Peter Schiff on Bitcoin

[xxjs]

btw, saving bitcoins does not make anybody hungry. The effect of saving bitcoin is that it drives the value up, prompting others to spend or buy capital goods.

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[NewLiberty]

"Intrinsic value" is a misnomer, intentionally designed to mislead people. The only legitimate use of the term is in futures/options trading as there is a "present value".

Case in point, answer these three questions:
1) What is the intrinsic value of water?
2) What is the intrinsic value of water if you are lost in a desert?
3) What is the intrinsic value of water if you are drowning?

Σ(N * (% of time N applies))

If everything had the same value to everyone else at all times there would be no trade.

How does any of this refute the notion of things having intrinsic value when it seems to  indicate the opposite?

[painlord2k]

"Intrinsic value" is a misnomer, intentionally designed to mislead people. The only legitimate use of the term is in futures/options trading as there is a "present value".

Case in point, answer these three questions:
1) What is the intrinsic value of water?
2) What is the intrinsic value of water if you are lost in a desert?
3) What is the intrinsic value of water if you are drowning?

Σ(N * (% of time N applies))

If everything had the same value to everyone else at all times there would be no trade.

How does any of this refute the notion of things having intrinsic value when it seems to  indicate the opposite?

Please compute the example above and give us the solution.
The explain why  it so.

There is no something "intrinsic value" and using fuzzy words cause just fuzzy thinking.
Substitute "intrinsic value" with "direct use value".
Direct use value is the value of gold (for example) when it started to be used as a mean of indirect exchange (like many others).
There is nothing "intrinsic" in "direct use value", because the subjective value change with the quantity available and its direct uses.

[NewLiberty]

"Intrinsic value" is a misnomer, intentionally designed to mislead people. The only legitimate use of the term is in futures/options trading as there is a "present value".

Case in point, answer these three questions:
1) What is the intrinsic value of water?
2) What is the intrinsic value of water if you are lost in a desert?
3) What is the intrinsic value of water if you are drowning?

Σ(N * (% of time N applies))

If everything had the same value to everyone else at all times there would be no trade.

How does any of this refute the notion of things having intrinsic value when it seems to  indicate the opposite?

Please compute the example above and give us the solution.
The explain why  it so.

There is no something "intrinsic value" and using fuzzy words cause just fuzzy thinking.
Substitute "intrinsic value" with "direct use value".
Direct use value is the value of gold (for example) when it started to be used as a mean of indirect exchange (like many others).
There is nothing "intrinsic" in "direct use value", because the subjective value change with the quantity available and its direct uses.

Certainly true.  Nothing has value without someone valuing it, so there is no "intrinsic" value, it is semantic slight of hand.
It is elementary to philosophy of perception.

Though when we climb out of the ivory tower and enter the town, there are things that have value without a law giving it value enforced by a state, and there are things that do not.  The things that do, we have adopted the convention of calling that value, intrinsic.  

So sure, it is not strictly true, in that water has no value unless there is something to value it, but it also does not rely on a legal tender law to get that value, or being useful for paying a tax to a government.

One of the core requirements of bitcoin was that it not have a value as something other than "money".  This way it does not compete with a market for its use as money.  It is designed to have no intrinsic value or backing, other than what we the people choose to back it with.

I back it with gold and silver, others with their time, everyone that uses it for trade backs it with something.

I will leave the computation and explanation to the reader as an exercise.
Stuff has had the value people give it, over time, each in their own situation.

[joae1975]

I know it's not Peter Schiff, but Erik Voorhees was on the Gold Money podcasts last Wed.

http://www.goldmoney.com/podcast/erik-voorhees-financial-independence-through-gold-and-bitcoin.html

[joae1975]

New links added to initial post.  An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.

[SilentSonicBoom]

New links added to initial post.  An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.

Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.

[joae1975]

New links added to initial post.  An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.

Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.

Hells yeah!  The laws of supply/demand, aka common sense, say gold is going to skyrocket. When gold gets so low that mining companies can't produce it at a profit, supply diminishes.  But demand is the same or higher, do naturally the price will go up.  It's a no brainer.  Good stuff! Price could go lower too. Maybe 1100.

[Seth Otterstad]

New links added to initial post.  An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.

Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.

