Topic: Global Financial Crisis scenarios - page 10. (Read 15898 times)

Quote from: CoinsCoinsEverywhere on July 22, 2014, 12:21:20 PM

The real estate bubble has been created by the low interests rates from the FED in 2000s and they blew more air into the bubble in recent years with 0% interest rates which means the crash will be bigger and more painful that it would have been if only they allow it to happen to destroy the bad debt

No it wasn't. It was mainly because of 90s deregulation that led to subprime lending. What you should blame the Fed for his not allowing interest rates to rise when they saw a bubble forming. The low interest helped accelerate the housing bubble, but it didnt cause it.

Also, in case you didn't notice; housing bubbles were a worldwide phenomenon not only USA

Housing bubbles exist because of the one bad property of current money: storage of value. Since current money is not good for that, houses are used. And since they are bought partly for the storage of value function, they acquire exchange value. But since the supply is not fixed, and the demand to hold can change as people move, the exchange value can be lost, and in case of over-supply in an area, their value can go below value for direct use.

So houses are money, but bad money. Bitcoin could solve that problem, making houses generally go down to their value for direct use.

But because real estate stores value, there's plenty of demand for it most of the time. Yes, when bubbles pop, real estate prices can drop below their direct use value, as you put it. But they usually don't stay there for long. What's the issue that you see with this? If real estate bubbles didn't cause the economy to crash now and then, then some other important asset would. That's the nature of capitalism--boom and bust cycles.

I'm curious: how do you think bitcoin would help solve this?

Well houses are used as a store of value, and thus acquires a higher value than its use value. If good money is available, that money will be used as a store of value. Then you don't have to realize half your house to pay for your kids college, that involves moving to a house of half the size, which is costly and maybe not what you want. So at any time you will have a right-sized house, and your savings in good money.

A house is not an investment, it is more like a durable consumer good that takes many years to consume.

The idea that a house is an investment, comes from the fact that it rises in the bubble build-up phase, combined with low interest loans which are the effect of government credit creation.

So it will be solved (if all goes well) in the way that the money value of houses will be sucked into bitcoins instead, leaving the houses with only the use value. I don't have a timeframe, other calamities may happen first.

Real estate is an investment if you collect rent on it. However, the mortgage is a liability but equity is an asset

The price of the house can potentially increase in value as well. However it is very difficult and time consuming to extract what value the hose does have.

CoinsCoinsEverywhere

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Quote from: CoinsCoinsEverywhere on July 22, 2014, 12:21:20 PM

But because real estate stores value, there's plenty of demand for it most of the time. Yes, when bubbles pop, real estate prices can drop below their direct use value, as you put it. But they usually don't stay there for long. What's the issue that you see with this? If real estate bubbles didn't cause the economy to crash now and then, then some other important asset would. That's the nature of capitalism--boom and bust cycles.

I'm curious: how do you think bitcoin would help solve this?

Well houses are used as a store of value, and thus acquires a higher value than its use value. If good money is available, that money will be used as a store of value. Then you don't have to realize half your house to pay for your kids college, that involves moving to a house of half the size, which is costly and maybe not what you want. So at any time you will have a right-sized house, and your savings in good money.

A house is not an investment, it is more like a durable consumer good that takes many years to consume.

The idea that a house is an investment, comes from the fact that it rises in the bubble build-up phase, combined with low interest loans which are the effect of government credit creation.

So it will be solved (if all goes well) in the way that the money value of houses will be sucked into bitcoins instead, leaving the houses with only the use value. I don't have a timeframe, other calamities may happen first.

Quote from: Erdogan on July 22, 2014, 07:32:00 PM

Plague? See my theory of money as bubbles. Since bitcoin has no use value, it is perfect for this. In fact adam smith considered that if something different from gold was money, that would be a problem, because it would distort the use value of the stuff being money. For instance, he said, if rice was money, the saving of rice would necessarily lead to hunger for some. What we have, is houses are money, and we have exactly the problems that adam smith envisioned: houses (in london and new york) are hoarded, and noone lives in them, to the detriment of people needing houses. That is the problem. Money like bitcoin (and fiat) with no value for direct use, is perfect exactly because they have no use value. Fiat is good for every money function, except the store of value, therefore bitcoin will solve the problem with houses as money, and release the resources now unneccesarily bound in houses.

