Echoes of the past

[Jutarul]

Put your tinfoil hats on, gentlemen. The similarity between the value of gold during the Weimar inflation and the USD/BTC price increase is cunning.

It also indicates that this correction will be short lived before we enter the final stages of the end game.

[kireinaha]

[GeniuSxBoY]

[MindGrenade]

If you also look at the charts, the *exact* same comparison can be made to the April 2013 bubble. And what happened then? What? It's gone up another 400% from the previous all time high? Hmmm. We should be ok.

It also had the initial peak ($1 -> $30 -> $2.50) in June 2011 and then a big peak two years later at $266. There is much more momentum now though.



TL;DR Welcome to cryptocurrencies, this is what they do.

[pand70]

If you find more you 'll find 1000000 other similar graphs. Also if you take smaller periods of btc price chart you 'll see notice a similar behavior of the price.
No tin foil hats needed here because it means nothing.

[Jutarul]

If you find more you 'll find 1000000 other similar graphs. Also if you take smaller periods of btc price chart you 'll see notice a similar behavior of the price.

If you find other graphs which look similar please post them here. The choice for the Weimar graph is that it is relevant in this discourse, because it describes a death event of fiat money. A few things are striking about this comparison:
a) overall time scale of the event (4-5 years, not scaled)
b) magnitude and timing of price increase of a safe haven asset (2011 and 2013 bubbles)

This suggests that these processes are driven by the same underlying dynamic. It also provides a narrative for the bitcoin price increase - it's not a speculation driven bubble, but a flight movement out of fiat.

No tin foil hats needed here because it means nothing.

What's your narrative? Coincidence?

[Oldminer]

Now I get it

[anu]

Put your tinfoil hats on, gentlemen. The similarity between the value of gold during the Weimar inflation and the USD/BTC price increase is cunning.

It also indicates that this correction will be short lived before we enter the final stages of the end game.

Are you suggesting the death of the Dollar within a year? While this curve matches with Bitcoin, it doesn't match with gold - which is Papermark comparison in your chart - gold was losing - interestingly the drop of gold vs USD started with the rise of Bitcoin. And Bitcoin gained value against everything else.

Now I get it

Unfortunately I don't. But I think the suggestion of a Weimar style dollar collapse within 12 months by someone who's judgements I respect is important enough to put more effort into it. Please elaborate the narrative. Do you have more supporting evidence?

[Rannasha]

This is a silly comparison. Simply overlaying somewhat similar-looking graphs does not make for a good comparison.

The explosive growth of BTC/USD this last year is primarily due to increased adoption and awareness. The purchasing power of the dollar hasn't gone down as much as the BTC-price has gone up this year. Not even close.

Conversely, the growth of the gold-price in Weimar Marks was not due to increased adoption and awareness of gold, but due to hyperinflation of the mark.

These two graphs, while looking vaguely similar, show two completely different scenarios.

[dakiller]

What's your narrative? Coincidence?
[/quote]
Purely coincidental patterns can be found absolutely everywhere in life, when none of them are true correlations. We end up deluding ourselves into seeing what we want to see.

http://www.forbes.com/sites/erikaandersen/2012/03/23/true-fact-the-lack-of-pirates-is-causing-global-warming/

[anu]

What's your narrative? Coincidence?

Purely coincidental patterns can be found absolutely everywhere in life, when none of them are true correlations. We end up deluding ourselves into seeing what we want to see.

http://www.forbes.com/sites/erikaandersen/2012/03/23/true-fact-the-lack-of-pirates-is-causing-global-warming/

You can make a strong case that the increase of piracy and global warming have a common cause - they don't cause each other but they do correlate in a meaningful way.

[Jutarul]

Put your tinfoil hats on, gentlemen. The similarity between the value of gold during the Weimar inflation and the USD/BTC price increase is cunning.

It also indicates that this correction will be short lived before we enter the final stages of the end game.

While this curve matches with Bitcoin, it doesn't match with gold - which is Papermark comparison in your chart - gold was losing - interestingly the drop of gold vs USD started with the rise of Bitcoin. And Bitcoin gained value against everything else.

Relevant to this discussion: http://www.lewrockwell.com/2013/12/mark-nestmann/the-anti-dollar/
"Gold should have been the anti-dollar, but it has a problem: it is more or less controlled by the central banks and their friends. (You can find US Treasury memos from the 70s discussing the necessity of controlling gold.)"

The printing frenzy of the central banks has created a lot of pressure by economic players to exit the system before things go sour and as a sign of protest. However, there are hardly any outlets for that, bitcoin and friendly cryptocurrencies being only one of a few.

Now I get it

Unfortunately I don't. ... Please elaborate the narrative.

