How long before nation states buy bitcoin?

[noproblem]

@WolfeTone I know hyperinflationary breakdown of the corrupt Western financial system is a fantasy of yours. If it stokes your fantasy that 5% yoy house price rises is bringing 50% mom inflation closer why should I rain on you?
I think you are on record as arguing that high interest rates cause inflation.

Having said that I think Mme. Lagarde is wrong on the low interest rates helping folk to buy their first apartment. All the low interest rates are doing there is driving up prices and making them less affordable. She’s out of her depth.

Was she ever anywhere other than out of her depth?

 

[Sunny]

Was she ever anywhere other than out of her depth?

Political appointment if ever there was one. Having said that, the role reminds me of the Lord mayor. Looks good and all the parties/countries want it but at the end of the day, very little power. Still run by the Governing Council.

 

[WolfeTone]

That's what you think she is saying.

Granted, it is my interpretation of what she is saying.

To elaborate a little,

"in order to make sure that jobs are kept, in order to make sure that cooperates can continue to operate and produce is clearly a trade off against some aspects that are resented by those that are only savers and are not borrowers"

I thought free market competition in a democratic society would decide all that?
Not a central bank?
At least that's what they thought at Junior cert in my school anyway.

Instead a centralised command banking economy where policy makers, unelected by the people, get to decide and implement a monetary policy over 400m people that says, savers pay a tax, regardless of the amount of savers, or those attempting to save in that actual economy.

If, for imagine, a majority of income earners in this economy are savers, or trying to save - on the premise of the age-old, but somewhat quaint, theory of prudence.
How should such income earners react?

I don't know, and I don't know when or for how long, but I do sense the prospect of dissent emerging at some point that exposes the bankrupt thinking.

 

[WolfeTone]

If it stokes your fantasy that 5% yoy house price rises is bringing 50% mom inflation closer why should I rain on you?

It's not just 5%yoy house prices Duke, please try look beyond the standard text book.
It's 5% increases coupled with monetary policy that taxes savers, coupled with a governing ideology that negative interest rates are actually a good thing for everyone.

I think you are on record as arguing that high interest rates cause inflation.

Again, you need to look beyond the standard text. If I may, use a 'thought experiment'.
If, per chance, ECB slaps a 50%, a 5% and a 0.5% interest rate on all debt tomorrow (just to see what happens), then what would happen in each scenario?
Hard to say precisely, however, my argument is, that for a period, and assuming law abidence, that businesses scrambling to stay afloat will pass on the the increased cost of debt service to consumers who in turn (scrambling to pay for necessities) will demand higher wages.

Higher wages has long been argued in this quarter as the holy grail of inducing an inflationary environment.

Lagarde is wrong on the low interest rates helping folk to buy their first apartment. All the low interest rates are doing there is driving up prices and making them less affordable.

Yes, that is the example I gave. Of course, underlying the paper statement of a 5% increase is the real and pretty dire consequence of younger generations not being able to create a stable future for themselves.
We have had a decade or so of increasing homelessness, mortgage indebtness etc... thankfully it only affected some 10,000 people or so .
Anyway, the critical element is that the ECB thinks we need more of this, not just in Ireland, but across the eurozone.

 

[Duke of Marmalade]

I thought free market competition in a democratic society would decide all that?
Not a central bank?
At least that's what they thought at Junior cert in my school anyway.

Lots of nigh eve stuff Wolfie in those last few posts, though I note you have not been deflected from your implicit prediction of 50% month on month inflation. I think someone once uncharitably suggested that you were way out of your depth in these waters, perhaps you should steer us back on topic to spare your own blushes.
Anyway I singled out the above. The disappointed leftie anarchos kept up this refrain during the crisis. Let the free market rip, they cried, let us all crash and burn along with the banks.
Short lesson, possibly above Junior cert level. Neither of the two extreme models of human economic organisation can be in anyway fit for modern purpose - unbridled free markets or the state command economy. Instead we need a well balanced mix which requires state involvement and management where it is beneficial. Perhaps the most delicate and essential lubricant of a modern economy is its monetary system. Central Banks in a democracy are essential servants of the common good not an elitist plot to deny the leftie anarchos their fantasy chaos.

