The financial markets are starting to crash, abandon the fiat titanic - page 4.

inca

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Quote from: MatTheCat on October 12, 2014, 11:06:02 AM

Quote from: nuff on October 12, 2014, 10:59:51 AM

Wrong. Bitcoin is or can be money (it's fungible, transactable, and has a value). But to me Bitcoin is more an asset, a store of value, rather than a currency. Bitcoin is entire independent, if bitcoin were to be affected by external markets that's only because the people thought it to be. But by its very nature, Bitcoin is absolutely independent and decentralized.

It could be money. But it isn't and it never will be.

If it is to succeed, it will be as a means of making money transfers or payments, but with the units of account that everyone is primarily concerned with being, Dollars, Euros, Pounds, Shekels, Yen, etc.

The most important ingredient behind any monetary standard is the authority that stands behind it and enforces it's use as money and that is because the #1 property of 'money', is that people have confidence in it. This even applies to the use of precious metals as money throughout history. Gold and silver coin also required some sovereign power somewhere, who was willing to recognise the metal tokens as being of value, or at least for a small fee, who was willing to the melt the metal coins and remint them into a form which was recognised as having value. This will never apply to Bitcoin.

What we might get is some kind of asset backed digital currency based around crypto technology, with all the pernicious aspect's of the Bitcoin block chain built into it. One wallet per global citizen. All economic transactions fully traceable.

Wrong Matt. It is functioning as money right now. Head over to an exchange or buy something off scan computers.

I have to be honest your post is something I would not have expected to read from you. Confidence in money we use today (fiat) backed by nothing more than the state is a temporary aberration. It is only since 1971 that people have accepted money not backed by an asset which was scarce and therefore valuable (gold).

Bitcoin has risen up from nothing and has value not because it is backed by the US military, used to buy oil, or because it is used to pay taxes, but because it is given value by the people, not under coercion but free will. And why does it retain this growing value? Because people value the properties associated with it compared with standard fiat or credit money. It is a superior money, global, frictionless with gold like commodity properties.

You really have lost the vision..

600watt

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Quote from: Trolololo on October 12, 2014, 01:57:26 PM

Quote from: toknormal on October 12, 2014, 01:41:52 PM

Quote from: Robert Paulson on October 12, 2014, 01:29:07 PM

the money is going to the banks.
when people don't borrow fast enough debt starts to outgrow the money supply to the point where people don't have money to buy anything because it all goes to service the debt.

Just to clarify what he's saying here, in the fractional reserve system, money can only be borrowed into existence. There are conceptually two concentric "layers" to that borrowing:

[1] - central bank issues currency backed by the sovereign (thereby creating sovereign debt)
[2] - commercial banks purchase that currency and MULTIPLY it's quantity by whatever the inverse of the capital reserve ratio is, BUT: they have to find private borrowers to underwrite the new money. If they can't, then no new money is created in the commercial banking sector so the economy DEFLATES, because other commercial debt is being paid off which extinguishes the "money" that debt underwrote.

If the economy deflates while the sovereign debt increases then you get an increasing debt to GDP ratio which is what central banks are tasked with avoiding (e.g. by having policy targets if 2% inflation).

I read somewhere that process is inverse:
[1] - commercial bank finds people that want to borrow. Then the bank creates the borrowed money out of nothing, just typing an accounting entry in its book. Then, the bank has to find a 1% of that borrowed money anywhere (deposits, i.e.)
[2] - the central bank simply saves commercial banks asses by printing all necessary notes to prevent bank runs.

That's all.

Avoiding high inflation, monitoring GPD growth and all the wordiness on CB's (QE, LTRO, TLTRO, etc) are BS to avoid people understanding what do they really do.

since banks were invented and since those banks (private or state owned) started to print paper money in renaissance italy, people always feared that those institutions may not really own enough physical gold or silver to back it. they feared that there was not enough gold present.
we have a slightly different problem: it is not a question of enough metal - there isn't even ENOUGH PAPER money printed to back all the money they have created on their balance sheets ...

Grin

Robert Paulson

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not only for the banks but also for the government.
in a bitcoin universe the government can't use the inflation tax, it actually has to ask for money from the people.
imagine the government had to ask the population to pay 1 trillion dollars for the iraq war, thats 3135$ per person.
who would send that money to the government?

2dogs

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That's why Bitcoin ~~could be~~ is the Black Swan ~~for banks.~~

FIFY

Trolololo

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Quote from: Trolololo on October 12, 2014, 01:57:26 PM

Quote from: toknormal on October 12, 2014, 01:41:52 PM

Quote from: Robert Paulson on October 12, 2014, 01:29:07 PM

the money is going to the banks.
when people don't borrow fast enough debt starts to outgrow the money supply to the point where people don't have money to buy anything because it all goes to service the debt.

