Bitcoin Forum

There's a very human tendency to define conceptual abstracts in terms of polar inverse opposites.

Light and dark. Good and evil. Black and white. Love and hate. Moral and immoral.

Its not for me to say if your depiction of "real wealth" versus "financial wealth" fits into a dualistic abstract framework.

Many have said the united states has not had real economic growth in at least a decade. The rationalize circumstances such that the financial and real estate sectors growing do not represent true economic growth. Others view derivatives and overprinting of money as not representing real wealth or value. I think you might be on to something with "fake wealth" being redefined to represent "true wealth".

There may be some misinformation campaigns in place to leverage a publics collective lack of knowledge and education.

The publicity campaign against bitcoin and crypto could represent one of said campaigns.

Which assets will do well *after* everyone knows about the reflation?

Obviously, bonds and cash will do poorly, unless you buy bonds when people are over-dumping them, and you hope for an end to the inflation soon.  Bank interest will go up.

Stocks and real estate should do well, as these represent a piece of limited-supply real wealth in a growing economy.

Bitcoin and gold will stagnate after reaching a very high value (very high at least in the case of Bitcoin.)  This is a major part of the final goal of the entire exercise, and this is probably what the elites will get.

Reflation is hard to exist in the economy.

Thank you for being a lone reply!  I'm not sure how I come across, but certainly my thinking is more nuanced than my writing in most cases, as you can only fit so much into something people will read.

Certainly financial wealth is not worthless.  At the beginning of the state-driven financial inflation cycle, it is, objectively speaking, usually quite conducive to growth and prosperity.  It's only gradually, as time goes on, that the distortions really kick in, requiring deception to keep the system afloat, and where these efforts become destructive.

It could be a version of that 'comparative advantage' thing...  The US does a good and cheap job at 'manufacturing' money and financial assets.  The emerging markets do so with real goods.  So they take our money and we take their goods.  This is classic 'free trade' and works as long as no one thinks about how much more financial wealth exists than real wealth, at current prices.

This has been the case throughout modern history.  Plus, the modern state-bank alliance is good at dividing the world public into groups and giving each an appropriate share of the loot, to keep them quiet.  The British and American populations were big beneficiaries at the early stages of their respective empires.  (And so are Bitcoin holders today!)

But, trust me, all of this 'benefit' will come back to bite the 'beneficiaries.'  Including members of the elites themselves.  There's got to be an immutable law somewhere, that says we lose happiness, the more we live apart from reality and from fairness with each other.  Of this, I can't spell out a proof, but I have a strong feeling this is the case.

How Economic Inequality Is (Literally) Making Us Sick

Imagine there was one changeable factor that affected virtually every measure of a country’s health— including life expectancy, crime rates, addiction, obesity, infant mortality, stroke, academic achievement, happiness and even overall prosperity. Indeed, this factor actually exists.

It’s called economic inequality. A growing body of research suggests that such inequality — more so than income or absolute wealth alone — has a profound influence on a population’s health, in every socioeconomic group from rich to middle class to poor.

As the protests against increasing inequities between rich and poor spread from Wall Street, it’s clear that the issue is crucial — not least for the understanding of human health. On Wednesday in Rio, in fact, a World Health Organization conference focused on related issues is being attended by high-level health officials from at least 60 nations around the world.

Economic inequality is measured by looking at the distribution of wealth and income in a society, not the general wealth of a country. At a basic level, a country’s overall economic success does predict its people’s well-being, but the healthiest and happiest countries in the world are not the richest. Rather, they are countries where wealth is shared widely and more equally.

One obvious way in which economic equality may improve health is by reducing barriers to health care among the poor. But it turns out that the health gap exists even in countries with national health services, so the roots of the problem appear to reach deeper than that. Indeed, they may go back to the dominance hierarchies of our primate ancestors.

As studies of wild baboons in Africa have shown, there are certain key side effects of inequality — namely, stress. Baboons have a rigidly enforced social hierarchy in which fights to win alpha status are common and higher-ranking males constantly abuse and bully those below them. Not surprisingly, this results in chronically elevated levels of stress hormones in the lower ranks.

Chronically high stress hormone levels are bad news, for both humans and baboons. While these hormones can be helpful in short-term fight-or-flight situations, if they are elevated over long periods of time, they increase the risk of virtually all major mental and physical illnesses, including stroke, heart disease, diabetes, depression, infectious disease, many cancers and, of course, all types of addictions.

