Alex was kind enough to protect me. I'm actually in Westport where the cannibals are worse, but at least the ones in New Canaan won't be able to find me here!
Seeing people starting to write about how BTC is down is one of the bottom-of-cycle buy signals, to be honest, but I'll wait another couple months here for the grave-dancing to *really* start up again.
My read inverts the usual narrative. Capital flows don't follow pure market logic at scale, they're substantially shaped by where entrenched financial power needs technological development to occur. Crypto served a real function here: the blockchain infrastructure, settlement mechanisms, and public acclimation to non-cash digital value all constitute R&D for the CBDC digital panopticon architecture that's now materializing across multiple central banks simultaneously. The upper elites have gotten what they needed from public participation in the technology.
The current rotation into AI fits the same pattern, and an Ashby framing re: requisite variety is relevant here: the core problem for any regulatory system is that it needs sufficient internal variety to match the complexity of what it's regulating. Legacy surveillance and social management architectures were being outpaced by social complexity involving distributed communication, encrypted coordination, proliferating subcultures. AI closes that gap structurally. CBDC provides the payment chokepoint; AI provides the pattern recognition and behavioral modeling; social credit mechanisms provide the enforcement gradient. These are components of a single control architecture, and capital is flowing toward whichever component currently needs development.
Gold and silver suppression fits here too, controlled to prevent public flight to alternatives - price suppressed to stay below a threshold of public interest. Obvious suppression would itself delegitimize fiat, so the price management has to be deniable, which is why it operates through paper markets and futures rather than crude intervention.
If this framework holds, Bitcoin isn't necessarily doomed, it's just no longer useful to advance it for upcoming digital panopticon architecture. All the other arguments surrounding the technology (both pro and con) are, I think, unfortunately tertiary at best.
You make some excellent points. I think one of the weaknesses of Bitcoin is the lack of anonymity. You're also correct that governments will view it as a threat to their fiat which they control and from which they extract seigniorage. The positive is Bitcoin is permissionless and has no associated liabilities (Saylor's activities are different). So, they can't stop us from using it instead of fiat. I see a lot of value in that alone. Thanks for the thoughtful comment.
The permissionless property operates at the protocol level, but that's not where governments will apply pressure. They control the fiat on- and off-ramps - Coinbase can be regulated or banned, exchanges can be required to KYC every transaction, and banking access for crypto businesses can be withdrawn, as we've already seen episodically. You don't need to ban Bitcoin to neutralize it as a fiat alternative; you just need to make conversion costly, surveilled, or legally precarious enough that ordinary people won't use it as one.
The stablecoin infrastructure compounds this. Tether - which has never passed a real audit despite claiming $100B+ in reserves, operated by a handful of people with documented histories in fraud-adjacent ventures - is load-bearing for crypto liquidity. Its existence as a manipulation vector is structural. If the on-ramps are regulated and the stablecoin layer is compromised, what remains of the fiat-alternative thesis is a protocol that works in principle but is effectively gatekept in practice.
Bitcoin may well have value as a speculative asset or even a long-term store of value. But "permissionless" as a fiat escape hatch requires that the full chain from fiat to crypto to goods and services be permissionless, and it isn't, and won't be allowed to become so.
These are all valid points. Thank you. There are ways around all of the above for those who want to own and self-custody Bitcoin. I'm confident that the majority of people reading this blog could figure it out given an afternoon of research. But you're correct that the guardrails could go up high enough that most people would give up before figuring out a reasonable workaround. At that point, there's no adoption story and Bitcoin would become a niche asset. I think it can get to scale before those guardrails go up and self-custody isn't difficult. But as this is the Tree of Woe, we should contemplate the possibility that fiat becomes a walled garden (ok - really a walled hellscape).
Just want to say how much someone like me, who is not a tech-priest, appreciate your back-and-forth on this and the original article as well.
If I was to try and add anything, it would be my outsider's perspective on this aspect:
There's another angle of the "state vs BC-owners". In the pre-internet days, we had several different collectives over here (Sweden), some with hundreds of members, who tried to set up their own internal system of bits (it was really called that, "bit" in Swedish means "piece") to regulate favours and services done between members:
I change your tyres, you babysit my kids for n hours, all services also payable in bit form, and the no. of bits was a fixed amount. And since you could straight up trade one servide for another, there was little point in hoarding the bits for anyone.
