not sure how you came about that figure, but it is, unfortunately, impossible to do a proper calculation. inflation rates are likely underreported on the one hand, and don't take into account the approx. $85 Billion being pumped into banks monthly as part of QE. you'd be surprised how much bigger of a problem inflation is than what is commonly understood. i also believe that, due to nominal price increases in things like gas and coffee, that real total inflation is around 300-400% since 1990.

--arepo

let's move this away from generalities, which are all well-hashed arguments on both sides, and focus on the specifics that we see in the global market today.

for instance, how is the poverty trap created by Walmart-esque wage suppression coupled with high unemployment rates attributable to governments? how is the large environmental externality of shipping and manufacturing attributable to governments?

the short answer is: they're not. but i'm sure you'll give me a longer answer

yes, i can understand how the effects on the purchasing power of the dollar drove the real value of wages down, but does that explain the decoupling of productivity and employment rates, as well?

unfortunately, the data has shown that this is not true anymore, and hasn't been for more than 4 decades.


can you demonstrate how the Bretton Woods System would have the aforementioned effect on productivity and wages? cum hoc ergo propter hoc is a logical fallacy.


there is very much so such a thing as a natural monopoly and if you disagree you are at odds with basic economics. you also conveniently forgot to address every other item on that list. there is no "free market" ideal, there is only the apparatus that exists, and the present apparatus rewards huge negative externalities and is perpetuating and accelerating wealth inequality, both things which render it unsustainable in the long term. high rates of unemployment coupled with wage suppression creates poverty traps worse than the welfare state. we're not talking about "Capitalism" or "The Free Market", we're talking about global capitalism as it exists today, and the global market. the ills are most certainly not the sole fault of governments, and scapegoating them in this way is a dangerous misdirection away from the real issues endemic in the apparatus that are contributing to the suffering of millions...

in other words, i don't care about your lofty Randian free market ideals. while capitalism may be "the best solution we can aspire to", and that would be hard to disagree with, it is also clear that our present form of global capitalism is suffering from a huge amount of inefficiencies, many of which cannot be attributed to meddling governments. how can we reconcile these two things? i have no clue, but we've first got to get our heads out of our asses and stop worshipping the sacred cow long enough to think critically about why the apparatus is failing at efficiently distributing resources.

--arepo

i agree that government and bureaucracy is in a large part obstructing some of the natural restructuring that would otherwise occur in the free market in today's stratified society. however, it is obvious that a paradigm shift occurred around 1970 when productivity, employment rates, and wages decoupled. i don't think it is a coincidence that this lines up with a shift towards automative replacement of many jobs, in both unskilled and skilled labor.

this coupled with the severe contraction of the economy in 2008 and the jobless recovery since has produced and maintained feedback loops manifesting themselves as rapid stratification in both income and wealth distribution in the US and the world: wage suppression, natural monopolization and other effects of economies of scale, globalization of economies corresponding to globalization of inequality, and large profits for the business and financial elite corresponding to large negative externalities for everyone else. each of these items could be expanded into an entire thesis, but i won't go into more detail. the point is that each of these things are independent feedback loops that support and accelerate wealth inequality.

these issues are not directly traceable to meddling governments but may be exacerbated by them. it is particularly misguided to place the blame on governments when these problems are endemic to the apparatus as it stands now that we call Modern Capitalism. it is difficult for some to accept that the sacred cow of "capitalism" may have some natural tendencies towards non-optimal states, but the truth is that the free market is not an ideal, it is a thing that exists in practice, in many forms. some forms may be more desireable than others, and i certainly do not think the state of the apparatus as it exists now is desireable.

--arepo

so much aggression in this thread

do you regularly pay for coke cans in postage stamps? or is BTC trading at a much higher price on your planet?

i'm fairly confident that (in general) any price manipulation would be costly, not profitable.

your scenario is discussed in the section titled "The Trading Metagame". the example i used is manipulating trading signals in indicators, but the analysis is relevant to any method that relies on inducing a certain action by other traders.

the take-away is that while this kind of manipulation may be able to yield profits in the short-term, it is unstable. that is, it cannot be performed consistently to yield profits.

--arepo

this. game theory, guys.

this is why we're not bubbling up yet. still too many weak hands in the market...

---
6-hour scale w/ mid-term resistance from figure on page 10, and a short-term moving support


https://i.imgur.com/Qva2Y7S.png

---

So we're running out of space here, and one of these bounds will have to fail. it still doesn't seem like we have enough volume to break above the mid-term resistance. the expected strong bounce down would send us slowly towards the mid-term support i noted in the newsletter, and you can continue to use the model i presented to trade the range. a break above the mid-term resistance would falsify this model.

here's the resource you can use to reconstruct the lines. use the "/" button to the right of the "Settings | Tools" panel.

--arepo

receipt confirmed, thanks again.

