Today BTC = $800, $9200 to go and why 10 BTC will never make you rich

[billyjoeallen]

Buying debt is the same as lending. Adding a negative number is the same as subtracting a positive number. The Fed increases the money supply by buying debt. Private banks further increase the money supply by making loans. Making loans is money creation. Buying debt is money creation, money "printing". Credit expansion happens when more loans are made. Credit expansion IS money printing. It doesn't matter who's borrowing. If they deposit the borrowed funds in a bank, the bank lends it out. If they spend it, the people who sell whatever was bought put it in a bank and it gets lent out again. Banks are holding historically high (but not high enough IMHO) reserves. There are various ways the Fed and the Government can encourage/force banks to lower those reserves. They are very very likely to do that (again) if the economy slows down.

Politicians and bureaucrats do not keep their jobs by making wise but unpopular policy. They are not experts on economics. They are experts at getting and keeping their jobs. They will print because their constituents will demand they print.  as they have time after time. The addict needs just one more fix, and this time could you make it a strong one?

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[DPoS]

Buying debt is the same as lending. Adding a negative number is the same as subtracting a positive number. The Fed increases the money supply by buying debt. Private banks further increase the money supply by making loans. Making loans is money creation. Buying debt is money creation, money "printing". Credit expansion happens when more loans are made. Credit expansion IS money printing. It doesn't matter who's borrowing. If they deposit the borrowed funds in a bank, the bank lends it out. If they spend it, the people who sell whatever was bought put it in a bank and it gets lent out again. Banks are holding historically high (but not high enough IMHO) reserves. There are various ways the Fed and the Government can encourage/force banks to lower those reserves. They are very very likely to do that (again) if the economy slows down.

Politicians and bureaucrats do not keep their jobs by making wise but unpopular policy. They are not experts on economics. They are experts at getting and keeping their jobs. They will print because their constituents will demand they print.  as they have time after time. The addict needs just one more fix, and this time could you make it a strong one?

the point you are missing is that it isn't as hand-in-hand as you say it is..  capital goes where it is best used.  And if someone buys your bad debt you don't HAVE to make loans after the 'mulligan'..  that was the plan but it didn't really happen since interest rates stayed near zero. Risk appetite took over instead of old custodian actions of years by gone...  And even if some did go towards loans, many didn't stay in the USA.  A lot of the FED actions are more global affecting than domestic with all these super corporations and banks

[billyjoeallen]

Buying debt is the same as lending. Adding a negative number is the same as subtracting a positive number. The Fed increases the money supply by buying debt. Private banks further increase the money supply by making loans. Making loans is money creation. Buying debt is money creation, money "printing". Credit expansion happens when more loans are made. Credit expansion IS money printing. It doesn't matter who's borrowing. If they deposit the borrowed funds in a bank, the bank lends it out. If they spend it, the people who sell whatever was bought put it in a bank and it gets lent out again. Banks are holding historically high (but not high enough IMHO) reserves. There are various ways the Fed and the Government can encourage/force banks to lower those reserves. They are very very likely to do that (again) if the economy slows down.

Politicians and bureaucrats do not keep their jobs by making wise but unpopular policy. They are not experts on economics. They are experts at getting and keeping their jobs. They will print because their constituents will demand they print.  as they have time after time. The addict needs just one more fix, and this time could you make it a strong one?

the point you are missing is that it isn't as hand-in-hand as you say it is..  capital goes where it is best used.  And if someone buys your bad debt you don't HAVE to make loans after the 'mulligan'..  that was the plan but it didn't really happen since interest rates stayed near zero. Risk appetite took over instead of old custodian actions of years by gone...  And even if some did go towards loans, many didn't stay in the USA.  A lot of the FED actions are more global affecting than domestic with all these super corporations and banks

In a functioning credit market, capital goes where it is best used, but decades of artificially low interest rates and years of ZIRP have distorted the market to the point where it is basically unfixable without triggering the Mother Of All Corrections. So they won't fix it. They'll keep printing. Yellen basically admitted as much in confirmation hearings. Anyone could have predicted what happened when the banks were bailed out. It's called "moral hazard". Save someone from the consequence of their foolish actions and they are MORE (not less) likely to repeat them. There are still house-flipping shows on cable TV. Nobody learned anything so we're all gonna repeat it, bigger and better than ever. They will kick the can. There is no other politically viable option.

