Bitcoin Forum

Put your tinfoil hats on, gentlemen. The similarity between the value of gold during the Weimar inflation and the USD/BTC price increase is cunning.

It also indicates that this correction will be short lived before we enter the final stages of the end game.

http://i41.tinypic.com/dzjtxz.png

If you also look at the charts, the *exact* same comparison can be made to the April 2013 bubble. And what happened then? What? It's gone up another 400% from the previous all time high? Hmmm. We should be ok.

It also had the initial peak ($1 -> $30 -> $2.50) in June 2011 and then a big peak two years later at $266. There is much more momentum now though.



TL;DR Welcome to cryptocurrencies, this is what they do.

If you find more you 'll find 1000000 other similar graphs. Also if you take smaller periods of btc price chart you 'll see notice a similar behavior of the price.
No tin foil hats needed here because it means nothing.

If you find other graphs which look similar please post them here. The choice for the Weimar graph is that it is relevant in this discourse, because it describes a death event of fiat money. A few things are striking about this comparison:
a) overall time scale of the event (4-5 years, not scaled)
b) magnitude and timing of price increase of a safe haven asset (2011 and 2013 bubbles)

This suggests that these processes are driven by the same underlying dynamic. It also provides a narrative for the bitcoin price increase - it's not a speculation driven bubble, but a flight movement out of fiat.

What's your narrative? Coincidence?

Now I get it

Are you suggesting the death of the Dollar within a year? While this curve matches with Bitcoin, it doesn't match with gold - which is Papermark comparison in your chart - gold was losing - interestingly the drop of gold vs USD started with the rise of Bitcoin. And Bitcoin gained value against everything else.


Unfortunately I don't. But I think the suggestion of a Weimar style dollar collapse within 12 months by someone who's judgements I respect is important enough to put more effort into it. Please elaborate the narrative. Do you have more supporting evidence?

This is a silly comparison. Simply overlaying somewhat similar-looking graphs does not make for a good comparison.

The explosive growth of BTC/USD this last year is primarily due to increased adoption and awareness. The purchasing power of the dollar hasn't gone down as much as the BTC-price has gone up this year. Not even close.

Conversely, the growth of the gold-price in Weimar Marks was not due to increased adoption and awareness of gold, but due to hyperinflation of the mark.

These two graphs, while looking vaguely similar, show two completely different scenarios.

What's your narrative? Coincidence?
[/quote]
Purely coincidental patterns can be found absolutely everywhere in life, when none of them are true correlations. We end up deluding ourselves into seeing what we want to see.

http://www.forbes.com/sites/erikaandersen/2012/03/23/true-fact-the-lack-of-pirates-is-causing-global-warming/

You can make a strong case that the increase of piracy and global warming have a common cause - they don't cause each other but they do correlate in a meaningful way.

Relevant to this discussion: http://www.lewrockwell.com/2013/12/mark-nestmann/the-anti-dollar/
"Gold should have been the anti-dollar, but it has a problem: it is more or less controlled by the central banks and their friends. (You can find US Treasury memos from the 70s discussing the necessity of controlling gold.)"

The printing frenzy of the central banks has created a lot of pressure by economic players to exit the system before things go sour and as a sign of protest. However, there are hardly any outlets for that, bitcoin and friendly cryptocurrencies being only one of a few.

The comparison with Weimar invites for two questions:
a) Why did the value of gold fluctuate up and down in Weimar and what were the driving forces behind these "bubbles". Is there a parallel to what we experience with bitcoin today?
b) When was it apparent that hyperinflation was around the corner and what was the market liquidity for gold under those conditions? Was gold still available in germany at the time of the collapse? Was somebody crazy enough to sell gold into a hyperinflating market? If not, when did the gold window close?

I would hypothesize that a flight movement out of one asset (fiat) into another (bitcoin/gold) resembles an adoption process. The resemblance with Weimar suggests that this flight movement follows a pattern which is universal.

Answering the questions above will either support or invalidate this narrative.
I don't suggest that the dollar will die, but that we're experiencing something akin to an end game, in which bitcoin is considered a safe haven. Probably a reaction to all the bail-in talks (and cryptocurrencies are bail-in resilient). It is likely that this end game will conclude within the next 2 years, based on the projection.

