Meh, I have that on a shirt, and probably dozens or hundreds of copies scattered around my hard drive.  What's one more in the blockchain?

They measure in FLOPS because that is what supercomputers do, and that is how supercomputers are measured.

Offending/illegal content?  We are still talking about text, right?

Except that bonds repay the principle when they mature.  In your example, and ignoring the discount function, the original bond has only appreciated by 20%.  The next halving of the interest rate will only give 11%.  A few more and you are down to 1%.  Zeno noticed a couple thousand years ago that the sum of this series is not infinite.

Two other factors make this system less than practical.  The first is that people will accept negative interest only when all the other places they could possibly park their money look really shitty, like back in 2008 when the commercial paper market broke the buck.  The second is that bonds mature, plus new issues have been for shorter and shorter average durations since the 90s, so the possible influence of older issues is shrinking steadily.

But yes, people do actually do what you describe.  Prior to the auctions, the primary dealers get their analysts to announce that the new issue will clear for a lower rate, which drives up the values of the bonds they are holding and also becomes a self fulfilling prophecy as the upcoming issue clears for less than it would have if the institutional investors that are required to buy bonds hadn't picked them up early.  Hey, free money for the primary dealers.  Who here can guess who they are?

The problem is that it is on a collision course with the two factors I mentioned earlier, plus all of the usual problems, plus the demographic timebomb (pensions will start paying out, reducing the size of the pools that are required by law to buy bonds), plus some other stuff.

The questions, as always, are how long the game can keep on, and what will replace it?  Armageddon is scheduled for "next week", or at least "real soon now", but it has been for 20, 30, 40, or 80 years (pick one).

P.S.  If you are under 60, this should probably be a matter of great concern to you.

Totally unimportant.  Flexcoin isn't a mining service, and all senders are constantly trying to reduce their fees.

Awesome!  Post your pull request (or patches).

Er, hang on.

You list two examples of UST defaults, both of which happened by changing the value of gold in relation to the dollar.  So, a bond holder got back the right number of dollars, but not the right mass of gold.  This type of default has been ongoing for like 40 years now, with no sign of ever stopping.

The other kind of default is the kind where the Treasury just declares some bonds to be worthless, or at least worth less than their face value.  In this type of default, bond holders don't even get back the right number of dollars.

The second type of default hasn't ever happened, and probably never will happen.  This kind of default would be apocalyptic, and would probably instantly create hyperinflation.  UST and USD are widely considered to be different instances of the same thing, so a loss of faith in one is the same as a loss of faith in the other.

I really can't imagine any possible way for the treasury to default in a way that actually increases the value of the dollar.

Heh, why bother drawing lines on the chart if you are just going to ignore them when you want to? 

But really, yes, it is quite possible.  If that is the case, we are pretty much on the lower bound of your green channel right now, and right now would be the time to dump metals and buy stocks.

I'm not sure that I buy the four seasons model advocated by the longwave group.  It does make sense at times, but I usually end up back at my theory that everyone is wrong.  If it does turn out to be right, we can expect the next bottom at around 2 or 1.  Two would be appropriate for a "winter" bottom.  One would be right if we match the 1896 and 1980 crashes, but ignore 1932.  Below that, to the 0.7 or 0.5 level as suggested by the 1932->1980 trendline (black line on the chart) seems a bit silly.  I think we would have bigger problems of the Mad Max variety before it gets there.

The difference is not trivial.  Getting it wrong means that you buy a third or a quarter or a sixth or a twelfth as much value as you could have.

If 6 comes and goes, start watching closely around 2.  If 2 comes and goes, then 1 is almost certainly the sure winner.  The problem will be knowing a temporary pullback from a sustained move.  I would watch for a sustained rally in the stock market that coincides with a sustained decline in the gold market.  Sustained meaning about 2 weeks, but I think it'll come down to a feeling rather than a set duration.

Economics and Finance are missing from that list.  Hopefully they are included under Science.

You need to see it in the bigger context.  See the long chart on the first page of this report.

1999 would have been a good time to dump your stocks to buy metals.  Each share of a Dow index would have picked up ~40 ounces of gold.  Right now, a bit under 6 ounces will buy you one share of the Dow.  I expect that to get down to about 2 before the trend reverses.

Of course, you can't really know for sure, so you need to pick your own indicators.  I've decided to go with either a ratio under 2, or a strong upward trend.

See how deep the myth goes?

Nothing has been abused.  The trade imbalance is an accounting identity.  Production + Imports = Consumption + Exports.  China doesn't have the capacity for consumption, so they must export.  That means that someone must consume.  Being that consumer has some benefits, but it also has some huge costs.  Unfortunately, the benefits are obvious to everyone, while the costs are subtle and hidden.  Triffin wrote about this problem, and we now know it as The Triffin Dilemma.  Others have expanded on it since then.

Also, I think you are mistaken about the United States' involvement in China.  There has certainly been spending, which is a very real transfer of wealth.  But there was more too.  China has learned in 20 years what the rest of the world worked on for centuries.  That influx of skill and industry wasn't simply a matter of the Chinese people getting their shit together, finally, after thousands of years.  It was a gift.

