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> Investing in virtually any asset other than cash will, almost by definition, shield you from inflation. ... which is why virtually every nation on Earth adop

by api 6y ago

> Investing in virtually any asset other than cash will, almost by definition, shield you from inflation. ... which is why virtually every nation on Earth adopted some kind of inflationary fiat currency. It pushes money to be invested, not held. Wealth is a verb, not a noun.

PragmaticPulp 6y ago
The world would certainly be a strange and sad place if the best thing for everyone to do with their wealth was hoard it in currency. Not holding wealth in cash has been investing 101 material long before cryptocurrency. It is fascinating how crypto proponents took over that narrative to imply that crypto was the only investment that could escape inflation. They’ve also spread an idea that money printing is the singular source of inflation, which isn’t true at all. Bitcoin, for example, is an inflating asset due to hype-driven demand. It hasn’t spiked upward 100% of the time because USD became 50% less valuable overnight
- CarelessExpert 6y ago
  > They’ve also spread an idea that money printing is the singular source of inflation, which isn’t true at all. Bitcoin, for example, is an inflating asset due to hype-driven demand. Uh, I'm very much of the opinion that your average BTC fan isn't exactly educated about macroeconomics, but this sentence makes absolutely no sense. Inflation isn't a thing that happens to a currency, it's a thing that happens to an economy. It's a systemic increase in prices across a basket of assets that demonstrates the devaluation of a currency, as a single unit of that currency effectively buys less. Bitcoin, if it had been a usable currency over the last decade, is very clearly deflationary, as its rise in value as a currency relative to USD has dramatically outpaced the rise in the price of goods and services as denominated in USD, meaning that had prices been denominated in BTC, they would have dropped.
  - jcranmer 6y ago
    Inflation can happen to assets, and PragmaticPulp is analyzing Bitcoin as an asset, not a currency. Given that even when you buy stuff with BTC, you're buying a product or service denominated in USD, their analysis is generally more correct than arguing that Bitcoin should be analyzed as a currency.
    - CarelessExpert 6y ago
      > Inflation can happen to assets, and PragmaticPulp is analyzing Bitcoin as an asset, not a currency. Actually PragmaticPulp was doing both. In the comment I quoted, they stated: > They’ve also spread an idea that money printing is the singular source of inflation, which isn’t true at all. This is specifically referring to currency inflation. They then went on to say: > Bitcoin, for example, is an inflating asset due to hype-driven demand. As you say, this is asset inflation. These should not be compared like this, which is why I noted that "this sentence makes absolutely no sense." I stand by that statement.
- abernard1 6y ago
  > The world would certainly be a strange and sad place if the best thing for everyone to do with their wealth was hoard it in currency. Wealth is never held in currency, ever. It's a physically impossible thing. When a person holds savings, it doesn't prevent humans from working, or raw resources from being used, or land from being purchased -- it just means that person is not redeeming a claim on those resources at the time. Their failure to redeem at a point in time does not preclude others from doing so: otherwise said, for every debit there's a credit. But historically, you don't have to take my word for it. The United States had deflation and 0% interest rates on government bonds for 100+ years during the period between the National Banks and the Fed. You held money in cash at 0%, because when you purchased goods later, your dollars were worth more.
- atleta 6y ago
  Not only that, but inflation is a feature not a bug. Maybe a bug turned into a feature, but still a feature. Something governments and national banks use to stimulate investment and thus economic growth. Because, as you say, hoarding and holding cash (or cash equivalent) does no good for the world. Even though our instinct is to do just that: secure what we have, secure our future and avoid risks. The strange thing about this is that it's not some secret knowledge, but something that is being discussed in (front of) e.g. the media constantly.
anewaccount2021 6y ago
This makes sense when you are under forty and can wait out a bad market. If you are 75, expect to live to be 83, you are much better off being able to guarantee your assets. This is a strange pattern emerging on HN lately - that inflation is fine because you should be fully invested in equities anyway

by api 6y ago

PragmaticPulp 6y ago

The world would certainly be a strange and sad place if the best thing for everyone to do with their wealth was hoard it in currency. Not holding wealth in cash has been investing 101 material long before cryptocurrency. It is fascinating how crypto proponents took over that narrative to imply that crypto was the only investment that could escape inflation. They’ve also spread an idea that money printing is the singular source of inflation, which isn’t true at all. Bitcoin, for example, is an inflating asset due to hype-driven demand. It hasn’t spiked upward 100% of the time because USD became 50% less valuable overnight

CarelessExpert 6y ago
> They’ve also spread an idea that money printing is the singular source of inflation, which isn’t true at all. Bitcoin, for example, is an inflating asset due to hype-driven demand. Uh, I'm very much of the opinion that your average BTC fan isn't exactly educated about macroeconomics, but this sentence makes absolutely no sense. Inflation isn't a thing that happens to a currency, it's a thing that happens to an economy. It's a systemic increase in prices across a basket of assets that demonstrates the devaluation of a currency, as a single unit of that currency effectively buys less. Bitcoin, if it had been a usable currency over the last decade, is very clearly deflationary, as its rise in value as a currency relative to USD has dramatically outpaced the rise in the price of goods and services as denominated in USD, meaning that had prices been denominated in BTC, they would have dropped.
- jcranmer 6y ago
  Inflation can happen to assets, and PragmaticPulp is analyzing Bitcoin as an asset, not a currency. Given that even when you buy stuff with BTC, you're buying a product or service denominated in USD, their analysis is generally more correct than arguing that Bitcoin should be analyzed as a currency.
  - CarelessExpert 6y ago
    > Inflation can happen to assets, and PragmaticPulp is analyzing Bitcoin as an asset, not a currency. Actually PragmaticPulp was doing both. In the comment I quoted, they stated: > They’ve also spread an idea that money printing is the singular source of inflation, which isn’t true at all. This is specifically referring to currency inflation. They then went on to say: > Bitcoin, for example, is an inflating asset due to hype-driven demand. As you say, this is asset inflation. These should not be compared like this, which is why I noted that "this sentence makes absolutely no sense." I stand by that statement.
abernard1 6y ago
> The world would certainly be a strange and sad place if the best thing for everyone to do with their wealth was hoard it in currency. Wealth is never held in currency, ever. It's a physically impossible thing. When a person holds savings, it doesn't prevent humans from working, or raw resources from being used, or land from being purchased -- it just means that person is not redeeming a claim on those resources at the time. Their failure to redeem at a point in time does not preclude others from doing so: otherwise said, for every debit there's a credit. But historically, you don't have to take my word for it. The United States had deflation and 0% interest rates on government bonds for 100+ years during the period between the National Banks and the Fed. You held money in cash at 0%, because when you purchased goods later, your dollars were worth more.
atleta 6y ago
Not only that, but inflation is a feature not a bug. Maybe a bug turned into a feature, but still a feature. Something governments and national banks use to stimulate investment and thus economic growth. Because, as you say, hoarding and holding cash (or cash equivalent) does no good for the world. Even though our instinct is to do just that: secure what we have, secure our future and avoid risks. The strange thing about this is that it's not some secret knowledge, but something that is being discussed in (front of) e.g. the media constantly.

anewaccount2021 6y ago

This makes sense when you are under forty and can wait out a bad market. If you are 75, expect to live to be 83, you are much better off being able to guarantee your assets. This is a strange pattern emerging on HN lately - that inflation is fine because you should be fully invested in equities anyway