Balaji bets $1M that USD will suffer hyperinflation within 90 days
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Balaji, please - get out of your bubble. Go talk to your neighbors. They're all concerned about where to go for their kids spring break, the next episode of Mandalorian, and whether or not their bracket is still in contention.
Let's game out what it would take for 50% inflation MoM -- you'd need severe supply issues up and down for every possible good, including goods created domestically. You'd need the Fed to fire up the printing presses in a way that surpasses even 2008, which, good luck on that one. You'd need interest rates to go negative. You'd need the real estate market to do a 180 from "nothing's really selling right now" to "people can't buy houses fast enough". You'd need a confluence of black swan events to happen globally in order to knock the dollar from being a reserve currency. How does that possibly happen?
Just dumb, all around.
> This isn't your typical fractional reserve situation. The problem is that there isn't enough in the banks on a mark-to-market basis to cover withdrawals.
How are people going to withdraw money and not put it into another bank? This guy is just saying ridiculous shit for attention, there’s no way he’s this stupid.
Again, his thesis is that bank withdrawals will cause banks to collapse and hyperinflation. It’s not possible for this to happen, there’s not enough physical cash to cause banks to collapse from withdrawals, and if you take money out of a bank in a non-cash form, where will you put it?
Maybe it goes something like this: AIUI the act of pulling money out of the banks will crash them, one by one. Along the way the government will continue to print to try to backstop it and restore confidence. The act of this just speeds up the demise. The money will get centralized to the GSIBs. But they have the same problem.
x40 in 90 days is in increase of 240% monthly (i.e. from 100% to 340%).
So it's a lot of inflation. This is not unheard, but it's very high and usually happens in countries with bigger problems. https://en.wikipedia.org/wiki/Hyperinflation#Notable_hyperin...
[Hi from Argentina, our peak was in July 1989 with 196% (i.e. from 100% to 296%), but the peak was short, we didn't have three months with 200% of mensual inflation. See the graph in https://es.wikipedia.org/wiki/Hiperinflaci%C3%B3n_argentina_...]
I don’t think he thought this all the way through.
He is selling a BTC put that expires in 90 days and is worth $800-900k for $26k, that’s all I said.
Balaji is betting the hyperinflation makes the BTC worth more than $1M hyper inflated US dollars. If hyperinflation happens, the BTC/USD pair will go up in dollar value.
>Terms of the bet: ideally someone can set up a smart contract where BTC is worth >$1M in 90 days, then I win. If it's worth less than $1M in 90 days, then the counterparty gets the $1M in USD.
[1]: https://wbtc.network
Do note this isn't _real_ wrapped bitcoin. It's essentially a stablecoin which price matches a bitcoin; it is not backed by any bitcoins unfortunately.
Real wrapped BTC would require a decentralised bridge which isn't exactly trivial.