Bitcoin Forum

https://i.imgur.com/Kgffo.png

The Billion Prices Project is an academic initiative that collects prices from hundreds of online retailers around the world on a daily basis to conduct economic research.

Above CPI:
http://bpp.mit.edu/daily-price-indexes/?country=USA
http://bpp.mit.edu/daily-price-indexes/?country=FRANCE
http://bpp.mit.edu/daily-price-indexes/?country=RUSSIA
http://bpp.mit.edu/daily-price-indexes/?country=ITALY
http://bpp.mit.edu/daily-price-indexes/?country=ARGENTINA
http://bpp.mit.edu/daily-price-indexes/?country=AUSTRALIA
http://bpp.mit.edu/daily-price-indexes/?country=VENEZUELA
http://bpp.mit.edu/daily-price-indexes/?country=COLOMBIA

At or below:
http://bpp.mit.edu/daily-price-indexes/?country=BRAZIL
http://bpp.mit.edu/daily-price-indexes/?country=TURKEY

very interesting

CPI apparently is "Consumer Price Index", but what is "BPP Index"?

Billion Price Project.

  http://www.econbrowser.com/archives/2010/11/billion_prices.html

interesting.  This BPP seems more close to raw data...doesn't try to fudge stuff like CPI does...

Hmm... two weeks later, up even more.   Still the same trajectory:

https://i.imgur.com/MP8g4.png

http://bpp.mit.edu/daily-price-indexes/

Accelerating for a few others as well:

• http://bpp.mit.edu/daily-price-indexes/russia/
• http://bpp.mit.edu/daily-price-indexes/?country=FRANCE
• http://bpp.mit.edu/daily-price-indexes/?country=AUSTRALIA

Not particularly surprising, a dip in prices during the worst bit of the credit collapse, presumably in response to falling demands, and now significant inflation beginning due to the increase in money supply.  The fed balance sheet was almost tripled in the last few years, largely over a few months now being referred to as QE1, followed by the smaller ("only" 600 billion) QE2.  Since the US dollar is only backed by debt, consumers and investors fleeing debts, going bankrupt, or defaulting would have caused a massive drop in the money supply, by reducing the amount the base supply is multiplied through further borrowing.  As peoples credit recovers it's logical that this multiplier will creep back up to where it was and we'll get pretty horrible inflation for the next several years.  All this could be avoided with hard currency IMHO of course but this is the stuff that happens when you essentially back your currency with credit card debt.  Well, what's bad for fiat currency is good for bitcoin I guess.

Good time to start selling wheelbarrows for btc to carry all the fiat around in ?

Call me an optimist, I think we're still look at the probable scenario being a "lost decade" a la japan.

The USA is not going to be so lucky as to get a lost decade like Japan.

Japan had exports, high rate of savings and a world economy that was not in recession. All those factors produced a carry trade that helped Japan money printing to not make prices rise (removing trade barriers with China and allowing cheap products into the country also helped).

The USA does not have any of those and its going to suffer an inflationary crisis, stagflation. People is going to look at the Japan lost decade with envy.

Oil prices seem much more interesting to me:

http://img28.imageshack.us/img28/4432/oilprices5years.png

Look at the mid-2008. See resemblance ?

USA economy is largely supported by cheap oil. If the oil ever goes again to over-130 dollars, there is very high probabilty of next crisis because it will suffocate the economy. If it goes over 140, then financial depression is almost inevitable.
And the oil is over $100 and still keeps rising...

And, of course, those increases in crude prices are making their way to the pump:http://66.70.86.64/ChartServer/ch.gaschart?Country=Canada&Crude=f&Period=6&Areas=USA%20Average,,&Unit=US%20$/G
  http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=6 (http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=6)

Where can I trade Bitcoins for Crude oil?

Nowhere.  Even Europeans have to buy oil inUS$ due to the Bretton Woods Treaty.  The Russians & Chinese would buy/sell oil in gold or their own currencies in a heartbeat if that wouldn't get them sideways with the US fed.

