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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1805454 times)
highlevelminer
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April 25, 2012, 09:04:40 PM
 #841

I noticed that sudden spike in the price from $4 to well over $5 last week.

It had been steadily traded at 4 dollars before then so I was curious if promotional awareness could be related to it.

Or possibly a big purchase from a mining pool to an independent contractor.

Either way its great new for businesses and lenders to have the bitcoin have a sudden spike and then remain stable.

Of course we will have to see how long this increase in price maintains before we can make any lasting judgments.


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MatthewLM
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April 25, 2012, 10:49:52 PM
 #842

perhaps you don't know.  the demand for credit is non-existent, hence the low rates.

The demand for credit is stratospheric. However, the demand for safety is greater. End result: stagnation.


The demand will only get greater as banks need bailing out again and again forcing central banks to inflate. Banks do have a lot of excess reserves which they haven't flooded out into the system yet. What about governments? They always need money to finance the deficits and we are seeing that their solution is to now monetise the debt directly from central bank purchases. The US pretty much has this sorted, as Greenspan said, the US wont default. At least not on the nominal debt obligations but it will default in some sense through inflation. So in the future I think direct monetisation of debt is more likely than general inflating, especially when faith is lost in US treasuries.

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bitcool
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April 26, 2012, 03:33:26 AM
 #843

perhaps you don't know.  the demand for credit is non-existent, hence the low rates.
Consumers are spending, it's like they are showing the middle finger to Mr. Frugality after a few years of belt-tightening.   
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April 26, 2012, 09:07:41 AM
 #844

perhaps you don't know.  the demand for credit is non-existent, hence the low rates.

Normally you talk a lot of sense cypherdoc; but it's worrying that you think central bank interest rates have anything to do with demand for credit.  They should have everything to do with demand for credit; but the rate is not set by a market, it's set by a committee.

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cypherdoc
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April 26, 2012, 02:04:39 PM
 #845

perhaps you don't know.  the demand for credit is non-existent, hence the low rates.

Normally you talk a lot of sense cypherdoc; but it's worrying that you think central bank interest rates have anything to do with demand for credit.  They should have everything to do with demand for credit; but the rate is not set by a market, it's set by a committee.

well i think there are differing opinions on this, like the horse before the buggy or vice versa.  the only area of consumer loans that has grown over the last 4 yrs is in the student loan arena and thats more a bad sign than anything else.  the kids can't get work so they decide to go to school instead and get degrees from worthless predatory lenders like the Univ. of Phoenix via Sallie Mae.

since the demand is so low, interest rates will naturally fall, but you're right that the central banks try to lower rates to boost demand by buying UST's in the open market creating artificial demand (~60-70% of demand is from the Fed); the problem is it isn't working.  you can't force ordinary ppl or corporations to borrow; the old pushing on a string analogy.  this is why the economy refuses to get back to ordinary growth; we already have too many debts and we're tapped out.

as bitcool says above, somehow consumers are spending but its b/c they're decreasing their savings rate.  thats not a good long term strategy.

eventually the bond vigilantes will come to the US.  they've been hibernating for 30 yrs.  and then the Fed will find they've lost control of interest rates.  you see that the CB's in Europe have already had this happen to them.
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April 26, 2012, 02:51:52 PM
 #846

Apple wash, rinse, repeat.
silverbox
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April 26, 2012, 03:13:46 PM
 #847

up up up, cept for aapl and btc..

The correlation continues!!

And since I haven't done it in a few days:


this thread was started 3/13

Bitcoin  5.40

Gold 1690.


today 4/26

Bitcoin 5.09   (down ~6%)

Gold 1656  (down ~2%)


Gold still hasn't collapsed,  Bitcoin still isn't up.

AAPL 605
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April 26, 2012, 06:33:29 PM
 #848

The federal reserve can keep rates low by inflating, when will cypherdoc ever get it?

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April 26, 2012, 06:37:05 PM
 #849

The federal reserve can keep rates low by inflating, when will cypherdoc ever get it?

There is a great deal of USDs held in foreign reserves.  Foreigners are already losing faith in the dollar, and if the Fed keeps printing, many of those USDs will be dumped on the market since the only reason they are held is to preserve value.  If hyperinflation really in keeping with the Fed's dual mandate?  No.  Are they smart enough to realize this?  I sure hope so.  Will a long-delayed period of deflation help shore up the value of the USD and convince those foreigner to keep holding?  Likely.

https://www.bitcoin.org/bitcoin.pdf
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MatthewLM
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April 26, 2012, 06:46:11 PM
 #850

Deflation is not in the mandate either. It's supposed be 2% inflation. They manipulate the figures to make it higher though.

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cypherdoc
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April 26, 2012, 06:53:30 PM
 #851

http://seekingalpha.com/article/525521-russia-and-mexico-both-buy-nearly-1-billion-worth-of-gold-in-march

so the Fed is really going to turn control of the global monetary system over to Russia and Mexico?
notme
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April 26, 2012, 07:53:21 PM
 #852

Deflation is not in the mandate either. It's supposed be 2% inflation. They manipulate the figures to make it higher though.

