Topic: Let's Say the Stock Market Corrects.. (Read 1877 times)
When you can't audit the Fed, they can make any number up they want for any kind of asset, they have the ability to create unlimited dollars - both printed fiat, and digital. They just won't tell us about the next QE, they will just do it behind the scenes (or worse they will tell us they are reducing QE but actually raising it...how does anyone really know??). There will just be shortages of just about everything, since no physical asset of any kind will be worth any amount of paper. The stawk market and every single stawk could go to infinity with a few simple key strokes.
It can begin in Monday even if Greece will not pay his debt and IMF will let Greece fail in to Bankruptcy
That moment situation from Cyprus can repeat,welthy Greeks already moved his money out of Greece,but it can give reeason to massive sell off on markets.Marketsare driven by greedy and fear if there is more fear sell off begin.Thatcan raisespeculation of the end of eurozone ,what can happen easly even without Greece help
But in my opinon btc will rise when inflation in USA will officially rise
Last economic data are showing that USA GDP is not growing,if there is no GDP growth and inflationis rising
,that it is like check math,that moment digital currencys will rise
Finally EBC is now printing 60bln euro per month,that will destroy Europe sooner or later
That moment situation from Cyprus can repeat,welthy Greeks already moved his money out of Greece,but it can give reeason to massive sell off on markets.Marketsare driven by greedy and fear if there is more fear sell off begin.Thatcan raisespeculation of the end of eurozone ,what can happen easly even without Greece help
But in my opinon btc will rise when inflation in USA will officially rise
Last economic data are showing that USA GDP is not growing,if there is no GDP growth and inflationis rising
,that it is like check math,that moment digital currencys will rise
Finally EBC is now printing 60bln euro per month,that will destroy Europe sooner or later
Unfortunately bitcoin will go down 
In times of uncertainty people will go for the things they know and bitcoin is not one of it. It's like with currencies of developing countries, they always loose out on corrects because stock markets don't trust unstable currencies. Also btc is still dependent on the
exchange rate of dollar and euro.
In times of uncertainty people will go for the things they know and bitcoin is not one of it. It's like with currencies of developing countries, they always loose out on corrects because stock markets don't trust unstable currencies. Also btc is still dependent on the exchange rate of dollar and euro.
Come again?
Everyone has an opinion, but the last 2 market meltdowns happened when the Fed was in the of a middle tightening cycle. Until that happens, the market will not see a major correction.
bobk71, there is NOTHING indirect about government manipulation the stock market. Check out the Greenspan Put for example. The rich get richer and the rest of us get a recession.
As to another crash happening: there must be some catalyst. It can be a real danger or a perceived one. However there will be a bear market soon when the fed raises interest rates. Yellen said they are going to. Whether it will be a crash from the currently overpriced market or a slow descent remains to be seen.
As to another crash happening: there must be some catalyst. It can be a real danger or a perceived one. However there will be a bear market soon when the fed raises interest rates. Yellen said they are going to. Whether it will be a crash from the currently overpriced market or a slow descent remains to be seen.
Most of the largest companies using Bitcoin are listed on major stock exchanges, but I don't think there's a strong connection between the stock price and Bitcoin markets - except maybe in the case of Overstock.
Patrick M. Byrne, the CEO and chairman of Overstock had said that only 1% of his revenue comes in the form of Bitcoin. And with the recent downward trend in the Bitcoin sector, that share would have been lowered even more. So even for Overstock, the connection is pretty weak. Anyway, let's hope that the situation will change for the better.
Most of the largest companies using Bitcoin are listed on major stock exchanges, but I don't think there's a strong connection between the stock price and Bitcoin markets - except maybe in the case of Overstock.
Generally it's a bad thing if something like that happens, but it looks like most economies are more stable now (except Argentina and a few others)
Generally it's a bad thing if something like that happens, but it looks like most economies are more stable now (except Argentina and a few others)
What if a 2008 style correction happens again in the next year or two. Would the price of Bitcoin go up or down?
Nobody knows, but till now there have been no correlation, positive or negative, between bitcoin and stocks.
Unless few scenarios happen.
1) people perception on bitcoin change. They see it as a stable and dependable currency. Also as a worth investment
2) bitcoin has gained mainstream status and there is a niche for it. Most probable area I think it would excel is for the use on cross border transaction
3) the price is moving on an uptrend and continue to maintain it that way. Volatility is not an issue, businesses demand for it.
Right. The new ground that is currently being broken, is in payments, according to media. So the new users will hold in order to pay, and thy will unknowingly strengthen the price by holding small amounts.