[Lloydie]

In a functioning credit market, capital goes where it is best used, but decades of artificially low interest rates and years of ZIRP have distorted the market to the point where it is basically unfixable without triggering the Mother Of All Corrections. So they won't fix it. They'll keep printing. Yellen basically admitted as much in confirmation hearings. Anyone could have predicted what happened when the banks were bailed out. It's called "moral hazard". Save someone from the consequence of their foolish actions and they are MORE (not less) likely to repeat them. There are still house-flipping shows on cable TV. Nobody learned anything so we're all gonna repeat it, bigger and better than ever. They will kick the can. There is no other politically viable option.

I am now asking myself, is it even politically viable for the Fed to continue with QE?  I'm starting to question that.

I am also asking, if QE continues, will emerging markets and China continues with credit creation?  I'm also starting to question that.  See India's central bank response to Fed's QE taper and China's forecasted slowdown in 2014. 

More QE could simply end with stagflation. 

[billyjoeallen]

In a functioning credit market, capital goes where it is best used, but decades of artificially low interest rates and years of ZIRP have distorted the market to the point where it is basically unfixable without triggering the Mother Of All Corrections. So they won't fix it. They'll keep printing. Yellen basically admitted as much in confirmation hearings. Anyone could have predicted what happened when the banks were bailed out. It's called "moral hazard". Save someone from the consequence of their foolish actions and they are MORE (not less) likely to repeat them. There are still house-flipping shows on cable TV. Nobody learned anything so we're all gonna repeat it, bigger and better than ever. They will kick the can. There is no other politically viable option.

I am now asking myself, is it even politically viable for the Fed to continue with QE?  I'm starting to question that.

I am also asking, if QE continues, will emerging markets and China continues with credit creation?  I'm also starting to question that.  See India's central bank response to Fed's QE taper and China's forecasted slowdown in 2014. 

More QE could simply end with stagflation. 

I agree that's likely, but stagflation is better from the policy-maker's perspective than the alternative. That's the dilemma they are in.

[Lloydie]

In a functioning credit market, capital goes where it is best used, but decades of artificially low interest rates and years of ZIRP have distorted the market to the point where it is basically unfixable without triggering the Mother Of All Corrections. So they won't fix it. They'll keep printing. Yellen basically admitted as much in confirmation hearings. Anyone could have predicted what happened when the banks were bailed out. It's called "moral hazard". Save someone from the consequence of their foolish actions and they are MORE (not less) likely to repeat them. There are still house-flipping shows on cable TV. Nobody learned anything so we're all gonna repeat it, bigger and better than ever. They will kick the can. There is no other politically viable option.

I am now asking myself, is it even politically viable for the Fed to continue with QE?  I'm starting to question that.

I am also asking, if QE continues, will emerging markets and China continues with credit creation?  I'm also starting to question that.  See India's central bank response to Fed's QE taper and China's forecasted slowdown in 2014. 

More QE could simply end with stagflation. 

I agree that's likely, but stagflation is better from the policy-maker's perspective than the alternative. That's the dilemma they are in.

Stagflation = high unemployment, low GDP growth, high inflation. 

This will end up with a Volcker type Fed = high interest rates.

Yellen could be a one term Chairperson.