Exactly.  Saddam Hussein tried to start an oil exchange that wasn't denominated in USD, and then he was taken out of power by the US government.

Iran started saying they were going to do the same thing, and again we heard the war drums beat again.

The US Government is pretty clear on their stance about this...

Citation needed.

http://maddok.files.wordpress.com/2009/09/ceiling-cat-uncaptioned1.jpg

Ceiling cat provides:

http://www.time.com/time/magazine/article/0,9171,998512,00.html
http://www.globalresearch.ca/articles/CLA410A.html
http://www.ratical.org/ratville/CAH/RRiraqWar.html
http://www.google.pl/search?hl=en&q=saddam+hussein+oil+euro+exchange

Selling oil for dollar and for dollar only is the only thing, that is keeping that currency from hyperinflating. Question is, how long can this trick work ?

Also, when will USA will attack Iran ? A month/week before opening of Euro-based oil exchange. Destruction of dollar = destruction of current US economy. They can't let it happen.

Weren't the Bretton Woods agreements pretty much finished when Nixon closed the gold window in 1971?

I hear this all the time, but I don't understand it.

There's a free exchange market between dollars and Euros. So if Iran sells oil for dollars and immediately exchanges those for Euros, how is that any different from Iran selling oil for Euros directly? (Apart from the currency exchange costs, of course).

Simple.

All countries have to hold certain amounts of dollars on their accounts, as they will always need it to buy Oil. Because they are holding it, they need to buy it from time to time, which creates demand for dollar. And demand rises dollar price and keeps it from falling and keeps it in the market.

With Euro-based oil exchange, nobody would need dollar at all, so no country would hold it, so nobody (outside USA) would buy it, so it would have a small fraction of today's value. Hyperinflation.

Wouldn't they do better to hold oil futures?

edit: and can't they buy those with any major currency?

I do not posess such details. You need to check it out yourself.

However, I imagine that US government took care of that possibility. After all, their world hegemony & military domination comes from taxing entire world with their always inflating currency.

Inflation = tax. When dollar inflates, US taxes entire world (because there is more dollar outside of US than inside US). This is the greatest thievery of the century, or perhaps even in history of mankind by the way.

Yes, and basicly everyone does this to some degree, but there remains a limit as to how well hedged any single nation can really be because ultimately the contracts have to be settled in US currency per international treaties.  This is a *major* part of the artificial demand that supports the value of the US dollar, but this will not ultimately prevent the US dollar from collapse.

Well, i hope it collapses soon.
The quicker it fails, the better it is for everyone (especially Bitcoiners :P).

The Chinese and Russian DO buy it with their own currencies now, they signed a treaty a few months back that took that U.S. out as the reserve currency.  That's one of the major reasons for the U.S. going to so many wars lately, they're trying to keep there position of power over the world, but since up to 50% of earth no longer accepts U.S. currencies (including large parts of the U.S.) their already toast.

Don't do that for the love of all things holy.
http://imghaven.com/images/11137

Except for all the people who'll probably end up dying in the collapse. It's hardly going to be better for them.

Sorry. Quite a few of my friends and family can't afford to hedge against such an event. While I know it's coming, and while I've done my best to hedge myself and warn others, I'm acutely aware that I'm probably going to fare much better than most of the people I'm close to. It's frustrating and a little frightening to imagine what things will look like when the sh*t hits the fan.  :-\

No need to imagine, just look at the periphery of the empire. The collapse has begun

Even that only applies to direct trade of crude between Russia and China.  Which, admittedly, is a pretty large market; but by itself is not a game-changing event.

Honestly, looking in the rear view mirror, one can see signs of a breakdown of an empire as far back as 1970.  And the same could be said for the USSR as far back as 1955.  The problem of a collapsing empire is that it takes quite a long time, and there is no reason to suspect that the modern world will be significantly quicker at such things than the Roman or Ottoman empires.  The risks are in the transitional periods anyway, at least to the individual.  Clans will fare better, as happened to Roman enclaves as the Roman empire imploded.  The small independently functioning regions loyal to Rome preserved the culture for generations longer, functioning as city-states.

