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

[Lloydie]

like all these valuations..  even if BTC equals $100,000 someday, perhaps a gallon of gas might be $300 so you don't really gain anything with BTC but preserve your wealth..  like with gold for the most part.

so watch what you wish for 

Or BTC could be $1 million and we don't use gas at all. What is the point of pointless speculation?

obviously if you don't see the point you think it is pointless..  what a world you must live in..  nothing exists unless you already understand it!!!

perhaps if you asked nicely I would of bother learning ya but these days people just slam someone and expect someone to rush to prove their point..  nah, people used to ask with some civility when there was a concept that they didn't seem to fully grasp

stay in the dark

Firstly, let me apologise for slamming you. I could've worded it differently. I work in financial services and deflation is much more a reality at this point unless yellen prints more after ben's farewell, in which case we might see very high inflation in the US. However, the political cost to the fed will be significant after QE3. So I think it is more likely deflation will hit and a recession ensue. Also, I believe that emerging technology will move us away from gas at $300 per gallon.

[DPoS]

Firstly, let me apologise for slamming you. I could've worded it differently. I work in financial services and deflation is much more a reality at this point unless yellen prints more after ben's farewell, in which case we might see very high inflation in the US. However, the political cost to the fed will be significant after QE3. So I think it is more likely deflation will hit and a recession ensue. Also, I believe that emerging technology will move us away from gas at $300 per gallon.

ok then you do know the area I am talking about. BTC's run up consists of a few variables and I was just pointing out the part where dollar destruction (which many people cling to as the reason to invest in btc) will also raise the price of anything else with value so there isn't a wealth gain with that jump.

Other areas can rise and crash the BTC price in relation to other things but those are different cases

The interesting thing with the Fed you mention is true, but they figured out that with the drop in credit creation, all that money printing pretty much just balanced the equation which is why we never really saw inflation go crazy (and yes inflation deals with more factors like velocity that is slowed from stagnation in wages)

So, if Yellen keeps tapering, we will probably see an uptick in more lending to fend off deflation..  but wages will probably need to rise as well since many folks aren't going to take real loans when tapped out. (the crazy college loans & car loans continue though)

one area is the shift to investor home ownership and tenant renters.. that will probably keep velocity really slow and prices stagnate  (American Homes 4 Rent, etc)

[Lloydie]

ok then you do know the area I am talking about. BTC's run up consists of a few variables and I was just pointing out the part where dollar destruction (which many people cling to as the reason to invest in btc) will also raise the price of anything else with value so there isn't a wealth gain with that jump.

Other areas can rise and crash the BTC price in relation to other things but those are different cases

The interesting thing with the Fed you mention is true, but they figured out that with the drop in credit creation, all that money printing pretty much just balanced the equation which is why we never really saw inflation go crazy (and yes inflation deals with more factors like velocity that is slowed from stagnation in wages)

So, if Yellen keeps tapering, we will probably see an uptick in more lending to fend off deflation..  but wages will probably need to rise as well since many folks aren't going to take real loans when tapped out. (the crazy college loans & car loans continue though)

one area is the shift to investor home ownership and tenant renters.. that will probably keep velocity really slow and prices stagnate  (American Homes 4 Rent, etc)

If yellen tapers deflation will ensue, not more lending. Money printing did not balance out the equation per se. It pushed down long term interest rates which encouraged speculative credit flows giving the illusion of wealth via asset price appreciation. Wages cannot rise in taper scenario as there is already inadequate consumption and corporations will retrench leading again to excessive labour capacity. Car and college loans cannot continue indefinitely as college loan defaults are near parabolic and car loan interest are ticking up plus the fact that car volumes are at pre GFC highs. Moreover, credit creation is not happening in the US as GDP growth of around 2% shows. Credit creation due to cheap dollars was occurring in emerging markets, especially China which created new credit equivalent to 36% of China's GDP in 2013.  Other emerging markets also did so but at lower but still dangerous levels. Fed taper ends this as USD starts to appreciate and the global reserve currency becomes more expensive. The global economy is fubar as emerging markets crumble.

[DPoS]

Yes I know credit creation isn't here yet, I said it will have to happen if Yellen continues...  there is plenty of sideline money that will fuel lending if interest rates tick up a little and it won't be consumer at first.. it will continue to be for those investors buying up foreclosures and renting them.. how that really fixes anything is a baby step from where we were

also I am seeing a big push for cities promoting tax-free incentives for people that create startup companies (new york is pushing hard their plan of 10 year tax free right now)  how that all works is to be watched.   The puppet master hands are moving for the next act.

yes emerging markets are going to have to fend for themselves for the short term

also, the asset prices got bloated by lots of companies fueling that easy money in buybacks to insiders selling large stakes..watch out below 

[billyjoeallen]

I work in financial services and deflation is much more a reality at this point unless yellen prints more after ben's farewell, in which case we might see very high inflation in the US. However, the political cost to the fed will be significant after QE3. So I think it is more likely deflation will hit and a recession ensue. Also, I believe that emerging technology will move us away from gas at $300 per gallon.

