And Just Like That AD's Interested in Bitcoin?

AD Robles iconAD Robles

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Hello there, this is AD Robles, and you're listening to AD on the Fight Laugh Feast Network.
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All right, all right. Well, before we begin today, I had a little bit of a startle this morning.
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I went out fishing. I've been doing that quite a bit in the morning before the sun comes up. And the fishing slowed down, by the way, big time, big time.
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I haven't really been catching much. But anyway, it was a little bit before 6 o 'clock and I walk out my basement door.
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We have a walkout ranch. Anyway, I walk out the door and right in front of me is a bobcat.
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And I proceeded to just back slowly back into the house. It was quite a startle.
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I'm going to post a picture of it here. He did not seem impressed with me, that's for sure. He wasn't scared.
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He just kind of looked at me for a while. And I snapped this picture of it. I tried to get a better picture, but by the time
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I did, it had kind of slowly turned away and left. I went outside with a flashlight afterwards and I didn't see it.
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So he must have been a little bit more startled than at first he let on. But man, it was a pretty big one.
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I mean, bobcats don't get that big anyway, but it was a larger sized bobcat.
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But yeah, so my backyard, it's like a wildlife preserve. I've got bobcats, bears, foxes, raccoons, you know, possums, you name it, you name it.
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Anyway, well, you know, I had to my surprise, I had a friend,
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Grant Van Brimmer, if you don't, you might know him. He has a podcast and all that. He actually just got, he just passed his ordination exam.
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So congratulations to him. So he sent me an article from the
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Gospel Coalition about Bitcoin and I skimmed through it. I'm going to read the entire thing here, but I thought it would be fun since, you know,
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I'm not necessarily that keen on Bitcoin. Now, I'm not a, I'm not a Bitcoin enemy. I know there's some people out there that are
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Bitcoin enemies. I'm not a Bitcoin enemy. I just don't own any myself. Now I have owned some
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Bitcoin and some Ethereum and, you know, in the past and things like that, but I don't anymore.
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And so I thought it would be fun to see what the Gospel Coalition says about Bitcoin because if anyone can convince me to own
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Bitcoin, it would be the Gospel Coalition coming out hard against it. So let's see.
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Maybe I'll be reactivating my accounts. By the way, somebody paid for a
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Social Justice Pharisees book with some Ethereum once. I sold it right away and took the cash. But anyway, let's, let's see what
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Gospel Coalition has to say. It's the, the article is titled Ask the Economist, Should a
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Christian Invest in Bitcoin by Greg Phelan. Now let's see what Greg Phelan's credentials are.
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Greg Phelan is an associate professor, professor of economics at Williams College.
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He earned his college and graduate degrees from Yale and his research focuses on macro economics and financial theory.
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He is an elder at Community Bible Church in Williamstown, Massachusetts, where he lives with his wife and children.
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Pretty good credentials. I mean, he went to Yale. He's a New Englander, just like me, and he's also a pastor.
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This should be quite interesting. Now, just in case you're wondering, my credentials are,
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I'm a guy on YouTube that has a pretty good understanding of economics in general, and that's about it.
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Let's see what we have to say here. Oh, by the way, I love this picture. It's very diverse here.
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It's got the, got a black guy, appears to be a black guy checking out some, some charts, looking at the candlesticks and trying to make some savvy investment advice.
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Very woke, very diverse. Good job, Gospel Coalition. Now let's see here.
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The question is, what can you tell me about Bitcoin? It sounds like monopoly money. Is it real?
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Is it safe to use? How can I think about it as a Christian? Kind of poisoning the well a little bit up there.
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It sounds like monopoly money. All right. One of the biggest stories in the financial markets in the last decade is the astronomic rise of Bitcoin and other cryptocurrencies.
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Some people think cryptocurrencies will revolutionize our world. I can't talk today. Others think it's a fraud.
