Bitcoin Forum

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What's QE?

Quantitative easing (http://en.wikipedia.org/wiki/Quantitative_easing)

first you say this will mean everyone will want to use USD
then you say we will see less USD / BTC trading volume

please explain

The fed is already easing.

As for the fed officially announcing additional easing and the media labeling it QE3.  Yup that will happen too.

I just made a quantitative easing..   

I almost should've named it.... whew..

I'm betting you are right on this one.

It is refreshing to see your post replete (relatively speaking) with some markers which could be used to gauge the hypothetical projection.

when you put it like that, its hard not to see it all fall to pieces.

well put!

I hold that we humans are a lot more similar to bacteria than we are different.  Once we run low on energy we'll start to die off.  When we do see an economic boom it will likely follow a significant population reducing incident.  We saw a similar scenario following the black plague for instance.  Growth happens as we fill up to the carrying capacity of the environment, and it looks to me like we are getting close.  Even if not, a glance at the exponential nature of various curves indicates that it won't be terribly long when measured in time anyway.

All the fed has to do is make sure Oil can only be bought with USD. That's their thumb, if you will, and the whole world is under it.

Yes.

First, funds are loaned via swap agreements:
Fed($)->Banks

Banks on the receiving end lever up through FRB:
Banks($)*X->($$$$$$$$$$)

Then initial funds are returned, but the levered funds remain:
(X)Banks($)->Fed

The difference between the two can be multiples of the initial funding made available:
(X)=($$$$$$$$$$)-($)

The end result is that fractional reserve fuel is provided for local/regional currency inflation (e.g. Euros):
Banks($$$$$$$$$)->Euros

The process begins all over again from the swap agreements. As the world ramps up its base monetary supply, the dollar remains relatively stable by comparison because the same amount of dollars are repeatedly lent out, so dollar value rises versus other currencies. That keeps going until strain develops at a sufficient level and the dollar finally has to be eased, which is where we are now.

This indirect form of QE has been continuously ongoing, and even accelerating. It's hard to say what form of direct QE we'll see, but it will be before the end of the year. The dollar will then sharply decline relative to other currencies and the inflationary cycle will repeat again.

The dilution of USD is a global effect, and I think inevitable that it's being reflected in the Bitcoin environment. Definitely a good thing for Bitcoin - increasing global mindshare with decreasing USD-exclusive exposure means that Bitcoin will be on the receiving end of wealth flows from multiple sources.

Gox may see a similar decrease in USD flows, but the overall BTC market share depends much more on policy. The recent AML/KYC moves have been very discouraging.

In what market do you expect USD will be diluted, traditional markets, or Bitcoin? I see a spillover effect from USD to other currencies. In looking at the overall trend formed by the cyclical dollar strength patterns, I agree that the dollar will be diluted more than others (in both traditional and Bitcoin markets), largely because of its periods of relative strength and compliance efforts.

The USD will die, by the hands of the federal reserve, we just need to count down the days. Manipulation of economies is what they do best...
It has already lost its world reserve currency holding, its all downhill from here.

Not sure which economy will pick up the slack when it tanks, the european maybe but not likely, my guess would be the far east. For all we know, it could be a domino effect taking one out after another.

The day that treasury rates begin to rise is the beginning of the end.

I don't know what the new reserve currency will be, but the dollar's last stand will be during the current debt crisis. Then it will go the way of the sterling IMO.

You must be new to this whole "American Backed Dollar" thing.

So long as the USA has an army and a choke hold on the worlds oil supply, the USD isn't going anywhere.

they will do everything and anything to keep the current system alive

theirs no reason it should fail... the rules can be changed.

Oh I was using dilution in regard to global usage of the dollar, not monetary inflation. Much like the Gox share of BTC trading has declined (dilution of the market by number and quality of competitors eroding Gox' share), usage of the USD around the world is declining relative to other currencies. Inflation is one reason for that decrease in usage.



Questions arise: to what extent will exploitation occur vs long-term productive enterprise, and by whom? Exploitation tends to result in difficulties later on, making continued exploitative activity more costly than more equitable ventures. Africa has been on China's & South American nations' radar for some time, with a lot of wealth engaged in such long-term dealings.

"...at any moment there might be a special bulletin from the Ministry of Peace. The news from the African front was disquieting in the extreme. ..."

 - Orwell

The end result remains the same.

Some aspects of our present condition when compared Orwell's material are so striking that I have to wonder if the story has been used as something of an inspiration to certain segments of our leadership.

Whatever the case, comparing the book against reality (and especially as reality evolves) is one of the more chilling and awe-inspiring things I can think of off-hand.

Sure it will. See FedWire News.