Yellen will almost certainly print. She was vetted to be a reliable printer. If she wasn't, she wouldn't have been confirmed. Yes, without QEternity, deflation is inevitable, but it won't happen because when your only tool is a printing press, every problem looks like a liquidity problem. We are not dealing with Paul Volker here. When the government starts screaming for more counterfeit fiat, they will get it and we will be screwed, unless we are holding bitcoin, that is. 

The Government is insolvent. The Banks are insolvent. The citizens are insolvent. The only two possible outcomes are deflationary systemic collapse soon or hyperinflationary systemic collapse later. Politicians and Fed Chairmen rarely see or care beyond the next election cycle, so they will kick the can. It's as close to a certainty as you can get.

[sublime5447]

Less than one million wallets (so less than one million users), and people think the price can't double again, let alone $10,000. Please... It's so far from being even close to widely adopted that really no one has any clue really what the price will do in the future. Only thing for certain is there is plenty of room for price growth, if bitcoin continues to be adopted and used as digital money.

It won't IMHO. I have been a naysayer for a long time though. When I got out I told my friends and family that it would blow into a huge bubble and then crash waaayyy down. Not to nothing but to something believable, like beanie babies and tulip bulbs. My brother in law basically says that it hasn't been blown as big as it is gonna get and that financial institutions are going to get in and give it a good pump, its possible but I dont see it happening.   

[billyjoeallen]

Less than one million wallets (so less than one million users), and people think the price can't double again, let alone $10,000. Please... It's so far from being even close to widely adopted that really no one has any clue really what the price will do in the future. Only thing for certain is there is plenty of room for price growth, if bitcoin continues to be adopted and used as digital money.

It won't IMHO. I have been a naysayer for a long time though. When I got out I told my friends and family that it would blow into a huge bubble and then crash waaayyy down. Not to nothing but to something believable, like beanie babies and tulip bulbs. My brother in law basically says that it hasn't been blown as big as it is gonna get and that financial institutions are going to get in and give it a good pump, its possible but I dont see it happening.   

You're like the guy in the street proclaiming the end of the world. You're no longer just wrong. You're becoming a joke. Bitcoin price periodically goes through manias, but the four year log trend is remarkably clear. This is a technology with utility and it's being adopted at an exponential growth rate. This will continue (and the price will reflect that) until a superior technology is developed and deployed or until adoption approaches saturation level.

[chessnut]

Less than one million wallets (so less than one million users), and people think the price can't double again, let alone $10,000. Please... It's so far from being even close to widely adopted that really no one has any clue really what the price will do in the future. Only thing for certain is there is plenty of room for price growth, if bitcoin continues to be adopted and used as digital money.

It won't IMHO. I have been a naysayer for a long time though. When I got out I told my friends and family that it would blow into a huge bubble and then crash waaayyy down. Not to nothing but to something believable, like beanie babies and tulip bulbs. My brother in law basically says that it hasn't been blown as big as it is gonna get and that financial institutions are going to get in and give it a good pump, its possible but I dont see it happening.   

You're like the guy in the street proclaiming the end of the world. You're no longer just wrong. You're becoming a joke. Bitcoin price periodically goes through manias, but the four year log trend is remarkably clear. This is a technology with utility and it's being adopted at an exponential growth rate. This will continue (and the price will reflect that) until a superior technology is developed and deployed or until adoption approaches saturation level.

The media are still pushing for ponzi scheme.....
http://www.bloomberg.com/news/2014-01-30/bitcoin-ponzi-scheme-worry-sparks-estonia-central-bank-caution.html
we are far from the top and it aint gonna come back.

[Lloydie]

I work in financial services and deflation is much more a reality at this point unless yellen prints more after ben's farewell, in which case we might see very high inflation in the US. However, the political cost to the fed will be significant after QE3. So I think it is more likely deflation will hit and a recession ensue. Also, I believe that emerging technology will move us away from gas at $300 per gallon.

Yellen will almost certainly print. She was vetted to be a reliable printer. If she wasn't, she wouldn't have been confirmed. Yes, without QEternity, deflation is inevitable, but it won't happen because when your only tool is a printing press, every problem looks like a liquidity problem. We are not dealing with Paul Volker here. When the government starts screaming for more counterfeit fiat, they will get it and we will be screwed, unless we are holding bitcoin, that is. 

