Michael Saylor's Financial Advice To Turkey
Among common features of all fiat currencies is that they all lose their purchasing power over time due to inflation, policies, backing, economic conditions, etc. Under normal economic conditions loss of value is not that significant in a short period of time that it may not be noticeable. This fact has become obvious in post-pandemic era. Many countries have experiences high inflations and noticeable purchasing power loss of their fiat currencies. Even stronger currencies like USD went through the same experience. Countries like Turkey, Venezuela, Argentina, and others went through high inflations and their currencies experienced drastic fall in value.
In one of his recent interviews, Michael Saylor, shared an advice or solution countries like Turkey can utilize to make their currencies stronger. This is not the first time Saylor used Turkey as example. He had suggested bitcoin could help Turkey's finances in the past. This time however, his advice involves selling gold reserves. If we ask Saylor everybody should be invested in bitcoin. She doesn't hesitate in giving financial advice of buying bitcoin regardless what people do and where they are. Unlike others though, Saylor himself and his company are heavily invested. He doesn't just tell people to buy bitcoin so his bitcoins appreciate in value. He truly believe in this idea and technology.
In this interview titled The digital transformation of property, Saylor outlines the reasons why Turkey should sell their gold reserves and use the money to buy bitcoin instead. It is a simple idea, but Saylor manages to present it in an interesting and thought-provoking way. Feel free to watch the interview yourself. First couple minutes summarize the his advice to Turkey to make Turkish Lira stronger. This advice can is not just for Turkey, but any country who has significant amounts of gold reserves. I am not completely sure that it is a good idea, but I do think it is an interesting one and worth exploring.
First he identifies three problems Turkey has:
- Turkey runs deficit of $20 to $40 billion.
- Turkish Lira is crashing.
- Turkey has $50 billion worth of gold.
Now, why would having so much gold be a problem? It seems it is a good problem to have for any country. The more gold, the better. No?
Saylor explain that gold loses power over time and is not appreciating. He believes there is no way gold is going to go up in value by a factor of a hundred. He concludes that time of gold is ending and calls it a dead rock.
As a solution, he suggests Turkey could turn the third problem into a long term solution. According to him, if Turkey sold $50 billion gold and bought $50 billion in bitcoin, bitcoin would appreciate in value by the factor of three, four, five, or six.
Now this action by Turkey would make everybody else think about their financial situations as well, and realize that gold will continue losing power and slowly other countries would join in selling gold and buying bitcoin. First few billions, then hundreds of billions, then trillions of dollars of gold would be sold and converted to bitcoin. Following this thought, he concludes 12 trillion dollars of gold's capital would get demonetized down to two trillion dollars, which is the utility value of gold in jewelry.
If this were to happens bitcoin would explode from 500 billion market cap to trillions, to ten trillion, and even to twenty trillion dollars. This would put Turkey's initial bitcoin investment into $250 billion valuation. And since bitcoin would continue to appreciate in value at the rate of 10 or 20 percent a year, Turkey would generate $50 billion of asset gains annually. And this would help Turkey to offset its deficit and still be in profit.
This would also lead Turkish Lira to become stronger currency, because it would be backed by bitcoin. If things would unfold the way Salor hypothesizes, this indeed could be Turkey's solutions for three problems Saylor outlined. It seems rational as well. However, things don't necessarily work out they way Saylor explains. Making such drastic moves and taking huge risks with people's is not an easy decision to make, and most likely it is not one person's decision to make. This probably would involve long public and legal debates within the country, and also in the international arena.
But Saylor makes a very good point, when he says gold reserves that Turkey has are not backing the Turkish Lira the way they should. It does seem like having so much gold doesn't necessarily help making the currency stronger. And if Saylor is right and gold is in decline, waiting longer wouldn't be in Turkey's benefit.