In humans, in fact, differences in health linked to social status — which tracks closely with economic status — have often been attributed only to addictions and to the generally bad health habits of the poor, such as eating a lousy diet. But baboons don’t have these “lifestyle factors” and yet increased mortality in the lower ranks is still seen.

Human studies bear out the association between low socioeconomic status and ill health. Sir Michael Marmot, professor of epidemiology at University College London, has spent decades looking at the effects of status differences in a population very different from baboons: British civil servants working in the government bureaucracy based in Whitehall Street in London.

Marmot found large health differences across the social scale. “There are two striking findings. The first was that there was about a threefold difference between the top and bottom in mortality. That’s absolutely enormous,” he says. “The second was that it wasn’t just a difference between the top and bottom; it was what I called a social gradient. There was a stepwise relationship between your socioeconomic position and your health.”

He adds, “Your readers who are not at the bottom [may want to know] that the second from the top had worse health and higher mortality than the top and the third was worse than the second.”

The effect is much more profound than that seen in baboon societies. As Stanford biologist Robert Sapolsky, who led much of the research in stress in African baboons, once told me: “When humans invented inequality and socioeconomic status, they came up with a dominance hierarchy that subordinates like nothing the primate world has ever seen before.”

Moreover, Marmot points out, the people who were on the “bottom” in his research were not poor or unemployed. “In Whitehall, we’re not dealing with poverty. We’re dealing with people in stable white collar employment and [still we see] this graded relationship between where they are in the hierarchy and health,” he says.

When Marmot and his colleagues controlled for lifestyle factors like smoking and lack of exercise in the lower socioeconomic groups, the gradient remained. “Those things accounted for about a third of the gradient,” he says, noting that you have to look for the “causes of the causes” — the reasons that the lower classes might be driven to smoke, drink, take drugs or indulge in sweet, fatty foods. “It’s now been described the world over,” Marmot says.

Indeed, in country-to-country comparisons, researchers find that the greater the difference between the richest and the poorest in a society, the worse off everyone in that society seems to be. “It looks as if what inequality does is amplifies the effect of social status differences,” says Richard Wilkinson, an epidemiologist and co-author of the British bestseller The Spirit Level: Why Greater Equality Makes Societies Stronger.

In countries such as Japan and those in Scandinavia, which have the lowest levels of socioeconomic inequality in the developed world, the populations also enjoy overall greater life expectancy, lower infant mortality, reduced obesity, heart disease and mental illnesses, and lower rates of murder and addictions, compared with nations with high inequality like the U.K., and even more so, the U.S. Countries with wider equality also have higher levels of academic achievement and happiness.

One study in Finland found that mortality rates were twice as high in the poorest people as in the richest, a much less stark difference than that seen in Whitehall, where bottom-of-the-ladder folks had a threefold higher mortality risk than those at the top. Marmot cautions that such comparisons are hard to make accurately and that even in relatively equal countries, some status differences still exist. Still, he says, “Fairly detailed comparisons done across Europe suggest that the magnitude of the gradient is less in Nordic countries.”

So how exactly does inequality lead to so much stress? By degrading our relationships with one another. “The most important pathway is the effect of inequality on the quality of social relationships in a society,” says Wilkinson. “I think the more unequal you get, the more competitive social relationships become, because there’s more status competition.”

And because good relationships are crucial for protecting people from stress, socioeconomic inequality creates an environment in which people with the most stress can’t counter its negative health effects. This social competition degrades relationships and erodes trust across the socioeconomic spectrum — and not just among those on the bottom. (More equal societies also have higher levels of trust.)

Although researchers like Marmot haven’t been able to study the top 1%, at least one recent finding in baboons should give pause even to the very well-off.

The study found that alpha males — those at the very peak of the hierarchy — were actually just as stressed as their lowest-ranked followers. The least stressed among the baboon troops were the beta males, the No. 2’s in the hierarchy. Unlike the alphas, they could chill out and reap the perks of power without constantly having to fight off challengers.

Even when you’re at the top, then, inequality affects you and a gradient always remains for those who are successively lower down.  But it’s not inevitable: in one baboon troop Sapolsky studied, rank appeared not to affect stress and health. What happened there was that the meanest top-ranked animals had died off due to eating tainted meat, leaving the mellower ones in charge, which reduced rank-related bullying.

In the U.S., inequality has been rising since the 1980s. Between WWII and Ronald Reagan’s election to the presidency, average income grew by $19,000. The bottom 90% of the country received 65% of that increase.