The state clamped down on it after a while, by charging the elected leaders with tax fraud, tax evasion, making false currency, banking without oktroj, and anything else they could think of. They also sicced Social Services and Childcare on those with children, as a way of harassment.
Point being: even if the bit-coins are e-money of a sorts, you the owner still has a physical presence somewhere in the world, and they can and will come for you if you make yourself a problem, according to their metrics for being such.
A final point: We must always remember that the state (or corporate capitalist organisations) doesn't care what we do, as long as what we do is not an open or de facto challenge to the system and their position as the definers of the system. A barnyard example is that I can make moonshine at home and the police won't care - until I start selling it outside the state's monopoly. Same with corporate - it doesn't care if they sell my old cellphone, but if I was to try and go to China to pick up a suitcase full of the latest whatever high-tech and sell it as a private citizen, undercutting corporate store prices?
Prison, financial ruin and social ostracisation - guaranteed.
I think the true proof of Bitcoin et al having made the breakthrough into mainstream use is when the state(s) start coming after it for real.
Hi Rikard. Thanks for the kind comments and the smart commentary. You and your neighbors creating a new currency for barter is brilliant. What a great way to trade goods and services with each other.
The fact that the government shut it down is proof that they'll always act to preserve their ridiculous monopoly on fiat. Short-term, I'd like to see so much widespread adoption of Bitcoin that it becomes practically impossible to shut it down.
Long-term, my reminder to governments everywhere is that capital and talent flow to the places where they're treated well. The story is that a government that treats its citizens like milk cows probably survives. When they start treating people like meat cows, capital flees. Elizabeth Warren is personally driving the most successful people (and biggest tax payers) out of the US.
As this is the Tree of Woe, I note that no government will heed my warning and many of us will leave.
But big picture; you're correct. We can create things, but still need to operate in the real world with real things and real consequences.
Hum, everybody's gotta flush and light plus heat are nice. Utilities tend to reflect the value of the buck, no matter inflation or deflation.
I like gold and silver. Bits backed by and exchangeable for such interest me. There was a Utah firm offering gold backed bits as well as a number of firms outside the U. S. However the redemption in gold appeared to me to be unnecessarily complex.
Yes - I own Bitcoin, gold, silver, and energy (in multiple forms). Completely agree with you that it's complicated. There are different ways to own and different ways to get paid. They all come with different benefits and risks. There's no one perfect clean answer. For myself, I make the best asset allocation and risk decisions I can. For my subscribers, I explain what I'm doing and why and in many cases, explain other options so they have enough information to make similar investments, but with different instruments when their risk profile favors other options. Thanks, Jim.
Pretty sure my lead and preserves strategy will work great on roving cannibals. But if that fails, plan B is a landwhaling business that feeds into an upscale longpig BBQ franchise for the discerning cannibal. You gotta be where the market is, is what I'm saying.
I always assumed cannibals were opportunistic. I hadn't considered the possibility of high-end market-based establishments. BBQ seems like an excellent choice. The comment section here is superior to any other I've seen. Let me know how the business goes. I primarily focus on publicly traded equities, but would consider investing in a growing BBQ business that has a low cost of food acquisition.
For poors such as myself, investment is a spectator sport. As such we are free to root for our favorite players regardless of whether we would choose their strategies!
I once heard someone describe the WWE as a soap opera for men and someone else describe CNBC as sports for those who liked finance. There were stocks, strategies, and sectors they'd cheer for and against.
As a professional investor, I work hard to try to separate my feelings about any particular company from the opportunity to make money. For those on the sidelines, enjoy the show and cheer for your team!