Overall, what Saylor is suggesting is the same thing that has been discussed since bitcoin started, that bitcoin is the new gold and eventually gold's value would pour into bitcoin. There are really good arguments for bitcoin and against gold, and I do tend side with arguments on bitcoin's side. At the same time it is still too early for people to give up gold and reassign its value to something like bitcoin.
For ideas like what Saylor is suggesting to become a reality in Turkey or any other country, first the government would need to be convinced of bitcoin. Then massive public education campaigns would have to happed to educate people about gold vs bitcoin, pros and cons. Then all the legal aspects would need to be considered to structure such transition, and pass some legislature to make it happen. Even after all this work is done, Turkey would have to confront international partners like countries, organizations and banks to seek their approval. Because such changes may backfire and Turkey may face international resistance, especially from the likes of World Bank, IMF, European Bank, etc. We all have seen how international bankers and central banks reacted to El Salvador's adoption of bitcoin as legal tender.
It is one thing to adop bitcoin as legal tender. Moving from gold reserves to bitcoin reserves would have bigger impact in the international stage. Saylor is right, if Turkey indeed converted $50 billion of gold into $50 billion of bitcion, that would make many countries to rethink their monetary policies, and definitely consider getting rid of gold. Nobody would want to be the last in that race, as financial penalty would be huge.
I doubt Turkey would make such moves, not anytime soon. I think we will see more institutional involvement first. Slowly bitcoins recognition is growing, and it is becoming accessible for institutions as well. Once regulatory frameworks reach some clarity in most countries, even more institutional money will pout into bitcoin. By that time, governmental entities will become more friendly to bitcoin as well and perhaps that will be the time for some countries publicly go all in with bitcoin. Until then, they will probably accumulate as much as they can in secret.
Another great thought experiment by Michael Sayor and great optimism about bitcoin's future. I do share his thoughts as well. They probably won't happen exactly as he described, but eventually bitcoin will replace gold. What do you think? Let me know in the comments
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Turkish lira is crashing and we get poorer day by day. I don't think that theybwould care Taylor or anyone else, but they have started to sell gold as there is no foreign currency to burn to stop the decreasing of TL.
Why would they sell gold, if they can just print more Lira?
We already suffer the consequences of constant printing TL.
Yep
Gold is more valuable to em...
🧡 Michael Saylor is just great with explaining Bitcoin and asking the crucial questions. Also love his talks and the interviews he gives.
Since the pandemic its been so difficult for many countries to recover financially. But i don't think for one moment, that selling gold for BTC can solved the problem. I rather use the money to buy another currency or stocks that have regular dividends. My ko (cola cola) stock has increased over 20% and i get 5% income annually !
His suggestion makes sense. Gold has diminished its luster over the eons of its dominance. Time has changed and so must everything. !PGM
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Gold can depreciate over time yes, but I don't understand why they are trying to decentralize everything and connect it to bitcoin. Turkey is too big an economy to adapt to bitcoin. Look, you can partially apply what you say in Central America, Asia or the Caribbean in economies with less than a few million inhabitants and an economy not exceeding a few tens of billions of dollars, but you cannot apply it in a country with a population of 85 million people with an economy size approaching $ 1 trillion. This is almost equal to the current value of the entire cryptocurrency market.
I don't think gold is the best store of value, but it has a value chart that has partially caught up with the S&P500 in the last 20 years. Gold may be able to cause losses to its investors for many years, but this does not change the fact that it is the most reliable store of value item. You can sell gold in very high volumes with almost no loss in value, but if you try to buy or sell $50bn of bitcoin tomorrow morning, you'll probably plant a pretty big green candle in the market graph.
Also check this graphs, first one is argentina's m2 money supply, second one is turkey's, third one is usa's. The most important difference between the USA and the other two is that the chart of the USA is increasing at a constant rate (excluding the banknotes printed during the covid19 pandemic), while the printing houses of Argentina and Turkey are printing money at an increasing parabolic rate.
