Gold collapsing. Bitcoin UP.

[cypherdoc]

It's the money velocity that has collapsed ... and is still in vicious downtrend. Monetising the debt directly is a futile attempt to boost money velocity by the wizards of fiat.

The two biggest stories of the week from the elite are that USA (White House) is considering bombing both sides in a far off war ... (suspected insanity) and that the CFR suggests to print money directly into householder accounts aka helicopter money drop (patently insane).

History will look back askance on these times with pity.

the collapse in velocity and interest rates is a strong signal that deflation is winning.  no matter how much money the Fed prints, it can't force ppl to spend.  the Fed's complicity with the US Treasury to buy bonds over the last 34 yrs has caused a steady drop in interest rates.  this drop in rates has caused periods of euphoria and over investment in certain sectors of the economy but overall what it is causing is deflation. the Treasury market, the largest market in the world next to forex, is continually front run by speculators searching for risk free profits in the form of ever rising bond prices.  speculators know that the Fed will be there to pay them a higher price for the bonds they just bought from front running auctions.  they know that ultimately in the case of a problem, bonds will be backstopped by the public either in the form of taxes or further money printing.  the Treasury market is a veritable Black Hole.  stop and think for a moment of the Ponzi scheme at work.  Fed uses fresh USD to buy UST's from gvt and turns around and sticks those UST's on the asset side of it's balance as backing for those same USD's it just printed.  gvt turns around and uses the USD's obtained from issuing UST's and wastes that money on welfare projects and warfare.  they are much worse at allocating capital compared to the free market.  when gvt needs to redeem the UST's, it just issues even more UST's for more USD's from Fed and the cycle spirals downward in terms of real productivity.  this is deflation and we're seeing it in a plunging monetary velocity and negative interest rates in Europe.  of course, certain sectors of the economy can experience price inflation at different times like the stock mkt currently just to fool you that hyperinflation is just around the corner.  the noughts saw commodities rise along with gold.  student loans are at all time highs.   but these are just distractions to the main dynamic in play; the US Treasury/Fed ponzi dynamic using USD's and UST's to cause inadvertent deflation.  real productivity suffers and the Fed is pushing on a string.

for more on this read the writings of Professor Antal Fekete.

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[majamalu]

It's the money velocity that has collapsed ... and is still in vicious downtrend. Monetising the debt directly is a futile attempt to boost money velocity by the wizards of fiat.

The two biggest stories of the week from the elite are that USA (White House) is considering bombing both sides in a far off war ... (suspected insanity) and that the CFR suggests to print money directly into householder accounts aka helicopter money drop (patently insane).

History will look back askance on these times with pity.

the collapse in velocity and interest rates is a strong signal that deflation is winning.  no matter how much money the Fed prints, it can't force ppl to spend.  the Fed's complicity with the US Treasury to buy bonds over the last 34 yrs has caused a steady drop in interest rates.  this drop in rates has caused periods of euphoria and over investment in certain sectors of the economy but overall what it is causing is deflation. the Treasury market, the largest market in the world next to forex, is continually front run by speculators searching for risk free profits in the form of ever rising bond prices.  speculators know that the Fed will be there to pay them a higher price for the bonds they just bought from front running auctions.  they know that ultimately in the case of a problem, bonds will be backstopped by the public either in the form of taxes or further money printing.  the Treasury market is a veritable Black Hole.  stop and think for a moment of the Ponzi scheme at work.  Fed uses fresh USD to buy UST's from gvt and turns around and sticks those UST's on the asset side of it's balance as backing for those same USD's it just printed.  gvt turns around and uses the USD's obtained from issuing UST's and wastes that money on welfare projects and warfare.  they are much worse at allocating capital compared to the free market.  when gvt needs to redeem the UST's, it just issues even more UST's for more USD's from Fed and the cycle spirals downward in terms of real productivity.  this is deflation and we're seeing it in a plunging monetary velocity and negative interest rates in Europe.  of course, certain sectors of the economy can experience price inflation at different times like the stock mkt currently just to fool you that hyperinflation is just around the corner.  the noughts saw commodities rise along with gold.  student loans are at all time highs.   but these are just distractions to the main dynamic in play; the US Treasury/Fed ponzi dynamic using USD's and UST's to cause inadvertent deflation.  real productivity suffers and the Fed is pushing on a string.

for more on this read the writings of Professor Antal Fekete.

