> This is an indirect return to taxpayers... who are holding these currencies.
All of these are basically commodities and unproductive assets (like gold).
Warren Buffett in 2011:
> Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.
> Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B? Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.
> A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.
It's no longer #2, but its market cap is a little higher, but it goes to another point Buffett often makes: don't try to pick stocks, but invest in a broad index fund.
For all of these, the only way to get a return is for someone to come along later and buy it (ideally at a higher (real) price):
> The main argument for a Strategic BItcoin Reserve seems to be that Bitcoin holders worry about an impending shortage of greater fools and need the US government to act as the greatest fool of last resort.
I've owned Bitcoin since Jan 2013 and I think this is a terrible idea.
I love speculative investments with interesting (to me) technology, but I don't want the foundation of my life (my country) to be affected by this speculation. I should control my exposure.
It's the same reason I'm glad the vote to get Microsoft to buy Bitcoin failed. I don't need more risk added to my other investments.
> The main argument for a Strategic BItcoin Reserve seems to be that Bitcoin holders worry about an impending shortage of greater fools and need the US government to act as the greatest fool of last resort.
I honestly don't think it's that far fetched. It meshes perfectly with the rest of "government busting" moves they've made so far, and it has the added elegance of catering to their crypto bro friends in the process. They don't have to burn all the social security on this to cause serious trouble.
> A strategic reserve makes sense if you can imagine a crisis where a crucial good - food, fuel, etc - would be in short supply: you want be able to release the reserve to meet demand.
> But I cannot imagine a crisis where releasing an emergency reserve of crypto would do any good.
Crypto companies accounted for almost half of corporate donations in the 2024 election cycle, with some contributing tens of millions of dollars to help Trump win a second term in office.
Trump previously called Bitcoin 'a scam against the dollar', but after crypto industry plowed tens of millions into the election, Trump is now for it.
John Reed Stark, former Chief of Internet Enforcement of SEC, explained Crypto on 60 minutes:
Crypto is a scourge, it is not something you want in your society. It has no utility. It is pure speculation. There is no balance sheet to crypto, there is no financial statements. There is no audit inspection, examination, net capital requirements, no licensure of individuals involved, and there is no transparency into it. That creates real systemic risks, not just risks for investors.
But the other part people don't talk about enough is the dire externalities that are enabled by crypto. Every single crime you can think of, is easier to do now because of crypto. Especially ransomware, human sex trafficking, sanctions evasion, money laundering. North Korea is financing their nuclear program using crypto.
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