Gold collapsing. Bitcoin UP.

[cypherdoc]

this is really a brilliantly crafted document from the Mercatus Center:

In contrast, the proposed requirement to identify all parties to a transaction might lead to the department having
less
visibility of transactions on the Bitcoin network or any other open cryptocurrency network. This is because,
as noted above, the consequence of such a requirement will likely be that Virtual Currency firms will be forced
to operate closed systems on top of the Bitcoin network. While the department may have good visibility into the
transactions conducted inside these closed networks, it will give up visibility into the broader open network.
Again, a determined actor will always be able to avoid BitLicensed intermediaries and connect directly to the
network in a peer-to-peer fashion. By segregating the BitLicensed businesses from the wider network, there will
be no contact between identified customers and the wider network, and the department will lose visibility into
that wider network.

http://mercatus.org/sites/default/files/BritoDourado-NY-Virtual-Currency-comment-081414.pdf

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[Pruden]

there are many who believe that markets "really" peaked on 3/24/00, the day the Nasdaq hit it's all time high and that every stimulation done since then has only served to postpone the inevitable long term decline.  you can see we haven't made it back there yet.

An investment in Treasury bills, absolutely liquid and short-term, on 01/01/2000 would have been ahead of stocks one year ago. Now it is slightly lagging behind (http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html).

I think we are indeed in a secular bear market that is about to end according to the 16-20 years trough-to-peak, then peak-to-trough cycle: 1949-1967-1982-2000-2016?. That is, unless stocks have reached a permanently high plateau (and 15 years is already exceedingly permanent, save for a few months between 2008 and 2009).

[rocks]

It takes chutzpah.
The Fed says that the Gold standard doesn't work because it can be ended by the politicians at the behest of the Fed.

They can be expected to try to use the same reasoning with bitcoin... but only if they first make it the bitcoin standard?  Somehow I think that simply asking for it all by force of law probably won't work again the same way Roosevelt took the gold.

Yeah,  you picked on that shit too? Amazing.   

ZH recently had an interesting article on Warren Buffet's father's support for the gold standard. It's worth a read.
http://www.zerohedge.com/news/2014-08-14/70-years-later-warren-buffetts-dad-proved-right-about-everything

What I find interesting is all of the reasons he uses to support gold can just as easily be applied to bitcoin today. From this view bitcoin simply becomes a better implementation of the gold standard, largely because it is less manipulable.

Some extracts from the article and Buffet's letter:

Unlike his son who has lauded the Federal Reserve and in particular its former chairman Ben Bernanke, along with others who intervened during and after the financial crisis of 2008, Howard Buffett was an outspoken proponent of laissez-faire economics and sound money. In a 1948 article he wrote:

Is there a connection between Human Freedom and A Gold Redeemable Money? At first glance it would seem that money belongs to the world of economics and human freedom to the political sphere.
 
But when you recall that one of the first moves by Lenin, Mussolini and Hitler was to outlaw individual ownership of gold, you begin to sense that there may be some connection between money, redeemable in gold, and the rare prize known as human liberty.
 
Also, when you find that Lenin declared and demonstrated that a sure way to overturn the existing social order and bring about communism was by printing press paper money, then again you are impressed with the possibility of a relationship between a gold-backed money and human freedom…
 
The subject of a Hitler or a Stalin is a serf by the mere fact that his money can be called in and depreciated at the whim of his rulers…
 
Under such conditions [of depreciating currency] the individual citizen is deprived of freedom of movement. He is prevented from laying away purchasing power for the future. He becomes dependent upon the goodwill of the politicians for his daily bread. Unless he lives on land that will sustain him, freedom for him does not exist…

Buffett argues that the lack of a gold standard meant that Congress was unrestrained in spending money to cater to various interest groups, stating “With no bad immediate consequence it becomes expedient to accede to a spending demand. The Treasury is seemingly inexhaustible. Besides the unorganized taxpayers back home may not notice this particular expenditure — and so it goes.” Further:

Far away from Congress is the real forgotten man, the taxpayer who foots the bill. He is in a different spot from the tax-eater or the business that makes millions from spending schemes. He cannot afford to spend his time trying to oppose Federal expenditures. He has to earn his own living and carry the burden of taxes as well.
 
But for most beneficiaries a Federal paycheck soon becomes vital in his life. He usually will spend his full energies if necessary to hang onto this income.
 