Just to clarify what he's saying here, in the fractional reserve system, money can only be borrowed into existence. There are conceptually two concentric "layers" to that borrowing:

[1] - central bank issues currency backed by the sovereign (thereby creating sovereign debt)
[2] - commercial banks purchase that currency and MULTIPLY it's quantity by whatever the inverse of the capital reserve ratio is, BUT: they have to find private borrowers to underwrite the new money. If they can't, then no new money is created in the commercial banking sector so the economy DEFLATES, because other commercial debt is being paid off which extinguishes the "money" that debt underwrote.

If the economy deflates while the sovereign debt increases then you get an increasing debt to GDP ratio which is what central banks are tasked with avoiding (e.g. by having policy targets if 2% inflation).

I read somewhere that process is inverse:
[1] - commercial bank finds people that want to borrow. Then the bank creates the borrowed money out of nothing, just typing an accounting entry in its book. Then, the bank has to find a 1% of that borrowed money anywhere (deposits, i.e.)
[2] - the central bank simply saves commercial banks asses by printing all necessary notes to prevent bank runs.

That's all.

Avoiding high inflation, monitoring GPD growth and all the wordiness on CB's (QE, LTRO, TLTRO, etc) are BS to avoid people understanding what do they really do.

Once printed currency is prohibited, banks will have absolute power. There will be no risk of bank runs, because no one will be allowed to change it's digital fiat account by anything (gold, silver or notes).
That's why Bitcoin could be the Black Swan for banks.

brg444

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Bitcoin replaces central, not commercial, banks

Quote from: MatTheCat on October 12, 2014, 11:06:02 AM

Quote from: nuff on October 12, 2014, 10:59:51 AM

Wrong. Bitcoin is or can be money (it's fungible, transactable, and has a value). But to me Bitcoin is more an asset, a store of value, rather than a currency. Bitcoin is entire independent, if bitcoin were to be affected by external markets that's only because the people thought it to be. But by its very nature, Bitcoin is absolutely independent and decentralized.

It could be money. But it isn't and it never will be.

If it is to succeed, it will be as a means of making money transfers or payments, but with the units of account that everyone is primarily concerned with being, Dollars, Euros, Pounds, Shekels, Yen, etc.

The most important ingredient behind any monetary standard is the authority that stands behind it and enforces it's use as money and that is because the #1 property of 'money', is that people have confidence in it. This even applies to the use of precious metals as money throughout history. Gold and silver coin also required some sovereign power somewhere, who was willing to recognise the metal tokens as being of value, or at least for a small fee, who was willing to the melt the metal coins and remint them into a form which was recognised as having value. This will never apply to Bitcoin.

What we might get is some kind of asset backed digital currency based around crypto technology, with all the pernicious aspect's of the Bitcoin block chain built into it. One wallet per global citizen. All economic transactions fully traceable.

so wrong, on so many levels.

stick to trading Mat

Trolololo

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Quote from: toknormal on October 12, 2014, 01:41:52 PM

Quote from: Robert Paulson on October 12, 2014, 01:29:07 PM

the money is going to the banks.
when people don't borrow fast enough debt starts to outgrow the money supply to the point where people don't have money to buy anything because it all goes to service the debt.

Just to clarify what he's saying here, in the fractional reserve system, money can only be borrowed into existence. There are conceptually two concentric "layers" to that borrowing:

[1] - central bank issues currency backed by the sovereign (thereby creating sovereign debt)
[2] - commercial banks purchase that currency and MULTIPLY it's quantity by whatever the inverse of the capital reserve ratio is, BUT: they have to find private borrowers to underwrite the new money. If they can't, then no new money is created in the commercial banking sector so the economy DEFLATES, because other commercial debt is being paid off which extinguishes the "money" that debt underwrote.

If the economy deflates while the sovereign debt increases then you get an increasing debt to GDP ratio which is what central banks are tasked with avoiding (e.g. by having policy targets if 2% inflation).

I read somewhere that process is inverse:
[1] - commercial bank finds people that want to borrow. Then the bank creates the borrowed money out of nothing, just typing an accounting entry in its book. Then, the bank has to find a 1% of that borrowed money anywhere (deposits, i.e.)
[2] - the central bank simply saves commercial banks asses by printing all necessary notes to prevent bank runs.

That's all.

