Revisiting Dorsey’s Hyperinflation Tweet: Elon, Wood, Saylor, Balaji, Chip In
04 Novembre 2021 - 2:55AM
NEWSBTC
When the Square mastermind declared hyperinflation was coming to
the US, the world shook With a single tweet, Jack Dorsey lit a fire
that keeps on burning. In that first article, NewsBTC compiled the
first reactions to this dangerous idea. Then, we told you about
Peter Schiff’s unimaginative response. Now, it’s time for the big
guns. Ark Invest’s Cathie Wood answered with her deflationary
theory, and Elon Musk, MicroStrategy’s Michael Saylor, and
notorious financial podcaster Preston Pysh answered. Related
Reading | Michael Saylor Brings The Thunder To Venezuelan
Bitcoin-Only Podcast Also, entrepreneur and former Coinbase CTO,
Balaji Srinivasan, threw extra logs to the fire. He was one of the
first responders, offering a reward for the design of a
decentralized inflation dashboard. Besides them, Wired columnist
Virginia Heffernan provided the 1984-like response, and Reason
magazine answered her promptly. This article is full of
knowledge and interesting theories for you to ponder. Make some
popcorn and enjoy the show. Hyperinflation And Cathie Wood’s Theory
Of Deflation This woman doesn’t mince words. “In 2008-09, when the
Fed started quantitative easing, I thought that inflation would
take off. I was wrong. Instead, velocity – the rate at which money
turns over per year – declined, taking away its inflationary sting.
Velocity still is falling.” Is she right? Isn’t purchasing power
the real victim of the rampant money printing that all governments
are engaging in? In 2008-09, when the Fed started quantitative
easing, I thought that inflation would take off. I was wrong.
Instead, velocity – the rate at which money turns over per year –
declined, taking away its inflationary sting. Velocity still is
falling. https://t.co/tFaXSaCKqS — Cathie Wood (@CathieDWood)
October 25, 2021 Let’s read her whole theory before jumping to
conclusions. According to Wood, “three sources of deflation will
overcome the supply chain-induced inflation that is wreaking havoc
on the global economy.” Those are: 1– “Artificial
intelligence (AI) training costs, for example, are dropping 40-70%
at an annual rate, a record-breaking deflationary force.” When
costs and prices decline, velocity and disinflation – if not
deflation – follow. If consumers and businesses believe that prices
will fall in the future, they will wait to buy buy goods and
services, pushing the velocity of money down. — Cathie Wood
(@CathieDWood) October 25, 2021 2.- ”Creative destruction, thanks
to disruptive innovation. They have not invested enough in
innovation and probably will be forced to service their debts by
selling increasingly obsolete goods at discounts: deflation.” They
leveraged their balance sheets to pay dividends and buy back
shares, “manufacturing” earnings per share. They have not invested
enough in innovation and probably will be forced to service their
debts by selling increasingly obsolete goods at discounts:
deflation. — Cathie Wood (@CathieDWood) October 25, 2021 3.-
“Businesses shut down and were caught flat-footed as goods
consumption took off during the coronavirus crisis, they still are
scrambling to catch up, probably double- and triple-ordering beyond
their needs.” + “As a result, once the holiday season passes and
companies face excess supplies, prices should unwind.” As a result,
once the holiday season passes and companies face excess supplies,
prices should unwind. Some commodity prices – lumber and iron ore –
already have dropped 50%, China’s crackdowns are one of the
reasons. The oil price is an outlier and psychologically important.
— Cathie Wood (@CathieDWood) October 25, 2021 She ends her Twitter
thread with an unironical “Truth always wins!” Well, Cathy, the
truth is that governments everywhere are printing money non-stop.
They’re literally inflating the monetary supply. We’re not talking
hyperinflation yet, but still… In any case, let’s invite other
celebrities to chip in. Elon, Saylor, Pysh, And Balaji
Respond To Wood Bitcoin-denier Elon Musk provides a practical
answer, “I don’t know about long-term, but short-term we are seeing
strong inflationary pressure.” Wood’s theory has some teeth to it,
but there’s no denying that the prices are rising. And that the
money printer goes brrrrrrrr. Musk also links to this satirical
article. No mention of hyperinflation here. Then, it’s time for
Bitcoin maximalist extraordinaire Michael Saylor. “Inflation is a
vector, and it is clearly evident in an array of products,
services, & assets not currently measured by CPI or PCE.