How do you think this will end?

[Zarathustra]

It's the money velocity that has collapsed ... and is still in vicious downtrend. Monetising the debt directly is a futile attempt to boost money velocity by the wizards of fiat.

The two biggest stories of the week from the elite are that USA (White House) is considering bombing both sides in a far off war ... (suspected insanity) and that the CFR suggests to print money directly into householder accounts aka helicopter money drop (patently insane).

History will look back askance on these times with pity.

the collapse in velocity and interest rates is a strong signal that deflation is winning.  no matter how much money the Fed prints, it can't force ppl to spend.  the Fed's complicity with the US Treasury to buy bonds over the last 34 yrs has caused a steady drop in interest rates.  this drop in rates has caused periods of euphoria and over investment in certain sectors of the economy but overall what it is causing is deflation. the Treasury market, the largest market in the world next to forex, is continually front run by speculators searching for risk free profits in the form of ever rising bond prices.  speculators know that the Fed will be there to pay them a higher price for the bonds they just bought from front running auctions.  they know that ultimately in the case of a problem, bonds will be backstopped by the public either in the form of taxes or further money printing.  the Treasury market is a veritable Black Hole.  stop and think for a moment of the Ponzi scheme at work.  Fed uses fresh USD to buy UST's from gvt and turns around and sticks those UST's on the asset side of it's balance as backing for those same USD's it just printed.  gvt turns around and uses the USD's obtained from issuing UST's and wastes that money on welfare projects and warfare.  they are much worse at allocating capital compared to the free market.  when gvt needs to redeem the UST's, it just issues even more UST's for more USD's from Fed and the cycle spirals downward in terms of real productivity.  this is deflation and we're seeing it in a plunging monetary velocity and negative interest rates in Europe.  of course, certain sectors of the economy can experience price inflation at different times like the stock mkt currently just to fool you that hyperinflation is just around the corner.  the noughts saw commodities rise along with gold.  student loans are at all time highs.   but these are just distractions to the main dynamic in play; the US Treasury/Fed ponzi dynamic using USD's and UST's to cause inadvertent deflation.  real productivity suffers and the Fed is pushing on a string.

for more on this read the writings of Professor Antal Fekete.

How do you think this will end?

It will end as a cycle of a collectivist society (tautology!) always ends; in destruction and desolation:

http://electrojelly.wordpress.com/2011/07/21/course-of-empire-by-thomas-cole/

http://en.wikipedia.org/wiki/The_Course_of_Empire


But as we all know: Endings are just beginnings:

Janet Brown (Margaret Thatcher) Minute 54:20

http://www.youtube.com/watch?v=tCB3i83oeLc


Hello everyone.
I suppose you think that nothing much is happening at the moment.
Ah-ha-ha-ha-ha.

Well, that's what I want to talk to you all about; endings.
Now, endings normally happen at the end.

But as we all know, endings are just beginnings.
You know, once these things really get started,
it's jolly hard to stop them again.

However, as we have all come this far,
I think, under the circumstances,
the best solution is that we all just keep going.

Let's keep this going in sight, never an ending.
Let's remember that this world wants fresh beginnings.
I feel here, in this country, and throughout the world,
we are crying out for beginnings, beginnings.

We never want to hear this word "endings".
I know we all want to sit down.
I know you want to take it easy. Of course we're looking for the good.
Of course we're looking for the fresh start....

[richardramirez9]

If you look at the log scale, you'll see it only has gone up

[klee]

http://bitcoinmagazine.com/15986/dominica-first-bitcoin-nation/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BitcoinMagazine+%28Bitcoin+Magazine%29

[Erdogan]

I have a problem with this debt creation means deflation meme.

In a restricted economic model, where we have some actors and some money, the value of each unit of money depends only on the actors willingness to hold. The demand and supply sides consists of the same people, where demand is the wish to hold more, and supply is the less willingness to hold.

Extending this with debt, a debt which is safe and of static volume, extends the money supply. The debt is more like money if it is transferable. If a debt is completely safe, have very low interest and is due very long time in the future, and is transferable, it is in practise equivalent to money.

