Echoes of the past

[Jutarul]

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?

False. Capital flight doesn't go into potatoes - it goes into money or other forms of safe havens assets.

The situation during Weimar was a little bit different than what we're experiencing today. In Weimar capital had somewhere to go: other countries. That impoverished the german economy and led to a situation where the german government decided to balance the trade deficit with new money, locking them into a vicious cycle of new money vs. a falling exchange rate.

Today what we're experiencing is that capital is trapped in a world-wide fiat system governed by the USD. There is simply nowhere to go to punish the USD, since all economies are basically built on the USD. That's why the worst thing which can happen to the USD are bilateral trade agreements, which cut the USD out of the picture. If that process has advanced to a sufficient degree, it'll be a game changer for the FED policies.

For the same reason cryptocurrencies can be considered the antidote to the USD, because it allows for direct trade settlement of any scale.

[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.

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.

How would a loss of confidence in the Dollar be so strongly deflationary? People would not donate the Dollars to the FED to have them destroyed. They'd buy anything - stock, commodities, Bitcoin, real estate, what ever seems a way out. As a consequence, the prices of all real assets would explode.

Bail-ins would extinguish Dollars, true, but bail ins would come after confidence is destroyed, but that would not hit all Dollar accounts around the world simultaneously. There would still be people with bank accounts around the world who would try to push Dollars into the market.

[Jutarul]

How would a loss of confidence in the Dollar be so strongly deflationary? People would not donate the Dollars to the FED to have them destroyed. They'd buy anything - stock, commodities, Bitcoin, real estate, what ever seems a way out. As a consequence, the prices of all real assets would explode.

Bail-ins would extinguish Dollars, true, but bail ins would come after confidence is destroyed, but that would not hit all Dollar accounts around the world simultaneously. There would still be people with bank accounts around the world who would try to push Dollars into the market.

I agree - a deflationary collapse is likely to erode the confidence in the same way as a hyperinflation does for common people. The only reason why the FED would choose deflation over inflation is to salvage the reserve currency status, i.e. they yield to other central banks and organizations.

I am not trying to predict a particular endgame scenario - what I am pointing at is that the crowd is using bitcoin as a vehicle to deal with an endgame. As such the appreciation of bitcoin is likely to be disconnected from any sober valuation and we may experience a lot of panic buying into bitcoin - not because people think bitcoin is great - it's because people want to hedge against fiat risks.

[Jutarul]

Somewhat related, Alessio Rastani is a technical trader and he things that his numbers show that middle of next year the level of debt will be unsustainable and precipitate a crisis. This pretty much falls into the prediction window of 6-12 months of a suggested endgame.

timestamp 17:20

https://www.youtube.com/watch?v=j8pi6L19bYo&t=1020

[anu]

Somewhat related, Alessio Rastani is a technical trader and he things that his numbers show that middle of next year the level of debt will be unsustainable and precipitate a crisis. This pretty much falls into the prediction window of 6-12 months of a suggested endgame.

timestamp 17:20

https://www.youtube.com/watch?v=j8pi6L19bYo&t=1020

We can probably all agree that the global economy is like the Eiffel tower with most beams rusted away. It will collapse. And when it starts, it will happen very fast. It will be spectacular.

But I am not sure the time of the collapse can be determined like that. The difference is that the US housing bubble was a bubble within the US economy. The world economy is some sort of cross-breed between a bubble and a Ponzi scheme: We are the bubble. That thing is bigger than anything in the past.

Another question is what certain events would do: Most people would think that a war between Japan and China would destabilize the situation, but it seems to me the opposite is the case: It would allow the US to export huge amounts of obsolete F-15 and F-16 and other stuff in exchange for the Japanese USD reserves, thereby deleveraging some and get a foreign trade surplus for a while. This would be good for the US and good for Japan, because it allows Japan to default on their domestic govt bonds. That would allow the global scam to go on for at least another year.

[Jutarul]

Somewhat related, Alessio Rastani is a technical trader and he things that his numbers show that middle of next year the level of debt will be unsustainable and precipitate a crisis. This pretty much falls into the prediction window of 6-12 months of a suggested endgame.

timestamp 17:20

https://www.youtube.com/watch?v=j8pi6L19bYo&t=1020

We can probably all agree that the global economy is like the Eiffel tower with most beams rusted away. It will collapse. And when it starts, it will happen very fast. It will be spectacular.

But I am not sure the time of the collapse can be determined like that. The difference is that the US housing bubble was a bubble within the US economy. The world economy is some sort of cross-breed between a bubble and a Ponzi scheme: We are the bubble. That thing is bigger than anything in the past.

Another question is what certain events would do: Most people would think that a war between Japan and China would destabilize the situation, but it seems to me the opposite is the case: It would allow the US to export huge amounts of obsolete F-15 and F-16 and other stuff in exchange for the Japanese USD reserves, thereby deleveraging some and get a foreign trade surplus for a while. This would be good for the US and good for Japan, because it allows Japan to default on their domestic govt bonds. That would allow the global scam to go on for at least another year.