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We need some basic economics to understand what's at stake. Joe Carter has a fantastic explainer.
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Joe Carter has a fantastic explainer about the details, so I'll focus on high level ideas.
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So you kind of know where he's at. Joe Carter. Forgot about Joe Carter.
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Okay. Here's what it says after the hilarious sentence about Joe Carter. There are no dividends here.
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Stick with me here. The return on any investment is found by adding the dividend yield, which is the value your investment produces, and the capital gain, the change in price from what you paid.
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So if you buy a house, your dividend is either the rental income, if you rent it out, or the value you receive from having a place to stay.
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Now let me step out of the article here for a second. I really appreciate that he called out the value you receive from having a place to stay as a dividend deal.
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I actually really appreciate that because that's very true. That is something that you receive from owning the house that you live in.
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You get something in return. So it's not like you're just owning something and you really don't get anything in return. You actually get a place to stay, you could enjoy the house, you could rent it out.
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I really appreciate that. This guy's got me, he's got me interested. Let's continue. If you invest in a company, your dividend is your part of the profit that that company earns.
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If you put your money in a savings account, your dividend is the currently tiny amount of interest your bank pays you.
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Bitcoin and other cryptocurrencies produce no dividends. They will never provide a place to stay or earned income or even interest.
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That's not a prediction, it's just a fact. And unlike a stock, which may pay higher dividends in the future and thus justify a price increase, crypto will never pay dividends in the future.
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Future dividends cannot justify a price increase for crypto. So far, so good.
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I completely agree. That doesn't mean it's bad or good, it's just a fact. I agree. So why do people invest in crypto?
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Because they expect the price to rise. We have a word in finance for an investment like this, a bubble.
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An asset that never pays a dividend but has a price that keeps rising is a bubble. An investor can believe
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Bitcoin is a bubble and rationally invest so long as she expects to sell before the bubble pops, but that isn't investing.
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That's gambling and it's a zero -sum game. Okay, I've got a few things that I need to say. I don't know if you noticed,
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I had a little bit of a pause there. And while that is a kind of bubble, it's really more specific.
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It's a speculation. You're buying it because you're speculating that the price is going to increase, or something's going to happen, or something like that.
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There are other bubbles that do pay dividends, that do have intrinsic value.
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Not intrinsic value, but some value. Like the stock market right now. The stock market is clearly in a speculative bubble.
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There's just no question about it. You look at the price -earnings ratios and things like that and you can easily tell that the stock market is tremendously overvalued.
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That's why people talk about the stock market bubble, or the housing bubble. The value of my house has gone up over 33 % in the last year and a half.
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I didn't improve it all that much. I've made some improvements on the house, but that's a bubble.
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The value of my house didn't actually go up that much. It's because people are freaking out and there's all kinds of market forces that are increasing the value, so to say, of my house.
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That's a housing bubble. It doesn't have to be a no -dividend, no intrinsic value investment for it to be a bubble.
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That's a little bit weird for him to call it that. I have to wonder why he's doing that.
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It's a speculative bubble, that's for sure, but it's not the only kind of bubble that exists. Again, the stock markets, which allegedly pay dividends and allegedly have capital gains, there's no way it should be valued the way it is right now.
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It's in the stratosphere. That's interesting how he called it something that, in my opinion, is not really the most accurate thing he could have called it.
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It's a speculation, I think. People buy Bitcoin because they're speculating a lot of the time. Not all of them, by the way, but a lot of people do buy
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Bitcoin and other cryptos to speculate. Now, there's nothing really wrong with speculating, but that's what it is.
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The other thing here, isn't it standard?
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This is a small thing, but it's kind of not when you're talking about an imaginary person, to use the male gender.
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It's like an investor can believe Bitcoin is a bubble and rationally invest so long as he expects to sell out before the bubble pops.
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He says she. Why? That's so weird. It's just very unusual. It's not like he's talking about a specific person, and he himself is a man, and you would think that you would write about what you would do.