 

[WolfeTone]

I think someone once uncharitably suggested that you were way out of your depth in these waters, perhaps you should steer us back on topic to spare your own blushes.

Thanks, Duke, certainly the junior cert theory of interest rates up, inflation down, interest rate down, inflation up, in a conventional monetary system is being peddled quite a lot. I certainly have no issue with that.
What I do take issue with is the prevailing belief that we are living in a conventional monetary system and that conventional monetary theories be applied.
Here is some more in-depth thought from Lagarde (assuming supported by her governing council). I wouldn't recommend a full read, I've summarized the theme in title.

I thought we had figured out inflation?

Instead, since you mentioned houses, I quote this excerpt,

"our economies are changing increasingly quickly. We need to keep track of broad concepts of inflation that capture the costs people face in their everyday lives and reflect their perceptions, including measures of owner-occupied housing. This is not about moving the goalposts for monetary policy. It is about future-proofing how we measure inflation."

Appreciating we can all interpret the same text in different ways, my interpretation of the above is a dawning realisation upon on monetary overseers that faith in the peddled inflation rate is increasingly wearing thin with the population, particular in consideration of the realities they experience with housing, mortgages and rents.

The disappointed leftie anarchos kept up this refrain during the crisis. Let the free market rip, they cried, let us

I thought that was Reagan/Tatcherism that wanted to let the free market rip? World-turned-upside-down-much?

Neither of the two extreme models of human economic organisation can be in anyway fit for modern purpose - unbridled free markets or the state command economy.

Ah, we can find some common ground here. I agree. The difference being I suppose, who should shoulder the burden, at what time and to what extent when things go pear-shaped, and who benefits and to what extent, when it's time to let the bull loose.
A concise set of rules, derived from democratic platform and applied without fear or favour, is often thought to be the most just way of ensuring a fair and equitable system.

Central Banks in a democracy are essential servants of the common good

Yes they are. But in a democracy there needs to be scope for dissent. And dissent should have meaningful channels to challenge the prevailing policy.
The ECB is not such an institution.

 

[Duke of Marmalade]

Thanks, Duke, certainly the junior cert theory of interest rates up, inflation down, interest rate down, inflation up, in a conventional monetary system is being peddled quite a lot. I certainly have no issue with that.
What I do take issue with is the prevailing belief that we are living in a conventional monetary system and that conventional monetary theories be applied.
Here is some more in-depth thought from Lagarde (assuming supported by her governing council). I wouldn't recommend a full read, I've summarized the theme in title.

I thought we had figured out inflation?

Instead, since you mentioned houses, I quote this excerpt,

"our economies are changing increasingly quickly. We need to keep track of broad concepts of inflation that capture the costs people face in their everyday lives and reflect their perceptions, including measures of owner-occupied housing. This is not about moving the goalposts for monetary policy. It is about future-proofing how we measure inflation."

Appreciating we can all interpret the same text in different ways, my interpretation of the above is a dawning realisation upon on monetary overseers that faith in the peddled inflation rate is increasingly wearing thin with the population, particular in consideration of the realities they experience with housing, mortgages and rents.




I thought that was Reagan/Tatcherism that wanted to let the free market rip? World-turned-upside-down-much?



Ah, we can find some common ground here. I agree. The difference being I suppose, who should shoulder the burden, at what time and to what extent when things go pear-shaped, and who benefits and to what extent, when it's time to let the bull loose.
A concise set of rules, derived from democratic platform and applied without fear or favour, is often thought to be the most just way of ensuring a fair and equitable system.



Yes they are. But in a democracy there needs to be scope for dissent. And dissent should have meaningful channels to challenge the prevailing policy.
The ECB is not such an institution.

Okay. But I still think suggestions of 50% month on month inflation do not belong in the thread. Happy to move back on topic.

 

[WolfeTone]

I still think suggestions of 50% month on month inflation do not belong in the thread

Fair enough, with the exception that policies being implemented, in my view, move closer to such an environment. That is why I buy bitcoin.
Others, like yourself, think differently and believe that the 'greater good' theory, in trusted hands, is sufficient to steer off such an environment.