Well. Certain things just have to happen, whether we like it or not.
The economy as of now is one big lie and manipulation, it has to and it will collapse ultimately.

Of course, you can warn your friends.... but since they are hopelessly dependant on the system, it is extremely hard to separate them from it (if possible at all).

Don't blame yourself needlessly, you have probably done everything you could without being seen as an insane person / conspiracy theorist / whatever.

Susan Lindauer is a CIA asset who was jailed without a trial for a year after whistleblowing re: 9/11. She was a diplomat working with Iraq and Libya. She claims that the reason we're going after Libya's oil is that most of the pipelines and other infrastructure in Iraq were damaged so badly during the Iraq war that we can't access the oil. She also says that she expects Qaddafi to torch his oil fields if he finds himself losing.

Anyone ever seen any data about Iraq oil infrastructure?

There's that smell again ... I can't quite put a finger on it though.

https://i.imgur.com/vL6OE.png (http://bpp.mit.edu/usa)

 - http://bpp.mit.edu/usa


Also, 8 year gas chart (U.S. Average):

https://i.imgur.com/SCVqp.gif (http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=96)

 - http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=96

No brainer.
All that happened in 2008-2009 is bound to happen again, because the old system stayed in place, nothing changed.
But when it happens the next time, it will be impossible to save the current system - no bailouts will ever be big enough to help.

If your children (banks,funds) are spoiled, then how should you correct them? By punishing them with rod (money cuts, bankrupcies) or perhaps giving them more candy (bailouts) ?

OMG, this is going to be one one of the greatest economical collapses of all times. Just sit and watch.

the question only is: how long will it take?

I wish gas where I live was under $4/gal. I live in a small town that has 1 gas station and price gouging here is ridiculous. The owner of the gas station has another one in a town with 3 gas stations and the prices are 5 cents cheaper per gallon.

In summary, gas station in my town with no competitor= $4.079/gal
gas station next town over (6 miles away) with competitors=$4.029/gal
Same gas, same delivery truck.

You do realise that's a price difference of about 1.25% right?  I often see larger price differences from one block to the next and from morning to night at the same station.  Dude, you're not getting gouged.  If he actually has a monopoly at one station in the area, you're very lucky the price difference isn't 50 cents per gallon.

sub

for some reason, i can't access the data myself. do i need an account at their site?

The BPP site?

They use Flash and they changed their URL structure since the OP and I can't get a URL to work for any country other than USA, and using the Flash app never gets past "collecting data".

My guess is that it is not being kept up-to-date except for the U.S.

What this data shows is that from pre-recession inflationary peak to the present day, U.S. currency has devalued in total 5% over the course of about four years.  That's about 1.25% inflation per year, average.  If you kept your dollars in an online savings account over this period of time, your interest rate would've averaged about 2%.  Kept them in the market and reinvested dividends?  Anywhere from 5% to 40% gain per year, depending on your timing competence.

Current inflation levels aren't problematic - deflation could be around the corner at any time and is a much bigger threat at current inflation levels of 1.25%.  Some goods have increased in price 50-100%, such as frozen vegetables, over this period in time, for reasons not directly tied to currency valuation.

Want to see bitcoin traded for goods instead of hoarded?  The currency needs to be fundamentally inflationary in nature.  Where are all of the merchants flooding in to embrace bitcoin?  People aren't likely to readily spend bitcoins due to their constant tendency to increase in value and their exceptionally high volatility.  It's a hoarder's world.  Bitcoin is more like a precious commodity exponentially increasing in scarcity over time, and the fact that people even consider it remotely comparable to government-backed currencies is incomprehensibly ludicrous.  After all, like gold, bitcoin is mined, not printed.  ;)

