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Crypto itself, or at least the bubble, was an unintended byproduct of low interest rates and lax securities enforcement. The low interest environment is intende

Crypto itself, or at least the bubble, was an unintended byproduct of low interest rates and lax securities enforcement. The low interest environment is intended to spurn the monied rich into investing in productive businesses, but "innovators" instead invented crypto assets and lauded them as the second coming of Mansa Musa, siphoning nearly a trillion dollars out of the productive economy. Clever crypto "innovators" recognized the monied rich's need to feed their insatiable craving for growth without doing any real work. Now that the government itself is providing that outlet, there's no reason for crypto to continue to exist.

cma 4y ago
> Now that the government itself is providing that outlet Inflation adjusted nothing the government is selling is earning other than I-bonds (individual yearly buy limit of $15K). With Trump's energy output restriction deal with Saudi and others expiring inflation may slow, but the situation of gas in Europe over the winter seems poised to keep it up (CPI doesn't include energy directly, but it feeds back in).
- boole1854 4y ago
  > Inflation adjusted nothing the government is selling is earning other than I-bonds (individual yearly buy limit of $15K). Inflation-indexed long term US treasuries are now earning positive rates of interest. See https://fred.stlouisfed.org/series/DFII30 https://fred.stlouisfed.org/series/DFII30 -- it's not necessarily a high rate (currently 1.74% after inflation with a 30-year term), but when you have millions or billions to invest, it's certainly not nothing. > (CPI doesn't include energy directly, but it feeds back in). CPI does directly include energy, including gas [1]. You may be thinking of "core CPI" which excludes energy and food prices. [1] https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm
  - cma 4y ago
    You're right about CPI and core CPI, and I didn't realize TIPS went that positive recently. Since the inflation adjustment gains are taxed I still don't know that you could come out preserving wealth at current inflation rates, unless it is held in a completely tax free account like a Roth.
- sangnoir 4y ago
  IIRC, individual I-bond purchases are are limited to $10k p.a. - not $15k
throwaway292939 4y ago
What is the government outlet here?
- OzzyB 4y ago
  I believe that would be BONDS (or GILTS if you're in the UK)
  - deleted 4y ago
    [deleted]
boole1854 4y ago
> siphoning nearly a trillion dollars out of the productive economy Not exactly correct. While the global crypto market cap is currently around a trillion dollars (and was higher in the recent past), this is vastly different than it being the case that a trillion dollars was invested in crypto (i.e., "siphoned out" of the rest of the economy). In fact, according to one estimate, in 2021 global crypto investment was $30.2 billion [1]. (I don't quickly see estimates for 2022.) For comparison, US gross private domestic investment across all industries was $4.1 trillion in 2021 [2] and globally it was several times that. While $30 billion is nothing to sneeze at when considered on its own, crypto investment is a rounding error when compared with global investment. [1] https://home.kpmg/xx/en/home/media/press-releases/2022/02/total-fintech-investment-tops-us-210-billion.html https://home.kpmg/xx/en/home/media/press-releases/2022/02/to... [2] See Table 1.1.5. Gross Domestic Product at https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri=1&select_all_years=0&nipa_table_list=5&series=a&first_year=2020&last_year=2022&scale=-9&categories=survey&thetable= https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri...
- omegaworks 4y ago
  Market cap also quantifies the value of the labor that has gone into developing the infrastructure that supports these networks. Had that labor been allocated differently, that trillion dollars of value might be seen in parts of the economy responsible for the production of goods that are now becoming expensive.

cma 4y ago

> Now that the government itself is providing that outlet Inflation adjusted nothing the government is selling is earning other than I-bonds (individual yearly buy limit of $15K). With Trump's energy output restriction deal with Saudi and others expiring inflation may slow, but the situation of gas in Europe over the winter seems poised to keep it up (CPI doesn't include energy directly, but it feeds back in).

boole1854 4y ago
> Inflation adjusted nothing the government is selling is earning other than I-bonds (individual yearly buy limit of $15K). Inflation-indexed long term US treasuries are now earning positive rates of interest. See https://fred.stlouisfed.org/series/DFII30 https://fred.stlouisfed.org/series/DFII30 -- it's not necessarily a high rate (currently 1.74% after inflation with a 30-year term), but when you have millions or billions to invest, it's certainly not nothing. > (CPI doesn't include energy directly, but it feeds back in). CPI does directly include energy, including gas [1]. You may be thinking of "core CPI" which excludes energy and food prices. [1] https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm
- cma 4y ago
  You're right about CPI and core CPI, and I didn't realize TIPS went that positive recently. Since the inflation adjustment gains are taxed I still don't know that you could come out preserving wealth at current inflation rates, unless it is held in a completely tax free account like a Roth.
sangnoir 4y ago
IIRC, individual I-bond purchases are are limited to $10k p.a. - not $15k

throwaway292939 4y ago

What is the government outlet here?

OzzyB 4y ago
I believe that would be BONDS (or GILTS if you're in the UK)
- deleted 4y ago
  [deleted]

boole1854 4y ago

> siphoning nearly a trillion dollars out of the productive economy Not exactly correct. While the global crypto market cap is currently around a trillion dollars (and was higher in the recent past), this is vastly different than it being the case that a trillion dollars was invested in crypto (i.e., "siphoned out" of the rest of the economy). In fact, according to one estimate, in 2021 global crypto investment was $30.2 billion [1]. (I don't quickly see estimates for 2022.) For comparison, US gross private domestic investment across all industries was $4.1 trillion in 2021 [2] and globally it was several times that. While $30 billion is nothing to sneeze at when considered on its own, crypto investment is a rounding error when compared with global investment. [1] https://home.kpmg/xx/en/home/media/press-releases/2022/02/total-fintech-investment-tops-us-210-billion.html https://home.kpmg/xx/en/home/media/press-releases/2022/02/to... [2] See Table 1.1.5. Gross Domestic Product at https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri=1&select_all_years=0&nipa_table_list=5&series=a&first_year=2020&last_year=2022&scale=-9&categories=survey&thetable= https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri...

omegaworks 4y ago
Market cap also quantifies the value of the labor that has gone into developing the infrastructure that supports these networks. Had that labor been allocated differently, that trillion dollars of value might be seen in parts of the economy responsible for the production of goods that are now becoming expensive.