I am not the expert you and others here might be but ... I have some concerns when you say:
"I continue to own Bitcoin because I’m 100% confident that the US Congress is going to keep debasing the dollar. We need money that’s not dependent on government decisions and is free of central banks. All of the above reasons outline possibilities that Bitcoin could experience trouble. Dollar debasement will continue and all fiat will lose purchasing power. "
I agree Congress is a bad actor, but they are also to an extent "our" bad actor. The Fed has also shown itself to be all too human over the decades since it was created. Together they are giving us the "something for nothing" we are too stupid to realize is wrong, and not wise, and not necessary. I doubt a balanced budget amendment would solve all of the problems we face, but it would be a good place to start. Mandating IRA holdings in lieu of SS payroll taxes might be another. Going to a first party payment system for medical care, vs. our current third party mode, is another. The insurance companies should not be the only group that (sort of) really knows what the pricing of medical care in our market really is. They seem to be the only party allowed to actually and seriously negotiate those prices.
I understand and view money as a mechanism or vehicle to provide a neutral transaction aid, and to remain neutral, it must also maintain a stable value relative to most of the other wealth items and services being transacted in the economy. Given the complexity of our domestic and global economies, that is not a simple task, but it is probably not as hard as our current processes or procedures seem to require. One suggestion that I have not yet heard significant criticism of is to hold money value stable vs. a basket of commodities or related services. Of course, even that basket has to be adjusted over time, but at a non-volatile rate. I am inclined to think the Fed should reduce its inflation target to 0.5 to 1.0%, max, but no one is asking me. No matter what target level is used, it is still a pernicious tax on wealth, with the potential for deflation apparently being too terrible to contemplate. Maybe it is not so bad if everyone understands (and many do not and will not) that their personal and combined economic growth has to exceed that target for meaningful prosperity. [Too many people still confuse supply and demand price changes with monetary inflation. But I was already about 24 years old before I learned that distinction clearly myself.]
As humans, and especially as Americans, we have a "leave us alone" attitude for those interfering with our preferred mode of social and economic activities. We institute governments to help keep "those people" in check, lately with less and less success. But trying to divorce the money and its management from government control or influence seems to really not be possible unless they get to adopt the form of the money they pay out for government services and then demand back the same from us in taxes.
I do have some fears that "the CBDC digital panopticon architecture" mentioned by Hermes below is an all too real possibility, but there are forces currently resisting that slide away from personal liberty. I suppose having the government know about what we are doing socially and economically via our transactions is almost unavoidable in today's low cash world, but keeping them from controlling our lives thereby is still a vital goal.
Excellent thoughts here. I think where you and I differ (a little) is I wrote about what's going to happen. You wrote about what should happen and how to avoid the coming fiat disaster. If I had it in my power to elect you to Congress, I'd do so on the basis of your ideas. Unfortunately, there aren't enough people like you in that building. I hope I'm wrong, but if I don't express some woe here, Alex won't let me post again ;)
If we need to up the level of woe right now, I can add that my computer just experienced a surge spike (all too common in FL), and my surge protector did not come back on for a few minutes. Then my monitor was flickering for a while.
And the muscle sprain or whatever I have had over the last few days is acting up again, along with a feeling of fever and flushedness. Does all that count? :-)
speaking of having the govt know what we are doing, I just made my 2nd estimated tax payment via the IRS Direct Payment web site, realizing all of a sudden it was already 6/13.
Supposedly in will go through by 6/15, and I do want the IRS to know about that. :-)
> I continue to own Bitcoin because I’m 100% confident that the US Congress is going to keep debasing the dollar
This is the key people need to grasp. Everything else is noise. Our victory is assured over time, we just need to be patient, focus on our families, keep stacking, and trust to providence. I don't think people fully have their heads wrapped around how your future financial well being really comes down entirely to how well you can spend less than you earn and save the remainder in bitcoin.
That said, i think this analysis is confused about the relationship between bitcoin's price and hash rate. The price drives the hashrate, not the other way around. When coins are more valuable, more people decide to mine. When the price drops, miners have a harder time profiting, and people running those datacenters make more money selling them to people using them for AI.
I think the real driver here is capital flight to AI investment. And there's a simple way that story ends: these AI companies have zero moat. They spend massive amounts of capital to build these frontier models, which are easily copied by Chinese researchers, who have models that are _almost_ as good, but substantially chaper. There is a good chance that these AI companies become like cisco in the .com boom , but maybe even worse. I think inference (running the models, the thing people actually pay for) becomes more or less a commodity. There are essentially no switching costs to move from one AI to another.
