Oddbean

There is no risk free rate of return in a sound money economy without a fiat money printer to backstop the banks. Save in Bitcoin and focus on your craft. Then, when the time comes, spend your sats as Satoshi intended. https://m.primal.net/KusU.mov

Nothing is risk-free, but the point is that you need credit and banks in a capitalist society, even under a Bitcoin standard. If Bitcoin becomes money, then it can be saved and earn interest. Granted, we don’t have the system to support this yet, but perhaps in the future.

Wrong You can earn yield in gold under a gold standard, though it depends on how the financial system is structured. 1. **Bank Deposits and Loans:** People could deposit gold or currency backed by gold in banks. The banks would lend out that gold at interest and, in turn, pay depositors a portion of the interest earned. 2. **Gold-denominated Bonds:** Governments and companies could issue bonds denominated in gold, paying interest to investors who lent them gold. 3. **Gold Leasing:** Large holders of gold, such as central banks, sometimes lent gold to other institutions or countries, earning interest (a practice known as gold leasing). While gold itself doesn’t generate yield, financial instruments tied to gold, such as loans or bonds, allow yield generation, similar to modern financial systems. Just substitute gold with bitcoin

They can, and who lends money will go bankrupt sooner or later. It simply does not work. That's why banks create central banks, to socialise the loss. Without central banks and with sound money, lending money simply does not work.

A friend raised funds to launch a startup last year. No credit. Simple capital for equity from many small investors using savings. That is maybe the move that Saif is saying will become the norm. Under that paradigm, is credit truly required?

Dunno. I worked for it, saved, bought car. Saved and bought the house I could afford. Only credit card I ever had was when I was working in countries with civil wars and stuff going on in case I needed a quick flight out. Never used a credit card and haven't had one for 25 years. I do get that credit can be useful and did have to take a small student loan but it is possible much of the credit based dynamic is less relevant in a more stable price environment under hard money. Dunno. Not an economist so I might be full of shot!

You saved enough money to buy a house in cash? Either you have a very high-paying job or live in a country with very low living costs. Most people living paycheck to paycheck wouldn’t be able to afford that

Agreed. But then people being pushed to buy houses with credit is what flooded real estate market with cheap liquidity over decades and caused over pricing. Yes, I worked my ass of to get to decent pay, didn't spend frivolously, saved and invested and bought in cash a small house surrounded by empty houses as they were all dominantly second homes. Then just started saving again till could move on. Cars always used, never new. Always took saved funds as budget limit and spent 80% on the vehicle, leaving 20% for the repairs I new were going to happen. Seemed logical. I have lived debt free my entire life. Maybe my perspective is wrong but if you don't earn enough, find a way to make more. Everyone being pulled into this whole credit based system seems to just flood economy in cheap credit, reduces value of money and drives up prices. Much of the time, it's also really obviously stupid. I met a chap at a friends birthday and he said he was always stressed. Really successful high earning program manager but had 1.5m mortgage. He was just miserable because trying to live way beyond means. We all make our choices

Not really, most people don’t have a choice. Either they pay exorbitant rent or get a mortgage. Not many people can afford to pay high rent and still save for a house, while the price of homes continues to rise further and further out of reach. If they get a low enough mortgage, maybe they’ll end up with a nice nest egg in the end.

I think that's the current catch-22. Maybe am not seeing things correctly but this definitely depends on generation. We have been living for decades in this financialized world where the creation of money through debt has created the dynamic where everything is poured into housing which has driven up the cost to nose bleed levels. I certainly feel for younger people trying to get onto the market now and we need to change the damned system so that, as Jeff Booth says, housing goes back to utility value and is more available to all. The insanity of the mortgage availability driven housing boom is causing problems for many. I remember being a student in London and trying to persuade my father to buy a 5 bedroom house in Camden for 95,000 pounds because i thought the market would go nuts. I didn't really understand the dynamics at that age but just had a feeling. He never bought it but it was worth over 1.5m just 5 years later. As far as I can tell, that's just stupid based on easy credit being sloshed around the system. I can't say I know what the fix is but I do think easy credit simply makes everything harder for all in the long run

exactly. My thing was simply work and put everything in to custodied gold for saving. It was the only option at the time really. At least there's an alternative. The pain being felt won't get better for a while and I also think governments likely to consider that some sort of wealth effect feeling will pacify so make mortgages easier which will then drive it all further until many countries start looking like Australia for real estate. I think we both come from same point of view, I am just talking from a perspective from the past. I was brought up in pretty poor relative poverty so I do get it, and I certainly feel for people, which is why I spend shit loads of time just trying to orange pill people and attempt to focus on the less well off parts of the community am in, but fuck me it's a lot of work with very low conversion rate so far.

We only 'need' credit because everything we want to buy is inflated way beyond what it is actually worth. In 1950 the average annual family income was $3,300, and the average cost of a house was $7,400. The only thing that has changed in that time is the money got inflated and became worthless. If anything, through technological progress things should get cheaper over time because they become easier to produce at scale. You can still do this today, but it takes time and disciplined. It's meant to be difficult so we rely on their systems of extracting more from us through loans.

Thankyou for wording things better than I do! Greatly appreciated. And yeah, I do understand that creaky joints aside, I am quite priviledged in my situation but I did also achieve it by hard work and not living beyond my means

It's really not easy to get away from the system of credit, since the fiat world is designed to almost coerce you into it, and that is THEIR means of income after all. It's amazing how far they have taken it, their greed disgusts me.

Agreed. It's a bitch. Have sometimes wondered how much of an impact computers had. So much easier to create more money with a keypad and enter key. Wonder if there is a correlation between CPU speed and house price inflation? 🙄🤔

Assuming USD is debasing at min 10% per year. You would lose around 65.13% of your purchasing power after 10 years, 87.84% after 20 years, and 95.76% after 30 years. Saving for 30 years in fiat currency to buy a house doesn’t make any sense

At the beginning of a fiat standard, before inflation really sets in, you would only need to save for 2-5 years based on the figures I provided, and you could afford a house. In a Bitcoin standard, there would be ~no inflation and the same would be true too. The idea that it takes 30 years of labour to buy a house in the first place is very specifically a fiat created problem. A manufactured issue that has become so normalized that almost everyone with a house has a mortgage of that length, because that's the only way to afford it. This only became the norm after the FED started raising rates and inflating the currency. https://m.primal.net/KuyV.png

The particular brand of orange pill that Saylor offers is perfect for older tradfi investors, as it requires minimal changes to their mental model of the world (ie. just add Bitcoin). For those who are younger, or further down the path of logical conclusions, the current fiat system cannot stand. Once Bitcoin reaches a tipping point where it becomes obvious you’d want to hold sats instead of bonds, the entire system will change irreversibly. Yes, even JP Morgan Chase, Coinbase, and the Federal Reserve itself will rugpull eventually. It’s not if, but when.

Audacity of this conversation is mind boggling .. The assumption that Bitcoin is going to grow 29 % YoY for next 21 years .. 😆 .. I would like a drag of that smoke 😜 nostr:nevent1qqsqf2appjnufv5rz7vskrap9yv8c0tfrkvyw837rf7dwp2xswq4qvcpz4mhxue69uhhyetvv9ujuerpd46hxtnfduhsygqm6v4rs6nmummg3v7u03yqalppek2xksl2c996fwncxjk80g37dypsgqqqqqqs7ytnud