It remains a strange sensation to read in the mainstream media how Sam Bankman-Fried is portrayed as a smart or nice boy. This time it hit the Volkskrant, in which journalist Olaf Tempelman says the following, among other things: “Ex-crypto billionaire and bitcoin genius Sam Bankman-Fried, briefly worth 30 billion, realized even better than others that money in the modern world is based on imagination.”
Always the same
It is quite a task in itself to make sense of Tempelman’s story, which has little consistency. The piece mainly shows that Tempelman sees little value in bitcoin and is frustrated about the fact that bitcoin has proven itself as the best performing financial asset in the world since 2009.
“This ‘ordinary nice guy’ (reference to Sam Bankman-Fried) realized perhaps a little better than peers that money in the modern world is based on imagination, that the time of gold bars in cellars will never come again,” writes Tempelman.
With this, Tempelman seems to forget that our own reliable euro has only lost purchasing power since its birth. To show that the natural scarcity of both bitcoin and gold protects against this, we don’t even have to look at the charts of those assets.
Olaf is clearly a journalist of the old stamp man. For years, similar figures have proclaimed that inflation is a thing of the past and that banks can print unlimited money without consequences. As long as the economy continues to grow, that seems true, but as soon as there is a bump in the road, reality also returns.
The reality is that everything in the world is scarce. Banks can print unlimited money, but time, energy and raw materials are unfortunately not printable. In that respect, it may be a wise decision to keep part of your wealth in uncorrelated assets that the government cannot print.
This time it’s different!
Journalists like Tempelman, who unsurprisingly has zero point zero background in economics, come across as figures who are not necessarily looking for the truth. It is a sign of our time that a journalist from a renowned medium such as de Volkskrant is given the space to write very emphatically about a subject of which he has little or no knowledge.
The reason? It generates clicks and nowadays de Volkskrant is mainly interested in selling as many newspapers as possible. It is clear that Tempelman has little or no knowledge of macroeconomics. One look at the world’s debt-to-income ratio is enough to see that something is amiss.
Tempelman grew up in the period when central banks started inflating the global debt mountain. Over the backs of future generations, the West managed to accumulate gigantic amounts of paper wealth in this way.
However, the debts are now so large that the interest payments on the mountain of debt are taking up an increasingly larger part of the gross domestic product of various Western countries. The only way to close that gap is through more money printing. Actually, I hope that Tempelman is not familiar with this dynamic, because otherwise he would have to look deeply into his own eyes. After all, the eyes are the mirror of the soul.
Based on the developments described above, it may be an intelligent decision to park at least part of your assets in so-called uncorrelated assets. Financial assets that do not depend on the health of the economy. Think of the scarcity of art, gold and bitcoin, for example.