How an EURO melt down will affect bitcoins?

[bitcoinbear]

LOL, take a wild guess.

It obviously affects Bitcoin. EUR is imminently endangered of a crash, USD is stupid monopoly money, Gold and Silver are bubbling as much as they can already. People are desperate for alternatives.

Gold+Silver are not in bubble territory yet. Once you get a foreclosed house with a ounce of gold and a car with an once of silver we are talking.

You can get houses in Detroit, Michigan for less than an ounce of gold.

I was wondering: the countries that now use the Euro, do they still circulate their own national currencies?

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[netrin]

I was wondering: the countries that now use the Euro, do they still circulate their own national currencies?

No. I'm sure they've still got the molds for the coins and printing plates for the notes, but the old currencies were phased out a decade ago*. In most countries** there was a window for redemption at fixed rates, after the window closed the coins were officially worth no more than melt or collector value (which is not much).

* Of course new entrants to the Euro-zone were phased out later, such as Estonia which only fixed the kroon 15.6:1 EUR last year.

** http://en.wikipedia.org/wiki/Euro#Introduction_of_the_euro

1992 The euro was established by the provisions in the 1992 Maastricht Treaty.
1995 The name "euro" suggested by Belgian Esperantist Germain Pirlot, 4 August 1995
1995 The name "euro" was officially adopted in Madrid on 16 December 1995
1998 Rates determined based on the market rates on 31 December 1998 (Greek drachma was fixed several months beforehand)
1999 Introduced in non-physical form (traveller's cheques, electronic transfers, banking, etc.) at midnight on 1 January 1999.
2001 Germany mark officially ceased to be legal tender on 31 December 2001
2002 Euro notes and coins were introduced on 1 January 2002.
2002 The changeover period lasted about two months, until 28 February 2002
2002 Portuguese escudos ceased to have monetary value after 31 December 2002, although banknotes remain exchangeable until 2022.
**** Currencies of Austria, Germany, Ireland and Spain continue to be accepted by national central banks forever

[zby]

Goldman Sachs predictions on Eurozone: http://www.zerohedge.com/news/goldman-endgame-approaches-rally-aaa-euro-area-sovereign-bonds-no-longer-seems-sustainable

The same Goldman Sachs that helped Greece to misreport their deficit / spending and had bets on their default?

Well - I read it as in this paper they had to admit their error in betting on Euro bailouts.

[Cluster2k]

You can get houses in Detroit, Michigan for less than an ounce of gold.

There's a very good reason for that: the properties have property tax arrears that the new owner must pay.  The house will still be valued at somewhere near its original value, not sub $2k, so the property taxes are going to be hefty.  The house has probably been stripped of all materials, used as a crack house and located in a neighbourhood where people are afraid to walk the streets during the day.

Some enterprising Americans are advertising these 'screaming bargains' to naive Australian property investors as a fantastic buying opportunity.  There's a sucker born every minute, and plenty are being hatched right now in Australia.

[Otoh]

Re: How an EURO melt down will affect bit coins?

When the € goes tits up expect protectionism & monetary controls to be the order of the day

Bank of England's working paper argues that it might be necessary to impose capital controls to repair the global financial system

Bitcoin may then come in to it's own as it is very hard to enforce monetary controls on it's almost instant international free flow of funds

[BTCurious]

What is capital control exactly?

[tvbcof]

What is capital control exactly?

Not answering your question, but...

'capital controls' are, I suspect, something which is going to do two things for Bitcoin:

 1) attract a significant interest from people who have some money.

 2) 'legitimize' Bitcoin's reputation.

I'll expand on #2 since I think it may be quite important.  As long as Bitcoin can be painted as being used by gamblers, druggies, scamers, etc, it is relatively easy manipulate public opinion about it (the the extent that it is even known of.)  Most 'normal' people will quite rationally consider Bitcoin to be a dark thing, and at least tacitly support any efforts that the authorities my take against the system.

OTOH, almost everyone is going to be able to relate to a countries citizens trying to protect their own savings against the backdrop of draconian capital control measures and wealth appropriation.  If Bitcoin is used for this purpose, and if such use of Bitcoin becomes more well known, it has the potential to be a very significant and positive 'PR' ramifications for the system.

[wareen]

What is capital control exactly?

Capital controls are measures such as transaction taxes and other limits or outright prohibitions, which a nation's government can use to regulate the flows into and out of the country's capital account.

