Martin Armstrong Discussion

[Lateralus]

So according to Martin Armstrong, fractional reserve banking & floating paper currencies are not scams as most of the crypto community seems to believe. He's saying the real scam is socialism/marxism/collectivism, the ability for the majority to take out loans under the names of the minority's unborn. Personally, I'm inclined to agree with him. I have a lot of respect for Rothbard, but it seems he was wrong about the nature of money and banking.

What it really comes down to is that Austrians believe FRB (elastic money supply) is responsible for the business cycle, and what Martin is saying is that cycles are inherent to all markets and that an elastic money supply can actually help in this scenario (acting kind of like gyroscopic stabilizer fins on a ship at sea, if you'll excuse such an analogy).

Assuming he's right, then that means the fundamental ideas that all cryptocurrencies are based on are inherently flawed.

So would it not be true that there is a massive opportunity for someone to develop a cryptocurrency based on fractional reserve banking & elastic money supply? Would there be a way to develop an autonomous decentralized fractional reserve system using blockchain technology? Say for example let's say this new alt coin is called "curro", and it's designed so that all the curro in existence can be drawn from by any private company and loaned to any individual, and the interest earned (the profit) is split between the loan provider and every other curro wallet. Meaning every single "curro" wallet is now an interest bearing savings account. You could also design it in a way that allows anyone with a curro wallet to dictate which private loan companies have drawing rights to your wallet, which would allow for a competitive market ensuring that there is no central point of failure (eliminating the possibility of some kind of virtual "bank run"). You could of course also have the option of not letting anyone have drawing rights to your wallet, essentially turning it into a vault which earns no interest but is otherwise completely immune to financial meltdown.

[1714894894]

1714894894

[1714894894]

1714894894

[1714894894]

1714894894

[1714894894]

1714894894

[sidhujag]

So according to Martin Armstrong, fractional reserve banking & floating paper currencies are not scams as most of the crypto community seems to believe. He's saying the real scam is socialism/marxism/collectivism, the ability for the majority to take out loans under the names of the minority's unborn. Personally, I'm inclined to agree with him. I have a lot of respect for Rothbard, but it seems he was wrong about the nature of money and banking.

What it really comes down to is that Austrians believe FRB (elastic money supply) is responsible for the business cycle, and what Martin is saying is that cycles are inherent to all markets and that an elastic money supply can actually help in this scenario (acting kind of like gyroscopic stabilizer fins on a ship at sea, if you'll excuse such an analogy).

Assuming he's right, then that means the fundamental ideas that all cryptocurrencies are based on are inherently flawed.

So would it not be true that there is a massive opportunity for someone to develop a cryptocurrency based on fractional reserve banking & elastic money supply? Would there be a way to develop an autonomous decentralized fractional reserve system using blockchain technology? Say for example let's say this new alt coin is called "curro", and it's designed so that all the curro in existence can be drawn from by any private company and loaned to any individual, and the interest earned (the profit) is split between the loan provider and every other curro wallet. Meaning every single "curro" wallet is now an interest bearing savings account. You could also design it in a way that allows anyone with a curro wallet to dictate which private loan companies have drawing rights to your wallet, which would allow for a competitive market ensuring that there is no central point of failure (eliminating the possibility of some kind of virtual "bank run"). You could of course also have the option of not letting anyone have drawing rights to your wallet, essentially turning it into a vault which earns no interest but is otherwise completely immune to financial meltdown.

Agree i kinda did this with syscoin.. supply is elastic based on service usage... gdp is service usage.

[Klima]

In one of his comments market analyst and author newsletters Martin Armstrong downplayed and misinterpreted recognition of Deutsche Bank in the manipulation of gold futures and derivatives markets in collusion with other banks.

[OROBTC]

...

I suspect that Armstrong will soon have something fun to say about the DNC antics this weekend.  Maybe I'll watch some of it after all.