Between 1981 and 2008, however, average income grew by around $12,000. About 96% of that went to the top 10% richest people in the country. The ratio of pay between CEOs and average workers also became much more extreme over the same time period: in 1980, it was around 35 to 1. Today it is about 185 to 1.

If we want to be healthier and happier, we can’t ignore inequality.

Jamie Dimon may just be trying to cool the Bitcoin market a bit.  He said the same thing when Bitcoin was in the low hundreds.

The major signs I see of elite promotion of cryptos are:

- The price rise.  This speaks volumes when the elites could have killed it with laws.

- The unknown buyer of cryptos shelling out $60 million at a time, over months.  What private entity would put that kind of funds at risk?

- The BIS ('central bank of central banks') recent release of the 'new taxonomy of money' where state money is no longer solely legitimate as today's economists like to say.  Instead, a plethora of monetary forms are recognized, including precious metals and cryptos.  Most significantly, it states that state-issued cryptos won't compete with non-state cryptos by trying to be limited-supply.

- In the political sphere, the disappearance of talk about Bitcoin being a crime-enabler and the need to tighten control over it.  The appearance (in a small way) of proposals to help cryptos.

- The SEC's quick response to the need to control the proliferation of ICOs.

- Between an essay by an ex-central-banker from South Africa and the ECB's recent announcement, it's pretty clear that the Western elites are going to adopt the narrative that cryptos' rise is simply due to market demand, and that authorities won't and shouldn't interfere.  This sounds morally impeccable, but is highly misleading as a description of reality.  Of course, it will benefit cryptos.

Your post was very quickly buried by spammers inhabiting this section. They appear to bury attempts at intelligent discussion here almost as if they receive a lifetime achievement award for it. I try to reply only to posts with less than 100 responses on pages 2, 3, 4, etc. That seems to help.

I think at the beginning of the state-driven financial inflation cycle in the united states around 1913 when income taxes were passed...  All americans were taxed @ 1% of income. The wealthy were taxed @ 6% of income.

That could explain why the beginning of inflation cycles are prosperous. As time passes and taxes are hiked 50% to 70% of income it has a strangling effect upon an economy and everyday life. There are massive diminishing returns for every $1 taxed.

Trump's initial proposal, reducing income taxes and the corporate tax may be the only opportunity we have to escape the state's insistence on attempting to tax its way into prosperity.

Here is an interesting piece done on that very topic, if you ever feel like reading.  :)

http://healthland.time.com/2011/10/19/how-economic-inequality-is-literally-making-us-sick/

Good overview.

I don't understand why the wealthy bother monetizing their already impressive holdings. Many of them don't do seem to do much with the wealth they have other than buy overpriced junk.   ???

Interesting that you would call it that lol. I hear that it's a deflationary currency and will be balancing out the debt that is currently circulating in US dollars.

Money, debt, and finance can get as complicated as you want.  But they can also be stunningly simple when looked at the right way.  And I like simple.
 
Basically, you have real wealth and financial wealth.  Real wealth is made up of goods, services, infrastructure, knowledge, etc.  Financial wealth is the various tickets that are claims on real wealth: money, bonds, stocks, derivatives, etc.
 
Over the modern centuries, top politicians and bankers have tended to issue too much financial wealth for the real wealth available.  To prevent a collapse of savers' confidence in the financial wealth, power and deception are used to prop up its value.  One of the favorites is somehow to keep the price of goods and services low by concentrating financial wealth.  As long as not all the dollars chase goods at the same time, all the saved dollars can appear to be still valuable.
 
At this point, the elites can play all kinds of tricks to keep this game afloat, for a while, but ultimately, the only way to true stability is to let prices rise.  When prices go up, the values of the financial wealth and real wealth will be more equal.  Real faith will return to the financial wealth, and the elites can go back to issuing more of it without worry.
 
The only problem with inflation, though, is that the public will lose faith in state-issued money.  This is the reason why the elites have tried not to resort to inflation until the last possible minute.  Helicopter money hasn't come, yet.

Enter cryptocurrencies.  If the elites can get the public to believe in crypto as a decentralized, limited-quantity money, then they can feel free to create inflation by issuing more money and debt: the normally embarrassing depreciation of state-issued money against non-state-issued money as a result of the inflation will be described by central banks and the media as free-market demand for a new type of money.  Crypto will help limit the demand for gold and silver, whose appreciation will be embarrassing.  And the state-issued money will be stable at the new 'exchange rate,' since the elites are likely buying up many bitcoins now to prepare for future suppression of Bitcoin's rise.

