No you have it ass backwards, if anything the problem is their is no USD flowing IN.  The dollar depth on Gox has been declining for weeks and just plunged to under 10 million dollars.  The shutdown of channels that allow USD to flow onto Gox may be part of the issue but I suspect that the natural ebbing away of the hype is just causing the quantity of dollars seeking BTC to decline.  People with BTC can meet the asking price of the dollars on the exchange and then they own the dollars on the exchange and even if they don't take them off the exchange they are not obligated to offer them again for BTC so the dollar depth declines even if dollars in Gox'es hands don't actually change.

Gosh you people are dense, what were seeing is the inevitable result of less dollars flowing into the purchase of coin.

Over the last 20 days the depth of USD orders on Gox has declined by nearly 9 and a half MILLION dollars.  It is now under 15 million total and lower then the point when BTC briefly broke below $80.  During most of that period the BTC depth was also declining in synch indicating neither coins nor dollars were moving into gox (likely out of fear of confiscation/shutdown following the dwolla and later Liberty reserve events), just existing coins and dollars were matching up and we saw declining volume of trades too which makes sense as neither buyers or sellers had the upper hand to push the price around.  But at the beginning of June the coin depth trend reversed and began to grow slightly even as dollars continued to decline.  If the current trends continue it will only take a month to drain away the dollar depth down to it's pre-bubble level, and build up coins to a depth equal to about 2 months worth of mining.  That would imply a$20 price as the BTC price is almost ALWAYS the dollar depth divided by the coin depth.  Some overshoot is likely so my buy price would be at $10 if your looking for an immediate return, or $30 if your willing to hold for longer as $30 reflects the likely plateau we will see once the current bubble has finally run its course, it is simply the pre-bubble price adjusted for the reduced reward quantity.

No one has any proof here, but we have a really really interesting coincidence.  Bter and vcx both go down nearly simultaneously, then for around 6 hours PXC goes up by a factor of 3 on the one remaining exchange, then collapses back to its original price and bter comes back online after the collapse is over.  It doesn't take a genius to conclude someone was attempting a market manipulation around PXC, who we have no idea and no one should be throwing accusations at specific parties, the only way to figure this out would be to examine who was bidding up PXC on cryptsy.

P.S.  I predict vcx will be back up very shortly

How are you determining current block rates?  I assumed you were just taking the coins target block rate, the reality is usually quite different and quite dynamic, you'd need to average the last 20-30 blocks to get a good estimate.

Calculate adjusted profitability by looking at the present hash rate and adjust for orphan blocks based on the block internal per the curve described earlier 5/block_interval_in_seconds.  All coins should have this adjustment including BTC which has been over target block times for some time now.

Coins running at very slow block rates would actually see their adjusted profitability increased (by a tiny amount) by this calculation and it would dynamically adjust as block rates change.

Indeed coinchoose needs to stop using Cryptsy, it's an invitation to pump and dump.  With both Bter and Vcx down Cryptsy now controls the price of most of the coins listed on coinchoose.  I looks like Phoenix coin is the one currently being pumped, it's tippled in value in just the last 6 hours which coincides quite nicely with the other exchanges going down.

Are people so dense they actually think a billion USD has been net spent aquiring BTCs because that's the market cap?

First off the circular exchange of BTC for commerce has little or no effect when all the commerce is denominated in USD, the dollars just flow through BTC with the buyer and seller each exchanging at the market price in a neutral pair of transactions.  The real price setting behavior is the purchase of newly minted coins and the demand for new BTC holdings weighed against the coins that miners choose to offer for sale.  Old hoarded coins can come out out of hibernation and crash the price too but this is secondary as the market can generally absorb such shocks and bounce back.  Currently miners are not offering many of their new coins because profitability is so high they need to liquidate a small fraction of them to pay for electricity costs (and many are likely deciding to eat the electric costs now under the belief the coins will appreciate).  Once mass uses of ASICS's squeezes out the profit margin we will see a correction as the miners are unable to hold back their coins.  The price will decline to an amount that reflects the sustainable new buy that users are willing to make in BTC.

