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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1807387 times)
cypherdoc
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December 08, 2012, 11:11:50 PM
 #3821


how did you get so rich cypherdoc?

years of hard work and dedication have made me rich by some ppl's definition.  but perhaps not others.

I figured you inherited some, and fished it a little bit about it one time for shits-n-giggles back when we were mortal enemies.  That was about the time someone fingered your real identity and his hit looked right.

Interestingly we might be in a generally similar wealth category in addition to our other similarities.  I happened to be able to do a reasonable well paying series of jobs reasonably well for the last 1.5-ish decades, and since I grew up poor I never broke the habit of living like a pauper.  Worked my ass off as well to in part to make up for a deficit in formal education...at least in the vocation I fell into.  G.W. Bush and his idiotic (or not) wars happened at an opportune time and got me researching things, paranoid, and sinking my excess funds into a couple of elemental substances which have panned out well so far.  I have more hope than ever that Bitcoin will be _the_ 'retirement event' for me, and it looks as promising as ever, but it is very far from something I am counting on.



no significant inheritance here.  just a few thousand a couple of years ago after my last parent passed away and well after i became established.  grew up in one of the worst parts of my country and was forced to pay my own way all the way thru my educational years.  of course thats when tuition for my final year at my higher ed school was a mere $1400 max.  truly, truly and incredible bargain.  a comparable inflationary measure for that degree is now comparable to the move in Apple stock btwn the bottom in 2002 to now.  and that is probably why i am now a deflationist and short Apple.  just how can any of us afford to let it possibly inflate any higher?
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miscreanity
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December 09, 2012, 08:55:36 PM
 #3822

that's good as i hope it gives you a better understanding of the importance of the debt buildup.  i wonder though whether you invested in a consortium or as an individual.  all my RE deals have been done individually and there were times where i personally was responsible for making mortgage payments of over $12K per mo.  while i never had to be in a position of defaulting on a payment, there was always an uncomfortable nagging feeling of having that much exposure.  i made a decision around 2008 to pay everything off and now have had the benefit of being debt free for almost 5 yrs.  it is truly liberating.

iirc, after 30 yr of a fixed mortgage on a $1M loan you will have paid approx $3.5M back to the bank.  someone throw that into a mortgage calculator to check my numbers.  certainly if the USD drops during that time and the RE goes up you're good; but if deflation kicks in caused by some trivial little currency like Bitcoin, then you're in big trouble.

Debt is easy to understand, it's the process and speed of clearing it that we disagree on. Your $12k/mo outlay in debt repayment is exactly why I advocate debt-free assets such as gold, silver, and Bitcoin - especially in the economic environment that exists now.

Again, it seems that your focus on investing has been to turn a profit on capital appreciation. This is not my focus - I aim for positive cash flow regardless of property value - if the property appraises for a higher value, that's icing. Leveraging to speculate on prices is very different from leveraging to generate revenue; risk generally increases geometrically with a speculative path, while it is much more linear with a cash flow focus.

The amount paid back to lender(s) depends on several variables, of course. Currently, it should be around $2mm on a $1mm 30yr loan.
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December 09, 2012, 10:34:58 PM
 #3823

how timely:







In summary: the shadow banking collapse continues.  the real problem, as Steve Keen sees it, is the growth in debt needs to be continuously accelerating to sustain our ponzi economy.  simply a slowdown or plateauing as we are seeing now will cause a collapse.

http://www.zerohedge.com/news/2012-12-09/historic-inversion-shadow-banking-now-complete
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December 09, 2012, 10:41:04 PM
 #3824

"Debt acceleration is the main factor in determining asset prices. Asset bubbles therefore have to burst, because debt acceleration cannot remain positive forever."

http://www.debtdeflation.com/blogs/2012/01/03/the-debtwatch-manifesto/

"Instead, its main effect was to dramatically increase the idle reserves of the banking sector while the broad money supply stagnated or fell, (see Figure 13), for the obvious reasons that there is already too much private sector debt, and neither lenders nor the public want to take on more debt."

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December 09, 2012, 10:45:00 PM
 #3825

What are the best stocks to short if you are trying to cash in on collapse?

(dont say bitcoin, i already have way more than i should in it =P )

Bro, do you even blockchain?
-E Voorhees
cypherdoc
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December 09, 2012, 10:49:26 PM
 #3826

"Asset markets display what engineers would call a “positive feedback loop” between asset prices and
the change in debt: rising debt causes rising asset prices, and rising asset prices encourage more people
to borrow to speculate. Such processes always break down—which is why real engineers take great care
to eliminate or control positive feedback processes in systems like cars, rockets and even bridges.
Unfortunately, “financial engineers” delight in amplifying these destructive positive feedback loops in
the financial system, by supporting deregulation and inventing derivatives."

http://www.debtdeflation.com/blogs/wp-content/uploads/2012/12/Keen2012FiscalCliffLessonsFrom1930s.pdf
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December 09, 2012, 11:00:14 PM
 #3827

What are the best stocks to short if you are trying to cash in on collapse?