The taxpayer is completely outmatched in such an unequal contest. Always heretofore he possessed an equalizer. If government finances weren’t run according to his idea of soundness he had an individual right to protect himself by obtaining gold.
 
With a restoration of the gold standard, Congress would have to again resist handouts. That would work this way. If Congress seemed receptive to reckless spending schemes, depositors’ demands over the country for gold would soon become serious. That alarm in turn would quickly be reflected in the halls of Congress. The legislators would learn from the banks back home and from the Treasury officials that confidence in the Treasury was endangered.
 
Congress would be forced to confront spending demands with firmness. The gold standard acted as a silent watchdog to prevent unlimited public spending.

Buffett ends his column with this warning:

Because of our economic strength the paper money disease here may take many years to run its course.
 
But we can be approaching the critical stage. When that day arrives, our political rulers will probably find that foreign war and ruthless regimentation is the cunning alternative to domestic strife. That was the way out for the paper-money economy of Hitler and others. In these remarks I have only touched the high points of this problem. I hope that I have given you enough information to challenge you to make a serious study of it.
 
I warn you that politicians of both parties will oppose the restoration of gold, although they may outwardly seemingly favor it. Also those elements here and abroad who are getting rich from the continued American inflation will oppose a return to sound money. You must be prepared to meet their opposition intelligently and vigorously. They have had 15 years of unbroken victory.
 
But, unless you are willing to surrender your children and your country to galloping inflation, war and slavery, then this cause demands your support. For if human liberty is to survive in America, we must win the battle to restore honest money.
 
There is no more important challenge facing us than this issue — the restoration of your freedom to secure gold in exchange for the fruits of your labors.

In the end those who argued against FDR and Wilson will be proven right. My fear is no one alive will notice or care. Bitcoin is our escape from this.

[STT]

there are many who believe that markets "really" peaked on 3/24/00, the day the Nasdaq hit it's all time high and that every stimulation done since then has only served to postpone the inevitable long term decline.  you can see we haven't made it back there yet.

We can swing way past the highs of 2000 on any index.
   The FED can ensure that and every statistic reads positive however they cannot account for a declining dollar index at the same time so if you combine dollar value & nasdaq nominal value it is quite unlikely we will surpass 2000 for many years.  
 I believe DXY has so far fallen from 120 to 80 and it seems intentional that dollars will continue to fall in value to underline the export capability of USA (while restricting certain exports like oil to favour nationals over foreign users of dollars)

[cypherdoc]

It takes chutzpah.
The Fed says that the Gold standard doesn't work because it can be ended by the politicians at the behest of the Fed.

They can be expected to try to use the same reasoning with bitcoin... but only if they first make it the bitcoin standard?  Somehow I think that simply asking for it all by force of law probably won't work again the same way Roosevelt took the gold.

Yeah,  you picked on that shit too? Amazing.   

ZH recently had an interesting article on Warren Buffet's father's support for the gold standard. It's worth a read.
http://www.zerohedge.com/news/2014-08-14/70-years-later-warren-buffetts-dad-proved-right-about-everything

What I find interesting is all of the reasons he uses to support gold can just as easily be applied to bitcoin today. From this view bitcoin simply becomes a better implementation of the gold standard, largely because it is less manipulable.

Some extracts from the article and Buffet's letter:

Unlike his son who has lauded the Federal Reserve and in particular its former chairman Ben Bernanke, along with others who intervened during and after the financial crisis of 2008, Howard Buffett was an outspoken proponent of laissez-faire economics and sound money. In a 1948 article he wrote:

Is there a connection between Human Freedom and A Gold Redeemable Money? At first glance it would seem that money belongs to the world of economics and human freedom to the political sphere.
 
But when you recall that one of the first moves by Lenin, Mussolini and Hitler was to outlaw individual ownership of gold, you begin to sense that there may be some connection between money, redeemable in gold, and the rare prize known as human liberty.
 
