Can you explain this a little more?
I can understand bitcoin being a store of value or perhaps people will fly into it as the money supply continues to increase (inflate). But how does Bitcoin demonetize stocks, bonds, and real estate?
These are the most over financialized assets in the modern world. For example: real estate. Most people don't buy real estate because they like being a landlord, paying taxes, and maintaining properties. It does not generate value for society...owning a rental property for example, does not generate any economic value - it is actually slightly parasitic and value destroying. Here's how:
Buying a bunch of rental property drives up the price. Now someone who might have afforded to buy that property cannot. Now you pay more in taxes to the government, (higher than true value) who wastes that money. And the taxes are even higher, because an owner occupant could get a large homestead exemption on property tax. Now you pass those higher taxes on to the renter. The renter makes less effort to maintain the property, since they have no skin in the game, meaning you have to pay more to maintain it than an owner would.
How about owning a house. People tend to buy much larger, more extravagant houses than they actually need, why? Because why not, when the money supply is inflating at 10% a year, and you can get a mortgage at 3%. The bank is making money on the spread, and generating zero economic value in return...they are simply rent-seeking, and also close to the money printer getting money at 0%. There's no free lunch though, since you pay most of the interest up front, the real rate is more like 10-15% if you are in your house less than 20 years. People do this because houses tend to hold their value more than dollars, yen, or euros. And far better than yuan, which is why the Chinese were flying to Canada or Australia with gold bars to buy housing.
Stocks: remember 30 years ago when the advice was to own municipal bonds in retirement, which would yield a risk free 8-12% return? You could live quite comfortably on 100k/yr with 1 million in muni bonds, with no draw on your principle. Now if you are 100% in equities, that is your return, 8-12%...with a substantially higher risk. Any year could have a 40% collapse in your principle, and that's just in nominal terms. In real terms, the stock market has not reached the highs that it did in 2007. At best, in 100% equities your purchasing power was halved in 2010, and is back to almost what it was in 2007. Now if you cherry pick the Nasdaq, that has actually increased in value since 2007, in real terms, because it has generated real value. The S&P however, is worse than what a savings account used to be.
Why are all these other companies not generating real economic value? (starkly reflected in the loss of purchasing power you would have by being invested in the S&P 500.) Every working individual is throwing money at them, buying shares, because that is the only way to keep from drowning from the money printing. If you had held cash in 2008, instead of buying stocks, you have lost half of your real buying power. Now these companies are over valued by 10x, barely making a real profit, they issue more shares and raise cash to stay competitive (at 10x what they are really worth). It is malinvestment. The flood of money is going anywhere it can, instead of to only companies that deserve it. Most of the middle class is taking a 40% risk for a 0% real return. Its insane.
What is the real purpose of money (aside from trade efficiency)? Lets say you start an olive orchard when you are 20 years old, and retire at 60. You produced 10 million excess gallons of olive oil that you don't need to sell to meet your daily expenses on your farm during your working life. You can't just store that olive oil for 40 years, it will be rancid and worthless. Money is what is supposed to store that value so you can consume your excess labor in the future. If the money you sold your olive oil for 40 years ago can only buy 1/10th of what it could back then, you've worked 10 hours for every 1 hour of labor that you can now demand from someone else, because there is now 10 times as much money in the world. That is a fiat money world.
Now imagine the same olive farmer using a money with fixed supply. 40 years after he started farming, olive trees are more productive, harvesters are better, olive presses can extract more oil from each pound of olives. If he worked for 1 hour to produce 10 gallons of oil -- 40 years ago, now when he is retired, a young farmer can produce 20 gallons per hour. In the fiat world, he would have been better off just saving the oil (assuming he could without it spoiling) because it would have more purchasing power than the dollars he sold it for. In the hard money world, he is better off selling immediately and saving the money, because now he can re-buy 20 gallons of oil with the money he made selling 10 gallons of oil 40 years ago (same 1 hour of labor). That is what deflation and hard money look like. The oil costs half as much, but the young farmer makes the same amount of money that the old farmer did, because he can produce twice as much per hour.
You don't need all this "stuff" that holds value, the money holds value. There is far less need of "financial instruments" and far less waste of resources in the economy.
In real terms, I'd say 3/4 of the so called assets in the world have a negative REAL yield. Of course bonds, 90% of stocks, and real estate, which has maintenance, taxes, insurance. 300 TRILLION in negative yielding assets that are over priced and yet still losing buying power, because paper money is so much worse. ALL of that will flow into Bitcoin...maybe not in my lifetime but eventually. At a 300T market cap, one Bitcoin will have 15 million dollars of buying power in TODAY'S money. By the time that happens in 30 or 50 years, as money printer go brrrr, the actual dollars per bitcoin could be 150 million, 1 billion, who knows.
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