Deflation fits the mandate just fine... The mandate is to keep prices fairly stable.  2% is the upper limit for inflation, not the minimum.

https://www.bitcoin.org/bitcoin.pdf
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silverbox
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April 26, 2012, 08:28:26 PM
 #853

http://seekingalpha.com/article/525521-russia-and-mexico-both-buy-nearly-1-billion-worth-of-gold-in-march

so the Fed is really going to turn control of the global monetary system over to Russian and Mexico?

Naw, probably to a French lead coalition, but not for like 150 years..
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April 26, 2012, 09:43:04 PM
 #854

Thanks for the vote of confidence in France, as a french citizen i'm glad you thought about us Cheesy Unless you were talking about the IMF
But seriously, you really think the global monetary system will stay with the dollar a world currency for 150 yrs ?
IMO, without bigger war that what the US is doing now, it's already over, just a matter of time.

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silverbox
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April 26, 2012, 10:34:26 PM
 #855


But seriously, you really think the global monetary system will stay with the dollar a world currency for 150 yrs ?


Yup. 
miscreanity
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April 27, 2012, 12:49:53 AM
 #856

The federal reserve can keep rates low by inflating, when will cypherdoc ever get it?

From the original gold thread, I think he gets it - he just doesn't think they'll inflate, or that inflation won't have significant effect at this point if they do.

There is a great deal of USDs held in foreign reserves.  Foreigners are already losing faith in the dollar, and if the Fed keeps printing, many of those USDs will be dumped on the market since the only reason they are held is to preserve value.  If hyperinflation really in keeping with the Fed's dual mandate?  No.  Are they smart enough to realize this?  I sure hope so.  Will a long-delayed period of deflation help shore up the value of the USD and convince those foreigner to keep holding?  Likely.

Deflation would put the dollar back on course to reliability, but it would be so painful at this point that people would be dying in the streets and major cities would turn into warzones; much worse than Greece is now.

The Fed has a protective mechanism in place with limits on movement. Flow can be managed if people are arbitrarily limited on transfers into or out of the country at a time, say $1,000 at a time. Bank holidays would be a more drastic variant of this, preventing the backflow of USD into America. That would allow the dollar to remain functional within US borders even as it withers on the vine around the rest of the world. Holders of USD outside of the US would be left holding the bag, so-to-speak.

Meanwhile, balance of payments would be needed if international commerce were to continue. That's where gold comes in, with other precious metals acting acting as backup. Sadly, Bitcoin is still too immature to participate fully in this function, though it will benefit.

http://seekingalpha.com/article/525521-russia-and-mexico-both-buy-nearly-1-billion-worth-of-gold-in-march

so the Fed is really going to turn control of the global monetary system over to Russia and Mexico?

No need - officially, only the collective Eurozone holds as much or more gold than the US. All others are simply catching up. The dollar is dead internationally. America just has to realise that it isn't the only big fish in the pond and must finally start playing nice with its neighbours.

It isn't an either-or situation, but a question of balance.
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April 27, 2012, 05:34:37 AM
 #857

Deflation would put the dollar back on course to reliability, but it would be so painful at this point that people would be dying in the streets and major cities would turn into warzones; much worse than Greece is now.

Meh... it doesn't have to be all deflation all the time.  In inflationary periods, there are days the dollar gains value.  In deflationary periods, the dollar will lose some days.  Sure, it will be rough for some, but the banks holding all those extra USD reserves they got on the cheap will do just fine.

https://www.bitcoin.org/bitcoin.pdf
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silverbox
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April 27, 2012, 03:11:07 PM
 #858

up up up today..

cept bitcoin and AAPL..

The correlation continues!!
MatthewLM
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April 27, 2012, 06:37:44 PM
 #859

The federal reserve can keep rates low by inflating, when will cypherdoc ever get it?

From the original gold thread, I think he gets it - he just doesn't think they'll inflate, or that inflation won't have significant effect at this point if they do.

Then he thinks that they wont keep rates low as long as for 2014 if deflation is apparently imminent.

2% is the target inflation rate. They don't want to exceed it but they don't want deflation either, they will inflate as much as possible without convincing others they are inflating too much. They will manipulate the figures to achieve this as they have been doing.

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miscreanity
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April 27, 2012, 09:29:23 PM
 #860

Then he thinks that they wont keep rates low as long as for 2014 if deflation is apparently imminent.

2% is the target inflation rate. They don't want to exceed it but they don't want deflation either, they will inflate as much as possible without convincing others they are inflating too much. They will manipulate the figures to achieve this as they have been doing.

Yes, it's a bugger of a balancing act. I don't know if rates can be kept low through 2014. Real rates are negative already, so anything done now (short of halting all capital flow or instituting a hard money standard) will be inflationary - the result being market forces overwhelming monetary policy and forcing CB rates higher. There has been an admirable amount of delaying effort, which could be enough to push the monetary implosion off that far.
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