Why Does Bitcoin Make a Great Inflation Hedge? | LA Blockchain Summit

LOL. Welcome to the latest panel at La blockchain Summit. Why Bitcoin and makes a good inflation hedge. My name is Charles Boulevard and I am vice president of content for financial services firm Quantum economics and a Forbes, senior, contributor joining us for the panel today. We have Matthew, Graham, CEO of Sino Capital, Jake, Ryan, founder, and CEO of tradecraft capital. William Harman, founder and managing partner of Wilshire Phoenix and Octavio. Costa partner, and portfolio manager at crescat Capital to get some thoughts more

panelist, we would like to ask a few questions. All right, so first of all, the world's central banks have printed trillions of dollars worth of currency in this year, the federals are reserved, for example, had printed roughly 3 trillion dollars in new currency. That's the last time I checked it is certainly worth emphasizing at this point that bitcoin's total Supply is capped at approximately 21 million units. If Central central banks continue to print money. How do you expect this to impact inflation?

Would anybody like to join us? Or I would answer if I tend to approach things a little differently from Manny in the Bitcoin space, because I'm really more of a Kenzie in more than an Austrian Economist and in terms of philosophy, but I would be greatly concerned. Not so much about the short run because exceptional situation, but the fact that we now have a 5-year span were into growth, has exceeded GDP for the first time since the 78th and 4th at 2:40. And

then you couple that with the fact that for decades, now we've had just inflationary pressures from globalization and there's a very strong chance that much of that is going to be Unwound, right? I think it's not so much about 2020. It's about the longer time frame. And the potential the potential globalization in Fallout. That's how I would take a look at it. I'll talk to you about 8 then. I think there has been a lot of deflation Arie forces in the technological advancements weeks that we've had so far that had an

impact on that. I think that the lawsuit has been a major reason why we haven't seen inflation as well. But in my view aside from ask the prices that be rising significantly all over the world. What we have in mind for you is, is, is that Commodities really haven't moved? We've had a kid in which almost any commodity Lookout, from oilton natural gas to iron ore and copper even silver. I went down significantly for the last 10 years, just recently, some of those Sergeant move up. I think that have that certainly had an impact on consumer prices in general. And allow the Federal

Reserve to continue to to to to to keep money in general. I think sheet money has also in a way allowed companies to survive in an environment. Wouldn't even probably survive in in the 70s or 60s 3 months, much higher cost of capital. So I think in the following years I believe strongly that the amount of Leverage we have in the global economic system, most likely would lead to some sort of geopolitical issues in which could cause Supply disruptions in commodity prices in general. I think at some point

investors will start putting money into hard assets. And when we see commodity prices rising significantly from cyclical to the fence of Commodities, you name it. I think that's when I will begin to pick up its overall so far. I think that has to be the major reason why we haven't seen flation is commodity prices in my view, not to mention that. The basement of currencies is another issue, but I think it's separate from from the actual Consumer Price inflation that you're referring to. I thinking your question Might be a little bit different. I think the data support that

monetary easing is deflation Mary and as we print more money and have lower and lower interest rate, we're seeing the bat really affect the economy in an advert Way by stunting growth. So I don't think the impact of just the FED itself is inflationary what was the inflation is is in addition to month, you know, easy monetary policy yet more spending around the low. The treasury, you know is that is getting more and more in debt and we're going out and going to be sending we have stimulus bill that's already past year in the u.s. do Congress and they're

looking at a second and I think it's the combination of monetary and fiscal policies together. The that could cause inflation in the future. Is that more than a decade with the chest? The FED printing money and Molitor monetary policy, and in that is not produced inflation. So I would suspect in Racine that for probably three decades in Japan, so it's not as much as the printing in money at the fiscal side as well, that really is going to create inflation of the future. Okay, so if I may clarify, when you said he basically said that, we had a decade where it was all the central banks

that were stimulating the economy, right? Well, the FED through monetary policy and we all know that the FED has been busy controlling. And none of the interest rate through their Fortress, Scott-Young risk, assets. Generally for the last 12 years. So I think, when people say, you know, this time is different, you know, what have you? I think that's usually the wrong thing to be the wrong thing to say. But I think she only this time is different here in truly unprecedented land. And I don't know if this is the next Crisis

