One of the indicators of divergence might be backwardation in monetary metals. Certainly this case has been bandied about extensively. GOFO rates are interesting in this regard. The failure of Germany's efforts to repatriate its gold is interesting. The various efforts to bilateralize trade, in RMB and in oil, are interesting.
I remember when the Bear Stearns CFO suddenly quit in 2007. If you read that event correctly, the subsequent failure of the bank was not a big surprise. What rats would leave this sinking ship, and on what mooring lines? Having a good list of these would be almost as good as having a drop-dead date.
Topic: The fiat experiment: Stopping time - page 3. (Read 5577 times)
It has been said that being right prematurely is the same as being wrong.
I'm hoping that this thread can elicit views which shed some sort of light on the question of when the inherent instabilities of the current regime will diverge. Above I mooted the hyperinflationary scenario, but a deflationary scenario is also looming: A whitepaper from the SF FRB suggests on the basis of correlated demographics that the S&P P/E will trend towards 8.4 ca. the year 2024. Today's Well's Fargo mortgage origination numbers, and the recent workforce participation rate numbers could conceivably be taken as a jump in that direction. It is precisely to avert such outcomes that the central banks have sat on the print button for the past 5 years.
Given the importance placed on job security, not to mention head-neck-body integrity, by bankers and politicos, it seems likely to me that a major goal will be preventing market nominal valuations from declining, while P/Es are contracting. This would be deflationary in the sense of being correlated with declining economic activity, even while it would be inflationary in the proper sense, the sense of corresponding to an increase in nominal money supply. Precisely that combination tends to result in a hyperinflation. The last time it seemed as likely to occur as it does in recent years was during the early 1970s, when the gold window closed, and "stagflation" predominated. The intensification of the Cold War and the draconian rate measures of Paul Volcker were sufficient, in tandem, to shake the U.S. out of that valley of despair, but today -- given sovereign debt levels -- can anyone realistically imagine a central bank allowing rates in excess of 20%? Die Volckerie will not ride into this gotterdamerung, I fear.
I'm hoping that this thread can elicit views which shed some sort of light on the question of when the inherent instabilities of the current regime will diverge. Above I mooted the hyperinflationary scenario, but a deflationary scenario is also looming: A whitepaper from the SF FRB suggests on the basis of correlated demographics that the S&P P/E will trend towards 8.4 ca. the year 2024. Today's Well's Fargo mortgage origination numbers, and the recent workforce participation rate numbers could conceivably be taken as a jump in that direction. It is precisely to avert such outcomes that the central banks have sat on the print button for the past 5 years.
Given the importance placed on job security, not to mention head-neck-body integrity, by bankers and politicos, it seems likely to me that a major goal will be preventing market nominal valuations from declining, while P/Es are contracting. This would be deflationary in the sense of being correlated with declining economic activity, even while it would be inflationary in the proper sense, the sense of corresponding to an increase in nominal money supply. Precisely that combination tends to result in a hyperinflation. The last time it seemed as likely to occur as it does in recent years was during the early 1970s, when the gold window closed, and "stagflation" predominated. The intensification of the Cold War and the draconian rate measures of Paul Volcker were sufficient, in tandem, to shake the U.S. out of that valley of despair, but today -- given sovereign debt levels -- can anyone realistically imagine a central bank allowing rates in excess of 20%? Die Volckerie will not ride into this gotterdamerung, I fear.
Traditional hedges include gold and real estate. Bitcoin is certainly very promising as another defensive asset class.
It is certainly true that there is not present hyperinflation, at large. In fact, there are profound deflationary forces at work, and it is surprising to me personally that inflation is as large as it is. I tip my hat to the global cabal of central banks, who, by coordinated global devaluation, have managed to achieve near price stability during a period of strong deflationary bias.
It always feels like you're having a luxurious and speedy trip, as you speed along the autobahn at 180kph in your S class, the moment before you collide with the pillar. That wonderful feeling of progress and comfort should not deter you from looking out the windshield to see what is in front of you. Most of us can do nothing to influence the driver. But now with bitcoin, we have been given rocket-powered ejection seats, and our lives are in our own hands once again.
It always feels like you're having a luxurious and speedy trip, as you speed along the autobahn at 180kph in your S class, the moment before you collide with the pillar. That wonderful feeling of progress and comfort should not deter you from looking out the windshield to see what is in front of you. Most of us can do nothing to influence the driver. But now with bitcoin, we have been given rocket-powered ejection seats, and our lives are in our own hands once again.
Yes lightning strikes happen quite quickly too.
No sign of hyperinflation in any advanced economy today. Maybe come back in 10 years and check again.
Yes, but isn't it true that when hyperinflation has happened in the past, it has been very quick and without warning?
Based on the articles I have read and the folks who are supposed to have done a good job in investigating such events, true hyperinflation will come almost overnight and almost no one will see it until it is too late.
