Why would sovereign nations want to hold US government debt if they know they will be repaid in devalued dollars?
#Bitcoin is a much better solution for long-term savings.
Example:
If you hold $100 billion of US debt for 30 years, you'll be paid back in dollars that are worth SIGNIFICANTLY less. You'll get interest payments along the way.
Right now, 30-year Treasury rates are around 4.34%. If the money supply is inflated by 7% on average over that time (this number has historically been much higher - it keeps up with the S&P 500), the bondholder would lose ~2.7% to inflation per year!
In 30 years, at maturity, the bondholder would receive $100 billion (in nominal terms). The holder would also receive ~$130 billion in annual interest payments throughout the 30 years.
The $100 billion payout has a present value of $11.3 billion. The interest payments have a present value of $51.1 billion, so the bond is actually worth only $62.4 billion in present value terms.
The bondholder would have LOST ~$37.6 BILLION by saving in US treasuries.
Why would you pay $100B for something worth only $62.4B?
If the investor put 5% of their portfolio in Bitcoin - $5 Billion in Bitcoin and 95 billion in bonds - their portfolio would perform SIGNIFICANTLY better.
Bitcoin has historically returned 100%+/year, but let's be conservative and say it will return 20%/year for the next 30 years.
The 5% allocation would be worth $1.19 trillion. The portfolio would be worth almost $1.8 trillion.
Instead of taking a compounded -1.5% annually (a 1.5% loss),
The portfolio would have returned 10.1% annually (a 10.1% gain).
rajatsonifnance / Rajat Soni, CFA
npub13w…pnp8z
2024-03-31 23:52:43
Author Public Key
npub13wl6gy2kp02zafh6vr8jfh58mzxxeza7as5mmx325xyq9x4z9rxqgpnp8zPublished at
2024-03-31 23:52:43Event JSON
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"content": "Why would sovereign nations want to hold US government debt if they know they will be repaid in devalued dollars?\n\n#Bitcoin is a much better solution for long-term savings.\n\nExample:\n\nIf you hold $100 billion of US debt for 30 years, you'll be paid back in dollars that are worth SIGNIFICANTLY less. You'll get interest payments along the way.\n\nRight now, 30-year Treasury rates are around 4.34%. If the money supply is inflated by 7% on average over that time (this number has historically been much higher - it keeps up with the S\u0026P 500), the bondholder would lose ~2.7% to inflation per year!\n\nIn 30 years, at maturity, the bondholder would receive $100 billion (in nominal terms). The holder would also receive ~$130 billion in annual interest payments throughout the 30 years.\n\nThe $100 billion payout has a present value of $11.3 billion. The interest payments have a present value of $51.1 billion, so the bond is actually worth only $62.4 billion in present value terms.\n\nThe bondholder would have LOST ~$37.6 BILLION by saving in US treasuries.\n\nWhy would you pay $100B for something worth only $62.4B?\n\nIf the investor put 5% of their portfolio in Bitcoin - $5 Billion in Bitcoin and 95 billion in bonds - their portfolio would perform SIGNIFICANTLY better.\n\nBitcoin has historically returned 100%+/year, but let's be conservative and say it will return 20%/year for the next 30 years.\n\nThe 5% allocation would be worth $1.19 trillion. The portfolio would be worth almost $1.8 trillion.\n\nInstead of taking a compounded -1.5% annually (a 1.5% loss),\n\nThe portfolio would have returned 10.1% annually (a 10.1% gain).",
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