[billyjoeallen]

In a functioning credit market, capital goes where it is best used, but decades of artificially low interest rates and years of ZIRP have distorted the market to the point where it is basically unfixable without triggering the Mother Of All Corrections. So they won't fix it. They'll keep printing. Yellen basically admitted as much in confirmation hearings. Anyone could have predicted what happened when the banks were bailed out. It's called "moral hazard". Save someone from the consequence of their foolish actions and they are MORE (not less) likely to repeat them. There are still house-flipping shows on cable TV. Nobody learned anything so we're all gonna repeat it, bigger and better than ever. They will kick the can. There is no other politically viable option.

I am now asking myself, is it even politically viable for the Fed to continue with QE?  I'm starting to question that.

I am also asking, if QE continues, will emerging markets and China continues with credit creation?  I'm also starting to question that.  See India's central bank response to Fed's QE taper and China's forecasted slowdown in 2014. 

More QE could simply end with stagflation. 

I agree that's likely, but stagflation is better from the policy-maker's perspective than the alternative. That's the dilemma they are in.

Stagflation = high unemployment, low GDP growth, high inflation. 

This will end up with a Volcker type Fed = high interest rates.

Yellen could be a one term Chairperson.

Yellen is no Tall Paul. If interest rates got even close to Volker's 18%, almost nobody could service their debt at that level, certainly not USG. The housing market would crash again and this time take out the entire banking system.
And that's the GOOD scenario.   Not gonna happen. I'm betting my life savings on it.

[CryptoNames]

Ok - I just like to look at charts.

This is the logarithmic chart of bitcoin price over the last 4 years, available at Blockchain.info:  the black square is for 2013.



Ok - some ups and downs, but kind of a straight line to me - $10 000 - yes in about a year or so, I would say.


Now, how this,





Compares to this?

+1 Thanks for putting this in perspective.

[FierceRadish]

Ok - I just like to look at charts.

This is the logarithmic chart of bitcoin price over the last 4 years, available at Blockchain.info:  the black square is for 2013.



Ok - some ups and downs, but kind of a straight line to me - $10 000 - yes in about a year or so, I would say.


Now, how this,





Compares to this?

+1 Thanks for putting this in perspective.

Interesting, but did we ever get an answer as to whether some of these large holder addresses belong to exchanges or similar bodies? That would significantly skew results.

[Heater]

In a functioning credit market, capital goes where it is best used, but decades of artificially low interest rates and years of ZIRP have distorted the market to the point where it is basically unfixable without triggering the Mother Of All Corrections. So they won't fix it. They'll keep printing. Yellen basically admitted as much in confirmation hearings. Anyone could have predicted what happened when the banks were bailed out. It's called "moral hazard". Save someone from the consequence of their foolish actions and they are MORE (not less) likely to repeat them. There are still house-flipping shows on cable TV. Nobody learned anything so we're all gonna repeat it, bigger and better than ever. They will kick the can. There is no other politically viable option.

I am now asking myself, is it even politically viable for the Fed to continue with QE?  I'm starting to question that.

I am also asking, if QE continues, will emerging markets and China continues with credit creation?  I'm also starting to question that.  See India's central bank response to Fed's QE taper and China's forecasted slowdown in 2014. 

More QE could simply end with stagflation. 

I agree that's likely, but stagflation is better from the policy-maker's perspective than the alternative. That's the dilemma they are in.

Stagflation = high unemployment, low GDP growth, high inflation. 

This will end up with a Volcker type Fed = high interest rates.

Yellen could be a one term Chairperson.

Yellen is no Tall Paul. If interest rates got even close to Volker's 18%, almost nobody could service their debt at that level, certainly not USG. The housing market would crash again and this time take out the entire banking system.
And that's the GOOD scenario.   Not gonna happen. I'm betting my life savings on it.

Can you explain the bet? Sounds interesting.

