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> For the rest of 2020, my inflationary thesis looked right Just to make it clear: there's absolutely no broad inflation almost everywhere in the world, certai

> For the rest of 2020, my inflationary thesis looked right Just to make it clear: there's absolutely no broad inflation almost everywhere in the world, certainly not in the United States. It may still come, but inflation is not why Bitcoin is on such a tear. Look at CPI or PPI of you don't believe me. Although this does remind me of the Green Lumber Trader story from Taleb. Congrats on the trade!

alcio 6y ago
inflation in consumer goods might not be high, but financial assets have clearly inflated: a quick look at gold denominated SPY shows it.
- H8crilA 6y ago
  Why not TSLA/gold? That proves there is inflation! Or I know, BTC/USD, that clearly proves there's lots inflation and look at that bitcoin price is perfectly correlated with it! (I am only half-joking here, the point is that broad inflation is much much more important than some bull market in this or that asset class) On a more serious note a lot of commodities are looking really bullish, including some foodstuffs, and that's obviously not good news ...
  - nivenkos 6y ago
    Real estate inflation is the real driver behind practical inflation all over the world though. Real estate bubble -> High deposits for house purchases -> High rents -> Effective inflation Most governments don't include real estate (or even rent payments) in their inflation calculations to keep it artificially low.
    - H8crilA 6y ago
      > Most governments don't include real estate (or even rent payments) in their inflation calculations to keep it artificially low. Housing is > 40% of the US CPI: https://www.bls.gov/cpi/tables/relative-importance/2019.pdf https://www.bls.gov/cpi/tables/relative-importance/2019.pdf
ur-whale 6y ago
>there's absolutely no broad inflation If your measuring stick is fiat, then sure there isn't any inflation. However, you're using a measuring stick whose length isn't constant. If you use Gold as your measuring stick, then things change. If you user Bitcoin as your measuring stick, things change dramatically. If you use real estate - can you still say there is no inflation ?
- H8crilA 6y ago
  You confused the numerator with the denominator. To get inflation we put a basket of things in the numerator, and currency in the denominator, then compute annualized % change in the said number. Now if you swap (in the denominator) the USD for either gold or bitcoin you'll conclude we've been in a severe deflation in 2020. (I do not agree with the above, I am just fixing basic mistakes in your reasoning) If you would like your basket of things (the numerator) to consist solely of Bitcoin or gold then go ahead but you may as well put baseball collectible cards there, as it doesn't relate to people's consumption needs.
keypusher 6y ago
Inflation is already here, it's just that the wealth hasn't "trickled down" into the middle/lower class so consumer goods haven't spiked yet. It will seep out eventually, but right now it's mostly still sitting in financial markets and corporate accounts. The trillions (yes, trillions) of dollars that have been pumped into the economy via QE and other fed programs don't just go away.
- H8crilA 6y ago
  Where's the inflation in the Eurozone? They're way ahead of the US. Or even better, Japan, "printing" like a madman since the 90s, uhm where is that inflation you mentioned? But yes, they don't go away, such things actually cause deflation because they prevent recession-cleansing of inefficient organizations, keep property prices high, cripple people and organizations with debt, ...
cryptoanonymous 6y ago
Author here. I agree that past inflation has been minimal; what I was referring to was the expectation of future inflation after the pandemic has materially ended. It would have been rational (or so my thinking went at the time) for investors to buy into Bitcoin in anticipation of this shift.
- H8crilA 6y ago
  There are explicit contracts for such things (based on TIPS, so it's not some small shady market). Inflation expectations are still low, though materially higher than even in May: https://fred.stlouisfed.org/series/T5YIFR https://fred.stlouisfed.org/series/T5YIFR In particular they do not go outside of the 3.0% range where we've been stuck for decades (the US CPI itself hasn't printed anything above 2.5% year-over-year since the 90s). Inflation will come one day (one year? one decade?), but sure as hell isn't here yet.

alcio 6y ago

inflation in consumer goods might not be high, but financial assets have clearly inflated: a quick look at gold denominated SPY shows it.

H8crilA 6y ago
Why not TSLA/gold? That proves there is inflation! Or I know, BTC/USD, that clearly proves there's lots inflation and look at that bitcoin price is perfectly correlated with it! (I am only half-joking here, the point is that broad inflation is much much more important than some bull market in this or that asset class) On a more serious note a lot of commodities are looking really bullish, including some foodstuffs, and that's obviously not good news ...
- nivenkos 6y ago
  Real estate inflation is the real driver behind practical inflation all over the world though. Real estate bubble -> High deposits for house purchases -> High rents -> Effective inflation Most governments don't include real estate (or even rent payments) in their inflation calculations to keep it artificially low.
  - H8crilA 6y ago
    > Most governments don't include real estate (or even rent payments) in their inflation calculations to keep it artificially low. Housing is > 40% of the US CPI: https://www.bls.gov/cpi/tables/relative-importance/2019.pdf https://www.bls.gov/cpi/tables/relative-importance/2019.pdf

ur-whale 6y ago

>there's absolutely no broad inflation If your measuring stick is fiat, then sure there isn't any inflation. However, you're using a measuring stick whose length isn't constant. If you use Gold as your measuring stick, then things change. If you user Bitcoin as your measuring stick, things change dramatically. If you use real estate - can you still say there is no inflation ?

H8crilA 6y ago
You confused the numerator with the denominator. To get inflation we put a basket of things in the numerator, and currency in the denominator, then compute annualized % change in the said number. Now if you swap (in the denominator) the USD for either gold or bitcoin you'll conclude we've been in a severe deflation in 2020. (I do not agree with the above, I am just fixing basic mistakes in your reasoning) If you would like your basket of things (the numerator) to consist solely of Bitcoin or gold then go ahead but you may as well put baseball collectible cards there, as it doesn't relate to people's consumption needs.

keypusher 6y ago

Inflation is already here, it's just that the wealth hasn't "trickled down" into the middle/lower class so consumer goods haven't spiked yet. It will seep out eventually, but right now it's mostly still sitting in financial markets and corporate accounts. The trillions (yes, trillions) of dollars that have been pumped into the economy via QE and other fed programs don't just go away.

H8crilA 6y ago
Where's the inflation in the Eurozone? They're way ahead of the US. Or even better, Japan, "printing" like a madman since the 90s, uhm where is that inflation you mentioned? But yes, they don't go away, such things actually cause deflation because they prevent recession-cleansing of inefficient organizations, keep property prices high, cripple people and organizations with debt, ...

cryptoanonymous 6y ago

Author here. I agree that past inflation has been minimal; what I was referring to was the expectation of future inflation after the pandemic has materially ended. It would have been rational (or so my thinking went at the time) for investors to buy into Bitcoin in anticipation of this shift.

H8crilA 6y ago
There are explicit contracts for such things (based on TIPS, so it's not some small shady market). Inflation expectations are still low, though materially higher than even in May: https://fred.stlouisfed.org/series/T5YIFR https://fred.stlouisfed.org/series/T5YIFR In particular they do not go outside of the 3.0% range where we've been stuck for decades (the US CPI itself hasn't printed anything above 2.5% year-over-year since the 90s). Inflation will come one day (one year? one decade?), but sure as hell isn't here yet.