In all cases up till now in the model, the money supply is static and we should have stable price level on goods in the market.

Extending the model again, now with an expanding money supply in the form of base money and debt, which is the current situation in the world, value of the money unit should fall, as the supply is now the willingness to hold less plus the new money, demand being the willingness to hold is the same.

Now the big unknown, hitherto considered static, is the willingness to hold. This is of course not static in the real world, as it depends on the actors life situation and the world situation, including the important prospect of the future value of the money. Basically, if there is an expectation that the money will fall in value, people will hold less money and hold long lasting, transferable goods instead. But this will only accelerate the fall of the value of the money, it will not be an upward pressure of the value of the money unit (otherwise called deflation).

I do not disagree that deflation is a real risk (or that it is happening now), i disagree only that it is the expanding money supply in the form of debt that is the reason for it.

In my view, it is a collapse of debt that is the reason for a possible deflation. A collapse of debt will happen when the market actors consider the risk of lending too high, or when other risks make people hoard wealth in the form of long lasting consumer goods like houses and cars, paid not with loans but paid for by less consumption of other goods.

[STT]

the value of each unit of money depends only on the actors willingness to hold

The value of money relies on the production and exchangeable worth.  So national currency should rise with the exports and productive capacity of that nation.   I agree supply and demand applies but at some point its use determines its value.
USA exports money but it does not export goods net, so why are foreign governments or people even willing to hold and use its money.   I think its has become increasingly reliant on political and military influence.   As the only remaining superpower, the regime of the dollar is reliant on nations which do export and support dollar use such as Saudi Arabia.   

A big problem I think is self bias in the estimation of GDP and also under estimating inflation as an adjustment to growth.    In 2007 when USA was in recession, at the time this was not stated only in later revisions was it acknowledged that the economy was in decline.
Current job growth could be as a consequence of increasing part time work which relates to legislation subsidising the labour cost of shorter worker hours compared to full time work.  Is there any accuracy is recording that effect

[Zarathustra]

I have a problem with this debt creation means deflation meme.

In a restricted economic model, where we have some actors and some money, the value of each unit of money depends only on the actors willingness to hold. The demand and supply sides consists of the same people, where demand is the wish to hold more, and supply is the less willingness to hold.

Extending this with debt, a debt which is safe and of static volume, extends the money supply. The debt is more like money if it is transferable. If a debt is completely safe, have very low interest and is due very long time in the future, and is transferable, it is in practise equivalent to money.

In all cases up till now in the model, the money supply is static and we should have stable price level on goods in the market.

Extending the model again, now with an expanding money supply in the form of base money and debt, which is the current situation in the world, value of the money unit should fall, as the supply is now the willingness to hold less plus the new money, demand being the willingness to hold is the same.

Now the big unknown, hitherto considered static, is the willingness to hold. This is of course not static in the real world, as it depends on the actors life situation and the world situation, including the important prospect of the future value of the money. Basically, if there is an expectation that the money will fall in value, people will hold less money and hold long lasting, transferable goods instead. But this will only accelerate the fall of the value of the money, it will not be an upward pressure of the value of the money unit (otherwise called deflation).

I do not disagree that deflation is a real risk (or that it is happening now), i disagree only that it is the expanding money supply in the form of debt that is the reason for it.

In my view, it is a collapse of debt that is the reason for a possible deflation. A collapse of debt will happen when the market actors consider the risk of lending too high, or when other risks make people hoard wealth in the form of long lasting consumer goods like houses and cars, paid not with loans but paid for by less consumption of other goods.

The 'money supply' is only a fraction of total debt (USA 60 trillion). As long as debt creation in an economy is faster than productivity, you'll have inflation. As soon as the total debt sum doesn't increase as fast as productivity, you'll have deflation (Japan first and now the rest of the western world following).

[Erdogan]

the value of each unit of money depends only on the actors willingness to hold

The value of money relies on the production and exchangeable worth.  So national currency should rise with the exports and productive capacity of that nation.   I agree supply and demand applies but at some point its use determines its value.
USA exports money but it does not export goods net, so why are foreign governments or people even willing to hold and use its money.   I think its has become increasingly reliant on political and military influence.   As the only remaining superpower, the regime of the dollar is reliant on nations which do export and support dollar use such as Saudi Arabia.    

