Subnostr

I think the main point I'm trying to make is there are two types of debt. If I borrow $10 of gold from you and pay you back with $10 of silver, we have settled the debt.

But if the government borrows $10 of your gold and prints $10 of fiat to pay you back, while you have received an equivalent amount, the government hasn't paid you, everybody who holds dollars has.

$10 is not significant, but what happens if, in the future, we lend the government $315 trillion of Bitcoin and they pay us back by printing $315 trillion dollar bills?

🇵🇸 whoever loves Digit 1y ago

You're thinking like a capitalist. Stop that. Use your neurons.

Whatever the fuck dollars are, if you borrow an oz of gold from me and you're planning to pay me back in silver while the gold to silver ratio is 86 to 1, you'd be an idiot, but I can see how that would make me have some sympathy and leave interest out of it, so when you give me back 86 oz of silver, we'd be all set.

Whatever the fuck a government is, if it borrows gold according to some gold-dollar ratio and then these things can just be printed to pay you back, you'd have to be an idiot to leave interest out of it because that ratio is going to get worse for you when they print the things to pay you back.

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hh 1y ago

Correct. In fact to begin with, nobody in their right mind would lend BTC, least of all to a government.

And inversely, if I am lending fiat against BTC, I will definitely demand overcollateralization and a fat interest to top it and to pay for the cost of opportunity that I'm incurring by lending that fiat to you instead of using it to buy BTC myself.

So, if in normal conditions I expect BTC to appreciate 100% yearly against the USD, and today's price is $100k, and you ask me to lend you fiat putting 1 BTC as collateral:

1. at most I will lend you $50k

2. I will make you pay at least 100% yearly interest

3. plus a premium