[Mythul]

To be honest I don't want to be super rich, I don't hodl enough coins for that. But some money to buy a decent apartment where I live will really help me and my family allot.
I will leave the jets for big whales 

[billyjoeallen]

In a functioning credit market, capital goes where it is best used, but decades of artificially low interest rates and years of ZIRP have distorted the market to the point where it is basically unfixable without triggering the Mother Of All Corrections. So they won't fix it. They'll keep printing. Yellen basically admitted as much in confirmation hearings. Anyone could have predicted what happened when the banks were bailed out. It's called "moral hazard". Save someone from the consequence of their foolish actions and they are MORE (not less) likely to repeat them. There are still house-flipping shows on cable TV. Nobody learned anything so we're all gonna repeat it, bigger and better than ever. They will kick the can. There is no other politically viable option.

I am now asking myself, is it even politically viable for the Fed to continue with QE?  I'm starting to question that.

I am also asking, if QE continues, will emerging markets and China continues with credit creation?  I'm also starting to question that.  See India's central bank response to Fed's QE taper and China's forecasted slowdown in 2014. 

More QE could simply end with stagflation. 

I agree that's likely, but stagflation is better from the policy-maker's perspective than the alternative. That's the dilemma they are in.

Stagflation = high unemployment, low GDP growth, high inflation. 

This will end up with a Volcker type Fed = high interest rates.

Yellen could be a one term Chairperson.

Yellen is no Tall Paul. If interest rates got even close to Volker's 18%, almost nobody could service their debt at that level, certainly not USG. The housing market would crash again and this time take out the entire banking system.
And that's the GOOD scenario.   Not gonna happen. I'm betting my life savings on it.

Can you explain the bet? Sounds interesting.

Not complicated. My portfolio is over 90% bitcoin. If The Fed stops printing, the fractional reserve money multiplier will turn negative due to credit contraction and we'll get fiat deflation, bankruptcies, failed banks, etc.  This is what needs to happen to fix the messed up capital structure of the economy, but the central planners won't let it happen.

[Lloydie]

I agree with billyjoeallen. But I remain concerned about the capacity of central planners to keep printing, as political forces are kicking back from enrichment of the 1%. I see that in the US, Europe and China. I don't doubt yellen is an instinctive printer, I just don't know how much political space she has to follow ben's path.

[glendall]

What billyjoeallen said.  Pretty much same believes here.

After looking at our current monetary system since I started to get really into bitcoin 1.5 years ago, I have come to the same conclusions.  We should have had more larger, severe market corrections to fix many of the markets over the last few decades. But these were not allowed. There is no escape I see now but a collapse.  I hate how pessimistic that sounds but I really don't see any other way it is going to work out. There is WAY too much funny money out there. It is like our global monetary policy stopped reflecting reality and is now almost a complete fabrication. At the best, it is a house of cards.

This year I am going to put 1/3rd to half of my day job income into bitcoin and bitcoin investments.  It is not that I see bitcoin raising so fast in the future, it is more that I see the print-storms of fiat currency losing value against bitcoin, which is a limited something with a growing demand.

If anyone wants to talk bubbles and crashes I think USD should be on the top of the list. You can only kick a can so many times down the road before it falls into a ditch.

[theFork]

considering BTC has gone from 0.001 cent to 1000K or something like that, this is 10^6 ~ 10^5 growth.

to go to 100k a coin is only 10^2.

the hard part has already been done. the proof that you can go to a $10 Billion market cap is no longer theoretical. It is a historical fact.

Go back to before 2009 and try and convince any one this was ever possible, and be laughed at by well, every one, if not ignored.

It so great to see the "economists" and other luminaries be proven so wrong about BTC, time after time after time. They have pronounced it dead a few times now only to see it come back orders of magnitude stronger. Nothing in their learning, or understanding has every done this.

Plus the other benefits of btc, and the shear amount of fiat sloshing around, makes frankly a btc of 1 million a coin not seem that much, its only 10^3 away.

It's just that 99.9999999% of people have no idea of the amount of money sloshing around, where is all resides, and who has it, how much printing + waste is going on.