The comparison with Weimar invites for two questions:
a) Why did the value of gold fluctuate up and down in Weimar and what were the driving forces behind these "bubbles". Is there a parallel to what we experience with bitcoin today?
b) When was it apparent that hyperinflation was around the corner and what was the market liquidity for gold under those conditions? Was gold still available in germany at the time of the collapse? Was somebody crazy enough to sell gold into a hyperinflating market? If not, when did the gold window close?

Are you suggesting the death of the Dollar within a year?
...
Do you have more supporting evidence?

I would hypothesize that a flight movement out of one asset (fiat) into another (bitcoin/gold) resembles an adoption process. The resemblance with Weimar suggests that this flight movement follows a pattern which is universal.

Answering the questions above will either support or invalidate this narrative.
I don't suggest that the dollar will die, but that we're experiencing something akin to an end game, in which bitcoin is considered a safe haven. Probably a reaction to all the bail-in talks (and cryptocurrencies are bail-in resilient). It is likely that this end game will conclude within the next 2 years, based on the projection.

[keystroke]

So this event will occur prior to the next halving. Interesting. There might be growth in the rate after then still as the money supply grows at a reduced rate. Or will the market attempt to price in future halvings before the event?

[Jutarul]

So this event will occur prior to the next halving. Interesting. There might be growth in the rate after then still as the money supply grows at a reduced rate. Or will the market attempt to price in future halvings before the event?

The inflation rate of bitcoin is more or less irrelevant for its price discovery. If it indeed acts as a safe haven, even high inflation rates are tolerable, because it preserves purchasing power.

[keystroke]

So this event will occur prior to the next halving. Interesting. There might be growth in the rate after then still as the money supply grows at a reduced rate. Or will the market attempt to price in future halvings before the event?

The inflation rate of bitcoin is more or less irrelevant for its price discovery. If it indeed acts as a safe haven, even high inflation rates are tolerable, because it preserves purchasing power.

Yea, just comparing with some of chodpaba's previous work. I think the halvings are still big events economically although I would guess the market tries to price them in years in advance.

[Wilhelm]

We're just entering the final stages as shown in this graph I got from reptilians whom have timetravelled back from the future.

[anu]

I don't suggest that the dollar will die, but that we're experiencing something akin to an end game, in which bitcoin is considered a safe haven. Probably a reaction to all the bail-in talks (and cryptocurrencies are bail-in resilient). It is likely that this end game will conclude within the next 2 years, based on the projection.

If you assume an endgame of some sort, what is an alternative scenario to a Dollar collapse? Should the Dollar's status as a reserve currency weaken sufficiently, confidence will be lost, probably within days, maybe even only hours in todays fast times. A panic will start and everyone will run for the exits. All internationally held Dollars will get pushed back home.

[Jutarul]

I don't suggest that the dollar will die, but that we're experiencing something akin to an end game, in which bitcoin is considered a safe haven. Probably a reaction to all the bail-in talks (and cryptocurrencies are bail-in resilient). It is likely that this end game will conclude within the next 2 years, based on the projection.

If you assume an endgame of some sort, what is an alternative scenario to a Dollar collapse? Should the Dollar's status as a reserve currency weaken sufficiently, confidence will be lost, probably within days, maybe even only hours in todays fast times. A panic will start and everyone will run for the exits. All internationally held Dollars will get pushed back home.

In a deflationary scenario, all credit money will more or less vanish and only (printed) base money will persist. Then the US government will choose who will be compensated for the losses by printing new base money and distributing it accordingly (general bail-in + bail-out of the privileged). The printed base money residing out of the United states can be devalued by import controls. Yes - it will shake the confidence in the dollar - but the deflation will be so huge that it will likely eat the inflationary pressure and then some.

There are more endgame scenarios, but the idea I am forming here is that there are economic players out there who think that crypto currencies are a way to cut the US out of their business - i.e. a flight of capital out of the USD into a viable alternative. If the momentum of this meme has similar characteristics to the one in Weimar, we should expect a similar type of escalation dynamics, i.e. it forces a resolution of the conflict within the next 6-12 months.

[im3w1l]

Clever 

But on a serious note please show a comparison of DMARK/Potato then together with a USD/Potato now. If there was truly a flight, the number of potatoes per USD would explode, right?

[zimmah]

you raise a good point, the dollar is on the end of it's lifespan and there are several clear signs of that. I just hope many people will think of bitcoin as the way out.

not only because it will benefit the whole bitcoin society, but also because it will benefit almost everyone. Because if they will invest in other fiat after the dollar collapsed, especially if the new fiat is also printed by U.S. central banks/fed the problem will not be solved. But when they lose trust of the dollar and put trust in bitcoin instead, they will not be scammed by the central banks, and the people will gain a large portion of their wealth back.

It will not solve all the problems in the world, but it will still make the world a little bit better.

http://voiceofrussia.com/2013_10_27/The-beginning-of-the-end-for-the-petrodollar-2572/