USD inflation affect on BTC?

[cypherdoc]

not one of you has mentioned the importance of debt.  i'm not sure if it's a generational thing or what with you guys.  perhaps its b/c none of you have ever bought real estate?  i don't know but having gone thru the process a half dozen times or so really makes one realize its importance.

you have to understand the enormity of the mortgage industry machine that existed for over 4 decades in this country.  the banksters made it so easy to qualify for just about anyone.  you could buy and flip a property in about a month if you knew what you were doing and you could make great money doing it.  the last property i flipped for a $45K profit was a condo in 2007 approximately.    all i did was change out all the doorknobs, toilets, and paint.  and i was probably one of the last to get in on that party.  prices were rising so fast you just knew it was going to all blow up but it was so easy to think the party would continue as it had for the previous several decades.  afterall, Ben said it was sustainable right?

i think that condo cost me around $645K and i sold it for $695K, maybe $5K in fees.  i could've paid cash for it but i didn't.  why?  b/c it was fashionable, and economically prudent to leverage those buys.  the thinking went that for a mere $20K or whatever, you could get a loan for the rest and get control of the property.  thus, if you had say $100K in cash you could do this 5x with 5 different condos thus magnifying the gains.  $45K x 5 = $225K in profits.  there were whole books written on this process.  now to say i could've paid cash put me in a distinct minority.  MOST flippers were secretaries or garbage men flipping on the side.  they had to borrow to make this happen.  stories abounded about secretaries who made themselves into millionaires (ignoring the fact that they had millions in debt too) using the "magic" of leverage.  it is mind boggling how much residential and commercial debt was built up worldwide.  and it still exists.  this is why any good definition of the money supply has to include not just the $2.8B in FRN's but the total amount of debt.

and then there was all the leverage that pyramided off the mortgage industry; mortgage derivatives, ARS's, CDS's, PIK's, ABS's.  other investors used the easy loans to buy stocks, bonds, commodities, GOLD, SILVER, etc.  i remember at the peak in 2007 reading about private equity firms making buyout deals almost daily involving billions in borrowed money.  new 3 letter acronyms of fancy new debt instruments were popping up everywhere as Wall St kept inventing new investment schemes for hyped up bulltard speculators leveraging up to grab every asset they could get their hands on as it was common wisdom that the USD was doomed to keep going down from all this debt money issuance.  and then it popped.

i went short stocks in Sept 2007 most notably in New Century Financial on a tip from Marc Faber's newsletter.  i thought i made a killing on that short when it went from $37 to $23 when i covered.  i could not believe how much and how fast it fell.  it promptly went to $0 and i almost kicked my door down.  i went uber crazy shorting a boatload of mortgage exposed companies like Countrywide, Wachovia, Downey Savings and Loan, Bear Stearns, Lehman, and Merrill.  2007-2009 was an extraordinary time of severe debt destruction.  during which the USD and UST's skyrocketed.

and then Ben stepped in with QE and the market turned at the bottom of the 4yr cycle.  let's not forget all the extraordinary measures he tried for the previous 2 yrs to try and prevent what was inevitable.  it is my contention that Ben and Obama got lucky; they just happened to be around to catch the bottom of that cycle.  certainly the money printing of QE has helped us reflate but that ability to stimulate has run out.  we never cleared all the bad debt and it fact have made it worse.  the debt destruction is outpacing the money printing and that is why the USD is rising.  and it will get worse.  we are on the verge of either Greece or Germany pulling out of the union.  the subprime borrowers of US real estate have been replaced by the subprime borrowers of sovereign nations.  they will default.  and when they do the debt destruction will domino just like it did here in the US forcing up the value of the remaining USD's in circulation.

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[cypherdoc]

i remember selling a condo for $845K that we lived in for 2 yr from 2002-4 while we were remodeling our home.  i bought it for $525K using leverage of course.  at that time it was fashionable to get an appraisal as a seller to prove to a buyer how much the home, or condo in this case, was worth.  my bank came back with an appraised value of $750K iirc based on comps.  i promptly called my bank rep and complained that it should be re-appraised for my $850K asking price.  i said that there were several other condos around me listing for around $850K and that given recent price trajectories that was a very reasonable price.  i don't think it hurt that i threw in a comment about how a depositor of my caliber ought to be treated more nicely.  within 6h i had my new appraisal.  

point being, everyone involved in the game had a vested interest to inflate prices to the maximum possible.  even if it did stretch the rules.  its my contention that we have reached the peak of that game and that everything is going to reverse.  the USD has been dropping for 100 yrs, perhaps it can rise now for several years?

[adamstgBit]

when people default on their mortgage, it destroys depth, and reduces the money supply?

[cypherdoc]

when people default on their mortgage, it destroys depth, and reduces the money supply?

absolutely

[adamstgBit]

and you think we'll see more defaults pushing the USD up, but hasn't the mortgage bubble popped already?

[cypherdoc]

why do u think the ECB and Fed are so desperately trying to prevent Greece and subprime borrowers from defaulting?  why do u think dead beat homeowners are being allowed to stay in their homes at NO COST.  b/c the banks don't want to write off the mortgages aka debt destruction of the asset side of their balance sheets aka known as negative equity or BK.  the Greeks and subprime borrowers know how to play the game.