No, the myth is that exponential growth can continue:
 http://physics.ucsd.edu/do-the-math/2012/04/economist-meets-physicist/

Works fine for me... also WTF is "productability"?

I agree, with the current financial system, an economy that does not grow is doomed. And because the current financial system isn't going anywhere, economic growth is only going to go faster and faster, and we'll kill the F'in planet in the process...

Oh well... we tried!
 
i find interesting how you say "Soon (years) technological progress will resume"

your right we should wait for technological progress to allow us to grow in a sustainable manner .... ( never gana happen -_- )

i think the biggest technological challenge in the next 100 years, will be figuring out how to feed 1 trillion people.... could we maybe PRINT more MONEY? or right no more F'in trees! damn it :D

we are soooo fucked  ;)



buy some bitcoins today, let it symbolize your anger toward the financial system that has played a key role in the destruction of ourselves

Phenomenal post! Thanks for sharing :)


Not at all! As Murphy suggested at the end of the discussion, future economies and growth will be unrecognizable.


The way Bitcoin is structured allows for development/growth (to use Murphy's terms) in a way so totally foreign to contemporary views that any lack of a deep understanding leads people to think it's a scam, when a decade from now we'll be laughing at how anyone could've even entertained that thought.

There's also a historical pattern in which slowing or stagnant growth builds pressure until a new direction for growth breaks out. Going the 'space cadet' route means it's likely that humanity will approach the limits possible on Earth, then expand outward from there - like the surface area of the light bulb to a body, activity from Earth will spread to other planets.

As long as we don't send ourselves into oblivion first :)

Have you been able to access the article yet?

The mistake in the "exponential economic growth is impossible" is assuming that growth of an economy is the same as growth in resource use.

For example; it used to be that gold plating on computer boards was 200nm thick.  Now it's more like 2nm.  For exactly the same resource use the economy can have grown by 100 times.

The resources needed to make a computer in the 1960s were enormous, just in terms of weight.  Now we regularly carry around miniature computers that can lap 1960s computers and yet weigh hardly anything.  The computer in my pocket, in fact, is more powerful than the desktop computer I owned 10 years ago and yet uses a tenth of the resources needed to build it.

Farmland is more productive per acre than it has ever been.  The power needed to light our houses is shrinking rapidly.  Our televisions are bigger and brighter, and yet weigh less and use less power.  There is no reason to suppose that this process won't continue, eventually resulting in the energy use per person dropping, but economic growth continuing.  As resources become scarce, the economic incentive to find cheaper alternatives increases.  We can already see this happening -- as the price of fossil fuels is increasing, the relative cost of solar panels is coming down (so much so that the US has enacted import restrictions on Chinese panels (morons) to protect their overpriced domestic producers) while at the same time huge efforts are being made to increase their efficiency.  Solar panels are just an example, fusion, biofuels, and recycling are all industries becoming more and more viable as energy demand goes up and fossil fuel supply goes down.

Population growth rates drop the richer the population becomes.  You can't simultaneously argue that energy use per capita will go up while claiming the population that is currently poor will remain poor.  As the third world gets richer, they will use more energy per capita but birth rates will go down (just as they have in the developed world).

The physicist was arguing with a bad economist.  Further, the physicist was bad too (invoking thermodynamics in a non-closed system like the Earth was pretty bad form; and is exactly the trick that the creationists try and pull); arguing that thermodynamics means we'll boil while completely ignoring the fact that the likely source of any future energy will be the Sun's rays -- which fall on the Earth regardless of whether we use them to power our electric coffee pots or not.  Finally, he limits his admittance of efficiency improvements to small refinements; that's not how it happens.  What actually happens is a technological leap (thermionic valves to transistors for example) that completely changes the game -- he admits that but then completely ignores the implications.

Growth can, counter-intuitively, equal less resource use.  It is the fact that resources become more expensive as the demand for them rises that is driving this more efficient use.  

I bet my bitcoins it'll be a food shortage problem, considering we're eroding and poisoning the very bottom of the food chain. You can desalinate water with sun power, but people don't live very long if all they have to eat is processed garbage.

Very interesting, can I get a source on that?

For Ukigo: http://www.yrral.net/phys-vs-econ.txt

http://www.nytimes.com/2012/05/18/business/energy-environment/us-slaps-tariffs-on-chinese-solar-panels.html

On the exponential growth thing... I have often wondered but never reached any conclusions about whether you can have economic growth forever (exponential or not). My gut feeling is no, but I will pose some questions that cause me indecision:

Can you have continual growth in services?

The thing with services is, you don't just need more people to provide more service. You can also have growth in quality of service. In this sense, it would seem possible for eternal growth to not only be possible, but a part of the human condition to always improve.