What if a 2008 style correction happens again in the next year or two. Would the price of Bitcoin go up or down?
Nobody knows, but till now there have been no correlation, positive or negative, between bitcoin and stocks.
Unless few scenarios happen.
1) people perception on bitcoin change. They see it as a stable and dependable currency. Also as a worth investment
2) bitcoin has gained mainstream status and there is a niche for it. Most probable area I think it would excel is for the use on cross border transaction
3) the price is moving on an uptrend and continue to maintain it that way. Volatility is not an issue, businesses demand for it.
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"wisely or otherwise, to let Lehman Bros. fail."
Basically Goldman Sachs runs the us government. Who got what had a lot to do with whether or not you were a competitor of GS. There is a really good documentary about it called "Inside Job". Paulson was ceo of GS and helped make the instruments that ruined the economy. Its some wacky shit. Just make sure you are sitting down when you watch it.
Basically Goldman Sachs runs the us government. Who got what had a lot to do with whether or not you were a competitor of GS. There is a really good documentary about it called "Inside Job". Paulson was ceo of GS and helped make the instruments that ruined the economy. Its some wacky shit. Just make sure you are sitting down when you watch it.
I'm pretty sure we've seen a weak positive longterm correlation between the stock market and bitcoin (and, perhaps more notably, quantitative easing). The stock market has been in a long term bull market since Feb 2009 as has Bitcoin. Quantitative Easing fuels bubbles.
So far the correlation has been weak since other factors have overridden it: notably whether or not anyone would use Bitcoin (or if the government would stop it, or if an alternative would beat it). Now that Bitcoin is established as the leading crypto currency with a large community of users and businesses, I think the correlation to the stock market is stronger. In the medium-term, I think the negative impact of a stock market correction could be outweighed by other positive factors like new bitcoin enterprises and the slow realization that Jan 2015 was the bottom of the bear market.
I think some type of "wealth effect" will happen. If people lose money in the stock market, they will sell their higher risk assets. And they will also stop investing new money in them (which Bitcoin needs to buy the newly mined coins).
http://en.wikipedia.org/wiki/Wealth_effect
So far the correlation has been weak since other factors have overridden it: notably whether or not anyone would use Bitcoin (or if the government would stop it, or if an alternative would beat it). Now that Bitcoin is established as the leading crypto currency with a large community of users and businesses, I think the correlation to the stock market is stronger. In the medium-term, I think the negative impact of a stock market correction could be outweighed by other positive factors like new bitcoin enterprises and the slow realization that Jan 2015 was the bottom of the bear market.
I think some type of "wealth effect" will happen. If people lose money in the stock market, they will sell their higher risk assets. And they will also stop investing new money in them (which Bitcoin needs to buy the newly mined coins).
http://en.wikipedia.org/wiki/Wealth_effect
I think if the US dollar were to crash due to a stock market crash, then Bitcoin's price would increase. But as said above, stocks aren't inversely proportional to stocks they in fact have no effect on one another. USD would have to be the one to crash for a price change in Bitcoin IMO.
I dont think it will be like that, because if dollar price is going down, bitcoin price will going down too since bitcoin is depends on dollar. It will like coin that has 2 sides, bitcoin is depends on dollar but dollar doesnt depends on bitcoin so this is one sided coin
I think if the US dollar were to crash due to a stock market crash, then Bitcoin's price would increase. But as said above, stocks aren't inversely proportional to stocks they in fact have no effect on one another. USD would have to be the one to crash for a price change in Bitcoin IMO.
TLDR; go to bed.
The root cause of the calamities ahead is, according to austrian economics, the combination of the expansion of the money volume (which includes debt) and the zero interest rate policy. Those two are connected, as the zero interest rate enables governments to run deficits. The deficits are used to buy support from citizens among other things.
The effect of the ZIRP is distortion of the capital structure. As a result of ZIRP, investments with long time returns become more profitable. With ZIRP, building something for billions, will still be profitable even if the income is just above running cost. The investment can be paid back in a thousand years, it does not matter because the interest is zero. This is of course not in line with real profit, rather it is waste of capital which is a scarce general resource. Existing projects like factories etc will wear down without proper maintenance, which is the same as the capital is consumed.
The effect of the above is that productivity goes down, meaning everybody will be poorer.
This is the background for the coming crisis, now we can speculate what happens:
I think that as poverty increases, people will consume less luxury goods, but keep buying essentials like food, shoes, clothes, toothpaste and the like, things that are now simple and cheap. The capital structure is reduced over all, but it will have to change in the direction of these types of goods, therefore the prices of essentials will rise to signal that.