 

[Duke of Marmalade]

Fair enough, with the exception that policies being implemented, in my view, move closer to such an environment. That is why I buy bitcoin.
Others, like yourself, think differently and believe that the 'greater good' theory, in trusted hands, is sufficient to steer off such an environment.

I would suggest that gold is a much surer insurance against hyperinflation. Notably its price has hardly moved in the last twelve months suggesting that fears of hyperinflation are not paramount in the investment community, as further witnessed by the 1.5% 10 year expected inflation in index linked bonds.
Gold is a fairly certain insurance against HI. In case you missed them, these are a few of the risks facing bitcoin even if we have HI.

It is usurped by a better crypto - surely at 12 years of age it is getting a bit old
Quantum computing destroys its elliptic curve private key technology
Central banks successfully suppress it (could happen to gold, I guess)
The satoshi drops that it actually has no intrinsic/utility value
Elon Musk moves on to some new fad like doggie or whatever

 

[WolfeTone]

It is usurped by a better

I have acknowledged this in past that it is a threat to bitcoin. But instead of it being the end of the crypto era with the death of bitcoin. It will still do what bitcoin does, only better.
And we may end up having the same discussion all over again, only this time it is with betterbitcoin.

Quantum computing destroys its elliptic curve private key technology

Or enhances it.

Central banks successfully suppress it (could happen to gold, I guess)

I think they have done that quite successfully.

 

[tecate]

Notably its price has hardly moved in the last twelve months suggesting that fears of hyperinflation are not paramount in the investment community, as further witnessed by the 1.5% 10 year expected inflation in index linked bonds.

$ has been moving from gold into bitcoin which goes some way into explaining why gold has been flat the last few months. Inflation is a two track affair. Some items are deflationary - whilst assets and commodities are inflationary.

It is usurped by a better crypto - surely at 12 years of age it is getting a bit old

These are old tired arguments but lets go through them. The classic example that usually gets rolled out in this discussion is Facebook flipping MySpace. What many don't account for in that instance is that ..A. MySpace wasn't anywhere near a $1 trillion dollar company at the time - bitcoin is a $1 trillion dollar asset. At its peak, MySpace had a valuation of $12 billion.
B. Any pretender is going to have to be a minimum 10x technological improvement in order to usurp it. Facebook managed to steal a march on MySpace as it was optimised for mobile at a time when mobile was taking off - MySpace wasn't.
Of course nothing is forever but there doesn't seem to be much on the horizon over the next decade. The case could be made that Ethereum 2.0 will challenge it - but I think its going to have a whole manner of smart contracting disruption to focus on. Bitcoin is programmably limited for a reason.

Quantum computing destroys its elliptic curve private key technology

It's a threat to be taken seriously but it's not imminent. Cryptography still has the time to develop to deal with this threat before it becomes a real concern. Other than that, it should be noted that in a quantum computing scenario, bitcoin is well down the list of targets for whomever has that capability. The US military, NSA and others use the very same SHA-256 algorithm-based cryptography. The gatekeepers of the bitcoin project are likely to have steered it toward a quantum-proof algo before this threat becomes imminent/realistic.

Central banks successfully suppress it (could happen to gold, I guess)

It has been long since acknowledged by most that the gold market has been and continues to be ..heavily manipulated. As I pointed out to you a couple of weeks ago, Henry Ford called this out over 100 years ago already.
Otherwise, with every day above ground bitcoin continues to expand its network effect. The Lindy Effect is in play. There is some risk re. wall street - in that if some centralised entities end up custodying large proportions of it, it becomes centralised and open to control/manipulation. Having them involved has some upside also as it staves off the likelihood of nation states banning it outright. It's a bit of a high wire act - but bitcoin stands a better chance than gold in freeing itself. Gold - due to the nature of how its stored (for the most part) - is centralised. It's easier for people to transport and self custody bitcoin - so it should work out that the majority of it remains in the hands of its owners....meaning that it can't be controlled/manipulated.

