PODCAST: Josh Brown on Why Bitcoin Is Like the 1800s Railroad Boom
(Source: coindesk.com)

clicks | 5 days ago | comments: discuss | tags: bitcoin


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(Original link: coindesk.com)

Nolan Bauerle: ( 01:50 )
Great to have you aboard. So we’re going to jump right in. This podcast is really all about bitcoin. And the first question is about bitcoin behaving as a macro asset. So you’ve seen a lot of what’s going on in the world today. You’re pretty plugged in. How do you see bitcoin fitting in here? Is it an actual asset that you can see as a way to hedge macroeconomic changes? Or is it sort of still in the wings waiting to be built up and mature a little more before it’s really in the major leagues of macro assets?
Josh Brown: ( 02:24 )
As I said to you just prior to recording, I see myself as more of a student than a teacher in this realm, but I’m an apt pupil, and I try to pay attention to various opinions and, of course, look at charts and price action. And I try my best to understand what’s happening. To answer that question directly, I would say I do not believe that bitcoin behaves in any way like a macro asset. And the only reason I’m saying that is because we have no evidence that it’s correlated with any other macro development. In other words, I wish I could say when … Think about gold. When people are worried about inflation, and I’m not saying gold is a great inflation hedge, but when people are worried about it, there are trades where you can see flows go into that asset class. It’s demonstrative.
Josh Brown: ( 03:21 )
So you could say whether or not you think gold is an inflation hedge, you know that other people do, and it acts that way. Think about utility stocks. All year long, the story has been the federal reserve about to lower rates, now they’re lowering rates. Maybe they’re going to lower rates more. And as that process has happened, you’ve seen money flow into utility stocks, which are prized for their high yields. So if you’re not getting yields in bonds, what’s the next best thing or the next, next best thing? It’s high yielding equities, and utilities are considered to be among the safest high yielding stocks. So you could say that, that’s a macro asset. What can we say about bitcoin that’s even close to being comparable? In the month of October, I think it’s a world record of people around the world involved in various protests, whether we’re talking about Santiago, or we’re talking about what’s going on in Hong Kong. All over the world, there are millions and millions of people taking to the streets.
Josh Brown: ( 04:20 )
Why isn’t bitcoin up 50% if in fact it’s a protest asset? Well, it isn’t, so I don’t know. If we’re worried about disinflation and we say that maybe people, if they’re scared of their own currency, there’ll be this huge rush into bitcoin. Well, where is that happening? It isn’t. So I would love to be able to answer in the affirmative and say, “Yes, bitcoin has now taken its place among the Pantheon of asset classes that people can use to express a macro view.” But it just isn’t, there’s no evidence for that. So my answer to you is no it isn’t, but maybe that’ll change at some point.
Nolan Bauerle: ( 04:57 )
Yeah. And that you’re focusing on the behavior I think is the important part here. A lot of people get caught up with what they want it to be and they sort of will fall into kind of a bubble, where they see it behaving in ways that maybe it isn’t actually, given the facts, and that you underlined here that the behavior of it, given all these conditions is pretty clear. It looks like a speculative asset that people are interested in making some money on, and certainly there needs to be a high risk tolerance to get exposure even to this day.
Josh Brown: ( 05:29 )
If we’re saying that bitcoin’s most obvious use case is the ability to get out of a fiat currency and move money out of a country, or … it’s got huge competition. US dollars are what people want all over the world. In Asia, maybe they want the yen when they fear for the safety of the currency, or the capital markets, or the economy in which they live. This is a fact, and then if we’re saying, “Well, people are going to use bitcoin when they want to get out of the denomination of whatever their country is”, or the jurisdiction. They want to, I don’t want to use the word hide money, but they want to literally move money where it can’t be touched. Well, real estate has been a much, much more prominent way to do that. Look at Vancouver, half the buildings are Chinese money.
Josh Brown: ( 06:21 )
Look at the towers they’re putting up in New York. They just put the capstone, I think it’s called, or whatever. They just put the cap on something called Central Park tower. I think it’s 1400 feet high. It’s the tallest residential building in the Western hemisphere. It’s only going to have 70 something apartments. So who’s buying those apartments? Well, it’s not like a guy who’s a lawyer in New York City. These are $7, $10, $20, $50 million apartments. You could think about these as safe deposit boxes for Russians, Indians, Chinese, people that are trying to have assets outside of the country. ...