I'm a little confused here. You say that bitcoin and fiat have no value for direct use, with which I agree. You then say that fiat does not work as a store of value. But then you imply that bitcoin can be a store of value that will suck in all of the extra stored value of the housing market. Why wouldn't bitcoin and fiat be the same in this regard? Yes, bitcoin has limited supply, but why does that mean that it should be considered a safe store of value (it would have to be considered even safer than real estate to suck in its stored value)? Or are you thinking of a future in which bitcoin basically becomes the reserve currency of the world, or at least the dominant currency of a particular country or region?

Erdogan

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Quote from: twiifm on July 22, 2014, 07:28:09 PM

Quote from: CoinsCoinsEverywhere on July 22, 2014, 12:21:20 PM

The real estate bubble has been created by the low interests rates from the FED in 2000s and they blew more air into the bubble in recent years with 0% interest rates which means the crash will be bigger and more painful that it would have been if only they allow it to happen to destroy the bad debt

No it wasn't. It was mainly because of 90s deregulation that led to subprime lending. What you should blame the Fed for his not allowing interest rates to rise when they saw a bubble forming. The low interest helped accelerate the housing bubble, but it didnt cause it.

Also, in case you didn't notice; housing bubbles were a worldwide phenomenon not only USA

Housing bubbles exist because of the one bad property of current money: storage of value. Since current money is not good for that, houses are used. And since they are bought partly for the storage of value function, they acquire exchange value. But since the supply is not fixed, and the demand to hold can change as people move, the exchange value can be lost, and in case of over-supply in an area, their value can go below value for direct use.

So houses are money, but bad money. Bitcoin could solve that problem, making houses generally go down to their value for direct use.

But because real estate stores value, there's plenty of demand for it most of the time. Yes, when bubbles pop, real estate prices can drop below their direct use value, as you put it. But they usually don't stay there for long. What's the issue that you see with this? If real estate bubbles didn't cause the economy to crash now and then, then some other important asset would. That's the nature of capitalism--boom and bust cycles.

I'm curious: how do you think bitcoin would help solve this?

Well houses are used as a store of value, and thus acquires a higher value than its use value. If good money is available, that money will be used as a store of value. Then you don't have to realize half your house to pay for your kids college, that involves moving to a house of half the size, which is costly and maybe not what you want. So at any time you will have a right-sized house, and your savings in good money.

A house is not an investment, it is more like a durable consumer good that takes many years to consume.

The idea that a house is an investment, comes from the fact that it rises in the bubble build-up phase, combined with low interest loans which are the effect of government credit creation.

So it will be solved (if all goes well) in the way that the money value of houses will be sucked into bitcoins instead, leaving the houses with only the use value. I don't have a timeframe, other calamities may happen first.

Real estate is an investment if you collect rent on it. However, the mortgage is a liability but equity is an asset

Correct. It is an investment (it is capital) if someone owns it and rents it out for profit.

But if you own the house and use it yourself, it is a (durable) consumer good that is consumed in roughly 50 years. It lasts longer of course if you keep it well (for a cost) and modernize it (for a cost), but the original expence is consumed in about 50 years. Therefore, a consumer good.

The raw land value, is of course kept indefinately. Housing economy is rather complicated, there must be at least 5-6 other factors determining the profit of a house as investment, and the cost of a house as a durable good.

Erdogan

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The real estate bubble has been created by the low interests rates from the FED in 2000s and they blew more air into the bubble in recent years with 0% interest rates which means the crash will be bigger and more painful that it would have been if only they allow it to happen to destroy the bad debt

No it wasn't. It was mainly because of 90s deregulation that led to subprime lending. What you should blame the Fed for his not allowing interest rates to rise when they saw a bubble forming. The low interest helped accelerate the housing bubble, but it didnt cause it.