I have not idea, just asking...
Apparently a loaf of bread costs 47p. Does that sound like hyperinflation to you?
http://www.dailymail.co.uk/news/article-2439907/David-Cameron-I-dont-buy-value-sliced-loaf--Ive-got-breadmaker.html
http://www.dailymail.co.uk/news/article-2439907/David-Cameron-I-dont-buy-value-sliced-loaf--Ive-got-breadmaker.html
No sign of hyperinflation in any advanced economy today. Maybe come back in 10 years and check again.
What's your definition of advanced economy?
No sign of hyperinflation in any advanced economy today. Maybe come back in 10 years and check again.
+1
What he said
What he said
Fiat currency was imposed upon the modern world on a global scale in 1971, when Nixon finally decoupled the dollar, the global reserve currency, from the price of gold. Thus, it is a relatively novel experiment, and unlikely to prove stable in the long run. Since the default of 1933, when debts payable in gold were invalidated, the US dollar has lost roughly 19/20ths of its value. This trend is likely to accelerate: Exponential expansion in debt creates a strong constituency for hyperinflation.
Indeed, in the developed world today, money is debt. Specifically, debt which accrues interest. As every schoolchild should know, interest accumulates exponentially when it is compounded. Sovereign debts have demonstrated compounding for decades, without meaningful surcease. With substantial volatility, debt overall has increased exponentially since banks were granted control over monetary policy.
Although I would not wish to be tasked with managing such a system, it is conceivable that an exponentially expanding debt could be serviced by an exponentially expanding economy. This would not be desirable, because all ownership would rapidly accrue to a small interest-receiving class, while the vast majority of the population, the interest-paying class, would be effectively enslaved. Such regimes always end in blood. Nonetheless, until social injustice forced the issue, the system would be balanced. Not stable, mind you, but balanced. However, exponential expansion of the physical economy requires exponential expansion of physical resource consumption, which is simply impossible, even in a short run, on the surface of a finite planet.
Therefore, resource restriction will destabilize the inherently unstable debt money system, even if brutal repression suffices to prevent popular uprising from overthrowing it. Any other outcome is so improbable as to be discounted out of hand. A failure of one of the 5 major sovereign powers (ECB, FRB, BOJ, BOC, BOE) is likely to rapidly spread to the remainder, and the bulk of fiat currency worldwide become worthless. If this occurs during a window of opportunity, when the infrastructure is adequate, and before it is superceded or co-opted, the largest portion of the resulting vacuum will be taken up by bitcoin.
I solicit discussion of the estimated time for a forthcoming sovereign crisis, and its relation to that window of opportunity. How can the instabilities of the debt system be usefully modeled? What are the critical missing elements (scalability, usability, workflow integration) necessary to ready bitcoin for a role as global reserve currency, and how soon can they be ready? Will bitcoin save civilization, or will the internal politics of software development make that impossible, and doom us - the survivors, at least - to neolithic population levels and lifestyles?
Indeed, in the developed world today, money is debt. Specifically, debt which accrues interest. As every schoolchild should know, interest accumulates exponentially when it is compounded. Sovereign debts have demonstrated compounding for decades, without meaningful surcease. With substantial volatility, debt overall has increased exponentially since banks were granted control over monetary policy.
Although I would not wish to be tasked with managing such a system, it is conceivable that an exponentially expanding debt could be serviced by an exponentially expanding economy. This would not be desirable, because all ownership would rapidly accrue to a small interest-receiving class, while the vast majority of the population, the interest-paying class, would be effectively enslaved. Such regimes always end in blood. Nonetheless, until social injustice forced the issue, the system would be balanced. Not stable, mind you, but balanced. However, exponential expansion of the physical economy requires exponential expansion of physical resource consumption, which is simply impossible, even in a short run, on the surface of a finite planet.
Therefore, resource restriction will destabilize the inherently unstable debt money system, even if brutal repression suffices to prevent popular uprising from overthrowing it. Any other outcome is so improbable as to be discounted out of hand. A failure of one of the 5 major sovereign powers (ECB, FRB, BOJ, BOC, BOE) is likely to rapidly spread to the remainder, and the bulk of fiat currency worldwide become worthless. If this occurs during a window of opportunity, when the infrastructure is adequate, and before it is superceded or co-opted, the largest portion of the resulting vacuum will be taken up by bitcoin.
I solicit discussion of the estimated time for a forthcoming sovereign crisis, and its relation to that window of opportunity. How can the instabilities of the debt system be usefully modeled? What are the critical missing elements (scalability, usability, workflow integration) necessary to ready bitcoin for a role as global reserve currency, and how soon can they be ready? Will bitcoin save civilization, or will the internal politics of software development make that impossible, and doom us - the survivors, at least - to neolithic population levels and lifestyles?
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