Also, when you find that Lenin declared and demonstrated that a sure way to overturn the existing social order and bring about communism was by printing press paper money, then again you are impressed with the possibility of a relationship between a gold-backed money and human freedom…
 
The subject of a Hitler or a Stalin is a serf by the mere fact that his money can be called in and depreciated at the whim of his rulers…
 
Under such conditions [of depreciating currency] the individual citizen is deprived of freedom of movement. He is prevented from laying away purchasing power for the future. He becomes dependent upon the goodwill of the politicians for his daily bread. Unless he lives on land that will sustain him, freedom for him does not exist…

Buffett argues that the lack of a gold standard meant that Congress was unrestrained in spending money to cater to various interest groups, stating “With no bad immediate consequence it becomes expedient to accede to a spending demand. The Treasury is seemingly inexhaustible. Besides the unorganized taxpayers back home may not notice this particular expenditure — and so it goes.” Further:

Far away from Congress is the real forgotten man, the taxpayer who foots the bill. He is in a different spot from the tax-eater or the business that makes millions from spending schemes. He cannot afford to spend his time trying to oppose Federal expenditures. He has to earn his own living and carry the burden of taxes as well.
 
But for most beneficiaries a Federal paycheck soon becomes vital in his life. He usually will spend his full energies if necessary to hang onto this income.
 
The taxpayer is completely outmatched in such an unequal contest. Always heretofore he possessed an equalizer. If government finances weren’t run according to his idea of soundness he had an individual right to protect himself by obtaining gold.
 
With a restoration of the gold standard, Congress would have to again resist handouts. That would work this way. If Congress seemed receptive to reckless spending schemes, depositors’ demands over the country for gold would soon become serious. That alarm in turn would quickly be reflected in the halls of Congress. The legislators would learn from the banks back home and from the Treasury officials that confidence in the Treasury was endangered.
 
Congress would be forced to confront spending demands with firmness. The gold standard acted as a silent watchdog to prevent unlimited public spending.

Buffett ends his column with this warning:

Because of our economic strength the paper money disease here may take many years to run its course.
 
But we can be approaching the critical stage. When that day arrives, our political rulers will probably find that foreign war and ruthless regimentation is the cunning alternative to domestic strife. That was the way out for the paper-money economy of Hitler and others. In these remarks I have only touched the high points of this problem. I hope that I have given you enough information to challenge you to make a serious study of it.
 
I warn you that politicians of both parties will oppose the restoration of gold, although they may outwardly seemingly favor it. Also those elements here and abroad who are getting rich from the continued American inflation will oppose a return to sound money. You must be prepared to meet their opposition intelligently and vigorously. They have had 15 years of unbroken victory.
 
But, unless you are willing to surrender your children and your country to galloping inflation, war and slavery, then this cause demands your support. For if human liberty is to survive in America, we must win the battle to restore honest money.
 
There is no more important challenge facing us than this issue — the restoration of your freedom to secure gold in exchange for the fruits of your labors.

In the end those who argued against FDR and Wilson will be proven right. My fear is no one alive will notice or care. Bitcoin is our escape from this.

that was interesting.

sounds like Warren didn't like his dad.

[STT]

You would have to listen very carefully and he would never say outright but I believe WB agrees with his dad in principal however for the sake of popularity and convenience he plays along with the current administration.  It certainly would be alot more trouble near term to realise the mistakes made over the last 40 years based on this endless government spending, even a simple default would turn the world upside down.  I doubt when Im 83 I will want the world to upset so much, cant blame WB but I think he knows the above full well.  He does say bonds or cash are awful afaik

[rocks]

You would have to listen very carefully and he would never say outright but I believe WB agrees with his dad in principal however for the sake of popularity and convenience he plays along with the current administration.  It certainly would be alot more trouble near term to realise the mistakes made over the last 40 years based on this endless government spending, even a simple default would turn the world upside down.  I doubt when Im 83 I will want the world to upset so much, cant blame WB but I think he knows the above full well.  He does say bonds or cash are awful afaik

That may be the case, but Warren has consistently stated over and over again that he hates gold and thinks anyone who holds it is crazy. One of his most commonly cited statements on why he is against gold is the following:

I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion dollars – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion dollars…you could have all the farmland in the United States, you could have about 7Exxon Mobils, and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils.

http://www.gurufocus.com/news/239678/gold-vs-farmland-vs-exxon-mobil--buffett-makes-ense-of-it-all

You could interpret this to be more of a statement that it is better to invest your savings, than to simply hold onto money. But this only makes sense when money offers zero interest rate (gold today has a negative interest rate since you have to pay to store it). However under the gold standard lending gold offered a reasonable and attractive yield, and during many period it made more sense to hold onto gold than to invest into a bubble.

Part if the problem for bitcoin is most people have been taught to see bitcoin or any sound money system in the same light.

