Sabia que ia achar o HLDR3 aqui 👏

Just buy the total market index

he just gave the case for Bitcoin without realizing it right after he said he didn't think it has that much real value with volatility

Well... in a closed economy, the main function of the value of the currency is mostly a wash. The biggest impact occurs when the value becomes too high for the unit to be used for the exchange of less valuable items. It's hard to transact in dollar if common items are less than a dollar. Of course we can, and do, just introduce currency divisions for this, down to the cent for the USD. This is assuming that when we inflate the currency, we do it proportionately to how much one had before the inflation. Inflation doesn't always work that way though, as freshly minted money can be inserted into different places in the economy that result in different levels of utility. But supposing we keep the original weights, then we aren't really concerned about inflation for a closed economy, but are mainly concerned with how it interacts with 1) contracts and laws that didn't consider inflation and 2) interactions with outside economies, i.e. foreign exchange and trade imports/exports. 1) is necessarily treated on a case by case basis and for 2) it can sometimes be an advantage to have a weaker currency, it depends which side of the trade balance you're on, etc... An example of 1) would be the minimum wage... it's beyond me why minimum wage isn't tied to inflation (I mean... I get why they do it, it's so that in real terms they frequently pay below any given established minimum wage until there is another political battle to raise it... but that's the greed talking rather than a fair and rational mind). Anyway, generally an inflationary currency matches better with an inflationary economy, and since we aim for growing GDP we would need an inflationary currency to keep our exchange at rough parity, otherwise scarcity of the means of exchange would make it difficult to carry out transactions of low value goods. The opposite may be desirable when a country has a shrinking GDP, or when it is advantageous for trade reasons... for instance, look up China's currency manipulation to devalue their own currency. I'll quote the US Department of the Treasury, "... China has a long history of facilitating an undervalued currency through protracted, large-scale intervention in the foreign exchange market. In recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past. The context of these actions and the implausibility of China’s market stability rationale confirm that the purpose of China’s currency devaluation is to gain an unfair competitive advantage in international trade." Though the department would later withdraw the label under Mnuchin. The trade benefit to China was undeniable, whether or not they had manipulated the currency.

Minimum wage is contested, and there are always opposition to it. So people who reluctantly agreed to have a raise did so because they know another round of inflation is round the corner.

Yes I def. enabled subtitles on this video which helped a lot.

Happy you enjoyed the episode! You can find our transcript here: rationalreminder.ca/podcast/200

I don't think that's what he means. Stocks are riskier than bonds and deliver a higher expected return for that risk. But, if people perceive this higher expected return to be a free lunch they might irrationally bid up the price of stocks to such an extent that the risk premium goes away. They would effectively price stocks as if they are as risky as bonds even though they clearly arent. He also says that if this were to happen it would be a market infeffeciency and he doesn't believe in those.

@@Martin-qb2mw I see. I should have listened back before posting from memory at the end of the interview. Thanks for responding.

Ben explained elsewhere that's its not about the relative market cap, its about the amount of trading. Index funds don't trade much, so their impact on price discovery is still very limited compared to active.

Click on the "CC" button for captioning.

We are working on a separate series dedicated to Bitcoin and public blockchains more generally.

But gold doesn't hold value... it remains a volatile asset even after all these years. Not as volatile as bitcoin, but far from stable in the modern era. You touch on the main "value" of bitcoin correctly as "human trust in a system." Even at the moment, the people buying bitcoin are among the most zealous... but how are you going to get regular people to put faith in an asset that drops in value by 50-80% overnight? With no proper body vested in supporting it as a currency. When I put faith in USD, it is faith in one of the most powerful governments on the planet, that they will work to protect the value of my asset. And yes, yes, there is inflation, but the Fed is currently moving to take monetary policy towards reducing it, and if that turns out to be too slow, fiscal policy is also an option. There are plenty of scarce assets with no value, scarcity alone is not an argument for value. I would point out that people often do not transact in physical dollars either, we do quite fine exchanging values digitally. Bitcoin is roughly as much of an asset as trading cards... sure they're a bit more fungible, but prices are volatile and risky and you're banking purely on continued interest (i.e. faith) in that asset. So it's not that it's worth nothing... it's just that it's much more along the lines of being a gambling asset than a store of value or medium of exchange.

@@zvxcvxcz It is the scarcity. Not a security but a property. Not the same

community.rationalreminder.ca/t/what-financial-podcasts-do-you-listen-to/3632

Your statement is at least debatable, but more likely false. This is all theoretical so there is no objective truth, but the commodity theory of money that you are referring to has not been a serious theory for decades. Money is the numeraire used to price goods and services, and the value of that numeraire is derived from the fact that people need it in order to pay their taxes. The relative value of the numeraire over time is related to the credit quality of the issuing government. I suggest checking out this episode we did with John Cochrane on this topic kzfaq.info/get/bejne/o6dyZch53NO2hI0.html -Ben

@@rationalreminder If the government does not create the initial demand of the currency how does it bootstrap at all? There are many countries as examples of mismanaged currencies that resulted in hyperinflation and the almost complete dollarization of their economies. How does these zombie currencies get resurrected again? Also why in most cases the area of use of a nation's currency almost exactly matches its borders?

Governments do not need to tax in order to spend. They create money out of thin air and give it value by demanding some back in taxes. Mismanaged currencies are not related to money supply etc., they are related to the finances of the government. Money is like short-term government debt. If government debt declines in value due to insolvency or weakening finances, currency purchasing power also declines. If a government improves its finances, the currency increases in value. National currencies are used within the borders of the nation state because it is the ability to pay taxes in that state, not some intrinsic worth as a medium of exchange, that gives it value. In the credit theory that I am referring to, money is not a medium of exchange. In commodity theory medium of exchange implies that barter is underlying all transactions and money is just the most convenient medium through which to conduct barter. In credit theory exchange is a credit relationship and money is the numeraire that prices the credits and debits involved in transactions.