Not to disrupt a good conversation, but a public posting begs for additional discourse and general labels of inflation or deflation can be dangerous assumptions. Some aspects of economies will be inflating while others will be deflating, according to definitions based on price. There is more to this whole tale than debt. The world has a two-tier economy: the one we're familiar with that is accessible to all and has its base in fiat currencies and the relative valuation applied with their denominations, and the real wealth production level that primarily involves gold and oil which is restricted to those entities large enough to engage it. If you aren't familiar with them: Martin Armstrong - long-term cycle analysis, projection and timing Eric De Groot - in-depth capital flow analysis Antal Fekete - deep financial/economic history Jim Sinclair - master gold trader/investor FOFOA - explanation of contemporary monetary system you're quite right; the economy has multiple moving parts and some can be deflating while others inflating. i guess one way to describe the business cycle would be at peaks and troughs the economy can have a mix but when looking at the middle of the rise or fall from those peaks and troughs then you get more absolute inflation or deflation. i've read 3 of the 5 above authors so i'm not doing too bad. Feketes analyses are most intriguing. i went to one of his courses and i like his description of how the UST bond market players anticipate the Feds buying helping to drive down interest rates which will suck the lifeblood out of the real economy. |
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no, not neccessarily. traffic analysis is about looking for patterns in the communications.
for instance (and this is a extremely basic example using callsigns)
if you were to see traffic containing the following ( > is the direction of communication):
ABC>DEF
DEF>GHI
JKL>DEF
DEF>MNO
and later you see
ABC>XQZ
XQZ>GHI
JKL>XQZ
XQZ>MNO
you can then infer that DEF is likely XQZ
of course the real world application of this gets MUCH more complex and has many more variables, this is just a very basic example. after mapping very large amounts of traffic, you can build a map of who talks to who, and when ; communication hierarchies become apparent. identities can be revealed in relation to the known identities of others in the communication structure.
you're right. thats an extremely simple and highly unlikely address scenario. even for me, someone who isn't trying to hide anything, ABC & MNO would never be used twice since a new receiving address is automatically inserted in the clipboard after every receive and any change returned from a sending address gets automatically assigned to new address. |
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multiple addresses don't matter, it only temporarily obscures things.
the principle works the same as it does with captured military communications (SIGINT/COMINT). with enough raw traffic, you can make communication maps that will reveal who is who, even if you are up against dynamic (constantly changing) callsigns.
wouldn't you have to have revealed your identity in relation to one of the addresses? |
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i'm not so sure how effective traffic analysis is with a determined thief. multiple moves and splits significantly complicate identification IMO. yes, i've read that article from those 2 researchers.
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the avg joe doesn't know how to download this from github let alone generate a keypair despite how easy you think this program is.
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if it wasn't, why hasn't anyone identified the stealer of the bitcoins of Allinvain, MyBitcoin and various other hacks?
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In case you were wondering.
That the adoption rate of bitcoins are not exceeding the additional 50 coins per every 10 minutes dumped on the market.
Hence the inflationary pressures on bitcoins currently exceed the adoption rate... it's why we're seeing inflation (IE: bitcoins going from 30 USD to 13 USD per BTC) as compared to deflation (13 USD to 30 USD per BTC).
Now that might change over time... but in all honestly though it's not centralized via a central bank we're still "bernankeing" the system. or better said.. printing too many bitcoins to cause deflation. In fact we're printing more bitcoins in relation to the US dollar because we're seeing the bitcoin exchange rate falling in relation to the US dollar.
If the creation of bitcoins slowed down for the next several months, we might see it rise in value, but until that time it most likely will continue to go down for the near term as too many bitcoins are flooding the market.
Better said we need less than half as many bitcoins on the market now to bring it back to 30 USD to a bitcoin. Or we need to increase the demand by double.
The fact that our bitcoins are being hacked every 10 minutes (mtgox, mybitcoin, wallets vanishing from Poland exchanges, people seeing 25,000 BTC disappear from their desktop wallet) isn't helping increase the demand.
Honestly if you want to grow the currency you need to do the following:
1 - secure our stuff
2 - slow down on "printing" them
3 - make it easier to use for less technically advantaged individuals.
That point we might increase demand and decrease supply, hence leading to an increase in BTC vs USD.
no, no, no, no. You cannot infer anything from the price action alone. the wild fluctuations are to be expected no matter the rate of btc production. you don't even mention speculation and cyclical mood swings which affect the price even more so. |
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Funny you should mention Mish as I found this article on the METAR forum that he started. Sounds like we come from similar backgrounds.