Imagine late 19th century central banks suddenly receiving a lot of gold from heaven, and you have almost the right picture.  Just that they have to first convince the public that this is gold.

This being a perfect play for the elites, plus the many observations in support of this story in recent months and years, we really have to consider the good chance that the Great Reflation is underway as we speak.

I find parts of your post really interesting, as it's an eloquent statement of ideas I've been thinking about for a long time, particularly the idea of the accumulation of "wealth" being more of a concept than an actuality, and also being necessary to keep prices stable. However, where I would differ from you is that you seem to view this as a conspiratorial conceit that's been implemented, and not the natural state that arises in a large group of self-interested and rational economic actors looking to create stability. Also consider that so much "wealth" is in the form of debt, which is just an expectation of future wealth. When the goods and services underwriting that debt are realized, the debt can be serviced. When they are not, the debt gets written off and that money essentially disappears from the economy. I think the default of debt is a natural way the system prunes itself and helps to prevent money creation from running away on itself, although that's not to say it makes it impossible. But I don't see crypto playing in to your idea at all, or being part of a concerted effort to game the monetary system by the "elites." 

If the so called elites are buying bitcoin instead of banning it, it just makes already rich bitcoin whales (which have pro-crypto agendas) richer. The amount of BTC they would need to buy is simply too high.

They can't do that much beyond causing price crashes with bans, and we already saw how that played out for China. We are about to hit an all time high after China basically banned all exchanges, think about that again.

All they can do with bans is temporal price crashes which will get bought up again, restoring confidence since the more times bitcoin resurges after bans, the less effective said bans are. This is why the market has not reacted at all at the South Korean ICO ban and Swiss ICO ban. Once you do it once, the next time is not interesting for the market, so the next time exchanges are banned somewhere else, it will be the same. You simply can't stop this at this point, pandora's box has been opened. Get in and get yourself a strong bitcoin position or be lefit behind, no other options.

I have no idea how big the role the Elite plays in Bitcoin, but I do accept the idea that they are buying it on a larger sale than is realized.

It is never that far away and it will always happen, well for quite some time. People follow the rumors and the fear and drop and run, but not the big boys and not the ones that make the markets hum, that is where the price gets most of its power and it is a great thing. No need to worry, speed bumps here and there and the rest is smooth sailing.

There is a certain amount to be said for owning revenue generating property in whatever guise it comes. If that is in the form of fiat money that inflates away over time in a predictabe way that works, the tricky part is when confidence is lost - see Zimbabwe for example. BTC is not immune from crisis in confidence either, but the benefit it does have is transparent operation and supply. Nobody can suddenly introduce another 21,000,000 out of a hat.

Real land, goods producing companies and factories, and service companies are also good bets.

This is all by design.  The modern system is designed to take wealth automatically from savers, to push them into risky assets, so they help sustain all the asset bubbles that benefit the elites.

Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically price level) back up to the long-term trend, following a dip in the business cycle.

I totally understand, 9 long years after the global financial crisis, the elites just can't seem to get inflation going.  Every time there's any sign of it, the hope is quickly crushed.

Or so they say...  The truth is that the elites can *always* get inflation if they want it.  All they have to do is print money and issue public debt until they get the inflation.  So it's a matter of 'won't' rather than 'can't.'

We'll see high inflation for a while, but probably lower in the US than in Europe and Japan.  We'll also see good job and economic growth, and lots of stimulus and redistribution to the poor from governments and central banks to keep social tension low.

Your post was very quickly buried by spammers inhabiting this section.

What this system is not is a true free market.

This is all by design.  The modern system is designed to take wealth automatically from savers, to push them into risky assets, so they help sustain all the asset bubbles that benefit the elites.

Is it possible that even things like social security were engineered with an intent to divide the family unit under an illusion that the state & social security will provide for people, degrading families and communities in some subtle way?

If the so called elites are buying bitcoin instead of banning it, it just makes already rich bitcoin whales (which have pro-crypto agendas) richer. The amount of BTC they would need to buy is simply too high.

They can't do that much beyond causing price crashes with bans, and we already saw how that played out for China. We are about to hit an all time high after China basically banned all exchanges, think about that again.

