[CHART] Bitcoin Inflation vs. Time

[valein1]

Bitcoin To-the-Moon   $ 8000      https://www.youtube.com/watch?v=cZQCkjVKy_I

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[logictense]

If bitcoin was a fiat, then it would be outlawed, period. But it's not, and so it will not be outlawed or treated as such, unless the some company itself engages in currency trading of some kind. But on the other hand given that recently (in the past years) dollar has had an inflation rate of around 2 percent, more and more influential persons try to persuade government to use/approve Bitcoin as an alternative to inflationary fiat currency. So that bitcoin (or candidates that would replace it on the technological basis in near future) is a deflationary currency because demand for bitcoin is rising as evidenced by the skyrocketing velocity. So even though the supply is growing, it is not excessive because velocity is growing so much faster. Actually, the supply of bitcoin should've grown faster during this period, but it is not programmed to do that.

[painlord2k]

But on the other hand given that recently (in the past years) dollar has had an inflation rate of around 2 percent

You are talking about CPI (Consumer Price Index) or something as manipulated.
The actual USD inflation the the last few years were a lot higher than 2%.

The pictures I posted before show the real M1 and Mb inflation after 2011.

https://docs.google.com/spreadsheets/d/17Jjhd_nnfRJ9EyYuOM1ACPMwRod3hhPqRk4YQp7FIZE/pubhtml# (look at the 2011 tab)

[Flashh]

declining prices until the end of this year

hopefully at the beginning of the year will rise sped up
 

[mmortal03]

But on the other hand given that recently (in the past years) dollar has had an inflation rate of around 2 percent

You are talking about CPI (Consumer Price Index) or something as manipulated.
The actual USD inflation the the last few years were a lot higher than 2%.

The pictures I posted before show the real M1 and Mb inflation after 2011.

https://docs.google.com/spreadsheets/d/17Jjhd_nnfRJ9EyYuOM1ACPMwRod3hhPqRk4YQp7FIZE/pubhtml# (look at the 2011 tab)

Have you extrapolated out to the date that the "diff with USD M1 Inflation (blue)" trendline crosses zero?

[painlord2k]

But on the other hand given that recently (in the past years) dollar has had an inflation rate of around 2 percent

You are talking about CPI (Consumer Price Index) or something as manipulated.
The actual USD inflation the the last few years were a lot higher than 2%.

The pictures I posted before show the real M1 and Mb inflation after 2011.

https://docs.google.com/spreadsheets/d/17Jjhd_nnfRJ9EyYuOM1ACPMwRod3hhPqRk4YQp7FIZE/pubhtml# (look at the 2011 tab)

Have you extrapolated out to the date that the "diff with USD M1 Inflation (blue)" trendline crosses zero?

Any time from now to the end of the year, probably in November.
The USD M1 inflation dropped from 12.94% to 8.87% in a month (august), so the cross is heavily dependant on how much money the Fed print and put in circulation.
These types of drops are, if you look at the chart, pretty common; Eg. in February it dropped 4% in just a month, then jumped back.

We know the Fed can not allow interest rates to grow in any way without collapsing the Federal, State and local budgets, forcing a lot of banks to fail in a verily not gracious way and obliterating the stock market.
So it is really improbable they can afford to keep (monetary) inflation low; they must print to suppress interest rates and manipulate the Prices Indexes to show low "inflation". In fact, government economists and journalists are starting to talk about the risks of "lowflation" instead of the risk of deflation.

They can run print, but they can't hide the money they print.

[mmortal03]

But on the other hand given that recently (in the past years) dollar has had an inflation rate of around 2 percent

You are talking about CPI (Consumer Price Index) or something as manipulated.
The actual USD inflation the the last few years were a lot higher than 2%.

The pictures I posted before show the real M1 and Mb inflation after 2011.

https://docs.google.com/spreadsheets/d/17Jjhd_nnfRJ9EyYuOM1ACPMwRod3hhPqRk4YQp7FIZE/pubhtml# (look at the 2011 tab)

Have you extrapolated out to the date that the "diff with USD M1 Inflation (blue)" trendline crosses zero?

Any time from now to the end of the year, probably in November.
The USD M1 inflation dropped from 12.94% to 8.87% in a month (august), so the cross is heavily dependant on how much money the Fed print and put in circulation.
These types of drops are, if you look at the chart, pretty common; Eg. in February it dropped 4% in just a month, then jumped back.

