Martin Armstrong Discussion

[STT]

Interest rates rise in a no bid market.  The alternative is that the govt confiscates your money in the bank and replaces it with bonds.

Arent Pension funds controlled by government already some of the largest holders of government bonds.   If they are holding at high prices such as now which is not justified, they will see losses.   Perhaps the pension will give out lump sums as a bond and the loss of value over time from its return is with the pension holder who is now getting 3% PA with 10% inflation

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[sloanf]

Remember his call on the Dow at 40K by 2015?

I wouldn't touch the stock market right now with someone else's money, let alone my own.  We will either have some form of super inflation or the DOW is gonna bring the pain in losses soon.  

I don't need to be persuaded that the Dow is not going to 30-40K not by 2017, 2020, or 2022. I exposed MA fraud from the very first message here https://bitcointalk.org/index.php?topic=1082909.msg13563151#msg13563151. He is a charlatan, does not know anything, does not have a supercomputer, almost always wrong and is there just to make money on idiots like @iamnotback. I proved it in my posts.

[r0ach]

That is why crypto is the new gold.

Gold and silver are the new gold and silver.  Bitcoin will always be a tier or more below and never able to defeat it on Exter's pyramid:

The r0ach report vol 7: Bitcoin is not an actual store of value because there is no real price floor or inelastic demand

https://steemit.com/bitcoin/@r0achtheunsavory/the-r0ach-report-vol-7-bitcoin-is-not-an-actual-store-of-value-because-there-is-no-real-price-floor-or-inelastic-demand

[STT]

Bitcoin is transactional we all know that.   The amount of data it stores is quite small though its a unique and lasting encryption perhaps but the store value side of it is the minor to its ability to transmit value faster, cheaper and securely over gold.   Gold requires additional security to ensure its transaction is safely done, bitcoin is self contained and slimer.  
Gold I accept but silver is industrial and varies more over time and has less advantage over bitcoin and its own variance.
https://i.imgur.com/J5JFDov.png
Here is a small picture of flipping between the two, some tiny gold transactions.  In theory its now possible to move grams of gold cheaply between consumers for transactions, though fractional base coins have existed before this is more exact but reliant on a more central system.  As per the statement above, bitcoin cannot be replaced by gold either they are distinct

Bitcoin's value is based entirely on transaction flow and artificial scarcity of block size. For gold or silver there's an actual cost of production price floor. Oil makes up a large part of that floor, but even if you invent free energy, you're still constrained by the fact that you're in a closed ecosystem with limited supply and most of what can be mined has already happened anyway, and most things on the periodic table have some type of inelastic demand in the first place.

Gold is usually rare but it has at times been found in large quantities with little effort, its still possible this can happen again.   There is massive amounts of gold in the earth still but mostly we presume it will only appear when distributed.   In theory we can get gold from outside earth as it was never produced here, a comet with gold is not impossible and I think South Africa is related to this historic event.   ie.  Its not perfectly regular either

[sidhujag]

Why would interest rates rise in an inflationary supply expanding scenario? Doesnt it rise to curb deflation?

Interest rates rise in a no bid market.  The alternative is that the govt confiscates your money in the bank and replaces it with bonds.

Do you have an example or is this your theory? I know some small countries had the bank confidcations a few yrs ago but that pushed bonds up and rates down not other way. If bonds crash only way rates go up

[iamnotback]

Inflation may be occurring domestically in the US but the rest of the world is demanding dollars as well, offsetting the money supply increase by a significant margin. This is when the interest rates will start to rise in an attempt to slow demand, since the unlikely alternative of simply introducing more dollars at a pace sufficient to handle the demand has become politically unpalatable.

I believe what you are saying is by raising interest rates on bonds, then demand for bonds can be reduced because investors will anticipate further interest rates hikes thus devaluing the already issued bonds at lower interest rates. Thus discouraging capital to convert FOREX to buy dollar bonds.

And this selloff of bonds will ignite a frenzy of buying in the stock market.

[iamnotback]

That is why crypto is the new gold.

Gold and silver are the new gold and silver.  Bitcoin will always be a tier or more below and never able to defeat it on Exter's pyramid:

The r0ach report vol 7: Bitcoin is not an actual store of value because there is no real price floor or inelastic demand

https://steemit.com/bitcoin/@r0achtheunsavory/the-r0ach-report-vol-7-bitcoin-is-not-an-actual-store-of-value-because-there-is-no-real-price-floor-or-inelastic-demand

My whitepaper solves the dilemma. Checkmate.