Great points, Mark. Thanks for the comment. Regarding the hash rate/price question, we agree they're correlated. Beyond that, it's a simple math question to determine which is the leading indicator. Think we'll get a new view on that in a few months when a line of high-quality mining machines become available. Agreed that inference is the direction AI is heading. DKI bought Intel ($INTC) at $35 last October and that's been a big part of the thesis. I just wrote a blog post for DKI subscribers detailing some key findings from a bunch of research calls in the industry.
Bitcoin implicitly assumes the world will continue as is -- reliable electricity, functioning internet, etc. The fundamental question is whether that assumption is a good one. It is analogous to the issue for gold bugs -- when everything goes to hell, will I (a) be able to get to Switzerland somehow, and (b) be able to get "my" gold from the foreigners who supposedly are holding it in their vault?
The fundamental problem for the entire West is that universal suffrage democracy has failed, especially when allied to a very loose definition of what constitutes a "citizen". The result is the mostly-immoveable worthless self-serving denizens of Congress spending money they don't have. Realistically, the world will not continue as is. Unhappy times for holders of bitcoin and gold bars in Swiss vaults -- and almost everyone else.
Hey Gavin. Great comments and you have embodied the spirit of those who contemplate these things on the Tree of Woe.
I mostly agree with you. Unfortunately, I think you're correct about the downfall of democracy and the definition of a voting citizen. Worse, you're correct that a worthless Congress is destroying the currency and thus, the ability of any normal person to save. It's a huge part of why so many young people are gambling. Why save when it's a guaranteed way to lose purchasing power. People are incentivized to consume instead of save and invest which is what creates future wealth. It's a disaster.
I also agree with you that we have no idea how many gold bars exist in the vaults vs the number of people who think they have gold bars there. In a SHTF scenario, we're not getting access to those vaults, and even if we did, I'm certain some enterprising criminals would be waiting outside for anyone who exited with a bag or briefcase.
Bitcoin is different. The entire network can be preserved and restored from a Raspberry Pi with a solar panel. It's currently the most resilient asset on the planet.
Now, in a REAL SHTF scenario, the only true wealth will be things like food, medical supplies, cleaning supplies, farming equipment, and whatever form of personal protection you possess. (A note to the concerned - you need to buy those things now. The only time you can prepare is in advance.) In that world, I'd rather have a bottle of whiskey, a bar of chocolate, and a bag of coffee beans than gold, Bitcoin, or SpaceX stock. We'll be in a theft or barter economy at that point.
I'm reminded of the novel A Canticle for Leibowitz about the cycles of human advancement and destruction. You might find it interesting.
And nobody has as yet invented an algorithm that can change the amount of Gold (AU) above ground 🤔 and one doubts even quantum computing can "crack" it 😉. Or turn it off. Mind you, the OzFedGov has just slapped a 30% Capital Gains Tax on ALL ASSETS. The unintended consequence is that P.M. holders will now deal with (non-Gov) Triad/Mafia types for a fairer price.
I own gold, silver, and energy in addition to Bitcoin. They all have advantages and disadvantages. I've written about the various ways to own and hold gold and as you note, those all have various advantages and disadvantages. Theft and confiscation are real threats which people tend to focus on when it comes to Bitcoin and tend to ignore when it comes to gold. Thanks for the comment - interesting!
Btc was created by "Data Bank"...I mean Satoshi, no, i mean the Deep State. ☺️ The Endgame was always Stable Coins & sublimation of FIAT into the Digital Landscape, at a level BELOW Choice or Alternative. ALL Stores of Value suffer security issues... 🤔 tech may one day allow Energy storage but again...security.
I recall a SciFi short story where a bio scientist released a "plague" that gave Humans the ability to HARVEST sunlight. Goodbye Economic Models 😘
PS Those of you who would like to sign up for Gary's newsletter can use coupon code Tree40 to get 40% off for a year.
Thanks, Alex. Signup link is here: https://deepknowledgeinvesting.com/subscribe-now/ . Please reach out if you have any difficulty using the coupon code.
>Remember, no investment strategy can protect you from the roaming cannibals that will plague post-collapse New Canaan, CT.<
Pater don't worry, They're friendly Cannibals! 🤭😊
Alex was kind enough to protect me. I'm actually in Westport where the cannibals are worse, but at least the ones in New Canaan won't be able to find me here!