Most are just in a zombifies state of consumer crap plastic state off purchasing.

A flat good size flat screen tv cost less  than a square meter of dirt in many capital cities. Let that sink in.

The fact that a book or theory like afluenza can get any traction shows how misguided people are, that now twe can buy crap, stuff, food, health care, etc etc we are affluent. Go and try and buy a house anywhere you'd want to live.

$1 million is [now] just a bundle of 1's and zeros on some state back computer system that has ceased any indication of value. See your purchasing power of FIAT, yes its going down isn't it, have you ever seen it go up in the long term?

I'm not sure most even in here have actually comprehend where this is going. The Cryto Currency space as a whole is going to leave reshape the entire landscape and cut out many many trillions in waste and poor decision making.

The magnitude of bad decision making at the public expense by govt's is in the 100's of trillions, a year.

The current Banking system costs, wages, realesate, IT alone which BTC tech replaces would be about 1/2 the banks total costs, per site.

There would be at least 1 million banks in the world, that cost at least an average of 500K to run p.a.. There's $250 Billion a year in savings just from BTC tech. That just a drop in the bucket for what sets a floor on BTC tech value.

middle class people within 15 years will be lucky to ever earn a BTC in their whole working life, within 25 years a single BTC will sufficient for be dynastic wealth.

The one caveat is it may not be BTC is could be some other coin, or bundle of coins, so you have to diversify. However it won't be a gov coin, or a closed source coin, those models are incompatible with BTC tech.

[chessnut]

considering BTC has gone from 0.001 cent to 1000K or something like that, this is 10^6 ~ 10^5 growth.

to go to 100k a coin is only 10^2.

the hard part has already been done. the proof that you can go to a $10 Billion market cap is no longer theoretical. It is a historical fact.

Go back to before 2009 and try and convince any one this was ever possible, and be laughed at by well, every one, if not ignored.

It so great to see the "economists" and other luminaries be proven so wrong about BTC, time after time after time. They have pronounced it dead a few times now only to see it come back orders of magnitude stronger. Nothing in their learning, or understanding has every done this.

Plus the other benefits of btc, and the shear amount of fiat sloshing around, makes frankly a btc of 1 million a coin not seem that much, its only 10^3 away.

It's just that 99.9999999% of people have no idea of the amount of money sloshing around, where is all resides, and who has it, how much printing + waste is going on.

Most are just in a zombifies state of consumer crap plastic state off purchasing.

A flat good size flat screen tv cost less  than a square meter of dirt in many capital cities. Let that sink in.

The fact that a book or theory like afluenza can get any traction shows how misguided people are, that now twe can buy crap, stuff, food, health care, etc etc we are affluent. Go and try and buy a house anywhere you'd want to live.

$1 million is [now] just a bundle of 1's and zeros on some state back computer system that has ceased any indication of value. See your purchasing power of FIAT, yes its going down isn't it, have you ever seen it go up in the long term?

I'm not sure most even in here have actually comprehend where this is going. The Cryto Currency space as a whole is going to leave reshape the entire landscape and cut out many many trillions in waste and poor decision making.

The magnitude of bad decision making at the public expense by govt's is in the 100's of trillions, a year.

The current Banking system costs, wages, realesate, IT alone which BTC tech replaces would be about 1/2 the banks total costs, per site.

There would be at least 1 million banks in the world, that cost at least an average of 500K to run p.a.. There's $250 Billion a year in savings just from BTC tech. That just a drop in the bucket for what sets a floor on BTC tech value.

middle class people within 15 years will be lucky to ever earn a BTC in their whole working life, within 25 years a single BTC will sufficient for be dynastic wealth.

The one caveat is it may not be BTC is could be some other coin, or bundle of coins, so you have to diversify. However it won't be a gov coin, or a closed source coin, those models are incompatible with BTC tech.

