The financial markets are starting to crash, abandon the fiat titanic

[Robert Paulson]

Financial markets are starting to crash?? -But commodities are, too. It's like we have spiraling (and unmeasured) deflation right now. Have you been to the gas pump, lately? It's time to buy all the things on near-0% interest loans!

thats exactly why there is about to be another round of QE of unseen scale.
all western governments are deep in debt, they absolutely can not afford to have deflation, they will drop sacks full of cash from airplanes if they have to.

It does make me wonder where the Hell the money's gone. Who's been stuffing the trillions under their mattress? Is it an effect of traders/banks seeing a coming deflation crisis and making a self-fulfilling prophecy or outright market manipulation? I mean, banks which decide outright to stop lending, instead hording cash, and maybe convert to an insurance company -- seems like they'd be all set to come out of a deflationary crisis as the world's overlord.

ETA: -Or just a weak economy, I guess. Low money velocity in bad market.

the money is going to the banks.
when people don't borrow fast enough debt starts to outgrow the money supply to the point where people don't have money to buy anything because it all goes to service the debt.

[toknormal]

the money is going to the banks.
when people don't borrow fast enough debt starts to outgrow the money supply to the point where people don't have money to buy anything because it all goes to service the debt.

Just to clarify what he's saying here, in the fractional reserve system, money can only be borrowed into existence. There are conceptually two concentric "layers" to that borrowing:

[1] - central bank issues currency backed by the sovereign (thereby creating sovereign debt)
[2] - commercial banks purchase that currency and MULTIPLY it's quantity by whatever the inverse of the capital reserve ratio is, BUT: they have to find private borrowers to underwrite the new money. If they can't, then no new money is created in the commercial banking sector so the economy DEFLATES, because other commercial debt is being paid off which extinguishes the "money" that debt underwrote.

If the economy deflates while the sovereign debt increases then you get an increasing debt to GDP ratio which is what central banks are tasked with avoiding (e.g. by having policy targets if 2% inflation).

[toknormal]

Traders appear to also have detected the 4 hour chart imminent crossover.

The buying has commenced on Bitstamp + BTCe.

[Trolololo]

4-hour BTC-USD chart about to complete a 36 hour correction. Going up tomorrow I think.

Yep.

But 3-day chart is still scaring...

[Trolololo]

the money is going to the banks.
when people don't borrow fast enough debt starts to outgrow the money supply to the point where people don't have money to buy anything because it all goes to service the debt.

Just to clarify what he's saying here, in the fractional reserve system, money can only be borrowed into existence. There are conceptually two concentric "layers" to that borrowing:

[1] - central bank issues currency backed by the sovereign (thereby creating sovereign debt)
[2] - commercial banks purchase that currency and MULTIPLY it's quantity by whatever the inverse of the capital reserve ratio is, BUT: they have to find private borrowers to underwrite the new money. If they can't, then no new money is created in the commercial banking sector so the economy DEFLATES, because other commercial debt is being paid off which extinguishes the "money" that debt underwrote.

If the economy deflates while the sovereign debt increases then you get an increasing debt to GDP ratio which is what central banks are tasked with avoiding (e.g. by having policy targets if 2% inflation).

I read somewhere that process is inverse:
[1] - commercial bank finds people that want to borrow. Then the bank creates the borrowed money out of nothing, just typing an accounting entry in its book. Then, the bank has to find a 1% of that borrowed money anywhere (deposits, i.e.)
[2] - the central bank simply saves commercial banks asses by printing all necessary notes to prevent bank runs.

That's all.

Avoiding high inflation, monitoring GPD growth and all the wordiness on CB's (QE, LTRO, TLTRO, etc) are BS to avoid people understanding what do they really do.

[brg444]

Wrong. Bitcoin is or can be money (it's fungible, transactable, and has a value). But to me Bitcoin is more an asset, a store of value, rather than a currency. Bitcoin is entire independent, if bitcoin were to be affected by external markets that's only because the people thought it to be. But by its very nature, Bitcoin is absolutely independent and decentralized.

It could be money. But it isn't and it never will be.

If it is to succeed, it will be as a means of making money transfers or payments, but with the units of account that everyone is primarily concerned with being, Dollars, Euros, Pounds, Shekels, Yen, etc.