The Government is insolvent. The Banks are insolvent. The citizens are insolvent. The only two possible outcomes are deflationary systemic collapse soon or hyperinflationary systemic collapse later. Politicians and Fed Chairmen rarely see or care beyond the next election cycle, so they will kick the can. It's as close to a certainty as you can get.

Ok. Lets say Yellen prints but China's economy corrects, then what? Without credit creation we are still facing deflation, no?

[billyjoeallen]

The media are still pushing for ponzi scheme.....
http://www.bloomberg.com/news/2014-01-30/bitcoin-ponzi-scheme-worry-sparks-estonia-central-bank-caution.html
we are far from the top and it aint gonna come back.

LOL. Central bankers warning of ponzi schemes. Reminds me of the pickpocket in the movie Casablanca warning of "vultures, vultures everywhere!"

[billyjoeallen]

I work in financial services and deflation is much more a reality at this point unless yellen prints more after ben's farewell, in which case we might see very high inflation in the US. However, the political cost to the fed will be significant after QE3. So I think it is more likely deflation will hit and a recession ensue. Also, I believe that emerging technology will move us away from gas at $300 per gallon.

Yellen will almost certainly print. She was vetted to be a reliable printer. If she wasn't, she wouldn't have been confirmed. Yes, without QEternity, deflation is inevitable, but it won't happen because when your only tool is a printing press, every problem looks like a liquidity problem. We are not dealing with Paul Volker here. When the government starts screaming for more counterfeit fiat, they will get it and we will be screwed, unless we are holding bitcoin, that is. 

The Government is insolvent. The Banks are insolvent. The citizens are insolvent. The only two possible outcomes are deflationary systemic collapse soon or hyperinflationary systemic collapse later. Politicians and Fed Chairmen rarely see or care beyond the next election cycle, so they will kick the can. It's as close to a certainty as you can get.

Ok. Lets say Yellen prints but China's economy corrects, then what? Without credit creation we are still facing deflation, no?

Money printing IS credit creation. When the Fed expands its balance sheet, dollars are loaned into existence. Further credit creation occurs when private banks re-lend, and the Fed has tools to encourage that, one being to stop paying interest for bank deposits held at the Fed. Private banks aren't going to sit on that money. They are going to lend it out. Yellen could also INCREASE QE rather than continue or taper. I think this is likely because most of the inflationary effects will be offset by lower import prices as the dollar strengthens relative to other national currencies. The government can and likely will encourage more consumer debt also, in the form of student loans, tax breaks like mortgage deductions, etc. And of course the government itself will likely increase it's borrowing. This isn't mere speculation. There are numerous historical precedents.

Yellen will be forced to print because every other central bank has an even greater incentive than she does to print. They will then she will. If she doesn't go along, exports will plunge, imports will explode and current accounts deficits will bring the whole damn thing to a grinding halt. China most likely will correct. They may try to print their way out of it, in which case the above scenario plays out. If they are uncharacteristically smart, they'll have massive deflation, bank runs, bankruptcies en masse and then get into a war to distract everybody and prevent the civil unrest from reaching critical mass. Wars are never deflationary.

[DPoS]

Money printing IS credit creation.

no, it isn't directly..  credit creation creates more debt money that gets cancelled out when debt paid, money printing is an absolute increase

 

[chessnut]

Money printing IS credit creation.

no, it isn't directly..  credit creation creates more debt money that gets cancelled out when debt paid, money printing is an absolute increase

 

the money that is printed is for lending......
lending = debt
debt=credit

[Lloydie]

Money printing IS credit creation.

no, it isn't directly..  credit creation creates more debt money that gets cancelled out when debt paid, money printing is an absolute increase

 

I don't believe money printing is debt creation because we have seen a commensurate rise in bank reserves.

[chessnut]

Money printing IS credit creation.

no, it isn't directly..  credit creation creates more debt money that gets cancelled out when debt paid, money printing is an absolute increase

 

I don't believe money printing is debt creation because we have seen a commensurate rise in bank reserves.

we have also seen a rise in debt.... huge debt.

the banks own the credit.....
people own the debt....

[Lloydie]

Money printing IS credit creation.

no, it isn't directly..  credit creation creates more debt money that gets cancelled out when debt paid, money printing is an absolute increase

 

I don't believe money printing is debt creation because we have seen a commensurate rise in bank reserves.

we have also seen a rise in debt.... huge debt.

the banks own the credit.....
people own the debt....

Yes, government debt is up. Corporate debt is up. Housing debt is down. Student debt is up. Car debt is up. Overall, slightly up but not for much longer. The US has not hit escape velocity nor will it.