[adamstgBit]

why do u think the ECB and Fed are so desperately trying to prevent Greece and subprime borrowers from defaulting?  why do u think dead beat homeowners are being allowed to stay in their homes at NO COST.  b/c the banks don't want to write off the mortgages aka debt destruction of the asset side of their balance sheets aka known as negative equity or BK.  the Greeks and subprime borrowers know how to play the game.

k but wouldn't Greeks defaults effect the EUR not USD

[myrkul]

So what effect do you think these guys will have:
http://rollingjubilee.org/

Given that they're buying up debt and then destroying it?

[cypherdoc]

and you think we'll see more defaults pushing the USD up, but hasn't the mortgage bubble popped already?

some of it has but the majority has been shifted to the Fed being bought by the $2.8B of fresh FRN's printed by the Fed.  problem is, total private debt in this country totals north of $52T, that's TRILLION:  http://en.wikipedia.org/wiki/Economy_of_the_United_States

this debt is now an obligation of the taxpayer.  this dynamic has played out all over the world esp. in Europe.  no wonder the Greeks can't pay.

[nobbynobbynoob]

So what effect do you think these guys will have:
http://rollingjubilee.org/

Given that they're buying up debt and then destroying it?

Alas, Bitcoin doesn't appear to be among their payment options.

[cypherdoc]

why do u think the ECB and Fed are so desperately trying to prevent Greece and subprime borrowers from defaulting?  why do u think dead beat homeowners are being allowed to stay in their homes at NO COST.  b/c the banks don't want to write off the mortgages aka debt destruction of the asset side of their balance sheets aka known as negative equity or BK.  the Greeks and subprime borrowers know how to play the game.

k but wouldn't Greeks defaults effect the EUR not USD

its one huge pyramid scheme originating with the USD.  being the world's reserve currency, USD's form the base and reserves of every countries individual fiat currency.  most foreign debt is denominated in USD's.  we're one big interconnected economy.  no such thing as decoupling.  Triffin's Dilemma.

[adamstgBit]

So what effect do you think these guys will have:
http://rollingjubilee.org/

Given that they're buying up debt and then destroying it?

6.5 million is nothing, no effect?

[cypherdoc]

Ben is pissing into an actively flushing toilet of destructing debt.  he'll never fill up the bowl.  plus, he's just a little wimp/pimp with a small bladder and appendage anyways.  how anybody thinks he owns a White Horse is beyond me.

so why do i think Bitcoin rises in this scenario?  wouldn't i think it would drop as well since i think gold and silver drops?  no.  its b/c we need a better system and Bitcoin offers that.  its also born of the Internet which is a big reason why all this is happening in the first place.  Bitcoin is just a baby at this point and is destined to become Godzilla.

[Richy_T]

Housing is still way over-priced in my opinion. Perhaps not dangerously so any more but enough, potentially, to cause some problems down the road.

[adamstgBit]

Ok so think about this...

gold and silver has been betting the USD would go continue to go down and recently have been scaring people into buying gold and silver , saying the USD would drop to 0  .

what will happen to gold and silver if deflation sets in?  

[adamstgBit]

Housing is still way over-priced in my opinion. Perhaps not dangerously so any more but enough, potentially, to cause some problems down the road.

the US went ape shit crazy and gave away mortgages to anyone, ( all thanks to the golden boy? )

Canada didn't do this.

I'm sure most countries are fine, and mortgages are not in a bubble ...

[cypherdoc]

Ok so think about this...

gold and silver has been betting the USD would go continue to go down and recently have been scaring people into buying gold and silver , saying the USD would drop to 0  .

what will happen to gold and silver if deflation sets in?  

there'a at least 182 pages of my gold thread where i voice my opinion on this. 

[cypherdoc]

Housing is still way over-priced in my opinion. Perhaps not dangerously so any more but enough, potentially, to cause some problems down the road.

the US went ape shit crazy and gave away mortgages to anyone, ( all thanks to the golden boy? )

Canada didn't do this.

I'm sure most countries are fine, and mortgages are not in a bubble ...

LOL!  are u kidding me?  ALL countries have done this with the most notable problem child being Spain.

[cypherdoc]

Housing is still way over-priced in my opinion. Perhaps not dangerously so any more but enough, potentially, to cause some problems down the road.

the US went ape shit crazy and gave away mortgages to anyone, ( all thanks to the golden boy? )

Canada didn't do this.

I'm sure most countries are fine, and mortgages are not in a bubble ...

have u heard what's happening to Vancouver real estate?

[adamstgBit]

Housing is still way over-priced in my opinion. Perhaps not dangerously so any more but enough, potentially, to cause some problems down the road.

the US went ape shit crazy and gave away mortgages to anyone, ( all thanks to the golden boy? )

Canada didn't do this.

I'm sure most countries are fine, and mortgages are not in a bubble ...

have u heard what's happening to Vancouver real estate?

nope, but i did hear housing prices in my area are sure to go up in the next few years.