Gold declining (and not closing above $1221) precisely as Armstrong said. Sigh.

[miscreanity]

Inflation may be occurring domestically in the US but the rest of the world is demanding dollars as well, offsetting the money supply increase by a significant margin. This is when the interest rates will start to rise in an attempt to slow demand, since the unlikely alternative of simply introducing more dollars at a pace sufficient to handle the demand has become politically unpalatable.

I believe what you are saying is by raising interest rates on bonds, then demand for bonds can be reduced because investors will anticipate further interest rates hikes thus devaluing the already issued bonds at lower interest rates. Thus discouraging capital to convert FOREX to buy dollar bonds.

And this selloff of bonds will ignite a frenzy of buying in the stock market.

Yes, that is one aspect at the institutional level although I think bonds will be bid on by large entities in an effort to support the financial system despite the intended psychological effect. That supportive effort will fail, of course.

A larger impact I see is that USD denominated loan rates will rise, eventually building the incentive to acquire funds in other denominations which will outweigh the demand during a wave of defaults. Even as rates rise and return for loans provided increases, there will be less lending bid on and the lion's share of capital will indeed flow into equities.

What borrower wants to pay back on something that has appreciated significantly, and at a higher rate than other sources? That will be exacerbated by newer tools making alternative denominations easier to handle. See Align Commerce as an example.

[CoinCube]

Bitcoin's value is based entirely on transaction flow and artificial scarcity of block size. For gold or silver there's an actual cost of production price floor. Oil makes up a large part of that floor, but even if you invent free energy, you're still constrained by the fact that you're in a closed ecosystem with limited supply and most of what can be mined has already happened anyway, and most things on the periodic table have some type of inelastic demand in the first place.

What interest me is the role bitcoin plays in improving the signalling mechanism of money. sidhujag has referred to a near perfect money from the framework of Nash's asymptotically ideal money.

At first glance bitcoin does not appear to be ideal money at all. It's utterly fixed quantity of 21 million creates a permanent incentive against growth. In a world with bitcoin as currency people would under-invest as it becomes very profitable to just to hold money. Bitcoin as money introduces a vector opposing growth.

Bitcoin, however, does not exist in a vacuum. It coexists alongside a usury based fiat system. This financed based system is built upon very different foundations. Usury introduces a vector for eternal exponential growth. Eternal exponential growth is impossible in a finite world so under our current system we must progressively lie to ourselves to maintain the illusion of exponential growth.

In mathematics if one wishes to zero out a vector field you introduce a vector pointing in the opposite direction. We may be able to achieve asymptotically ideal money not via any single currency breakthrough but by the existence of competing currencies founded upon differing fundamental assumptions different vectors.

If we allow free flow of capital between these currencies capital can flow between them matching overall growth signaling with underlying reality. Perhaps ideal money will not be a single currency but the result of a dynamic competition between them.

[sidhujag]

Bitcoin's value is based entirely on transaction flow and artificial scarcity of block size. For gold or silver there's an actual cost of production price floor. Oil makes up a large part of that floor, but even if you invent free energy, you're still constrained by the fact that you're in a closed ecosystem with limited supply and most of what can be mined has already happened anyway, and most things on the periodic table have some type of inelastic demand in the first place.

What interest me is the role bitcoin plays in improving the signalling mechanism of money. sidhujag has referred to a near perfect money from the framework of Nash's asymptotically ideal money.

At first glance bitcoin does not appear to be ideal money at all. It's utterly fixed quantity of 21 million creates a permanent incentive against growth. In a world with bitcoin as currency people would under-invest as it becomes very profitable to just to hold money. Bitcoin as money introduces a vector opposing growth.

Bitcoin, however, does not exist in a vacuum. It coexists alongside a usury based fiat system. This financed based system is built upon very different foundations. Usury introduces a vector for eternal exponential growth. Eternal exponential growth is impossible in a finite world so under our current system we must progressively lie to ourselves to maintain the illusion of exponential growth.

In mathematics if one wishes to zero out a vector field you introduce a vector pointing in the opposite direction. We may be able to achieve asymptotically ideal money not via any single currency breakthrough but by the existence of competing currencies founded upon differing fundamental assumptions different vectors.