Avoiding high inflation, monitoring GPD growth and all the wordiness on CB's (QE, LTRO, TLTRO, etc) are BS to avoid people understanding what do they really do.

Trolololo

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Quote from: toknormal on October 12, 2014, 01:27:18 PM

4-hour BTC-USD chart about to complete a 36 hour correction. Going up tomorrow I think.

Yep.

But 3-day chart is still scaring...

toknormal

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Traders appear to also have detected the 4 hour chart imminent crossover.

The buying has commenced on Bitstamp + BTCe.

toknormal

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Quote from: Robert Paulson on October 12, 2014, 01:29:07 PM

the money is going to the banks.
when people don't borrow fast enough debt starts to outgrow the money supply to the point where people don't have money to buy anything because it all goes to service the debt.

Just to clarify what he's saying here, in the fractional reserve system, money can only be borrowed into existence. There are conceptually two concentric "layers" to that borrowing:

[1] - central bank issues currency backed by the sovereign (thereby creating sovereign debt)
[2] - commercial banks purchase that currency and MULTIPLY it's quantity by whatever the inverse of the capital reserve ratio is, BUT: they have to find private borrowers to underwrite the new money. If they can't, then no new money is created in the commercial banking sector so the economy DEFLATES, because other commercial debt is being paid off which extinguishes the "money" that debt underwrote.

If the economy deflates while the sovereign debt increases then you get an increasing debt to GDP ratio which is what central banks are tasked with avoiding (e.g. by having policy targets if 2% inflation).

Robert Paulson

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Quote from: Kluge on October 12, 2014, 12:48:02 PM

Quote from: Robert Paulson on October 12, 2014, 12:36:55 PM

Quote from: Kluge on October 12, 2014, 12:35:03 PM

Financial markets are starting to crash?? -But commodities are, too. It's like we have spiraling (and unmeasured) deflation right now. Have you been to the gas pump, lately? It's time to buy all the things on near-0% interest loans!

thats exactly why there is about to be another round of QE of unseen scale.
all western governments are deep in debt, they absolutely can not afford to have deflation, they will drop sacks full of cash from airplanes if they have to.

It does make me wonder where the Hell the money's gone. Who's been stuffing the trillions under their mattress? Is it an effect of traders/banks seeing a coming deflation crisis and making a self-fulfilling prophecy or outright market manipulation? I mean, banks which decide outright to stop lending, instead hording cash, and maybe convert to an insurance company -- seems like they'd be all set to come out of a deflationary crisis as the world's overlord.

ETA: -Or just a weak economy, I guess. Low money velocity in bad market.

the money is going to the banks.
when people don't borrow fast enough debt starts to outgrow the money supply to the point where people don't have money to buy anything because it all goes to service the debt.

toknormal

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4-hour BTC-USD chart about to complete a 36 hour correction. Going up tomorrow I think.

Trolololo

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Quote from: toknormal on October 12, 2014, 01:01:01 PM

Quote from: Trolololo on October 12, 2014, 12:52:29 PM

But the dollar, without any competence, could hold on for 40 more years. The pound, the euro, etc, all them are tightly glued to the dollar. All world currencies go together.

(...)

I don't think that central banks have as much control over events as people think they have. If you don't control EVERYTHING then you control nothing. All it takes is a hairline crack. Manipulating commodity paper markets is a very superficial tool - it doesn't run very deep and only works as long as there's no panic.

The 2008 crisis changed the entire landscape because people suddenly realised that money can "disappear". There is less and less room for central control to work because they cannot afford the slightest failure in confidence otherwise an unstoppable run will commence.

What kind of power does a world monopoly issuing entity (banks and central banks, altogether) have?
Absolute power.

toknormal

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Quote from: Robert Paulson on October 12, 2014, 12:34:59 PM

bitcoin is the ultimate form of money because it has all the monetary properties of gold but its easier to secure and transport.
bitcoin has no use except as a monetary system and yet the free market chose to value each bitcoin 360 times more than each USD, and thats without anyone forcing people to accept it at the point of a gun.

+1. Absolutely spot on - particularly the bit about bitcoin having "no use except as a monetary system". That's what makes is valuable as a monetary medium.

Fiat: highly levered debt money
Crypto: unlevered base money

Crypto to Fiat: Hot lava to candle wax.

The two cannot be allowed to come into contact with each other otherwise one will simply "melt" into the other. (I'll leave you work out which one will be doing the "melting"). That's why there's almost no Fiat-Crypto exchanges in existence anywhere in the world having significant liquidity.