BTC is not Ghandi

Good read on some of Ceasars domestic policies, though your blog tends to ramble at times.

You should really look into Silvio Gesell's theories, he explains much the society wide chronic effects that lead to economic crisis (it's not the fault of bad actors but a result of the system) but devises a simple yet effective escape in making money lose face-value over time.  This allows us to do away with both capitalism (the loaning of money at interest) and Marxist counter-reactions while preserving the free-market.

Again I do not claim to lack values, I do use the term usury as a pejorative and I like the company that I'm keeping on this side of the issue.  Accusing me of something I'm openly claiming and doing is not much of an accusation, your simply trying to divert attention from YOUR 'Austrian' values, they don't call it 'supply side' economics for nothing, Austrian theory puts savings first and gives it prime power to create everything else.  Saying that you have not put a value on that is like saying you believe a god has created the universe but you don't put any moral value on said god, it's just an absurd claim.

Your Austrian explanation for interest is subsumed by Gesell's theory because he looks INTO the money paradigm.  Austrian theory basically starts with hard money as a given then finds the obvious liquidity premium and under hard money you will inevitably get interest as a kind of waste byproduct of the mismatch of the two, with hard money as an axiom interest is an inevitable conclusion.  But Gesell shows that the same liquidity always exists and money can just be made to counter it rather then creating an unnecessary and unearned flow of funds called interest.  Now in all likelihood the rate of demurrage would need be be variable and market based to give a stable economic output, this is something we have thought about and may try as a future innovation if we can figure out how to structure the market (some kind of illiquid bond with no counter party probably).

Anyone claiming that their ideology is value free is either ignorant or ashamed of the values it actually carries.  Nothing made by man is free of value judgments, especially economics.  You would have to be the most blindly obtuse person ever born to think that Marx-vs-Adam Smith or hard-vs-soft money or the Keynes-vs-Hayek debates are value-free, it is saturated with value judgments.  These are indeed some of the most pivotal value debates that have existed in the last century.

And BTC basically proves the Austrians wrong, the velocity of BTC is terribly low, the interest rates are high, investment is low (the only investment is in more mining equipment) and hoarding is rampant.  If not for the fact that BTC is using USD as a unit of account for virtually every transaction and it's commerce base is largely black-market activity benefiting from the pseudo-anonymous nature of the coin their would be virtually no commerce what so ever.

I never said I wasn't, it's myrkul who needs to defend this absurd claim that the rest of 'you' and 'Austrians' broadly are not operating out of a moralistic framework that rationalizes usury by defining the lender as morally virtuous and the borrower as morally flawed.

Your confusing risk premium in an individual loan with core interest rates, risk-free loans such as government bonds still carry interest.

Their is an unabashed moralistic tone on these forums that praise savings as virtuous and noble and thus entitled to great personal gain, the only distinction is most of BTCs windfall is deflationary rather then from interest.  But the same general tone is present when ever I've discussed interest.  Naturally such moralizing dose not appear in dry academic papers that constitute the academic Austrian school core (or at least its subtle), but no one can seriously deny that this belief is rampant amongst the wider non academic Austrian populous.

Inflation is not at all a component of REAL interest which is what were really concerned with, real interest arises purely from liquidity premium, aka the value of liquidity.  The only argument among economists is to what the source of that liquidity value is.  The general Austrian answer (which myrkul endorsed last time we debated) was a time-preference in which most people wants to engage in shortsighted consumption in the present.  Thus the 'good' savers who resist the temptations of immediate gratification are entitled to extract interest from the shortsighted gluttons, basically a kind of sick morality play designed to justify usury upon ones fellow man.

The reality is that liquidity is in the nature of money and it has value because liquidity is insurance against any possible calamity as well as a ticket to any opportunity that may arise.  And their is nothing wrong with people acting on the real opportunities or calamities that may be occurring, it is not a moral failing on their part to seek liquidity, but it is an impediment to the economy when they are forced to pay for it.  For liquidity is not created by the money holder, it is created by the marketplaces willingness to accept money and thus give it liquidity, a publicly created good like liquidity should not be monopolized but instead it should be available to all but it should cost you what it's worth. 

