7 ms·

Thank god we have crypto & NFTs to help people use all this free cash

human 5y ago
It doesn’t work like that though. If I buy BTC at 60k then someone is selling BTC at the same price. The fiat is just moving from one account to the next. The people getting cash-rich from crypto are either spending it (on lambos) or putting it back into the stock market.
- mikeodds 5y ago
  Depends who you are buying it from and which country they are spending in
- Ozzie_osman 5y ago
  It's a little more complicated than that. You buy 1 BTC from me for 60k. Now let's say I want to buy BTC again, but you want to sell it for 120k, so now I buy 0.5 BTC from you for 60k, and if everyone agrees that 120k should be the fair price, we've just bid up the market cap and value of BTC without really increasing the fiat. Now imagine that with different crypto, stocks, other financial instruments, real estate, etc etc and in different combinations and with margin and derivatives and what not.
  - JumpCrisscross 5y ago
    > we've just bid up the market cap and value of BTC without really increasing the fiat If anyone in their chain borrows against their inflated crypto, that creates new fiat.
- clavicat 5y ago
  In all probability, you’re selling to a crypto trader or bot who then uses those funds to make more crypto trades, so the money is in a sense trapped in crypto markets until someone withdraws it from the exchange. The extent to which this money is being absorbed by crypto can be seen by analyzing exchange flows.
- WJW 5y ago
  I think most of the fiat money spent on crypto goes to miners, who then turn around and pay the electricity bill with it.
radicaldreamer 5y ago
Exactly, without that escape valve, the value of "real" goods would be skyrocketing even more.
nine_zeros 5y ago
This is not even a joke. Crypto has absolutely helped absorb the inflation.
- IAmGraydon 5y ago
  No, it hasn’t. As money spirals deeply into inflation, crypto holdings and equities will have to be liquidated so that people have money to live off of. This will only feed into the inflation more. Investments haven’t absorbed inflation. They’ve delayed it slightly.
  - Supermancho 5y ago
    > No, it hasn’t. ... They’ve delayed it slightly. So it has, by your own admission. You predict a worse eventual outcome, which is not insightful. When this will all end badly is the question, not if. Rome lasted a good long time playing these games.
  - cgio 5y ago
    You can assume some stickiness on investment decisions. If people end up panic liquidating it would on the one hand deflate crypto on the other indicate lower demand.
  - tharkun__ 5y ago
    If 10000 people buy bitcoin at 60k per coin as an investment and later have to sell at 10k per coin to make ends meet, I somehow doubt that the guy that pocketed the difference will contribute to inflation as much as the 10000 guys trying to put up a meal for tomorrow. It feels like saying Elon Musk will make make your next stop at the grocer's more expensive, because selling his 10% of shares for $20 billion will contribute to inflation because of all the stuff he's gonna buy with that money.
    - GoOnThenDoTell 5y ago
      Unlike most billionaires, we have a fair idea of what he’s going to buy with it: more employee wages in companies like SpaceX I wonder about the price of real estate in Brownsville though
evergrande 5y ago
Actually, that's a good point. Inflation would be even worse if that cash was going into physical goods and services. The government now has an incentive to leave crypto alone aside from providing clarity.
- mensetmanusman 5y ago
  That is an interesting justification for leaving crypto alone. “Well if those poor people weren’t gambling on that ponzi scheme for a new dog coin they would actually be materially improving their living conditions and prices for everyone else would go up” It’s interesting to see the wealth transfer of all these people that usually buy weekly lotto tickets get crypto instead and send their 10s of millions to programmers making an ICO and a fancy website.
- bezalmighty 5y ago
  In the macro economic sense, fiat money isn't 'used up' or 'locked away' when you buy something like crypto, it's transferred from your account to someone else's bank account. Worse, it goes through the process of fractional reserve banking and multiplies about ~10x after changing hands repeatedly.
  - Dylan16807 5y ago
    Minus all the fees to the crypto miners, which end up wasting many hours of labor and causing pollution. That money will eventually be used again but it's worse than paying someone to dig and fill a hole.
  - RC_ITR 5y ago
    The trickiest question in business that noone seems to get right: Q: How much money flows into "X" market? A: None, money flows THROUGH markets.
    - WA 5y ago
      Not sure about that. Money velocity went down a lot. If you pay Apple money, Apple – the company – keeps that money as cash reserves in some form or another. This might be reinvested and circulates a bit more, but is it really spend in the real economy so that average Joe benefits from this?
boringg 5y ago
Oh I figure he's being super sarcastic and saying that all that money went into propping up prices in NFTs and crypto that will at some point show their inherent worth. Maybe I read it wrong compared to all the other commenters
- Jensson 5y ago
  Pretty sure the poster meant "thank god people burn their cash by putting it into crypto and NFT's instead of buying more goods".
salt-licker 5y ago
Which contribute to a chip shortage making cars more expensive, seemingly pure financial instruments directly causing inflation for everyday people, there is no escape