Yeah, but it reaches a point where the market cap begins to have some massive effect on the global economy. we are not on the radar yet, but it will be difficult to pass 500 Billion. yeah it's not improbable though...  at this point in time I would say it is unlikely to pass 2 trillion market cap. the implications are too severe.

[Lloydie]

chessnut, please elaborate on "implications too severe."  Thanks. 

[chessnut]

chessnut, please elaborate on "implications too severe."  Thanks.  

There are only a few hundred trillion dollars in the world... many other large markets take share of this market cap and it's is very competitive.
also, there can only be so many millionaires made by bitcoin before it loses it's meaning.
-So maybe you got me there, but what I mean is that the market cannot remain denominated in USD while bitcoin has a market cap of several trillion. The implications of a larger market cap are very severe, but by then you couldn't measure it in dollars.

and by severe I mean new world order.

[Lloydie]

chessnut, please elaborate on "implications too severe."  Thanks. 

There are only a few hundred trillion dollars in the world... many other large markets take share of this market cap and it's is very competitive.
also, there can only be so many millionaires made by bitcoin before it loses it's meaning.
-So maybe you got me there, but what I mean is that the market cannot remain denominated in USD while bitcoin has a market cap of several trillion. The implications of a larger market cap are very severe, but by then you couldn't measure it in dollars.

Okay.  I think I get your point.  You are saying that Bitcoin cannot be a perpetual millionaire minting factory as the global economy is a fixed size?  As Bitcoin's economy expands, the USD and other currencies will lose market share of the global economy.  That makes sense.  Thanks for explaining.

I think it will happen anyway, bitcoin or some other crypto.  I don't think the global economy will shrink due to Bitcoin.  It's possible for the Bitcoin economy to increase the size of the global economy via efficiency gains, productivity, job creation etc...

However, in dollar terms, I can definitely see economic contraction.  I know many here are betting on inflation but I suspect deflation will hit first. Inflation might follow later as a consequence of central bank responses.  However, the next money printing adventure might just end in stagflation and political turmoil.

Overall, I expect Bitcoin's economic growth rate to overcome the USD's deflationary forces caused by QE taper.

[chessnut]

chessnut, please elaborate on "implications too severe."  Thanks.  

There are only a few hundred trillion dollars in the world... many other large markets take share of this market cap and it's is very competitive.
also, there can only be so many millionaires made by bitcoin before it loses it's meaning.
-So maybe you got me there, but what I mean is that the market cannot remain denominated in USD while bitcoin has a market cap of several trillion. The implications of a larger market cap are very severe, but by then you couldn't measure it in dollars.

Okay.  I think I get your point.  You are saying that Bitcoin cannot be a perpetual millionaire minting factory as the global economy is a fixed size?  As Bitcoin's economy expands, the USD and other currencies will lose market share of the global economy.  That makes sense.  Thanks for explaining.

I think it will happen anyway, bitcoin or some other crypto.  I don't think the global economy will shrink due to Bitcoin.  It's possible for the Bitcoin economy to increase the size of the global economy via efficiency gains, productivity, job creation etc...

However, in dollar terms, I can definitely see economic contraction.  I know many here are betting on inflation but I suspect deflation will hit first. Inflation might follow later as a consequence of central bank responses.  However, the next money printing adventure might just end in stagflation and political turmoil.

Overall, I expect Bitcoin's economic growth rate to overcome the USD's deflationary forces caused by QE taper.

yeah thats what I mean, if theoretically the max market cap is the global market cap, it becomes exponentially unrealistic for BTC to approach that number. If we consider commodities and stocks to be in fact equivalent to USD, we cannot expect BTC to replace these in market cap. If bitcoin market cap were to exceed more than a few trillion (thats a guess) it would imply a new world order. the USD out and probably many other currencies.
I just dont want to sit on my computer as a speculator and plot a new world order..... so Ill say the best market cap that BTC is likely to achieve is several hundred billion.