A big problem I think is self bias in the estimation of GDP and also under estimating inflation as an adjustment to growth.    In 2007 when USA was in recession, at the time this was not stated only in later revisions was it acknowledged that the economy was in decline.
Current job growth could be as a consequence of increasing part time work which relates to legislation subsidising the labour cost of shorter worker hours compared to full time work.  Is there any accuracy is recording that effect

My line above was in a restricted model with a fixed supply and no debt. I did not extend it to countries and different national money, which I think is mostly irrelevant in the grand scheme, also the import export question becomes irrelevant if you just disregard national borders.

The use of the money i only relevant is only relevant as far as use of money infers production and consumption, this of course indirectly affects the demand to hold from different actors, therefore also the value of money. With expanded trade, you can also expect changes in productivity of work, with higher productivity reducing the value of each unit of good, often perceived as increased value of the unit of money, or deflation. These things are always at play, but at a rather slow pace.

The important things are volume of money, tendency to save value for later, and the expected future value of money, which decides the amount of value held in money contra value held in goods.

The significance of the debt being the larger part of the money supply by far, is that the debt is connected to risk, and perceived risk will reduce the debt.

The question arises why the powers that shouldn't be prefer to have the money supply largely in the form of debt, as it is destabilizing compared to having mostly base money and only full reserve lending. The answer is that printing of new money outright is seen as what it is by the public, but creation of debt, guarantees, fractional reserve banking (negative reserve banking really), implicit guarantees and the cost of entitlements to be paid out in the future, goes under the radar, people just do not understand the money supply implications of it.

So they do not see the man behind the curtain, stealing their savings and productivity and setting the global trade system at risk.

[Zarathustra]

"Why Bitcoin is Better Than Gold, with Wences Casares"
https://www.youtube.com/watch?v=gKkfhi8Eaiw


I think his talk from Bitcoin2014 (https://www.youtube.com/watch?v=NERAN-89j8M) is better, but the above is shorter and more recent (published today).

"Barter never happened" This is the truth. It's the debt, stupid....

[cypherdoc]

Starting to eat walls. I love it. Money probably arriving at the exchanges now.

[adamstgBit]

"Why Bitcoin is Better Than Gold, with Wences Casares"
https://www.youtube.com/watch?v=gKkfhi8Eaiw


I think his talk from Bitcoin2014 (https://www.youtube.com/watch?v=NERAN-89j8M) is better, but the above is shorter and more recent (published today).

"Barter never happened" This is the truth. It's the debt, stupid....

thats not stupid thats just true

think about it, if there was a lazy ass in the trib that called everyone names and never did anything, you think poeple would feel the owe him anything ever? so why would the help him out and "Barter", nope, its always been, poeple keeping track of who owes who.

this is just how humans interact, Barter never happened, deal with it.
 

its a good point he makes.

[flipperfish]

"Why Bitcoin is Better Than Gold, with Wences Casares"
https://www.youtube.com/watch?v=gKkfhi8Eaiw


I think his talk from Bitcoin2014 (https://www.youtube.com/watch?v=NERAN-89j8M) is better, but the above is shorter and more recent (published today).

"Barter never happened" This is the truth. It's the debt, stupid....

thats not stupid thats just true

think about it, if there was a lazy ass in the trib that called everyone names and never did anything, you think poeple would feel the owe him anything ever? so why would the help him out and "Barter", nope, its always been, poeple keeping track of who owes who.

this is just how humans interact, Barter never happened, deal with it.
 

its a good point he makes.

Actually, isn't it barter if some guy hands out meat and receives firewood? The only difference I see is the time delay between giving and receiving. Or is it the definition of barter, that the exchange of goods has to be immediate?

[justusranvier]

How do you think this will end?

The USA will end in the same manner as the USSR.

[adamstgBit]

"Why Bitcoin is Better Than Gold, with Wences Casares"
https://www.youtube.com/watch?v=gKkfhi8Eaiw


I think his talk from Bitcoin2014 (https://www.youtube.com/watch?v=NERAN-89j8M) is better, but the above is shorter and more recent (published today).