(dont say bitcoin, i already have way more than i should in it =P )

subscribe to the letter Wink
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December 09, 2012, 11:50:30 PM
 #3828

this video belongs here Smiley

http://youtu.be/CTtf5s2HFkA
cypherdoc
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December 10, 2012, 12:09:21 AM
 #3829

this video belongs here Smiley

http://youtu.be/CTtf5s2HFkA

best part of the video was that blokes doo.  he couldn't even lift one bar with one hand, lol!  send that down a wire!
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December 10, 2012, 12:31:19 AM
 #3830

"Asset markets display what engineers would call a “positive feedback loop” between asset prices and
the change in debt: rising debt causes rising asset prices, and rising asset prices encourage more people
to borrow to speculate. Such processes always break down—which is why real engineers take great care
to eliminate or control positive feedback processes in systems like cars, rockets and even bridges.
Unfortunately, “financial engineers” delight in amplifying these destructive positive feedback loops in
the financial system, by supporting deregulation and inventing derivatives."

http://www.debtdeflation.com/blogs/wp-content/uploads/2012/12/Keen2012FiscalCliffLessonsFrom1930s.pdf
+1 very informative

Supporting people with beautiful creative ideas. Bitcoin is because of the developers,exchanges,merchants,miners,investors,users,machines and blockchain technologies work together.
miscreanity
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December 10, 2012, 04:32:25 PM
 #3831

how timely:

...

In summary: the shadow banking collapse continues.  the real problem, as Steve Keen sees it, is the growth in debt needs to be continuously accelerating to sustain our ponzi economy.  simply a slowdown or plateauing as we are seeing now will cause a collapse.

http://www.zerohedge.com/news/2012-12-09/historic-inversion-shadow-banking-now-complete

Precisely, which is why it is disingenuous to misrepresent the article by cherry-picking graphs - I'd recommend reading it in entirety. Some especially important bits:

Quote
However, the bigger problem as more and more deposit-based liabilities take place of deposit-free shadow equivalents, is that the systemic propensity for runaway inflation rises with every quarter in which Fed reserve conceived deposits -prone to spilling over into the broader market based on the irrationality of individual psychology -serve to offset delevering shadow conduits. As explained in July, shadow banking was nothing more than a massive inflation buffer whose historic build up allowed the Fed to inject trillions without this money leading to a collapse in the USD value, now that it is actively deleveraging. But with every "shadow dollar" that is taken out of the system, said buffer gets smaller and smaller...

Economies are now in the process of hitting a brick wall. If the Fed slows, or even merely maintains its monetary activities, the collapse ensues. Should that happen, your equity shorts will likely mean little, as the entire system would be in turmoil - food and physical safety would be major concerns.

Quote
To summarize: all hope abandon ye who think the Fed will stop monetizing debt, and thus injecting flow, at some point in the next several years.

Threading the needle to proceed between deflationary collapse and hyperinflation is becoming more difficult because the path is narrowing. Imminent global societal collapse, or keep things going in the hope that the system will sort itself over time? It was the wrong thing to do a decade ago, but erring on the side of inflation is the only prudent course of action at this point.

I am not suggesting this will continue indefinitely. Eventually, there will be no way possible to sustain inflation, and that failure will result in a worse collapse than would happen if deflation overwhelmed today. The danger with rooting for deflation right now is that the fall will be fatal. By inflating, additional time is being bought - additional time to prepare. During that time, we can continue positioning ourselves for when the collapse does occur.

In other words, there might have been an 80% survival rate in 2000, a 15% rate today, and 50% in another year or two. Obviously, we can't go back to before the system became unstable, but we can hold the dam back from breaking to get as many as possible out of the path of destruction. It's the difference between a heroin addict dying during sudden detox, or making it through withdrawals over a longer period.
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December 10, 2012, 05:06:58 PM
 #3832


Precisely, which is why it is disingenuous to misrepresent the article by cherry-picking graphs - I'd recommend reading it in entirety. Some especially important bits:


dude, the only person who's been disingenuous is you.  by first claiming that traditional banking debt was expanding faster than the collapse in shadow banking debt which i've shown to be false.  second, by claiming that securitization had returned to higher than prior peak levels which i've also shown to be false. 


What's at issue in respect to deflation is the process of writing down these 'assets'. By accepting less than face value for the debt, non-performing securitised assets are a reducing factor on the money supply. However, this is not happening in isolation - the process of securitising debt is continuing, as is the fractional reserve system. By comparison to the amount of debt being written off, there is much more being created at the same time.

i only meant to post the data to refute your previous claims.  what you claim i disingenuously ignored was an interpretation of that data.  the interpretation is what we're all disagreeing about.
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December 10, 2012, 07:18:16 PM
 #3833

how bullish does this look?  MEW was THE major source of discretionary income used by homeowners in the run up to 2008.  no longer looking so good and turning down AGAIN:

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December 10, 2012, 07:55:38 PM
 #3834

Are you still talking about Gold here?
Cuz I can't make a connection between that graph and Golds valuation - you seem to do... care to enlighten me?