Also, in case you didn't notice; housing bubbles were a worldwide phenomenon not only USA

Housing bubbles exist because of the one bad property of current money: storage of value. Since current money is not good for that, houses are used. And since they are bought partly for the storage of value function, they acquire exchange value. But since the supply is not fixed, and the demand to hold can change as people move, the exchange value can be lost, and in case of over-supply in an area, their value can go below value for direct use.

So houses are money, but bad money. Bitcoin could solve that problem, making houses generally go down to their value for direct use.

The same plague would chase Bitcoin as well (actually, even stronger since Bitcoin has no "direct use value" at all). Bitcoin could indeed substitute houses as a store of value (at least to a degree), but it would inherit the same faults (that is "bubbleness", in the first place).

Plague? See my theory of money as bubbles. Since bitcoin has no use value, it is perfect for this. In fact adam smith considered that if something different from gold was money, that would be a problem, because it would distort the use value of the stuff being money. For instance, he said, if rice was money, the saving of rice would necessarily lead to hunger for some. What we have, is houses are money, and we have exactly the problems that adam smith envisioned: houses (in london and new york) are hoarded, and noone lives in them, to the detriment of people needing houses. That is the problem. Money like bitcoin (and fiat) with no value for direct use, is perfect exactly because they have no use value. Fiat is good for every money function, except the store of value, therefore bitcoin will solve the problem with houses as money, and release the resources now unneccesarily bound in houses.

twiifm

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Quote from: CoinsCoinsEverywhere on July 22, 2014, 12:21:20 PM

The real estate bubble has been created by the low interests rates from the FED in 2000s and they blew more air into the bubble in recent years with 0% interest rates which means the crash will be bigger and more painful that it would have been if only they allow it to happen to destroy the bad debt

No it wasn't. It was mainly because of 90s deregulation that led to subprime lending. What you should blame the Fed for his not allowing interest rates to rise when they saw a bubble forming. The low interest helped accelerate the housing bubble, but it didnt cause it.

Also, in case you didn't notice; housing bubbles were a worldwide phenomenon not only USA

Housing bubbles exist because of the one bad property of current money: storage of value. Since current money is not good for that, houses are used. And since they are bought partly for the storage of value function, they acquire exchange value. But since the supply is not fixed, and the demand to hold can change as people move, the exchange value can be lost, and in case of over-supply in an area, their value can go below value for direct use.

So houses are money, but bad money. Bitcoin could solve that problem, making houses generally go down to their value for direct use.

But because real estate stores value, there's plenty of demand for it most of the time. Yes, when bubbles pop, real estate prices can drop below their direct use value, as you put it. But they usually don't stay there for long. What's the issue that you see with this? If real estate bubbles didn't cause the economy to crash now and then, then some other important asset would. That's the nature of capitalism--boom and bust cycles.

I'm curious: how do you think bitcoin would help solve this?

Well houses are used as a store of value, and thus acquires a higher value than its use value. If good money is available, that money will be used as a store of value. Then you don't have to realize half your house to pay for your kids college, that involves moving to a house of half the size, which is costly and maybe not what you want. So at any time you will have a right-sized house, and your savings in good money.

A house is not an investment, it is more like a durable consumer good that takes many years to consume.

The idea that a house is an investment, comes from the fact that it rises in the bubble build-up phase, combined with low interest loans which are the effect of government credit creation.

So it will be solved (if all goes well) in the way that the money value of houses will be sucked into bitcoins instead, leaving the houses with only the use value. I don't have a timeframe, other calamities may happen first.

Real estate is an investment if you collect rent on it. However, the mortgage is a liability but equity is an asset

98problems

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Quote from: CoinsCoinsEverywhere on July 22, 2014, 12:21:20 PM

The real estate bubble has been created by the low interests rates from the FED in 2000s and they blew more air into the bubble in recent years with 0% interest rates which means the crash will be bigger and more painful that it would have been if only they allow it to happen to destroy the bad debt

No it wasn't. It was mainly because of 90s deregulation that led to subprime lending. What you should blame the Fed for his not allowing interest rates to rise when they saw a bubble forming. The low interest helped accelerate the housing bubble, but it didnt cause it.