I agree with you on Greece, they're past the 150% debt/GDP point-of-no-return. JPMorgan is saying Italy and Spain will be out of cash by September and February, respectively, if they lose access to the funding markets.
Mish is a deflationist and was only one of a few who said everything would plummet in 2008 including commodities. i tend to think he'll be right again altho no 2 crises play out the same way. i can't believe the rioting thats been going on in Greece for a couple of years now and nobody does anything different. its a powderkeg. Italy and Spain have been denying any debt problems for years now as well. yield spreads and CDS have been betraying these folks though for a long time now and we're getting very close... |
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Thanks Curbside. thats an interesting article.
i find it so strange that many of us, including you, could see way back in 2006-2007 that there was just too much leveraging going on in the financial markets. the economists and shills didn't see it or maybe they did but were paid not to. i remember so clearly at the top in 2007 the marketing of PIK loans, ARS (auction rate securities), CDS's, interest rate swaps, etc. Leveraged buyouts were occurring left and right. Private equity was at the top of its game. Even i, a non financial guy, could see the looming danger and went short the stock market. fortunately i was following some great blog writers like Calculated Risk, Mish, and Naked Capitalism and we had some great debates on those forums.
it looks like the stock market is turning down again which is a very bad sign. i'm short yet again. the economic data stinks and Europe is falling apart. someone is going to default here and its most likely going to be Greece as the first domino. i'm also short the Euro. this will topple the debt pyramid like dominoes. it'll be subprime all over again.
Rogoff is very right; this is going to be the Mother of All Great Contractions and maybe the 2nd Great Depression and its gonna hurt. paradoxically the USD might skyrocket as the USD denominated debt worldwide gets written down. i know this is the opposite of what many think but this is why i've been selling my gold and silver which could plummet if this plays out. i know this is controversial and i'll get a lot of flack for saying so but it makes me nervous when everyones on the same bandwagon of an 11 yr bull. i'll keep a few ounces of my gold just in case.
i'm dumbfounded that he's suggesting a sustained inflation boost of 4%. since when does debasing your currency stop whats going on now? i'm more from the Austrian camp that says lets get it over with; it'll be a horrid 2 yrs but then it will be over much like the Recession of 1921. then we can wash out the bad actors and speculators and be done with it. sustained inflation will just allow more stealing from the avg US taxpayer so the speculators can have time to rid themselves of their bad investments. they've already been given that chance over the last 2.5 yrs and look what they've done with it; ramped stocks and commodities to the moon so they could recoup their losses and raped the shorts that deserved their payout from a correct reading of the fundamentals. now we're worse off than before and the gold price is evidence of this.
it will be interesting to see what happens to Bitcoin. i should have been more cautious over $10 but fortunately had started buying at $1.60 so i'm still ahead if we stay where we are now. i still think its a great idea and more utilitarian than gold/silver but you never know. i will give it 10 yrs.
thanks for listening.
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i'll throw in 3 BTC for bounty as well. we need to move this project forward quickly before it disintegrates.
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Don't blame wasteful consumption on bankers.
you mean like Dick Fuld's $30K bidet? or how 9/10 yachts in NY harbor are owned by bankers? read "Where are the Customers Yachts?" by Fred Schwed. how bout all the mansions, hookers and blow owned by bankers. cmon, have you looked at the recent wealth disparity stats? |
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we're all here b/c we all think BTC is going to $1000  |
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and none of what you say applies with a deflationary currency which may increase in value with time more than compensating for the small amt of interest paid by a bank along with the risk. That the adoption rate of bitcoins are not exceeding the additional 50 coins per every 10 minutes dumped on the market. Hence the inflationary pressures on bitcoins currently exceed the adoption rate... it's why we're seeing inflation (IE: bitcoins going from 30 to 13) as compared to deflation (13 to 30). Now that might change over time... but in all honestly thought it's not centralized via a central bank we're still "bernankeing" the system. or better said.. printing too many bitcoins to cause deflation at this time. In fact we're printing more bitcoins in relation to the US dollar because we're seeing the bitcoin exchange rate falling in relation to the US dollar. its more complex than that. there are the psychological aspects of dynamic markets involved as well. the decrease from 30-12 could just be a normal cyclical wave which could reverse upwards at any time and have nothing to do with the 50 btc / 10 min. |
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Will you give me 100 bitcoins today if I promise to give you 100 bitcoins next year? Of course not -- even if you 100% trust me, you're still giving up the opportunity value of being able to spend those bitcoins within the next year should you choose to do so. There's no reason you should give that up in exchange for nothing. If you hold your bitcoins, that's exactly what you're doing.
