Hi Ben, surely you must be expecting some replies. Here is mine.
Inflation.
An inflation rate of 3-4% is healthy, when it goes to 15-20% is not. Last year 30% of the money in circulation was printed out of think air. If that doesn't create inflation nothing will.
Governments use CPI to calculate inflation because is very convenient; it only measures goods that traditionally don't go up much ignoring the rest.
A more accurate measure of inflation would be the money printed every year so yes, we have high inflation and it is a huge problem. Wood up 200%, steel up 100%, meat up 20%. Check your expenses and you'll find everything has gone up apart from your salary.
You know another place that loves printing money? Venezuela.
Bitcoin is not a solution, it's a hedge against inflation. You need assets that grow faster than inflation or you'll end up poorer in the long run.
Bitcoin has only one use, storing value, but it does it rather well. Better than real estate, gold or stocks. You don't want to work all your life only to find that you have nothing when you retire. that's why it is important. During low inflation times stocks and property were fine, now only Bitcoin can keep up.
Gold and Bitcoin are deflationary assets due to their scarcity. That's why they provide a safe haven when the fed prints trillions out of thin air. They are very useful and necessary.
Bitcoin has some advantages over gold; it's easier to verify, store, transact and transport. That's why the market are buying it instead of gold.
Inflation wouldn't be a problem if salaries went up at the same rate but that is not happening. Using CPI gives the government an excuse to keep wages low and this erodes employees purchasing power.
Bitcoin energy FUD
Bitcoin is mainly mined in China. China burns coal to produce electricity because is cheap. But there is even cheaper energy; solar and hydro, and that is what it's mostly used. 75% of the electricity used for mining comes for renewable. China is the biggest producer of hydro and solar in the world.
Besides, miners are migrating from China to North America, Russia, Iceland and Kazakhstan due to regulatory problems. Anywhere with cheap electricity (renewable) and friendly regulations is good for mining. Mining operations have gone down from 80% to 55% in China in recent months.
You know something more polluting than bitcoin? The petrodollar.
Is Bitcoin a Bubble?
Perhaps.
Is the dollar a bubble?
For sure.
There is only 21 million Bitcoins and the fed is printing 6 Trillion this month. which one do you think is more bubbly?
Quantitative easing at this scale is a big problem and we'll pay for all this eventually. Can you find an economist that don't see a problem with printing 2 trillions every other month?
I visited Venezuela in 2003, a beer was 10 bolivars, now it cost 1 Million. This is a problem.
There many currencies in the world, most of them are rubbish. if you earn your salary in Argentinian pesos, Zimbabwean dollars or south Sudanese pounds, you'd find Bitcoin extremely useful as a way to store your money.
We've been very privileged to live with low inflation and stable economies (until now) but for them and for us Bitcoin can provide a great solution to a big problem. Storing wealth.
I write about this in more depth here:
