Gold collapsing. Bitcoin UP.

[cypherdoc]

A truly enlightened article about where the monetary system is headed, including Bitcoin and gold.

the problem is Sclichter can't spell; "parastatal" -> "parasital".

[1714213362]

1714213362

[bitsire]

A truly enlightened article about where the monetary system is headed, including Bitcoin and gold.

Excellent article miscreanity!! They are parasites, nothing more. I loathe going to the bank - the lines, the attitudes, the incompetence. Nowadays I only go to the bank for one reason - to deposit cash into my Virtex account so I can buy more Bitcoins. Back when I was stacking metals I had it set up so I could simply place a phone call, enter a pin code and wire money to ye olde coin shoppe 

[bitcoinBull]

Anyone wanna guess if gold will headfake up one last time before $1550 caves? Trying to time my first short..

[silverbox]

Anyone wanna guess if gold will headfake up one last time before $1550 caves? Trying to time my first short..

This is a headfake down..  The money printing has not stopped.

[HorseRider]

Anyone wanna guess if gold will headfake up one last time before $1550 caves? Trying to time my first short..

This is a headfake down..  The money printing has not stopped.

The money printing and the gold priceI don't think this linkage is stronger than imagination.
even back in 2006 and 2007, we were not in hyperinflation, right?

If the imagination stops, the gold price will plunge.

most of the things that you need to produce something is plunging (coal, oil, metals), there is no sigh of inflation, don't mention the hyperinflation, so why gold?

Maybe you're right, maybe it will turn out that you and other gold bugs are the rare people who predicted the right future and we indeed have a hyperinflation, but the most important thing is that right now, most of the market don't believe in inflation, the "money printing leading to hyperinflation" is a fading story.

why not just sell the gold and buy it back when you see the some evidence that market need to chase gold again. Don't say QE3. QE1 and QE2 did not bring us hyperinflation, so won't QE3. people won't buy gold b/c of QE3.

[silverbox]

Anyone wanna guess if gold will headfake up one last time before $1550 caves? Trying to time my first short..

This is a headfake down..  The money printing has not stopped.

The money printing and the gold priceI don't think this linkage is stronger than imagination.
even back in 2006 and 2007, we were not in hyperinflation, right?

If the imagination stops, the gold price will plunge.

most of the things that you need to produce something is plunging (coal, oil, metals), there is no sigh of inflation, don't mention the hyperinflation, so why gold?

Maybe you're right, maybe it will turn out that you and other gold bugs are the rare people who predicted the right future and we indeed have a hyperinflation, but the most important thing is that right now, most of the market don't believe in inflation, the "money printing leading to hyperinflation" is a fading story.

I've never subscribed to the hyper inflation scenario.  I think true inflation is around 8-10% per year.  Approximately the amount the National Debt is expanded per year.  I think in the future we will continue to have ~10% rise per year in National Debt, gold will rise with this.  I don't think you can get rich with gold, you just tread water.  Its a store of value, one that is superior to FRNs.  The gold market is more volatile then the FRN market, thus it has bigger swings (we are in a minor downswing atm imo), but the general uptrend of gold will continue unless they stop deficit spending and money printing.

[HorseRider]

I've never subscribed to the hyper inflation scenario.  I think true inflation is around 8-10% per year.  Approximately the amount the National Debt is expanded per year.  I think in the future we will continue to have ~10% rise per year in National Debt, gold will rise with this.  I don't think you can get rich with gold, you just tread water.  Its a store of value, one that is superior to FRNs.  The gold market is more volatile then the FRN market, thus it has bigger swings (we are in a minor downswing atm imo), but the general uptrend of gold will continue unless they stop deficit spending and money printing.

Why not avoid the downswing?

[silverbox]

I've never subscribed to the hyper inflation scenario.  I think true inflation is around 8-10% per year.  Approximately the amount the National Debt is expanded per year.  I think in the future we will continue to have ~10% rise per year in National Debt, gold will rise with this.  I don't think you can get rich with gold, you just tread water.  Its a store of value, one that is superior to FRNs.  The gold market is more volatile then the FRN market, thus it has bigger swings (we are in a minor downswing atm imo), but the general uptrend of gold will continue unless they stop deficit spending and money printing.

Why not avoid the downswing?

Cause selling at the bottom of a downswing is a very bad strategy .  I prefer to sell when its high and BUY when its low .  Which is why I bought before the FED meeting, and I will probably buy again before the next FED meeting if prices are lower then they are now.

[TTBit]

"Hyperinflation" is a bad term. It implies that it is the extension of "normal inflation". As more people realize that they have to get out of bed and work for 8 hours a day for the same pieces of paper that a select group of people only have to print or borrow (w/o repayment), this will lead to hyperinflation. What chump would work in this scenario?

[molecular]

A truly enlightened article about where the monetary system is headed, including Bitcoin and gold.

the problem is Sclichter can't spell; "parastatal" -> "parasital".

parastatal [ˌpærəˈsteɪtəl]
n
(Government, Politics & Diplomacy) a state-owned organization, esp in Africa
adj
(Government, Politics & Diplomacy) of or relating to such an organization

Banks are parastatal dinosaurs

Banks are parasital dinasaurs, true, but he wrote parastatal... does it make sense? "Banks are dinasaurs related to state-owned organizations"? not sure. maybe he did screw up here, but I wouldn't expect it from him. He's a german but has worked in "the city" for quite some time. His english seemed perfect when I heard him talk in Prague... but what do I know, I'm german, too.

[miscreanity]

The money printing and the gold priceI don't think this linkage is stronger than imagination.
even back in 2006 and 2007, we were not in hyperinflation, right?

If the imagination stops, the gold price will plunge.

most of the things that you need to produce something is plunging (coal, oil, metals), there is no sigh of inflation, don't mention the hyperinflation, so why gold?

Maybe you're right, maybe it will turn out that you and other gold bugs are the rare people who predicted the right future and we indeed have a hyperinflation, but the most important thing is that right now, most of the market don't believe in inflation, the "money printing leading to hyperinflation" is a fading story.

why not just sell the gold and buy it back when you see the some evidence that market need to chase gold again. Don't say QE3. QE1 and QE2 did not bring us hyperinflation, so won't QE3. people won't buy gold b/c of QE3.

Yes, deflation has been in vogue since 2007. The reason real assets other than gold (and silver) plummet is due to the fact that they are not replacing the currency systems. We cannot realistically use oil in place of dollars, or lumber to replace Euros; their industrial value outweighs their value as a medium of exchange or savings.

If there were no concerns about counterparty risk, asset seizure by governments, or geopolitical stability even in developed nations, there would be no legitimate predictions of hyperinflation or gold's continued ascent. If the dollar could not be printed into existence by a third party, holding fiat cash would have no real downside. Being that is not the case, physical gold is the most recognizable and densest form of wealth storage available which cannot be debased or otherwise tampered with so long as it remains in your possession.

Gold is essentially in the process of eating away at fiat market share. Because of this, debts in fiat terms will become less expensive in terms of real assets, and especially in terms of gold as it displaces existing currencies. In order to offset that, fiat inflation is necessary to get the de facto debt money supply, also known as derivatives, in line with the actual economic value of each currency's respective region. In other words, there are currently too few fiat units (dollars, Euros, etc) for the amount of debt in existence.

A visual example (with Bitcoin as a rounding error):

Global Supply (100)

USD (50)
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

EUR (49)
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

XAU (1)
>

BTC (0.1)
.

If Bitcoin rose to 1% and gold were to gain to 4%, the others would have to decrease:

USD (47.5)
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.

EUR (47.5)
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.

XAU (4)
>>>>

BTC (1)
>

Gold becomes worth 4x its prior value and Bitcoin jumps 10x, while the others decrease by a few percent each. Since those systems are leveraged to such extremes, even those tiny decreases are capable of causing massive chaos through defaults and debt deflation. That destabilizes confidence in those systems and leads to further efforts to escape to the safety of gold, so EUR and USD would continue to fall while gold continues to rise. This is the same reason why Bitcoin is rising - it is coming to be viewed as safer than the end-of-life fiat systems and the confidence is migrating.

The current dilemma could be resolved by authorities abandoning the existing monetary system. Since that system is what the world we know is based upon, it just isn't going to happen. Authorities have already shown that they will attempt to create nominal gains that are illusory rather than address the issue of real gains declining. The only question is what they'll do to disguise the inflation.

[notme]

It only takes 2 words to explain why inflation was the old boss and deflation is the new:

Baby boomers

As they retire and trade their assets for fiat to live on, there are far fewer people to buy them up.  When they started saving for retirement, they were all competing to buy limited assets.  Unfortunately, many economists have become convinced that this transient market behavior caused by a population boom is a new paradigm brought on by technology.  Of course, expanding debt has also come into play as they attempt to keep this zombie limping along.  Excessive debt can be handled in two ways: inflate it away, or deflate and deal with the defaults.  If you were the one holding the levers as well as the debt, with a backdrop of boomer-driven deflation tendency, what would you shoot for?  Oh, and if you shoot for inflation, most of your currency is held by foreigners who will dump it and cause a hyperinflationary meltdown.

To me it doesn't look like old Ben has too many options he can actually accept the consequences of.

[MoneyIsDebt]

Interesting thought experiment: People fight fiat printing by simply stopping to accept dollars having higher than a certain serial number.

[HorseRider]

It only takes 2 words to explain why inflation was the old boss and deflation is the new:

Baby boomers

As they retire and trade their assets for fiat to live on, there are far fewer people to buy them up.  When they started saving for retirement, they were all competing to buy limited assets.  Unfortunately, many economists have become convinced that this transient market behavior caused by a population boom is a new paradigm brought on by technology.  Of course, expanding debt has also come into play as they attempt to keep this zombie limping along.  Excessive debt can be handled in two ways: inflate it away, or deflate and deal with the defaults.  If you were the one holding the levers as well as the debt, with a backdrop of boomer-driven deflation tendency, what would you shoot for?  Oh, and if you shoot for inflation, most of your currency is held by foreigners who will dump it and cause a hyperinflationary meltdown.

To me it doesn't look like old Ben has too many options he can actually accept the consequences of.

+1

[molecular]

Interesting thought experiment: People fight fiat printing by simply stopping to accept dollars having higher than a certain serial number.

lol. there goes fungibility. In germany, there are some people rejecting EUR serial numbers starting with "Y" (greek notes), some even only accept "german Euros".

[molecular]

Interesting thought experiment: People fight fiat printing by simply stopping to accept dollars having higher than a certain serial number.

won't work so easily in practice: how to tell the atm this? also: banks will still accept all bills, so there will be people gladly buying up the "bad bills" from the "purists" should they be offered below face value. => this idea wont work.

[cloon]

Interesting thought experiment: People fight fiat printing by simply stopping to accept dollars having higher than a certain serial number.

won't work so easily in practice: how to tell the atm this? also: banks will still accept all bills, so there will be people gladly buying up the "bad bills" from the "purists" should they be offered below face value. => this idea wont work.

more than 90% of USD were never printet on paper. they're only a numer on a screen... i think there is no serial number

[molecular]

Interesting thought experiment: People fight fiat printing by simply stopping to accept dollars having higher than a certain serial number.

won't work so easily in practice: how to tell the atm this? also: banks will still accept all bills, so there will be people gladly buying up the "bad bills" from the "purists" should they be offered below face value. => this idea wont work.

more than 90% of USD were never printet on paper. they're only a numer on a screen... i think there is no serial number

surely not, that would be database hell. On the other hand it might've been a good idea to avoid "misappropriation" of funds or funds simply going missing or popping up due to "accounting mistakes", as has happened multiple times in the past already and will probably happen again in the future.

[cloon]

Interesting thought experiment: People fight fiat printing by simply stopping to accept dollars having higher than a certain serial number.

won't work so easily in practice: how to tell the atm this? also: banks will still accept all bills, so there will be people gladly buying up the "bad bills" from the "purists" should they be offered below face value. => this idea wont work.

more than 90% of USD were never printet on paper. they're only a numer on a screen... i think there is no serial number

surely not, that would be database hell. On the other hand it might've been a good idea to avoid "misappropriation" of funds or funds simply going missing or popping up due to "accounting mistakes", as has happened multiple times in the past already and will probably happen again in the future.

do you really think if the FED makes 100billion they print 100'000'000 tousand-dollar bills put them into a bag and walk to the government or to an another bank and give it to them?

surely not! ist a 2 klick thing: print 100billion *klick*, change for statebond/debt *klick* -> 100billion USD created!
more than 90% of USD are digital

[silverbox]

It only takes 2 words to explain why inflation was the old boss and deflation is the new:

Baby boomers

As they retire and trade their assets for fiat to live on, there are far fewer people to buy them up.  When they started saving for retirement, they were all competing to buy limited assets.  Unfortunately, many economists have become convinced that this transient market behavior caused by a population boom is a new paradigm brought on by technology.  Of course, expanding debt has also come into play as they attempt to keep this zombie limping along.  Excessive debt can be handled in two ways: inflate it away, or deflate and deal with the defaults.  If you were the one holding the levers as well as the debt, with a backdrop of boomer-driven deflation tendency, what would you shoot for?  Oh, and if you shoot for inflation, most of your currency is held by foreigners who will dump it and cause a hyperinflationary meltdown.

To me it doesn't look like old Ben has too many options he can actually accept the consequences of.

And the counter argument to the above is that the boomers are still consumers, inflation is driven by the supply of money and the consumption of the population.  If consumption remains the same (and all those boomers are actually going to consume more, because they still gotta eat and drive and now they are old and need a ton of health care) and the money supply is increased, inflation will rear its head right quick. 

What is holding inflation in check at the moment is that the banks aren't lending so people are being forced to live within their means and not over consume!!  Go try to get a mortgage with bad or medium credit, roflmao...