I thought bankers are superconservative folks that would never go near something like bitcoins. Of course, I was wrong.
The same superconservative folks that dumped tons of money into subprime mortgages?  Everybody was doing it. What could go wrong? |
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This is risky, but I'm willing to give #1 a shot, the other two are beyond unpredictable.
I say the stock market low for this cycle will either be in October 2010, or the low for October will be within 5% of the cycle low whenever that occurs.
Considering the recent rally, this may seem absurd, but hear me out.
The second October following a new presidency is traditionally the market low month, as politics always affects the market, the 'honeymoon' period is over, and tensions are highest leading into the mid-term elections. After the election, the near term future tends to look more clear regardless of the outcome, and uncertainty is always bad for stocks. Add that to the overall state of the market, and if next month isn't the worst, it'll still be bad for those currently still in the market.
Of course, it could also be a 'fire sale' for those who got out years ago and have the capital to jump back in. I agree with this. All the GDP forecasts are going down. The USA will show a weak GDP. Ireland just announced a -1.2% GDP. All european advanced indicators are showing a decline. This is actually good for the economy because it means that the inefficient industry from the bubble is disappearing, but in the short run its going to hurt. The stock market is disconnected from reality because of all the liquidity, but its not going to get away from this. Then at some point Bernanke will appear with QE2 and more monetization and then stagflation will start. |
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You definitively either work at CNBC or watch too much CNBC. I think there is still a chance, albeit getting smaller as time goes on, that the Fed will be able to sell treasuries to mop up the excess reserves. Treasuries are only selling now because the Fed is buying some (POMO) and people are frontrunning the Federal Reserve who has guaranteed another big intervention in the future. But this is a short time trade, very profitable but short term. Once the Fed has done its second big intervention the game is over. If the Fed does not support the Treasury then the interests that it will have to pay for the debt will be mean default for the government. In this scenario do you really think the Fed will stop buying treasuries, and even start selling them? And even if it did so, how much is the Fed going to get from a junk government bond? It does appear that the banks still have quite a way to go with the new worries about credit unions. Until confidence returns, the liquidity is necessary to keep the economy moving. As certainty in the US's economic future returns, US investment should increase, and allow the Fed to act in kind to remove the excess reserves. What good does JPM, GS or CityGroup do to the economy? They are horrible capital allocators as proven by the crisis. You dont want to get this economy artificially alive. You want the bad companies to go under, so new and efficient ones can prosper. You have to think that the USA was living a bubbled economy not a sustainable one. Returning to a bubbled economy is not the objective. By saving the banks and trying to save all the zombie companies (f.e.: GM) the government has turned what could have been a one-two year recession into a long depression. |
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Yes, since Japan started devaluating about two weeks ago it has spiraled down.
Not only Brasil is devaluating the currency, also Perú and Colombia, and many others are probably doing it but not saying it.
And the Japan-China diplomatic conflict that is going on now in reality is a hidden monetary conflict, because China is buying a lot of Japanese bonds, pushing the yen up.
Isnt keynesianism great? I hope Marc Faber is wrong and this crisis does not end up in a war.
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And s an Austrian, I reject the very concept that central planners have any such abilities. The deflation is the correction. The thing is that the central planners use violence therefore they dont operate under the same market rules the rest of us do. Specifically, the central bank manages the monopoly on money imposed by the government using force. The Fed is not omnipotent, but it does have a very strong influence, greater than anything else probably. Sure, it would have been more intense, but it would likely already be over. Which is worse; 18 months of an unabated natural correction, with high unemployment, bank failures and forclosures; or the same exact end results over 10 years?
I'd rather take rip off the band-aid fast. I completely agree. So markets vary, and different industries correct in different ways on different timelines. That does not alter the overall results.