Types of capital control include exchange controls that prevent or limit the buying and selling of a national currency at the market rate, caps on the allowed volume for the international sale or purchase of various financial assets, transaction taxes such as the proposed Tobin tax, minimum stay requirements, requirements for mandatory approval, or even limits on the amount of money a private citizen is allowed to remove from the country. There have been several shifts of opinion on whether capital controls are beneficial and in what circumstances they should be used.

I'd expect Bitcoin to become a very hot topic in case of capital controls in Europe.

[BTCurious]

So, if that is implemented, all those measures could effectively be circumvented using bitcoin?

[mila]

So, if that is implemented, all those measures could effectively be circumvented using bitcoin?

assuming bitcoin would be big enough to move such amounts of money around, yes.

on the other hand, control btc exchanges, find out who where converted money to bitcoin, track their customers' bitcoins movement and see if they cashed out into other currency abroad and there you go, busted. blockchain is public, exchangers' records can be inspected and either way government could take its share (either tap the money on the out exchange or simply take your bitcoins). if they'll be smart enough to know what's bitcoin, they would be capable of wiping the balances at gox or any other exchange. just curious if they would send them to an invalid address (read destroy) or they would 'get lost' in the archives and find a way to black market.

[tvbcof]

So, if that is implemented, all those measures could effectively be circumvented using bitcoin?

I would doubt it and cannot visualize it ('all' being a very broad term.)

I could see Bitcoin being mainly a way of transferring value across international borders in a relatively reliable and autonomous manner.  That is a sharp tool to have, but the major problem remains of how to get control of BTC in the first place.  First movers (into almost anything but assets under national control) will have a big advantage.  Then Bitcoin could provide a mechanism which is helpful in allowing the value of these things to migrate across borders.

[StewartJ]

Re: How an EURO melt down will affect bit coins?

When the € goes tits up expect protectionism & monetary controls to be the order of the day

Bank of England's working paper argues that it might be necessary to impose capital controls to repair the global financial system

Bitcoin may then come in to it's own as it is very hard to enforce monetary controls on it's almost instant international free flow of funds

So what you're saying is, Bitcoins might be the ultimate wealth life preserver if  the Global Economic Crisis reverts to Financial Martial Law.

[P4man]

In most countries** there was a window for redemption at fixed rates, after the window closed the coins were officially worth no more than melt or collector value (which is not much).
[..]
**** Currencies of Austria, Germany, Ireland and Spain continue to be accepted by national central banks forever

Its the same here in Belgium, and I assume(d) elsewhere too; you can still change your old notes and even coins. They are no longer legal tender though, so you can not pay with them.

[molecular]

When the € goes tits up[...]

pix plz

[ribuck]

Keynes ... to be fair, he recommended counter-cyclical policy, not deficit spending bubble pumping that has been enacted in his name since.

The intractible problem with Keynes is that you can never tell when the cycle begins and ends until after it has happened. At any instant, you don't know how much of the growth is the underlying steady growth, and how much is illusory cyclical growth.

Gordon Brown made a big noise about balancing the budget "over the economic cycle", but in the later years of the credit-induced boom he was already increasing the government deficit because he thought those were the leaner years of the cycle, when actually they turned out to be the fattest. Almost no-one (and certainly no Keynsians) challenged him at the time.

[netrin]

Keynes ... to be fair, he recommended counter-cyclical policy, not deficit spending bubble pumping that has been enacted in his name since.

The intractible problem with Keynes is that you can never tell when the cycle begins and ends until after it has happened. At any instant, you don't know how much of the growth is the underlying steady growth, and how much is illusory cyclical growth.

Gordon Brown made a big noise about balancing the budget "over the economic cycle", but in the later years of the credit-induced boom he was already increasing the government deficit because he thought those were the leaner years of the cycle, when actually they turned out to be the fattest. Almost no-one (and certainly no Keynsians) challenged him at the time.

There are always innumerous cycles/waves of different magnitude playing out simultaneously. However, when the central banks start playing with near-zero percent interest rates, they are up to some artificial inflationary policy, they are priming the economy, and they know it. Central banks target core price inflation and have a very good idea of market growth.

Alan Greenspan inflated the economy in the 90's and the policy was continued in the 00's (and Clinton made similar noise). Just because few complained does not in anyway suggest that it was John Maynard Keynes policy. Remember, the time period was referred to as the "New Economy".

Billions of people label themselves Liberal, Conservative, Intelligent, Beautiful, and Clever, but let us not presume that they are.