Seeing people starting to write about how BTC is down is one of the bottom-of-cycle buy signals, to be honest, but I'll wait another couple months here for the grave-dancing to *really* start up again.
A blood-in-the-streets investor is exactly who I'd expect to find here at Tree of Woe. Approved!
My read inverts the usual narrative. Capital flows don't follow pure market logic at scale, they're substantially shaped by where entrenched financial power needs technological development to occur. Crypto served a real function here: the blockchain infrastructure, settlement mechanisms, and public acclimation to non-cash digital value all constitute R&D for the CBDC digital panopticon architecture that's now materializing across multiple central banks simultaneously. The upper elites have gotten what they needed from public participation in the technology.
The current rotation into AI fits the same pattern, and an Ashby framing re: requisite variety is relevant here: the core problem for any regulatory system is that it needs sufficient internal variety to match the complexity of what it's regulating. Legacy surveillance and social management architectures were being outpaced by social complexity involving distributed communication, encrypted coordination, proliferating subcultures. AI closes that gap structurally. CBDC provides the payment chokepoint; AI provides the pattern recognition and behavioral modeling; social credit mechanisms provide the enforcement gradient. These are components of a single control architecture, and capital is flowing toward whichever component currently needs development.
Gold and silver suppression fits here too, controlled to prevent public flight to alternatives - price suppressed to stay below a threshold of public interest. Obvious suppression would itself delegitimize fiat, so the price management has to be deniable, which is why it operates through paper markets and futures rather than crude intervention.
If this framework holds, Bitcoin isn't necessarily doomed, it's just no longer useful to advance it for upcoming digital panopticon architecture. All the other arguments surrounding the technology (both pro and con) are, I think, unfortunately tertiary at best.
You make some excellent points. I think one of the weaknesses of Bitcoin is the lack of anonymity. You're also correct that governments will view it as a threat to their fiat which they control and from which they extract seigniorage. The positive is Bitcoin is permissionless and has no associated liabilities (Saylor's activities are different). So, they can't stop us from using it instead of fiat. I see a lot of value in that alone. Thanks for the thoughtful comment.
The permissionless property operates at the protocol level, but that's not where governments will apply pressure. They control the fiat on- and off-ramps - Coinbase can be regulated or banned, exchanges can be required to KYC every transaction, and banking access for crypto businesses can be withdrawn, as we've already seen episodically. You don't need to ban Bitcoin to neutralize it as a fiat alternative; you just need to make conversion costly, surveilled, or legally precarious enough that ordinary people won't use it as one.
The stablecoin infrastructure compounds this. Tether - which has never passed a real audit despite claiming $100B+ in reserves, operated by a handful of people with documented histories in fraud-adjacent ventures - is load-bearing for crypto liquidity. Its existence as a manipulation vector is structural. If the on-ramps are regulated and the stablecoin layer is compromised, what remains of the fiat-alternative thesis is a protocol that works in principle but is effectively gatekept in practice.
Bitcoin may well have value as a speculative asset or even a long-term store of value. But "permissionless" as a fiat escape hatch requires that the full chain from fiat to crypto to goods and services be permissionless, and it isn't, and won't be allowed to become so.
These are all valid points. Thank you. There are ways around all of the above for those who want to own and self-custody Bitcoin. I'm confident that the majority of people reading this blog could figure it out given an afternoon of research. But you're correct that the guardrails could go up high enough that most people would give up before figuring out a reasonable workaround. At that point, there's no adoption story and Bitcoin would become a niche asset. I think it can get to scale before those guardrails go up and self-custody isn't difficult. But as this is the Tree of Woe, we should contemplate the possibility that fiat becomes a walled garden (ok - really a walled hellscape).
Just want to say how much someone like me, who is not a tech-priest, appreciate your back-and-forth on this and the original article as well.
If I was to try and add anything, it would be my outsider's perspective on this aspect:
There's another angle of the "state vs BC-owners". In the pre-internet days, we had several different collectives over here (Sweden), some with hundreds of members, who tried to set up their own internal system of bits (it was really called that, "bit" in Swedish means "piece") to regulate favours and services done between members:
I change your tyres, you babysit my kids for n hours, all services also payable in bit form, and the no. of bits was a fixed amount. And since you could straight up trade one servide for another, there was little point in hoarding the bits for anyone.