It doesn’t work like that though. If I buy BTC at 60k then someone is selling BTC at the same price. The fiat is just moving from one account to the next. The people getting cash-rich from crypto are either spending it (on lambos) or putting it back into the stock market.

mikeodds 5y ago
Depends who you are buying it from and which country they are spending in
Ozzie_osman 5y ago
It's a little more complicated than that. You buy 1 BTC from me for 60k. Now let's say I want to buy BTC again, but you want to sell it for 120k, so now I buy 0.5 BTC from you for 60k, and if everyone agrees that 120k should be the fair price, we've just bid up the market cap and value of BTC without really increasing the fiat. Now imagine that with different crypto, stocks, other financial instruments, real estate, etc etc and in different combinations and with margin and derivatives and what not.
- JumpCrisscross 5y ago
  > we've just bid up the market cap and value of BTC without really increasing the fiat If anyone in their chain borrows against their inflated crypto, that creates new fiat.
clavicat 5y ago
In all probability, you’re selling to a crypto trader or bot who then uses those funds to make more crypto trades, so the money is in a sense trapped in crypto markets until someone withdraws it from the exchange. The extent to which this money is being absorbed by crypto can be seen by analyzing exchange flows.
WJW 5y ago
I think most of the fiat money spent on crypto goes to miners, who then turn around and pay the electricity bill with it.

radicaldreamer 5y ago

Exactly, without that escape valve, the value of "real" goods would be skyrocketing even more.

nine_zeros 5y ago

This is not even a joke. Crypto has absolutely helped absorb the inflation.

IAmGraydon 5y ago
No, it hasn’t. As money spirals deeply into inflation, crypto holdings and equities will have to be liquidated so that people have money to live off of. This will only feed into the inflation more. Investments haven’t absorbed inflation. They’ve delayed it slightly.
- Supermancho 5y ago
  > No, it hasn’t. ... They’ve delayed it slightly. So it has, by your own admission. You predict a worse eventual outcome, which is not insightful. When this will all end badly is the question, not if. Rome lasted a good long time playing these games.
- cgio 5y ago
  You can assume some stickiness on investment decisions. If people end up panic liquidating it would on the one hand deflate crypto on the other indicate lower demand.
- tharkun__ 5y ago
  If 10000 people buy bitcoin at 60k per coin as an investment and later have to sell at 10k per coin to make ends meet, I somehow doubt that the guy that pocketed the difference will contribute to inflation as much as the 10000 guys trying to put up a meal for tomorrow. It feels like saying Elon Musk will make make your next stop at the grocer's more expensive, because selling his 10% of shares for $20 billion will contribute to inflation because of all the stuff he's gonna buy with that money.
  - GoOnThenDoTell 5y ago
    Unlike most billionaires, we have a fair idea of what he’s going to buy with it: more employee wages in companies like SpaceX I wonder about the price of real estate in Brownsville though

evergrande 5y ago

Actually, that's a good point. Inflation would be even worse if that cash was going into physical goods and services. The government now has an incentive to leave crypto alone aside from providing clarity.

mensetmanusman 5y ago
That is an interesting justification for leaving crypto alone. “Well if those poor people weren’t gambling on that ponzi scheme for a new dog coin they would actually be materially improving their living conditions and prices for everyone else would go up” It’s interesting to see the wealth transfer of all these people that usually buy weekly lotto tickets get crypto instead and send their 10s of millions to programmers making an ICO and a fancy website.
bezalmighty 5y ago
In the macro economic sense, fiat money isn't 'used up' or 'locked away' when you buy something like crypto, it's transferred from your account to someone else's bank account. Worse, it goes through the process of fractional reserve banking and multiplies about ~10x after changing hands repeatedly.
- Dylan16807 5y ago
  Minus all the fees to the crypto miners, which end up wasting many hours of labor and causing pollution. That money will eventually be used again but it's worse than paying someone to dig and fill a hole.
- RC_ITR 5y ago
  The trickiest question in business that noone seems to get right: Q: How much money flows into "X" market? A: None, money flows THROUGH markets.
  - WA 5y ago
    Not sure about that. Money velocity went down a lot. If you pay Apple money, Apple – the company – keeps that money as cash reserves in some form or another. This might be reinvested and circulates a bit more, but is it really spend in the real economy so that average Joe benefits from this?

boringg 5y ago

Oh I figure he's being super sarcastic and saying that all that money went into propping up prices in NFTs and crypto that will at some point show their inherent worth. Maybe I read it wrong compared to all the other commenters

Jensson 5y ago
Pretty sure the poster meant "thank god people burn their cash by putting it into crypto and NFT's instead of buying more goods".

salt-licker 5y ago

Which contribute to a chip shortage making cars more expensive, seemingly pure financial instruments directly causing inflation for everyday people, there is no escape