Bitcoin is the most practical solution for a consumer, investor, or
corporation seeking inflation protection over the long term.”
Inflation is clearly evident and that’s that. No mention of
hyperinflation either. Inflation is a vector, and it is clearly
evident in an array of products, services, & assets not
currently measured by CPI or PCE. #Bitcoin is the most practical
solution for a consumer, investor, or corporation seeking inflation
protection over the long term. — Michael Saylor⚡️ (@saylor) October
26, 2021 BTC price chart for 11/03/2021 on Gemini | Source: BTC/USD
on TradingView.com Investor and podcaster Preston Pysh goes even
further, “That’s because all the debasement keeps nesting itself
into the cap rates of anything equity based AND the prices of Fixed
Income. It should all make total sense when the market they are
manipulating IS the fixed income market.” Market manipulation.
Total control of the data. Those are factors to consider. That’s
because all the debasement keeps nesting itself into the cap rates
of anything equity based AND the prices of Fixed Income. It should
all make total sense when the market they are manipulating IS the
fixed income market. — Preston Pysh (@PrestonPysh) October 26, 2021
Contributing to the conversation for the second time, Balajis plays
peacemaker and says that both Dorsey and Wood are “right in
different ways.” According to him, “Everything technology disrupts
will see prices fall. Everything the state subsidizes will see
prices rise.” That’s because “The state actively prevents
automation in the sectors it controls.” So, the current scenario is
“a race between technological hyperdeflation & state-caused
inflation, possibly hyperinflation.” Both @jack and @CathieDWood
are right in different ways. Everything technology disrupts will
see prices fall. Everything the state subsidizes will see prices
rise. Like the graph below, but even more extreme.
https://t.co/KDIGBH9iZp pic.twitter.com/JYTlw4xF55 — Balaji
Srinivasan (@balajis) October 25, 2021 Manifesting Hyperinflation
Into Existence There’s an old wives’ tale that says that by only
mentioning hyperinflation, one could generate a chain of
unfortunate events that end up causing it. Cathie Wood brushed on
the subject by saying “If consumers and businesses believe that
prices will fall in the future, they will wait to buy goods and
services, pushing the velocity of money down.” Taking it to another
level, Wired columnist Virginia Heffernan brings 1984 vibes to the
discussion. “Like “divorce” in a marriage this word Jack tweeted
should not be uttered unless you’re trying to bring it into being.
No one shd take investment advice from someone who sees himself as
making markets.” Like “divorce” in a marriage this word @jack
tweeted should not be uttered unless you’re trying to bring it into
being. No one shd take investment advice from someone who sees
himself as making markets. How insanely reckless to tweet this.
Immoral. Jack, ban thyself. pic.twitter.com/fl7CWRXdN8 — Virginia
Heffernan (@page88) October 24, 2021 Could Jack Dorsey bring
hyperinflation with a tweet? Maybe. However, isn’t the main suspect
the relentless money printing the governments are engaged in? That
seems to be a determinating factor, since that’s exactly what
inflation means. There are no two ways about it, the governments
are inflating the money supply with their constant money printing.
And Jack Dorsey’s tweet is just a comment on the situation. Related
Reading | Is Evergrande Defaulting? Is This The Reason For China’s
War Against Bitcoin? In any case, Reason magazine has another
interpretation for Heffernan’s bizarre behavior. Apparently,
historically speaking, when hyperinflation happens the next move by
the money printers is to prohibit people from even mentioning
hyperinflation. “It is true that expectations do affect behavior
and therefore prices. But any brouhaha Dorsey could stir up with
his monetary shitpost obviously pales in comparison to the potent
macroeconomics factors—spending and printing bonanzas, high debt
overhangs, lockdown policies, and the current situation with the
supply chain, to name a few—that are truly driving the “transitory”
inflation that our widely respected experts do admit.” Still, the
USA is far from hyperinflation and the Dollar is still the reserve
currency of the world, which gives them leeway. Featured Image by
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