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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1954000 times)
cypherdoc
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September 03, 2014, 04:32:03 PM
 #11541

"Peter Warburton: The debasement of world currency: It is inflation, but not as we know it.

Being a young man, I was heavily into econometrics -- or economic tricks, as some would have it."

http://gata.org/node/8303/print

--
One of the best essays around. Written in 2001 and even though it's linked from Gata it doesn't focus on gold. Interestingly at the end he lists possible investments to look at but of course bitcoin wasn't around at the time. His criteria seem like a perfect match, for now at least. Gold doesn't make the cut, I assume because of the fifth criterion.

"The search is on for the perfect hedge.

What would be the ideal characteristics of such a numéraire? First, it would be in fixed physical supply. Second, it would be resistant to weather-related influences. Third, its ownership would be diffuse, rendering futile any attempt to restrict supply through a non-competitive structure. Fourth, it must be freely tradable. Fifth, there would be no futures or options markets attached to it.

Finally, I list some of the candidates, in no particular order. Each seems promising, yet none of them seems to me to satisfy fully all five of the requirements above.

Arable land with a dependable climate

Oil-refining capacity

Electricity generating capacity

Water-treatment capacity

Drinking water, bottled or piped

Coastal access, harbours and ports

Palladium/platinum/diamonds

Real estate in long-standing, distinctive locations

Antiques, fine art, stamps and coins

Commodities without futures and options markets

Could these be the winning investments of the early years of the 21st century?"




good article.  the parts i liked:

The more obvious are the system's weaknesses, the greater is the fear of collapse and the larger the demand for liquidity within the financial markets. In these stressful episodes, it is the financial markets themselves that are the principal driving force behind the monetary expansion. Hence, there is relatively little monetary impact on the product and labour markets, that is, on prices and wages.  In this way, we can arrive at a crude understanding of the paradox of disconnection: how volatile and often rapid monetary growth rates can be consistent with seemingly low and stable inflation outcomes. In the US, the annual price deflator for GDP has been below 2.5% in every year since 1991. Consumer price inflation has been no higher than 3% in every year since 1991. In Canada, the record is slightly better; in the UK, slightly worse. To parody Paul Samuelson's quip about the productivity "miracle," credit excesses are visible everywhere except in the inflation figures. Time and time again, respected commentators and analysts have warned of the approaching inflationary backlash from the credit and monetary excesses, only to be humiliated and discredited by events. This is not because their instincts were at fault, but because they were looking in the wrong place.

i agree this is why citizens aren't seeing excess prices in most of their daily consumption items while certainly so in a minority of items.  most of the speculative debt is extended to the financial mkts and is reflected in stock and bond prices, derivatives, an other speculative assets.  this is why the financial sector at the peak in 2007 consisted of a large % of the S&P valuation at the time.

many bodies of short sellers have been carried off bond trading floors over the years.

However, since all debt is borrowed money, in order to write off a debt, it is necessary to destroy part of the money supply. It may be that the debt was structured as a bond issue rather than a bank loan; it doesn’t matter. The bondholders exchanged money balances for those bonds when they acquired them. If the bond is cancelled, this money is lost. Actual and impending losses give rise to a desire for additional liquidity in the financial system. Here, only money will do.

this destruction of the debt portion of the money supply is called deflation.  the resulting scramble for dollars to pay off that debt causes demand for dollars driving up its value paradoxically.  it's actually quite a clever system.  as i've said many times, it almost makes you want to be a Keynesian.
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September 03, 2014, 04:44:53 PM
 #11542

great video from a true IT pioneer.  simple question:  how is it possible that so many smart ppl can be fooled by ponzi Bitcoin?  ans:  it's not.

https://www.youtube.com/watch?v=3CMucDjJQ4E
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September 03, 2014, 04:51:25 PM
 #11543

"as i've said many times, it almost makes you want to be a Keynesian."

haha, I'll reserve my judgment on that one! Smiley The world is so screwed up that it takes a drunken night out at an incredibly noisy chinese nightclub to make me see somewhat straight again. There is a naivety here that offsets my otherwise overbearing cynicism.