"Barter never happened" This is the truth. It's the debt, stupid....

thats not stupid thats just true

think about it, if there was a lazy ass in the trib that called everyone names and never did anything, you think poeple would feel the owe him anything ever? so why would the help him out and "Barter", nope, its always been, poeple keeping track of who owes who.

this is just how humans interact, Barter never happened, deal with it.
 

its a good point he makes.

Actually, isn't it barter if some guy hands out meat and receives firewood? The only difference I see is the time delay between giving and receiving. Or is it the definition of barter, that the exchange of goods has to be immediate?

I guess...

it makes a lot of sense what he says, sure poeple made deals, ill give you this if you give me that, but its hard to imagine that poeple didn't keep track of who should get a piece of the leg and who should eat the balls. its human nature to keep track of such thing in groups, fair? probably not, thats why they started using other things to keep track of this kind of thing.

[cypherdoc]

LOL!!!

[cypherdoc]

wiping out this ask wall on Bitfinex...



will cause all sorts of pain for that little red line...

[cypherdoc]

i should have said, "wiping out the ask wall on either Bitfinex OR Bitstamp will cause all sorts of pain for that little red line".

[Zarathustra]

"Why Bitcoin is Better Than Gold, with Wences Casares"
https://www.youtube.com/watch?v=gKkfhi8Eaiw


I think his talk from Bitcoin2014 (https://www.youtube.com/watch?v=NERAN-89j8M) is better, but the above is shorter and more recent (published today).

"Barter never happened" This is the truth. It's the debt, stupid....

thats not stupid thats just true

think about it, if there was a lazy ass in the trib that called everyone names and never did anything, you think poeple would feel the owe him anything ever? so why would the help him out and "Barter", nope, its always been, poeple keeping track of who owes who.

this is just how humans interact, Barter never happened, deal with it.
 

its a good point he makes.

Yes, I fully agree with him.

[notme]

I have a problem with this debt creation means deflation meme.

In a restricted economic model, where we have some actors and some money, the value of each unit of money depends only on the actors willingness to hold. The demand and supply sides consists of the same people, where demand is the wish to hold more, and supply is the less willingness to hold.

Extending this with debt, a debt which is safe and of static volume, extends the money supply. The debt is more like money if it is transferable. If a debt is completely safe, have very low interest and is due very long time in the future, and is transferable, it is in practise equivalent to money.

In all cases up till now in the model, the money supply is static and we should have stable price level on goods in the market.

Extending the model again, now with an expanding money supply in the form of base money and debt, which is the current situation in the world, value of the money unit should fall, as the supply is now the willingness to hold less plus the new money, demand being the willingness to hold is the same.

Now the big unknown, hitherto considered static, is the willingness to hold. This is of course not static in the real world, as it depends on the actors life situation and the world situation, including the important prospect of the future value of the money. Basically, if there is an expectation that the money will fall in value, people will hold less money and hold long lasting, transferable goods instead. But this will only accelerate the fall of the value of the money, it will not be an upward pressure of the value of the money unit (otherwise called deflation).

I do not disagree that deflation is a real risk (or that it is happening now), i disagree only that it is the expanding money supply in the form of debt that is the reason for it.

In my view, it is a collapse of debt that is the reason for a possible deflation. A collapse of debt will happen when the market actors consider the risk of lending too high, or when other risks make people hoard wealth in the form of long lasting consumer goods like houses and cars, paid not with loans but paid for by less consumption of other goods.

The 'money supply' is only a fraction of total debt (USA 60 trillion). As long as debt creation in an economy is faster than productivity, you'll have inflation. As soon as the total debt sum doesn't increase as fast as productivity, you'll have deflation (Japan first and now the rest of the western world following).

Good point.  Increasing productivity has been known to cause deflation since at least Adam Smith (1776).  I still don't see how collapse of debt (which reduces the demand for money because now that debt isn't going to be repaid) causes deflation.  If you have to make debt payments, you will try make sure you have enough dollars to pay them.  This is why debt increases demand for dollars.  Again, yes initial issuance is short term inflationary, but I don't see how you can claim it is inflationary overall.