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Some things are better hedges than others. Bitcoin happens to have been the best over the past decade. Edit: I'd argue this is because it has better monetary p

Some things are better hedges than others. Bitcoin happens to have been the best over the past decade. Edit: I'd argue this is because it has better monetary properties than the alternatives.

lottin 5y ago
Do you even know what a hedge is? The perfect hedge against inflation is a large basket of consumer goods and services, because it correlates perfectly with inflation. Anything else correlates less perfectly with inflation and therefore is a worse hedge against inflation compared to a basket of goods and services.
- louloulou 5y ago
  You're talking about consumer price inflation, I'm talking about monetary supply inflation. A basket of consumer goods and services is a nonsensical way to hedge monetary inflation under anything but the most extreme conditions, since those things should be getting cheaper as production processes/technology/understanding of the world improve.
  - AnimalMuppet 5y ago
    But, unless you're a central bank or something, why do you care about monetary inflation instead of consumer price inflation? How is it going to affect you? Consumer price inflation is the one that affects you.
    - louloulou 5y ago
      Uh, because they're stealing the purchasing power that I worked hard to obtain, and then using it to bail-out debtors without my consent. Also, I don't really care what the price of a "general basket of goods and services" is (whatever that means). I care about the prices of the specific things that I want now or will want in the future. Edit: And I would say my personal CPI seems to track money supply inflation pretty closely.
      - AnimalMuppet 5y ago
        > because they're stealing the purchasing power that I worked hard to obtain... "Purchasing power" is exactly CPI inflation, not monetary inflation. > And I would say my personal CPI seems to track money supply inflation pretty closely. This I can buy. If the CPI figures are wrong, then we need to get ones that are right. But CPI inflation is still the one we actually care about. Why should we not care about monetary inflation? Well, say the population doubles. Either the monetary supply has to double, or each dollar is worth twice as much. (In case you think "that sounds good": it stinks if, say, you owe a mortgage and each dollar you pay back is twice as valuable.) Yes, I know that's not why the monetary supply inflated over the last 15 years. The point stands: CPI inflation is the one that actually affects us.
        louloulou 5y ago
        > The point stands: CPI inflation is the one that actually affects us. If your only purpose in life is to be a "consumer", sure. But changes in relative purchasing power between people also distort you're ability to affect the world. Increasing purchasing power of a bank or home owner relative to a saver through policy decisions increases their power to affect the world relative to the saver. This ability to arbitrarily choose winners and losers is not what you want in a monetary system IMO. Edit: ability to affect the world as well as freedom to act, since you can substitute money for your own time.
      - lottin 5y ago
        I'd argue that the only person stealing purchasing power from you is yourself. Read some books, get an education, have ambition, work hard, take care of yourself. If you did that, instead of blaming others for your failures, your purchasing power would be fine.
        louloulou 5y ago
        My purchasing power is fine, because I became a bitcoiner. I was pretty angry during the financial crisis though, and am letting it come through in this thread.
    - srean 5y ago
      I need healthcare, real estate, educational services. I hear that they are not appropriately represented in CPI. Personal basket of goods and services can be quite different from the tracked CPI
  - lottin 5y ago
    Confirmed then, you have no clue what hedging is. A hedge is not an investment, you fool. A hedge is position that is intended to offset an exposure. A successful hedge can very well be a terrible investment.
    - louloulou 5y ago
      Yeah, in this case offsetting exposure to the inflating fiat monetary and banking system. No need for name calling.
      - lottin 5y ago
        That's not an exposure. You keep using technical terms in order to sound knowledgeable, but it's obvious that you don't know what they mean.
        louloulou 5y ago
        Yes, it is. If you have a deposit in a bank, you are a creditor of that bank. If the bank fails, you might not get that money back. Also, maybe try to form an actual coherent argument, rather than continuing to claim I don't know what I'm talking about.
        lottin 5y ago
        Sure, so you want to hedge against a bank run (even though bank deposits are insured)? I don't think you're making any sense but, anyway... what kind of hedging instrument do you intend to use against a bank run and why?
VHRanger 5y ago
Bitcoin doesnt have good monetary properties? Go back to your textbook: - Medium of exchange: bad. Caps out at a few transactions per second, transaction cost go up massively when actually used. - Unit of account: Terrible. Because of price volatility you denominate BTC in terms of USD - something priced in BTC has a different price depending on the minute you look at it - Store of value: Hilariously terrible. Storing value has to do with *low price volatility* something which Bitcoin does not have. The average price might be up over time, but this is *speculation*, not storing value! If you store value you want as close to what you put in as possible, not more (or less). People claiming Bitcoin is a "store of value" don't understand what the word "storing" means, nor the textbook definition.
- louloulou 5y ago
  So condescending. That's because Bitcoin is not widely used as money yet. Those things don't all happen at the same time, they happen sequentially. - collectable -> It's cool, I want some. - store of value -> it holds value better than any other money. (Bitcoin is here) - medium of exchange -> People request it in exchange for goods and services because it holds its value over time. - unit of account -> People denominate prices in it because it's a widely used medium of exchange. Edit: My initial point was Bitcoin has properties that make it suitable for use as money: divisible, portable, easy to verify, doesn't degrade over time, etc.