Getting something for nothing is never fair, as they say their is no such thing as a free lunch and liquidity under a hard currency is a glaring example.  How ever free the lunch might seem someone else always bears the cost and no self-respecting believer in fairness should endorse such a thing.

Seems you just need a new column for 'trade volume' and let people establish their own cut offs.  Also trade volume needs to be ralative to actual coin production.  If a coins is under the target hash rate and is producing only a fraction of the target rate but they are all being sold then this is perfectly able to be mined and fully liquidated, hash-rates can be ignored for the individual miner but volume is a network wide phenomenon.  In fact you can have a column for block rates as a percentage of target to show which coins are perhaps being over or under mined, together this would give a miner a lot of relevant data.

anaikh:  We get asked this question frequently

We believe that no one should be deprived of the VALUE of their money by the monetary system, but neither should money earn interest that gives one more value, demurrage in our view a means to make money held by a person completely constant in value once the wider economy is factored in.  All money has by necessity of being money high liquidity (indeed an accurate definition OF money is what ever thing in society has highest liquidity).  That liquidity has a value over time which gives rise to interest and which someone with money can gain more value from without engaging in any risk.  Gaining without risk is considered usury.

The ideal rate of demurrage is the rate that matches and counter-acts the liquidity premium.  We used a 5% per year rate in Freicoin as this is the figure Gesell's believed (siting earlier research) was a long term historical rate and we do not believe it will be significantly different now, a floating rate was considered but no technical solution was evident so a fixed rate was employed.  Rates of demurrage intentionally set far above the liquidity premium would be unfair by this standard.

A person stuffing money under a mattress would indeed lose 5% a year to demurrage, but that person would be very liquid and enjoy the safety that liquidity provides.  On the other hand someone placing money in a long term savings account with a bank would be giving up most of their liquidity and the bank would pay a rate to him that effectively lowers their demurrage loss.  The more liquidity one gives up the less demurrage one should pay, the longest term lending should be very nearly at par.

Your also naturally correct about money supply needs to be managed to keep valuation constant, this is another area ware FRC developers acknowledge a potential flaw in the economics of the coin as-launched but hope that the core demurrage concept will prove itself to be useful regardless and that improvements can be made by future hard-forks.  My personal opinion is that an internal futures market could regulate the quantity of coins such that they keep a deflation rate sufficiently low as to avoid hoarding.

The only read driver is the market, just divide the total dollars bid depth (USD) by the total ask depth (BTC) on Mt. Gox and you will have the price practically to a tee.


This graph is all you need

http://www.bitcoinx.com/charts1/depth_mtgox.png

The point concerning the operation of central banks, will the managers be 'political' or 'faithful monetary eunuchs' is rather central to BTC.  Most people claim that BTC has no central bank operator, but this is wrong, the protocol is doing the job of a central bank manager and Satoshi programmed it to be a blind utterly tyrannical manager that would mint a predetermined quantity of coins hourly for years to come.

Their exists a false dichotomy between this 'blind tyrant' and a the 'political man' with the rejection of the latter sending people into the arms of the former with disastrously unstable valuation of BTC as a result.  A 'faithful monetary eunuchs' COULD be programmed if people really put their minds too it, an example already exists too.  Difficulty adjustment is not set in stone, we don't know what difficulty will be 3 years from know but we know the difficulty-algorithm eunuch will be faithfully keeping the block rate to around 10 minutes which is what matters.

A faithful monetary eunuch needs some important data about prices to crunch and that's the rub, no simplistic first-order data from the block-chain would be accurate and most importantly free from manipulation.  My conclusion is that a fully realized futures market must exist inside the block-chain that will allow present and future to trade places so to speak.  By selling future right to mine coins for present coins the expected inflation or deflation rate can be determined and then a counteracting change in money supply created automatically.