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It's just very weird. Does anyone have any insight into that? Why did he choose she there? Sometimes people will say she when they're talking about a ship or an animal, like a fish or something like that.
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I get that. But why did he use she here for an investor? That's very, very interesting.
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Now let's continue. Not an asset, maybe a currency. So, as an asset,
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Bitcoin should have no value at all. But as a currency, it might. After all, you don't get a dividend from holding money in your wallet, but you don't buy money because you intend to hold it forever.
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The point of holding money is to sell it in the future, to use it to buy something, like a hot dog or a living room furniture.
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The value of currency comes from people's willingness to accept it as a means of payment. But Bitcoin is a much less robust means of payment than other currencies.
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While there is a black market demand for Bitcoin transactions because of anonymity, the current level of payments can't explain the price.
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The number of Bitcoin transactions slowed down starting in 2012 and has not increased since 2017. But the price has soared since then.
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As a currency, Bitcoin is not as good as dollars or any other currency. There is no debate about that.
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The only explanation for investing in Bitcoin is that people expect the price to rise. That's completely false.
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I actually disagree with that, but I think a lot of people do. But let's just finish the paragraph and we'll talk about that.
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An investor could believe that the transaction value will rise and one day Bitcoin will be a true currency, justifying the price increase today.
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I don't believe that belief is realistic. Okay. So, okay. I don't think that belief is realistic.
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Okay. So, he actually says the exact thing I was thinking of. So, this is a weird paragraph because he says the only explanation for investing in Bitcoin is that people expect the price to rise.
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And then in the next paragraph, or the next sentence, he says another explanation, that somebody believes that the transaction value will rise eventually in the future.
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So, it'll be a better currency in the future than it is today. I think a lot of my friends actually do believe that.
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Like, I think that they do expect the price to rise, but the reason they expect the price to rise is because they think its value as a currency will be better in the future.
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Now, I don't necessarily agree with that either. I don't think that that's a realistic belief either. But, you see how weird this is?
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This is a weird paragraph. Like, I don't get that. So, he's giving you an explanation that's perfectly reasonable.
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I don't believe it. I don't think it's realistic. So, I agree with his take on that.
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But, why is he, like, coming out with this strong, there's no other explanation except they believe the price to rise.
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No, a lot of people believe that it's going to be necessary in the future for a lot of different reasons.
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Now, let's continue to see if he goes into those reasons. All economists agree that a stable price is highly desirable for a currency.
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I agree. But the price of Bitcoin is incredibly volatile. The crypto sector knows it, which is why an alternative class of cryptocurrencies has emerged, stablecoins.
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Stablecoins are virtual currencies designed to have a fixed price because a currency without a stable price won't last as a currency.
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That's the whole problem with Bitcoin. It's not a stablecoin. The price fluctuates tremendously. Becoming a real currency in the future would require the price to stop rising and become stable one day, at which point
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Bitcoin would need to have the same liquidity value as other currencies. Bitcoin would have to displace global currencies like the dollar and the euro to have equivalent liquidity value.
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Most economists find that preposterous. Okay, just because Bitcoin is almost surely a bubble doesn't mean you should go sell short tomorrow.
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Bubbles can persist for a long time. John Maynard Keyes famously said, The market can remain irrational longer than you can remain solvent.
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And Sir Isaac Newton declared about the South Sea Bubble that he could calculate the motions of the heavenly stars, but not the madness of people.
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I mean, there's some weirdness here. I completely agree that with a lot of his general takes on Bitcoin, I don't think it's realistic that it'll become a currency.
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I don't think it has any fundamental value at the end of the day. But I don't think that he's being fair with saying, well, the only people that are buying and holding
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Bitcoin are people that are speculating. I think that there's an entire movement of people that are never, ever going to sell ever.