I think we're not going to move from a growth-based economy to a 'stable' economy, but rather from a product-heavy economy to a service-heavy economy. This will better facilitate the 'endless growth' that seems so desirable.

But as I say, I'm still really undecided on this issue.

So.... less fast cars, more hookers.

But, despite this, it does seem like eternal growth is possible if you do the things you suggest such as investment in education, efficiency etc (which I forgot to implicitly state myself and agree with). Without increases in efficiency then growth will of course consume too many resources no matter where that growth happens. As you suggest, growth isn't just about consumption, it's also about reducing the consumption and changing to non-resource consumption, yet whenever growth is mentioned in an economic sense it's about 'doing more with more' not about 'doing the same with less', but they're both still forms of growth.

It depends if there is an assumption that to provide better service requires more energy. Right now, I think it does, but with the right attention, it's possible to provide better service with equal or less energy than before, which would facilitate eternal growth. As you say, we are certainly not heading this way by way of policy, but perhaps we'll figure it out ourselves before too long...

As for charging more for the same service ($200 for a $20 manicure), that's not really 'growth of the economy' that's just growth of the monetary system. There's a very distinct difference between the value of something and the cost of something. I'm talking about eternal growth in the value of an economy, regardless of the relative cost associated. I imagine people generally consider growth to be reflected in 'the awesomeness of sports cars' rather than 'the cost of sports cars' (substitute 'features' with 'awesomeness' and 'family car' for 'sports car' if it pleases you more)

It all depends how you define growth, which I have not yet seen a reasonable definition in this thread.

To me it means increasing pressure for re-distribution of wealth.  This pressure is quite moderated in a growing system by letting some of the excess trickle down.  Absent that things could become quite ugly.

Gold and 'the one true crypto-currency' both fail miserably in such an environment.  Both for the masses, and most likely for those who managed to win (or be born with) all the chips since they are in constant danger of ending up on meat-hooks in the town square and it will come to pass on occasion (absent and unfortunate de-population event.)

Giving the majority an option to freely select a currency solution which happens to be working for them strikes me as a pretty good solution in that the 1% either has to make it work for everyone, or everyone selects a different solution and the 1% join the 99%.  I'm all about the freedom to choose.

The mechanism leading to re-distribution (downward) would be the that the 'pressure' I talked about would build to the point that it is more difficult to retain and there would be explosive failures.  In a growing system everyone can 'have more.'  In a static or shrinking system this is not possible.  It may be that the 'haves' would be willing to 'have less' in the interest of self preservation, but history doesn't argue for this.  The haves are at least as prone to the old tragedy-of-the-(not-so)-commons as any other group.

I personally am totally down with the 'local community currency' idea.  Accounting has always been an issue with such things (as have laws) and this is one reason why crypto-accounting systems hold such a draw for me.

With a stable supply and a stable environment, gold does phenomenally well as money. The same applies to crypto-currencies, especially static-supply variants like Bitcoin that can do well in both growth and post-growth economies. In a relatively static growth system, it would be very difficult for wealth disparities to arise, and any disruptions would spread quickly until they become normalized.


Yes. Although redistribution may be more likely to occur in a market-force capacity because of that increased mobility.


Growth potential is still effectively unlimited (http://bitcoinmedia.com/off-planet-economics/).

I've never been totally comfortable with my grasp of money markets and yield curves and such, in part because I've never played around with them.  But I understand what you are saying here and it makes a lot of sense.  And sucks.  Someone made the point that what we moving fairly rapidly into is a 1% vs. a .01% world, and whoever it was was probably right.  Throw some trinkets (new cars, big screen TV's, etc) at the 99% and they'll stay mostly content.  It doesn't even take that in most of the world outside of the West.  But in a non-growth environment I don't think that there will be enough excess to even allow for trinkets.  Bulltet-proof boot?  Ya, probably.  Cost of doing business.


I never figured that the Chinese would be happy to slave away making tennis shoes for me forever even if it were the key to unlimited status quo.  Even if the fruits of their labor were more evenly spread about the globe it never struck me as a likely perpetual motion machine to keep the globe in blissful abundance.

As for Africa, I am guessing that the competitive gang-rape can (and will) render her quite repulsive within a timeframe measured in years.

As I have said before, I believe that at some level it all gets back to very basic thermodynamics in the end.  Measuring energy input and distributing it over a population.  And again, I suspect that the results of us humans running out of energy will be a startling mirror of bacteria running out of nutrients in a petri dish.  Environmental contamination, warfare, and death for all but those individuals who have some sort of an advantage or an extraordinary level of luck.  I suspect we'll see this type of misery before we figure out nuclear fusion.

go on...