Yes. This charts prove how no so reliable fiat currencies are over long periods of time as store of value.
I disagree that bitcoin can't be adopted into larger economies. It actually would work better in larger economies, because efficiency would be easily noticeable in comparison. However, that is a different topic.
This idea doesn't necessarily involve Turkey adopting bitcoin to use within its economy. It only suggests converting its gold reserves into bitcoin. The bitcoin itself wouldn't be used as a currency. Sure, gold still may appreciate a little bit over the years, but 10x 20x appreciation in short period of time like 5-10 years wouldn't be possible. The only asset that has this possibility at this time is bitcoin. Turkey's advantage in this situation would be being the first to implement such solutions. Those who follow afterwards wouldn't have the same benefits.
I don't completely agree with Saylor's opinion. I don't think backing the Lira with BTC will solve the solution. It will be a set number of BTC backing things and they can still inflat the Lira supply. At some point, I still think the economic situation needs to be resolved before anything can happen.
That is a great point. Even if bitcoin scenario worked out as Saylor describes, if the country decides to keep printing more and more they may cancel out the original benefits of the plan. It would have to be well planned out comprehensive approach.
Politics in Turkey is more influential on the economy than in Western countries. Turkey's high inflation stemmed from its low-interest rate preference. Thus, the economy remained lively before the elections held in May. High inflation also allows for resource transfer. The voters of the ruling AK Party are those in the lowest income group. The opposition CHP is the representative of the middle class. In an environment of high inflation, the incomes of the educated middle class fell sharply, and the seigniorage revenues of the state increased. The Turkish treasury was also heavily indebted, and the resources created were used to increase the incomes of the poorest. For this purpose, the lowest pensions were increased, the minimum wage was increased, and social benefits were accelerated. As a result, Ak Party won the election.
I would also like Turkey to invest in Bitcoin. In order to make such an investment, gold can be sold. On the other hand, the Turkish central bank has created more than $50 billion in debt within the scope of swap agreements it has made with various countries in the last few years. Central bank reserves are negative due to populist spending. Therefore, the Turkish treasury has, in a sense, invested in gold with borrowed money. If Turkey sells gold and buys Bitcoin, and if Bitcoin rallies, the reserves may go into surplus, but this will undoubtedly be risky.
Thank you for explaining the internal politics of Turkey. It is interesting. Sometimes the most obvious solutions seem risky, especially when politicians are involved. The question is if bitcoin could make things worse than what they have been.
The Turkish government has experimented with keeping interest rates low over the past two years to reduce inflation. Inflation did not fall, and the country's foreign exchange position fell to negative. Buying Bitcoin instead of gold would have been a less daring act, and the results would undoubtedly have been positive.
Looking at salor view i completely agree with his idea it could as well turn Turkey finance into a stable one but selling all their gold reserve will be a public matter that will take time and due process for a start making bitcoin legal tender will do for the country.
Saylor really gave a good point and advice on how Turkey can capitalize on though not 100% but can be very useful.
Micheal saylor seems very good at analysing Bitcoin and his financial advice will be helpful to enhance their financial growth.
The problem in Turkey stems from a scarcity of foreign currencies such as the Euro and USD. The primary issue lies in the imbalance between imports and exports. When a country's expenditures in foreign currencies, primarily imports, are not adequately supported by the availability of foreign currency reserves, the country must rely on its own resources to purchase foreign currency. Consequently, there is a significant demand for foreign currency, leading to an increase in its cost. Therefore, neither backing the currency with Bitcoin nor backing it with gold would effectively resolve the issue.
If any cryptocurrency were to assist, individuals should consider investing in USDT or Bitcoin for personal savings and leave foreign currency trading to companies that possess sufficient cash reserves in USD or Euros for their business operations. However, even in this scenario, the assistance provided is limited.
disobedient
Why invest in USDT?
USDT because its value remains stable and it is perceived as relatively risk-free when compared to other alternatives.