The satoshi drops that it actually has no intrinsic/utility value

It's a $1 trillion dollar asset now Duke. At what point are you going to be prepared to walk away from that objection? You'll be aware that there is a very well worn counter argument to that point too - i.e. it has a base value due to mining cost, it has utility as a settlement layer and means of payment (which you may not find ideal today for micro-transactions - but then that too is getting addressed via lightning network). As per the point raised a couple of days ago, it is being used by the likes of Microsoft and Blockstack as a security layer to secure their digital identity and decentralised internet projects...an emerging use case.

Elon Musk moves on to some new fad like doggie or whatever

Most of Elon's tweets have been about Dogecoin rather than bitcoin. I don't believe that the influence here is as great as you think it is - where bitcoin is concerned. Doge is a different matter entirely! It's attracted the gamestop/wall street bets crowd and is a phenomenon of this moronic 'fin-fluencer' nonsense. I'm not from the TikTok age - so naturally I don't use it - but by all accounts there's all forms of moronic shilling of dogecoin going on there over the course of the past few weeks.

 

[Duke of Marmalade]

$ has been moving from gold into bitcoin which goes some way into explaining why gold has been flat the last few months. Inflation is a two track affair. Some items are deflationary - whilst assets and commodities are inflationary.



These are old tired arguments but lets go through them. The classic example that usually gets rolled out in this discussion is Facebook flipping MySpace. What many don't account for in that instance is that ..A. MySpace wasn't anywhere near a $1 trillion dollar company at the time - bitcoin is a $1 trillion dollar asset. At its peak, MySpace had a valuation of $12 billion.
B. Any pretender is going to have to be a minimum 10x technological improvement in order to usurp it. Facebook managed to steal a march on MySpace as it was optimised for mobile at a time when mobile was taking off - MySpace wasn't.
Of course nothing is forever but there doesn't seem to be much on the horizon over the next decade. The case could be made that Ethereum 2.0 will challenge it - but I think its going to have a whole manner of smart contracting disruption to focus on. Bitcoin is programmably limited for a reason.


It's a threat to be taken seriously but it's not imminent. Cryptography still has the time to develop to deal with this threat before it becomes a real concern. Other than that, it should be noted that in a quantum computing scenario, bitcoin is well down the list of targets for whomever has that capability. The US military, NSA and others use the very same SHA-256 algorithm-based cryptography. The gatekeepers of the bitcoin project are likely to have steered it toward a quantum-proof algo before this threat becomes imminent/realistic.


It has been long since acknowledged by most that the gold market has been and continues to be ..heavily manipulated. As I pointed out to you a couple of weeks ago, Henry Ford called this out over 100 years ago already.
Otherwise, with every day above ground bitcoin continues to expand its network effect. The Lindy Effect is in play. There is some risk re. wall street - in that if some centralised entities end up custodying large proportions of it, it becomes centralised and open to control/manipulation. Having them involved has some upside also as it staves off the likelihood of nation states banning it outright. It's a bit of a high wire act - but bitcoin stands a better chance than gold in freeing itself. Gold - due to the nature of how its stored (for the most part) - is centralised. It's easier for people to transport and self custody bitcoin - so it should work out that the majority of it remains in the hands of its owners....meaning that it can't be controlled/manipulated.


It's a $1 trillion dollar asset now Duke. At what point are you going to be prepared to walk away from that objection? You'll be aware that there is a very well worn counter argument to that point too - i.e. it has a base value due to mining cost, it has utility as a settlement layer and means of payment (which you may not find ideal today for micro-transactions - but then that too is getting addressed via lightning network). As per the point raised a couple of days ago, it is being used by the likes of Microsoft and Blockstack as a security layer to secure their digital identity and decentralised internet projects...an emerging use case.


Most of Elon's tweets have been about Dogecoin rather than bitcoin. I don't believe that the influence here is as great as you think it is - where bitcoin is concerned. Doge is a different matter entirely! It's attracted the gamestop/wall street bets crowd and is a phenomenon of this moronic 'fin-fluencer' nonsense. I'm not from the TikTok age - so naturally I don't use it - but by all accounts there's all forms of moronic shilling of dogecoin going on there over the course of the past few weeks.