Neither does the CPI, or even GPD for that matter. Human minds require looking a small slices of representative data at a time, which is why we depend upon statistics to begin with. Yes, but it seems very clear to me that the new money injected by the Fed is not going to go to blow another bubble in the typical way, but rather concentrate in the most needed products: food, commodities, energy, etc... So its my opinion that the bubbled industries (mainly housing) is going to keep going down in price for a while, but the basic stuff like food or energy is going to go ballistic. The UK government is studying what would happen if the price of oil goes ballistic like it happen in the 70's:http://www.telegraph.co.uk/news/newstopics/politics/liberaldemocrats/8016774/Liberal-Democrat-Conference-Oil-price-could-double-in-return-to-1970s-style-shocks.html Keep in mind that I am saying that prices will go up, but the economy will not recover. Unemployment will be still high. That may yet be, but it still looks like this is running more like 1932 than 1978 to me. We will have to wait and see. |
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I still trust that having come this far, the Fed will persevere and maintain order.
Mmmmm, are you a CNBC comentator?  Can you be a bit more specific on the exact options and actions that the Fed could take to remove the money that sits as excess reserves in the banks? Also, do you believe that the treasury will be able to finance itself without the support from the Fed? Btw, let me remind you again that Bernanke when starting QE1 said that it would remove the liquidity. Less than a month ago announced that it would use the money its getting from the maturing MBS into buying more treasuries, and has been doing so. So basically he is not removing the money. Also, in the Jackson Hole meeting, Bernanke basically assured that QE2 will be a reality, or at least that is what everybody understood. |
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There is both understanding and error in your statements. Deflation is here and now, and has been happening for at least a year. What the Fed does has little bearing on that now, and arguablely never could have. http://www.nfib.com/Portals/0/PDF/sbet/sbet201009.pdfCheck out the first and second charts on page 10. Your thinking of total base currency, basicly M2, as your judge of whether there should be inflation or not. However, the majority of transfers in the US isn't currency, but credit. So a better measure of future inflation is the trend in M3 (M2 + credit), which has been in freefall for two years or more, the massive currency creation by the Fed notwithstanding. Our near term outlook is all deflation, all the time, for as far into the future as I am willing to guess. Note that I did not say that deflation did not happen. I said that the Fed aborted the "deflationary correction". About what you are saying, there has been monetary deflation for sure, specially in the longer term debt (M3) towards cash or shorter term debt (M2). But if the Fed had not monetized government debt (pushing new money directly into the market) it would had been far more intense. As for prices, consumer goods prices, the CPI which is usually what is referred as "prices" when talking in macroeconomics, have not gone down. If you look at shadowstats statistics is even worse, and they have been increasing around 5%. Sure, homes have gone down, stocks have gone down, etc... but the articles that people buy everyday, like food, have not gone down, and have keep going up, slower than usually, but still up. I have checked the statistics in page 10 of that report, and yes its a big decline, but it seems to include all goods and only small business. Its interesting data, but it does not represent the whole thing. And I am not denying there are deflationary presures. I believe the deflationary correction is going to start showing again (its already showing) until the Fed starts printing again on what its being called Quantitive Easing 2. Then prices will start rising again and heavily. Note that I am saying that prices will rise, not that the economy will recover, therefore stagflation. |
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I predict great things for the prediction market  I predict success for the prediction of the prediction market. |
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Lets make this a separate topic thread:
What can be done about stagflation? Stop inflation so prices stop rising? You speak of stagflation like if its something that comes out of the blue, and not something that happened because of a set of policies. Its not "what can be done about stagflation". It is "what should the government stop doing to stop stagflation". But the high inflation that comes with stagflation devaluates government and financial institutions debt, so the government has all interest in letting stagflation run for a while. But for now, I'm more interested in why you believe increased inflation (as a component of stagflation) is inevitable. I have had this discussion a lot of times and its getting kind of boring right now, but lets give it another shot. Basically the Fed has pumped a lot of money into the financial system. This money has not been released into the market yet and it sits as excess reserves. Also, the Federal Reserve has bought government debt, which is one of the main reason the deflationary correction did not happen, therefore turning the crisis into a long depression. The Fed bought specially long term debt, to keep the yield curve in check, which is funny because the Fed spent years saying that it only influences the short term yields. The reason that prices will start rising because of all this inflation is because the Fed has no chance to remove all that liquidity. If you want to discuss why we would have to analyze the Federal Reserve balance sheet, which I have no problem doing. But it should be noted that when Bernanke started all this mesures he said that he would have no problem removing this liquidity, but now he started using the money he gets from the MBS he bought into buying more government debt. He has no intention of removing the liquidty, but even if he wanted to, he has no chance. The question is not why will inflation happen. The question is how can anyone be so blind as to not see big inflation is coming, and its going to push prices up a lot. PS: English is not my mother language, and speaking technically is hard for me, so excuse any incorrection. |
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I don't believe I have the understanding necessary to communicate others concerns. I think one common theme that is discussion worthy:
The current economic bailout will require hyper-inflation in the future.
