Hacker News Reader

Comment by vmception | Hacker News Reader

So, the classic the hyperinflation events occurred because it happened to a currency in isolation.

What is new here is that you cant really see it because all major currencies are increasing their supply at similar rates.

So stocks, houses and apples increase in value rapidly as more money exists than there are things to buy, but the relative inflation of any economic union is completely masked.

Therefore the classic concern - speculators loosing confidence in the currency - isn't quite a classic concern.

They don't have an alternative as all major currencies are doing the same thing. To play that script they would need to be exiting fiat currencies, so watch for that.

But the macro trend is worldwide speculators pounding against the dam for negative interest rates in the US. Thats the season finale for now and cliffhanger, with no real prediction on the next season’s contents.

View on HN

>So stocks, houses and apples increase in value rapidly as more money exists than there are things to buy, but the relative inflation of any economic union is completely masked.

Wages/work notably excluded so hardly masked as has been the case to anyone looking at the share of taxable income over the past 40 years

Considering that cryptocurrencies are still treated more like high risk speculative bets than currencies, it seems like gold would be the main beneficiary of an across-the-board collapse of confidence in fiat currency?

The price of gold has gone up a bit during the crisis, but nothing close to the increase in M1. So it would seem that markets are indeed sticking with fiat currencies in spite of the huge supply expansion...

Markets aren't sticking with fiat currencies, they're buying up stocks like there's no tomorrow. Asset inflation is a very real thing.

I agree that asset inflation is an inevitable consequence of money supply expansion. I just don’t see any indication that we’re headed toward a fiat collapse.

Markets might not be choosing fiat currency for a store of value, but they’re still apparently choosing it for a medium of exchange.

They're not "choosing" it, it's literally their only option. If I want to trade my ETH to GME shares, I have to convert it to USD in between.

What this will do is erode faith in the USD. If demand for cryptos, for example, stays the same, but suddenly everyone has more $$$ to throw around, crypto will keep skyrocketing in value while the USD buys less and less of the things people actually need. At that point there will be runaway demand for crypto because people will start "believing" it's more stable than the USD.

Yeah, that’s my point: it’s the only option, except maybe for gold. And gold is only going up a little. So how could fiat currency be collapsing?

Crypto may be seen as an alternative in the future, but right now it’s all over the map. No one is using it for their savings account (or checking account, for that matter).

Where can I buy stocks for gold?

Honestly though, a crypto-based brokerage probably isn't too far off. Might even be a billion dollar idea.

Back when the Covid crisis kicked off I (with minimal knowledge) speculated with friends that stuff would get weird economically because all the countries (developed economies) in the world are going to do similar things to counter this so we may not see obvious sides effects we would typically see. Sounds similar to what you’ve said above?

kind of, the only thing you are missing is that macroeconomic trend is in play no matter what the catalyst turned out to be

the yield curve flattening was a big headline long before and seen as a bearish sign, its not important that COVID spooked everyone to selloff and its not interesting that Congress and the Fed stepped in because of that.

All the monetary policy and the fiscal policy decisions were written in advance and just placed on Congress’s desk when they were scrambling for a solution. 5,000 page bills werent just made overnight.

the entire game is to put your losses on the balance sheet of the biggest whale in the market (a sovereign with no consequence) and keep all the profits for yourself, and reaching a place in society where that is practical. there is no andrew jackson to dismantle the central bank for the specific reason he dismantled the first one. so the outcome is always predictable, the cause and effect is easy to understand. the mechanism that all central banks (except china’s) use to flood the market with cash is by purchasing an ever expanding universe of bonds, with pushes the bond price up and interest rates of those bonds down.

Would negative interest rates actually percolate down to retail consumers? Will I be able to get paid to take a loan?

If US treasuries go steeply negative enough (and the spread remains as tight or gets tighter) then yes, banks will pay you interest, while you still pay principle.

Lenders so far stay in the market because they actively trade the debt object even if they lose the business of earning interest. (With debt, the price of the contract increases as interest rates go down)

In other words: this time is different.

Every time is different don't be reductive.

But yes, for now the central bank and legislative actions far outweigh my uber drivers and unemployed dates talking about daytrading, as more money is going to hit the market. US Congress is going to create/distribute $2 trillion more dollars and the US Federal Reserve is still purchasing corporate bonds, creating new money in every transaction. Babies better be daytrading on abacuses.

Reply on news.ycombinator.com