The state clamped down on it after a while, by charging the elected leaders with tax fraud, tax evasion, making false currency, banking without oktroj, and anything else they could think of. They also sicced Social Services and Childcare on those with children, as a way of harassment.
Point being: even if the bit-coins are e-money of a sorts, you the owner still has a physical presence somewhere in the world, and they can and will come for you if you make yourself a problem, according to their metrics for being such.
A final point: We must always remember that the state (or corporate capitalist organisations) doesn't care what we do, as long as what we do is not an open or de facto challenge to the system and their position as the definers of the system. A barnyard example is that I can make moonshine at home and the police won't care - until I start selling it outside the state's monopoly. Same with corporate - it doesn't care if they sell my old cellphone, but if I was to try and go to China to pick up a suitcase full of the latest whatever high-tech and sell it as a private citizen, undercutting corporate store prices?
Prison, financial ruin and social ostracisation - guaranteed.
I think the true proof of Bitcoin et al having made the breakthrough into mainstream use is when the state(s) start coming after it for real.
Hi Rikard. Thanks for the kind comments and the smart commentary. You and your neighbors creating a new currency for barter is brilliant. What a great way to trade goods and services with each other.
The fact that the government shut it down is proof that they'll always act to preserve their ridiculous monopoly on fiat. Short-term, I'd like to see so much widespread adoption of Bitcoin that it becomes practically impossible to shut it down.
Long-term, my reminder to governments everywhere is that capital and talent flow to the places where they're treated well. The story is that a government that treats its citizens like milk cows probably survives. When they start treating people like meat cows, capital flees. Elizabeth Warren is personally driving the most successful people (and biggest tax payers) out of the US.
As this is the Tree of Woe, I note that no government will heed my warning and many of us will leave.
But big picture; you're correct. We can create things, but still need to operate in the real world with real things and real consequences.
You invest in gold and bits, stocks bad?
Hum, everybody's gotta flush and light plus heat are nice. Utilities tend to reflect the value of the buck, no matter inflation or deflation.
I like gold and silver. Bits backed by and exchangeable for such interest me. There was a Utah firm offering gold backed bits as well as a number of firms outside the U. S. However the redemption in gold appeared to me to be unnecessarily complex.
Yes - I own Bitcoin, gold, silver, and energy (in multiple forms). Completely agree with you that it's complicated. There are different ways to own and different ways to get paid. They all come with different benefits and risks. There's no one perfect clean answer. For myself, I make the best asset allocation and risk decisions I can. For my subscribers, I explain what I'm doing and why and in many cases, explain other options so they have enough information to make similar investments, but with different instruments when their risk profile favors other options. Thanks, Jim.
Pretty sure my lead and preserves strategy will work great on roving cannibals. But if that fails, plan B is a landwhaling business that feeds into an upscale longpig BBQ franchise for the discerning cannibal. You gotta be where the market is, is what I'm saying.
I always assumed cannibals were opportunistic. I hadn't considered the possibility of high-end market-based establishments. BBQ seems like an excellent choice. The comment section here is superior to any other I've seen. Let me know how the business goes. I primarily focus on publicly traded equities, but would consider investing in a growing BBQ business that has a low cost of food acquisition.
I dislike crypto nearly asuch as LLMs, but I wish and pray Makurisu Arekusandā the best success, in financial endeavors as well as all others
It speaks well of you that you wish for the success of those with whom you disagree.
For poors such as myself, investment is a spectator sport. As such we are free to root for our favorite players regardless of whether we would choose their strategies!
I once heard someone describe the WWE as a soap opera for men and someone else describe CNBC as sports for those who liked finance. There were stocks, strategies, and sectors they'd cheer for and against.
As a professional investor, I work hard to try to separate my feelings about any particular company from the opportunity to make money. For those on the sidelines, enjoy the show and cheer for your team!