So this event will occur prior to the next halving. Interesting. There might be growth in the rate after then still as the money supply grows at a reduced rate. Or will the market attempt to price in future halvings before the event?

The inflation rate of bitcoin is more or less irrelevant for its price discovery. If it indeed acts as a safe haven, even high inflation rates are tolerable, because it preserves purchasing power.

Yea, just comparing with some of chodpaba's previous work. I think the halvings are still big events economically although I would guess the market tries to price them in years in advance.

We're just entering the final stages as shown in this graph I got from reptilians whom have timetravelled back from the future.

https://i.imgur.com/UPuMUx8.jpg

If you assume an endgame of some sort, what is an alternative scenario to a Dollar collapse? Should the Dollar's status as a reserve currency weaken sufficiently, confidence will be lost, probably within days, maybe even only hours in todays fast times. A panic will start and everyone will run for the exits. All internationally held Dollars will get pushed back home.

In a deflationary scenario, all credit money will more or less vanish and only (printed) base money will persist. Then the US government will choose who will be compensated for the losses by printing new base money and distributing it accordingly (general bail-in + bail-out of the privileged). The printed base money residing out of the United states can be devalued by import controls. Yes - it will shake the confidence in the dollar - but the deflation will be so huge that it will likely eat the inflationary pressure and then some.

There are more endgame scenarios, but the idea I am forming here is that there are economic players out there who think that crypto currencies are a way to cut the US out of their business - i.e. a flight of capital out of the USD into a viable alternative. If the momentum of this meme has similar characteristics to the one in Weimar, we should expect a similar type of escalation dynamics, i.e. it forces a resolution of the conflict within the next 6-12 months.

Clever  ;)

But on a serious note please show a comparison of DMARK/Potato then together with a USD/Potato now. If there was truly a flight, the number of potatoes per USD would explode, right?

you raise a good point, the dollar is on the end of it's lifespan and there are several clear signs of that. I just hope many people will think of bitcoin as the way out.

not only because it will benefit the whole bitcoin society, but also because it will benefit almost everyone. Because if they will invest in other fiat after the dollar collapsed, especially if the new fiat is also printed by U.S. central banks/fed the problem will not be solved. But when they lose trust of the dollar and put trust in bitcoin instead, they will not be scammed by the central banks, and the people will gain a large portion of their wealth back.

It will not solve all the problems in the world, but it will still make the world a little bit better.

http://voiceofrussia.com/2013_10_27/The-beginning-of-the-end-for-the-petrodollar-2572/

False. Capital flight doesn't go into potatoes - it goes into money or other forms of safe havens assets.

The situation during Weimar was a little bit different than what we're experiencing today. In Weimar capital had somewhere to go: other countries. That impoverished the german economy and led to a situation where the german government decided to balance the trade deficit with new money, locking them into a vicious cycle of new money vs. a falling exchange rate.

Today what we're experiencing is that capital is trapped in a world-wide fiat system governed by the USD. There is simply nowhere to go to punish the USD, since all economies are basically built on the USD. That's why the worst thing which can happen to the USD are bilateral trade agreements, which cut the USD out of the picture. If that process has advanced to a sufficient degree, it'll be a game changer for the FED policies.

For the same reason cryptocurrencies can be considered the antidote to the USD, because it allows for direct trade settlement of any scale.

How would a loss of confidence in the Dollar be so strongly deflationary? People would not donate the Dollars to the FED to have them destroyed. They'd buy anything - stock, commodities, Bitcoin, real estate, what ever seems a way out. As a consequence, the prices of all real assets would explode.

Bail-ins would extinguish Dollars, true, but bail ins would come after confidence is destroyed, but that would not hit all Dollar accounts around the world simultaneously. There would still be people with bank accounts around the world who would try to push Dollars into the market.

I agree - a deflationary collapse is likely to erode the confidence in the same way as a hyperinflation does for common people. The only reason why the FED would choose deflation over inflation is to salvage the reserve currency status, i.e. they yield to other central banks and organizations.

I am not trying to predict a particular endgame scenario - what I am pointing at is that the crowd is using bitcoin as a vehicle to deal with an endgame. As such the appreciation of bitcoin is likely to be disconnected from any sober valuation and we may experience a lot of panic buying into bitcoin - not because people think bitcoin is great - it's because people want to hedge against fiat risks.