--arepo

it's difficult for me to analyse your figure because i don't deal much with elliot waves. my analysis was using a different fractal model which focussed on the patterning of capitulation events. either way, i don't doubt that your data may suggest that as it is using a different model. that is, both of our interpretations are likely correct, we are just measuring different dimensions.

--arepo

confirmed

thanks for the feedback

i'm not sure i quite follow your first criticism. it is true that the April bubble shows a fifth capitulation, "E"; is this what you are referring to? i'm not sure i would describe the intervening price action as a bear market, though. also, from what i can gather, you're talking about a conclusion for the mid-term, which i intentionally was not focussing on. the main reason so much of this issue handled the mid-term picture is because it's always good to be aware of the larger price environment within which these weekly actions are embedded, and the picture i conveyed is the model we're probably going to be working with for the next few issues at least. also in this case, it can inform us pretty well on the weekly scale, but if you're wondering why a conclusion about the mid-term price behavior is missing, that is the reason.

as for (2), i do see your point. i assume you take issue more with the drawn support than the resistance. remember on page 6 and 7, i demonstrate how the CCI data supports the conjecture that d2 is an outlier, so that takes care of the most recent violation. i also think that the consistency of the 'factor 3' data calls d2 into suspicion, by the principle of parsimony. further, the 'cuspiness' of the price action below this support during the two brief periods it was violated is further evidence. all that, however, is in the report, so i assume that doesn't satisfy?

--arepo

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+1

i have outlined in the past the basic idea here, but in more rigorous terms using concepts from game theory applied to the concept of market efficiency. the reasoning behind why even individuals with large amounts of capital in proportion to the average market participant would find it difficult to manipulate the market in any profitable way goes as follows:

Market efficiency
the market moves to minimize traders' profits -- this is a consequence of efficiency. in a market that is perfectly efficient, there would be zero excess profits. by my own experience and the collective experience of this subforum, i think we can safely assume that the bitcoin price function does not exhibit this kind of perfect efficiency (and i would argue that no market does, but that's another topic).

Profit-minimization in (mostly) efficient markets
each time profit is extracted from the market, it causes the price to converge on its "true" price. that is, the process of correctly anticipating market behavior and extracting profits makes the market more efficient. for instance, speculators who can guess where a natural price support is (which is determined by the emergent behavior of the sum total market participants) will exert buying pressure below this support, thereby strengthening it. a mostly efficient market quickly recovers from flash crashes like the one on 24 Feb by this exact process. if the bitcoin price remains undervalued for too long, excess profits can be made by buying low and selling high (and vice versa), so speculators enforce efficiency by buying sudden dips that have a disproportionately large effect on price due to slippage. this is also the mechanism for "corrections" due to profit-taking during periods of rapid price gains.

The cost of market manipulation
now, in this way, the market rewards successful speculators with the few spare profits available from lapses in efficiency like in the examples above. following from this relationship between the theoretical "true" value and the actual stochastic price function which approximates this value, the most profitable move is always the one which enforces efficiency, that is, the move which converges the ticker price to this underlying "true" value. in other words, generally speaking, the most profitable move is one which anticipates trends, not contradicts them. in fact, it also follows from the above relationship that direct price manipulation would be costly, not profitable, because any true manipulation would move the price further away from the "true" price, which is equivalent to creating more inefficiency. this correlates to more excess profits, and the game is zero-sum! it follows that the profits created come from the pocket of the manipulator.

The trading metagame
i do feel i must address the idea that certain clever manipulators may be able to beat a metagame of inducing signals in indicators upon which other traders rely (e.g. creating a "false" crossover). in this situation, the manipulator tricks other market participants into inducing inefficiency through their actions, and then scoops up the excess profits thereby created for themselves! this is a nuanced kind of manipulation that relies on the metagame revolving around anticipating the strategies of other traders. however, this meta-strategy is subject to the same pressures it exploits, as any other market participant may be able to consistently anticipate it and scoop up the profits before the original manipulator does. in this way, the manipulator is still bound by the rules of the "game", and cannot use this meta-strategy to consistently extract excess profits. once the manipulator's own behavior becomes predictable, it is no longer profitable.

in closing: the market incentivizes all participants to enforce trends (by means of profits), and deters them from violating them (by means of costs),

and the corollary: any manipulative meta-strategy that can consistently extract profits can and will be exploited by other participants and thereby neutralized by the same principle.

i hope this issue can now be solidly put to rest. however, i have a sinking feeling i'll be making the same post in another six months or so

--arepo

no problem! it's really unfortunate that i haven't been able to maintain a more consistent presence on the forums in the past, due to bitcoin-external responsibilities, but that's why i am happy to see the newsletter's popularity. your support has made it possible for me to dedicate my efforts for the next four months, at least.

--arepo

two more subscriptions from kwest and jlin today just confirmed. thanks for the support

--arepo