While this is all true, the problem is this kind of analysis is (at best) concurrent or (more likely) delayed.  Said another way, these metrics look at recent history (and perhaps the trends) in order to make a future prediction.  That is, after all, the point of all this; to make an educated guess as to what comes next.  The problem with that is there are other metrics that should more indicitive of the future than (in particular) the consumer price index over the past several years.  The metrics of the monetary base, for example (M1, M2 & M-prime) have more than doubled over that same time frame.  Has the demand for liquidity and/or the practical size of the US economy doubled during that time?  No and No.  So the simple logic of the law of supply and demand (as applied to monetary demand) says that, eventually, we are going to see some rather severe inflation, assuming that the federal reserve does not (or cannot) withdraw that liquidity from the banking system at the next inflection point.  There is no historical evidence that the academics who work at the federal reserve even have a reliable theory that could inform them of such an inflection point.  And that should worry you more than the small, and dropping, risks of a deflationary event.

Economists and others stuck on this deflationary spiral never consider transaction costs in their arguments.  

Why not?

When I spend a $100 on something and pay using a payment card, the person I'm making the purchase from gets $97.  So the price of the good is raised 3% more than it needs to be.   When I spend using bitcoin, that transaction cost -- even when exchanging to and from fiat on both ends is a fraction of that level.  

So with USD you have a currency that inflates at 1.5% per year but has transaction costs of 3% for each time the funds are turned over.  With Bitcoin you have a currency that will (eventually) inflate at a much lower level but whose transaction costs are just 1% or less, for example, with each turn of the money.

So at the market, the customer is asked to choose:

Option A.) For about $103 USD using your payment card you get $100 worth of goods.    

Option B.) Optionally, you can pay using bitcoins, first convert $101 of your USDs to get $100 worth of Bitcoins and then with that you are able to purchase $100 worth of goods.

Which option will the consumer choose?

And thus, even with an expected increase in the value of bitcoin, using Bitcoins will continue to be the choice made when making payments.

-----

Faced with competition at the point of sale, an argument would be that the payment card transaction will drop to a more competitive level.  A 2% or so difference is enough of an incentive to switch for many consumers.  1% ... not so much.

What might happen though is normal payment flow will move over to bitcoin to take advantage of the discount, but the payments occurring from fraud can't (or at least if it does those losses won't be borne by the banks or the issuer) and as a result that 3% truly might be the actual floor that payment cards can still function at profitably.

Incidentally, Bitcoin's currency inflation rate just dropped below 30% per annum and slowing each and every day.  When the block reward drops in half around December, its currency inflation rate will drop from about 25% to just 12.5% per annum.  So Bitcoin still is at a rapid inflationary level yet hoarding also is happening at the same time.

List of actual merchants flooding in to accept Bitcoin:
https://en.bitcoin.it/wiki/Trade

The only active inflationary "cryptocurrency" I'm aware of:
http://solidcoin.info/
(Warning: it's managed by one anonymous guy who keeps changing the rules)

The only inflationary coin proposal that I think could actually work:
http://encoin.bitcoinforums.net/
(Still in early planning stage)

I couldn't find a list of potential merchants that WOULD have flooded in to accept something because it decreases in value. Inflation encourages HOLDERS to want to move the currency - it discourages merchant acceptance.

Part of the reason Bitcoin is deflationary is because it's much simpler that way. The only way a bunch of computer geeks are going to embrace a more complicated solution is if:
A. Bitcoin crashes and burns horribly
B. A better alternative is demonstrated

Be patient: most merchants have not even heard of bitcoin yet. Bit-pay and us  (perhaps other evangelists) are only starting to speak up at trade shows. We are meeting big merchants and the idea of bitcoin is gradually gaining attention within these organizations.
Adopting a new transaction acquisition mechanism is not something a big merchant will engage in without due diligence: we are in the middle of it.

