1544 sats \ 21 replies \ @siggy47 5 Nov 2023 \ on: Bitcoin Milkshake Theory Happening in Japan bitcoin
Can you explain to me what you mean by that? I understand the dollar milkshake theory, which involves central bank action increasing liquidity while raising rates. The ultimate endgame is the collapse of the dollar. I never understand how the bitcoin analogy applies.
I think he means that the yen is devaluating against the dollar.
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Okay. Maybe this is the wrong lace to ask, but I read about the dollar milkshake theory a lot. Putting aside bitcoin for a moment, can someone explain to me in detail the analogy.
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I think that the idea is that before the collapse of the dollar, the weaker fiat currencies have to collapse first, and people holding those weaker fiat currencies flee to the dollar as a "safe" haven. So it might appear that the dollar is strong during this process. This might explain also why fiat brains like USDT so much.
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Yes. You described it perfectly. I understand that. What I dont understand is the milkshake image. Why is that like a milkshake? The liquid is liquidity, the straw is raising rates, but where do we go from there?
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This is what chatGPT told me:
"The metaphorical imagery of the U.S. slurping up liquidity from other economies like a milkshake through a straw is the explanation commonly associated with the origin of the term."
Also here's an article from bitcoin magazine on the dollar milkshake theory, and the bitcoin extension: https://bitcoinmagazine.com/markets/weaponized-us-dollar-for-global-hegemony
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Thanks. ChatGPT didn't mention the dollar's inevitable collapse? In explanations I have read about the theory that is always included.
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Nope. Probably the ChatGPT rules don't allow it to talk about the dollar collapsing.
I did a little experimenting with ChatGPT, asking it if the US will be able to pay it's debts. For instance, "
How will the US be able to pay its debts, without printing lots of money and making the dollar valueless?"
Soothing answer -
"Managing a country's debt responsibly is indeed a complex task. Excessive money printing, or engaging in a practice known as hyperinflation, can erode the value of a currency, causing prices to rise dramatically and leading to economic instability.
Governments use several strategies to manage their debt without resorting to hyperinflation: blah blah blah
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Interesting...
Thank you for asking. I keep hearing about this, too, and it never quite rose to the level where I bothered to find out. Thanks for being on that wall :)
Here's a cleaner explanation than the bitcoinmagazine one linked below, with an interview from Brent Johnson, the guy who invented the term.
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From reading your linked article, it doesn't look like the milkshake theory transfers well to Bitcoin. If the milkshake represents liquidity being injected into the economy with a period of QE and low interest rates, and the slurping through the straw represents an ensuing period of higher interest rates that lead to carry trades, it sounds dependent on international spreads on interest rates (which Bitcoin has no concept of).
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You could be right -- I viewed the 'btc milkshake' thing in a more conceptual way: something stronger absorbing the flux of the weak things fleeing to value.
But I just learned what any of this meant like an hour ago, so my opinion isn't worth much :/
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Excellent link. Thanks for posting it. It does explain things better. I'm still not certain about understanding where the milkshake comes in. I guess the dollar is the guy sucking up global liquidity?
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I believe that's right -- all the foreign currencies getting slurped up as they fall apart first and migrate to the USD as the best available option.
I suppose that's where the bitcoin part comes in? Either some of that bypassing the USD, bc they've been orange pilled, or else btc slurping up the dollar in the same way the dollar slurped up everything else.
Sounds a lot like the hyperbitcoinization story except with actual financial mechanics and not just pure cotton candy hopium.
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I guess. I wish we could get this Bruce Johnson guy on SN so we can ask him.
That, I don't know. Never thought about the why of the "milkshake" metaphor.
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Thanks for listening, anyway. I hope I'm not boring you, but you seem to know as much about this as anyone. Why would bitcoiners then come up with a bitcoin milkshake theory, if the dollar milkshake theory ultimately ends in the collapse of the dollar? The dollar of course is supposedly the least bad fiat, hence it collapses last. But bitcoin? Totally different asset without any entity controlling its interest rate or liquidity.
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Not at all, it's not boring, it's my pleasure.
For me, that theory makes me remember that the path to hyperbitcoinization will be long and tortuous. That the normies will try to exhaust all the fiat options before considering bitcoin.
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True
Being the reserve currency, it seems like the US Dollar is akin to a giant milkshake mixer attracting different capital and investments globally.
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Sure it's not meaning this... 😛
"I Drink Your Milkshake is a phrase spoken by Daniel Plainview to Eli Sunday at the end of There Will Be Blood, directed by Paul Thomas Anderson. In the film, the phrase was intentionally used as a metaphor: sucking milkshake from someone else to demonstrate not only oil drainage from prized land but the harsh nature of how cruelty often trumps meekness"
In the movie he speak about drilling underneath someone else's land to steal the oil literally out from under them even though it's not his land. The movie is 2h 38m long and the scene is right at the very end. It's hilarious lol
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I really liked that movie. I never heard that analogy for oil before. I heard a similar concept in law school for riparian rights cases, where wells are drilled to drain water from contiguous property owners.
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