The Fed didn't have a meeting...

uh ok you said "The Fed did not ease."  You didn't say, the Fed sent signals today..

Of course they didn't ease today..  You can say that everyday, but the only day it's relevant is when they have a meeting.. The next one is June 19-20..

Lol, So its just not possible that on June19-20 they ease anyways, even thu the Bernake didn't address it today..  Or they ease the meeting after that, or the meeting after that.. 

The Fed WILL ease!  The Fed will raise rates!  The Fed will lower rates!   Thats what the Fed does..

China just dropped rates 25 basis points, so this theory might have some legs. I don't know how they are extending the pressure on other countries to do this, though.

Define immediately..  3 Fed meetings??  next week?  I can unequivocally say that the Fed will in fact not ease next week ;).

Lol, I predict that you will never take a shit again..  Well.. until conditions change..

Naw they extended twist and pretty much said any more bad news and we will QE next meeting.  Like there won't be bad news.  QE for sure next meeting.

it won't matter.

the acronyms and cheesy sound bites have gotten ABSURD.

Heavily funded by the Fed via the IMF and swaps and other routes, of course.

Fed sitting on hands have any influence on the upcoming Eurobonds? ouch
http://www.thelocal.fr/3581/20120621/
http://video.ft.com/v/1698049499001/Eurobonds-are-the-answer
etc, etc.

I love the way the media keeps trying to make what bernanke said to mean what they would like it to mean.

I.E.,
Media; Bernanke have said that, "We will persue whatever is neccesary to prevent economic hardship and can still use QE if needed."

Bernanke; We have reinstated operation twist (BIG FAT COMMA HERE), through THIS we are using all neccesary options."


Forgive me for I know that is not the exact quote. Buttt, I do know that he said exactly, "operation twist, through THIS........." before he made any mention what so ever about the fact that QE option still exists. Yep, it sure does, it always will. But there was no indication of him having any intention of using it now or when the twist reinstatement expires.

The media wants so bad to make it sound as if the fed is actively considering QE... oh well, that's why we don't get our info from the news. We actually read, listen and evaluate what is written, said and there to examine.


forgive my ramble and poor grammar. Been a long day already. ;p

Is more OT kinda ease ?

Absolutely, in 'markets' where the only real participants have access to unlimited funds and are the ones talking up QE. Makes it awfully easy to paint the charts when there's no opposition because nobody else of size is playing (or they're colluding... China).

of course not.  What was the latest? I've not bothered checking in on any of it lately.

Ahh yes, the jobs report. I caught the media version of it. They of course made sure to only show 'jobs added' which was pitiful on its own. But they made sure to not contrast it with the number of jobs lost for the same period. And people eat that shit up don't they?

I'm familiar with Jackson Hole, WY. What JH are you refering to?

its a banker lovefest in October where last year Bennie announced Operation Twist which jacked the market up to its present highs.  that's when i went long stocks.

Gotcha. Guess my invitation got lost in the mail. ;p

shhhhh.  i've been trying to keep that under wraps!

Suckers :)

petty details... ;)

Simple: I don't play the short game. It's harder to make short-term calls, but harder to stay the course in the long-term. Traders can go about and make a thousand trades per year. I'd rather make a handful of investments during my entire lifetime and have the same result. Gold is one of those.

No agonizing over every squirrelly price move, no desperate attempts to modify theories on each tick, no obsessing with eyeballs glued to charts. Only a driving vision based on unassailable principles. A better question might be: how can you live life when your emotional attachment to the short-term is exhausting?

i have a solution...only analyze yearly bar charts like silverbox.  then you won't have to deal with a noticeable trend change for at least a few years.

+1

Looking at real-time data helps to confirm the mechanism that produces long-term patterns. It's like sifting through LHC data and finding correlations with theories in cosmology. The thing is, we don't have a chance of directly operating consistently at such a rapid pace, but it's very easy to front run events that occur far more slowly. Patience is the greatest virtue, after all.

Big Ben is saddling up his white horse right now..  Look at all that extra value the dollar has packed on the last year, time to trim the fat..

The Keynesian's speak!

But what happens when they use all the dollars to buy future dollars?

that's like saying i'm going to use the next QE to short gold.

still whistlin'.

It's only a matter of time! I think it's inevitable at this point.

I hadn't taken that into account and I think it's a good point.

However, I still believe the FED will eventually decide on QE3 somewhere down the line. I think this recession is just getting started. What are your thoughts? I'd also be interested in reading any articles you would suggest.

Thanks!

The Fed didn't ease :).

this is true.  there ARE problems with solvency however.

Frisch's Restaurants or Family Radio Service?

