I thought that the main point of the efficient markets hypothesis was that this was an efficient way for all the rent seekers to extract their rents from the market.
Nuthin' new about crypto. The art market has been working on these lines for several generations. I view it all as too much money in too few hands chasing too few opportunities.
The difference is that art is actually valuable, insofar as lots of people are willing to pay to hang it on their walls, without worrying about resale value. Similarly for gold and for paper money (because governments accept it in payment of taxes). There's no value for crypto outside crypto.
Turning something into an asset multiplies its value, because some people want to hold it that way. But an asset with no actual use is not sustainable.
I agree there's no reason to take the efficient market hypothesis seriously, but if one were to take it seriously it would need a great big caveat about real interest rates. When real interest rates are very low (or negative), capital is like a cockroach when the lights have been turned on - blindly rushing around searching for a place to rest. Once interest rates are reasonable and there is a safe place for money to go and earn a decent return with (near) zero risk, the pressure to find some return, any return fades and the market can get closer to something like efficiency.
Another factor that's pushing in the same direction is the extraordinary amount of money around looking for returns. Between a growing class of ultra-rich and more and more money under management, there's now just a huge amount of capital looking for returns. So it's not just that the cockroaches are rushing round trying to find any piece of shadow, it's that there are too many cockroaches for the area of shadow available - they're all bumping into each other and displacing one another in a frenzy.
As with most things in economics, the solution is to not get in the situation in the first place, but the long term solution is to drain the capital of the ultra-rich, skim the incomes of the wealthy and redistribute to those who actually spend the money they receive. Reserve banks have kept interest rates criminally low for far too long and tried all sorts of exotic tricks to stimulate inflation when low interest rates weren't sufficient. But governments have had the capacity to boost inflation that whole time - give money to the poor.
A responsible government would aim to keep interest rates about where they are now by advising the RBA they'll respond to inflation reaching its target range by raising Newstart and undertaking serious infrastructure spending (or funding for the states) and they should fund this spending by raising the top tax rate (and similar measures). Then we might reach a manageable situation with 2-3% inflation, 4-6% interest rates and a massive deflation in asset values.
Gold is actually valuable because people like gold for jewellery (shiny, malleable, ductile), not to mention industrial uses. Similarly for art and for paper money (because governments accept it in payment of taxes). There's no value for crypto outside crypto.
Turning something into an asset multiplies its value, because some people want to hold it that way. But an asset with no actual use is not sustainable.
BitCoin ATMs are appearing in shopping centres in Queensland, including in the one where I buy my groceries.
Roulette-wheels-as-an-asset-class
I thought that the main point of the efficient markets hypothesis was that this was an efficient way for all the rent seekers to extract their rents from the market.
Nuthin' new about crypto. The art market has been working on these lines for several generations. I view it all as too much money in too few hands chasing too few opportunities.
The difference is that art is actually valuable, insofar as lots of people are willing to pay to hang it on their walls, without worrying about resale value. Similarly for gold and for paper money (because governments accept it in payment of taxes). There's no value for crypto outside crypto.
Turning something into an asset multiplies its value, because some people want to hold it that way. But an asset with no actual use is not sustainable.
I agree there's no reason to take the efficient market hypothesis seriously, but if one were to take it seriously it would need a great big caveat about real interest rates. When real interest rates are very low (or negative), capital is like a cockroach when the lights have been turned on - blindly rushing around searching for a place to rest. Once interest rates are reasonable and there is a safe place for money to go and earn a decent return with (near) zero risk, the pressure to find some return, any return fades and the market can get closer to something like efficiency.
Another factor that's pushing in the same direction is the extraordinary amount of money around looking for returns. Between a growing class of ultra-rich and more and more money under management, there's now just a huge amount of capital looking for returns. So it's not just that the cockroaches are rushing round trying to find any piece of shadow, it's that there are too many cockroaches for the area of shadow available - they're all bumping into each other and displacing one another in a frenzy.
As with most things in economics, the solution is to not get in the situation in the first place, but the long term solution is to drain the capital of the ultra-rich, skim the incomes of the wealthy and redistribute to those who actually spend the money they receive. Reserve banks have kept interest rates criminally low for far too long and tried all sorts of exotic tricks to stimulate inflation when low interest rates weren't sufficient. But governments have had the capacity to boost inflation that whole time - give money to the poor.
A responsible government would aim to keep interest rates about where they are now by advising the RBA they'll respond to inflation reaching its target range by raising Newstart and undertaking serious infrastructure spending (or funding for the states) and they should fund this spending by raising the top tax rate (and similar measures). Then we might reach a manageable situation with 2-3% inflation, 4-6% interest rates and a massive deflation in asset values.
I think crypto, of which Bitcoin is a subset, is here to stay.
It’s the Gen Z (or X or Y) variation on gold. Gold bugs are so last gen, crypto is the new go to for the digitally empowered disenfranchised.
Or so I believe.
Gold is actually valuable because people like gold for jewellery (shiny, malleable, ductile), not to mention industrial uses. Similarly for art and for paper money (because governments accept it in payment of taxes). There's no value for crypto outside crypto.
Turning something into an asset multiplies its value, because some people want to hold it that way. But an asset with no actual use is not sustainable.