Yesterday Ron Paul tweeted a poll that received a tremendous response. Today he shares his thoughts on the results. Yesterday Ron Paul tweeted a poll that received a tremendous response. Today he shares his thoughts on the results. Yesterday Ron Paul tweeted a poll that received a tremendous response. Today he shares his thoughts on the results.
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Bitcoin's Inflation Reflection
00:07:56
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| Hello, everybody, and thank you for tuning in to the market update. | |
| Many of you know that we did a little poll yesterday on Twitter and had a surprisingly large number of people that participated. | |
| I was very pleased, and I want to thank you who did participate for doing that. | |
| There were over 70,000 people that voted. | |
| And I found the results interesting. | |
| I couldn't have predicted exactly, but of course, the question is: if you were given $10,000, and that was as of yesterday and the day before, and you had to decide where would you put that money if you had to stash it away for 10 years? | |
| Would you just get Federal Reserve notes and put it in a shoebox? | |
| Not too likely. | |
| 2% of the people said that. | |
| Well, what about U.S. Treasury bonds? | |
| You know, that's the government bonds are guaranteed and all this. | |
| Only 8% said they'd won any U.S. government bonds. | |
| But then the contest, of course, was between gold and Bitcoin. | |
| Now, I wouldn't have predicted this turned out quite like this, but gold had 36%, but Bitcoin 54%. | |
| And maybe this is a reflection of what is happening in the Bitcoin market right now. | |
| The only thing I was thinking about is what people would have done, because it probably would have been slightly different. | |
| What if they could have split it? | |
| There probably would have been some gold people, some Bitcoin, and Bitcoin people buying gold. | |
| But I wanted to get an estimate on what the viewing audience is thinking about. | |
| And I thank you for participating and giving me that information. | |
| Today, Bitcoin is certainly in the news. | |
| You know, it soared up to $19,000. | |
| There was a correction of $4,000, then up another $1,000 or two. | |
| So it is really, really very volatile. | |
| And I'd like to go ahead and show a little chart on how long it takes for Bitcoin to increase by $1,000. | |
| And this comes from Zero Hedge. | |
| It's a neat little chart. | |
| It has to be updated quite frequently now. | |
| But look, they go back to when this all started a good many years ago. | |
| And it took 1,789 days for it to become $1,000. | |
| Then 1,200 days, then 23 days. | |
| That's every time to go up $1,000. | |
| But look at the chart down at the bottom. | |
| You know, it only took one day. | |
| Then it took six days. | |
| Then 17 hours, four hours, 10 hours. | |
| And now we're down to minutes at the speed of Bitcoin change in value. | |
| So that indicates it's volatile, to say the least. | |
| It doesn't prove the case which is money and which one will last the longest, but it certainly shows a lot of interest. | |
| So one question I get asked a lot is: where does this money come from? | |
| Well, it has to come from someplace, and the money actually is fiat money because it's Federal Reserve notes that people are getting tired of and they're leery of, so they're willing to put their money into something that maybe is a hedge and a protection. | |
| So it's really fascinating to watch this because it's billions. | |
| I mean, hundreds of billions of dollars the cryptocurrencies are worth now. | |
| And you think, well, what in the world created all this? | |
| Course, the biggest deal is the Fed creates the money as a base currency, the monetary base, and then they hope for and pray for circulation of money and that the money goes where they want it to to build a strong economy and make sure the CPI is going up at a certain rate. | |
| They've been very, very frustrated because that isn't where the money has been going, because there's been very little velocity in money. | |
| People aren't spending it. | |
| They've been holding on to this by the trillions of dollars. | |
| But all of a sudden, now, in these last several months, the money is starting to move. | |
| And there will be fractional reserve banking, and people are deciding that, look, survival might be the most important thing. | |
| They're not actually investing in building new factories and bringing our jobs home. | |
| It's being used to try to preserve their wealth. | |
| But it is quite amazing on what has happened. | |