Agreed. That's why governments are so keen on getting wars started - to mask economic problems and perpetuate fraud.

E.g. while the adoption curve for bitcoin looks very similar to the value appreciation of gold in Weimar, it may actually start to deviate at a point where the resolution was enforced in Weimar, simply because an additional event is possible to perpetuate the status quo. However, eventually the market cap of bitcoin will eat into the market cap of the global economy - and when that happens things will happen fast, as more and more people feel confident to hold them as reserves and protection against political uncertainty (since bitcoin is nonpolitical).

I suggest to diversify out of bitcoin into other nonpolitical assets on the way up, since when the controls crumble these assets will be cheap compared to bitcoin.

[keystroke]

Somewhat related, Alessio Rastani is a technical trader and he things that his numbers show that middle of next year the level of debt will be unsustainable and precipitate a crisis. This pretty much falls into the prediction window of 6-12 months of a suggested endgame.

timestamp 17:20

https://www.youtube.com/watch?v=j8pi6L19bYo&t=1020

We can probably all agree that the global economy is like the Eiffel tower with most beams rusted away. It will collapse. And when it starts, it will happen very fast. It will be spectacular.

But I am not sure the time of the collapse can be determined like that. The difference is that the US housing bubble was a bubble within the US economy. The world economy is some sort of cross-breed between a bubble and a Ponzi scheme: We are the bubble. That thing is bigger than anything in the past.

Another question is what certain events would do: Most people would think that a war between Japan and China would destabilize the situation, but it seems to me the opposite is the case: It would allow the US to export huge amounts of obsolete F-15 and F-16 and other stuff in exchange for the Japanese USD reserves, thereby deleveraging some and get a foreign trade surplus for a while. This would be good for the US and good for Japan, because it allows Japan to default on their domestic govt bonds. That would allow the global scam to go on for at least another year.

Agreed. That's why governments are so keen on getting wars started - to mask economic problems and perpetuate fraud.

E.g. while the adoption curve for bitcoin looks very similar to the value appreciation of gold in Weimar, it may actually start to deviate at a point where the resolution was enforced in Weimar, simply because an additional event is possible to perpetuate the status quo. However, eventually the market cap of bitcoin will eat into the market cap of the global economy - and when that happens things will happen fast, as more and more people feel confident to hold them as reserves and protection against political uncertainty (since bitcoin is nonpolitical).

I suggest to diversify out of bitcoin into other nonpolitical assets on the way up, since when the controls crumble these assets will be cheap compared to bitcoin.

Examples of recommended nonpolitical assets?

[Jutarul]

I suggest to diversify out of bitcoin into other nonpolitical assets on the way up, since when the controls crumble these assets will be cheap compared to bitcoin.

Examples of recommended nonpolitical assets?

Commodities, especially precious metals are a good choice. If looking further, resource producing sectors are a safe bet, as all societies need resources to produce products and build stuff. Especially comes in handy when we have a shooting war.

The opposite would be investments which benefit from particular political decisions. These should be avoided in times of political uncertainty. Especially those which are already heavily subsidized by governments, as they will correct heavily when the political support vanishes.

[Jutarul]

I am going to revive this topic. Find below an updated trend comparison.


The irony of the matter is that the resemblance significantly broke when this pattern was posted. Note that if the endgame prediction still stands there won't be much time left (~ 5 months) before the market cap of BTC will see a massive revaluation.

Note the location of the summer 2014 mini rally. It pretty much is aligned with the rally in the german mark gold price from >1000 to <10000. Albeit there is a massive deviation from the pattern since Dec 2013, there exists a subtle timing in the market which suggests that a monetary death event goes through similar timing.

We're now also at a time when the german mark hit the 10,000 barrier after which all hell broke loose and the exponential curve added additional growth factors. This timing suggests that we're now entering monetary exodus.

I am aware that this analysis almost looks ridiculous given the recent decline in BTC price. However, I do not need to remind you that the BTC market is tiny and that the price can be whatever the central players dictate. The only reason for BTC to break out of the containment is for it to become the battle field of the central players.

Gentlemen, be careful with spending your BTC. You may not get them back.

[Jutarul]

Updated graph. Critical point approaching fast. ETA March/April 2015.

[AtheistAKASaneBrain]

BTC/USD 1 trillion dollars in 2023.

[JamesBrown]

BTC/USD 1 trillion dollars in 2023.

Damn does the dollar get replaced by the yuan in 2023? Why would it be so cheap?

[cryptocult live]

nah dude, you got it all wrong.
1 btc = 1 btc

"price is irrelevant" 

[keystroke]

Bump. Not long now.

[Jutarul]

Updated graph


We're well beyond the critical point in the graph now, which means that the correlation with this historical data can be declared dead.
On that note, here is some comical relief:
https://www.youtube.com/watch?v=v5xS3WoG76w

[ashour]

You can't just "print" bitcoins and grow the supply. Germany back then was printing notes like hell to finance the war of the kaiser. Bitcoin isn't anyway similar to this .