Well I was only pointing out to Wolfie that if hyperinflation is big on his radar gold is a surer insurance policy than any crypto. Other than the dawning that Professor Roubini and the Nobel crowd are right I don't think the other risks I cited are significant.

But I do want to tease out this Quantum Computing thing. I am by no means an expert but my understanding is that it is the elliptic curve private key/public key technology which is at more risk than SHA-256. If it becomes possible to easily trace the private key from the public key that looks like a nuke to me. But my instinct is that this isn't a significant risk.

 

[WolfeTone]

gold is a surer insurance policy than any crypto.

Michael Saylor on gold

"Gold invites violence.

Ceasar sacked Gaul to take the gold
Kublai Khan seized the gold
Pizarro seized gold from the Incas
Cortez seized gold from Aztecs
Charles I seized the gold from British Nobles
Prussians seized gold from the French in 1871
WWI everyone seized the gold
Lenin seized gold from the church in 1922
Roosevelt seized the gold in 1933
Stalin seized the gold of the Spaniards in 1936
Churchill took everyone's gold in 1940 at the onset of the war.
At Bretton Woods the US seized the world's gold and took it hostage. And in 1971 Nixon killed all the hostages.

Gold is always getting seized."

 

[Duke of Marmalade]

Michael Saylor on gold

"Gold invites violence.

Ceasar sacked Gaul to take the gold
Kublai Khan seized the gold
Pizarro seized gold from the Incas
Cortez seized gold from Aztecs
Charles I seized the gold from British Nobles
Prussians seized gold from the French in 1871
WWI everyone seized the gold
Lenin seized gold from the church in 1922
Roosevelt seized the gold in 1933
Stalin seized the gold of the Spaniards in 1936
Churchill took everyone's gold in 1940 at the onset of the war.
At Bretton Woods the US seized the world's gold and took it hostage. And in 1971 Nixon killed all the hostages.

Gold is always getting seized."

If I was looking for a HI insurance policy, that would be a terrific promotion of gold. Or is your point that it might be seized?

 

[WolfeTone]

If I was looking for a HI insurance policy, that would be a terrific promotion of gold. Or is your point that it might be seized?

It's Saylor view, I think he articulates the point very well, don't you think?

Best of luck cashing in an insurance policy after a state seizure.

 

[tecate]

@WolfeTone : This latest development suggests the answer to your original question is 'soon' (if a few are not already holding).

https://twitter.com/x/status/1387123993614946304

Regardless of the underlying circumstances, that's a central bank normalising the use of crypto for payments ( particularly large international settlement). The rest will follow (and by the rest I mean them holding significant bitcoin reserves (although there's a good chance they do already) and the practice spreading to other jurisdictions).

It's not just time for CBs to get off zero, it's time for everyone to get off zero.

 

[Duke of Marmalade]

When a cult looks to Iran for its affirmation its levels of self doubt must be high indeed.

 

[tecate]

When a cult looks to Iran for its affirmation its levels of self doubt must be high indeed.

Quite clearly that works both ways, your Dukeness.
The irony is that its your good self presenting with the cultish behaviour such that you can't see the wood from the trees. It was specifically this viewpoint from Acheson that I was referring to:

"But this is a bold move by a central bank, and it sends a strong signal to the global financial community that bitcoin is an alternative.
The implications of the whole world having access to greater choice of payment instruments… we have yet to fully understand what that means."

You can focus on ...'meh, it's Iran - it doesn't count' all you wish but that's not what's at play here.

 

[WolfeTone]

This latest development suggests the answer to your original question is 'soon'

Also, I read somewhere that Turkish Central Bank, having banned its banking system from engaging with crypto a week ago, has since set up its own crypto custodial Bank.
Albeit I only heard this fleetingly so I may be way off the mark.

 

[WolfeTone]

When a cult looks to Iran for its affirmation its levels of self doubt must be high indeed.

You can focus on ...'meh, it's Iran - it doesn't count' all you wish

Yes, @Duke of Marmalade perhaps you can elaborate on your obvious disdain toward the Iranian central bank?
I'm kind of minded that a central bank is a central bank is a central bank?

Or perhaps, when is a central bank not a central bank?