If we allow free flow of capital between these currencies capital can flow between them matching overall growth signaling with underlying reality. Perhaps ideal money will not be a single currency but the result of a dynamic competition between them.

I've thought a bit about this. If bitcoin was used as the default currency you can pay taxes in then banks would refuse to lend.. ie people with bitcoin would then become banks. You wouldn't want to loan your coins out? There will always be peaks and troughs in the market, so maybe during a downturn people loan coins for cheap (lower interest rates) while on uptrends the demand for loans picks up but at higher interest rates based on that demand. In general people want to HODL as they expect higher prices but there will still be lending available because people want to assure income through interest rates as lenders and borrowers want to always make more coin. Lenders know they will get their coins back so they will always lend with interest unless the borrower defaults (which is risk placed in the calculation of the interest rate to the borrower).

[iamnotback]

What interest me is the role bitcoin plays in improving the signalling mechanism of money.

Gold couldn't play that role very well because it didn't pay any income (although Armstrong claims he was the first to teach the Arabs how to lease gold), so it doesn't make sense to hold it until you think sovereign bonds will collapse, i.e. gold is only a hedge against collapse. So it doesn't signal until too late (and we can overshoot into MadMax).

Whereas, the crypto-currency I am going to offer (not only fixes Bitcoins problems) but it also has perpetual deflation (the money supply is forever asymptotically shrinking), thus it will provide the signaling you aim for. I am not making this up now, as this was already in my white paper which is already recorded online.

Now you might be getting closer to appreciating my bifurcation thesis.


Edit: in case this wasn't obvious, a few % a year of deflation (i.e. investment income for the holder) is a reasonable signaling option against a usury system that is dying, yet is not going to prevent someone from investing in the Knowledge Age which is growing at very high rates. The bifurcation thesis has many details to it.  

Also the deflation of the money supply is probably even outweighed by the growth of the Knowledge Age and thus the increasing market value of the crypto-currency.

I really don't think we will achieve any panaceas of Utopias. More important is what the Knowledge Age can do to advance the maximum division-of-labor which is naturally destructive to finance.

[miscreanity]

What interest me is the role bitcoin plays in improving the signalling mechanism of money.

...

Whereas, the crypto-currency I am going to offer (not only fixes Bitcoins problems) but it also has perpetual deflation (the money supply is forever asymptotically shrinking), thus it will provide the signaling you aim for. I am not making this up now, as this was already in my white paper which is already recorded online.

That struck me as an interesting element in Ripple, although there the supply was instantly available. Anxiously curious to see how you've got the supply structured to avoid instamine.

[iamnotback]

What interest me is the role bitcoin plays in improving the signalling mechanism of money.

...

Whereas, the crypto-currency I am going to offer (not only fixes Bitcoins problems) but it also has perpetual deflation (the money supply is forever asymptotically shrinking), thus it will provide the signaling you aim for. I am not making this up now, as this was already in my white paper which is already recorded online.

That struck me as an interesting element in Ripple, although there the supply was instantly available. Anxiously curious to see how you've got the supply structured to avoid instamine.

Actually at the start the money supply in my design is expanding. As it matures, the money supply can begin contracting.

I contrasted with PoS and PoW:

https://bitcointalk.org/index.php?topic=1744718.msg17558554#msg17558554

[CoinCube]

What interest me is the role bitcoin plays in improving the signalling mechanism of money. sidhujag has referred to a near perfect money from the framework of Nash's asymptotically ideal money.

At first glance bitcoin does not appear to be ideal money at all. It's utterly fixed quantity of 21 million creates a permanent incentive against growth. In a world with bitcoin as currency people would under-invest as it becomes very profitable to just to hold money. Bitcoin as money introduces a vector opposing growth.

Bitcoin, however, does not exist in a vacuum. It coexists alongside a usury based fiat system. This financed based system is built upon very different foundations. Usury introduces a vector for eternal exponential growth. Eternal exponential growth is impossible in a finite world so under our current system we must progressively lie to ourselves to maintain the illusion of exponential growth.

In mathematics if one wishes to zero out a vector field you introduce a vector pointing in the opposite direction. We may be able to achieve asymptotically ideal money not via any single currency breakthrough but by the existence of competing currencies founded upon differing fundamental assumptions different vectors.

