"Intrinsic value" - Part 1

I posted a video about the increasing money supply and investments that had done well during in the increase of money supply. I received a single reply.

I wanted to reply to this comment but need a Post to do so.

Let’s break down the post reply and analyze it.

Nonsense.

I would urge all readers to hold a fluid mindset, where they are open to new ideas. Read stuff you disagree with and play steel man.

It is true that the economic damage is done by government debt

Agree

but the idea that an investor can minimize the damage by investing in bitcoin is the nonsense.

Lets look at the numbers. We can look at this two ways:

Can Bitcoin minimize damage from government pumping money supply?

Let’s backup - to the building blocks of how the world works.

You want the things you can buy from money. You don’t want the money.

So two things:

• Things that you can buy

• Money

In mathematics, a relationship can be represented as a division, where one number is the things you can buy and the other is money.

Lets look at this relationship in a vacuum, with no other interference to get a measure on what is going on. We are looking at a comparison between two things - money (Dollar) and things you can buy. You can see that the purchasing power of the dollar (things you can buy) gets destroyed over time.

Said another way. The price of the US Dollar will fall relative to things you can buy.

If you buy anything, a hamster, a propane grill, Bitcoin - the US Dollar a Fiat Currency, will fall against it.

but the idea that an investor can minimize the damage by investing in bitcoin is the nonsense.

Hamsters minimize damage, so does Bitcoin. Proof in the chart above. Bitcoin or anything other than a fiat currency will be better than the fiat currency. Except maybe a brand new Mercedes or BMW

An extension - How does Bitcoin perform against other assets?

A quick search on Google revealed this. This actually excludes recent Bitcoin bull market data which would increase the numbers.

This chart shows an order of magnitude difference between Nasdaq 100 and BTC.

Bitcoin relies on its value for the bigger mug theory. There is no underlying value

I believe what the author here is saying - the thing holds no value and relies upon Greater Fool Theory.

Studying Austrian Economics the idea of “Intrinsic Value” is a misnomer. It is an innate default state for human reasoning.

However, when you probe and study value deeper you will find out that:

value is actually “perceived value”

Said another way, value is subjective to the individual not on the underlying object in question. One of my personal definitions of value is:

Value only exists when two consciousness are present - one who personally values the object less than what he will receive for it, another who personally values the object more than he will pay for it

Greater Fool Theory is one and the same as Subjective/Perceived Value.

Intrinsic value is false

Axiomatic Logic and Reasoning

Logic is predicated on the underlying logic being true. If any step of your logic graph is invalid then your higher level reasoning is flawed or wrong.

It is important to understand the lowest level of all things if you care about your high level reasoning.