It doesn't? Please explain.

It's basically assets vs. liabilities. If your assets (income) are greater than your liabilities (expenses), you're fine. The other way around, though - not so good.

Let's say I run a bank, and my reserve is 10% of total assets. As with any business, I have cyclical expenses including employees, property costs, shareholder dividends, etc. To make things easy, let's say that the annual expenses are equivalent to 10% of total assets.

I have 90% of total assets to work with, so I make 9 loans at 10% each. Every one of the loans returns 2% annually for an 18% total return. This means that the bank will be running at break-even if 4 of the loans default and cannot make payments. There may be costs involved with recovering the principal capital which could turn a defaulted loan into a net loss, but let's just assume 5 of the loans have defaulted. In that situation, there is now an annual shortfall of 20% (the 2% out of 10% total asset value necessary to keep the lights on). The reserve now has to be dipped into in order to make up the difference.

What liquidity injections attempt to do is recapitalize the banks to a point where the assets are greater than the liabilities again. However, liquidity cannot make defaulted loans profitable again. Instead of helping directly, liquidity can simply flood the banks and allow them to stay afloat until there are worthwhile loan applicants that aren't likely to fail in repayment. The problem is that there's a very large percentage of defaults, like a swimming pool with dozens of big cracks - pouring water in like liquidity injections just winds up flowing out almost as quickly.

The really dangerous part for the banks comes from any shift away from them as a primary source of business. If the banks start losing potential customers (to Bitcoin!), the solvency problem gets even worse, requiring bigger liquidity injections than before. Since most governments are highly dependent upon the banks, there's an extreme incentive to keep them alive. Without the ability to create productive clients for the banks and fix the solvency issue, and no money or insufficient cashflow (tax revenue) to pump into the banks, let alone keep the government itself going, the only option is to generate funny money and distribute that until nobody wants it anymore.

You can think of buggy whip makers for an easier analogy. If everyone has switched to using horseless carriages and no longer need whips, it doesn't matter how many whips you make - you're going out of business. Economists can be a mind-boggling contradiction with their ability at being intelligently stupid.

That went a little further than solvency, but the cascading effect is important too. And this highlights the especially dangerous nature of Bitcoin and gold for the banks in the current situation :)

Okay... Haven't heard that acronym before and google was no help.

Thanks for your explanation, miscreanity.

Why doesn't the fed give the money to the people unable to repay their loans instead of propping up their balance sheets with it? Would that fix the solvency problem? Probably not, right, because you can't borrow yourself out of a debt problem.

Banker Reply; HAHAHAH MUAHAHAhh ROFLMAO, give, give.. money to workers? They do not know how to manage their money or they would not need our loans in the first place..

Heh, that's probably not too far from the truth.

This had been attempted early in the crisis - $500-600 was provided to each taxpayer. The problem from a bank/gov't perspective is that there's no way to guarantee that money will go to consumer spending (or the right kind of spending), thereby supporting economic activity. If it goes toward paying debt down, that exacerbates the banks' condition (the loan may be paid off, but there's still a cashflow shortage). Essentially, attempting to herd cats is much more difficult than just putting the funds into banks where it can then be more effectively directed.

At least, that's the gist of the reasoning. In reality, the banks are black holes due to their insolvency and are dragging the entire system down - but because there's no external reference point, it's hard to see what's actually going on. You could picture a family in a house, with each family member representing one of the major world regions. All of a sudden, a sinkhole opens up under the house and it goes into freefall. Unless one of them looks outside, it will just seem like someone forgot to pay the gravity bill, so they try tying weights on themselves to counteract their floating.

Now it's a catch-22 where immediate collapse of the banking system as it is today will cause massive disruption because of the extent of dependence upon finance, and continuation of the banks' existence by supplying liquidity is just making the problem even bigger without actually fixing the underlying cause. The central and supranational banks (BIS, IMF, etc) have to decide which course of action will be most effective, and that's direct liquidity infusions into banks. It's like the difference between inhaling a drug or injecting it when you've got a plastic bag over your head and can't breathe.

Sounds like a bunch of shattered knees and ankles when they hit the bottom of that sinkhole.  Maybe a few hips and backs too.

Jumper Down (http://gothamist.com/2012/05/05/jumper_down_reported_at_tony_fifth.php)!

Hmm... three in one day - connected? Were they bankers?

sounds like those guys wanted to hit the pavement as hard as they could.

Too bad nobody wants to take their position off their hands.

Me! Me! Does covering shorts for massive gains count?

lmao, your analogies are fucking hilarious!

