| Price........ | Allotment..... | Total..... |
| $.0125 | 1M
In its most simplest form:
The crops all come in at the same time. The farmers need money to pay their loans back - they can't wait. So they sell. All at once. The price plummets, the supermarkets get great prices, but the farmers go broke and starve. Enter the speculator. He has extra money, he knows the price will likely rise in the near future. He buys the wheat and warehouses it. The price rises, he sells and makes money. With money to be made, the speculators compete for the wheat at harvest and eventually the price does not plummet at harvest anymore.
Could you explain in detail how speculators in grain prevent people from starving? I am NOT arguing, I actually do not understand this and would like to hear it explained. I have a very rough idea that increased price of grain is good for speculators and bad for hungry people, but I am well aware that my models are over-simplified at this point. If you would, please continue.
Ronwan, you give me hope. But bear in mind my sense of time. If the government shall be cast down as a Golden Calf, then why do the commoners need to starve by the machinations of the financially clever? How is that an improvement? The government has to be "cast down" so that the commoners DON'T starve. Not all people are skilled and can provide this market function at a profit. Thus the don't help AND they loose money. They eventually go away. Most people need to use bitcoins not speculate in them. As far as starvation, as I said, successful grain speculators KEEP people from starving. That was my point. Voluntarism is the best way to maximize the commoners standard of living in my view. I have services to offer. I'm not convinced that offering them for BC will enamour me to my clients. For your existing clients, probably not. Will accepting bitcoins attract new clients? Again, probably not, but this is the right question to ask. For me, trading a few bitcoins back and forth makes me part of the drama while I wait for the bitcoin economy to mature to the point where there is something that I want to do that is more conveniently done with bitcoins.
I am so accustomed to seeing the "main money" in the world belonging to, and ultimately being destroyed by empires, it is taking me some time to imagine in detail that which attracts me most to this new toy. If it becomes a widely accepted currency, the government will freak out and try hunting down the "source". Of course, there isn't one, by definition...but they will try none the less.
Also "smooth out" is not the same as "hold exactly still". Things in the real world change and prices reflect that. The better and more quickly they reflect that the better plans we can all make.
In terms of Bitcoin price, if Bitcoin is ultimately going to be the main money in the world then signaling this as quickly as possible lets people rationally start building the infrastructure that will be needed. If it is going to fail and be worthless knowing that in advance would save lots of effort and resources. Whoever can tell us the truth (or be most accurate) will get paid, people who mislead with wrong predictions pay that bill in money lost from trading. If what good traders do, like a capacitor (understood, btw, I know about analog integration), is smooth out the price...then why is an arbitrary number of dollars per chicken, the cost of gasoline, the "value" of your mortgage supposed to double every ten years? Who is gaming the game? New dollars coming in dilute the value. This is why Bitcoin is capped at a known amount and no one has a special place, unlike the dollar and it's lords.
In part to answer my own question...at this point, I have more interest in BC than in my own salary (USD) and I have been trying to belittle paper money by selling BC high and buying low. I'm a little surprised that no one else answered my question correctly, but I've always lived in a paradox. Where you keep your treasure, there is your heart.
If what good traders do, like a capacitor (understood, btw, I know about analog integration), is smooth out the price...then why is an arbitrary number of dollars per chicken, the cost of gasoline, the "value" of your mortgage supposed to double every ten years? Who is gaming the game?
I have been given good advice after the fact. I also blew a hundred bucks trying to figure out what the hell this was about. Like going to Atlantic City, it was just for fun, I have no regrets. I am still not convinced that my learning how to play this game makes any real value in the world.
I may not have said this before in so many words. I have no idea what financial markets are actually about. I was never interested in money. I pay my rent by solving puzzles. This is just a new one, and perhaps the best introduction to something that has always offended me. One that does not immediately seem to be funding senseless wars with my taxes. So. J'y suis. J'y reste. neither do i. i find, however, that approaching them (financial markets) from a different direction can be effective. and so... since the vast majority of the trading community appears to rate their own performance in terms of USD, i have decided that it makes the most sense to rate mine in terms of Bitcoin.
Olomana, this does not solve my puzzle. I have already taught myself how to increase both. There is a model that says one currency is better than another. I would love to claim BC as my currency of choice, but practical concerns make me vote for US dollars. I have services to offer. I'm not convinced that offering them for BC will enamour me to my clients. So I try to fish for more USD than BC. I want to hear from people that are playing it the other way around.
Ronwan, you give me hope. But bear in mind my sense of time. If the government shall be cast down as a Golden Calf, then why do the commoners need to starve by the machinations of the financially clever? How is that an improvement?
I may not have said this before in so many words. I have no idea what financial markets are actually about. I was never interested in money. I pay my rent by solving puzzles. This is just a new one, and perhaps the best introduction to something that has always offended me. One that does not immediately seem to be funding senseless wars with my taxes. So. J'y suis. J'y reste.
The house always wins. The basic principle of money markets is "screw the other guy, he's stupid." Playing that particular game at length is a clear indication that you have nothing of value yourself to offer, as is true with all gambling. This is a common misconception about market functions. What good traders will do is smooth out the price. They are like a capacitor in a parallel DC circuit acting as a voltage reculator. The voltage is the abundance of bitcoins (low price). If the price were high on Thursday and low on Saturday, then this means the supply on Saturday is over average and Thursday it is under average. If you buy when it is abundant (cheap) and take coins off the market, and sell when it is scarce (high), you smooth out the curve. This is what grain contracts do which is why the price of wheat does not crash at harvest time. Speculators are buying like crazy, storing, and selling later in the year. This helps everyone. Communist Revolutions are lead by violent economically ignorant people and these "speculators" are some of the first to go to the gulags. Why not, they aren't working for a living, the farmers are growing the food and they make money by gambling. Note that some form of famine usually follows a Communist take over as there is not enough food later in the year before the next harvest. Jump to:
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