It looks like we could be at the bottom of the deflationary cycle (which has been ongoing for over 10 years now, according to your chart).  Not to say that we are, but could be.

OR, you think $DXY is going to see new highs?

Here's an experiment to try with your friends and family to see if PoS is viable. Play the game Monopoly by Parker Brothers with a few small rule changes. You would play with one die per turn because shaking two dice takes more energy (we can't have that) than one. We remove the rule about shaking doubles for extra turns because too much variance is just silly in a PoS game. Then, compare your real life net worth with them and you each get to take a proportional number of turns by ranking order. For instance, if you as a childless adult have five as much wealth as your poorest married competitor, you would get five turns at the start. After the first round you then get another roll each round for every property and house that you own. After playing one game, see who would play the game with you again. Most likely the winner of the game would be the same every time.

PoW does have a real threat that if someone gets too much control of the network they can reject transactions until that monopoly is broken, but it can be broken and then things go back to normal. With PoS, once a monopoly takes hold it would be nearly impossible to change the balance of power. As a monopolist, you could dictate who does business with whom. You can even choose who gets to buy food for their families and who shall starve to death. That would be fine for the people in the good graces (rhymes with races) of the monopoly holder, but it's more likely that everyone else will simply switch to another currency and not play with you anymore.

There is a reason that Satoshi created variance for block rewards. The element of chance (like playing the game Monopoly with an equal amount of dice) adds enough chaos to make the balance of power unpredictable. Some may not agree, but most people believe that everybody deserves a chance in life to thrive. When the block rewards are sufficiently depleted to remove variance, there should still be a mechanism to add variance to fee rewards. Just like the game Monopoly (one of the most popular in history), people will continue to play a PoW game as long as they have a chance of winning. I wholeheartedly disagree that downtrodden people will succumb to a monopolist or we would all still be speaking Latin. There must always be a fighting chance.

Actually the market reaction to the default is quite positive, this again proved my observation, that writing off a debt will not hurt economy, since those money has been spent long time ago, it is those who loaned out money get loss, this in turn will encourage borrowing and discourage loaning

Thanks to keep reminding me why I got you ignored Cypherdoc.

Hint : No sense of scale.

Did the Fed quit printing money??

Maybe I've not been around long enough... what does that mean?

And you still think Bitcoin won’t be affected by a USD deflation?

To me it seems like the first asset to be liquidated in terms of risk.

Do you have any target on gold/silver cypherdoc ?
I have to admit that i didn't believe you back in July, even if a correction clearly made sense.
Now the real question is where the bottom will be... We're not there yet, i do think PM will go down with stocks, and the correction in stocks should happen (soon ?).

So will the gold bugs start fleeing the ship and buy some BTC?

i've been telling ppl for quite some time now that i've been selling my bullion for btc for several months now.  and its true, i've liquidated lots of the stuff since April that i first bought in 2005-2007.  i'm an ardent suporter of btc for the longest time.  i've also been warning ppl about divergences in the PM market i've been exploiting via shorts such as the divergence in silver, miners, and the gold price.  i understand what gold is all about and i love the stuff but when btc came along my allegiance switched.

the basis of my thinking has been and always will be that its all about the USD.  the Fed controls the issuance of the USD and its its only franchise.  i don't think they want to relinquish that control of the worlds reserve currency.  the USD is also how most billionaires wealth is stored in this country.  most of the debt in the world is denominated in USD (60%).  there was a great article someone posted about how the bankers have been complaining to Ben that they're being hurt by the weak USD.  Duh.

let me list the warnings i see:

1. silver has broken down badly from $50. it continues to this am.
2. silver stocks are in an obvious decline and got hit yesterday hard.
3. gold stocks are no better.  they usually lead.
4. we're at 11 yrs of the bull.  some ppl say theres an extended 9 yr cycle going on.
5. asset classes don't all break down simultaneously.  it took gold and miners several months to break down after the Dow in 2007 so i don't expect them to have followed the Dow down since May 2011.
6. gold is trying to or has, depending on how you look at it, entered a parabola.  do you really want to buy a parabola now if we're entering a major deflationary phase when cash is King?
7. its debatable how widespread the evangelism about gold has spread but everywhere i turn, on street corner stores, tv ads, and my secretary everyone's buying gold.

ok, now for the tinfoil hat stuff.  stop right here if you want to stick with the technical trading stuff above.  over many years of trading i've learned to think like a criminal and this is what i see happening.

1. GS and JPM have huge short positions in the metals.  do you think they will let them double, triple from here even if they represent hedges?  i think thats the last thing they want to see.
2. gold has acted very strange the last coupla weeks to me ramping in the face of a severe selloff in the Dow and the clear threat of deflation.
3. altho GS & JPM probably never saw the bull in PM's they aren't stupid and know how to handle them.  so how do you handle a losing situation?  Buy into it. Profit as well.  create a huge parabola. Build up an even greater short position. Get Ben to squelch liquidity. Then sell it off at the top when everyone's in and short the crap out of it. this is what happened in silver.
4. why is btc rallying all of a sudden?  could it be that its exerting itself in the economic scene based on the virtues of what we all know?  it also could be that Wall St is rotating out of stocks and soon pm's into btc.
5. when would the trap go off?  i think todays FOMC meeting with lack of any further QE would be the perfect timing for a gold selloff.

so guys, just give me a few hours to see if my theory proves correct.  if it doesn't work by all means buy the parabola.  personally i'm going to give it a few days from today to let it work but you can all call me a tinfoiler if gold doesn't start going down after the announcement.

Disclosure:  i do have a huge short position in bullion in place.

Phew.

So the Fed pays traders? Awesome!