We know the Fed can not allow interest rates to grow in any way without collapsing the Federal, State and local budgets, forcing a lot of banks to fail in a verily not gracious way and obliterating the stock market.
So it is really improbable they can afford to keep (monetary) inflation low; they must print to suppress interest rates and manipulate the Prices Indexes to show low "inflation". In fact, government economists and journalists are starting to talk about the risks of "lowflation" instead of the risk of deflation.

They can run print, but they can't hide the money they print.

I'm looking for when we might see a spike in bank loans: http://research.stlouisfed.org/fred2/series/BUSLOANS/ (You have to change the Units to one of the rate of change options)

[painlord2k]

Have you extrapolated out to the date that the "diff with USD M1 Inflation (blue)" trendline crosses zero?

Any time from now to the end of the year, probably in November.

I'm looking for when we might see a spike in bank loans: http://research.stlouisfed.org/fred2/series/BUSLOANS/ (You have to change the Units to one of the rate of change options)

Looking at the last 20 years, there had two spikes before large crisis.
One smaller first (and we can see it at february 2014) and one larger one year later, then the hell get loose.
It appear we are 6 months from the largest spike.

[CoinProfits]

Have you extrapolated out to the date that the "diff with USD M1 Inflation (blue)" trendline crosses zero?

Any time from now to the end of the year, probably in November.

I'm looking for when we might see a spike in bank loans: http://research.stlouisfed.org/fred2/series/BUSLOANS/ (You have to change the Units to one of the rate of change options)

Looking at the last 20 years, there had two spikes before large crisis.
One smaller first (and we can see it at february 2014) and one larger one year later, then the hell get loose.
It appear we are 6 months from the largest spike.

Very good observation..next crisis will bring BTC walue to new ATH for sure, but the problem is that we still cannot live without the FIAT system, and until then - there will be crisis after a rally all around.

[mmortal03]

But on the other hand given that recently (in the past years) dollar has had an inflation rate of around 2 percent

You are talking about CPI (Consumer Price Index) or something as manipulated.
The actual USD inflation the the last few years were a lot higher than 2%.

The pictures I posted before show the real M1 and Mb inflation after 2011.

https://docs.google.com/spreadsheets/d/17Jjhd_nnfRJ9EyYuOM1ACPMwRod3hhPqRk4YQp7FIZE/pubhtml# (look at the 2011 tab)

I just saw that they updated the "Velocity of M1 Money Stock" today for Q2, now at 6.2, which is the lowest quarterly figure since Q4 1975. It was nearly this low at the end of 1993. I don't know how predictive it is, but I did notice that recessions have more often started when the velocity is at a local maxima, of which this is most definitely not.

I'm not sure when they update for Q3.

http://research.stlouisfed.org/fred2/series/M1V

[painlord2k]

I just saw that they updated the "Velocity of M1 Money Stock" today for Q2, now at 6.2, which is the lowest quarterly figure since Q4 1975. It was nearly this low at the end of 1993. I don't know how predictive it is, but I did notice that recessions have more often started when the velocity is at a local maxima, of which this is most definitely not.

I'm not sure when they update for Q3.

http://research.stlouisfed.org/fred2/series/M1V

Velocity of money is a very different and tricky concept.
In essence, velocity of money is a measure of how fast money circulate in the economy. But, as money go left, goods and services go right.

In the past I would suggest people had the ability to spend more if the interest rate come down.
What happen now is the interest rate can not come down further because it is not going to negative and people, differently than in the past, is saddled with so much debt they can not and want not  take more debts.
So they are spending (consuming/investing) as little as they are able.
Or they just buy gold/silver/BTC/durable goods with their spare money or they stash their spare money in their bank account or their mattress or they try to pay back their debts as much as they can.

Any QE or whatever can inflate but can not force people to take up debts they don't want take. Mainly because the only effect of inflation is to raise prices and people is left with even less money to spend.

The possibility are two:

1) People keep faith in the USD and continue to pay back debts and save and the velocity go down further to the level of the 1960 (but the Fed should start to behave like they were in the 1960)

2) People lose faith in the USD, see inflation as a political tool the Fed will never stop to use and Washington politicians never stop to abuse, and start using their USD to buy anything and everything durable and able to keep its value longer than the USD. With the current level of debt (personal, state, federal, business) if the velocity start to raise, it would be the start of hyperinflation.

