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#currency

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Bibliolater 📚 📜 🖋

:bitcoin: **Bitcoin, Currencies, and Fragility**

_“In its current version, in spite of the hype, bitcoin failed to satisfy the notion of “currency without government” (it proved to not even be a currency at all), can be neither a short nor long term store of value (its expected value is no higher than), cannot operate as a reliable inflation hedge, and, worst of all, does not constitute, not even remotely, a safe haven for one's investments, a shield against government tyranny, or a tail protection vehicle for catastrophic episodes.”_

Taleb, N.N. (2021) 'Bitcoin, currencies, and fragility,' arXiv (Cornell University) [Preprint]. doi.org/10.48550/arxiv.2106.14.

#Bitcoin #Currency #Money #Wealth #Economics #Finance #Academia #Academic #Preprint #arXiv @economics

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arXiv.orgBitcoin, Currencies, and FragilityThis discussion applies quantitative finance methods and economic arguments to cryptocurrencies in general and bitcoin in particular -- as there are about $10,000$ cryptocurrencies, we focus (unless otherwise specified) on the most discussed crypto of those that claim to hew to the original protocol (Nakamoto 2009) and the one with, by far, the largest market capitalization. In its current version, in spite of the hype, bitcoin failed to satisfy the notion of "currency without government" (it proved to not even be a currency at all), can be neither a short nor long term store of value (its expected value is no higher than $0$), cannot operate as a reliable inflation hedge, and, worst of all, does not constitute, not even remotely, a safe haven for one's investments, a shield against government tyranny, or a tail protection vehicle for catastrophic episodes. Furthermore, bitcoin promoters appear to conflate the success of a payment mechanism (as a decentralized mode of exchange), which so far has failed, with the speculative variations in the price of a zero-sum maximally fragile asset with massive negative externalities. Going through monetary history, we show how a true numeraire must be one of minimum variance with respect to an arbitrary basket of goods and services, how gold and silver lost their inflation hedge status during the Hunt brothers squeeze in the late 1970s and what would be required from a true inflation hedged store of value.
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Eric Maugendre

@keefeglise

The sovereign state borrows from other financial institutions: the national Treasury offers an "obligation" or a "bond" whereby it #promises to later give away its fiat currency in exchange for the actual payment of money or title presented by the rentier.

It gets more complicated: mas.to/@maugendre/109760408033

mas.toEric Maugendre (@maugendre@mas.to)[Below is a reformat of a Twitter thread about #finance by Alfonso Peccatiello, dated 25th January 2023.] Money ’’liquidity’’ is a crucial and widely misunderstood driver of financial markets. Let’s explain what #liquidity means, and where it’s headed next. Let’s first explain what "liquidity" is in #simpleEnglish. Let’s start with the basics: "liquidity"==bank reserves. Bank #reserves are money for banks:
#securities#borrowing#debt
Continued thread
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Eric Maugendre

“The U.S. government is not like a household. It is the issuer of the currency. It doesn’t need to ‘get’ money from anyone else—not from taxpayers, not from China.”

– Stephanie Kelton (economist, former US Senate Budget Committee Chief Economist)

#slogan#quotes#debt
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Eric Maugendre

Is borrowing a burden on future generations?
No, it's not: if the borrower is a nation-state, then no person (children or taxpayers) will be asked to repay.

“Paying off the debt” is just the sovereign swapping Treasury securities (savings) for cash. No burden is passed on to persons.

#debt#Treasury#slogan
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Eric Maugendre

“As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e. unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”

– St. Louis Fed, in their publication titled “Why Health Care Matters and the Current Debt Does Not”

#slogan#quotes#debt
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