Some things are better hedges than others. Bitcoin happens to have been the best over the past decade. Edit: I'd argue this is because it has better monetary properties than the alternatives.

lottin 5y ago

Do you even know what a hedge is? The perfect hedge against inflation is a large basket of consumer goods and services, because it correlates perfectly with inflation. Anything else correlates less perfectly with inflation and therefore is a worse hedge against inflation compared to a basket of goods and services.

louloulou 5y ago
You're talking about consumer price inflation, I'm talking about monetary supply inflation. A basket of consumer goods and services is a nonsensical way to hedge monetary inflation under anything but the most extreme conditions, since those things should be getting cheaper as production processes/technology/understanding of the world improve.
- AnimalMuppet 5y ago
  But, unless you're a central bank or something, why do you care about monetary inflation instead of consumer price inflation? How is it going to affect you? Consumer price inflation is the one that affects you.
  - louloulou 5y ago
    Uh, because they're stealing the purchasing power that I worked hard to obtain, and then using it to bail-out debtors without my consent. Also, I don't really care what the price of a "general basket of goods and services" is (whatever that means). I care about the prices of the specific things that I want now or will want in the future. Edit: And I would say my personal CPI seems to track money supply inflation pretty closely.
    - AnimalMuppet 5y ago
      > because they're stealing the purchasing power that I worked hard to obtain... "Purchasing power" is exactly CPI inflation, not monetary inflation. > And I would say my personal CPI seems to track money supply inflation pretty closely. This I can buy. If the CPI figures are wrong, then we need to get ones that are right. But CPI inflation is still the one we actually care about. Why should we not care about monetary inflation? Well, say the population doubles. Either the monetary supply has to double, or each dollar is worth twice as much. (In case you think "that sounds good": it stinks if, say, you owe a mortgage and each dollar you pay back is twice as valuable.) Yes, I know that's not why the monetary supply inflated over the last 15 years. The point stands: CPI inflation is the one that actually affects us.
      - louloulou 5y ago
        > The point stands: CPI inflation is the one that actually affects us. If your only purpose in life is to be a "consumer", sure. But changes in relative purchasing power between people also distort you're ability to affect the world. Increasing purchasing power of a bank or home owner relative to a saver through policy decisions increases their power to affect the world relative to the saver. This ability to arbitrarily choose winners and losers is not what you want in a monetary system IMO. Edit: ability to affect the world as well as freedom to act, since you can substitute money for your own time.
    - lottin 5y ago
      I'd argue that the only person stealing purchasing power from you is yourself. Read some books, get an education, have ambition, work hard, take care of yourself. If you did that, instead of blaming others for your failures, your purchasing power would be fine.
      - louloulou 5y ago
        My purchasing power is fine, because I became a bitcoiner. I was pretty angry during the financial crisis though, and am letting it come through in this thread.
  - srean 5y ago
    I need healthcare, real estate, educational services. I hear that they are not appropriately represented in CPI. Personal basket of goods and services can be quite different from the tracked CPI
- lottin 5y ago
  Confirmed then, you have no clue what hedging is. A hedge is not an investment, you fool. A hedge is position that is intended to offset an exposure. A successful hedge can very well be a terrible investment.
  - louloulou 5y ago
    Yeah, in this case offsetting exposure to the inflating fiat monetary and banking system. No need for name calling.
    - lottin 5y ago
      That's not an exposure. You keep using technical terms in order to sound knowledgeable, but it's obvious that you don't know what they mean.
      - louloulou 5y ago
        Yes, it is. If you have a deposit in a bank, you are a creditor of that bank. If the bank fails, you might not get that money back. Also, maybe try to form an actual coherent argument, rather than continuing to claim I don't know what I'm talking about.
        lottin 5y ago
        Sure, so you want to hedge against a bank run (even though bank deposits are insured)? I don't think you're making any sense but, anyway... what kind of hedging instrument do you intend to use against a bank run and why?

VHRanger 5y ago

Bitcoin doesnt have good monetary properties? Go back to your textbook: - Medium of exchange: bad. Caps out at a few transactions per second, transaction cost go up massively when actually used. - Unit of account: Terrible. Because of price volatility you denominate BTC in terms of USD - something priced in BTC has a different price depending on the minute you look at it - Store of value: Hilariously terrible. Storing value has to do with *low price volatility* something which Bitcoin does not have. The average price might be up over time, but this is *speculation*, not storing value! If you store value you want as close to what you put in as possible, not more (or less). People claiming Bitcoin is a "store of value" don't understand what the word "storing" means, nor the textbook definition.

louloulou 5y ago
So condescending. That's because Bitcoin is not widely used as money yet. Those things don't all happen at the same time, they happen sequentially. - collectable -> It's cool, I want some. - store of value -> it holds value better than any other money. (Bitcoin is here) - medium of exchange -> People request it in exchange for goods and services because it holds its value over time. - unit of account -> People denominate prices in it because it's a widely used medium of exchange. Edit: My initial point was Bitcoin has properties that make it suitable for use as money: divisible, portable, easy to verify, doesn't degrade over time, etc.