*   *   *

I took a look over at his blog, here is an interesting post of a new data storage technology that looks very good (100 x the capacity of now):

https://www.armstrongeconomics.com/markets-by-sector/technology/every-book-ever-written-can-be-stored-on-a-postage-stamp-size-device/

[criptix]

...

I suspect that Armstrong will soon have something fun to say about the DNC antics this weekend.  Maybe I'll watch some of it after all.

*   *   *

I took a look over at his blog, here is an interesting post of a new data storage technology that looks very good (100 x the capacity of now):

https://www.armstrongeconomics.com/markets-by-sector/technology/every-book-ever-written-can-be-stored-on-a-postage-stamp-size-device/

I think armstrong is not up to date:

http://www.computerworld.com/article/3034260/data-storage/superman-memory-crystals-could-store-data-for-billions-of-years.html

http://www.southampton.ac.uk/news/2016/02/5d-data-storage-update.page

[OROBTC]

...

NICE Armstrong article on under-invoicing (in this case gold):

https://www.armstrongeconomics.com/markets-by-sector/precious-metals/gold/trade-misinvoicing-78-billion-of-missing-gold/

Playing games with Commercial Invoice amounts is a game that has been played for ages by importers and exporters.  One problem though (mentioned by Armstrong) is that actual amounts of goods and services being traded cannot be known with much precision...

And how would lil ol OROBTC rectify that?  Lower taxes, tariffs and fees...

[aminorex]

An Alt would need a fairly big pond (bigger than the pond is now), and would have to demonstrate marked superiority to Bitcoin to be the winner.

In my opinion, Monero has both of those advantages, as well as superior governance.  Fungibility and risk control are the transmission channels of that superiority.  There are more currency use-cases for an opaque chain than for a transparent one.  Software usability still lags, but is definitely catching up. I consider it a tortoise, in a field of hares.

Since I am here, I offer some general views:

Gold, oil seem good bets for the coming week. Oil should outperform gold into mid-August, but in late August I expect gold to compete again. I am torn on SPX.  Treasuries probably have a few more days to run as well, but will correct again mid-August.  It's a QE/NIRP-based asset inflation week again, I guess.

As mentioned elsewhere: On technical grounds, I think SPX short interest may not reach capitulation for another 5 months, and if that holds true, the subsequent bear market should be a very strong one indeed.  I am not sure it can hold out that long, however.  The rot is so deep, so pervasive.  18 months of declining earnings and rising prices.  Outright manipulation in the form of covert as well as overt central bank buying can basically stick the prices wherever they wish, for now, but it's hard to believe they could be so foolish as to do so without limit, contra fundamentals.  Particularly when it is obvious that the Gini effects are creating both political risk and economic headwinds, on a massive scale.

The only truly adequate grounds for taking a strong medium-long range view on equities, since 2012 at least, has been a robust game-theoretical model for the boards of the major central banks.  I lack that, so my views lately are primarily very short-term and technical or event-based. I am confident in the very long term of a correction to demographic trends and economic rationality.  Between, my crystal ball is utterly fogged, specifically regarding SPX, caught in a haze of Fedspeak.

Disclosure: My positions on these instruments are currently long XMR, short the front gold OTM calls in a ratio to long December gold ITM calls, short the front SPX OTM puts in a ratio to long SPX ITM 2017 ITM puts, and long August WTI ITM calls.  I have no present position in long bonds, but may be a buyer on Monday and a seller on Friday, to catch the tail of this swing.

[deisik]

So would it not be true that there is a massive opportunity for someone to develop a cryptocurrency based on fractional reserve banking & elastic money supply? Would there be a way to develop an autonomous decentralized fractional reserve system using blockchain technology?

The thing which distinguishes fiat from cryptocurrencies is that it can be printed, as they say, "out of thin air". So you are basically suggesting the same for a new cryptocurrency. As I got your point, the new coin should be emitted through loans in a way that all wallets get an interest (part thereof). And how are you going to bootstrap this system? Should there be a sort of "premine" and an ICO?