If we allow free flow of capital between these currencies capital can flow between them matching overall growth signaling with underlying reality. Perhaps ideal money will not be a single currency but the result of a dynamic competition between them.

I've thought a bit about this. If bitcoin was used as the default currency you can pay taxes in then banks would refuse to lend.. ie people with bitcoin would then become banks. You wouldn't want to loan your coins out? There will always be peaks and troughs in the market, so maybe during a downturn people loan coins for cheap (lower interest rates) while on uptrends the demand for loans picks up but at higher interest rates based on that demand. In general people want to HODL as they expect higher prices but there will still be lending available because people want to assure income through interest rates as lenders and borrowers want to always make more coin. Lenders know they will get their coins back so they will always lend with interest unless the borrower defaults (which is risk placed in the calculation of the interest rate to the borrower).

(This is my current thinking feedback is welcome)

Imagine for a moment coexisting large and liquid bitcoin and fiat markets in equilibrium. Given the option borrowers will prefer loans is a currency they have a reasonable expectation of repaying.

Along comes a major technological innovation that promises dramatic innovation and profits. Innovators seeking to capture this new market will need capital. Some will invest their fiat others will take out fiat loans and some will sell bitcoin. Overall the demand for bitcoin will decline relative to the demand for fiat. The signal transmitted through the cumulative system of monetary transmission (fiat and bitcoin) will be one of increased growth. Capital shifting from bitcoin to fiat increases the overall growth vector matching capital appropriately to opportunity.

Now imagine the opposite scenario of limited growth exhaustion of opportunities and economic consolidation. Fiat requires perpetual debasement which will continue with or without growth so individuals will sell productive assets who's future prospects require growth, take out fiat debts to by bitcoin (anticipating debasement without growth), and exchange fiat for bitcoin. The signal transmitted through the cumulative system of monetary transmission (fiat and bitcoin) will be one of reduced growth. Bitcoin is ultimately a zero growth vector. Capital shifts away from fiat decreasing the intensity of the growth vector.

In this way individual actors shifting back and forth between liquid markets can alter the behavioral vector introduced by money so that it matches underlying reality.

[r0ach]

Gold I accept but silver is industrial and varies more over time and has less advantage over bitcoin and its own variance.

I wrote an entire page for why I consider your statement wrong, that "only gold" is money:

The r0ach report vol 8: The real fundamentals involving gold, silver, and copper as money

http://steemit.com/money/@r0achtheunsavory/the-r0ach-report-vol-8-the-real-fundamentals-involving-gold-silver-and-copper-as-money

[sidhujag]

What interest me is the role bitcoin plays in improving the signalling mechanism of money. sidhujag has referred to a near perfect money from the framework of Nash's asymptotically ideal money.

At first glance bitcoin does not appear to be ideal money at all. It's utterly fixed quantity of 21 million creates a permanent incentive against growth. In a world with bitcoin as currency people would under-invest as it becomes very profitable to just to hold money. Bitcoin as money introduces a vector opposing growth.

Bitcoin, however, does not exist in a vacuum. It coexists alongside a usury based fiat system. This financed based system is built upon very different foundations. Usury introduces a vector for eternal exponential growth. Eternal exponential growth is impossible in a finite world so under our current system we must progressively lie to ourselves to maintain the illusion of exponential growth.

In mathematics if one wishes to zero out a vector field you introduce a vector pointing in the opposite direction. We may be able to achieve asymptotically ideal money not via any single currency breakthrough but by the existence of competing currencies founded upon differing fundamental assumptions different vectors.

If we allow free flow of capital between these currencies capital can flow between them matching overall growth signaling with underlying reality. Perhaps ideal money will not be a single currency but the result of a dynamic competition between them.

I've thought a bit about this. If bitcoin was used as the default currency you can pay taxes in then banks would refuse to lend.. ie people with bitcoin would then become banks. You wouldn't want to loan your coins out? There will always be peaks and troughs in the market, so maybe during a downturn people loan coins for cheap (lower interest rates) while on uptrends the demand for loans picks up but at higher interest rates based on that demand. In general people want to HODL as they expect higher prices but there will still be lending available because people want to assure income through interest rates as lenders and borrowers want to always make more coin. Lenders know they will get their coins back so they will always lend with interest unless the borrower defaults (which is risk placed in the calculation of the interest rate to the borrower).