Non-stable cryptocurrencies like Bitcoin or others are considered too risky by the majority of individuals in this scenario.
Since we live in a world run by fascists new are always going to have 2 sides against each other to demonise each other. History shows us that Russia China and the Brics nations are one side and the others UK America etc. So we are never imo going to have a single currency or all be friends on earth. unlikely until the complete end game prison planet agenda anyway at least. Until then the Brics go on a gold back digital currency and the west America uk since they have no gold anyway will be on a Bitcoin standard. Which side is Turkey on is the question?? Answer its they don't know and that's probably why the Lira is getting hammered. U sit on the fence for too long and you will get knocked off it.
That is an interesting take. I have never thought about bitcoin vs gold in Cold War type of scenario. The way you explained and how things have been unfolding do support it. I didn't really understand why BRICS countries would want to utilize gold instead of bitcoin. From this point of view it does makes sense now why China would ban bitcoin and BRICS minded countries would try to stay away from bitcoin even though in their situations utilizing it would help. At the same time how all of the sudden in the US and EU bitcoin is being left alone and only rest of crypto being attacked (which also may benefit bitcoin) do support the idea of bitcoin vs gold blocks. This is interesting, but a new theory for me. I am not fully convinced yet that any global players are ready for bitcoin standard. Thank you!
I actually was thinking BRICS would eventually transition to bitcoin once they realize that gold may not be a good solution what they were trying to achieve. It seems such an obvious solution for what they are trying to achieve.
Gold is always a good solution because it's a store of energy by its very nature. Energy is the only real money in this world. (Satoshi understands this.) so if you create a digital currency and you want it to have a value and be money that's not backed by POW, is retarded and shows you don't understand what is going on. (Fiat is backed by POW, AKA us going to work to pay tax. )
Bill Gates is so smart he's patented a POW digital currency backed by human energy and movement that is green and will never die as long as humans exist. Scary he is so smart.
A digital currency pegged to gold which will be going up in value is the most sane and realistic solution for those Brics nations to have an edge over the west and save from the fiat currency collapse. The rest is debt and the biggest trick in the history of time. The answers are always in the past. The alliances in this world and sides will always remain the same, always. What happens is always a scapegoat to demonise an make themselves look innocent and to seize the crisis to herd society into a doorway they want. The west will blow up so bad that Bitcoin is the only lifeboat to save anyone and people will be left to find this solution as the crisis unfolds. Brics dictate and the west an illusion of choice. The problem is when Bitcoin swallows everything it will erupt., it is corruptible, it is vulnerable to politics because humans never agree on anything ever. (They fight over it instead). The crisis that ensues will be demonised and utilised to form something else to make sure it never happens again. The always close the gate once the horse has bolted. Bitcoin is not the answer it is going to be the scapegoat that creates the answer.
Well, you have a point
Let me talk about the fiat currencies that you have mentioned. Cryptocurrency is full of investors here and there and that's why you hardly see anyone who buys fiat currencies because we all want to invest...
Anyone who buys fiat currencies either saves it for urgent use or will buy cryptocurrency later.
That's actually what I feel
Do you think I have a point here?
Yeah, I wrote an article a few weeks ago, especially drawing attention to Turkey and the Turkish lira. At the time, Bitcoin was printing a new all-time high against the lira. Saylor is somewhat of a maxi, for sure. However, in relation to Turkey, he has a valid point. The currency is collapsing... there's not much hope. Utilizing gold reserves makes sense, especially right now... in terms of where we are in relation to Bitcoin's cyclical nature.
He is 100% Maxi! He says - "There is no second best to bitcoin."
I think Saylor is 100% right. If Turkey makes a move like he is suggesting, it will pull itself out of its financial problems. However, the world does not revolve around your financial problems. Global investment in the fiat system is substantial and robust, making it unlikely that those in control will allow any other country to replicate what El Salvador has done. Thanks for providing an insightful article.