The most important ingredient behind any monetary standard is the authority that stands behind it and enforces it's use as money and that is because the #1 property of 'money', is that people have confidence in it. This even applies to the use of precious metals as money throughout history. Gold and silver coin also required some sovereign power somewhere, who was willing to recognise the metal tokens as being of value, or at least for a small fee, who was willing to the melt the metal coins and remint them into a form which was recognised as having value. This will never apply to Bitcoin.

What we might get is some kind of asset backed digital currency based around crypto technology, with all the pernicious aspect's of the Bitcoin block chain built into it. One wallet per global citizen. All economic transactions fully traceable.

 

so wrong, on so many levels.

stick to trading Mat

[Trolololo]

the money is going to the banks.
when people don't borrow fast enough debt starts to outgrow the money supply to the point where people don't have money to buy anything because it all goes to service the debt.

Just to clarify what he's saying here, in the fractional reserve system, money can only be borrowed into existence. There are conceptually two concentric "layers" to that borrowing:

[1] - central bank issues currency backed by the sovereign (thereby creating sovereign debt)
[2] - commercial banks purchase that currency and MULTIPLY it's quantity by whatever the inverse of the capital reserve ratio is, BUT: they have to find private borrowers to underwrite the new money. If they can't, then no new money is created in the commercial banking sector so the economy DEFLATES, because other commercial debt is being paid off which extinguishes the "money" that debt underwrote.

If the economy deflates while the sovereign debt increases then you get an increasing debt to GDP ratio which is what central banks are tasked with avoiding (e.g. by having policy targets if 2% inflation).

I read somewhere that process is inverse:
[1] - commercial bank finds people that want to borrow. Then the bank creates the borrowed money out of nothing, just typing an accounting entry in its book. Then, the bank has to find a 1% of that borrowed money anywhere (deposits, i.e.)
[2] - the central bank simply saves commercial banks asses by printing all necessary notes to prevent bank runs.

That's all.

Avoiding high inflation, monitoring GPD growth and all the wordiness on CB's (QE, LTRO, TLTRO, etc) are BS to avoid people understanding what do they really do.

Once printed currency is prohibited, banks will have absolute power. There will be no risk of bank runs, because no one will be allowed to change it's digital fiat account by anything (gold, silver or notes).
That's why Bitcoin could be the Black Swan for banks.

[2dogs]

That's why Bitcoin could be is the Black Swan for banks.

FIFY

[Robert Paulson]

not only for the banks but also for the government.
in a bitcoin universe the government can't use the inflation tax, it actually has to ask for money from the people.
imagine the government had to ask the population to pay 1 trillion dollars for the iraq war, thats 3135$ per person.
who would send that money to the government?

[600watt]

the money is going to the banks.
when people don't borrow fast enough debt starts to outgrow the money supply to the point where people don't have money to buy anything because it all goes to service the debt.

Just to clarify what he's saying here, in the fractional reserve system, money can only be borrowed into existence. There are conceptually two concentric "layers" to that borrowing:

[1] - central bank issues currency backed by the sovereign (thereby creating sovereign debt)
[2] - commercial banks purchase that currency and MULTIPLY it's quantity by whatever the inverse of the capital reserve ratio is, BUT: they have to find private borrowers to underwrite the new money. If they can't, then no new money is created in the commercial banking sector so the economy DEFLATES, because other commercial debt is being paid off which extinguishes the "money" that debt underwrote.

If the economy deflates while the sovereign debt increases then you get an increasing debt to GDP ratio which is what central banks are tasked with avoiding (e.g. by having policy targets if 2% inflation).

I read somewhere that process is inverse:
[1] - commercial bank finds people that want to borrow. Then the bank creates the borrowed money out of nothing, just typing an accounting entry in its book. Then, the bank has to find a 1% of that borrowed money anywhere (deposits, i.e.)
[2] - the central bank simply saves commercial banks asses by printing all necessary notes to prevent bank runs.

That's all.

Avoiding high inflation, monitoring GPD growth and all the wordiness on CB's (QE, LTRO, TLTRO, etc) are BS to avoid people understanding what do they really do.

since banks were invented and since those banks (private or state owned) started to print paper money in renaissance italy, people always feared that those institutions may not really own enough physical gold or silver to back it. they feared that there was not enough gold present.
we have a slightly different problem: it is not a question of enough metal - there isn't even ENOUGH PAPER money printed to back all the money they have created on their balance sheets ...

