Topic: Gold collapsing. Bitcoin UP. - page 418. (Read 2032286 times)

That was the symptom, but not the cause.

The cause was following the LTCM blow-up, the FED made it clear to creditors that they would always be bailed out and there was no risk to lending money. LTCM was levered 50 to 1, this means that for every dollar invested they borrowed 50 dollars from creditors. When LTCM went down creditors lost billions. However the FED engineered a group bailout by the banks where equity holders lost big, but more importantly credit holders recovered 100% of their principle. This was historic and it was a first.

This action created the moral hazard where it was now known the FED would restore creditors from their bad decisions and protect them from any and ALL loses. After LTCM the credit market went wild. Credit standards crashed and no one was worried because the assumption was the FED would keep them whole.

One symptom of this was the low standard mortgage debt issued (that you mention), in 2006 no one thought they could lose money because the FED would backstop fannie mae. Another symptom was every bank was able to leverage anything (no matter how junky) and IBs went to record amounts of leverage themselves.

After Bear went down, the FED again saved creditors. But this time it telegraphed that it was worried about the current state of the credit market (which it created) and may not do this again. Smart investors understood this and started to remove their exposure to credit instruments. This in turn put pressure on the credit system.

Then when Lehman went under stress the FED finally said no more, closed their liquidity window with them, and stated creditors were on their own. The run was immediate and Lehman was bankrupt in less than an hour.

This demonstrated 1 thing:
- The entire credit market existed and depended upon an implicit understanding that the FED would bail creditors out. With this understanding default risk is removed and high leverage is possible. Without this understanding risk returns and existing leverage must unwind.

Today we see the same thing with sovereign debt. No one believes any real government will default, and that the IMF or someone will always come in and bail them out. When Greece exits the euro and defaults, creditors will see that there are risks and start to price that back in. If suddenly you become worried that default risk is real, why the hell would you lend money to Spain or Japan at < 1% rates? No upside but you risk the principle. Sovereign debt valuations are based only on the (false) belief that established governments will never default.

So it comes back to my original point. Everything is enabled, supported and depends on the central banks. They enable credit bubbles in the first place. Once they are either unwilling or unable to continue artificial support, credit will deleverage which will cause the market will go down. Their only alternative is to hit Cntl+P hard.

It crashed in 2008 because of the greed on wallstreet caused by repackaging debt of households that couldn't afford the mortgages.. the math model was assuming that a large % of people wouldn't go bankrupt at the same time which they did and caused a ripple effect. THey did make some changes but didnt make enough... however it will rise until it breaks because there is so much money just sitting around waiting to be put somewhere.

We should do the opposite and add more privacy features to clients.

Adding finishing touches to an improved stealth address proposal that includes useful features like being usable on mobile wallets without requiring the help of a trusted third party server to identify your incoming payments.

Realized fiat gains are taxable about anywhere. Just saying you wish you could hide from the taxes is less noble than asking what tax haven island you can move to.

I fully support idea of stealth addresses but as long as we have fully centralized exchange services which requires us to deliver our full personal data if we want to sell or buy coins we won't be safe.
Government will got our info from crypto exchanges and even with the stealth address we would be fated to pay taxes in the future.

We should do the opposite and add more privacy features to clients.

Adding finishing touches to an improved stealth address proposal that includes useful features like being usable on mobile wallets without requiring the help of a trusted third party server to identify your incoming payments.

We should do the opposite and add more privacy features to clients.

Adding finishing touches to an improved stealth address proposal that includes useful features like being usable on mobile wallets without requiring the help of a trusted third party server to identify your incoming payments.

We should do the opposite and add more privacy features to clients.

Adding finishing touches to an improved stealth address proposal that includes useful features like being usable on mobile wallets without requiring the help of a trusted third party server to identify your incoming payments.

We should do the opposite and add more privacy features to clients.

Adding finishing touches to an improved stealth address proposal that includes useful features like being usable on mobile wallets without requiring the help of a trusted third party server to identify your incoming payments.

I'll continue to maintain that the best defense to this is to make bitcoin as widely used worldwide directly by people as end-users with their own wallets. If everyone just holds coins or uses bitpay and coinbase, it will be much easier to push regulation into the system. If usage grows globally to be a complicated mess of direct person-to-person usages and numerous small services spread around the world, it will be very hard for a single gov to push regulation in (even for the USSA).

I'll continue to maintain that the best defense to this is to make bitcoin as widely used worldwide directly by people as end-users with their own wallets. If everyone just holds coins or uses bitpay and coinbase, it will be much easier to push regulation into the system. If usage grows globally to be a complicated mess of direct person-to-person usages and numerous small services spread around the world, it will be very hard for a single gov to push regulation in (even for the USSA).

I think there’s a really high chance that we see a lot more government action against bitcoin, including the core protocol.

...

I keep talking to regulators at conferences who believe bitcoin simply must change to bring it in line with other payment systems; unfortunately this means adding identity information to bitcoin transactions and making it possible to blacklist funds.

I don't see how, they hired some head guy from the Obama admin involved with "IT technologies" who must have overseen the pillorying of Snowden and turned a blind eye to god only knows what other abuses coming out of the NSA, FISA, FBI and Dept. of Justice regarding privacy violations and 4th amendment crimes.