6 ms·

Because the dollar supply has also skyrocketed in the same time period.

by nicolashahn 6y ago

yorwba 6y ago
66% of all dollars were printed in the past six months?
- qeternity 6y ago
  No - M2 increased by 20% in 2020. There is no connection to USDT issuance. As Michael Saylor, famed Bitcoin bull, says: no institutions and using Tether. Tether are printing it out of thin air. Bitcoin bulls know this and they rush to hand wave away Tether at every turn.
  - TekMol 6y ago
    M2 includes "I owe yous" by banks. But USDTs are only the "I owe yous" by the emitter. So a better comparison might be the federal reserve balance sheet: https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren... 43% of these "original emitter" dollars have been printed in 2020.
    - qeternity 6y ago
      No it’s not a better comparison as banks genuinely create money by lending. This is the whole point of FRB. You can cherry pick your numbers but it doesn’t change the fact that Tether’s reserves likely don’t exist in the way they’re supposed to (cash and cash equivalents).
      - incrudible 6y ago
        I don't think it's a better comparison when it comes to how much money is "printed". That's M1, not M2. Fractional reserve banking don't print money, it increases (and decreases) the money supply through lending. Despite perhaps not being backed properly, Tether is not supposed to be fractional reserve, nor is Tether created through debt.
        qeternity 6y ago
        > Fractional reserve banking don't print money, it increases (and decreases) the money supply through lending. Technically the Fed does the same. They lend money to the Treasury by buying Treasuries (or more recently, to other people by buying IG credit). When the Fed prints money, in theory it’s offset by a liability somewhere. They are the same. M2 is what matters.
  - deleted 6y ago
    [deleted]
shuckles 6y ago
Is this trying to say that the primary destination of new dollars is cryptocurrency?
- PragmaticPulp 6y ago
  It’s trying to imply that the dollar is collapsing and everyone is rushing for the exits, which isn’t true by any other measure. These arguments are dishonest because they treat Bitcoin as a dual currency/asset but then only compare to the M2 money supply (currency) while ignoring the total wealth of the United States (including assets). These arguments also confuse quantitative easing with traditional government debt spending, and they ignore that the stimulus money is designed to fill gaps in the economy left by COVID, in which case inflation would be negligible (although I think the US is overshooting that target) They also ignore the fact that crypto isn’t the only exit for holders of USD looking to avoid inflation. They can invest in stocks or assets (crypto is a narrow subset of this), or they could exchange into the currency of another nation.
  - shuckles 6y ago
    Counter-point: the US government added $2.2T more dollars, yet they are almost as good at buying commodities and other goods and services today as they were a year ago. Furthermore, the market expectation of their goodness, as determined by Treasury Inflation-Protected Securities, is quite strong. That seems like almost the opposite of dollar holders rushing for the exits!
- pmayrgundter 6y ago
  I don't know, but I think the destination is primarily the stock market for the past year. Maybe some also went to bitcoin. - Fed open market operations: $2.8T introduced over 9 month by the Fed in 2020[1]. - Stock market (DJIA) run-up in 2020: $2.2T [2] I don't think this can be just correlation, even on the simplest reading of how the Fed OMO works, but there is debate about this[3]. [1] https://fred.stlouisfed.org/series/M1 https://fred.stlouisfed.org/series/M1. I believe M1 money is a good proxy for the Fed's open market operations that would go towards the kind of asset purchases that would increase stock equity valuation. I'd appreciate any feedback on this [2] DJI went from $22k on Mar 1 2020 -> $30k, for an $8k change by end of year. DJI had a market cap of $8.3T when it was at $29k Dec 2019[2.1], so 8/29=0.27. 27% of 8.3T = $2.2T. [2.1] https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average [3] https://economics.stackexchange.com/questions/12226/does-the-federal-reserve-buy-and-sell-stocks https://economics.stackexchange.com/questions/12226/does-the...
ur-whale 6y ago
> Because the dollar supply has also skyrocketed in the same time period. With the following difference: USD is backed by guns, tanks, warships and missiles. And some actual tangible assets (a fraction of the mass of USD in circulation). USDT is backed by a bunch of italian people that are very well-versed in: - the art of engineering financial complications - the art of running when the weather turns bad - a vague, unaudited promise of USD reserves. Not a good thing.