Either way, he made some really insightful points.
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September 03, 2014, 04:53:49 PM
 #11544

Now I get it -it's been staring in my face for weeks:

You use the word deflation in an unconventional third way, not the economic sense of shrinking money supply, not in the populist sense of shrinking prices, but generally as shrinkage.

Shrinking real wages, shrinking house building, shrinking GDP, shrinking dicks.

Makes sense, although it should be properly agreed upon during a discussion.
 

altho it is still probable that my definition fits the traditional definition of shrinking money supply (monetary base+credit). the problem is i can't find any reliable figures on total aggregate debt over time, including shadow banking, and whether it is shrinking or not.  that chart above of net shadow banking liabilities is a big hint as to what is going on, the question being, whether or not it is being adequately offset by increasing gvt debt and monetary base.

anyone?

Fair. Seeing the world overall, we have government debt creation in Japan and China. China is desperate to reduce debt ratios in businesses, but they can't, when they try they feel the pain with failing businesses all over the place. With money supply deflation, we should see falling prices. We have falling prices in gold and some capital commodities. Commodity prices are where we should expect it first, anyway.


gvt debt creation is a black hole of inefficiency and corruption.  in this transition from increasing private debt to public debt accumulation, productivity is being destroyed.  if the Chinese gvt is desperately trying to reduce debt ratios in private businesses, perhaps they should stop and look at themselves first; oh my, not gonna happen.  this is called the heavy hand of regulation that is even more oppressing and destructive.  think Ben Lawsky.  actually, if you look at the prices of a variety of commodities, they have been falling along with oil since the beginning of the year.  what will really be concerning would be a fall in financial speculative asset prices, like the stock mkt.
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September 03, 2014, 05:24:31 PM
 #11545

Edmund Moy deserves much respect for his tireless advocacy of Bitcoin:

This should not surprise anyone, and more support for cryptocurrencies is to be expected.  This is the first time we had a financial technology that 1) competes with banks and credit cards, and 2) provide cryptographic proof of reserves, and 3) separates the ability to spend from the ability to audit (allowing public and real time audits of finaicial transactions).  Certainly, banks might not like the competition.  But the U.S. Mint isn't a bank. Why would Edmund May, by virtue of his former position with the U.S. Mint, care about competition to banks? - Paul Snow

Edmund Moy's criticism, although a bit unexpected, is the natural reaction anyone would have that understands the monetary freedom that cryptocurrencies provide.  Competition in capitalism is an essential factor that allows for human choice. The absence of competition lends way to bad actors, making bad decisions, because they can.  Cryptocurrencies provide competition for banks in a way the world has never seen before. - Lamar  Wilson


"Credit Suisse takes a public stance not of contrition, repentence and assuring the public it will never happen again, but instead reassures its clients that the crimes committed on their behalf will be a net benefit to their investments. We need to understand that 'too big to jail' makes institutions more daring in their financial escapades". Matthew Slater


http://cointelegraph.com/news/111528/us_mint_promotes_bitcoin
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September 03, 2014, 05:32:45 PM
 #11546

"Big fine 'won't do much damage': Credit Suisse CEO", TO OUR FRAUDULENT ACTIVITIES.

http://www.cnbc.com/id/101696645

sick and tired of this unfettered funneling of money to these financial terrorists.
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September 03, 2014, 06:38:48 PM
 #11547

oh crap:

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September 03, 2014, 06:58:31 PM
 #11548

don't be fooled:

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September 03, 2014, 08:02:06 PM
 #11549

this is good:

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September 03, 2014, 08:03:52 PM
 #11550

so is this:

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September 03, 2014, 08:28:45 PM
 #11551

the fact that we're finally starting to see transactional increase is an incredibly positive thing.
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September 03, 2014, 08:37:20 PM
 #11552

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Fifth, there would be no futures or options markets attached to it.