What people will consume less is cars (as long as they are not essential) second homes (which mean homes generally, there is no basic difference between the first and second home, except location), extravagant vacations (cruises, air transport).
Equity shares will have to come down in line with reduced productivity, some types of businesses will be ok, others fail.
Lower value of equity and houses will take out the loans, leaving savers, including your pension funds that you might not even know about.
General loss of faith in lending will take out large parts of the money volume. Deflated prices in so called assets, not so much in simple consumables.
We might see a divide between real fiat (the rectangles) and paper fiat (bonds and bank deposits).
With gold and bitcoin I don't know, gold will probably do well, but for the few people that know bitcoin, bitcoin will do better, but not enough to make a dent in the other considerations.
Most fiats will die when governments try to print to save themselves in an environment where loaning is not possible.
USD is a special fiat, but I think it is not guaranteed that it will be the longest standing.
New fiats will be created. Diverse backings will be tried to establish trust: Gold, land, wheat, etc.
They may be able to establish an international fiat (for a while).
The root cause of the calamities ahead is, according to austrian economics, the combination of the expansion of the money volume (which includes debt) and the zero interest rate policy. Those two are connected, as the zero interest rate enables governments to run deficits. The deficits are used to buy support from citizens among other things.
The effect of the ZIRP is distortion of the capital structure. As a result of ZIRP, investments with long time returns become more profitable. With ZIRP, building something for billions, will still be profitable even if the income is just above running cost. The investment can be paid back in a thousand years, it does not matter because the interest is zero. This is of course not in line with real profit, rather it is waste of capital which is a scarce general resource. Existing projects like factories etc will wear down without proper maintenance, which is the same as the capital is consumed.
The effect of the above is that productivity goes down, meaning everybody will be poorer.
This is the background for the coming crisis, now we can speculate what happens:
I think that as poverty increases, people will consume less luxury goods, but keep buying essentials like food, shoes, clothes, toothpaste and the like, things that are now simple and cheap. The capital structure is reduced over all, but it will have to change in the direction of these types of goods, therefore the prices of essentials will rise to signal that.
What people will consume less is cars (as long as they are not essential) second homes (which mean homes generally, there is no basic difference between the first and second home, except location), extravagant vacations (cruises, air transport).
Equity shares will have to come down in line with reduced productivity, some types of businesses will be ok, others fail.
Lower value of equity and houses will take out the loans, leaving savers, including your pension funds that you might not even know about.
General loss of faith in lending will take out large parts of the money volume. Deflated prices in so called assets, not so much in simple consumables.
We might see a divide between real fiat (the rectangles) and paper fiat (bonds and bank deposits).
With gold and bitcoin I don't know, gold will probably do well, but for the few people that know bitcoin, bitcoin will do better, but not enough to make a dent in the other considerations.
Most fiats will die when governments try to print to save themselves in an environment where loaning is not possible.
USD is a special fiat, but I think it is not guaranteed that it will be the longest standing.
New fiats will be created. Diverse backings will be tried to establish trust: Gold, land, wheat, etc.
They may be able to establish an international fiat (for a while).
IMO the effects of a further recession on bitcoin would be very interesting. 
Recessions are generally triggered by the markets waking up to the fact that some financial asset is not worth its price, despite being directly or indirectly propped up by the state (e.g. the stock market is indirectly propped up by low interest.) For one reason or another (maybe because the effects are expected to be mild,) the authorities decide to let markets take their course this time. (As opposed to 2008 when they pulled out all the stops to save the "troubled" bank assets after deciding, wisely or otherwise, to let Lehman Bros. fail.)
Asset prices go down, people lose savings and consume less, leading to job losses and further cutbacks of consumption, etc. etc.
Now the key question is whether the core world system will hold, i.e. whether the public continue to have confidence in the money issued by the central banks. In practice, we probably also have to count Western public debt and bank deposits as money -- allowing these to crash while protecting only currency would mean a lot of economic pain and thus be politically unfeasible.
If the core system holds (and the very fact that the authorities allow a market correction means they expect it to,) then every other asset is in effect an investment. Investments tend not to do well in recessions, since the prevailing climate is a shortage of money to go into any investment, and a tendency of money to go into perceived safe havens like dollars and Treasuries.
That said, certain investments are special cases. Gold, silver, and now bitcoin have the potential to become reserve currencies, being naturally limited in supply and possessing other properties of money. And it doesn't take an imminent meltdown of the core system for their values to go up. If there is a significant chance of either a meltdown (and note that the longer the current system lives on, the more uncertain the answer will be) or prolonged economic pain which becomes politically or otherwise unsustainable, the authorities may decide to peg their currencies against these limited-supply assets, for the safety of the world system. And they will have to peg at a very high price of these assets, to give themselves room to push stimulus and reflate the economy. But they will not let us know until the very last minute.