happens, in 6 months to a year, 5 years and years, but, and, you know, it take me to begin with it kind of losing faith and maybe the US a $70 kind of losing its Reserve status. I think that, you know, I guess it's something, I think I wouldn't be a short-term or we notified intermediate-term, but I don't think it's, you know, something that I'm looking at in the next two years or so, to five years, maybe longer, Okay. So does anybody have any final thoughts on that question? I think the physical stimulus to point is a valid point, I think, you know, back in

after the World War II. Certainly that was a huge impact on inflation Air Forces. And perhaps why? It's that certainly more direct way of of inter intervening and economy overall. What we've seen so far is literally helicopter, money money coming into Reno and for everyone's pockets and then you stopped to spend money. So I could get the man has not being has any crazy ass of the fiscal stimulus so far. And I have been having really having an impact on on demand. If that's us, I think that that would certainly create inflationary Force. Again,

there's two ways to do that. One of them is going to be through the man and the other one's going to be through Supply and supplies is in my view through Commodities in and it was happening in the fiscal or monetary side of things. We've had us The oil shock him in that closet. Leaf legionary forces you to move higher globally. So we haven't had a shock like that in a real long time and I think we should do it as we see me. History amount of leveraging. The system tends to cause either war or your political issues. Think there's a pretty high

probability that could happen in the next few years. Amount of Leverage in the system to me is that if you raise interest rates, that that's going to have a much more difficult time tempering inflation there, a lot of things that quickly add up and increase risk, your long-term situation and potentially, a rising-rate environment could cause never going to raise the rates and the natural progression rates going up naturally, over the last several weeks, so they can control what I can control, but at the end of the day, but

I'm not sure how much longer I have a crystal ball. You're holding out on this here. Bring up the potential implications of USB losing, its Reserve currency. But you didn't you mention that? That could be one scenario on the horizon. I'd love to know more about. You think I might look like I don't know if we have time or not though. My crystal ball just came out so it does not look good. But No, I think there's no America as a sort of the, the world superpower or what-have-you, I think with other

countries sort of I don't think anybody's exceeded us but I don't think it's because the world is the US dollar uses the reserve status. But it's going to be a really big deal for financial markets and Global markets around the world and it would probably cause a lot of Destruction to the to the system. I have issues with that beautiful soul, who didn't lose it to. I, I mean, Does it really matter if, you know, the cleanest dirty shirt. So, but yeah, I mean, I don't

Scenarios. I think my cookie, I may be my crystal ball is wrong there, but no, I mean, it's it's something that's certainly. You can't take it off the off. The tables on me. I mean, you just you just can't. I mean, what can I not take off the table? That's my base case scenario. I mean some people argue that would be tryna, I would strongly argued that. That's that's probably not, not going to be the case, but highly unlikely. Do you think it's is China?

That's why I was asking what kind of asking kind of back at you? Like what you guys think would be like For the mentally stronger than any other fiat, currency in the world today. I can't think of any other currency that would be better than the dollar. I'm not saying that that's, that doesn't create an environment where the monetary stimulus begin to just stop. It used to on fiscal stimulus and and the two men dates of central banks now have is to keep Equity markets said, High valuations, afloat. At the same time as suppress interest rates and somebody else made a point about they can't raise

rates right now. You're right. And they have to continue to purchase treasuries. Then on a to was suppressed rates going forward and that's a good question about the who possibly could take over the dollar. But I I just can't, I can't think of one reason for my suggestion is that it's a scenario that can't be ruled out, but if you start to talk about what would a world look like that did not have USD as a reserve currency. My suggestion is Most likely scenario. If we take that as a premise, is that it

would be a multi pole their world. I don't think we would be a hero comes in and that's the reserve currency Renminbi. That seems to me, much less likely than multipolar Renminbi. Of course it's an extremely complicated situation because it's not a Free Falling, free floating currency, first and foremost, but I do think that I am neighboring countries especially with the promulgation of these except that we could start to see more and more contracts denominated in Renminbi International contracts. We need DirecTV is we could see more and more