Also, in case you didn't notice; housing bubbles were a worldwide phenomenon not only USA

The real estate bubble was caused the CRA that forced banks to lend to people who are mot qualified for the loans in order to serve enough of the communities

Erdogan

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Quote from: CoinsCoinsEverywhere on July 22, 2014, 02:47:25 PM

The real estate bubble has been created by the low interests rates from the FED in 2000s and they blew more air into the bubble in recent years with 0% interest rates which means the crash will be bigger and more painful that it would have been if only they allow it to happen to destroy the bad debt

No it wasn't. It was mainly because of 90s deregulation that led to subprime lending. What you should blame the Fed for his not allowing interest rates to rise when they saw a bubble forming. The low interest helped accelerate the housing bubble, but it didnt cause it.

Also, in case you didn't notice; housing bubbles were a worldwide phenomenon not only USA

Housing bubbles exist because of the one bad property of current money: storage of value. Since current money is not good for that, houses are used. And since they are bought partly for the storage of value function, they acquire exchange value. But since the supply is not fixed, and the demand to hold can change as people move, the exchange value can be lost, and in case of over-supply in an area, their value can go below value for direct use.

So houses are money, but bad money. Bitcoin could solve that problem, making houses generally go down to their value for direct use.

But because real estate stores value, there's plenty of demand for it most of the time. Yes, when bubbles pop, real estate prices can drop below their direct use value, as you put it. But they usually don't stay there for long. What's the issue that you see with this? If real estate bubbles didn't cause the economy to crash now and then, then some other important asset would. That's the nature of capitalism--boom and bust cycles.

I'm curious: how do you think bitcoin would help solve this?

Well houses are used as a store of value, and thus acquires a higher value than its use value. If good money is available, that money will be used as a store of value. Then you don't have to realize half your house to pay for your kids college, that involves moving to a house of half the size, which is costly and maybe not what you want. So at any time you will have a right-sized house, and your savings in good money.

A house is not an investment, it is more like a durable consumer good that takes many years to consume.

The idea that a house is an investment, comes from the fact that it rises in the bubble build-up phase, combined with low interest loans which are the effect of government credit creation.

So it will be solved (if all goes well) in the way that the money value of houses will be sucked into bitcoins instead, leaving the houses with only the use value. I don't have a timeframe, other calamities may happen first.

blumangroup

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'Slow and steady wins the race'

Quote from: CoinsCoinsEverywhere on July 22, 2014, 02:47:25 PM

Housing bubbles exist because of the one bad property of current money: storage of value. Since current money is not good for that, houses are used. And since they are bought partly for the storage of value function, they acquire exchange value. But since the supply is not fixed, and the demand to hold can change as people move, the exchange value can be lost, and in case of over-supply in an area, their value can go below value for direct use.

So houses are money, but bad money. Bitcoin could solve that problem, making houses generally go down to their value for direct use.

The same plague would chase Bitcoin as well (actually, even stronger since Bitcoin has no "direct use value" at all). Bitcoin could indeed substitute houses as a store of value (at least to a degree), but it would inherit the same faults (that is "bubbleness", in the first place).

The only way I could see bitcoin being a store of value is if people simply decided that it would be. As you pointed out, you can't use bitcoin for anything but payments, whereas real estate is quite useful--people will always want real estate. If people simply decided that bitcoin would be a store of value (and it would appear that they have for right now given the price), they can also simply decide that it won't be anymore (which is something that concerns me about bitcoin, but that's another topic).

Bitcoin needs to have price stability for it to have a store of value. It has nothing to do if people decide that it does or not.

tee-rex

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Housing bubbles exist because of the one bad property of current money: storage of value. Since current money is not good for that, houses are used. And since they are bought partly for the storage of value function, they acquire exchange value. But since the supply is not fixed, and the demand to hold can change as people move, the exchange value can be lost, and in case of over-supply in an area, their value can go below value for direct use.

