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Speculative asset class fails as non-speculative legal tender class. If king for the day with a sovereign wealth fund I wouldn't forbid investment choices like

• Terr_ 2y ago
  > sovereign wealth fund That reminds me of Hong Kong, where I used to live and which maintains a large sovereign wealth fund to ensure its currency is pegged to the US dollar. While various US think tanks ranked it well on their checklists of "economic freedom", they tended to gloss over the rest of the recipe that made it work. Not just the huge sovereign wealth fund, but also how half the housing is government-run or subsidized and you don't really own land, you just rent it for a very long term from the government.
  • jaggederest 2y ago
    > you don't really own land, you just rent it for a very long term from the government. This is probably economically a good idea, absent something like georgist land taxes. It eliminates some or all of the incentive to speculate in land, which is of course the whole problem El Salvador ran into with bitcoin as currency.
    • ggm 2y ago
      It hasn't entirely stopped rents in HK being untenably high, for many people. It has rent controls, but the system permits some very untenable outcomes which if left unchecked would re-create Kowloon Walled City. So whilst politically I agree, practically I am unsure there is no land speculation: A waterfront view remains valuable in and of itself, no matter what.
      • ty6853 2y ago
        Kowloon Walled City ended because it was attacked by the state, rather than through market forces. Many of those people are now likely in worse shape effectively renting a cage sized bed, but now paying the governments cut on top of whatever black market shenanigans goes on in both the slum housing and kowloon.
        • kiba 2y ago
          Kowloon Walled City was neither a dystopia nor a utopia. It works and was able to maintain itself, but it could have been done better if it was actually supported by the government.
          • gsf_emergency 2y ago
            That's "just" a bug-feature of common law systems >The Kowloon Walled City was exempt and remained under the control of Qing China. https://www.thecollector.com/kowloon-walled-city-lawlessness-and-claustrophobia/ https://www.thecollector.com/kowloon-walled-city-lawlessness... https://en.wikipedia.org/wiki/999-year_lease https://en.wikipedia.org/wiki/999-year_lease https://en.wikipedia.org/wiki/999-year_leases_in_Hong_Kong#Valuation https://en.wikipedia.org/wiki/999-year_leases_in_Hong_Kong#V...
      • jaggederest 2y ago
        Right, obviously HK is a bit of a special case. Land in Manhattan would, I'm 100% certain, remain incredibly expensive. The cool thing about leases is that you can change the cost of the lease periodically, which ensures that the value of the land does not accrue purely to the person occupying it.
        • FabHK 2y ago
          > obviously HK is a bit of a special case Reminds me of the old macro economist joke: There are 4 types of economies, developed economy, developing economy, Japan, and Argentina. Maybe HK should be added to that joke...
      • 2y ago
    • sidewndr46 2y ago
      Economically, communism is a great idea. In practice, you get "collectivization" in the Soviet Union that basically starves millions to death
      • MaxPock 2y ago
        Don't millions starve too in capitalism?
        • kragen 2y ago
          No. No liberal capitalist economy has ever had a famine. By contrast, most communist economies have created major famines, and history's largest famines have all been created by communist economies, outdoing even colonialism in their death tolls. These are well-known historical facts.
          • cco 2y ago
            To save some time, can you define the True Scotsman here? Would the US in the 1920s count as a liberal capitalistic country for example? England in the 1860s?
            • kragen 2y ago
              Yes, and yes, which is one reason that, as it turns out, neither the US in the 01920s nor England in the 01860s experienced the famines that affected some other parts of the world at the same time. (In the 01920s Russia was experiencing its first famine that could reasonably be attributed to communism, and in the 01860s Sweden and Finland were experiencing their last famines before their transitions to capitalism.) But not, for example, Ireland in the 01840s and 01850s; that was neither, being colonialist and agricultural. Nobody starved to death in "famines" like the so-called Lancashire Cotton Famine. By contrast, in the Finnish famine starting the next year, almost 10% of the population of Finland died. As it turns out, that was the last famine in Finland because it became capitalist over the following decades.
  • bawolff 2y ago
    > That reminds me of Hong Kong, where I used to live and which maintains a large sovereign wealth fund to ensure its currency is pegged to the US dollar. That doesn't sound like a soverign wealth fund. Foreign currency reserves are not the same thing as a soverign weath fund.
    • Terr_ 2y ago
      I'm not sure what you're reacting to here, I never said it was just US currency reserves. (Those are a component, sure, but that's hardly abnormal.) > The Exchange Fund of Hong Kong is the primary investment arm and de facto sovereign wealth fund of the Hong Kong Monetary Authority. https://en.wikipedia.org/wiki/Exchange_Fund_(Hong_Kong) https://en.wikipedia.org/wiki/Exchange_Fund_(Hong_Kong) It's also 10th-largest on: https://en.wikipedia.org/wiki/Sovereign_wealth_fund#Largest_sovereign_wealth_funds https://en.wikipedia.org/wiki/Sovereign_wealth_fund#Largest_...
