeatedly pointed to major asset price inflation - again, not reflected in the CPI.
 
Once again - here's your cult.

There are various means of calculating inflation. The one that is rolled out to the general public is this one - with its exclusions.
The cult (cue picture of a greenback) is cherry picking its story. Apparently economists in the US prefer to exclude the things you say. Cult grabs this titbit and screams "told you so" even with some faux concern for the housing problems of the poor. But the official US CPI most certainly does not exclude those items. The following is an extract from the FAQ on the official calculation of the CPI provided by the US CSO.
 
The cult (cue picture of a greenback) is cherry picking its story.
The Duke of Pot Calling Kettle Black Marmalade is correct. Any unreasonable tar and feathering 'cult' references will be accompanied by a demonstration of the cult of fiat money -> 'In God We Trust' .....you think they didn't have cult in mind with that - and that's before we get into the rest of the symbolism on a dollar bill.
But here you go.
The euro can't in any way compete with that - the ECB has settled for the signature of a convicted fraudster on its notes.
You've just proven my point. People are fed this nonsense - with the exclusion of food, energy and housing - to blind them from the real rate of inflation.
 
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You've just proven my point. People are fed this nonsense - with the exclusion of food, energy and housing - to blind them from the real rate of inflation.
The Fed target 2% inflation - this is the official CPI not the one that is preferred by some economists. The cult seems to get great buzz from a belief that the reason for these economists to take this position is part of a grand conspiracy to hood wink the ordinary punter who are not as enlightened as the cultists.
 
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Saylor is spot on about inflation.
And more and more people are seeing through the phony CB orchestration of fiat based economies.

2% is the touted target, by Fed and ECB.
Are there two more abysmally performing organisations presumptuous to their own self-importance?
The Vatican perhaps?

These two banks are now full throttle on the money-printing machine. They have abandoned the one core tenet of all economic theory, scarcity.
Their policy is to patch up all and any structural deficits in the economy by additional splashes of fiat currency to cover up the disrepair.
It works for a while, but Covid has forced the hand and exposed the magic money trees that grease the rentier sector in favour of the productive sector.
 
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