21 ms·

Flee to where?

by thinkingkong 6y ago

Flee to where?

the-dude 6y ago
Crypto?
- toomuchtodo 6y ago
  Central banks will outlaw it because they can't control it and devalue it (either through negative interest rates or helicopter money). Remember when the US outlawed holding gold? [1] [1] https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102
  - kinghajj 6y ago
    1. Central banks (at least, the US Fed) doesn't have the authority to declare crypto tokens illegal unilaterally. 2. EO 6102 made sense with the gold standard. It wasn't just an "FU" to gold hoarders, but a way to raise revenue to counter the depression. It's not clear to me that it would make sense for such a confiscation of crypto, especially if the legislature were to try option #1.
    - deleted 6y ago
      [deleted]
  - nostrademons 6y ago
    They probably will, but central government authority tends to collapse when hyperinflation begins. Venezuela (and the international community recognizing Venezuela) can't even agree on who the president is, and 60% of the Venezuelans who do work do so in the informal sector.
  - PragmaticPulp 6y ago
    People are giving too much credit to cryptocurrencies as the only vehicle for dodging inflation. Any asset that rises with inflation (most of them) is a sufficient vehicle for avoiding having your cash devalued. People could simply exchange their domestic currencies for foreign currencies of more stable countries. That's what happens in countries with hyperinflation right now, despite access to cryptocurrency. The only real advantage of cryptocurrency is that it could be transferred around hypothetical government controls. That's more of an extreme edge case scenario, though. To be clear: The US inflation is too high, IMO, but it's nowhere near hyperinflation or government collapse. The average citizen is more likely to benefit from recent stimulus packages than to lose out from it. It's not like everyone keeps their 401K invested in pure cash. That said, we're overdue for interest rates to start creeping up. COVID is coming to an end quickly and the unemployment never really got out of control in the first place. People aren't going to go bankrupt if their mortgages go back to 4-5% instead of 2-3%
    - nostrademons 6y ago
      > People could simply exchange their domestic currencies for foreign currencies of more stable countries Most of the developed nations are competitively devaluing their currencies. If one country does it, they gain a trade advantage: their exports are relatively cheaper on the world market, so consumption flows to their industries and makes them wealthy. Therefore once one country does it, they all have to do it, lest all their export industries become uncompetitive and they lose those jobs. I've heard some speculation (nicely backed up by data [1]) that the real reason we couldn't follow through with monetary tightening 2015-2018 is because it created a carry trade of investors borrowing in Euros and investing in dollars [2], which led to a continual outflow of dollars out the door. If hyperinflation hits it will likely hit nearly all the developed world in short succession. If the dollar goes, all investors are going to dump dollars for Euros, but if they do that the value of the Euro will skyrocket, which means European exports will become super expensive and Euro-denominated debt will be harder to pay off, which will spur European central banks to dump more Euros into the system. As long as we have free capital flows there's no way around this: inflation in one fiat currency will lead to inflation in others. That's why people are looking for non-fiat currencies. (You're right that tradable assets like stocks can fulfill this job rather than cryptocurrency, though.) [1] https://www.pimco.com.br/-/media/global-assets/resources/education/negative-interest-rates/pimco_education_negativeinterestrates_dec2016_fig1.ashx?vs=2&d=20200608172439&hash=6F738875B6A5CD075D764B03B3DDCED114E89C48&la=en-br https://www.pimco.com.br/-/media/global-assets/resources/edu... [2] https://www.ft.com/content/fe099068-169d-11ea-8d73-6303645ac406 https://www.ft.com/content/fe099068-169d-11ea-8d73-6303645ac...
      - paganel 6y ago