This seems to be off-topic here, you may want to start a new thread for discussing this matter further

[Lateralus]

So would it not be true that there is a massive opportunity for someone to develop a cryptocurrency based on fractional reserve banking & elastic money supply? Would there be a way to develop an autonomous decentralized fractional reserve system using blockchain technology?

The thing which distinguishes fiat from cryptocurrencies is that it can be printed, as they say, "out of thin air". So you are basically suggesting the same for a new cryptocurrency.

First of all how is this off-topic when Martin Armstrong is as far as I can tell one of the only people to ever suggest that the Fed is just serving as a patsy for the fiscal crimes of congress, and that both Keynesian AND Austrian economists are delusional and dangerously wrong when it comes to their understanding of fractional reserve banking and the history of money.

Second of all, I did not suggest that. The WHOLE POINT is that banks are not printing money out of thin air, the Fed and the Treasury does that UNDER THE AUTHORITY OF CONGRESS. Even that is still a drop in the bucket compared to the amount of money created through congress' debt expenditures (borrowing), of which they (like all governments) have never had any intentions of paying back. But even that money isn't being "created", and certainly not out of thin air! That is REAL DEBT, owed to REAL LENDERS. You don't need central banks with cryptocurrency, but even if you did that wouldn't be a problem in the first place as long as it's privately run and privately funded. Armstrong has explained how the Federal Reserve's ORIGINAL design was intended to be nothing more than just that, a reserve managed and funded by the bankers themselves. He said that was J.P. Morgan's original design, based on the lessons he learned during the panic of 1907. His design only last a year apparently, when the progressives in Washington hijacked it to fund their debts during WWI, after which it was (OF COURSE) never returned to it's original design.

[deisik]

So would it not be true that there is a massive opportunity for someone to develop a cryptocurrency based on fractional reserve banking & elastic money supply? Would there be a way to develop an autonomous decentralized fractional reserve system using blockchain technology?

The thing which distinguishes fiat from cryptocurrencies is that it can be printed, as they say, "out of thin air". So you are basically suggesting the same for a new cryptocurrency.

First of all how is this off-topic when Martin Armstrong is as far as I can tell one of the only people to ever suggest that the Fed is just serving as a patsy for the fiscal crimes of congress, and that both Keynesian AND Austrian economists are delusional and dangerously wrong when it comes to their understanding of fractional reserve banking and the history of money

I'm not the OP, so it is entirely up to him to decide on this matter. I was just thinking that he might not like this discussion going any further

Second of all, I did not suggest that. The WHOLE POINT is that banks are not printing money out of thin air, the Fed and the Treasury does that UNDER THE AUTHORITY OF CONGRESS. Even that is still a drop in the bucket compared to the amount of money created through congress' debt expenditures (borrowing), of which they (like all governments) have never had any intentions of paying back. But even that money isn't being "created", and certainly not out of thin air! That is REAL DEBT, owed to REAL LENDERS. You don't need central banks with cryptocurrency, but even if you did that wouldn't be a problem in the first place as long as it's privately run and privately funded. Armstrong has explained how the Federal Reserve's ORIGINAL design was intended to be nothing more than just that, a reserve managed and funded by the bankers themselves. He said that was J.P. Morgan's original design, based on the lessons he learned during the panic of 1907. His design only last a year apparently, when the progressives in Washington hijacked it to fund their debts during WWI, after which it was (OF COURSE) never returned to it's original design

And how is all that related to the idea of developing a cryptocurrency based on fractional reserve banking and elastic money supply? I'm not so much interested in FRB (since this is an often misunderstood concept and utterly misguiding) as in the elastic money supply. So how are you (or whoever you got this idea from) going to implement this feature in practice, in a cryptocurrency? Further, the concept of EMS assumes that money is not only created but also destroyed as required by the economy, so how are you going to realize in blockchain the feedback loop mandatory for this kind of thing?

Please, be specific and don't digress into irrelevant details about the Federal Reserve and its history (which I can read about myself if required)

[sidhujag]

So would it not be true that there is a massive opportunity for someone to develop a cryptocurrency based on fractional reserve banking & elastic money supply? Would there be a way to develop an autonomous decentralized fractional reserve system using blockchain technology?