That's why I have far more in bitcoin than my retirement account.  If my broker doesn't explode, I'll reinvest the profits for the long term once the blood is running thick.

aka Wile E Coyote

http://libweb5.princeton.edu/Visual_Materials/gallery/animation/jpeg/animation3.jpeg

Time's up! (http://www.forbes.com/sites/nathanvardi/2012/08/02/knight-capital-shows-how-financial-services-firms-have-become-widow-makers/)

 :D

they won't

Does that 2 day meeting begin or end on Thur?

the only thing useful the Fed can do is commit hara-kiri.

Another solution is the IMF. After all, they also have a full functioning printing press ;) They even bought some gold a few month ago, to me that's a sign they'll act at some point.
But if you listen to Jim Rickards (who is both smart and well connected imo), they'll announce some sort of GDP targeting measures. No big numbers, just a crazy big commitment to do whatever it takes to "save" the economy.
We should know soon enough.

I understand what you mean, but apparently it's not exactly the case.
They way I understand it, if they print money (SDR), they don't ask a loan to the FED. They have their own balance sheet.
https://twitter.com/JamesGRickards/status/245022924711534592 (https://twitter.com/JamesGRickards/status/245022924711534592)

It's still probably true somewhat, but less and less : Now they all are pressured.
Do you think the Fed wants to wait for after the election at all costs ? Do you think ECB buying short term bonds will be enough ?

PS : should read more about BIS, I don't know enough about it.

The Federal Reserve has been easing this entire time through various means.    The end game they will avoid at all costs is deflation.  This is the real threat (inflation is a after-effect of combating deflation so you can have both).   We are in a debt-based system so without growth it eventually consumes itself because you can't cover even small amounts of interest payments over time.   

Large defaults of debt is the signal you need to look for if you want to know what will signal any meaningful recovery.  If you don't see those then we are ever-inflating with fresh debt to paper over and roll the old debt.  This has historical evidence since the dawn of recorded history.  Different times but the basics are still the same.

soft landing=post growth=controlled deflation=the best that can be hoped for=NOT----->uncontrolled deflation=volatility

no, its gonna happen alot faster than you think.

http://youtu.be/C6sFP_7Vezg (http://youtu.be/C6sFP_7Vezg)=US eCONomy

lol!  maggots, muppets, whatever.

QE = Quick Escape :D

A more common outcome in nature is that once the aroma wafts around a bit, various of the more powerful class of scavengers drops by and gobbles down what's left while there is still a fair amount of nutritional value left in the corpse.  One could argue that we are starting to see that (in Jon Corzine as an example...)

nice analogy except Corzine is more like The Alien; eating the victim from the inside first.

I believe that if there is more money printing the price of EVERYTHING tangible will go up. All currencies value will go down.

Gold is tangible...will go up

Bitcoin not tangible but has gold like properties...kind of a wild card.

I would argue bitcoin is tangible for the purposes of the argument presented in the sense that you can lock it away from access to third parties ("physically own it"). "tangible" == "not paper" == "no third party risk".

Maybe it'd be better to say: "Anything that doesn't involve some kind of a promise and can be owned unconditionally will go up" instead?

Unfortunately, in some kind of an economic meltdown situation, bitcoin might become generally unusable for a while. Temporarily nonexistant.

The word tangible means 'perceptible by touch' or 'cear and definite; real' but the etymology for tangibility (http://www.etymonline.com/index.php?allowed_in_frame=0&search=tangible&searchmode=none) has more to do with mental sense than corporeal status. It appears to be used to connote realness as opposed to fantasy, delusion or illusion.

I have been thinking a lot about tangibility and how it applies in monetary science in an attempt to formulate a rule or theorem.

In the Information Age I think organized information, information objects, can have properties of tangibility just as clear and definite, or real, as physical objects. Thus, for something to be real it does not have to be corporeal.

The Bitcoin Magazine exists in both a corporeal (paper) and incorporeal (PDF) form. Both are both clear and definite thus they are equally real. One is an information object the other a physical object. But this distinguishment does not go to tangibility as they both exist in the real world and are not figments of imagination, fantasy, delusion or illusion. We would agree that the Bitcoin Magazine Issue #1 is tangible, regardless of of paper or PDF form, and flying fire breathing black dragons are not tangible.

A bitcoin is real because it has clear and definite organization of information therefore making it an information object in the real world and is not a figment of imagination, fantasy, delusion or illusion. Therefore, a bitcoin is tangible.

Anyone up for logically attacking the assertions?

Agree that bitcoins should be considered "tangible" for economic-discussion purposes (not so much for, say, throwing them in the air or something, though).