As far as alternatives are concerned, bitcoin IS an alternative to elastic money as we know it (dollars, euros, etc). I fail to see what an elastic cryptocurrency would bring to the table. As soon as you deal with a non zero demurrage rate or money supply growth rate, the question is who sets the non-zero value of the rate. With bitcoin, the rate is set to zero, period. Much easier to build a wide consensus on that.

Well, if it (inflationary-led collapse) is happening now, it isn't being broadcast by BPP -- they haven't been updating their chart.
 - http://bpp.mit.edu/usa/

If it is happening now, it isn't being shown in data from the BLS.

If it is happening now, you would see it occurring in the prices for commodities, and in food and energy prices paid as a consumer.
 - http://finviz.com/futures_charts.ashx?t=SOFTS&p=w1

Doug Short says it isn't happening (but includes in grey the data from ShadowStats which says high inflation is happening):

https://i.imgur.com/weEQu.gif

 - http://www.advisorperspectives.com/dshort/updates/Inflation-Since-1872.php

And the conclusion here is that as long as you don't buy food, fuel or pay rent, you won't see any inflation:
 - http://www.zerohedge.com/contributed/2012-10-12/inflation

Wait ... what?

Whether or not inflation is high depends upon how you define it.  If you believe that increases in general prices are inflation, then we have had about 40% inflation over the past four years looking at foodstuff, and about 100% inflation over the same time period looking at energy.  If, on the other hand, you define inflation as the increase of the base money supply (over and beyond the growth of the economy at large) then M1 is through the roof but M2 is not.  It very much depends upon what you consider to be of greater importance, the actual production of currency or the creation of debt.  Bear in mind that under any modern fiat currency system, debt underlies the economic usefulness of the currency base, thus the total amount of money should rationally include the total amount of debt in the private sectors (government debts are often self-cancelling, but not always) Thus the most accurate metric that we have for determining the currency base across time is probably M3, which has been declining since 2007; primarily due to the popping of the housing industry and the fact that a huge number of Americans had over-leveraged themselves with home-equity loans and refinacing.  As those bad real estate deals liquidate, debt is destroyed and what was once believed to be valid currency ceases to exist.  This is deflationary overall, and this can be expected to continue until the real estate actually bottoms out.  However, once it does bottom out, the effects of the past several years of QE, bailouts and increases in public indebtedness are going to start to show up in the real economy.  To put it simply, we have not seen anything yet.

Having said that, I don't believe that a hyperinflationary event in in the cards so long as the Federal Reserve system exists.  The reason is that such an event is always a political event, not a fiscal or economic event.  If it comes to the point that TPTB in government want to increase the currency base for their own perceptions of gain, the Fed will comply right up until the point that they perceive a threat to their own existance, and then they will refuse to comply.  Since they are a creation of the five major regional banks, and not so much a creation of the government, their contiued existance is dependent upon those banks and the FRN.  If they permit a hyperinflationary event, their con game is over, and they don't want that.  But if Congress were to decide to revoke the Fed's charter (something that I'm in favor of for philosphocial reaons, despite knowing what could happen next), the Congress itself could trigger such a hyperinflationary event.  So could another world war or civil war, but under no concivable condition would the Federal Reserve participate in it's own destruction.

The US economy is going to collapse real soon.

This is such a meaningless statement.  It's not really possible for an economy to 'collapse', since it's not any kind of structure, not even figuratively.  The economy can slow down, and it can even do so at a catastrophic rate for certain classes or groups of economic actors, but in any practial manner it cannot really be said that the long term wealth of the US (infrastructure, arable land mass, educated labor base, etc.) is destroyed under such an event.  From a personal perspective, personal wealth is destroyed, but most of that is actually transfered to new ownership or simply underutilized, and not actually destroyed.

So when you say the statement above, it would be nice if you would state what the conditions that define "collapse" in your view, so that the rest of us can evaluate whether or not we agree that those conditions apply to the rest of us.  For example, "collapse" for you might be that you lose your job and there is no work within your field of expertise and/or within your accustomed salary range.  That would certainly be bad for you and your family, but might not have any direct effect upon myself.