The thing which distinguishes fiat from cryptocurrencies is that it can be printed, as they say, "out of thin air". So you are basically suggesting the same for a new cryptocurrency.

First of all how is this off-topic when Martin Armstrong is as far as I can tell one of the only people to ever suggest that the Fed is just serving as a patsy for the fiscal crimes of congress, and that both Keynesian AND Austrian economists are delusional and dangerously wrong when it comes to their understanding of fractional reserve banking and the history of money

I'm not the OP, so it is entirely up to him to decide on this matter. I was just thinking that he might not like this discussion going any further

Second of all, I did not suggest that. The WHOLE POINT is that banks are not printing money out of thin air, the Fed and the Treasury does that UNDER THE AUTHORITY OF CONGRESS. Even that is still a drop in the bucket compared to the amount of money created through congress' debt expenditures (borrowing), of which they (like all governments) have never had any intentions of paying back. But even that money isn't being "created", and certainly not out of thin air! That is REAL DEBT, owed to REAL LENDERS. You don't need central banks with cryptocurrency, but even if you did that wouldn't be a problem in the first place as long as it's privately run and privately funded. Armstrong has explained how the Federal Reserve's ORIGINAL design was intended to be nothing more than just that, a reserve managed and funded by the bankers themselves. He said that was J.P. Morgan's original design, based on the lessons he learned during the panic of 1907. His design only last a year apparently, when the progressives in Washington hijacked it to fund their debts during WWI, after which it was (OF COURSE) never returned to it's original design

And how is all that related to the idea of developing a cryptocurrency based on fractional reserve banking and elastic money supply? I'm not so much interested in FRB (since this is an often misunderstood concept and utterly misguiding) as in the elastic money supply. So how are you (or whoever you got this idea from) going to implement this feature in practice, in a cryptocurrency? Further, the concept of EMS assumes that money is not only created but also destroyed as required by the economy, so how are you going to realize in blockchain the feedback loop mandatory for this kind of thing?

Please, be specific and don't digress into irrelevant details about the Federal Reserve and its history (which I can read about myself if required)

The key is to have a metric of work available for the health function (the get work function in btc core). Money can be created based on demand for this metric and burned based on lack of it... take a look at my inplementation in syscoin if you want a closer look. I did comment the code to explain.

[deisik]

The key is to have a metric of work available for the health function (the get work function in btc core). Money can be created based on demand for this metric and burned based on lack of it... take a look at my inplementation in syscoin if you want a closer look. I did comment the code to explain.

I don't quite understand what you mean. Could you expand more on this, I feel interested how the EMS is made possible, from an economic point of view, before all...

What is the health function in this context and how "health" (whatever you may mean) is measured?

[aminorex]

Expecting gold to decline over the next week or so.  Definitely a buy below 1250

[sidhujag]

Expecting gold to decline over the next week or so.  Definitely a buy below 1250

Im looking at around 700 to 800 for final target

[sidhujag]

The key is to have a metric of work available for the health function (the get work function in btc core). Money can be created based on demand for this metric and burned based on lack of it... take a look at my inplementation in syscoin if you want a closer look. I did comment the code to explain.

I don't quite understand what you mean. Could you expand more on this, I feel interested how the EMS is made possible, from an economic point of view, before all...

What is the health function in this context and how "health" (whatever you may mean) is measured?

Syscoin uses services for marketplace activities or aliases, certificates or arbitrated escrow with marketplace activitiss. Because we can detect these servicse transactions we can define what work means for syscoin as anything value add that is done onchain between peers. There is rating and moderation and fees included to avoid people from creating services for no reason.

So we can tie in a burn or inflate based on number of syscoin transactions per block we see. The crude implementation i did was.. if under 5 a block i burn the fees otherwise i inflate the fees and give to miners (its merge mined with bitcoin)... so essentially the idea is to deflate if work is not being done or inflate if too much work is being done based on how much extra work is being done.