Kluge

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Quote from: toknormal on October 12, 2014, 01:01:01 PM

Quote from: Trolololo on October 12, 2014, 12:52:29 PM

But the dollar, without any competence, could hold on for 40 more years. The pound, the euro, etc, all them are tightly glued to the dollar. All world currencies go together.

What about the BRICS gold-backed bank ?

What about all the gold that China has been hoovering up for the last 3 years. They're clearly going to use it to offset their losses when they start dumping US treasuries.

I don't think that central banks have as much control over events as people think they have. If you don't control EVERYTHING then you control nothing. All it takes is a hairline crack. Manipulating commodity paper markets is a very superficial tool - it doesn't run very deep and only works as long as there's no panic.

The 2008 crisis changed the entire landscape because people suddenly realised that money can "disappear". There is less and less room for central control to work because they cannot afford the slightest failure in confidence otherwise an unstoppable run will commence.

Sounds like a lot of downward pressure on gold, too, then, which's already dropped like a stone this year, if banks hold commodities and have to sell them to keep solvent. Doesn't this mitigate inflationary pressure from a weakening USD? I mean - if everything equally collapses, the USD isn't any weaker at the end, relative to any other currency/commodity. I'm assuming banks aren't keeping BTC reserves, though, so...

Trolololo

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Quote from: toknormal on October 12, 2014, 01:01:01 PM

Quote from: Trolololo on October 12, 2014, 12:52:29 PM

But the dollar, without any competence, could hold on for 40 more years. The pound, the euro, etc, all them are tightly glued to the dollar. All world currencies go together.

What about the BRICS gold-backed bank ?

What about all the gold that China has been hoovering up for the last 3 years. They're clearly going to use it to offset their losses when they start dumping US treasuries.

I don't think that central banks have as much control over events as people think they have. If you don't control EVERYTHING then you control nothing. All it takes is a hairline crack. Manipulating commodity paper markets is a very superficial tool - it doesn't run very deep and only works as long as there's no panic.

The 2008 crisis changed the entire landscape because people suddenly realised that money can "disappear". There is less and less room for central control to work because they cannot afford the slightest failure in confidence otherwise an unstoppable run will commence.

A BRIC's gold based bank would be a black swan.

That's what Gaddafi tried to do, and we all know how they ended him...

toknormal

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Quote from: Trolololo on October 12, 2014, 12:52:29 PM

But the dollar, without any competence, could hold on for 40 more years. The pound, the euro, etc, all them are tightly glued to the dollar. All world currencies go together.

What about the BRICS gold-backed bank ?

What about all the gold that China has been hoovering up for the last 3 years. They're clearly going to use it to offset their losses when they start dumping US treasuries.

I don't think that central banks have as much control over events as people think they have. If you don't control EVERYTHING then you control nothing. All it takes is a hairline crack. Manipulating commodity paper markets is a very superficial tool - it doesn't run very deep and only works as long as there's no panic.

The 2008 crisis changed the entire landscape because people suddenly realised that money can "disappear". There is less and less room for central control to work because they cannot afford the slightest failure in confidence otherwise an unstoppable run will commence.

Trolololo

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Toknormal,

I fully agree with your analysis.

All hyperinflations (Weimar, Zimbabwe, etc) had other countries' currencies in competence, and in those cases people run towards them.
But the dollar, without any competence, could hold on for 40 more years. The pound, the euro, etc, all them are tightly glued to the dollar. All world fiat currencies go together.

The black swan for hyperinflation in fiat currencies could be gold, silver or Bitcoin.
Through short selling futures of paper gold (and silver), the FED controls the market price. And that's what they will do to Bitcoin.

So dollar hyperinflation is not happening because there is no competence.
Could Bitcoin be the black swan for the fiat currencies? May be...

toknormal

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Quote from: MatTheCat on October 12, 2014, 11:06:02 AM

The most important ingredient behind any monetary standard is the authority that stands behind it and enforces it's use as money and that is because the #1 property of 'money', is that people have confidence in it

What ivory tower nonsense.

Markets can crash a currency in a day's sentiment change regardless of what "authority stands behind it". What about interest rate wars ? What about overlevered sovereigns ? What about toxic derivative mountains ? A single trader & his army managed to dump one of the world's oldest and most stable currencies - Sterling - to such an extent it had to exit the Eurozone.

To a forex market, a currency is just another tradeable commodity. They're not sitting there thinking "hey - this is guvpaper, I'm not dumpin this for anythin".

Blazin604

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Price is going to bounce up 50-100 very soon guys. I think the time is now to go all in. Don't sleep on it.

Topic: The financial markets are starting to crash, abandon the fiat titanic - page 4. (Read 7787 times)