Because the dollar supply has also skyrocketed in the same time period.

yorwba 6y ago

66% of all dollars were printed in the past six months?

qeternity 6y ago
No - M2 increased by 20% in 2020. There is no connection to USDT issuance. As Michael Saylor, famed Bitcoin bull, says: no institutions and using Tether. Tether are printing it out of thin air. Bitcoin bulls know this and they rush to hand wave away Tether at every turn.
- TekMol 6y ago
  M2 includes "I owe yous" by banks. But USDTs are only the "I owe yous" by the emitter. So a better comparison might be the federal reserve balance sheet: https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren... 43% of these "original emitter" dollars have been printed in 2020.
  - qeternity 6y ago
    No it’s not a better comparison as banks genuinely create money by lending. This is the whole point of FRB. You can cherry pick your numbers but it doesn’t change the fact that Tether’s reserves likely don’t exist in the way they’re supposed to (cash and cash equivalents).
    - incrudible 6y ago
      I don't think it's a better comparison when it comes to how much money is "printed". That's M1, not M2. Fractional reserve banking don't print money, it increases (and decreases) the money supply through lending. Despite perhaps not being backed properly, Tether is not supposed to be fractional reserve, nor is Tether created through debt.
      - qeternity 6y ago
        > Fractional reserve banking don't print money, it increases (and decreases) the money supply through lending. Technically the Fed does the same. They lend money to the Treasury by buying Treasuries (or more recently, to other people by buying IG credit). When the Fed prints money, in theory it’s offset by a liability somewhere. They are the same. M2 is what matters.
- deleted 6y ago
  [deleted]

shuckles 6y ago

Is this trying to say that the primary destination of new dollars is cryptocurrency?

PragmaticPulp 6y ago
It’s trying to imply that the dollar is collapsing and everyone is rushing for the exits, which isn’t true by any other measure. These arguments are dishonest because they treat Bitcoin as a dual currency/asset but then only compare to the M2 money supply (currency) while ignoring the total wealth of the United States (including assets). These arguments also confuse quantitative easing with traditional government debt spending, and they ignore that the stimulus money is designed to fill gaps in the economy left by COVID, in which case inflation would be negligible (although I think the US is overshooting that target) They also ignore the fact that crypto isn’t the only exit for holders of USD looking to avoid inflation. They can invest in stocks or assets (crypto is a narrow subset of this), or they could exchange into the currency of another nation.
- shuckles 6y ago
  Counter-point: the US government added $2.2T more dollars, yet they are almost as good at buying commodities and other goods and services today as they were a year ago. Furthermore, the market expectation of their goodness, as determined by Treasury Inflation-Protected Securities, is quite strong. That seems like almost the opposite of dollar holders rushing for the exits!
pmayrgundter 6y ago
I don't know, but I think the destination is primarily the stock market for the past year. Maybe some also went to bitcoin. - Fed open market operations: $2.8T introduced over 9 month by the Fed in 2020[1]. - Stock market (DJIA) run-up in 2020: $2.2T [2] I don't think this can be just correlation, even on the simplest reading of how the Fed OMO works, but there is debate about this[3]. [1] https://fred.stlouisfed.org/series/M1 https://fred.stlouisfed.org/series/M1. I believe M1 money is a good proxy for the Fed's open market operations that would go towards the kind of asset purchases that would increase stock equity valuation. I'd appreciate any feedback on this [2] DJI went from $22k on Mar 1 2020 -> $30k, for an $8k change by end of year. DJI had a market cap of $8.3T when it was at $29k Dec 2019[2.1], so 8/29=0.27. 27% of 8.3T = $2.2T. [2.1] https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average [3] https://economics.stackexchange.com/questions/12226/does-the-federal-reserve-buy-and-sell-stocks https://economics.stackexchange.com/questions/12226/does-the...

ur-whale 6y ago

> Because the dollar supply has also skyrocketed in the same time period. With the following difference: USD is backed by guns, tanks, warships and missiles. And some actual tangible assets (a fraction of the mass of USD in circulation). USDT is backed by a bunch of italian people that are very well-versed in: - the art of engineering financial complications - the art of running when the weather turns bad - a vague, unaudited promise of USD reserves. Not a good thing.