Its kinda like central bank inflation targeting but with a metric of work that cant be hacked and everyone understands.. thus like what john nash labelled as an asymptotically ideal currency.

[deisik]

The key is to have a metric of work available for the health function (the get work function in btc core). Money can be created based on demand for this metric and burned based on lack of it... take a look at my inplementation in syscoin if you want a closer look. I did comment the code to explain.

I don't quite understand what you mean. Could you expand more on this, I feel interested how the EMS is made possible, from an economic point of view, before all...

What is the health function in this context and how "health" (whatever you may mean) is measured?

Syscoin uses services for marketplace activities or aliases, certificates or arbitrated escrow with marketplace activitiss. Because we can detect these servicse transactions we can define what work means for syscoin as anything value add that is done onchain between peers. There is rating and moderation and fees included to avoid people from creating services for no reason.

So we can tie in a burn or inflate based on number of syscoin transactions per block we see. The crude implementation i did was.. if under 5 a block i burn the fees otherwise i inflate the fees and give to miners (its merge mined with bitcoin)... so essentially the idea is to deflate if work is not being done or inflate if too much work is being done based on how much extra work is being done.

Its kinda like central bank inflation targeting but with a metric of work that cant be hacked and everyone understands.. thus like what john nash labelled as an asymptotically ideal currency.

Indeed, this is still a far cry from how the real economy works and the convoluted ways in and by which it works, but even implementing a simple feedback loop seems to be a step in the right direction. From an economic point of view though, you shouldn't inflate currency when just any kind of work has been done, since many services (which you also use a work metric as I got it) don't require an increased amount of coins...

There should be a simple but economically based rule when the new money is actually needed to be created

[sidhujag]

The key is to have a metric of work available for the health function (the get work function in btc core). Money can be created based on demand for this metric and burned based on lack of it... take a look at my inplementation in syscoin if you want a closer look. I did comment the code to explain.

I don't quite understand what you mean. Could you expand more on this, I feel interested how the EMS is made possible, from an economic point of view, before all...

What is the health function in this context and how "health" (whatever you may mean) is measured?

Syscoin uses services for marketplace activities or aliases, certificates or arbitrated escrow with marketplace activitiss. Because we can detect these servicse transactions we can define what work means for syscoin as anything value add that is done onchain between peers. There is rating and moderation and fees included to avoid people from creating services for no reason.

So we can tie in a burn or inflate based on number of syscoin transactions per block we see. The crude implementation i did was.. if under 5 a block i burn the fees otherwise i inflate the fees and give to miners (its merge mined with bitcoin)... so essentially the idea is to deflate if work is not being done or inflate if too much work is being done based on how much extra work is being done.

Its kinda like central bank inflation targeting but with a metric of work that cant be hacked and everyone understands.. thus like what john nash labelled as an asymptotically ideal currency.

Indeed, this is still a far cry from how the real economy works and the convoluted ways in and by which it works, but even implementing a simple feedback loop seems to be a step in the right direction. From an economic point of view though, you shouldn't inflate currency when just any kind of work has been done, since many services (which you also use a work metric as I got it) don't require an increased amount of coins...

There should be a simple but economically based rule when the new money is actually needed to be created

Its set up in a way such that you would get a 2 pct inflation rate in firsr year if we get full blocks every block. We know that wont happen yet so inflation is neglible. Also inflation rate drops as time goes. The hope is that one day there will be a breakthrough which will allow for an increased tps on blockchain thus putting this targetting mechanism in focus. Until then it wont affect supply in any meaningful way.

[deisik]

Syscoin uses services for marketplace activities or aliases, certificates or arbitrated escrow with marketplace activitiss. Because we can detect these servicse transactions we can define what work means for syscoin as anything value add that is done onchain between peers. There is rating and moderation and fees included to avoid people from creating services for no reason.

