Bitcoin

Argentina, macroeconomics and Bitcoin

Published

7 months ago

16 June, 2024

TOPSHOT – Argentine President Javier Milei arrives to give a speech at the World Economic Forum… [+] (WEF) met in Davos on January 17, 2024. (Photo by Fabrice COFFRINI/AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)

AFP via Getty Images

The exciting news of Javier Milei’s election in Argentina last year received widespread acclaim across the Bitcoin community and libertarian circles. Argentina’s decades of hyperinflation should lead to natural skepticism about excessive central bank money printing, and it is reassuring to see that policy can follow this basic logic. This was a huge victory for the solid monetary movement, of which Bitcoin is a part. The election of the former television commentator as head of state is a warning to all central bankers around the world and a wave of hope that democracies can indeed control the power of government bureaucrats.

Argentina and modern macroeconomics

Argentina has also played an outsized role in the war of ideas waged in the academic economy over the last 30 years. The giants of this field, such as Robert Lucas, Thomas Sargent, and Ed Prescott, were all in the economics department at the University of Chicago.

Lucas presented the official critique of the central bank’s stabilization policy in his Nobel-winning article “Expectations and the Neutrality of Money”. He makes a technical contribution by establishing a new area of mathematics applied to macroeconomics, following in the footsteps of John Muth. Lucas was a master storyteller and his main idea comes from a simple parable that even children can understand.

Imagine a community of people at a circus who magically receive an extra $20 bill in their pocket. At first, everyone is delighted with the new money and buys more cotton candy, roller coaster rides and hot dogs. New money now circulates throughout the circus, yet the total supply of goods and services remains fixed. Over time, prices only have one way to go: up. There may be some adjustment time, but the price increase is inevitable. And so purchasing power falls and the general price level will rise.

But here’s the problem: people are rational, so they know this will happen. So the moment everyone receives their R$20 bill, they know in advance that everything will end up being R$20 more expensive. And so it’s impossible to trick them into spending more now. In economic terms, these rational expectations will not lead to changes in real consumption. This was a broad critique against Keynesian economics, which argued that increasing the money supply can, in fact, deceive people. Keynesian economics gave carte blanche to central bankers to manage the money supply and try to induce economic growth. But Lucas argued that such an exercise is a fool’s errand. You cannot trick people into changing their real consumption or investment if they are intelligent enough to form rational expectations about the future.

The rational expectations movement took hold in the economy in the 1970s and 1980s, in the freshwater schools of Carnegie Mellon, the University of Minnesota, and the University of Chicago, as a pushback against the saltwater schools of Harvard and MIT. Lucas and Sargent often referred to hyperinflation in Argentina as a prime example of an out-of-control central bank. The University of Chicago, at the turn of the century, imported dozens of doctoral students from Argentina who had lived this daily experience of hyperinflation, in which prices change not quarterly or monthly, but weekly or daily. And it’s a sad story that, 25 years later, the same is true.

Rational Expectations and Bitcoin

It is a loss to academia that Robert Lucas has died, as he pioneered many of the early critiques of central banks. But how does rational expectation fit into Bitcoin? This response is subtle and nuanced. At one level, rational expectations are a strong criticism of central banks, just like Bitcoin. So they have a common enemy. Both criticize the bad choices that inevitably result from humans managing their own money supply. For Lucas, trying to stabilize the macroeconomy by changing the interest rate every six weeks is a waste of time and ineffective.

But the arguments in favor of Bitcoin go further. Bitcoin’s issuance schedule is a strong endorsement of a very specific type of money supply, which is predictable and immutable. In rational expectations, money doesn’t matter, because people are too smart to be fooled by changes in money. For Bitcoin, the money supply is important and it is vital that everyone knows the supply in advance and that it cannot be changed. So at some level there are different assumptions about people’s rationality. Lucas argued that people are too rational to be fooled by an errant central bank, while Satoshi assumed (in his protocol design choices) that people are not rational enough to fully adjust to bad central bank policies, which is why which a fixed and unchanging policy the money supply is better.

An erratic monetary policy, such as those recently adopted by central banks, can harm individual investors and destroy the social fabric. The rollercoaster of interest rates, which constantly oscillate between easy money and tight money, has a profound impact on an otherwise unknown but essential component of the economy: the allocation of our human capital. The search for income induces individual investors to bet on the stock market and young students to pursue careers in commerce rather than producing goods and services in the real economy. A fixed, unchanging monetary supply prevents these worst human instincts from taking over, just as a setting on your iPad prevents your children from spending too much time in front of a screen.

And so, although Argentina motivated the movement of rational expectations in academic economics, that movement has now come full circle. Bitcoin puts some decisions directly in the hands of individuals (such as mining a block or setting a transaction fee), but not all decisions (such as selecting the schedule for issuing new money). I believe that this is the right balance and is closer to what we can and should aspire to in our economic policies.

Argentina would be a great candidate for Bitcoin and would give the world a proof of concept that it certainly needed. But even if Argentina doesn’t adopt Bitcoin as legal tender, Bitcoin has still managed to frame the conversation around sound money, which will ultimately discipline central bankers in the future. Even if this is all Bitcoin does or does, for me it is still a resounding success. It is the only technology that has ever managed to keep the power of central banks in check.

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Related Topics:Argentina Bitcoin Javier Milei Macroeconomics

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Bitcoin

What to watch for in the markets

Published

6 months ago

21 July, 2024

SatoshiTimes Staff

Photo: Andrew Harnik (Getty Images)

After witnessing one of the largest global IT outages on record, affecting the travel, finance and healthcare sectors worldwideThis week is set to see more political drama, events, and earnings reports from tech giants.