[STT]

Savings placed in a bank are not cash, they are an investment at that point.    In normal circumstance, you are relying on that bank as a company to return a positive on their business and to maintain a solid model that allows them to give your cash back.   Really this is investment risk and return.
   In modern times we of course think its impossible to lose and the money is guaranteed to come back to us so it is savings not investment but really its closer to the second and government interference in which banks fail does not qualify it differently

His piece about gold vs farmland is correct.   Gold is not an investment but the laws of physics wont be changing so the gold is not a risk as such though insurance on its theft is a cost.   Gold is savings or cash if you like but the farmland is investment and is normal risk vs return.   Gold has a yield of zero and its not supposed to be a profit but it is savings of your labour, your excess wealth in solid form so I really back that as the original meaning of the word; to save wages or saved labour paid, saved capital whatever.

The really confusing thing cash notes are not really cash.  A dollar bill is a zero coupon bond, its a promissory note and it has no value, its returns are a risk reliant on various departments of government.  We are supposed to see it as cash, its modern alchemy because it is not but thats how we use it.  

I still back WB as someone to learn from, you may have to sieve out all the dross he has taken on from politics but really I dont see him as a political player.  He does say he wants to be liked or he values influence, etc


I dont think he does things that differently but he does speak differently or not plainly on how bad gov is, for money, etc

lending gold offered a reasonable and attractive yield, and during many period it made more sense to hold onto gold than to invest into a bubble.

Thats fair enough, we simulate that with interest rates and in the eighties we had to raise them to 20% to get people to think twice about dollars.  Plus other changes like the Chinese exporting perhaps helped.   You are right, its a brake on the bubbles or ponzis that appear indirectly from easy fed policy, they arent actually productive but we have no brakes now as gov cant afford higher rates hence gold is really the best idea

[rocks]

Fully agree with everything said, thanks.

[Melbustus]

...<Buffet Excerpts>...


that was interesting.

sounds like Warren didn't like his dad.

I've read a number of Buffet bios, as well as much of his own writings. I believe he very much liked and respected his father. I think the divide is due to different generations and experiences. By the time Warren was an adult, he was lucky to start his investing career during one of the biggest bull markets, and rises in aggregate living standards, in human history. I think that very much formed his opinion of the world. He's an eternal American optimist. Which is indeed great in many ways. He (probably) correctly asserts that life will, over the long-haul, keep getting better for most people. And further, that Western-style business and innovation will be the driver of such in the upcoming century as it has been in the past couple.

And so he chooses to, again pretty much correctly, focus on investing in companies; in the underlying organizations that generate new efficiencies for humankind (ie, rising living standards).

So it's no surprise that he hates gold. Indeed, gold is a ridiculous asset to hold. Since the moment we humans have needed to transact quickly over distance, gold has ceased being a good money, and hasn't been all that rational to hold for its own merits. Various geo-political dynamics have been the drivers, but all that stuff is so far removed from the underlying purity of efficiency generation that Buffet invests upon that he (mostly correctly, at least in the longrun) views gold "investing" as stupid, archaic, and absurd.

The irony is that Warren is something of a hard-headed purist just like his father. Again, he just focuses on the core drivers of human advancement (ie, companies generating innovation and efficiencies), while his father focused on the same from a different angle (ie, ensuring a playing field of pure/true free-market capitalism). I think the fact that Warren has lived and invested exclusively in probably the richest country and richest period in human history has very much *allowed* him to focus on the firm-internals side without having to worry all that much about the overarching economic-system side. To his mind, at least empirically, the latter has been totally fine....why worry about it?

Sitenote: I remember reading that many of the House votes ended up being: All-Reps-Besides-HowardBuffet vs. Howard Buffet. Reminds me a better-spoken (and probably smarter) Ron Paul.

I personally agree almost entirely with Warren's investment approach; including his opinion of gold. I obviously diverge with him on bitcoin. As a technically-educated person, it's far easier for me to see bitcoin as the ideal-money-for-our-times that it is than it is for Warren to see it and really appreciate that fact. I also haven't lived and invested through the biggest bull-generation in human history, so some of my thinking is more like his father Howard's as well. Those facts combined lead to me to consider bitcoin a fantastic investment; the fact that it's better money means it'll naturally gain market share (transaction volume), and I also find it to be an important freedom-ensuring innovation that fits nicely into the decentralizing tendencies of modern times.

