Bitcoin’s Place in Austrian Economic Thought

Published on
November 10th, 2020
Duration
63 minutes


Bitcoin’s Place in Austrian Economic Thought

The Interview - Crypto ·
Featuring Mark Valek

Published on: November 10th, 2020 • Duration: 63 minutes

Mark Valek, fund manager and partner at Incrementum AG, joins Ash Bennington, Real Vision senior editor, to discuss Austrian Economics, gold, and how Bitcoin fits into the Austrian school of thought. Valek dives deeply into the relationship between gold and Bitcoin and how investors can utilize this relationship within their portfolio. He explains how his company approaches these two assets in a way that reduces volatility and makes them complementary. Valek also briefly touches on the use cases for Bitcoin as a digital gold and the emergence of other crypto assets such as Ethereum. Filmed on November 3, 2020. Key Learnings: Bitcoin may be a very young asset, but it can be used within a portfolio strategically to capture upside while rebalancing it with an asset like gold to reduce volatility over time. Valek walks through his investment thesis for Bitcoin, how it's very similar to that of gold, and how Bitcoin and gold both fit into the Austrian school of thought.

Comments

Transcript

  • SS
    Steven S.
    26 November 2020 @ 08:53
    I would suggest that Mr. Valek read up on the subject of confirmation bias. He has it bad. I started to count each time he expressed warning signs of confirmation bias, and stopped counting at 15 less than halfway through. Realvision needs to do a better job at screening for this. On substance, he is right that the Austrian School is a philosophy. But it is not state of the art economics. It might fit his world view better to think that the "individual" predominates in an economic analysis, but reality has no obligation to make him feel better. It is simply not possible to predict emergent properties of a complex system by making judgments based on individual behavior. This is why his inflation analysis is so far off, and has been for so many years. The idea that “asset inflation” is the same as monetary inflation is a completely unsupported assumption. But listening to an Austrian economist offering economic advice is like getting marriage counseling from a Freudian psychologist. At some point you just have to let it go and find someone who knows what they’re talking about.
    • PB
      Paul B.
      30 November 2020 @ 09:22
      Its is from here on in because GDP has no Heartbeat.....So Asset inflation can only be 100% related to inflating the Money Supply
  • PB
    Paul B.
    30 November 2020 @ 09:18
    The Biggest difference between Gold & Bitcoin is everyone expects Gold to hold it's value relative to the Money supply and yet everyone expects Bitcoin to go to the moon.
  • JS
    John S.
    24 November 2020 @ 13:54
    This is one of the best interviews. Questions were not rushed and the sequence was excellent
  • rp
    ravi p.
    23 November 2020 @ 05:21
    this is feedback on most interviews. Provide a "primer" intro for dummies and key topics that interviewers are experts in, such as Austrian economics, or what is Bitcoin, what is etherum, what is defi, etc. So, interviews can be more in-depth, by saving time on asking these intro questions.
  • LF
    Lisa F.
    14 November 2020 @ 01:38
    how often should you rebalance?
    • mw
      michael w.
      17 November 2020 @ 05:13
      Buy low, sell high.
    • LM
      Larry M.
      20 November 2020 @ 01:12
      Great question, but I think any answer is speculation at this point. Also, IMO given the current conditions the question/answer is not how often, but when. Bitcoin has a halving every ~4yrs, and so far has cycled along with that. So you might answer - roughly every 4 years - probably. After halving the supply slows down and there tends to be a rise in price. That rise tends to trigger a lot of hype so the price overshoots. After price rises high enough there is enough supply and after that is realized there tends to be a decreased rate of rise and that ultimately leads to a peak and then fall only to overshoot the real balance. And, thus a cycle. As Bitcoin matures the swings may decrease because there is now expectation of this effect or may continue as people try to take advantage of it. The swings of the last 3 cycles seem to decrease in relative amplitude. So, long term I think it will stabilize but that may be quite a ways off. Currently, with hype, billionaires, banks, and even countries are buying in, so beyond supply side economics we are likely seeing increasing demand which may have dramatic effects beyond prior bull markets. Some use the 200wk moving average or Plan B stock to flow as a baseline of where we are in the cycles. There are lots of ways to do this (always subject to change on new information), but for example, assuming that gold still is a bull market I plan to draw profits off bitcoin by buying a gold coin with bitcoin for each day bitcoin is ~2x the 200day moving average and above plan B's estimate. I might draw the rest down to 50% with a macd cross after those conditions. After bitcoin price falls below the stock/flow model again and when the 50 day average crosses the 200 day average (signal of another bull bitcoin bull run) I plan to buy bitcoin with these coins. In other-words, I would not be surprised to see 2021 look like a pattern similar to 2017 and as this happens, do what you can to recognize things and try to avoid the 2018-9 like downside by storing back to some other safe haven asset like gold.
