Bump this thread a little, this is more likely to be coming months' topic  |
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And after checking the inflation adjusted data, the price increase of gold is not that dramatic, from 1970 low to today, less than 10 times  And in 2000, gold price almost fell back to 1975 level, means it really get sold a lot due to plenty of economic activities out there |
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Interesting link, and together with this chart,  In 1850, one ounce gold worth $19, and until 1970, it still worth as little as $35, but in the next 30 years, it shoot up almost 50 times to reach a high of $1900, since the gold standard is abandonded. Is it means that everyone become 50x richer in the latest 30 years? Or something else happened  Another fact is that the gold price do not change at all after discovery of the gold in California, this is against the economy theory that sudden increase of gold/silver supply will cause inflation. Actually, since the USD exchange rate is fixed, discovery of new gold simply means new money, and that created a huge prosperity of the west coast area. Maybe it is from here FED learned that increase money supply can simply create growth without causing inflation, but they missed that new money must be debt free  |
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Ok, basically what you are asking me is about the keynesian story about people putting their savings in the mattress when there is a crisis, what keynesians call the paradox of thrift. Hayek wrote about it in his article "The 'Paradox' of savings", but I dont think you can find it for free on the Internet.
So if you do not look at the relation between sectors and how the decrease in agregate production output is a result of a process of shifting the types of production, and only care about keeping an arbitrary amount of growth in the production output, then the keynesian explanation makes sense. The problem is that looking only at macroeconomic aggregates only and therefore arriving to the conclussion that keeping an arbitrary amount of growth in the total output is what the economy should be doing, you miss what it is really happening in the economy and what the economy should be really doing, providing to the people what they need/want.
But what about the unemployed? We let them rot? No, but if we want to help them we need to know how to create employment, and for that we need to understand what really caused the crisis and the real mechanism that will solve it. And answering to your question: So why do economic recession last so long? Is it because everybody starts hiding money under the matress as Keynes said? No, the reality is that people hardly hide money in the matress during crisis, more like are really struggling to get along. The lack of liquidity during the Great Depression or during the years after the 2008 crash is real, but it does not come from people saving more as Keynes argued, it comes mainly from banks having to cut their lending activities due to being completely overextended. And because the banking system is a government created oligopolly around the central bank and its monopollistic currency, competition can not fill the void propperly. Its not coincidence that during the Great Depression there was a big increase in the use of alternative currencies. Banks are broke and the transmission from savings into investment (what banks do) is broken, cutting any opportunity of recovery.
Great post! I think the fact that banks could not loan out money in a recession is not only caused by the credit crisis in the banking system, it is also affected by the general atmosphere in investment world. Few companies dare to invest when they can easily forecast the majority of people's spending is going down for the forseeable future, due to their saving action. Until people feel safe after they have accumulated enough saving, things will not improve, and the stimulus from either FED or Government will just give them enough money to save until they feel safe. Suppose the normal transaction need for money is 1 trillion, then the panic saving could easily eat up 10 trillion without any significant spending improvement. And when the sentiment changed eventually, all these saved money will pour out quickly and cause heavy inflation. Sentiment plays a very important role here, the psychology effect of a financial crisis is not very easy to disappear in 3-5 years I regard Keynesian economics as painkiller, it does not really cure the internal structure problem but it stopped the financial panic and buy people some peace to deal with the real problem at a later time. Interestingly more and more modern medicine are taking this approach. The internal problems are quite complex and have various historical reason, it typically takes a long time to solve by themselves |
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I think OP's thinking have some valid concern
Imagine some time in the future, someone want to move billions of dollar worth of bitcoin into another place in the world, but then he has to convert bitcoins to that country's currency, without a very liquid exchange market, this conversion will crash the btc price very hard so that eventually he could lose half of the original value
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Bitcoin is not perfect, but at least it is based on some honest computation work, but USD is purely based on debt, and now that debt has fallen on the next generation even before they get a work |
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Stan Druckenmiller, one of the best- performing hedge fund managers of the past three decades, has a warning for the youth of America: Don’t let your grandparents steal your money. Druckenmiller, 59, said the mushrooming costs of Social Security, Medicare and Medicaid, with unfunded liabilities as high as $211 trillion, will bankrupt the nation’s youth and pose a much greater danger than the country’s $16 trillion of debt currently being debated in Congress. “While everybody is focusing on the here and now, there’s a much, much bigger storm that’s about to hit,” Druckenmiller said in an hour-long interview with Stephanie Ruhle on Bloomberg Television’s Market Makers. “I am not against seniors. What I am against is current seniors stealing from future seniors.” Druckenmiller said unsustainable spending will eventually result in a crisis worse than the financial meltdown of 2008, when $29 trillion was erased from global equity markets. What’s particularly troubling, he said, is that government expenditures related to programs for the elderly rocketed in the past two decades, even before the first baby boomers, those born in 1946, started turning 65. ... http://www.bloomberg.com/news/2013-03-01/druckenmiller-sees-storm-worse-than-08-as-seniors-bankrupt-kids.html |
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By that time, people will use bitcarat (0.001 btc) to count, daily generation dropped from 2500000 bitcarat to 1250000 bitcarat, still feels quite a lot  |
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Well the whole New World Order crap is obvious bullshit, but here's a thought:
Is it possible Bitcoin was created by one of the large Wall Street firms? These guys, especially Goldman Sachs, have a reputation of hiring the best and the brightest fellows you could find. The whole point of these firms is to make obscene profits, usually by inventing complicated financial products such as Collateralized Debt Obligations, Credit Default Swaps and the like.