All they can do with bans is temporal price crashes which will get bought up again, restoring confidence since the more times bitcoin resurges after bans, the less effective said bans are. This is why the market has not reacted at all at the South Korean ICO ban and Swiss ICO ban. Once you do it once, the next time is not interesting for the market, so the next time exchanges are banned somewhere else, it will be the same. You simply can't stop this at this point, pandora's box has been opened. Get in and get yourself a strong bitcoin position or be lefit behind, no other options.

Very interesting point. I question sometimes how deeply such a design may run.

I'll try to give you a real world example. In the united states many american families pride themselves on kicking their kids out of the house when they turn 18. In foreign countries, this trend is often non-existent. Young adults live with their parents well past adulthood and it may be fair to say there isn't the same negative stigma against this trend found in the USA.

Here's where things might get interesting. Americans have social security. Foreigners often lack an equivalent. In practice this could imply foreigners lacking a pension/retirement plan, rely more heavily upon their children to care of them when they get old. Wheras in the united states parents might believe they don't need to have a decent relationship with or do a decent job raising their kids believing they don't need their family to be there for them in old age as they have social security.

If it is true that elites have designed a system to divide society, break up communities and families to an extent to prevent people from uniting or coordinating effectively. Is it possible that even things like social security were engineered with an intent to divide the family unit under an illusion that the state & social security will provide for people, degrading families and communities in some subtle way?

I had to search the meaning of the word Reflation. Wiki (https://en.wikipedia.org/wiki/Reflation):

While the European Central Bank largely increases the money supply, our national government (the Netherlands) has raised several taxes and increased the government's spending as a share of GDP since 2008. They also increased VAT, which further increases inflation. So they're doing one thing according to Wiki's definition, and the exact opposite on the other thing.

As a family with some savings, we don't need inflation. ECB is still printing enough money to slowly inflate away savings, banks give very low interests, taxes on savings alone are 5 to 30 times higher than the interest the bank pays. We don't have a capital gain tax, which is very beneficial if you're rich and own a lot of assets, but the common man sees his savings slowly evaporate.

So what can we do to change this?

...

BobK71 just wrote:

"As I wrote in other posts, this will unfortunately be a multi-century struggle.  The only true cure is public awareness, but the corruption is deep and impossible for most people to see, and the system is good at distributing the 'benefits' around to keep a lot of people content and quiet."

I had never seen this idea expressed like that.  The truest words I have seen written in quite sometime.  Yes, it will take centuries because of public laziness and The Elite's excellent reading of what they can get away with.

Bitcoin has been one little escape hatch for many of us (here).  Those who never bought any BTC have lost even more financial ground as a result of the machinations by The Elite.

I think this will cause panic for the billionaires with the fear of getting more competition. it is undeniable that the movement of crypto price increase some percent is from the role of the middle class down. this will certainly make people upscale to enter the crypto activity because of course they want to get a bigger advantage of course this thing that will make the middle class down the more marginalized. of course there needs to be a counterweight in order to avoid too much inequality.

Money, debt, and finance can get as complicated as you want.  But they can also be stunningly simple when looked at the right way.  And I like simple.
 
...
Imagine late 19th century central banks suddenly receiving a lot of gold from heaven, and you have almost the right picture.  Just that they have to first convince the public that this is gold.
...

This has already happened in history and led to the decline of Spain to the XVII century.

In the treasury of the empire, united by that time under the scepter of Charles I of Habsburg, golden rivers flowed. The treasures brought from Mexico and Peru by the conquistadors made the country fantastically rich. This period has gone down in history as Siglo de Oro - the Golden Age of Spain.

If at the end of the XV century in Castile was the most successful sheep in Europe, wine cultivation flourished in Andalusia, and in Toledo - weapons business, then by the 16th century Spanish peasants and artisans could not only not sell their produce outside Spain, competition within the country.

By the end of the sixteenth century, the price of bread had risen fivefold, and the general level of prices in the Spanish state had increased fourfold. The servants of the king, who received a salary from the treasury and had no connections with the colonies, immediately became impoverished. In addition, all economically active subjects of the corona rushed to the colony for easy profit.

To supplement the original story:

Between the OP and today, Bitcoin has gone to $19K and come back down to $8K, and the total market cap of all cryptocurrencies is still less than 10% of that of gold.

So the full reflation hasn't happened, yet.  But the elites have thought it wise to raise the value of Bitcoin by quite a bit, from the last stable value of about $300, to at least prepare for the reflation, if it should become necessary.