Yes, I read it carefully until the end, I can say this about gold, there are no gold reserves in the world as much as gold shares given by banks and stock markets. It looks like this will cause a gold crisis soon, of course this is a guess, people who will read this please don't mind me too much :)
The reason why Turkey is the country most affected by the economic crisis in the world is the low interest policy of the state, of course, this is not the whole reason, this is only one of the reasons, the privatization of companies, 10 million refugees taken into the country, Turkish stock markets losing confidence by investors are among the reasons.
Even though the country is so badly affected, Erdoğan is still the president of Turkey, there is something the world does not understand. If they do not like Erdogan, Turkish people will continue to elect him. I think that whenever Europe loves Erdogan, someone else will replace him :D
In particular, Turkish people is now very accustomed to bitcoin and knows how to use crypto and how to access it. Maybe it will be a good start for the economy to rise and thank you for sharing this post and asking for our opinions :)
You are absolutely right about what bankers have been doing. Saylor actually mentions that problem of gold as well. The word he used is rehypothecation.
Thank you for listing all the causes for the economic and currency crisis in Turkey. You bring up a good point how such problems actually opened the door for people to learn about crypto and utilize them to preserve their property.
I'm sure Taylor's advice when heeded not only by the Turkish, will do good. 50billion networth of gold is bad at all but after sometime it remains the same, stagnant and never appreciating meanwhile Bitcoin does
So I really do see reasons with Taylor for bringing up such a magnificent idea
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I also believe that Bitcoin will replace gold. Many countries will be compelled to adopt Bitcoin, especially those using the CFA franc
I’m new here and I find this interesting.
I would want to ask, do you think it is advisable for countries whose currencies are depreciating to adapt the Bitcoin as a legal tender. What if they do not have gold reserves what do you think they should use in exchange for the bitcoin.
I don’t know. Each will choose their own path based on their unique situations. I am sure there are benefits of utilizing bitcoin either as legal tender or as innovative technology.
So a few thoughts I have on this topic. I've studied Turkey's economy and currency for much of the past 13 years or so. Turkey's fiat currency has hyperinflated against the USD, selling their gold will not strengthen the Lira, it will only increase liquidity in the global gold market - temporarily. All that gold has to have a buyer, and Russia, China, and the US, would be happy to buy up a mere $50B in gold. That's small potatoes in the global economy, and Turkey's fiat currency has been losing purchasing power in Dollar-denominated terms for most of the past decade.
Bitcoin wouldn't improve the Lira's position in Dollar terms. Bitcoin is not a hedge against hyperinflation in the US Dollar, as proven in Venezuela and Iran, where their annual inflation rates are ungodly. This isn't to say I think Bitcoin has no use case, but, in this situation, Michael Saylor is pumping his bags. This is the same man who committed the largest accounting fraud in Wall Street history, up to the Dotcom crash, and this is the same man who went on tell-you-vision and preached to the viewing audience that they should all get a second mortgage on their houses to buy more Bitcoin.
It's straight up cult behavior, and no government would dare cross the IMF or the UN in going for Bitcoin rather than gold. Gold is a store-of-value, and Michael Saylor's opinion on it has always been negative, it's not like he was ever a fan of gold, and he is a small fish in a gigantic universal ocean. I would never take financial advice from someone who puts all his eggs in one basket.
I used to think this way, but the older I get and the more I study all of the people that are way richer than me, I see that many of them got that way by precisely putting all of their eggs in one basket.
It is a hard pill to swallow, but it seems more and more clear to me as time goes on that that might just be the way to do it ;-)
They focus on one thing and get really really good at it.
Thing is, at least in my view, Saylor is a cult leader, he says things that enrich his company and his personal Bitcoin holdings. Considering the reality that BlackRock is on a mission to corner the market and dry up the entire liquid supply, means price will most likely hyperinflate, before it becomes impossible to buy