So houses are money, but bad money. Bitcoin could solve that problem, making houses generally go down to their value for direct use.

The same plague would chase Bitcoin as well (actually, even stronger since Bitcoin has no "direct use value" at all). Bitcoin could indeed substitute houses as a store of value (at least to a degree), but it would inherit the same faults (that is "bubbleness", in the first place).

The only way I could see bitcoin being a store of value is if people simply decided that it would be. As you pointed out, you can't use bitcoin for anything but payments, whereas real estate is quite useful--people will always want real estate. If people simply decided that bitcoin would be a store of value (and it would appear that they have for right now given the price), they can also simply decide that it won't be anymore (which is something that concerns me about bitcoin, but that's another topic).

Money didn't appear by itself, people needed it and the functions it fulfills, so there is a need for a payment system. Its usefulness (utility) is as objective as a need for a home (though not as vital indeed). In this aspect, it is not that people just decided to use Bitcoin per se but for its usefulness in attaining their purposes. And since Bitcoin is deflationary by its nature at that (through limited emission), it can be used as a store of value.

CoinsCoinsEverywhere

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Housing bubbles exist because of the one bad property of current money: storage of value. Since current money is not good for that, houses are used. And since they are bought partly for the storage of value function, they acquire exchange value. But since the supply is not fixed, and the demand to hold can change as people move, the exchange value can be lost, and in case of over-supply in an area, their value can go below value for direct use.

So houses are money, but bad money. Bitcoin could solve that problem, making houses generally go down to their value for direct use.

The same plague would chase Bitcoin as well (actually, even stronger since Bitcoin has no "direct use value" at all). Bitcoin could indeed substitute houses as a store of value (at least to a degree), but it would inherit the same faults (that is "bubbleness", in the first place).

The only way I could see bitcoin being a store of value is if people simply decided that it would be. As you pointed out, you can't use bitcoin for anything but payments, whereas real estate is quite useful--people will always want real estate. If people simply decided that bitcoin would be a store of value (and it would appear that they have for right now given the price), they can also simply decide that it won't be anymore (which is something that concerns me about bitcoin, but that's another topic).

tee-rex

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Quote from: sgk on June 18, 2014, 09:03:50 AM

The real estate bubble has been created by the low interests rates from the FED in 2000s and they blew more air into the bubble in recent years with 0% interest rates which means the crash will be bigger and more painful that it would have been if only they allow it to happen to destroy the bad debt

No it wasn't. It was mainly because of 90s deregulation that led to subprime lending. What you should blame the Fed for his not allowing interest rates to rise when they saw a bubble forming. The low interest helped accelerate the housing bubble, but it didnt cause it.

Also, in case you didn't notice; housing bubbles were a worldwide phenomenon not only USA

Housing bubbles exist because of the one bad property of current money: storage of value. Since current money is not good for that, houses are used. And since they are bought partly for the storage of value function, they acquire exchange value. But since the supply is not fixed, and the demand to hold can change as people move, the exchange value can be lost, and in case of over-supply in an area, their value can go below value for direct use.

So houses are money, but bad money. Bitcoin could solve that problem, making houses generally go down to their value for direct use.

The same plague would chase Bitcoin as well (actually, even stronger since Bitcoin has no "direct use value" at all). Bitcoin could indeed substitute houses as a store of value (at least to a degree), but it would inherit the same faults (that is "bubbleness", in the first place).

sandykho47

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Knowledge its everything

Of course the price will skyrockets a bit
But BTC will dead, if :
1. no power
2. no internet connection
3. no miner Huh

Quote from: binks1 on June 17, 2014, 10:35:33 PM

Hi,

I have a question, but please direct me to a post if already asked:

In case of another GFC, would BTC bitcoin price:

a) stays on the same level Cool

b) skyrockets Grin

c) tumble down Cry

Take your pick:

I pick Fiat & Crypto Grin

CoinsCoinsEverywhere

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The real estate bubble has been created by the low interests rates from the FED in 2000s and they blew more air into the bubble in recent years with 0% interest rates which means the crash will be bigger and more painful that it would have been if only they allow it to happen to destroy the bad debt

No it wasn't. It was mainly because of 90s deregulation that led to subprime lending. What you should blame the Fed for his not allowing interest rates to rise when they saw a bubble forming. The low interest helped accelerate the housing bubble, but it didnt cause it.