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And I think that they're waiting for the time when Bitcoin becomes highly desirable as a currency in the sense of transacting and stuff like that, because they are looking forward into the future and thinking the dollar's toast and all these other ridiculous currencies are toast.
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I do the same thing. I think the dollar's toast. I still hold some dollars. But the thing is, so I don't think he's being quite fair, but in general,
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I agree. So I'm not going to get too uppity about it. I still can't understand why he said she, but hey, that's a small thing.
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There's the Christian response. Okay. So how should a Christian feel about Bitcoin? Well, how do you feel about gambling as an investment strategy?
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Well, why don't you tell me how you really feel? How do you feel about gambling as an investment strategy?
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Investing in Bitcoin means betting on getting out before the bubble bursts. That's a zero -sum game between you and other traders in which your gains are their losses.
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You might make a lot of money by investing in Bitcoin. Many people have, but I think it's better to put your money elsewhere, even if that might mean leaving profits on the table.
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I agree with that last sentiment, but man, like how, this is, this is not fair at all because not all
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Bitcoiners are just betting all the house on Bitcoin. That's not their whole investment strategy.
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I've talked to many Bitcoiners that like Bitcoin. They've got a percentage of their assets in Bitcoin, but then they've got a percentage of their assets in gold.
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They've got a percentage of their assets in property, real estate. They've got a percentage of their assets in stocks of various things, commodities, all this.
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So the way he just kind of puts it out there, like those Bitcoiners, man, they're just gambling it. Listen, I've got a certain amount of money that I have in speculative investments.
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Is that gambling? I mean, I guess in a way, but is that like, is that my investment strategy?
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I mean, I just don't, I don't like that. It's got his finger on the scale here, but let's continue.
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With real assets, you earn a return because you put money at risk and it's productive and it's put to productive use.
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When you buy a stock or a corporate bond, on the other side of your investment is a business that uses your money to expand, to create new products, to employ workers.
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One hopes to serve the common good. When a bank issues a mortgage, it makes a loan to a homeowner who borrows money to buy a house.
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The investor earns a return and the borrower earns benefits as well. Christians should be excited to invest in ways that serve the common good, whether by using their retirement funds to align values and investments or by providing funding for a car wash to provide jobs or in any number of ways investing creates and serves.
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Given the choice between investing in a bubble that enables illicit black market transactions, oh man, given the choice between investing in a bubble that enables illicit black market transactions or investing in real assets that one hopes to serve the common good, the choice should be obvious for Christians.
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This is not a very good article. I agree with a lot of takes. He's pretty negative about Bitcoin.
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I'm also kind of negative about Bitcoin as well. So I agree with that. But I just don't think he's being fair to the
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Bitcoiners out there saying, well, if you have Bitcoin, it's just gambling as an investment strategy. It's not true.
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And the other thing is too, like it certainly seems to me that he thinks the only kind of real asset is something like a stock or a bond.
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Like it's basically the official narrative, stocks and bonds. Like if you have your money anywhere else, like it's not even a real asset because it doesn't produce anything and stuff like that.
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People criticize gold this way as well. Like if you have gold, then that's just wasted money.
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It doesn't produce anything. It's not a real asset. But I think it's like, there's reasons why people own gold.
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There's reasons why people own various kinds of things. Bitcoin even, you know, and that kind of thing.
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They think that there's going to be some value there in the future and people would be better served for me to not be involved in this speculative stock bubble.
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Because this is the thing, like what's kind of insidious about this is it sort of, it just kind of sidesteps the whole idea that stocks could be in a bubble.
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That bonds could be completely irrational market right now. Like the bond market right now is totally irrational.
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It doesn't make any sense to be involved. Like unless you really know what you're doing, right? So stocks are in a bubble, bonds are insane, but those are real assets.
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So as Christians, we need to put our money into those things because they're actually good. But what do you do in a situation where you see, okay, yeah, there's some good companies out there.
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There's some companies that I'm eyeballing right now that I'd like to buy. But the thing is like, the stock price right now is not justified by the business, the underlying business.