        > As long as we have free capital flows there's no way around this I think that's the gist of it, and as such I also think that free capital flows will be massively restrained in the scenario you mention (a scenario which I also find very likely). A similar thing has just happened with the freedom of movement for people, a "right" that the great majority of us had taken for granted, and then Covid came and that "right" was forgotten about like it never had existed.
      - 6y ago
  - tachyonbeam 6y ago
    > Central banks will outlaw it because they can't control it and devalue it Except that, many rich investors and large corporations are putting money into crypto as we speak. Some of those large investors may include people who work in the government and at central banks. I tend to think that, these people will have a conflict of interest there. It might be in their own best personal interest to not ban crypto, and to leave that door open. In other words, it might soon be too late to ban crypto. The ball already started rolling down the hill.
    - deleted 6y ago
      [deleted]
    - 1996 6y ago
      > In other words, it might soon be too late to ban crypto. The ball already started rolling down the hill. In other words, it might soon be too late to ban crypto. The ball already started rolling down the hill. Great analysis. Give it another few years: then when most of the S&P companies will hold crypto, along with your richest supporters and voters, trying to ban it will become political suicide.
  - tabs_masterrace 6y ago
    Remember Crypto knows no borders, it's decentralized, peer to peer, and private keys aren't seizable by force. Central banks may outlaw it, and that will hurt, but it's not going to put an end to it. Especially should USD go into hyperinflation and all hell breaks lose.
- PragmaticPulp 6y ago
  Virtually any investment, other than cash or a money market account. Assets, stocks, real estate, all of the things that inflate with inflation. Crypto gets a lot of undue attention as a way to escape inflation, but investors have been investing in assets to losing buying power long before crypto came along.
- tristanj 6y ago
  The market cap of crypto is not large enough to accommodate a several-dozen trillion dollar an outflow from stocks/bonds into it. Crypto would have to rise massively in value for that to happen. That's one of the bull cases for crypto.
  - tachyonbeam 6y ago
    > Crypto would have to rise massively in value for that to happen. No, crypto would rise massively if that were to happen.
david927 6y ago
Precious metals, commodities
- jacquesm 6y ago
  Real estate. That's essentially an infinite sized sink for surplus capital.
  - david927 6y ago
    Primary residence real estate, yes! But otherwise, no. It's the least liquid asset class and liquidity will be king.
adamcstephens 6y ago
Why not cash? It doesn't matter where they flee to. Once everyone distrusts the market, a positive feedback loop begins and prices crater.
- nostrademons 6y ago
  The same applies to cash once a critical mass of people believe there's an effectively unlimited amount of it flooding the market. That's what hyperinflation is. You really don't want to be in cash if that happens. See the performance of Venezuela's stock market over the last 5 years: https://tradingeconomics.com/venezuela/stock-market https://tradingeconomics.com/venezuela/stock-market (The "crash" in late 2018 was the redenomination of the bolivar at a 1:1000 ratio, which affected everything denominated in bolivars, including the stock market.)
  - adamcstephens 6y ago
    Ok, a savings account so that you can take advantage of the inflation? Honestly wealth growth is the least of my worries if we have another 1929 level crash or hyperinflation.
    - mattmanser 6y ago
      I thought banks don't actually keep up with the hyperinflation, so your saving eventually dwindle to worthless.
    - nealabq 6y ago
      My grandfather bought a mansion in SF (Dolores St) for $8K in 1934 (approx). You can optimize for a 1929-style crash (hold cash), and you can even plan for hyperinflation (anything but cash), so the trick is to figure out which way to go.
      - pashamur 6y ago
        I think that's the appeal of Bitcoin and/or Gold: it's both cash in that it might act as a safe haven in the case of an asset crash and would retain it's value during hyperinflation (since you can't print more of it). Though bitcoin has really been untested as a safe asset and currently behaves more like a speculative one.
scarmig 6y ago
RMB?
tambeb 6y ago
Beanie Babies
tofurocks 6y ago
Sealed Pokemon booster boxes