Also, in case you didn't notice; housing bubbles were a worldwide phenomenon not only USA

Housing bubbles exist because of the one bad property of current money: storage of value. Since current money is not good for that, houses are used. And since they are bought partly for the storage of value function, they acquire exchange value. But since the supply is not fixed, and the demand to hold can change as people move, the exchange value can be lost, and in case of over-supply in an area, their value can go below value for direct use.

So houses are money, but bad money. Bitcoin could solve that problem, making houses generally go down to their value for direct use.

But because real estate stores value, there's plenty of demand for it most of the time. Yes, when bubbles pop, real estate prices can drop below their direct use value, as you put it. But they usually don't stay there for long. What's the issue that you see with this? If real estate bubbles didn't cause the economy to crash now and then, then some other important asset would. That's the nature of capitalism--boom and bust cycles.

I'm curious: how do you think bitcoin would help solve this?

Erdogan

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Quote from: binks1 on June 17, 2014, 10:35:33 PM

The real estate bubble has been created by the low interests rates from the FED in 2000s and they blew more air into the bubble in recent years with 0% interest rates which means the crash will be bigger and more painful that it would have been if only they allow it to happen to destroy the bad debt

No it wasn't. It was mainly because of 90s deregulation that led to subprime lending. What you should blame the Fed for his not allowing interest rates to rise when they saw a bubble forming. The low interest helped accelerate the housing bubble, but it didnt cause it.

Also, in case you didn't notice; housing bubbles were a worldwide phenomenon not only USA

Housing bubbles exist because of the one bad property of current money: storage of value. Since current money is not good for that, houses are used. And since they are bought partly for the storage of value function, they acquire exchange value. But since the supply is not fixed, and the demand to hold can change as people move, the exchange value can be lost, and in case of over-supply in an area, their value can go below value for direct use.

So houses are money, but bad money. Bitcoin could solve that problem, making houses generally go down to their value for direct use.

STAyre

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Hi,

I have a question, but please direct me to a post if already asked:

In case of another GFC, would BTC bitcoin price:

a) stays on the same level Cool

b) skyrockets Grin

c) tumble down Cry

?

I think that when another GFC will come bitcoin price will fall down too because bitcoin is not an independent currency.

twiifm

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Quote from: efreeti on July 20, 2014, 12:27:14 AM

The real estate bubble has been created by the low interests rates from the FED in 2000s and they blew more air into the bubble in recent years with 0% interest rates which means the crash will be bigger and more painful that it would have been if only they allow it to happen to destroy the bad debt

No it wasn't. It was mainly because of 90s deregulation that led to subprime lending. What you should blame the Fed for his not allowing interest rates to rise when they saw a bubble forming. The low interest helped accelerate the housing bubble, but it didnt cause it.

Also, in case you didn't notice; housing bubbles were a worldwide phenomenon not only USA

Both lending practice and low interest rate contributed to housing bubble.

Yeah thats what I said. But interest is lower now than during bubble. So interest didn't "create" the bubble. And you can't blame the Fed for bubbles in multiple countries

And 0% is a bank rate. Not consumer rate.

efreeti

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The real estate bubble has been created by the low interests rates from the FED in 2000s and they blew more air into the bubble in recent years with 0% interest rates which means the crash will be bigger and more painful that it would have been if only they allow it to happen to destroy the bad debt

No it wasn't. It was mainly because of 90s deregulation that led to subprime lending. What you should blame the Fed for his not allowing interest rates to rise when they saw a bubble forming. The low interest helped accelerate the housing bubble, but it didnt cause it.

Also, in case you didn't notice; housing bubbles were a worldwide phenomenon not only USA

Both lending practice and low interest rate contributed to housing bubble.

twiifm

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