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We learned about the fraud because of macroeconomic factors! inflation -> rising interest rates -> crypto less attractive [0] -> people ask for their deposits

We learned about the fraud because of macroeconomic factors! inflation -> rising interest rates -> crypto less attractive [0] -> people ask for their deposits back -> company can't meet obligations -> company folds -> scrutiny -> fraud revealed Is my basic model of things. [0] from https://marginalrevolution.com/marginalrevolution/2022/11/the-ftx-debacle-eli5.html https://marginalrevolution.com/marginalrevolution/2022/11/th...: "When interest rates are very low a dollar in the far future is worth almost as much as a dollar today. Thus, in a regime of low interest-rates, crypto and other projects with (speculative) long-run payoffs could be valued highly. As interest rates rose, however, long-run speculative returns began to look much less attractive than say T-bills and money flocked out of assets in the long-run sector causing prices to plummet."

woodruffw 4y ago
I completely agree! My point was that it's very funny to blame the macro (and even funnier to blame geopolitics), when it's clearly just serving a revelatory purpose.
- function_seven 4y ago
  So you're saying that when I get arrested for public indecency, my defense should start with "due to tidal forces and the changing orientation of our Moon, my nether region emerged above the water's surface" Or something like that?
  - woodruffw 4y ago
    I don't know if I'd recommend it, but it'll be roughly as convincing as blaming geopolitics!
  - setgree 4y ago
    My advice is to repeat Warren Buffet's adage -- "only when the tide goes out do you discover who's been swimming naked" -- and adamantly deny that it has any non-literal meaning whatsoever. Warren was just telling us about something he observed at the beach one time
    - danenania 4y ago
      Swimming naked feels great and is plainly superior to swimming in a bathing suit. If you read between the lines, Buffet was clearly recommending that everyone swim naked and put their full net worth into crypto.
      - setgree 4y ago
        "I recant! I recant!" screams Warren Buffett as he runs ashore covered in jellyfish
        Obscurity4340 4y ago
        > Covered in Kraken
- killjoywashere 4y ago
  I'm not an economist, but it does seem like the inflation is primarily attributable to geopolitical factors: the various spending programs countries embarked on during the pandemic, China's zero-Covid policy, the Russian invasion of Ukraine putting a premium on both oil and grain. Are you suggesting that crypto is to blame for inflation? how would that work?
  - woodruffw 4y ago
    > Are you suggesting that crypto is to blame for inflation? how would that work? No. The only claim is that crypto is sleeping in the bed it made, bedfellows included.
- SkyMarshal 4y ago
  Rising inflation and correspondant rising interest rates would have resulted in a major crypto market decline with or without the fraud. Bitcoin had already fallen from $60k+ to ~$20k before the waves of failures even began happening. All of cryptocurrency is a risk asset. When credit and money is cheap and flowing freely, it flows into risk assets like crypto, driving up their price and forming bubbles. When rates rise and credit and money is no longer flowing freely, it flows out of risk assets into safer havens, popping the bubbles. That's what happened to crypto this year. The collapses and fraud revelations were a consequence of that, not the cause. Blaming the macro is accurate.
  - WeylandYutani 4y ago
    It's been 15 years now I think? And still cryptocurrency mainly revolves around speculation. It's adoption as a currency has been... lacking.
    - SkyMarshal 4y ago
      Close, almost 14yrs. Launched Jan 2009. Bitcoin's economic design incentivizes saving rather than spending, so it's no big surprise that's what's happening. DeFi currently is all about using loans to make money speculating, so yeah, but it's still kinda new so jury's still out on whether it might develop into something more broadly useful.
      - automatic6131 4y ago
        >but it's still kinda new so jury's still out on whether it might develop into something more broadly useful Lol. Lmao, even.
BlandDuck 4y ago
Spot on. Warren Buffet put this succinctly: "When the tide goes out you discover who's been swimming naked."
Kye 4y ago
They would have gotten away with it, too, if it weren't for those pesky feds.
deleted 4y ago
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woodruffw 4y ago

I completely agree! My point was that it's very funny to blame the macro (and even funnier to blame geopolitics), when it's clearly just serving a revelatory purpose.

function_seven 4y ago
So you're saying that when I get arrested for public indecency, my defense should start with "due to tidal forces and the changing orientation of our Moon, my nether region emerged above the water's surface" Or something like that?
- woodruffw 4y ago
  I don't know if I'd recommend it, but it'll be roughly as convincing as blaming geopolitics!
- setgree 4y ago
  My advice is to repeat Warren Buffet's adage -- "only when the tide goes out do you discover who's been swimming naked" -- and adamantly deny that it has any non-literal meaning whatsoever. Warren was just telling us about something he observed at the beach one time
  - danenania 4y ago
    Swimming naked feels great and is plainly superior to swimming in a bathing suit. If you read between the lines, Buffet was clearly recommending that everyone swim naked and put their full net worth into crypto.
    - setgree 4y ago
      "I recant! I recant!" screams Warren Buffett as he runs ashore covered in jellyfish
      - Obscurity4340 4y ago
        > Covered in Kraken
killjoywashere 4y ago
I'm not an economist, but it does seem like the inflation is primarily attributable to geopolitical factors: the various spending programs countries embarked on during the pandemic, China's zero-Covid policy, the Russian invasion of Ukraine putting a premium on both oil and grain. Are you suggesting that crypto is to blame for inflation? how would that work?
- woodruffw 4y ago
  > Are you suggesting that crypto is to blame for inflation? how would that work? No. The only claim is that crypto is sleeping in the bed it made, bedfellows included.
SkyMarshal 4y ago
Rising inflation and correspondant rising interest rates would have resulted in a major crypto market decline with or without the fraud. Bitcoin had already fallen from $60k+ to ~$20k before the waves of failures even began happening. All of cryptocurrency is a risk asset. When credit and money is cheap and flowing freely, it flows into risk assets like crypto, driving up their price and forming bubbles. When rates rise and credit and money is no longer flowing freely, it flows out of risk assets into safer havens, popping the bubbles. That's what happened to crypto this year. The collapses and fraud revelations were a consequence of that, not the cause. Blaming the macro is accurate.
- WeylandYutani 4y ago
  It's been 15 years now I think? And still cryptocurrency mainly revolves around speculation. It's adoption as a currency has been... lacking.
  - SkyMarshal 4y ago
    Close, almost 14yrs. Launched Jan 2009. Bitcoin's economic design incentivizes saving rather than spending, so it's no big surprise that's what's happening. DeFi currently is all about using loans to make money speculating, so yeah, but it's still kinda new so jury's still out on whether it might develop into something more broadly useful.
    - automatic6131 4y ago
      >but it's still kinda new so jury's still out on whether it might develop into something more broadly useful Lol. Lmao, even.

BlandDuck 4y ago

Spot on. Warren Buffet put this succinctly: "When the tide goes out you discover who's been swimming naked."

Kye 4y ago

They would have gotten away with it, too, if it weren't for those pesky feds.

deleted 4y ago

[deleted]