 

[inca]

Wrong. Bitcoin is or can be money (it's fungible, transactable, and has a value). But to me Bitcoin is more an asset, a store of value, rather than a currency. Bitcoin is entire independent, if bitcoin were to be affected by external markets that's only because the people thought it to be. But by its very nature, Bitcoin is absolutely independent and decentralized.

It could be money. But it isn't and it never will be.

If it is to succeed, it will be as a means of making money transfers or payments, but with the units of account that everyone is primarily concerned with being, Dollars, Euros, Pounds, Shekels, Yen, etc.

The most important ingredient behind any monetary standard is the authority that stands behind it and enforces it's use as money and that is because the #1 property of 'money', is that people have confidence in it. This even applies to the use of precious metals as money throughout history. Gold and silver coin also required some sovereign power somewhere, who was willing to recognise the metal tokens as being of value, or at least for a small fee, who was willing to the melt the metal coins and remint them into a form which was recognised as having value. This will never apply to Bitcoin.

What we might get is some kind of asset backed digital currency based around crypto technology, with all the pernicious aspect's of the Bitcoin block chain built into it. One wallet per global citizen. All economic transactions fully traceable.

Wrong Matt. It is functioning as money right now. Head over to an exchange or buy something off scan computers.

I have to be honest your post is something I would not have expected to read from you. Confidence in money we use today (fiat) backed by nothing more than the state is a temporary aberration. It is only since 1971 that people have accepted money not backed by an asset which was scarce and therefore valuable (gold).

Bitcoin has risen up from nothing and has value not because it is backed by the US military, used to buy oil, or because it is used to pay taxes, but because it is given value by the people, not under coercion but free will. And why does it retain this growing value? Because people value the properties associated with it compared with standard fiat or credit money. It is a superior money, global, frictionless with gold like commodity properties.

You really have lost the vision..

[CryptoCarmen]

not only for the banks but also for the government.
in a bitcoin universe the government can't use the inflation tax, it actually has to ask for money from the people.
imagine the government had to ask the population to pay 1 trillion dollars for the iraq war, thats 3135$ per person.
who would send that money to the government?

Those that works in army industry.

[brg444]

not only for the banks but also for the government.
in a bitcoin universe the government can't use the inflation tax, it actually has to ask for money from the people.
imagine the government had to ask the population to pay 1 trillion dollars for the iraq war, thats 3135$ per person.
who would send that money to the government?

Those that works in army industry.

fine, let them have the bill then

[Robert Paulson]

how about rescuing the banks, sounds like fun?
that'll be 7.77 trillion usd, about 20,000$ per person, im sure everyone would like to pay that to save the failed banksters.

http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html

"It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year."

[exocytosis]

You sir are a nutcase

Says the man with a post count of 3.

And how is that relevant?

[leopard2]

printed fiat is only a fraction of fiat

it's all digital credits now, fake credits backed by nothing

long live btc

nobody really knows but afaik total world money supply is around 60 - 100 000 000 000 000 dollars

or 10 cents per satoshi in existence

a huge bubble huh?

check the VIX volatility index, currently 20, was 80-90 in 2008, this can get ugly

[Wekkel]

In case of fiat failing, food is a better hedge than Bitcoin.

[telemaco]

In case of fiat failing, food is a better hedge than Bitcoin.

I agree, they could even solve two problems if greenbacks were made of broccoli instead of paper.

[nuff]

The bottom line is this: The banking system (and several sovereigns) are loaded with so much debt that the major Western economies + Japan CANNOT AFFORD AT ANY COST TO ENTER INTO A DEFLATIONARY TREND. The reason they can't is because that would herald the onset of defaults caused by debt to GDP ratios going beyond manageable levels and markets sending bond yields sky high due to loss of confidence.

+1

GOverments are just prolonging and holding off the inevitable collapse of the debt-based banking system. The elites running the banks and governments know about this and they have pulled their money out of fiat and into gold, commodities, land ie real assets but they needed the people to continuing believing in the system, giving out 0% interest loans, telling them to spend, buy bonds, securities etc. They just cannot afford to let the people realize that the whole debt-based banking system is actually the biggest scam in all of history.

[FNG]

The beloved dollar, on the other hand, has gone from a monetary base of around $850 billion to $2800 billion in the space of 5 years. Thats more than a 300% expansion of the monetary base. If you don't think that is a recipe for some major economic upheaval in its own right then you don't understand money.

Your chart is old. It's gotten much worse..