women be on the balance sheet in neighboring countries countries that are politically and economically free much intertwined. If not dependent on the People's Republic of China, that's kind of my My sentiment look it's possible. We know there's 50 trillion dollars of of of of Assets in the banking system, in China, it's a highly levered economy, I'm hungry and other items aren't, but he usually throughout history. What we see is that monitor debasement of those places are going forward as a, as a consequence of the this deck build up. And

what, you know, I think we're in the race to the bar for all of the occurrences personally, I'd like to the next question. Thank you for all the input on that this particular inquiry. So we meant various factions were brought up that could potentially push prices higher in the future. So what I'm wondering is that if, for example, you mentioned helicopter money but you said that it hasn't posted aggregate demand yet. And I was so, for example, if helicopter money, Boost aggregate demand and pushes it to the right. And if you take these other factors and they

combined to push prices higher, I mean that could show up in both traditional inflation measures snow. For example, the Consumer Price Index but also the price of assets. So it guess what I'm saying is that, if if the price is prices get pushed higher, do you think that it will show up equally between the CPI and asset prices? That was at 3 or 1. If you think about everybody, you know, we have consumption and production and if everybody is at home getting stimulus, check continuing their consumption and

producing. Then we're going to have a lot less stuff and we're going to be eating on that the only way that's going to result in higher prices. So there's a lot of ways that we can get for inflation CPI inflation. It may not just be an increase in aggregate demand or maybe change in production just because of the pandemic. And then I think really, if it's just asset price inflation, or if it's really mainstream core inflation, will largely be determined by how

much is this coming from the treasury and fiscal policy versus how much is coming? Treasury and the fiscal policy with fed and monetary policy if they're both working in concert, If the Fed becomes less and less independent, more and more messed with the treasury that I think you're going to see you, no more rules. Get redefine more ideas of the vine. And, you know, corporate bond, buying equities, buying other assets, getting more exotic in our monetary easing policies, and as the fed, and

the treasury become more and more one, and you're you're really talking about money for thing that that, you know, banana Republic's and many, many other countries that are really high inflation. I will start to see that. So what is the next monetary and fiscal policy that will really change. Okay, with anybody else, like the way in. For me. And I think the probability of asset bubbles is considerably larger than the probability of of CPI inflation in the short and medium-term. I'm much more concerned

about the possibility of S&P 500, for example, decoupling from intrinsic value. I think that's, that's something that is much more front and center, short, and medium-term. S&P decoupling from intrinsic value, what do you value? So, I never really heard that. So what I mean that, I think we talked about higher multiples, earnings multiples, or I mean, how much higher I would. I I think that's a good point. I would concur that it is a current cancer Rather than a theoretical concern, I would agree with that.

Yeah, we have unlimited money chasing, limited stuff than that. Limited stuff was going to get one more expensive. So stop School, bring it back up back to bitcoin. Anything that is going to be more stairs, is going to get more expensive as we get more and more money, you know, more and more the denominator of that becomes higher and higher we print one running. So yeah, I definitely think the worst fears were proven least their assets are going to do much better in an

environment like that. Oh yeah. In a little bit on a while, I do think that that's that would show up on the CPI on even though I know it is largely manipulated and acts, but it will probably show up in an in a significant way. Perhaps very understated, there is an issue with seen so far in one, part of the market, going to car prices. It's not that it hasn't been driven by demand. It's not like people were buying cars left and right, that the issue with car prices that are all time highs. It looks like a NASDAQ index. If you look at our private used car prices

today, it is mostly due to a lack of production. A lot of companies do I have not produced cars as much takes you shopping for a car right now. So you might have to pay 10 grand more than you used to stay on a car that's that's just do do with lack of supply and destruction there. So that's up. That's one thing. I think the question about inflation which is perhaps a little bit but Different than the basement is. It's a very big deal for for specially the equity Market at multiples. That that we are today. Pretty much at

all times higher than in any fundamental matriki look at. I think it's going to be very difficult to justify those valuations if we have inflation in the Horizon. So I think that I could certainly change the picture for insulation. I'm at, as a money manager, I think it's important to search for assets that are cheap relative to the money supply index. For instance. You can find, you know, Commodities are a very great example of that. If you look at Equity prices today, relative to money supply and basically their all-time Highs, are we testing levels of the tech bubble today, so