[DPoS]

Money printing IS credit creation.

no, it isn't directly..  credit creation creates more debt money that gets cancelled out when debt paid, money printing is an absolute increase

 

the money that is printed is for lending......
lending = debt
debt=credit

you need to review the fed balance sheet to see how this works.. the fed can take junk assets and hand out money with ZIRP but then they don't have control of that money..  you won't see that balance sheet money really come into lending until interest rates rise so it is worth it for lending to occur.. (besides the ultra safe loans)

but this is one of those long 80 year cycles instead of the normal recession cycles..  this usually leads to depressions and wars as many have said since there is no real way out except these are strange times with the massive amount of handouts and globalization.

bankruptcy doesn't seem to exist anymore except for targeted things (cities and companies use it to flush out unions/pensions) but fundamentals aren't really driving when it happens or it would be widespread already

[bitmarket.io]

Sure it will hit $10K+ one day. Even if it hits that mark in 2-3 years that is one steller ROI.  Probably the best you can get.

By the time all 21m coins are mined there will be 10 billion plus people crawling around this planet. Most will have smartphones and will be connected.  Ecommerce will be the dominate form of shopping.  With arial logistics we'll get our stuff faster too.  Not to mention all the unforeseen economic and political turmoil the world will go through. There is tremendous room for growth but expect it gradually.

The boost you got so excited about in November was because of China. He second biggest economy working it's way to that number one spot. A country with a smartphone userbase twice the entire US population. With growth that outpaces anyone. And a culture generally geekier than the US.

Also I'm not sure what the hell your talk about but 100BTC can buy you a descent small house somewhere.  Anyway like maletovon said, your not accounting for all those people that will sell their precious coin for some of their shitty fiat when it hits $2k. Oh and then they'll try to do more of that. Like a gambling addict.

[billyjoeallen]

Money printing IS credit creation.

no, it isn't directly..  credit creation creates more debt money that gets cancelled out when debt paid, money printing is an absolute increase

Unless we are just arguing semantics, you have made a conceptual error. We're not talking literal money printing which is done by the dept. of Treasury and accounts for a small fraction of the money supply. We're discussing the expansion of the Fed's balance sheet which can only occur when the fed conjures money out of thin air to lend it to someone, usually the government, but increasingly other markets like mortgage-backed securities. This money doesn't exist before it's lent. It's just an entry onto the Fed's ledger.

of course all loans must be repaid WITH INTEREST, and since all new money is created by debt, there isn't enough money in the world to repay all the debts plus interest. More money is created to pay the interest payments. But that's a little off topic.

More money is created when new Fed money is deposited in private banks and re-lent. This is called the money multiplier and it's usually estimated to be around 10X as much as the original Fed expansion, but it can vary greatly depending on how much is kept at the deposit bank as a reserve. Since 2008, banks have held an uncharacteristically high amount in reserve, partly because the fed pays them interest for reserved they keep on overnight deposit at the Fed itself. This is why we haven't (yet) seen as much inflation as many have predicted.

The "absolute increase" in money you mention is canceled out when the fed sells the bonds or whatever it put on it's balance sheet when the money was created. So it's no more absolute than any other kind of credit. They are effectively the same thing.

[Lloydie]

Money printing IS credit creation.

no, it isn't directly..  credit creation creates more debt money that gets cancelled out when debt paid, money printing is an absolute increase

Unless we are just arguing semantics, you have made a conceptual error. We're not talking literal money printing which is done by the dept. of Treasury and accounts for a small fraction of the money supply. We're discussing the expansion of the Fed's balance sheet which can only occur when the fed conjures money out of thin air to lend it to someone, usually the government, but increasingly other markets like mortgage-backed securities. This money doesn't exist before it's lent. It's just an entry onto the Fed's ledger.

of course all loans must be repaid WITH INTEREST, and since all new money is created by debt, there isn't enough money in the world to repay all the debts plus interest. More money is created to pay the interest payments. But that's a little off topic.

More money is created when new Fed money is deposited in private banks and re-lent. This is called the money multiplier and it's usually estimated to be around 10X as much as the original Fed expansion, but it can vary greatly depending on how much is kept at the deposit bank as a reserve. Since 2008, banks have held an uncharacteristically high amount in reserve, partly because the fed pays them interest for reserved they keep on overnight deposit at the Fed itself. This is why we haven't (yet) seen as much inflation as many have predicted.

The "absolute increase" in money you mention is canceled out when the fed sells the bonds or whatever it put on it's balance sheet when the money was created. So it's no more absolute than any other kind of credit. They are effectively the same thing.

Multiplier is 2.2 to 1.7 over one year.