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We’re in a hyperinflationary period. Loans are extremely inexpensive, cash is cheap. I suspect the majority of influx in crypto is due to an abundance of fiat.
by 58x14 5y ago
We’re in a hyperinflationary period. Loans are extremely inexpensive, cash is cheap. I suspect the majority of influx in crypto is due to an abundance of fiat.
With that said, there’s quite a lot going for Ethereum and defi as a sector. Major tech players like Google are funding many web3 startups. Facebook is fully embracing the “metaverse,” whatever the f** that is.
Tesla is trading at some ridiculous multiple of earnings for the same reasons. Yes, there’s likely much future value in Tesla and web3. But the rapid recent growth is mostly indicative of the fed money machine going brrr.
- PaulHoule 5y agoPeople frequently mistake "inflation" for "hyperinflation". Zimbabwe had hyperinflation. Zimbabwe had a $100 trillion dollar bill: https://www.dallasfed.org/assets/documents/institute/annual/2011/annual11b.pdf#:~:text=Zimbabwe%E2%80%99s%20extreme%20and%20uncon https://www.dallasfed.org/assets/documents/institute/annual/... If we had 20% inflation per year for the next decade in the US that would be high inflation but wouldn't be hyperinflation. We are nowhere near that. I wonder if the crypto bubble creates a "wealth effect" that makes people feel richer, spend money, and drive inflation.
- SubiculumCode 5y agohyperinflation is hyperbole. Our inflation: 5% since last year. Hyper inflation: ~50% per month https://www.investopedia.com/terms/h/hyperinflation.asp https://www.investopedia.com/terms/h/hyperinflation.asp
- thoughtstheseus 5y agoThe S&P 500 returned > 30% over the last year. Inflation shows up in many places.
- supermatt 5y agoInflation refers to the price of goods/services. Stocks are neither.
- thoughtstheseus 5y agoStocks represent the present value of future claims on consumption.
- imtringued 5y agoOk, now actually read what you said. If the price of stocks goes up without revenue going up that just means people value future consumption more and present consumption less. That has absolutely nothing to do with inflation. If anything, it's disinflationary.
- supermatt 5y agoNope. Stock represents the fractional ownership of a company, and its price represents the perceived value thereof. By all means use it as whatever indicator you like, but lets stick to the facts.
- ac29 5y agoI think they are referring to the "net present value of future cash flows" model for valuing stocks. Its one model that can be used to help determine the value of a company - the idea being that you aren't necessarily buying a company's stock for its earnings today, you are buying it for what it will earn over the time period you intend to hold it. Of course, that's not the only thing that determines stock price.
- thoughtstheseus 5y agoCool, tell that to Alan Greenspan. I wonder where that perceived value comes from?
- supermatt 5y ago> Cool, tell that to Alan Greenspan. Your word salad is your own, not Greenspans. > I wonder where that perceived value comes from? I believe that is the holy grail of investment. There are many different models that try to approximate it.
- keyle 5y agoIt's true. Every time governments have given a cash bonus away, these "instruments" took a major lift for no fundamental reason.