Japan
The Bank of Japan (BoJ) has been the most consistent over the last few decades. It has done the most QE by far of any central bank, yet it struggles with low growth, low inflation, low interest rates (these things always go together by the way, as I wrote here).
After three decades of ultra-low inflation, I read a story about Umaibo, a snack item in Japan, that has been selling for 10 yen a piece for 40 years, but is raising their price now to 12 yen. Gasp, the horror.
Some people think this development, along with the recent creeping up of the 10-year Japanese Government Bond rate to 21 basis points (BPS) is a sign that inflation might be coming to Japan, too.
I highly doubt it. The amount of QE the BOJ has done over the last 20 years puts the Federal Reserve to shame, and is not stimulus. Long-term QE actually hangs over the economy as a wet blanket on any growth. Just compare the three major central banks — the Fed, the ECB and the BOJ. Their CPI inflation rates are in opposite order to the ranking of the central bank balance sheet as a percent of GDP. The more QE a central bank does, the lower the CPI inflation rate.
Bitcoin’s Credit Market And BlockFi
We ended the show this week by talking about the nascent bitcoin credit market. A central player in this ecosystem is BlockFi, and it has been at the center of a growing scandal in bitcoin.
A post on the company’s own subreddit went viral. In the post, an individual relates that BlockFi called in his loan due to the bitcoin he used having a history of mixing. It is a very bad sign for many BlockFi customers, who probably mix their coins as part of a routine in good financial hygiene.
Another development this week is the raising of minimum withdrawal limits from BlockFi. Again, via the company’s subreddit:
“At this time we are only supporting wire withdrawals of $50,000 USD or more for US-based clients, or $5,000 USD for international. Since we don’t support ACH withdrawals for international clients at this time, I might recommend withdrawing to a different platform/exchange that can. This is specifically why we offer 1 stablecoin (plus BTC or LTC) withdrawal per month.”
–u/Brandon_BlockFi, Community Manager
Lastly, BlockFi has downgraded its interest terms to very low levels. The new tier one (less than 0.1 BTC) offers 4.5%. However, if you were to have the over-the-minimum-withdrawal amount of $50,000, you’d be in tier three (more than 0.35 BTC), earning only 0.1% on your bitcoin.
Something is very fishy about what is going on at BlockFi. There are alternatives in the bitcoin ecosystem. Ledn is one, Hodl Hodl is another. Be very careful with bitcoin lending.