But if you want to get literal, you could simply argue that the distinction between things that exist physically and things that exist as information is artificial, since matter is really just uber-dense energy (e=mc^2, after all). So, something that exists as magnetic alignment or capacitive charge somewhere is just as real as a baseball. Still consists of energy packed in one way or another, just not as much of it total. Is that a meaningful/useful argument, though? Meh.

Nope, I like it ;)


Probably not very useful for the categorization of moneys, yet interesting to think about. A difference (between "corporeal" and "real") might be that a "bitcoin" exists as many copies not in exactly one location. Maybe this is a slippery slope to the mind/matter discussion, so I don't know wether we should continue along these lines ;)

Maybe "bitcoin" is tangible but "a bitcoin" is not.  If you send a bitcoin to my wallet (that has other bitcoins in it), I can't send you that same "coin" back... a bitcoin is not a chunk of bits like a .pdf file, a wallet or the blockchain.

One major difference between electronic files and bitcoins is that electronic files can be copied.  If I make a PDF copy of bitcoin magazine without paying for it then Vladimir would not suffer as much as if I stole all the physical copies of bitcoin magazine from him since he needs to mail those out and they cost money to print.  (Yes you can use a photocopy machine to copy the magazine too but there is cost to do this.  An electronic copy takes no effort and little or no monetary value to copy.)

If bitcoins are tangible then tangibility needs to be redefined such that tangible objects cannot be easily copied.  You cannot copy a bitcoin.  A bitcoin is tangible because, in addition to being clear and definite, it cannot be duplicated (easily).

interesting.. more thoughts:

on the definition of tangibility regarding money: Tangible objects can be in possession by someone (differs from ownership). bitcoins can also be in possession (by knowledge of key). possession in the sense that one can deny access to the object by others (if he has the means). the object can be passed on to a new owner.

I wouldn't call bitcoins "transactions" as chodpaba did, but I think I know what he's aiming at: there is no "bitcoin" per se.
"having a bitcoin" means to possess the key that allows transfer of "ownership" of - basically - nothing (a scarce specific "nothing" to add to the confusion). So like a tangible object, one can possess bitcoin in in the sense that one can deny access to it by other and one can pass it to a new owner (make a transaction).

@chodpaba: thanks for the insight with the proof of transaction, that's something I hadn't thought about when comparing bitcoin to other commodity moneys.

;tldr: "tangibility" regarding money == "possessibility"

funny etymological fact: the latin verb "tangere" (which "tangible" derives from) can also mean: "to cost". funny etymological fact 2: the italian verb "tangere" can also mean "come home to". in that sense: "come home to papa, little bitcoins!"

I think you are conflating two issues unnecessarily: tangibility and scarcity. An item, either physical or informational, can be tangible, or in other words be real, and yet not be scarce.

And before we start talking about and discussing property rights with regards to bitcoins I think it is important that we establish that bitcoins are real, or in other words, tangible.

This proof issue is a huge comparative advantage for bitcoin (http://www.youtube.com/watch?v=06fa20Y_cXg). In fact, I would assert that Bitcoin's ability to solve the double spend issue is the great innovation and only reason bitcoins have attained any-type of material value.

personally, i'd like to see someone like you rant about how Bitcoin is "backed" vs. being tangible.  that argument will resonate more with skeptics if you can make a convincing case.

I agree that bitcoins are tangible, but why are bitcoins tangible and math equations not tangible? Well, I think it could be possible that tangibility could also depend on scarcity.  Hollywood movies are worth more if the material is new, has a good plot, and that pirated movies are scarce.  If a film is more pirated then Hollywood makes less money.  Hollywood would like to believe that their movies are tangible, but thepiratebay believes information is free and that movies are most likely not tangible.

It seems like if something has value then it is tangible. Value depends on scarcity.  There is an infinite supply of air guitars so these musical instruments have no value and thus are not tangible.  Bitcoins are scarce and have value, and thus, it is one reason they are tangible.

I can prove I have an air guitar.  I just pretend I have an air guitar, pretend to jam, and voila!  I have an air guitar!  It's easy.  So I don't think the "proof" method works to determine tangibility.

this is exactly one of the problems with gold.  the majority of storage has to be in centralized places like the LBMA, Comex, basement of the FRBNY.  but is it really there?  why do you think several foreign countries like Germany have requested to remove their gold from the likes of these?  b/c they can't trust the caretakers.  neither can the American people.

Sorry for the offtopic, but the bold sentence is flat out wrong.  The highest grossing films are also the most pirated.  So called pirates also spend more money on movies and music than the average person.

Sheldon? Is that you?

Interesting.  If that is the case then everything including thought, math equations, air guitars is tangible.  It's just that it is worth $0.

I don't get it. Where in this thread did we (even try to) link tangibility with value?