Flee to where?

the-dude 6y ago

Crypto?

toomuchtodo 6y ago
Central banks will outlaw it because they can't control it and devalue it (either through negative interest rates or helicopter money). Remember when the US outlawed holding gold? [1] [1] https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102
- kinghajj 6y ago
  1. Central banks (at least, the US Fed) doesn't have the authority to declare crypto tokens illegal unilaterally. 2. EO 6102 made sense with the gold standard. It wasn't just an "FU" to gold hoarders, but a way to raise revenue to counter the depression. It's not clear to me that it would make sense for such a confiscation of crypto, especially if the legislature were to try option #1.
  - deleted 6y ago
    [deleted]
- nostrademons 6y ago
  They probably will, but central government authority tends to collapse when hyperinflation begins. Venezuela (and the international community recognizing Venezuela) can't even agree on who the president is, and 60% of the Venezuelans who do work do so in the informal sector.
- PragmaticPulp 6y ago
  People are giving too much credit to cryptocurrencies as the only vehicle for dodging inflation. Any asset that rises with inflation (most of them) is a sufficient vehicle for avoiding having your cash devalued. People could simply exchange their domestic currencies for foreign currencies of more stable countries. That's what happens in countries with hyperinflation right now, despite access to cryptocurrency. The only real advantage of cryptocurrency is that it could be transferred around hypothetical government controls. That's more of an extreme edge case scenario, though. To be clear: The US inflation is too high, IMO, but it's nowhere near hyperinflation or government collapse. The average citizen is more likely to benefit from recent stimulus packages than to lose out from it. It's not like everyone keeps their 401K invested in pure cash. That said, we're overdue for interest rates to start creeping up. COVID is coming to an end quickly and the unemployment never really got out of control in the first place. People aren't going to go bankrupt if their mortgages go back to 4-5% instead of 2-3%
  - nostrademons 6y ago
    > People could simply exchange their domestic currencies for foreign currencies of more stable countries Most of the developed nations are competitively devaluing their currencies. If one country does it, they gain a trade advantage: their exports are relatively cheaper on the world market, so consumption flows to their industries and makes them wealthy. Therefore once one country does it, they all have to do it, lest all their export industries become uncompetitive and they lose those jobs. I've heard some speculation (nicely backed up by data [1]) that the real reason we couldn't follow through with monetary tightening 2015-2018 is because it created a carry trade of investors borrowing in Euros and investing in dollars [2], which led to a continual outflow of dollars out the door. If hyperinflation hits it will likely hit nearly all the developed world in short succession. If the dollar goes, all investors are going to dump dollars for Euros, but if they do that the value of the Euro will skyrocket, which means European exports will become super expensive and Euro-denominated debt will be harder to pay off, which will spur European central banks to dump more Euros into the system. As long as we have free capital flows there's no way around this: inflation in one fiat currency will lead to inflation in others. That's why people are looking for non-fiat currencies. (You're right that tradable assets like stocks can fulfill this job rather than cryptocurrency, though.) [1] https://www.pimco.com.br/-/media/global-assets/resources/education/negative-interest-rates/pimco_education_negativeinterestrates_dec2016_fig1.ashx?vs=2&d=20200608172439&hash=6F738875B6A5CD075D764B03B3DDCED114E89C48&la=en-br https://www.pimco.com.br/-/media/global-assets/resources/edu... [2] https://www.ft.com/content/fe099068-169d-11ea-8d73-6303645ac406 https://www.ft.com/content/fe099068-169d-11ea-8d73-6303645ac...
    - paganel 6y ago
      > As long as we have free capital flows there's no way around this I think that's the gist of it, and as such I also think that free capital flows will be massively restrained in the scenario you mention (a scenario which I also find very likely). A similar thing has just happened with the freedom of movement for people, a "right" that the great majority of us had taken for granted, and then Covid came and that "right" was forgotten about like it never had existed.
    - 6y ago
- tachyonbeam 6y ago
  > Central banks will outlaw it because they can't control it and devalue it Except that, many rich investors and large corporations are putting money into crypto as we speak. Some of those large investors may include people who work in the government and at central banks. I tend to think that, these people will have a conflict of interest there. It might be in their own best personal interest to not ban crypto, and to leave that door open. In other words, it might soon be too late to ban crypto. The ball already started rolling down the hill.
  - deleted 6y ago
    [deleted]
  - 1996 6y ago
    > In other words, it might soon be too late to ban crypto. The ball already started rolling down the hill. In other words, it might soon be too late to ban crypto. The ball already started rolling down the hill. Great analysis. Give it another few years: then when most of the S&P companies will hold crypto, along with your richest supporters and voters, trying to ban it will become political suicide.
- tabs_masterrace 6y ago
  Remember Crypto knows no borders, it's decentralized, peer to peer, and private keys aren't seizable by force. Central banks may outlaw it, and that will hurt, but it's not going to put an end to it. Especially should USD go into hyperinflation and all hell breaks lose.
PragmaticPulp 6y ago
Virtually any investment, other than cash or a money market account. Assets, stocks, real estate, all of the things that inflate with inflation. Crypto gets a lot of undue attention as a way to escape inflation, but investors have been investing in assets to losing buying power long before crypto came along.
tristanj 6y ago
The market cap of crypto is not large enough to accommodate a several-dozen trillion dollar an outflow from stocks/bonds into it. Crypto would have to rise massively in value for that to happen. That's one of the bull cases for crypto.
- tachyonbeam 6y ago
  > Crypto would have to rise massively in value for that to happen. No, crypto would rise massively if that were to happen.

david927 6y ago

Precious metals, commodities

jacquesm 6y ago
Real estate. That's essentially an infinite sized sink for surplus capital.
- david927 6y ago
  Primary residence real estate, yes! But otherwise, no. It's the least liquid asset class and liquidity will be king.

adamcstephens 6y ago

Why not cash? It doesn't matter where they flee to. Once everyone distrusts the market, a positive feedback loop begins and prices crater.

nostrademons 6y ago
The same applies to cash once a critical mass of people believe there's an effectively unlimited amount of it flooding the market. That's what hyperinflation is. You really don't want to be in cash if that happens. See the performance of Venezuela's stock market over the last 5 years: https://tradingeconomics.com/venezuela/stock-market https://tradingeconomics.com/venezuela/stock-market (The "crash" in late 2018 was the redenomination of the bolivar at a 1:1000 ratio, which affected everything denominated in bolivars, including the stock market.)
- adamcstephens 6y ago
  Ok, a savings account so that you can take advantage of the inflation? Honestly wealth growth is the least of my worries if we have another 1929 level crash or hyperinflation.
  - mattmanser 6y ago
    I thought banks don't actually keep up with the hyperinflation, so your saving eventually dwindle to worthless.
  - nealabq 6y ago
    My grandfather bought a mansion in SF (Dolores St) for $8K in 1934 (approx). You can optimize for a 1929-style crash (hold cash), and you can even plan for hyperinflation (anything but cash), so the trick is to figure out which way to go.
    - pashamur 6y ago
      I think that's the appeal of Bitcoin and/or Gold: it's both cash in that it might act as a safe haven in the case of an asset crash and would retain it's value during hyperinflation (since you can't print more of it). Though bitcoin has really been untested as a safe asset and currently behaves more like a speculative one.

scarmig 6y ago

RMB?

tambeb 6y ago

Beanie Babies

tofurocks 6y ago

Sealed Pokemon booster boxes