First they ignore you, then they laugh at you, then they keep laughing, then they start choking on their laughter, and then they go and catch their breath. Then they start laughing even more.
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December 10, 2012, 08:18:29 PM
 #3835

Are you still talking about Gold here?
Cuz I can't make a connection between that graph and Golds valuation - you seem to do... care to enlighten me?

this thread is about what's going on in the economy and whether we're on the verge of another inflationary wave or going to see something we've never really seen in this country and that is deflation.  either or is going to have a big affect on gold either up or down.
miscreanity
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December 10, 2012, 08:29:03 PM
 #3836

dude, the only person who's been disingenuous is you.  by first claiming that traditional banking debt was expanding faster than the collapse in shadow banking debt which i've shown to be false.  second, by claiming that securitization had returned to higher than prior peak levels which i've also shown to be false. 

...

what you claim i disingenuously ignored was an interpretation of that data.  the interpretation is what we're all disagreeing about.

I have to admit, selectively choosing US-based charts and willfully ignoring the information not captured by them could be considered an "interpretation" of sorts. I suppose that's like saying the unemployment rate is declining because people have given up looking for work and are no longer counted.
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December 10, 2012, 08:56:11 PM
 #3837

Are you still talking about Gold here?
Cuz I can't make a connection between that graph and Golds valuation - you seem to do... care to enlighten me?

this thread is about what's going on in the economy and whether we're on the verge of another inflationary wave or going to see something we've never really seen in this country and that is deflation.  either or is going to have a big affect on gold either up or down.

I take some exception to the assertion that deflation will necessarily have a significantly negative effect on gold prices.  Certainly that is the conventional wisdom, but several things give me pause:

1) we had a hushed but very real deflationary event not long ago and gold prices did quit well through it.

2) more obvious deflation is not something we're familiar with (as you point out) and I suspect that it would be shocking and enough to call into serious question the stability of the U.S. economy (and thus solidity of our solution.)  This could create a much more broad demand for PM's.  And other alternatives such as Bitcoin of course.

There is, of course, also the possibility that deflation will be staved off at any cost.  'QE to infinity' some call it, along with whatever accounting rule changes are needed.  That too would likely result in happy days for USD alternatives such as gold and Bitcoin.


cypherdoc
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December 10, 2012, 09:06:46 PM
 #3838

Are you still talking about Gold here?
Cuz I can't make a connection between that graph and Golds valuation - you seem to do... care to enlighten me?

this thread is about what's going on in the economy and whether we're on the verge of another inflationary wave or going to see something we've never really seen in this country and that is deflation.  either or is going to have a big affect on gold either up or down.

I take some exception to the assertion that deflation will necessarily have a significantly negative effect on gold prices.  Certainly that is the conventional wisdom, but several things give me pause:

1) we had a hushed but very real deflationary event not long ago and gold prices did quit well through it.

2) more obvious deflation is not something we're familiar with (as you point out) and I suspect that it would be shocking and enough to call into serious question the stability of the U.S. economy (and thus solidity of our solution.)  This could create a much more broad demand for PM's.  And other alternatives such as Bitcoin of course.

There is, of course, also the possibility that deflation will be staved off at any cost.  'QE to infinity' some call it, along with whatever accounting rule changes are needed.  That too would likely result in happy days for USD alternatives such as gold and Bitcoin.



everyone here takes exception to what i'm asserting about gold and deflation so you're not alone.  gold dropped 35% in 2008 and the miners were totally devastated around minus 74%.  i remember when SLW went to $2 and GG to $13.  extraordinary drops.  if real deflation kicks in again i think we see a repeat and more.

quite honestly, if it wasn't for Bitcoin, i would have never sold my gold/silver.
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December 10, 2012, 11:34:58 PM
 #3839

...
I take some exception to the assertion that deflation will necessarily have a significantly negative effect on gold prices.  Certainly that is the conventional wisdom, but several things give me pause:

1) we had a hushed but very real deflationary event not long ago and gold prices did quit well through it.

...

everyone here takes exception to what i'm asserting about gold and deflation so you're not alone.  gold dropped 35% in 2008 and the miners were totally devastated around minus 74%.  i remember when SLW went to $2 and GG to $13.  extraordinary drops.  if real deflation kicks in again i think we see a repeat and more.
...

You are right, but...

Some say that the reason for the drop in physical was that it was the only thing left of value and people who needed desperately to raise capital and had some kicking around were unloading it.  It's more than possible that that was simply the messages which resonated with me, though, as a physical gold holder.  One way or another, I recall being happier than my traditionally invested friends coming out of the 2008 event, and only several periods (including the last few years) when this was not the case.

As for the miners, it is exactly like someone (who's advice I took in the early 2000's) said...they are paper shares and will share the same fate as other paper shares if/when TSHTF.  So, I never obtained any and have never paid much attention to them.  I honestly don't know what SLW and GG even are except that they are not the phyzzz...nothing is (though Bitcoin is close enough for my tastes.)


cypherdoc
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December 13, 2012, 12:48:56 AM
 #3840

i just talked about this last week:  http://www.zerohedge.com/news/2012-12-12/theres-problem-kicking-can-down-road
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