Somewhat related, Alessio Rastani is a technical trader and he things that his numbers show that middle of next year the level of debt will be unsustainable and precipitate a crisis. This pretty much falls into the prediction window of 6-12 months of a suggested endgame.

timestamp 17:20

https://www.youtube.com/watch?v=j8pi6L19bYo&t=1020

We can probably all agree that the global economy is like the Eiffel tower with most beams rusted away. It will collapse. And when it starts, it will happen very fast. It will be spectacular.

But I am not sure the time of the collapse can be determined like that. The difference is that the US housing bubble was a bubble within the US economy. The world economy is some sort of cross-breed between a bubble and a Ponzi scheme: We are the bubble. That thing is bigger than anything in the past.

Another question is what certain events would do: Most people would think that a war between Japan and China would destabilize the situation, but it seems to me the opposite is the case: It would allow the US to export huge amounts of obsolete F-15 and F-16 and other stuff in exchange for the Japanese USD reserves, thereby deleveraging some and get a foreign trade surplus for a while. This would be good for the US and good for Japan, because it allows Japan to default on their domestic govt bonds. That would allow the global scam to go on for at least another year.

Agreed. That's why governments are so keen on getting wars started - to mask economic problems and perpetuate fraud.

E.g. while the adoption curve for bitcoin looks very similar to the value appreciation of gold in Weimar, it may actually start to deviate at a point where the resolution was enforced in Weimar, simply because an additional event is possible to perpetuate the status quo. However, eventually the market cap of bitcoin will eat into the market cap of the global economy - and when that happens things will happen fast, as more and more people feel confident to hold them as reserves and protection against political uncertainty (since bitcoin is nonpolitical).

I suggest to diversify out of bitcoin into other nonpolitical assets on the way up, since when the controls crumble these assets will be cheap compared to bitcoin.

Examples of recommended nonpolitical assets?

Commodities, especially precious metals are a good choice. If looking further, resource producing sectors are a safe bet, as all societies need resources to produce products and build stuff. Especially comes in handy when we have a shooting war.

The opposite would be investments which benefit from particular political decisions. These should be avoided in times of political uncertainty. Especially those which are already heavily subsidized by governments, as they will correct heavily when the political support vanishes.

I am going to revive this topic. Find below an updated trend comparison.
http://i57.tinypic.com/1tr9ft.png

The irony of the matter is that the resemblance significantly broke when this pattern was posted. Note that if the endgame prediction still stands there won't be much time left (~ 5 months) before the market cap of BTC will see a massive revaluation.

Note the location of the summer 2014 mini rally. It pretty much is aligned with the rally in the german mark gold price from >1000 to <10000. Albeit there is a massive deviation from the pattern since Dec 2013, there exists a subtle timing in the market which suggests that a monetary death event goes through similar timing.

We're now also at a time when the german mark hit the 10,000 barrier after which all hell broke loose and the exponential curve added additional growth factors. This timing suggests that we're now entering monetary exodus.

I am aware that this analysis almost looks ridiculous given the recent decline in BTC price. However, I do not need to remind you that the BTC market is tiny and that the price can be whatever the central players dictate. The only reason for BTC to break out of the containment is for it to become the battle field of the central players.

Gentlemen, be careful with spending your BTC. You may not get them back.

Updated graph. Critical point approaching fast. ETA March/April 2015.


http://i57.tinypic.com/2e35ow3.png

BTC/USD 1 trillion dollars in 2023.

Damn does the dollar get replaced by the yuan in 2023? Why would it be so cheap? :D

nah dude, you got it all wrong.
1 btc = 1 btc

"price is irrelevant"  ::)

Bump. Not long now.

Updated graph
http://i59.tinypic.com/k3nfpy.png

We're well beyond the critical point in the graph now, which means that the correlation with this historical data can be declared dead.
On that note, here is some comical relief:
https://www.youtube.com/watch?v=v5xS3WoG76w

You can't just "print" bitcoins and grow the supply. Germany back then was printing notes like hell to finance the war of the kaiser. Bitcoin isn't anyway similar to this .