I’m hoping your new book addresses the paradigm shift required?

I was writing about Bitcoin vs Real Estate the other day. Real Estate being my background and I was musing over if the ‘relatively non volatile’ high ratio, loan to equity, leverage currently available on realestate has a place in a Bitcoinised world? 

Leaning on the idea that credit is time travelling resources. The borrower moves potential resources from the future into the present and the lender, forgoes resources in the present for an expected increase of resources in the future. Or banked past labour is exchanged for promised future labour in excess of current banked labour. 

I believe the conclusion I landed on to be  correct. I concluded that we will need to shift our paradigm from our current debt based paradigm, that fiat money has created, back to my grandfather’s paradigm that debt to purchase a stagnant asset, such as a house, is going to be bad debt.   Buying a house (particularly for utility purpose) with debt will be an exceptionally bad idea. On a Bitcoin standard, Bitcoin wages should decrease in # of Satoshis over time whilst simultaneously your lower # of Satoshis will buy you more stuff.  Thus any fixed debt on a house will get further and further out of our reach over time. Thus for these types of purchases both for assets that hold value across time, such as a house, or lose value over time, such as a car, we will need to save the full amount in advance before purchase. “Never a lender or borrower be” 

The only debt that will make sense on a Bitcoin standard is debt against a business/asset that will outperform the natural incremental or exponential global increases in GPD from improved efficiencies due to technological improvements. 

It’s a massive paradigm shift but I’m enjoying the cognitive dissonance this has forced upon me. Plus having a background in psychology and being a student of human motivation I’m excited to watch the cultural change this forced shift to financial prudence creates. 

I can’t imagine a more exciting time to be alive. 

On a person note, thank you for all the value you add Jeff. You have been a calming energy of reason amidst all the shilling and anarchy. 

 🙏 

 Question. I follow your reasoning. This means that the effect of living in a deflationary world for many people will be that it is harder to buy a house. 

Maybe some will not be able to put enough money aside to ever own a house or other luxury assets, while living on a minimum wage!for example. 

Does a deflationary world have a solution for this? 

 No, that is not what my reasoning is suggesting. In fact, quite the opposite. Following my reasoning, houses will deflate in value faster than your wages will go down. Wages are sticky.  House would be subject to the naturally deflationary pressures of efficiency gains due to ever improving technology. 

 The purchasing power of your money, on a Bitcoin standard, should forever go up as the price of everything you want to purchase comes down. So as your stash of Satoshis increase as you save across time, the number of Satoshis needed to buy a house will decrease over time. If we were to plot on a graph, the increasing line indicting your savings will cross the decreasing line showing the price of a house. So as long as you save to buy your house outright vs attempting to buy your house with debt, a home will forever continue to become closer to within reach across time. 

 I’m thinking of people who live from paycheck to paycheck.

If I am understanding correctly, also for them daily living will gradually become cheaper, as wages decrease slower then prices. Purchasing power goes up. 

So, even if they have no opportunity to save today, they might be able next year. And gradually the available amount to save will increase, next to the purchasing power of what is already saved. 

It sounds like a hopeful future for everyone. Is it realistic to think this will ever happen?

If I listen to Michael Saylor for example, he seems to approach Bitcoin only from the fiat perspective. As of like Bitcoin will always be part of an inflationary world. 

Maybe this was not the initial utopian idea behind Bitcoin, but as of things are developing right now (with Microstrategy, the Blackrock’s and government stashing BTC’s), this seems to be a more realistic scenario than a deflationary future. 

I’d love to hear your thoughts about this. 

Thnx