I don't understand what you're saying. Your argument seems to imply the exact opposite of your conclusion. You seem to be saying that if you want to be able to use your money at any time, you should let someone else take care of it. No, I am saying that if you simply hold onto your money, the opportunity value is lost. Whereas, if you deposit the money in a bank, you can extract the opportunity value. But actually, when you do that, you are risking losing access to your money, because they may run off with it, or do something else irresponsible with it and lose it. True. That is the downside of a bank. However, the upside is that you don't waste the opportunity value of the money. And you also seem to argue that this is why you shouldn't hold on to your money... because then you can't use it when you want. No, that's not what I'm saying. If you hold onto the money, you cannot use it unless you find some way to extract the opportunity value. If you cannot do that, and in general you cannot, that value is wasted. A banker is an expert at extracting the opportunity value of money. But exactly the opposite of this is true. It is only when you have it that you can use it when you want. I would say that if you have it, you can only use it when you want. But if you don't want to use it, the opportunity value is wasted. This is value to which you are entitled that you are simply giving up for nothing if you hold the money. The opportunity value is decreased, not increased, by storing money in a bank. No, it is increased. That's how the bank pays you interest. Look, say you have 100 bitcoins and you don't need them until next week. Say someone else needs 100 bitcoins right now, badly enough that he's willing to pay back 110 bitcoins next week. If you hold your 100 bitcoins, you lose the 10 bitcoins of opportunity value you could have made by loaning those bitcoins out. Even if you say "well, then you risk losing the whole 100", you can easily imagine a situation where you could also obtain insurance against loss of your principle for, say, 2 bitcoins. So you still waste 8 bitcoins of opportunity value by holding your bitcoins, and the guy who could have done something with the bitcoins today doesn't get to do that either. Lose/lose. (But then the fewer bitcoins in circulation do benefit some people, so they win.) Actually, more likely someone else will lend the guy the 100 bitcoins. So he'll have 110 bitcoins less 2 for insurance and you'll have 100. You're playing the sucker. But Joel, you're thinking is clouded by the system we have in place today which pays interest. First of all, the banks pay way less interest than they should given the enormous risks they take with our money. in fact the FDIC has made way more guarantees than it can possibly handle and only maintain the facade thru the taxpayers guarantee. and none of what you say applies with a deflationary currency which may increase in value with time more than compensating for the small amt of interest paid by a bank along with the risk. |
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A banker is an expert at extracting the opportunity value of money.
i stopped reading right there. the real question is to whose benefit and to whose risk? |
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It seems that being an early adopter really is brutal and harsh.
LOL. and we have a bunch of whiners here on the forum always complaining about how early adopters assumed NO RISK. |
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It's not all due to banksters. Machines pushed workers from agriculture and production to service industries. Now self-service terminals and (increasingly artificial intelligent) robots will push workers out of the service industries at an exponential rate. Many workers have nowhere to go. We just adapt like we have done in the past. I'm sure it will eventually be better for us all.
how do the unemployed adapt? larger unemployment checks? oh wait... Actually I think that is one of the good solution. And of course those paychecks comes from tax (or debt) Raising tax might stress business, so it should not be taxed on income or revenue, but rather on cash: The more cash holded, the more tax, this also encourage companies not hoarding cash and activly spend and invest how do higher unemployment checks encourage going back to work? just the opposite. saving is not necessarily bad either by individuals or companies. They do not, and that is the purpose, less and less people need to work in future. Work is no longer a means to make a living, the society already can provide each person good living condition with the help of robots and machines. Saving action is bad for today's economy model, since it will cancel out many of the monetary policy efferts generated by government and FED. This can be explained by a very simple example wow, you certainly have a different viewpoint from most ppl on this forum. the problem here in the US is we have an unemployment level of 9.2%; not enough jobs for ppl who want to work. the debt levels have become so high it is squelching growth not just here but worldwide. technology is having the paradoxical effect of contributing to this by displacing human workers. you think of this as good but what are these ppl to do? there's not enough money to continue the handouts we've promised to everyone. this is precisely why the Congress had difficulty raising the debt ceiling. everyone realizes we can't just keep taking on more debt to fund everyones easy lifestyle here in the US. this is because we have saved too little and borrowed from the future to fund our current desires. |
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even if btc banks are honest, they represent a centralized source for gov't repossession
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yeah, banks never made sense to me.
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