Even if there is just an increased chance of this happening, these assets tend to see increased demand. I suspect this was why gold went up several fold during the Great Recession even though the core system held (at least it seems so far.)
I guess this is a long-winded way to say we don't really know!
Recessions are generally triggered by the markets waking up to the fact that some financial asset is not worth its price, despite being directly or indirectly propped up by the state (e.g. the stock market is indirectly propped up by low interest.) For one reason or another (maybe because the effects are expected to be mild,) the authorities decide to let markets take their course this time. (As opposed to 2008 when they pulled out all the stops to save the "troubled" bank assets after deciding, wisely or otherwise, to let Lehman Bros. fail.)
Asset prices go down, people lose savings and consume less, leading to job losses and further cutbacks of consumption, etc. etc.
Now the key question is whether the core world system will hold, i.e. whether the public continue to have confidence in the money issued by the central banks. In practice, we probably also have to count Western public debt and bank deposits as money -- allowing these to crash while protecting only currency would mean a lot of economic pain and thus be politically unfeasible.
If the core system holds (and the very fact that the authorities allow a market correction means they expect it to,) then every other asset is in effect an investment. Investments tend not to do well in recessions, since the prevailing climate is a shortage of money to go into any investment, and a tendency of money to go into perceived safe havens like dollars and Treasuries.
That said, certain investments are special cases. Gold, silver, and now bitcoin have the potential to become reserve currencies, being naturally limited in supply and possessing other properties of money. And it doesn't take an imminent meltdown of the core system for their values to go up. If there is a significant chance of either a meltdown (and note that the longer the current system lives on, the more uncertain the answer will be) or prolonged economic pain which becomes politically or otherwise unsustainable, the authorities may decide to peg their currencies against these limited-supply assets, for the safety of the world system. And they will have to peg at a very high price of these assets, to give themselves room to push stimulus and reflate the economy. But they will not let us know until the very last minute.
Even if there is just an increased chance of this happening, these assets tend to see increased demand. I suspect this was why gold went up several fold during the Great Recession even though the core system held (at least it seems so far.)
I guess this is a long-winded way to say we don't really know!
If the market goes ass up,you will not see a rush to bitcoin.
People that invest in the markets mostly(guessing here) are not going to have much backup besides real estate. So they will be looking dump stock and then property. So since they all will be doing that,they will be doing the death spiral and way to focused on that to be able to ponder bitcoin.
That said I do not buy into the gloom and doom of the markets. I used to but my mind has changed on that after listening to some great minds discussing the topic on podcasts.
People that invest in the markets mostly(guessing here) are not going to have much backup besides real estate. So they will be looking dump stock and then property. So since they all will be doing that,they will be doing the death spiral and way to focused on that to be able to ponder bitcoin.
That said I do not buy into the gloom and doom of the markets. I used to but my mind has changed on that after listening to some great minds discussing the topic on podcasts.
What if a 2008 style correction happens again in the next year or two. Would the price of Bitcoin go up or down?
i think the two things are not correlated.
until now, few people knows and use bitcoin.
i'm just hoping who next year there are a large adoption and use of bitcoin...
this could really help ecosystem and price, too.
Yes but the mass is start to gain for every year since 2008 and the popularity of this bitcoin is start to become mainstream to everyone so I think the price will going up higher than before since nowadays there are so many demands of bitcoin
Yes the price is volatile as always but with that volatile price we can get a great profit and the demands are great compared to 2008 because some of them are out from this bitcoin and others are hold on and a newbie joining that will make us a bitcoin collector and wait for the price to sell and get profit
Traders will always search for something with a high ROI. If the stocks can't deliver, they may move towards bitcoin. However, before they do, we will probably need big regulated exchanges. Nobody will bring their millions to the current exchanges, and who would blame them?
If a 2008 style of "correction" (crash) occurs again, high ROI will not be the main concern. During times of panic, preservation of capital is the main concern. If you recall, in 2008 almost every market crashed. Even markets that traditionally did well during economic downturns did very poorly. It would take extraordinary circumstances and stupidity to recreate that market, so it might take a few years yet to get there. But being that we have never seem such a broad and severe downturn in modern economic history as the one in 2008, it's impossible to guess what would happen with Bitcoin.
Traders will always search for something with a high ROI. If the stocks can't deliver, they may move towards bitcoin. However, before they do, we will probably need big regulated exchanges. Nobody will bring their millions to the current exchanges, and who would blame them?
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