But make no mistake; once bitcoin obtains mature transaction volume and adoption, I will not hold it as an investment, choosing instead to invest as best I can like Warren Buffet.

[NewLiberty]

In the end those who argued against FDR and Wilson will be proven right. My fear is no one alive will notice or care. Bitcoin is our escape from this.

Andrew Dickson White was one of the most informed and reasoned,
http://president.cornell.edu/history_bio_white.cfm
http://en.wikipedia.org/wiki/Andrew_Dickson_White

If you haven't read through "Fiat Money Inflation in France" which was presented 1892, and then again in 1912 it rings as true now as it did then.

It doesn't stop there.

"Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

Could be Bitcoin?

[cypherdoc]

Keep buying dips.

[mmortal03]

there are many who believe that markets "really" peaked on 3/24/00, the day the Nasdaq hit it's all time high and that every stimulation done since then has only served to postpone the inevitable long term decline.  you can see we haven't made it back there yet.

Here it is adjusted for inflation: http://www.macrotrends.net/1320/nasdaq-historical-chart-adjusted-for-inflation

[cypherdoc]

Meanwhile, holdings in Belgium climbed $1.7 billion last month to $364.1 billion, the report showed.

Code words:  US. gubmint

http://mobile.bloomberg.com/news/2014-08-15/u-s-investment-outflow-reaches-record-as-china-sells-treasuries.html

[wachtwoord]

Meanwhile, holdings in Belgium climbed $1.7 billion last month to $364.1 billion, the report showed.

Code words:  US. gubmint

http://mobile.bloomberg.com/news/2014-08-15/u-s-investment-outflow-reaches-record-as-china-sells-treasuries.html

How long until Belgium owns the US? The they can start auctioning off cities. New York people. Any takers?

[zeetubes]

Meanwhile, holdings in Belgium climbed $1.7 billion last month to $364.1 billion, the report showed.

Code words:  US. gubmint

http://mobile.bloomberg.com/news/2014-08-15/u-s-investment-outflow-reaches-record-as-china-sells-treasuries.html

How long until Belgium owns the US? The they can start auctioning off cities. New York people. Any takers?

Hopefully they'll auction off Ben Lawsky first.

[wachtwoord]

Meanwhile, holdings in Belgium climbed $1.7 billion last month to $364.1 billion, the report showed.

Code words:  US. gubmint

http://mobile.bloomberg.com/news/2014-08-15/u-s-investment-outflow-reaches-record-as-china-sells-treasuries.html

How long until Belgium owns the US? The they can start auctioning off cities. New York people. Any takers?

Hopefully they'll auction off Ben Lawsky first.

Are you interested in acquiring him?

[_mr_e]

Lol, NXT has a plan! It's called the rollback machine!  :

http://www.reddit.com/r/Bitcoin/comments/2dmccc/chinese_trading_platform_btercom_announcesomeone/

Nxt did not fork and bter has gotten most of the nxt back. I am now more bullish then ever! With the release of the instantdex around the corner (near instant trading on the asset exchange and decentralized crypto to crypto, nxt is preparing to be a force to be reckoned with.

[cypherdoc]

Meanwhile, holdings in Belgium climbed $1.7 billion last month to $364.1 billion, the report showed.

Code words:  US. gubmint

http://mobile.bloomberg.com/news/2014-08-15/u-s-investment-outflow-reaches-record-as-china-sells-treasuries.html

How long until Belgium owns the US? The they can start auctioning off cities. New York people. Any takers?

Hopefully they'll auction off Ben Lawsky first.

Are you interested in acquiring him?

He's already been acquired; by the banks.

[HeliKopterBen]

Lol, NXT has a plan! It's called the rollback machine!  :

http://www.reddit.com/r/Bitcoin/comments/2dmccc/chinese_trading_platform_btercom_announcesomeone/

Nxt did not fork and bter has gotten most of the nxt back. I am now more bullish then ever! With the release of the instantdex around the corner (near instant trading on the asset exchange and decentralized crypto to crypto, nxt is preparing to be a force to be reckoned with.

I was quite impressed with nxt.  The developers released a version of the client that would reverse the stolen transaction only but the forgers did not accept the change.  This demonstrates the power of distributed consensus and hopefully the world takes notice.  Obvious threat to central banks is obvious.  Maybe POS has merit after all.