4 ms·

It's probably more reflective of inflation and the dollar losing value, which is the natural consequence of dropping interest rates to zero and pumping $6T more

It's probably more reflective of inflation and the dollar losing value, which is the natural consequence of dropping interest rates to zero and pumping $6T more into the economy. TSLA has gone from $191 to $576 since June, GOOG from $1394->$1761, AMZN $2478->$3143, ZM $262->$466. Where I'm at restaurant meals have gone from about $13/plate to $20/plate, and houses have gone from ~$1.6M -> $2.1M. BTC's rise isn't all that out of line with any of those. I think you're seeing investors rush out of dollars and into anything that'll have hard value in the digital economy going forward. Inflation doesn't hit all markets evenly, so you may not see it in your paycheck yet (if you still have a paycheck) and areas without a lot of people seeing money come in won't have prices rise as much. But I think you should read this as a currency crisis for the dollar, not a bubble for Bitcoin.

arcticbull 6y ago
Inflation has a specific definition with reference to the cost of a set basket of goods and rent. An increase in the price of assets and assets alone as a result of an increase in money supply is not inflation.
- sjwalter 6y ago
  You are talking specifically about consumer price inflation, which is as you state a well-specified concept based on a (hilariously disconnected from reality) weighted basket of goods and how the basket's price changes over time. Inflation as a concept itself is much broader than this. The comment you're replying to is referring to asset price inflation, which has been happening hardcore. You seem to be saying since the Fed's stupid basket hasn't shot up in price (based on what they're saying), that inflation hasn't happened?
  - arcticbull 6y ago
    I’m saying CPI inflation (which is what people mean when they say inflation) has not gone up. I suggest that to prevent confusion among the readers that folks using a nonstandard (or at least non-colloquial) definition of inflation should make that clear.
- nostrademons 6y ago
  That's the definition of the CPI. The definition of inflation that an individual cares about is "the rise in prices of the goods that I want to buy". Asset purchases, housing, and food are my biggest expenses. YMMV. I gave some examples of consumer goods inflating in my post - restaurant meals are up about 40%, housing up about 18%, groceries have also been up about 20% since the pandemic started. Also have friends that own or work in non-tech businesses (one owns a packaging factory, another sells hot tubs) that say that supply chains are in shambles and all of their producer prices are going up, significantly. You'll see that in consumer prices eventually, but it takes time to work its way through the economy.
  - arcticbull 6y ago
    Asset purchases are not inflation related. If Apple goes up because their business is doing well, that’s not inflation, that’s a good investment. You need to tease apart the performance of the underlying to even get a sense of how the money supply is impacting prices. I’d love to see a study. However simply seeing stonks go up doesn’t mean inflation. If I had to speculate the current market froth has more to do with individuals access to leveraged investments via smartphone apps like Robinhood. The pandemic has turned them into a generation of gamblers. When you buy options from a market maker they hedge by purchasing the underlying. This has a positive feedback cycle effect causing them to purchase more and more to hedge. Look up a gamma squeeze. https://realmoney.thestreet.com/investing/stocks/is-the-gamma-squeeze-back-on--15456225 https://realmoney.thestreet.com/investing/stocks/is-the-gamm...
    - pashamur 6y ago
      Generally house prices are a ~somewhat decent proxy for asset inflation which is driven by monetary policy; I believe the low rates have definitely driven inflation in housing prices (and the gamma squeeze argument above does not apply to the housing market). Part of the reason we've had an insane housing market valuation growth over the last ~40 years is that cost of capital has gone down from ~15% to 2.5% over that time frame. If rates were near the historical average right now, you would see very different asset prices.

arcticbull 6y ago

Inflation has a specific definition with reference to the cost of a set basket of goods and rent. An increase in the price of assets and assets alone as a result of an increase in money supply is not inflation.

sjwalter 6y ago
You are talking specifically about consumer price inflation, which is as you state a well-specified concept based on a (hilariously disconnected from reality) weighted basket of goods and how the basket's price changes over time. Inflation as a concept itself is much broader than this. The comment you're replying to is referring to asset price inflation, which has been happening hardcore. You seem to be saying since the Fed's stupid basket hasn't shot up in price (based on what they're saying), that inflation hasn't happened?
- arcticbull 6y ago
  I’m saying CPI inflation (which is what people mean when they say inflation) has not gone up. I suggest that to prevent confusion among the readers that folks using a nonstandard (or at least non-colloquial) definition of inflation should make that clear.
nostrademons 6y ago
That's the definition of the CPI. The definition of inflation that an individual cares about is "the rise in prices of the goods that I want to buy". Asset purchases, housing, and food are my biggest expenses. YMMV. I gave some examples of consumer goods inflating in my post - restaurant meals are up about 40%, housing up about 18%, groceries have also been up about 20% since the pandemic started. Also have friends that own or work in non-tech businesses (one owns a packaging factory, another sells hot tubs) that say that supply chains are in shambles and all of their producer prices are going up, significantly. You'll see that in consumer prices eventually, but it takes time to work its way through the economy.
- arcticbull 6y ago
  Asset purchases are not inflation related. If Apple goes up because their business is doing well, that’s not inflation, that’s a good investment. You need to tease apart the performance of the underlying to even get a sense of how the money supply is impacting prices. I’d love to see a study. However simply seeing stonks go up doesn’t mean inflation. If I had to speculate the current market froth has more to do with individuals access to leveraged investments via smartphone apps like Robinhood. The pandemic has turned them into a generation of gamblers. When you buy options from a market maker they hedge by purchasing the underlying. This has a positive feedback cycle effect causing them to purchase more and more to hedge. Look up a gamma squeeze. https://realmoney.thestreet.com/investing/stocks/is-the-gamma-squeeze-back-on--15456225 https://realmoney.thestreet.com/investing/stocks/is-the-gamm...
  - pashamur 6y ago
    Generally house prices are a ~somewhat decent proxy for asset inflation which is driven by monetary policy; I believe the low rates have definitely driven inflation in housing prices (and the gamma squeeze argument above does not apply to the housing market). Part of the reason we've had an insane housing market valuation growth over the last ~40 years is that cost of capital has gone down from ~15% to 2.5% over that time frame. If rates were near the historical average right now, you would see very different asset prices.