I am not the expert you and others here might be but ... I have some concerns when you say:
"I continue to own Bitcoin because I’m 100% confident that the US Congress is going to keep debasing the dollar. We need money that’s not dependent on government decisions and is free of central banks. All of the above reasons outline possibilities that Bitcoin could experience trouble. Dollar debasement will continue and all fiat will lose purchasing power. "
I agree Congress is a bad actor, but they are also to an extent "our" bad actor. The Fed has also shown itself to be all too human over the decades since it was created. Together they are giving us the "something for nothing" we are too stupid to realize is wrong, and not wise, and not necessary. I doubt a balanced budget amendment would solve all of the problems we face, but it would be a good place to start. Mandating IRA holdings in lieu of SS payroll taxes might be another. Going to a first party payment system for medical care, vs. our current third party mode, is another. The insurance companies should not be the only group that (sort of) really knows what the pricing of medical care in our market really is. They seem to be the only party allowed to actually and seriously negotiate those prices.
I understand and view money as a mechanism or vehicle to provide a neutral transaction aid, and to remain neutral, it must also maintain a stable value relative to most of the other wealth items and services being transacted in the economy. Given the complexity of our domestic and global economies, that is not a simple task, but it is probably not as hard as our current processes or procedures seem to require. One suggestion that I have not yet heard significant criticism of is to hold money value stable vs. a basket of commodities or related services. Of course, even that basket has to be adjusted over time, but at a non-volatile rate. I am inclined to think the Fed should reduce its inflation target to 0.5 to 1.0%, max, but no one is asking me. No matter what target level is used, it is still a pernicious tax on wealth, with the potential for deflation apparently being too terrible to contemplate. Maybe it is not so bad if everyone understands (and many do not and will not) that their personal and combined economic growth has to exceed that target for meaningful prosperity. [Too many people still confuse supply and demand price changes with monetary inflation. But I was already about 24 years old before I learned that distinction clearly myself.]
As humans, and especially as Americans, we have a "leave us alone" attitude for those interfering with our preferred mode of social and economic activities. We institute governments to help keep "those people" in check, lately with less and less success. But trying to divorce the money and its management from government control or influence seems to really not be possible unless they get to adopt the form of the money they pay out for government services and then demand back the same from us in taxes.
I do have some fears that "the CBDC digital panopticon architecture" mentioned by Hermes below is an all too real possibility, but there are forces currently resisting that slide away from personal liberty. I suppose having the government know about what we are doing socially and economically via our transactions is almost unavoidable in today's low cash world, but keeping them from controlling our lives thereby is still a vital goal.
Excellent thoughts here. I think where you and I differ (a little) is I wrote about what's going to happen. You wrote about what should happen and how to avoid the coming fiat disaster. If I had it in my power to elect you to Congress, I'd do so on the basis of your ideas. Unfortunately, there aren't enough people like you in that building. I hope I'm wrong, but if I don't express some woe here, Alex won't let me post again ;)
If we need to up the level of woe right now, I can add that my computer just experienced a surge spike (all too common in FL), and my surge protector did not come back on for a few minutes. Then my monitor was flickering for a while.
And the muscle sprain or whatever I have had over the last few days is acting up again, along with a feeling of fever and flushedness. Does all that count? :-)
I don't speak for Alex, but it seems like you're experiencing the regular doses of micro-woe that is the original intention of this blog. Approved!
speaking of having the govt know what we are doing, I just made my 2nd estimated tax payment via the IRS Direct Payment web site, realizing all of a sudden it was already 6/13.
Supposedly in will go through by 6/15, and I do want the IRS to know about that. :-)
Given that everyone commenting on this blog is probably on a government list, I think it's safe to assume the IRS has been alerted.
Everyone, please remember to send a nice note to your FBI agent who is monitoring your communications!
> I continue to own Bitcoin because I’m 100% confident that the US Congress is going to keep debasing the dollar
This is the key people need to grasp. Everything else is noise. Our victory is assured over time, we just need to be patient, focus on our families, keep stacking, and trust to providence. I don't think people fully have their heads wrapped around how your future financial well being really comes down entirely to how well you can spend less than you earn and save the remainder in bitcoin.
That said, i think this analysis is confused about the relationship between bitcoin's price and hash rate. The price drives the hashrate, not the other way around. When coins are more valuable, more people decide to mine. When the price drops, miners have a harder time profiting, and people running those datacenters make more money selling them to people using them for AI.