it's very difficult, but I think that inflation would as is a, very important question for any Equity investor today, and it will probably mean lower growth. If we do have that happening going for, Okay, so you mentioned that, it's important to seek out assets that are probably scarce. So what I'd like to get into is if if you know, prices continue if prices push higher whether it's for the Consumer Price Index and or the price of assets, what do you think that sort of fit? What impact would that have on

bitcoin? Well I think it's going to do particularly well in that environment when we have what looks like about gold and didn't win for a little bit. I mean we have to say we have to ensure we have to store the greatest scam. I think a couple billion dollars worth in China so the idea provable scarcity is is one that is becoming more and more and more investors Bitcoin implementing the idea of being able to know exactly and prove exactly who owns Every piece of the puzzle in Bitcoin that the whole idea, triple entry accounting and being able to

have a boundary system that allows you to look for in an insurer increasing accessibility in the financial markets. And other markets are just going to do very well for big point. I'm all alone in this. Well, I think I think that the monetary stimulus in the extremes that we've seen so far. We will probably make you faster search for Alternatives of the monetary system. Vic, we certainly fits that category along with gold and silver and some others that have fit in the past, copper Princeton, but have a much more cyclical aspect to it does have to and

certainly at the technological advancement aspect to it as well. And perhaps why they moved sometimes very closely with the S&P 500 at some periods of time in terms of correlation daily weekly, or monthly, not all the time. So I think, I think it's certainly could benefit from this environment. It's it's what I called The Supercharged environment in which central banks have been expending their monetary base to suppress interest rates. That is a perfect mix for any any ass at the services. An eternity for the monetary system, gold would be, it's it's

it's a bigger Market. It's not going to move us as much as other. Father asked us to perhaps her more, he seemed a bit coin. Silver are very similar in that way. They have much more room for growth but I think we'll probably need their way. Not in terms of appreciation of price. Just to let you know, just give him the credibility and and then the likelihood have larger print Pension funds and enlarging vester's to to come across the thesis of gold. In general verses are there are but that would certainly benefit Bitcoin and and it's over Miners and other other

related assets that are linked to the monitor system. I think it's I think it's just sort of alternative assets. Are generally bucket, even though it's not something you can hold or touch, but I think it's sort of the it it fits right in that bucket. And it's going to be interesting to see how it does does performance insulation. I buy me cuz obviously Bitcoin has never existed and inflationary environment and you know we can sort of go back and see how it goes. Has performed

overtime and inflationary period and silverware. So it'll be interesting to see what actually does happen when it occurs. Yeah I would phrase it like this so since its Genesis Bitcoin has mostly been correlated to crypto related things but as it continues to mature as an asset class discussions about correlation in the S&P 500, things like that they become much more serious, much more realistic if you subscribe to Paul Tudor Jones is rate monetary inflation through and I would encourage you to read his investor letter

from earlier this year. He has a fantastic analysis of Bitcoin relative to other potential wasted, the play, the gmr. And so he talks about how you have different horses and you want to choose the fastest horse. And so some horses might be going long, the nasdaq-100 when Mom called when long Bitcoin playing treasuries, one of the two short the third. And so that the interesting thing is that Bitcoin you could make a strong case that is now one of the fastest horses and certainly it's one of the horses

that you would want in your stable. And that's something that is very new, and very important for people that work in the blacks and Sektor. Yeah, when I would add on that to you, we started with the idea of provable scarcity. And this topic again, I think Collectibles like rare cars, rare wine, and how those have done over the last 10 years, you've seen a great performance compared to a 7500. So really collectible art glass of wine and cars. Other than Global scarcity are really doing a performing market. And I think that we can take that

into our pieces and really add why Bitcoin and is provable scarcity will do well in the coming. Dearborn. I would, I would tablet that though I would say in the scenario we're income in equal wealth inequality, continues to increase or at least doesn't think which, which I'm and I'm not totally convinced we haven't reached a Tipping Point in that regard. Yeah, that's a great point. Also Fine Wines, Collectibles and art and Eddie's all the it's about access to. And I think that kind of goes into the SharePoint Matthew about at the start of any quality type thing. It's

all, okay, at the shop and I'd like to thank everybody for joining us. Thanks, thank you.