On average you lose money at a casino because it is a business designed to make you lose money.
My vanguard funds on the other have gone up very nicely on average. Because they are invested in businesses designed to make shareholders money.
But I'm not talking about stocks. I'm talking about cash here. Cash is literally an article of faith and nothing else. It's not backed by any asset.
Let me guess, bought on credit, he over leveraged
> Cash is literally an article of faith and nothing else. It's not backed by any asset.
The US dollar is backed by the federal government, a behemoth that handles more assets than any other entity on earth. For example we know they target 2% inflation on average. So US dollars are much more stable than if I were to issue my own "klipt bucks" currency.
There is no reason why payment for labor should be a “temporary store of labor value”, whatever that means. There is no reason one cannot receive wage in productive assets, commodities, credit and whatnot.
You're right about that. It's called the barter system and we don't use it anymore because it's inefficient and sucks shit.
>The main reason the value of cash decays and the main reason central banks target 2% is downward wage rigidity. If you reduce wages of people, they get angry, sometimes very angry to the point of strikes. If the value simply drops, they don’t get as mad. It’s as simple as that, a matter of psychology and social institutions.
No, it's because if cash has a fixed value, then the "temporary" part of labor storage goes away and the economy grinds to a halt.
Barter sucks because of coincidence of wants. It doesn’t suck because paying in S&P500 ETF doesn’t correspond to magical temporary store of labor whatever that is supposed to mean.
> No, it's because if cash has a fixed value, then the "temporary" part of labor storage goes away and the economy grinds to a halt.
What would grind to a halt exactly? Sorry, plebs, only rich people are allowed to be paid in stocks and other non-inflationary assets. You have to suffer, otherwise economy grinds to a halt!
How many shares of SPY does a car cost? Before you answer that, you cannot convert any value of this into currency first. I certainly can't answer it!
>Sorry, plebs, only rich people are allowed to be paid in stocks and other non-inflationary assets.
Rich people are paid in cash. When the CEO of a company gets $10m in stock grants, nobody involved in the transaction is working on number of shares of stock, they work with dollars and figure out how many shares they need to meet that number. If I get a $500 bonus from work and immediately buy a few shares of AAPL, there's no fundamental difference between that and me getting a $500 stock grant of AAPL. They're even taxed the same.
How many wons does a car cost? Why would I know it? You seem to keep missing the point that the unit of payment doesn’t need to be inflationary. And that there is no magical requirement for it to be a temporary store of labor value.
> Rich people are paid in cash.
You confuse a store of value with a unit of account.
> If I get a $500 bonus from work and immediately buy a few shares of AAPL, there's no fundamental difference between that and me getting a $500 stock grant of AAPL.
Ok? If there is no fundamental difference then how is swapping one for another supposed to bring an economy to a halt?
> we know they target 2% inflation on average
That's why you don't put all your long term savings in USD. But it's good to have your emergency fund in USD because it has less short term fluctuations than assets like stocks.
Currency is useful because people have faith in its properties: scarcity and ubiquity as a medium of exchange. Dollar is important because people have faith in the US government to not dilute it (too much), and because everyone in the world accepts it.
Bitcoin _is_ a currency. Its scarcity is limited by its construction, and it's widely accepted. But it's a bad currency, that is mostly backed by illicit transactions, and its "mechanical" usability just sucks due to delays and transaction fees.
Yes, cigarettes, like the dollar have an intrinsic value. You can smoke them and nicotine makes you feel good. It is similar to the way that I can pay my taxes in USD and feel comfort in the fact that I won't have to barter for cigarettes in federal prison.
Bitcoin is not a currency because it no longer meets the primary economic definition of currency - a medium of exchange. It is a speculative asset. A security, if you will. It can be used as a currency in the same way as gold bars and bricks of cocaine can (barter system) but it's not a currency.
If your old manager went bankrupt by mis-timing the market with a handful of tech stocks, then he most certainly didn't invest the Vanguard way: diversify and hold on for the long haul.
It's backed by contracts to pay it back. There are powerful institutions employing people with guns and other means to make you pay back. "Faith" undersells the situation. We developed the whole system to force people to pay their loans back.
Instruments in money market are of the kind of: "give me 100$ now and I will give you 101$ 3months later". Bitcoin is not backed by such contract. It's only backed by the hope of finding a bigger sucker later.