Not necessarely hyper-inflation, but stagflation is granted. I have been betting in stagflation since the beginning of the crisis. Which leads to another question. Redengin what will the kyenesian academia do when stagflation happens again and its too obvious to blame it on the oil producers again? |
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They will default on their promises. That is why you either want to have your cash in your mattress, or in a very strong bank.
Or, most cynically, put your money in a very weak bank. If the banks start going down, you want yours to go down first when they're still paying on the 'insurance'.
Default will never ever happen. The USA government will never default on its citizens. It will print away all it needs, which is equivalent to defaulting, but it will never directly default. There is a reason why there has never been a deflationary collapse and the empire collapse are always hyper-inflationary. The USA would only default on some foreign nation. The event would obviously trigger war, probably IIIWW. |
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Inflation is when the monetary base increases relative to the economic activity that the currency represents. Inflation is when there is a increase of the monetary base above of the demand of that money. |
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Anything that is being used as a medium of exchange is money. Bitcoin, like gold, is money.
Bingo! |
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It's not a cash equivalent. Unless I don't know what cash equivalent means. What does it mean?
Bitcoin can be considered a cash equivalent from an economic point of view. |
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I have pretty good skills in Drupal module development. What;s about bounty for it? =) Do someone have real project to use this module? Not that I know right now, but I having a bitcoin module in the drupal module directory would give bitcoin some publicity. Some peope might give it a try on their shops just for the sake of it. |
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- Payment processor, well supported, with sandbox, and a shopping cart interface similar to this or this or this. mtgox and gazoakley (bitcoinpay.com) both have some merchant tools, but they need to be "fleshed out."
This is very important for business to adopt bitcoins. I bet if there was a drupal module to do it automatically a lot of online places would accept them. The most e-commerce module for Drupal is Ubercart ( http://drupal.org/project/ubercart and http://www.ubercart.org/) so making a module for this would be a great asset. I am starting to look into Drupal and PHP because we just started an economic blog with some friends, but obviously I am no expert at all yet. If someone knows PHP and/or Drupal I would not mind collaborating with him/her to create the module. I honestly dont see myself capable of doing it on my own. My idea before I read this was to learn to create a module for Drupal creating a "Donate Bitcoin" module. So if anyone likes the idea of a bitcoin module for Ubercart (or something similar) pm me. |
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I noticed the same. I have started accepting bitcoin donations at my blog, and I keep promoting bitcoin at the forums I visit ( yesterday for example). But I completely agree that being able to spend bitcoins is the key to success. I have said several times that having business that accept bitcoins is the key to success. Maybe we should do something to target business. Maybe not big business because that would be unrealistic, but local small business. Maybe going to some local business association would be a good idea. Just thinking out loud. |
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MIT-style licensing is the only way to ensure widespread adoption. Companies won't touch GPLed software. I dont have any problem with MIT license, but there are a lot of companies that are using and developing GPL software. Saying that companies dont like GPL is not true. |
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