Gold collapsing. Bitcoin UP.

[zeetubes]

For those who care about the money velocity parameter, this might be of interest:

http://www.lse.ac.uk/economicHistory/pdf/FACTSPDF/1306Morgan.pdf

Basically, it is guesswork, derived from GDP and money supply.

Thanks for sharing.

""Quantitative” refers to a level of precision and exactitude we associate with the notion of measurement"

And hence 'Quantative Easing' refers to a reduction in both those attribues?

"...But we form a truer picture if we think of banks as the home of money,
and the circulation of money as a temporary excursion from that home.
If this be true, the circulation of money is not very different from the
circulation of checks. Each performs one, or at most, a few transactions
outside of the bank, and then returns home to report its circuit."

How do you think this will this pan out in the age of cryptocurrencies?

"Either velocity was a meaningful concept, but is variations were unpredictable, and so it provided no anchor or constraints; or it was merely the ratio of GDP to M-1B, and so provided no independent anchor or constraint."

An LSE peer reviewed paper shouldn't have a damn' typo in it.

[1713853915]

1713853915

[iCEBREAKER]

Frankfurt court bans Uber taxi services across Germany

Perhaps they shouldn't have chosen a German name for the company.

http://www.reuters.com/article/2014/09/02/us-uber-germany-ruling-idUSKBN0GX0OM20140902

Especially uber. Very touchy name.

Germans are so authoritarian in their approach to everything.  Even anti-fascism, ironically enough.   

I hope these clever Israelis remove the Frankfurt Court fascists from Uber's neck and put them on their knees where they belong:

http://lazooz.org/wiki/index.php?title=Main_Page

La'Zooz is an open-source, decentralised and autonomous, collaborative transportation ecosystem, that is using cryptocurrency technology for establishing, coordinating and growing its community of users, developers, and promoters alike.

Hat tip: http://www.reddit.com/r/Bitcoin/comments/2as9jb/an_uber_competitor_that_accepts_and_pays_out_in/

[vuduchyld]

In such circumstances, you should have the opposite emotion, or even better, no emotion.
Options contracts are a contrary indicator. 
The more options bought against your position, the better you position is.
Think about it.  After you do, if you still don't get it, let us know and we can break it down or find a link for you.

Yeah. If you do a few things over your investing career, you'll be successful:
1) Be emotionless.
2) Do your due diligence and fundamentals analysis.
3) Incorporate new information rationally as it comes to light.
4) And the classic Warren Buffet line: Be greedy when others are fearful, and fearful when others are greedy.

To be sure, you won't always win, but winning just a little more than 50% of the time translates to a good deal of success. And (also as Buffet says) you only need two or three truly great investment ideas in your lifetime in order to be fantastically successful as an investor.

Great replies, gentlemen.  Thank you. 

I think that nervous was a bad choice of words.  Maybe curious is better.  If there is one thing I'm definitely NOT, it's over-invested in crypto.  I sleep pretty well at night with crypto as a part of what I hope is a reasonably diverse portfolio.  My investment horizon is 2019-2020 (hard to imagine anything shorter, easy to imagine a longer time frame for me), although I do incorporate new information.  I have done some M2-based calculations to try to determine what I think might be a reasonable 2020 value--and I totally get that price and value are not the same in financial markets.  My feeling is that the price has dropped in the last 6 months, while the value has grown.  Overall, I think this is a great time to buy and I don't worry too much about timing and trying to catch bottoms (or tops).  It's not my strength. 

I'm still a little hesitant on the points that NewLiberty makes--will definitely find some reading about options contracts as a contrary indicator.  Thank you for that tip.  I just feel like BTC is a market where information asymmetry might even be greater than it is with US stocks.  I look around the table and I can't spot the sucker, and I know what that means. 

Again, I appreciate your thoughtful replies!

[zeetubes]

"I look around the table and I can't spot the sucker, and I know what that means."

Love it!!!

[Melbustus]

...
My feeling is that the price has dropped in the last 6 months, while the value has grown. 

Agreed. Feels a lot like late-2011/early-2012 to me. Bubble blow off, recovering from a bunch of nasty stuff, yet steady ecosystem development and investment under the hood.

... I don't worry too much about timing and trying to catch bottoms (or tops).  It's not my strength. 

Likewise. I'm not good at the short-term.

...I just feel like BTC is a market where information asymmetry might even be greater than it is with US stocks.  I look around the table and I can't spot the sucker, and I know what that means. 

The information asymmetry issue is interesting. On one hand, it's an illiquid market, so if someone with money is making plans on either side of the boat, the subsequent move is going to be big, and you don't know about it. On the other hand, these are completely new waters that bridge computer science, finance, economics, markets, virality, network effects, politics, etc, etc... One's ability to simply think clearly and rationally about all of the above without any prejudice or preconceived notions should result in what amounts to some sort of informational - or at least educational - advantage in the domain.

And have you read the comments on mainstream-press articles about bitcoin? The folks who voice aggressive yet ignorant opinions (ie, most people) are the suckers (not just in bitcoin, but in life more generally). These people are not buying and/or are encouraging selling.

And I full well acknowledge that in the short-run, we bulls may in fact be the suckers. But the long-run looks like a clear +EV (but very high variance) situation to me.

[cypherdoc]

UN High Commissioner: Mass Surveillance Violates International Law … and Snowden Should NOT Be Prosecuted

http://www.ritholtz.com/blog/2014/09/mass-surveillance-violates-u-s-law/

[zeetubes]

"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?"

[vuduchyld]

... But the long-run looks like a clear +EV (but very high variance) situation to me.

Couldn't agree more!

[cypherdoc]

"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.

[cypherdoc]

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

[zeetubes]

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

haha, I'll reserve my judgment on that one! 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.

[cypherdoc]

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.

[cypherdoc]

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

[cypherdoc]

"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.

[cypherdoc]

oh crap:

[cypherdoc]

don't be fooled:

[cypherdoc]

this is good:

[cypherdoc]

so is this:

[cypherdoc]

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

[marcus_of_augustus]

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

Bitcoin has futures and options markets.