I'm pretty sure there's a lot of evidence that gold is a great inflation hedge but otherwise doesn't offer much in the way of returns on a long run basis. Which is a reason in various cases to hold or diversify into it over a money market fund (essentially over cash). That said, currently crypto has not proven itself to be either much like cash or much like gold.
Vanguard is 1. what they mention in their anti-cryoto thesis, all the real value makers that you don't need Vanguard to get into + 2. a casino on top of 1.
They sold you the idea, that their casino on top of 1. brings you money. I sincerely doubt it. You are making money on 1, true, and probably losing them on Vanguard.
Also, in BTC your Vanguard funds went down significantly on average.
Vanguard is a service that manages your portfolio so you don't have to. Literally the definition of providing an economic service.
Owning the portfolio does come with risk, but it's not fixed odds, rather the odds track the literal economy. If you buy index funds, your ballot tracks the value of the country you invested in. When society does well, so do you. And guess what? Everyone, including the government, spends their life trying to generate value and wealth.
It isn't a casino. Likening the US economy to a casino is perhaps the most disingenuous nonsense I've heard from the church of crypto.
How is it different from Bitcoin conceptually? Bitcoin reflects financial markets overall just as well as any Vanguard-managed fund. It does not matter that Vanguard intention is precisely that while Bitcoin's isn't if the outcome is the same.
Just in case I'll explain what I mean by an analogy: Imagine we are sailing an ocean in a small ship, and consequentially the ship rocks really hard. There's a table with two straight sticks on it in everyone's room, and the sticks constantly slide around the table due to rocking. And for whatever reason the parent comment author is tasked with keeping them as parallel as possible, while not stopping their movement alltogether. To do so he makes a contraption with electric motors attached to one end of each stick and sensors that detect when sticks are not parallel, which causes motors to align them. In the mean time in my room I took my sticks from the table and attached them to the ceiling instead because they look nice there. Here despite the lack of intention on my part my sticks will tend to stay parallel without much effort.
No it doesn't.
Bitcoin has no intrinsic tie to the financial markets.
The financial markets are all based on goods, services, and economic value. They build meta layers on top of it and sometimes those layers are bad, but nonetheless they are based on value.
Bitcoin is based on speculation. It offers no inherent value. No one needs or wants Bitcoin. People do want or need food, shelter, health, entertainment, education, human connection, etc, that the rest of the financial markets are based on.
I think a lot of crypto advocates don't understand that the stock market isn't made up. Yes there is volatility, yes it isn't perfect. But it isn't a pure casino.
Bitcoin has sometimes* correlated with the broader financial markets, but not because it was an indicator of the markets but because it was accidentally caught up in them as an inconsequential side thought. It got treated as an investment commodity by some big asset managers and thus followed the same trading patterns. When the asset managers thought outlook was poor, they sold a bit of everything, and everything would go down.
Not an obvious one for sure.
> The financial markets are all based on ...
> Bitcoin is based on ...
I don't understand why people consider this to be any kind of argument. The very same one also applies to AI discussions and comparing hardware used to run it to brains.
What does it matter what the thing "is based" on? Gas turbines, photovoltaics, and nuclear reactors are based on completely different phenomenon, and yet they all generate electricity.
I think you missed the whole point of my previous comment. Maybe the analogy was unclear? What do you think I was trying to say?
Vanguard is not a for-profit business, it's more like a credit union, it is owned by its own customers.
That's exactly the claim, yes. But how do you know just owning crypto (at infinity) does not have the same outcome?
On the other hand Bitcoin doesn't seem to have significant use as a currency outside of crime. Meme coins are even worse in that they don't have any use at all other than speculation.
People use it as part of an allocation, sure, but nobody plans to retire with interest from a checking account, which is pretty much what you'd be doing if you invest in a money market fund.
You may have a point that since fiat currency has no inherent value compared to physical commodities there's no reason that the right crypto couldn't function as a fiat currency, which seem true. But if crypto were fit for use as a fiat currency, you wouldn't expect it to be an investment at all - at least no compared to stocks, bonds, etc.
Even bitcoin is priced in USD and operates trades via a Tether/Circle "stablecoin" "backed" by USD.