Hells yeah!  The laws of supply/demand, aka common sense, say gold is going to skyrocket. When gold gets so low that mining companies can't produce it at a profit, supply diminishes.  But demand is the same or higher, do naturally the price will go up.  It's a no brainer.  Good stuff! Price could go lower too. Maybe 1100.

Don't be ridiculous.  Saying gold demand is always the same or higher is like saying the demand for bitcoin is always the same or higher while the price was going down from $30 to $2.  Almost the entire market cap of gold and bitcoin is speculative and monetary value.

Also, the price of gold is capped because there is $150t worth of it that is recoverable on the ocean floor using technology that is not cost effective at current price levels.

I would highly recommend quitting listening to the Schiff if you are getting these ideas from him.

[joae1975]

New links added to initial post.  An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.

Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.

Hells yeah!  The laws of supply/demand, aka common sense, say gold is going to skyrocket. When gold gets so low that mining companies can't produce it at a profit, supply diminishes.  But demand is the same or higher, do naturally the price will go up.  It's a no brainer.  Good stuff! Price could go lower too. Maybe 1100.

Don't be ridiculous.  Saying gold demand is always the same or higher is like saying the demand for bitcoin is always the same or higher while the price was going down from $30 to $2.  Almost the entire market cap of gold and bitcoin is speculative and monetary value.

Also, the price of gold is capped because there is $150t worth of it that is recoverable on the ocean floor using technology that is not cost effective at current price levels.

I would highly recommend quitting listening to the Schiff if you are getting these ideas from him.

Yeah, and there's infinite gold in space too, that should drive the price to the floor.  The transformers are going to come with quantum technology and produce fake bitcoins that are valid.  Ocean mining is the future, yes, and that's bullish for gold. It will require more capital and drive the price up.  You can't compare gold with bitcoin when talking about current supply/demand economics.  Bitcoin is too new, too volatile.  Gold is predictable...in the long run.

[Seth Otterstad]

New links added to initial post.  An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.

Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.

Hells yeah!  The laws of supply/demand, aka common sense, say gold is going to skyrocket. When gold gets so low that mining companies can't produce it at a profit, supply diminishes.  But demand is the same or higher, do naturally the price will go up.  It's a no brainer.  Good stuff! Price could go lower too. Maybe 1100.

Don't be ridiculous.  Saying gold demand is always the same or higher is like saying the demand for bitcoin is always the same or higher while the price was going down from $30 to $2.  Almost the entire market cap of gold and bitcoin is speculative and monetary value.

Also, the price of gold is capped because there is $150t worth of it that is recoverable on the ocean floor using technology that is not cost effective at current price levels.

I would highly recommend quitting listening to the Schiff if you are getting these ideas from him.

Yeah, and there's infinite gold in space too, that should drive the price to the floor.  The transformers are going to come with quantum technology and produce fake bitcoins that are valid.  Ocean mining is the future, yes, and that's bullish for gold. It will require more capital and drive the price up.  You can't compare gold with bitcoin when talking about current supply/demand economics.  Bitcoin is too new, too volatile.  Gold is predictable...in the long run.

So I am to understand that you think the demand for gold was constant while it was losing value for the 2 decades prior to the turn of the century, and that the demand was also still constant during the price increase of this last decade?

[NewLiberty]

New links added to initial post.  An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.

Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.

Hells yeah!  The laws of supply/demand, aka common sense, say gold is going to skyrocket. When gold gets so low that mining companies can't produce it at a profit, supply diminishes.  But demand is the same or higher, do naturally the price will go up.  It's a no brainer.  Good stuff! Price could go lower too. Maybe 1100.

Don't be ridiculous.  Saying gold demand is always the same or higher is like saying the demand for bitcoin is always the same or higher while the price was going down from $30 to $2.  Almost the entire market cap of gold and bitcoin is speculative and monetary value.

Also, the price of gold is capped because there is $150t worth of it that is recoverable on the ocean floor using technology that is not cost effective at current price levels.

I would highly recommend quitting listening to the Schiff if you are getting these ideas from him.

Yeah, and there's infinite gold in space too, that should drive the price to the floor.  The transformers are going to come with quantum technology and produce fake bitcoins that are valid.  Ocean mining is the future, yes, and that's bullish for gold. It will require more capital and drive the price up.  You can't compare gold with bitcoin when talking about current supply/demand economics.  Bitcoin is too new, too volatile.  Gold is predictable...in the long run.