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So I'm not going to buy it. And in the meantime, what do I do? So do I just have a bunch of cash lying around?
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I do have some cash. But the thing is, what do I do with my money in the meantime, right? Well, there's a lot of different ways you could go.
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And I think Bitcoiners, some of them are doing exactly that. They're putting their money somewhere instead of just cash.
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Now, this is the other thing about this as well. Notice this last sentence. He really didn't go into this that much, but he just puts it out there at the end.
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Given the choice between investing in a bubble that enables illicit black market transactions, it's like, dude, could you poison the well anymore?
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Okay, so yes, maybe it does enable illicit black market transactions. Right. You know what else does that?
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Cash does that as well, like actual physical cash. So what, should we get rid of cash as well?
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I wouldn't be surprised if he thinks we should. A lot of these academic types think we should.
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I think it's a terrible idea. See, what's interesting about this is the official narrative, the government and the official things that they do, they can do no wrong.
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There's no sin issue there. There's no stain of sin there. No, no, no. It's just the people that love freedom that don't want to be tracked by the government.
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They're the ones doing illicit things. The government and BlackRock, they don't do anything illicit. It's all the individuals who want to have a little bit of privacy in their transactions.
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That's illicit. Black market, bad. Black market, bad. Government, good. It's like, I can think of many reasons why someone would want to do something on the black market that don't involve sin, right?
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At all. Like, I can think of many reasons why someone would want to have some kind of a privacy in their financial transactions that does not involve sin.
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So at the end of the day, I agree with him on Bitcoin. I think that Bitcoin is not the greatest idea for most people.
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And I think that there are some people that are very good speculators, they can read technical charts and stuff like that, then they're gonna make a lot of money.
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Go for it. Go for it. I'm not gonna buy any Bitcoin. So the article did not succeed at making me want to buy
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Bitcoin. But the way he's kind of done this, it's like, things that enable black market transactions, even if they're not bad in themselves, that's bad.
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And official narrative, that's good. And that's a very kind of simplistic, and you could tell he has an axe to grind here.
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I'm not sure what his axe is. Maybe someone he knows lost a lot of money in Bitcoin. I don't know. But it certainly seems like this has an axe to grind article.
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And this is coming from a guy that's not really that Bitcoin -friendly. I don't mind Bitcoin. I'm not an enemy.
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So I agree with him. But I don't know. The choice should be obvious for Christians. Buy stocks.
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S &P index funds. The choice is obvious. No, it's not all that obvious. It's not all that obvious when you're talking about two things that I think have issues.
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I think there's speculation in both of those areas. And so it's like, I don't know. I don't know if this is helpful or anything like that.
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I'm interested in this Greg Phelan guy. I wonder what kind of other stuff he's done. Usually they have like a thing here.
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Yeah, here it is. Should I look for a better job? Teach kids? This guy might be a goldmine for the future.
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Can you help me understand the welfare system? Hmm. God commands us to care for the poor.
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The real question is not whether the church should replace the welfare system. Ah, man.
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Sidestepping the issue again. No, we need to abolish the welfare system. Okay. Okay, Greg.
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I found a new favorite contributor to Gospel Coalition. If you're interested in hearing me talk about the welfare system contra what
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Greg Phelan has to say, let me know in the comments below. I hope you found this podcast helpful.
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Not buying Bitcoin this time, but I don't know. It's more likely that I'll buy Bitcoin today than it was yesterday.
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God bless. Don't forget to tune in next week on Thursday for AD on the
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Fight Laugh Feast Network. By the way,
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Gospel Coalition just played itself. You know, one of the things a lot of people like about Bitcoin is that it's a very diverse investment.
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A lot of a lot of blacks, Latinos, non -whites are involved in it. And it's kind of like the great equalizer in their mind.
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And they put a black guy here on this anti Bitcoin article. That's pretty racist.