Bitcoin has futures and options markets.

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September 03, 2014, 08:42:01 PM
 #11553

the fact that we're finally starting to see transactional increase is an incredibly positive thing.

All time high! Metcalfe's law Smiley
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September 03, 2014, 08:46:54 PM
 #11554

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Fifth, there would be no futures or options markets attached to it.

Bitcoin has futures and options markets.

i think the key here is that you can't print the underlying BTC.

it's also important to have a number of exchanges spread worldwide so that no one exchange could be dominant or manipulated by a gvt.  no cash settlements allowed either, if one borrows BTC to short, they gotta return BTC.  and their leverage margin needs to be limited to reasonable levels.
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September 03, 2014, 08:48:16 PM
 #11555

could Bitcoin be their solution?:

Criminals and corrupt politicians steal $1trn a year from the world's poorest countries

http://www.independent.co.uk/news/world/politics/criminals-and-corrupt-politicians-steal-1trn-a-year-from-the-worlds-poorest-countries-9707104.html
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September 03, 2014, 08:57:51 PM
 #11556



Doodling....

If you're one of those guys who subscribes to repeating patterns, it's hard NOT to imagine what happens next.
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September 03, 2014, 09:05:43 PM
 #11557



Doodling....

If you're one of those guys who subscribes to repeating patterns, it's hard NOT to imagine what happens next.

it's incredibly positive.  it kinda creeped up on us after all the yammering Mike Hearn's has done complaining about this.  in fact, it was probably the one negative tick in my checklist that was bugging me all along.  to see it rising like this is great news in my book.
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September 03, 2014, 09:09:29 PM
 #11558

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Fifth, there would be no futures or options markets attached to it.

Bitcoin has futures and options markets.

i think the key here is that you can't print the underlying BTC.

it's also important to have a number of exchanges spread worldwide so that no one exchange could be dominant or manipulated by a gvt.  no cash settlements allowed either, if one borrows BTC to short, they gotta return BTC.  and their leverage margin needs to be limited to reasonable levels.

I think discounting it as a factor is unwise.

With a monetary good price plays an intricate relationship with perception and price-perception. A minimal coin holding leveraged with options and futures can have a large effect on perceptions, as has been done in the commodities markets for managing inflation perceptions and stock markets for managing "wealth effect" perceptions ...

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September 03, 2014, 09:09:58 PM
 #11559

the fact that we're finally starting to see transactional increase is an incredibly positive thing.
All time high! Metcalfe's law Smiley

Not quite, but getting there Smiley




Run Bitcoin Unlimited (www.bitcoinunlimited.info)
cypherdoc
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September 03, 2014, 09:18:59 PM
 #11560

Quote
Fifth, there would be no futures or options markets attached to it.

Bitcoin has futures and options markets.

i think the key here is that you can't print the underlying BTC.

it's also important to have a number of exchanges spread worldwide so that no one exchange could be dominant or manipulated by a gvt.  no cash settlements allowed either, if one borrows BTC to short, they gotta return BTC.  and their leverage margin needs to be limited to reasonable levels.

I think discounting it as a factor is unwise.

With a monetary good price plays an intricate relationship with perception and price-perception. A minimal coin holding leveraged with options and futures can have a large effect on perceptions, as has been done in the commodities markets for managing inflation perceptions and stock markets for managing "wealth effect" perceptions ...

no one's dismissing it.  i've been worried about it all along.  it's just that i think manipulation can be capped b/c we're talking about an international monetary unit whose security is in the interest of all nations, not just the US.  these types of manipulations would occur at the exchanges.  the fact that the highest volume exchanges are in China today would make it hard for the US gvt to manipulate Bitcoin at this time, imo.  we need to have a large # spread out round the world, preferably in jurisdictions that vie against each other otherwise, like China, Russia, and the US.
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