      • FabHK 2y ago
        HK has a currency pegged to the USD via a currency board, that is (similar to a stable coin) backed one-to-one with USD denominated short-dated treasuries. That is within the HK exchange fund operated by the HK Monetary Authority. The exchange fund also (and somewhat controversially) runs additional portfolios (with foreign shares and bonds, and private equity, real estate etc.) in the manner of a sovereign wealth fund.
  • deleted 2y ago
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  • xwolfi 2y ago
    Like in the UK...
  • r00fus 2y ago
    This is such a huge thing. One of my relatives worked in the housing authority of the HK government - he said that at any given time at least 50% of the housing was publicly owned and rented directly to tenants for like 2k HKD (~300 USD)/mo. That's why anyone can afford to live there. Actual property leases are incredibly expensive - in the 10s of millions of HKD. Hong Kong functions as a free-trade market by socializing large parts of its basic economy.
• breadwinner 2y ago
  Speaking of Sovereign Wealth Funds... Trump Calls for Wealth Fund in Executive Order https://www.nytimes.com/2025/02/03/us/politics/sovereign-wealth-fund-trump.html https://www.nytimes.com/2025/02/03/us/politics/sovereign-wea...
  • slashdev 2y ago
    Wouldn’t they need to balance a budget first? Not in my lifetime
    • nyokodo 2y ago
      > Not in my lifetime Were you alive in the mid to late 90s? A string of balanced budgets and surpluses. There are new problems and no dot com bubble right now but most Americans were alive the last time we had balanced budgets. It is quite possible.
      • stephen_g 2y ago
        Yes, it does happen from time to time coincidentally usually in the lead-up to financial crises…
        • acdha 2y ago
          It became unbalanced by choice: a recreational war in the Middle East and tax cuts. The dotcom bubble helped, but those trillions in debt were not caused by people paying less capital gains tax on pets.com sales.
        • r00fus 2y ago
          Yes, Democrats balance the budget, then Republicans sneak in and break the bank with wars, or deficit spending.
      • slashdev 2y ago
        I remember it well. It was possible. That’s not the same as saying it is still possible at this debt level with the massive shortfalls in social security and other entitlements. I do not think it’s possible without also seriously eroding the debt burden through sustained higher inflation. That horse has left the barn.
• codethief 2y ago
  > Speculative asset class fails as non-speculative legal tender class. This. Bitcoin proponents often claim that eventually everyone will use Bitcoin for payments ("Finally no more governments or central banks!") and that's why it will increase in value, so everyone should invest in BTC. But this argument is fundamentally flawed: A currency, in order for it to work (in order for people to be able to trust it), needs to be stable in value. Which contradicts it being an investment vehicle and drastically varying in value over time.
  • mikepurvis 2y ago
    And quite apart from that fundamental misalignment, sovereign states having some measure of control over their own monetary policy is arguably a pretty good thing.
    • mindwok 2y ago
      And on top of that, consumers prefer institutions in the loop. That’s why people use Amex to pay for stuff, because if it goes wrong you’ve got a massive institution with a tonne of clout to help you out.
    • varenc 2y ago
      This is moot for El Salvador. They’ve been dollarized since 2001 and USD is effectively the only legal tender.
      • mikepurvis 2y ago
        That is helpful context— it's too bad TFA wasn't a bit more clear on the history. In any event, you could still make the case that prior to this bitcoin experiment, the people and economy of El Salvador still were benefiting from a human hand on the monetary tiller, it's just it was that of the US Fed rather than their own officials (elected or otherwise).
  • roenxi 2y ago
    In fairness, markets can operate quite well with almost nobody in them being able to argue why. Gold has remarkable staying power but it is rare to find gold proponents who can explain why convincingly. A lot of the arguments for where the value comes from are bunk. If I hear one more person explaining that jewellery matters I'll ... go peacefully about my day I suppose. Still holds its value though, the economy does not care if people understand why the price signals are so.
• odo1242 2y ago
  It might have worked if El Salvador made their own cryptocurrency which they control and could mint more of and backed it properly as a non-speculative legal tender, but they didn’t and that didn’t happen.
  • fny 2y ago
    So... fiat?
    • odo1242 2y ago
      Yes. A "digital fiat" currency, basically. It could potentially incorporate privacy features from cryptocurrencies or replace digital payment providers. Or be a ginormous waste of time. I don't really know enough to tell you which one.
  • hammock 2y ago
    Correct. The IMF can’t run its debt trap/looting playbook without more currency control
    • odo1242 2y ago
      What playbook is this? Genuine question.
• deleted 2y ago
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