(This is my current thinking feedback is welcome)

Imagine for a moment coexisting large and liquid bitcoin and fiat markets in equilibrium. Given the option borrowers will prefer loans is a currency they have a reasonable expectation of repaying.

Along comes a major technological innovation that promises dramatic innovation and profits. Innovators seeking to capture this new market will need capital. Some will invest their fiat others will take out fiat loans and some will sell bitcoin. Overall the demand for bitcoin will decline relative to the demand for fiat. The signal transmitted through the cumulative system of monetary transmission (fiat and bitcoin) will be one of increased growth. Capital shifting from bitcoin to fiat increases the overall growth vector matching capital appropriately to opportunity.

Now imagine the opposite scenario of limited growth exhaustion of opportunities and economic consolidation. Fiat requires perpetual debasement which will continue with or without growth so individuals will sell productive assets who's future prospects require growth, take out fiat debts to by bitcoin (anticipating debasement without growth), and exchange fiat for bitcoin. The signal transmitted through the cumulative system of monetary transmission (fiat and bitcoin) will be one of reduced growth. Bitcoin is ultimately a zero growth vector. Capital shifts away from fiat decreasing the intensity of the growth vector.

In this way individual actors shifting back and forth between liquid markets can alter the behavioral vector introduced by money so that it matches underlying reality.

What is the difference between investing with bitcoin vs investing with fiat? One is closer to ideal money than the other and thus will win. They may work in harmony up to a tipping point where the preferred market instrument will take over due to higher transfer utility. You seem stuck in thinking that people cannot invest or will not invest with bitcoins. If the breakthrough is significant people will want bigger gains than what they would have been getting with btc.. if not then the breakthrough isn't big enough to justify large capital investments. Just as there is demand to hold coins over investing there is also likewise demand to lend bitcoins to high quality borrowers.

[OROBTC]

Gold I accept but silver is industrial and varies more over time and has less advantage over bitcoin and its own variance.

I wrote an entire page for why I consider your statement wrong, that "only gold" is money:

The r0ach report vol 8: The real fundamentals involving gold, silver, and copper as money

http://steemit.com/money/@r0achtheunsavory/the-r0ach-report-vol-8-the-real-fundamentals-involving-gold-silver-and-copper-as-money

A blogger I know knows various people from E Europe (Romania and Yugoslavia).  At least two of these guys went through hyperinflation in the 1990s (or so).  Neither reported that silver (or even gold) was accepted as currency.

US dollars and German marks only.

I have real doubts -- barring a TEOTWAWKI/The Road -- that silver will ever again be "money".

But, I will go visit your r0ach report vol. 8, it sounds like something not to be missed...


EDIT: Not a bad effort r0ach.  Moi?  I am still in the gold-only camp as being the best wealth-preserver, but I do hold some Pt, a small amount of Ag, and tiny amounts of Pd and Ir -- mostly because I like metals.

[deisik]

Gold I accept but silver is industrial and varies more over time and has less advantage over bitcoin and its own variance.

I wrote an entire page for why I consider your statement wrong, that "only gold" is money:

The r0ach report vol 8: The real fundamentals involving gold, silver, and copper as money

http://steemit.com/money/@r0achtheunsavory/the-r0ach-report-vol-8-the-real-fundamentals-involving-gold-silver-and-copper-as-money

A blogger I know knows various people from E Europe (Romania and Yugoslavia).  At least two of these guys went through hyperinflation in the 1990s (or so).  Neither reported that silver (or even gold) was accepted as currency.

US dollars and German marks only

Obviously, this is mainly because people had relatively easy access to hard currencies like the US dollar and German mark. It goes without saying that fiat currencies are more liquid form of money and handy for everyday expenses that gold. But what if there are no more such stable currencies altogether, and all currencies turn to trash more or less simultaneously? I'm inclined to think that gold in the form of gold bars and gold specie will still be used for the purchases of expensive and durable goods like homes or cars...

In fact, at the most severe moments of the Leningrad Blockade a gold ring could buy you a loaf of bread when nothing else would

[iamnotback]

The Divided States Of America (DSA):

[iamnotback]

Highly recommended (Michael Pettis and I have exchanged communications in the past):

http://carnegieendowment.org/chinafinancialmarkets/66610
http://carnegieendowment.org/chinafinancialmarkets/64825