    • TS
      Tao S.
      20 November 2020 @ 21:47
      how about an Index. They auto-re-balance.
    • LF
      Lisa F.
      21 November 2020 @ 18:50
      thank you for the replies thinking about this more - is rebalancing really worth it if i would have to pay taxes each time i convert one asset to another?
  • TS
    Tao S.
    20 November 2020 @ 21:45
    Intriguing combo: Bitcoin/Austrian economics. From an Austrian no less! Easy depth. Thanks.
  • TC
    Thomas C.
    19 November 2020 @ 19:45
    great new mic !
  • sc
    sung c.
    13 November 2020 @ 17:42
    "The monopoly of money, and the manipulation of money" is sadly, 95% of the public still are not aware of nor understand. Like sheep being led to be sheared, where their "wool" represents their hard earned "money" which they hope will keep them warm for the coming winter.
  • PJ
    Peter J.
    11 November 2020 @ 11:38
    Superb interview , the coverage of volatility and gold / BTC portfolio balancing was excellent. I’m 62 and hold gold and BTC (gold heavy), so got a great deal out of this. I personally think BTCs adoption and value in the DEFI space is barely on the radar within mainstream and has massive potential over and above the store of value. I also 100% agree with Mark around the complimentary relationship that he believes will grow between the two over the coming years.
    • sc
      sung c.
      13 November 2020 @ 17:37
      Interesting, I'm 59 and hold 10X BTC to my gold and silver positions, knowing I will have to watch my BTC more carefully in a year or two, watching for the usual 4-year cycle dump after the next ATH, sometime in 2022.
  • CC
    Christian C.
    12 November 2020 @ 01:53
    At around 08:49 Mark mentions an "effect". Could anyone tell me what he is saying here? Quanteo? Kanteo? Would love to look into this a bit more. Cheers!
    • DP
      Duane P.
      12 November 2020 @ 04:53
      Cantillon Effect https://www.aier.org/article/cantillon-effects-and-money-neutrality/#:~:text=The%20Cantillon%20Effect%20refers%20to,flow%20path%20through%20the%20economy.
  • LP
    Lynn P.
    12 November 2020 @ 02:01
    Ash is an excellent interviewer, forming thoughts, perspectives, to skillfully organize the interview for the listener.
  • FR
    FLAVIO R.
    12 November 2020 @ 01:54
    Proper!
  • SP
    Stephen P.
    12 November 2020 @ 01:49
    Excellent discussion, I have been writing about the BTC/gold ratio trend (seems headed toward kilogram and above value) and looking at optimal Kelly allocations. Gold as a rebalancing hedge with Bitcoin makes sense. Kelly capital growth analysis suggests you should have more BTC than gold and more BTC than you probably have now. His thinking about BTC price logarithmically is the way to go, a standard deviation for several long-term models is a factor of 4 in price or more.
  • KM
    Katherine M.
    11 November 2020 @ 21:13
    An excellent video with a brilliant insight.
  • JB
    Jordi B.
    11 November 2020 @ 17:53
    Outstanding interview!
  • WT
    William T.
    10 November 2020 @ 18:25
    Very good insight. Always good to see others intellectual perspectives. Very good interview Ash.
    • MP
      Matthew P.
      11 November 2020 @ 14:14
      Agreed, great work Ash. Well grounded thought process rebalancing w/gold. Interesting food for thought.
  • SS
    Steven S.
    11 November 2020 @ 04:51
    Wonderful interview. Simply brilliant insights by Mark. The idea of gold-BTC rebalancing and the rationale behind that strategy really resonated with me. Thanks!
  • AM
    Alexander M.
    11 November 2020 @ 03:20
    Another relaxed and top drawer interview. Thanks gentlemen.
  • MB
    Miles B.
    11 November 2020 @ 00:14
    For anyone not familiar with his "In Gold We Trust" reports that come out every year that are incredibly comprehensive, they are here: https://www.incrementum.li/en/ingoldwetrust-report/ The compact version is over 80 pages, the extended version is over 350 pages and there is a lot about Bitcoin in addition to gold in them. Seriously world class research in them.
  • TC
    Tom C.
    10 November 2020 @ 17:37
    Why was Paypal's embracing Bitcoin on their platform not discussed?