You have to do this no matter what.  If you use option 1, you need a system to communicate your keys to the signing service, otherwise it won't know which user's policy to apply.  If the system uses a fixed policy for every user, the attacker will just steal slightly less than X BTC per user per day, or whatever.

Also, you need a way to present the partially signed transaction to the service, so that it can finish signing it (if policy allows) and send it to the network.  I don't think that you can avoid this step by using sequence and lock time, yet.


The emergency key is going to cause problems, no matter what you do.  Most people that don't really care about anonymity will probably prefer to generate, store and use a single key C.  The people that really do care about anonymity will want to make a new one each time, and deal with the hassle of storing it safely.

I really can't think of any way to avoid having to make the trade off.  Mechanic's shops usually have a sign that says "Fast, Good or Cheap.  Pick any two."  I think we are going to need to think in terms of "Anonymity, Security or Convenience.  Pick a linear combination where the vector sum is less than 2."

The network is not flipping coins over and over again.  Let me say it again, this time more clearly.  There is no fucking coin.

The network is generating what we hope is a more or less random number, trillions of times per second.  Can you really not tell the difference between quintillions of hashes vs. thousands of coin flips?

Pardon me for not being startled by the difference between 2,298/10,000,000,000,000,000,000 vs. 2,432/10,000,000,000,000,000,000.

I don't think this was directed at me, but...  I decided long ago that everyone was wrong about economics, including me.

I mostly read doom and gloom types (Jesse, Mish, Steve Keen, etc) for two reasons.  First, the positive view is ubiquitous, it is permeates every part of our culture.  There is no need to seek out the message that is all around you.  Second, I'm pretty conservative financially, in the sense that I'm more interested in avoiding downsides than gaining upsides.

In the end though, I don't think that either side is much better than the other.  I think that they are both wrong, in different ways, at different times, and for different reasons.

I'm pretty sure that the value of the dollar will approach zero, because that seems to happen to all fiat currencies.  And I think it possible, maybe even probable that this will happen during my lifetime, but I wouldn't care to bet much on exactly when, or even roughly when.  So, I don't want to hold dollars any more than necessary, even if dollars are doing better than everything else at any given moment.

And when it comes up in other contexts, I defend the dollar.  Our fake paper bullshit money is the best fake paper bullshit money on the planet, right now, and reports of its impending doom are certainly premature.

The one indicator that I watch carefully is the DJIA priced in gold.  Chart here.

If that is low and falling, like it is now, I feel that buying gold and silver is a better bet, long term, than buying stocks.  Once that turns around, I'll probably dump my metals and buy stocks (index funds, actually).

The good news for me is that I don't have a lot of assets, so it doesn't really matter much that I also don't have the time to spend watching markets, or learning to be better at watching markets.

I'm pretty sure that mtgox matches only once per pass through the loop.

Jesse always has the best photoshops.  And thank god he wasn't able to keep that awful MIDI player when he changed to a blog.

Ahh, I understand your point, and I agree that it is useful in that situation.  But eww.

The Kitco charts, as far as I know, represent the physical market.  Currently, the physical and paper markets are pretty tightly coupled, so they are essentially the same, not counting premiums.  If the markets decouple, I expect that chart to rise with the physical.  If I'm wrong, and the chart shows a low price while the premium for physical skyrockets, I'm willing to lose the 10 BTC on a technicality.

This is a very simple view of things, and it is based on the popular current misrepresentation that the United States is evil.

The truth is that the United States has been able, and willing, to invest heavily in other parts of the world, at great cost, and with uncertain rewards, and to do so when no one else would.  You can see the same major cycle working at least 3 times since World War II.

First, the United States was the only industrial country still intact after the war, so the rebuilding of Europe was financed on the backs of American workers.  I don't mean to diminish the part that Europeans played in rebuilding their own countries, they certainly did a lot too.  But the miracle came from across the Atlantic.

Next, the US attempted to do the same thing with a whole bunch of Asian countries in the 70s and 80s.  The mechanism was different, but it was essentially the same plan.  The results were spectacular again, but short lived.  This was mostly because Asia is not Europe.  Japan was the standout, apparently possessing more of whatever it was that made Europe work, but demographics caught up with them.

You can see the same thing playing out in China over the last 20 years or so.  Almost by itself, the United States has made it possible for the typical Chinese to aspire to be a factory worker, rather than the peasant his father was.  This may not seem like a great deal.  After all, no one in developed countries wants to be a factory worker.  But apparently it is to them, because they have thousands of applicants for each factory position.

The popular narrative is that the United States is trading worthless dollars to the rest of the world, in exchange for useful, valuable products.  The part that is always left out is that the United States is bleeding out productive capital, the real wealth, to places around the world in hopes that some day both sides will be better off for it.

So, until someone else has the capacity, the foresight, and the determination to step up and make those investments, the world still does very much need the United States, and the US Dollar.

By your logic, people should blame hangovers for making them drunk the night before.

Bonds don't have variable coupon rate (I'm ignoring TIPS here).  All that is needed to avoid paying more interest to the banks is to stop issuing new bonds.