| A big question is: what will happen at the end? | |
| I suspect that there will be an adjustment. | |
| That chart I just showed, that can't be maintained, and it can go up thousands of dollars within minutes. | |
| So that's just not likely to continue. | |
| But how lasting it's going to be, nobody knows because this is all decided upon by subjectivity, the subjective theory of value. | |
| And why do prices go up? | |
| Why does gold go up? | |
| Why does the price of Bitcoin go up? | |
| It's because people decide that they're willing to put that money in it and they believe that it is going up. | |
| So it is a subjective thing. | |
| It's not proof of anything. | |
| But prices are always set by the subjective theory of value, and that can be variable. | |
| There's been times when things are worth a whole lot and then all of a sudden they lose their value. | |
| Maybe some new invention comes in and it destroys the old items that they were selling. | |
| So this is something that is going on, but I think one of the biggest lessons for me on this is to say that the price of Bitcoin and what's going on there is a reflection of first a lot of dollars out there and also a lot of inflation. | |
| The Fed can't control where the inflated dollars go. | |
| They can't push it into the CPI and different jobs. | |
| The market decides this. | |
| And right now, the market is deciding they'd rather have a Bitcoin than even have gold. | |
| Now I'm still a pretty strong believer in gold and I think gold has a pretty long history, so I'm very sympathetic to gold. | |
| Matter of fact, I take a position right now which is quite controversial because gold's doing poorly right now. | |
| Bitcoins are soaring in price and all the crypto coincidence is getting all the attention. | |
| Stocks are up, bonds are up. | |
| But I believe, actually, and I mentioned this last week on this report, that it's quite conceivable that gold is in the early stages of a bull market. | |
| You say, how could that be? | |
| Well, in my lifetime, I saw a bull market start in 1971 at $75 an ounce. | |
| It ended at $800 an ounce. | |
| And then a long-time correction. | |
| By the year 2000, it was $270 an ounce after overshooting on the downside. | |
| And then after another 10 years, it went up to $1,800. | |
| And then there was another correction up until last year. | |
| And last year, after being up to $1,800, it went down to just $1,050 in January of last year. | |
| Right now, even with all the selling and the weakness in gold, it's up $200. | |
| Pretty puny compared to what's going on in Bitcoin. | |
| But if you're looking for stability and understanding and what people do in tough times, gold has held up pretty well. | |
| I have a hard time accepting the belief that gold is no longer money. | |
| Bernanke told me that is true. | |
| When I asked him, he says, no, gold is no longer money. | |
| But it's not being used as money. | |
| Neither is Bitcoin being used as money. | |
| The big question is, will Bitcoin take over daily activities in currency transactions and gold never looked at again and going to $100 an ounce? | |
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Gold And Bitcoin
00:01:10
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| No, that's not going to happen. | |
| But it remains to be seen. | |
| The timing is unpredictable. | |
| But one thing for sure, our government is going to continue spending and all this talk about spending and taxes and not allowing the debt to go up and are we going to have a closure of government. | |
| It's all talk. | |
| Spending is going to go up. | |
| Deficits are going to go up. | |
| The Fed is going to be active. | |
| They're always going to be printing. | |
| They're always the lender of last resort. | |
| They have a military-industrial complex that they have to feed, and they have a welfare system they have to feed. | |
| Puts pressure on the dollar. | |
| So the dollar will get much weaker. | |
| It's been very weak since 1971. | |
| People will go to gold, and they will go to other commodities, and they will go to property, and they'll go to cryptocurrencies. | |
| So it's an interesting event that is happening. | |
| Unfortunately, in events like this, a lot of people end up getting hurt, and then it's not quite as much fun. | |
| But right now, it's a lot of fun for a lot of people. | |
| And right now, once again, I want to thank you for joining in on that poll that we did yesterday. | |
| And maybe soon we'll have another poll on an interesting subject in economics. | |
| Thank you for joining today. | |