[Cubic Earth]

Current BTC inflation could be closer to 15%, rather than the 10% suggested by the chart in the OP.  I made a similar chart, and gave it a separate thread https://bitcointalk.org/index.php?topic=800890.0  It factors in an assumed 3,000,000 lost bitcoins, as well as actual block time being under 10 minutes.  The 3,000,000 lost coins comes from the Zombie Bitcoin analysis.

[painlord2k]

Current BTC inflation could be closer to 15%, rather than the 10% suggested by the chart in the OP.  I made a similar chart, and gave it a separate thread https://bitcointalk.org/index.php?topic=800890.0  It factors in an assumed 3,000,000 lost bitcoins, as well as actual block time being under 10 minutes.  The 3,000,000 lost coins comes from the Zombie Bitcoin analysis.

Under your assumptions current inflation is, baseline, 12.75% per year (at this moment), falling to ~10.2% before the next halving at the double of speed.
I did the math in a copy of my spreadsheet subtracting 3.000.000 BTC from the total.
After the first halving our assumptions are the same.

[Cubic Earth]

Under your assumptions current inflation is, baseline, 12.75% per year (at this moment), falling to ~10.2% before the next halving at the double of speed.
I did the math in a copy of my spreadsheet subtracting 3.000.000 BTC from the total.
After the first halving our assumptions are the same.

So you also compensated for the faster rate of block issuance?  Glad someone double checked my work.  I came up the 15% figure just by eyeballing the chart, and I forgot that "halfway" in distance between two ticks on a log scale is not halfway in numbers.  So I can see the 12.75% being the correct value.  If anyone wants my R code, to review or modify, just PM me.

[painlord2k]

To make data easier to understand i will punt it in a grid:

	All coins	Live coins
Inflation last 52 weeks	13.39%	18.00%
Weekly trend 2014/9/17	11.54%	14.92%
Projected next 52 weeks	09.89%	12.79%

The "Projected Next 52 weeks" value is computed using 3600 BTC/day issuance. So actual inflation will probably be higher
The Weekly trend is "=(D300-D299)*52/D299" current value less last week value multiplied 52 and divided by last week value.

[braum]

this is a harsh reality to me.. 

[reQu]

To make data easier to understand i will punt it in a grid:

	All coins	Live coins
Inflation last 52 weeks	13.39%	18.00%
Weekly trend 2014/9/17	11.54%	14.92%
Projected next 52 weeks	09.89%	12.79%

The "Projected Next 52 weeks" value is computed using 3600 BTC/day issuance. So actual inflation will probably be higher
The Weekly trend is "=(D300-D299)*52/D299" current value less last week value multiplied 52 and divided by last week value.

----fantastic, thank you Sir!
Though to make it even more easy to understand: - Does one buy and hold BTC, right about now'ish, or - Does one simply awaits while surfing these forums for a little while longer? 

-trading/investing n0ob I am, but loving the process!

[braum]

what if we dont live that long to see 2027?

[reQu]

what if we dont live that long to see 2027?

  trolling my n00b or just trolling? Could you answer my question perhaps since you know so much 

[Cubic Earth]

----fantastic, thank you Sir!
Though to make it even more easy to understand: - Does one buy and hold BTC, right about now'ish, or - Does one simply awaits while surfing these forums for a little while longer? 

-trading/investing n0ob I am, but loving the process!

1)  Don't get investing advice on internet forums
2)  Don't put all your eggs in one basket
3)  Don't invest more than you can afford to lose
4)  I am not an investment adviser

5)  Literally no one knows if this is the best time to buy or not, as no one knows what tomorrow may hold.  That being said, if you currently have zero BTC, but some USD, perhaps you should change that!  Dollar cost averaging is the way to do it.  If you have say $1,000 you want to put in to BTC, throw in a couple hundred today, and then maybe $50 or $100 per week until you $1,000 is all spent.

6) Never sell when the price is down
7) Take a little bit of profit if BTC doubles, say $500.  Then you would still have $1,500 in BTC.
If the price 'crashes' after taking that profit, perhaps reinvest it.  Then you would have more BTC than when you started.