So we can tie in a burn or inflate based on number of syscoin transactions per block we see. The crude implementation i did was.. if under 5 a block i burn the fees otherwise i inflate the fees and give to miners (its merge mined with bitcoin)... so essentially the idea is to deflate if work is not being done or inflate if too much work is being done based on how much extra work is being done.

Its kinda like central bank inflation targeting but with a metric of work that cant be hacked and everyone understands.. thus like what john nash labelled as an asymptotically ideal currency.

Indeed, this is still a far cry from how the real economy works and the convoluted ways in and by which it works, but even implementing a simple feedback loop seems to be a step in the right direction. From an economic point of view though, you shouldn't inflate currency when just any kind of work has been done, since many services (which you also use a work metric as I got it) don't require an increased amount of coins...

There should be a simple but economically based rule when the new money is actually needed to be created

Its set up in a way such that you would get a 2 pct inflation rate in firsr year if we get full blocks every block. We know that wont happen yet so inflation is neglible. Also inflation rate drops as time goes. The hope is that one day there will be a breakthrough which will allow for an increased tps on blockchain thus putting this targetting mechanism in focus. Until then it wont affect supply in any meaningful way.

So it works very much like how the Dogecoin emission is done, that is, a constant inflation rate in absolute terms (the same number of coins gets mined every year), and, consequently, an always diminishing inflation rate in relative terms (in percentages)

[sidhujag]

Syscoin uses services for marketplace activities or aliases, certificates or arbitrated escrow with marketplace activitiss. Because we can detect these servicse transactions we can define what work means for syscoin as anything value add that is done onchain between peers. There is rating and moderation and fees included to avoid people from creating services for no reason.

So we can tie in a burn or inflate based on number of syscoin transactions per block we see. The crude implementation i did was.. if under 5 a block i burn the fees otherwise i inflate the fees and give to miners (its merge mined with bitcoin)... so essentially the idea is to deflate if work is not being done or inflate if too much work is being done based on how much extra work is being done.

Its kinda like central bank inflation targeting but with a metric of work that cant be hacked and everyone understands.. thus like what john nash labelled as an asymptotically ideal currency.

Indeed, this is still a far cry from how the real economy works and the convoluted ways in and by which it works, but even implementing a simple feedback loop seems to be a step in the right direction. From an economic point of view though, you shouldn't inflate currency when just any kind of work has been done, since many services (which you also use a work metric as I got it) don't require an increased amount of coins...

There should be a simple but economically based rule when the new money is actually needed to be created

Its set up in a way such that you would get a 2 pct inflation rate in firsr year if we get full blocks every block. We know that wont happen yet so inflation is neglible. Also inflation rate drops as time goes. The hope is that one day there will be a breakthrough which will allow for an increased tps on blockchain thus putting this targetting mechanism in focus. Until then it wont affect supply in any meaningful way.

So it works very much like how the Dogecoin emission is done, that is, a constant inflation rate in absolute terms (the same number of coins gets mined every year), and, consequently, an always diminishing inflation rate in relative terms (in percentages)

No the mining rewards are seperate... and mining ends around 900 million coins... the fees are regenerated or burned (as an added incentive for miners to keep their equipment on). The supply will be determined by the fees after mining generation has stopped. Dogecoin never stops mining and thus has a constant mining inflation rate which is more inflationary for a longer period of time. Thereafter, Syscoin will rely solely on the the output of "work" to determine inflation and will only matter when TPS is high enough to make a dent in total amount of coins in existance when that breakthrough occurs.

Either way since Sys is merge mined its an easier sell for miners to keep mining, nevermind the extra fees that may be generated for them.

[aminorex]

Expecting gold to decline over the next week or so.  Definitely a buy below 1250

Im looking at around 700 to 800 for final target

That would take a while, were it to happen.  AFAICT, gold is going down past the ides of August, and should have a distinct local top sometime in September.  In order to reach as low as you suggest, then, it would require several months of decline, into mid-2017 at least.  Personally, I think the policy risk environment will prevent that from occurring during that time-frame.  But my gold exposure is small enough so that I wouldn't mind doubling down on it, if so.