It would be conceivable some of these guys found out it was possible to create a digital decentralized currency and it was only a matter of time before someone eventually would. The creator of this currency would get a head-start in mining, thus accumulating enormous amounts of it. Only one digital currency would survive, due to the network effect. It is important then that the currency you are building is the most likely to become the favorite currency of the people. The creator, whether it be some lone programmer hiding under the name Satoshi Nakamoto or the experimental department at the Goldman Sachs Tower at 200 West Street, New York, could become the ruler of the world.
The bank's power come from that they could get loan from FED endlessly. But with bitcoin they could not get more if they want, and once bitcoin leave their hand, it will disappear from their vault forever (with fiat, it eventually deposited back into another bank), so it is not a very interesting business, maybe pension fund are more interested |
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As much as I love seeing the price point rise, I'm afraid of a bubble. There's no need for the price to rise so quickly. In fact, there should be little focus on the price point.
The focus should be on the actual economy. In order for this to not be a bubble, there needs to be an economy to back this up, as in, more people and businesses should be trading in bitcoin, and the price rises accordingly. If big media attention brings loads of speculators to bitcoin without plans to actually use bitcoin as a medium of exchange, then a bubble is quite likely.
Downplay the price, and focus on the economy.
Edit: if people come because of the price to use bitcoin as a medium of exchange, then that's good. It's a swarm of speculators that I'm worried about. But I have a feeling people are more likely to use a currency as a medium of exchange if they hear about merchants using it, rather than price hikes.
What is a bubble? If price doubled every day/week/month/year/decade, is it a bubble? |
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Some progress  |
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To give some reference: I just ordered one case of industrial material from china using chinese EMS service, order date 22nd FEB, and I received it today morning (Europe), that's 5 days include weekend |
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Good post, and I think there is no need for alt chain at all
Just like someone pointed out, gold still works as a store of value and it seldom get moved once a year, bitcoin will work the same
People will abuse more and more transaction capacity, they will get wise and plan their transactions accordingly if the transaction becomes expensive. Today, Credit Card companies always charge you a fixed amount of dollar for cash withdraw, but that won't stop people from doing withdraw, they just withdraw as much as possible to reduce the fee. So does bitcoin, if the transaction becomes expensive, people will plan their transaction with bigger amount and reduce the frequency of transaction, problem solved
And due to the fact that fiat currency are still 99.9% mainstream, to replace fiat currency is totally impractical and unnecessary, they suit much better for daily small transaction, they are created to be spent
Bitcoin should function as the saving heaven for average people (retirement saving now get eaten by government and inflation), in current debt based monetary system, there is no other better alternative, even gold can not compete
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The semiconductor industry is having huge problem right now, bitcoin is the savior for ST  I hope the referense design is usb or esata interface, just plug in and mine |
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#2
Avalon have not shipped any thing by end of March, and most of ASICMINER's chips burned after initial weeks of test
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Now it made a new high, this forecast failed  And there are some news behind this: https://bitcointalk.org/index.php?topic=146371.0If we foresee 28nm chips with referense design rollout quickly during the second half of 2013, the difficulty will rise further |
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They did handle with quite a lot of transparency, this is professional, seems that they could ship a well tested unit before the end of March
ASICMINER has low effect on network difficulty, if Avalon do not ship as fast as they promised, BFL will catch up quickly
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There are many fantasy here, just feel fun to read all these get-rich-quick dreams, but who knows if that really becomes true (for once at last) |
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I see there are some negative elements:
Avalon and BFL are going to delay their delivery of ASIC devices due to low capacity of production, so for now the difficulty increase of network is only generated by ASICMINER and since all these ASIC devices are still not very mature, customer have a high possibility runing into hardware problems, the network difficulty increase will not be that dramatic as imagined by some people. I think we could possibly see a double of difficulty each month, and if the difficulty do not increase that fast, there won't be lot of people rushing to buy bitcoin
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