€500-bln eurozone bailout gets green light in Germany  (http://www.youtube.com/watch?v=9s4GlSi6K44)

190 billion euro is not enough.

hmm, I thought supermario was buying govt. debt with no limit (albeit strings attached)?

what the hell is wrong with you Germans anyway?  can't you reign in that Merkel and the Karlsrhue?  ;D ;)

Draghi-f*cks  announcement is so garbled who knows what it means.  "sterilized" means no more new money.  "conditionality" means giving up sovereignty to IMF and Troika.  buying the short end is gonna mean a continual series of rollovers ad infinitum at increasing frequency.  they're making it worse.

There's still something left in the can, so kick it down the road..

Did you think they would do anything different??

The price movement in PM's is telling me Big Ben is about to get into the kicking game as well ;)

http://www.zerohedge.com/news/and-todays-most-shocking-headline-we-have

silverbox: "molecular!  front and center!

molecular:  "what?"

silverbox:  "pony up now.  right now!"

molecular:  "why?"

silverbox:  "so my gold can go up!"

 ;D

here's the problem there and throughout the world; banks get to pay 0% or print free money for themselves but they insist that everyone else, citizens, corporations, municipalities, and even gov'ts pay either thru high interest rates or thru "conditionalities" aka austerity or coughing up your assets (a few islands here and there).

when is the nightmare going to stop?

http://www.marketwatch.com/story/fed-to-launch-qe3-of-40-billion-mbs-each-month-2012-09-13?link=MW_latest_news


 ::)

why don't they just buy $40b of chevy volts, fill them with iphone 5s, solyndra solar panels, and corn ethanol, and then set them all on fire every month

I'm confused. I thought that's what they're doing anyway.

So, does QE3 mean everyone here starts posting rocket pictures ?

Silver and Gold rockets :)

hmmm..

wut?...

This sounds like more than jawboning a stance to me...

"To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."

When more people take screwing banks (http://screwbanks.net/) seriously.

They're going to start the $40B monthly purchasing TOMORROW.

So QE(infinity) starts tomorrow. Like lots of gov programs, this is going to be hard to shutdown once started without an explicit end-date set up front. A couple years from now, the argument will be "The Federal Reserve needs to maintain an active long-term role in debt markets in order to have an immediate tactical capability to smooth out market inefficiencies and maintain stability". I think it's fairly likely in the next couple years that these purchase targets will be raised here and there, giving the Fed more "flexibility", and something open-ended on the Treasury market will probably also happen. With $15T in total debt, gotta keep rates low for as long as possible somehow! Long-term consequences be damned.

Right, today they talk. Tomorrow they act. :p

$16T cough $16T

Keep up with the times man,

http://www.treasurydirect.gov/NP/BPDLogin?application=np

It will

Meh. Off by a trillion dollars. Silly me. Was using figures from April, I guess. Lol.

http://www.usdebtclock.org/

this post makes no sense to me at all.

Greece and the rest of the PIGS continue to be in need of unlimited bailouts.  Who's doing the bailing?  Why the German people of course like you.  This makes gold bugs like silverbox very happy b/c it means his gold and silver might go up as well.  In fact, he demands it from you. ;)

Please cypherdoc don't make this shortcut. Obviously we would all want the situation to be really solved, and that politicians stopped printing money to bail out loosers (in this case, banks).
But we shouldn't bet on what we want, we should bet on what is more likely to happen. And you're smart enough to understand that.

molecular: "what choice do I have?"

*prints loads of EUR, gives them to banksters, watches them buy up all assets, watches greece, spain, france, everyone else give up sovereignity, ducks*

molecular: "here we go, silverbox"

silverbox: "cool, thanks!"

*watches 'race to the bottom', banks runs, flight into hard assets, gold price sky-rocket, the daaaash to digital caaash, fiat burning in piles, 3rd world war, economic collapse*

silverbox: "ooouh yeah!"

silverbox *eats some silver for breakfast*

molecular *eats some bitcoins for lunch*

cypherdoc: "bitcoin up 562,000%, gold only up 372,000%, see? Hm, maybe I should finally these gold shorts..."

Thoughts on this?

http://www.profitconfidential.com/debt-crisis/could-this-be-a-trick-to-drive-even-more-investors-to-u-s-treasuries/

Rofl. ;)

btw I have plenty of food, supplies, guns and ammo.  I still haven't installed my solar, propane genny, battery, grid tie inverter set up that I been wanting yet, but once thats done, I'm set. 

pretty good.  ;)

OP needs to change title to "FED DID EASE I WAS WRONG"  :D

QE forever, is a fantastic idea and should provide some short term stability

for now, gold is still going down  ;)