Donald Trump’s ‘Lovefest’ Sets Jamie Dimon Up for Consideration for Treasury Secretary Job

Let’s take a look at what awaits us:

Major companies will release their earnings reports

Major tech companies and others will release their earnings reports this week, paving the way for what the second half of 2024 will look like.

Monday

Verizon will report earnings before the start of operations.

Tuesday

Coca-Cola, Comcast and UPS are all set to report earnings before the market opens.
Tesla will report earnings in the morning, while General Motors will report earnings in the evening.
Alphabet and Visa will report results after the market closes.

Wednesday

AT&T will release its report before the market opens.
Ford and Chipotle will report earnings after the market closes.

Thursday

Earnings reports from AstraZeneca, American Airlines and Southwest Airlines will be released before the market opens.

Trump to speak at Bitcoin conference

Presumptive Republican presidential nominee Donald Trump will speak at the next Bitcoin Conference in Nashville, Tennesseewhich is scheduled for July 25-27. While this is the first time a presidential candidate will attend the conference, it has sparked a debate over whether the crypto-friendly Trump will receive support from the crypto community in the upcoming election.

In addition to Trump, independent presidential candidate Robert F. Kennedy Jr. will also discuss crypto during the conference. Crypto advocates such as ARK Investment’s Cathie Wood, MicroStrategy’s Michael Saylor, and whistleblower Edward Snowden are among some prominent names who will be participating in the conference.

Ether ETFs are on the way

New Ether Spot ETFs are set to begin trading on Tuesday, July 23. Much like the spot Bitcoin ETFs, these ETFs will allow investors to buy the second most popular cryptocurrency like stocks. BlackRock, Ark Invest/21Shares, VanEck, Grayscale, Fidelity, Bitwise, Franklin Templeton, and Invesco/Galaxy Digital are all set to offer Ether ETFs. Crypto asset manager Bitwise predict that trading in the Ether ETF will drive the price of Ether higher, potentially surpassing $5,000.

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Bitcoin

Cryptocurrency’s Biggest Winners and Losers in a Second Trump Presidency

Published

6 months ago

21 July, 2024

SatoshiTimes Staff

Cryptocurrency’s Biggest Winners and Losers in a Second Trump Presidency

Bitcoin miners and cryptocurrency companies that have been blocked from going public in the U.S. could ultimately be the biggest winners in the digital asset world under a second Donald Trump presidency. Foreign companies at risk of losing market share could end up being the biggest losers.

That’s the view that’s taking hold among market participants and observers in the wake of the former president’s growing embrace of cryptocurrency as his chances of election grow. survey released Thursday by CBS News showed Trump with the majority — 52 percent — of likely voters in his likely November rematch with President Joe Biden.

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Bitcoin

Bitcoin, Ethereum, Solana and Cryptocurrency Markets Look Ready to ‘Send’ as Stars Align, According to Investor Chris Burniske

Published

6 months ago

21 July, 2024

SatoshiTimes Staff

Bitcoin, Ethereum, Solana and Cryptocurrency Markets Look Ready to ‘Send’ as Stars Align, According to Investor Chris Burniske

Cryptocurrency investor Chris Burniske says Bitcoin (BTC), Ethereum (ETH), Solana (SUN) and the cryptocurrency market in general seem poised for a run.

Former Head of Cryptocurrency at ARK Invest account his 292,200 followers on social media platform X that several catalysts are aligning, suggesting that digital asset markets are on the verge of a bull run.

According to Burniske, a partner at venture capital firm Placeholder, the highly anticipated launch of Ethereum-based exchange-traded funds (ETFs), Republican presidential candidate Donald Trump speaking at an upcoming Bitcoin event, and the current state of the BTC, ETH, and SOL charts all suggest significant optimism for the cryptocurrency markets.

“With ETH ETFs set to go live, Trump speaking at The Bitcoin Conference, and BTC, ETH, and SOL charts looking [they do] (while stocks are weak), it’s hard to imagine a world where we don’t ship next week.”

Reuters recently reported that preliminary approval for ETH ETFs has been granted as the Bitcoin Conference is scheduled to take place from July 25-27.

BTC, ETH, and SOL are trading at $67,333, $3,528, and $174 at the time of writing, respectively.

The venture capitalist too provides an update on his prediction that the total crypto market cap will eventually hit $10 trillion. According to his chart, the path to $10 trillion is currently “23%” complete, as it sits around $2.2 trillion.

Source: Chris BurniskeX

Earlier this month, Burniske he said in an interview with Real Vision CEO Raoul Paul that he has his eye on the Move ecosystem, which was originally built by social media giant Meta and then used to develop layer 1 blockchains Sui (IUE) and Apts (APT).

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Bitcoin

Here’s the next target for BTC before bulls can hold out for $70K

Published

6 months ago

21 July, 2024

SatoshiTimes Staff

Here’s the next target for BTC before bulls can hold out for $70K

Bitcoin’s recovery is going well, and the market is seemingly poised to create a new all-time high in the near term.

Technical analysis

Per NegotiationRage

The daily chart

As the daily chart shows, the price of Bitcoin has been rising since it broke above the 200-day moving average.

The market has also reclaimed the $60K and $65K levels and is moving towards the $68K resistance zone, which could be the last hurdle before creating a new all-time high. With the RSI also indicating that the price has clear bullish momentum, it could be just a matter of time.

Source: TradingView

The 4-hour chart

Looking at the 4-hour chart, it is evident that the price has been rising rapidly since breaking the downtrend line to the upside. The market also broke the $65K resistance level with momentum, turning it into a support.

While almost everything points to a new record high in the coming weeks, there is one worrying sign. The RSI is showing a clear bearish divergence between recent price highs, which could indicate a correction or even a reversal in the near term.

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Cryptocurrency Charts by TradingView.

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