So I am to understand that you think the demand for gold was constant while it was losing value for the 2 decades prior to the turn of the century, and that the demand was also still constant during the price increase of this last decade?

Consumer demand has been pretty constant, but that is a very tiny fraction of the demand.  Almost the entire market is central banks.

[joae1975]

Consumer demand has been pretty constant, but that is a very tiny fraction of the demand.  Almost the entire market is central banks.

Right, people are not selling their physical gold.  All the selling is in the futures, derivative, and ETF markets etc.  All of the "dumb" money is getting out of gold.  More smart buyers are buying more physical (me.)

Soon, smart countries will be buying more physical gold, i.e. China.  Once the price gets low enough, it will slingshot back to the old highs and beyond.  So the demand is still the same, if not higher, within the physical market.  Gold is going to go up so fast when the s*it storm comes.  Those who sold in the recent correction will probably stay out and not rebuy, that's how fast it's going to move.  imho

[mobile]

Im all for, buying up gold & precious metals. Solid investment. But I sure hope you all have a means to secure your armory.  Whether it is a vault, hidden vault and/or weaponry. I am not a doomsday guy by any means but just a thought as I was reading through....

[joae1975]

Im all for, buying up gold & precious metals. Solid investment. But I sure hope you all have a means to secure your armory.  Whether it is a vault, hidden vault and/or weaponry. I am not a doomsday guy by any means but just a thought as I was reading through....

hidden and locked up. Not even in the same country some if it

[NewLiberty]

Consumer demand has been pretty constant, but that is a very tiny fraction of the demand.  Almost the entire market is central banks.

Right, people are not selling their physical gold.  All the selling is in the futures, derivative, and ETF markets etc.  All of the "dumb" money is getting out of gold.  More smart buyers are buying more physical (me.)

Soon, smart countries will be buying more physical gold, i.e. China.  Once the price gets low enough, it will slingshot back to the old highs and beyond.  So the demand is still the same, if not higher, within the physical market.  Gold is going to go up so fast when the s*it storm comes.  Those who sold in the recent correction will probably stay out and not rebuy, that's how fast it's going to move.  imho

China has been scooping up retail gold.  A lot of it.  The Chinese new generation very much like the bling factor, and nothing has the bling factor like gold.



Also Chinese government is encouraging it.  They have removed the tax on gold panda coins this year.
http://numismaster.com/ta/numis/Article.jsp?ArticleId=26693

India did last year
http://online.wsj.com/article/SB10001424052702304363104577389443337247370.html
but raised it again this year.

China is one of the top miners, and exports almost none of it.

[xxjs]

Peter Schiff has written some good books, but what he is probably missing:

Debt money is unstable because the lender has to trust the loaner. If trust generally disappears, the money also disappears.

On the other hand, the central bank can regulate the wider money supply easily by changing the banks' reserve requirements.

As long as bonds are trusted, the government can loan money indefinitely, and also continually expand the loans forever. A government lives for ever.

Continualy increasing loans has the same effect as printing money. The effect of printing money is more resources to the government and their friends, including voting cattle.

The printing moves resources from the rest of the world to USA. As other money system tanks, and rising economies partially wants to use USD, the user base increases and also the value of the USD increases.

In sum, this can lead to price deflation in the area where dollar is used.

This might be countered, as it is always easy for a central bank to take down the value of its money unit.

In short, there can be heavy deflation before the onset of hyperinflation. This Schiff does not take into account.

It is a possibility. With heavy regulation from a single person who only reads the data, but never depend on fundamental principles, anything can happen. It is an extraordinarily extraordinar situation.

[MoonShadow]

In short, there can be heavy deflation before the onset of hyperinflation. This Schiff does not take into account.

This is, almost word for word, Mish's complaint with Schiff and other hyperinflationists today.

http://globaleconomicanalysis.blogspot.com/2011/05/hyperinflation-nonsense-in-multiple.html
http://globaleconomicanalysis.blogspot.com/2012/08/reader-questions-on-hyperinflation.html

[xxjs]

Yes, it was buried in there.

[NewLiberty]

Hyperinflation is dire tragedy on a massive scale.
High inflation is bad enough without raising the boogeyman of hyperinflation.