I think the real driver here is capital flight to AI investment. And there's a simple way that story ends: these AI companies have zero moat. They spend massive amounts of capital to build these frontier models, which are easily copied by Chinese researchers, who have models that are _almost_ as good, but substantially chaper. There is a good chance that these AI companies become like cisco in the .com boom , but maybe even worse. I think inference (running the models, the thing people actually pay for) becomes more or less a commodity. There are essentially no switching costs to move from one AI to another.
Great points, Mark. Thanks for the comment. Regarding the hash rate/price question, we agree they're correlated. Beyond that, it's a simple math question to determine which is the leading indicator. Think we'll get a new view on that in a few months when a line of high-quality mining machines become available. Agreed that inference is the direction AI is heading. DKI bought Intel ($INTC) at $35 last October and that's been a big part of the thesis. I just wrote a blog post for DKI subscribers detailing some key findings from a bunch of research calls in the industry.
Bitcoin implicitly assumes the world will continue as is -- reliable electricity, functioning internet, etc. The fundamental question is whether that assumption is a good one. It is analogous to the issue for gold bugs -- when everything goes to hell, will I (a) be able to get to Switzerland somehow, and (b) be able to get "my" gold from the foreigners who supposedly are holding it in their vault?
The fundamental problem for the entire West is that universal suffrage democracy has failed, especially when allied to a very loose definition of what constitutes a "citizen". The result is the mostly-immoveable worthless self-serving denizens of Congress spending money they don't have. Realistically, the world will not continue as is. Unhappy times for holders of bitcoin and gold bars in Swiss vaults -- and almost everyone else.
Hey Gavin. Great comments and you have embodied the spirit of those who contemplate these things on the Tree of Woe.
I mostly agree with you. Unfortunately, I think you're correct about the downfall of democracy and the definition of a voting citizen. Worse, you're correct that a worthless Congress is destroying the currency and thus, the ability of any normal person to save. It's a huge part of why so many young people are gambling. Why save when it's a guaranteed way to lose purchasing power. People are incentivized to consume instead of save and invest which is what creates future wealth. It's a disaster.
I also agree with you that we have no idea how many gold bars exist in the vaults vs the number of people who think they have gold bars there. In a SHTF scenario, we're not getting access to those vaults, and even if we did, I'm certain some enterprising criminals would be waiting outside for anyone who exited with a bag or briefcase.
Bitcoin is different. The entire network can be preserved and restored from a Raspberry Pi with a solar panel. It's currently the most resilient asset on the planet.
Now, in a REAL SHTF scenario, the only true wealth will be things like food, medical supplies, cleaning supplies, farming equipment, and whatever form of personal protection you possess. (A note to the concerned - you need to buy those things now. The only time you can prepare is in advance.) In that world, I'd rather have a bottle of whiskey, a bar of chocolate, and a bag of coffee beans than gold, Bitcoin, or SpaceX stock. We'll be in a theft or barter economy at that point.
I'm reminded of the novel A Canticle for Leibowitz about the cycles of human advancement and destruction. You might find it interesting.
And nobody has as yet invented an algorithm that can change the amount of Gold (AU) above ground 🤔 and one doubts even quantum computing can "crack" it 😉. Or turn it off. Mind you, the OzFedGov has just slapped a 30% Capital Gains Tax on ALL ASSETS. The unintended consequence is that P.M. holders will now deal with (non-Gov) Triad/Mafia types for a fairer price.
I own gold, silver, and energy in addition to Bitcoin. They all have advantages and disadvantages. I've written about the various ways to own and hold gold and as you note, those all have various advantages and disadvantages. Theft and confiscation are real threats which people tend to focus on when it comes to Bitcoin and tend to ignore when it comes to gold. Thanks for the comment - interesting!
Btc was created by "Data Bank"...I mean Satoshi, no, i mean the Deep State. ☺️ The Endgame was always Stable Coins & sublimation of FIAT into the Digital Landscape, at a level BELOW Choice or Alternative. ALL Stores of Value suffer security issues... 🤔 tech may one day allow Energy storage but again...security.
I recall a SciFi short story where a bio scientist released a "plague" that gave Humans the ability to HARVEST sunlight. Goodbye Economic Models 😘