Topic: Today BTC = $800, $9200 to go and why 10 BTC will never make you rich - page 2. (Read 8310 times)

Stagflation = high unemployment, low GDP growth, high inflation. 

This will end up with a Volcker type Fed = high interest rates.

Yellen could be a one term Chairperson.

I agree that's likely, but stagflation is better from the policy-maker's perspective than the alternative. That's the dilemma they are in.

I am now asking myself, is it even politically viable for the Fed to continue with QE?  I'm starting to question that.

I am also asking, if QE continues, will emerging markets and China continues with credit creation?  I'm also starting to question that.  See India's central bank response to Fed's QE taper and China's forecasted slowdown in 2014. 

More QE could simply end with stagflation. 

In a functioning credit market, capital goes where it is best used, but decades of artificially low interest rates and years of ZIRP have distorted the market to the point where it is basically unfixable without triggering the Mother Of All Corrections. So they won't fix it. They'll keep printing. Yellen basically admitted as much in confirmation hearings. Anyone could have predicted what happened when the banks were bailed out. It's called "moral hazard". Save someone from the consequence of their foolish actions and they are MORE (not less) likely to repeat them. There are still house-flipping shows on cable TV. Nobody learned anything so we're all gonna repeat it, bigger and better than ever. They will kick the can. There is no other politically viable option.

the point you are missing is that it isn't as hand-in-hand as you say it is..  capital goes where it is best used.  And if someone buys your bad debt you don't HAVE to make loans after the 'mulligan'..  that was the plan but it didn't really happen since interest rates stayed near zero. Risk appetite took over instead of old custodian actions of years by gone...  And even if some did go towards loans, many didn't stay in the USA.  A lot of the FED actions are more global affecting than domestic with all these super corporations and banks

Buying debt is the same as lending. Adding a negative number is the same as subtracting a positive number. The Fed increases the money supply by buying debt. Private banks further increase the money supply by making loans. Making loans is money creation. Buying debt is money creation, money "printing". Credit expansion happens when more loans are made. Credit expansion IS money printing. It doesn't matter who's borrowing. If they deposit the borrowed funds in a bank, the bank lends it out. If they spend it, the people who sell whatever was bought put it in a bank and it gets lent out again. Banks are holding historically high (but not high enough IMHO) reserves. There are various ways the Fed and the Government can encourage/force banks to lower those reserves. They are very very likely to do that (again) if the economy slows down.

Politicians and bureaucrats do not keep their jobs by making wise but unpopular policy. They are not experts on economics. They are experts at getting and keeping their jobs. They will print because their constituents will demand they print.  as they have time after time. The addict needs just one more fix, and this time could you make it a strong one?

Multiplier is 2.2 to 1.7 over one year.

Unless we are just arguing semantics, you have made a conceptual error. We're not talking literal money printing which is done by the dept. of Treasury and accounts for a small fraction of the money supply. We're discussing the expansion of the Fed's balance sheet which can only occur when the fed conjures money out of thin air to lend it to someone, usually the government, but increasingly other markets like mortgage-backed securities. This money doesn't exist before it's lent. It's just an entry onto the Fed's ledger.

of course all loans must be repaid WITH INTEREST, and since all new money is created by debt, there isn't enough money in the world to repay all the debts plus interest. More money is created to pay the interest payments. But that's a little off topic.

More money is created when new Fed money is deposited in private banks and re-lent. This is called the money multiplier and it's usually estimated to be around 10X as much as the original Fed expansion, but it can vary greatly depending on how much is kept at the deposit bank as a reserve. Since 2008, banks have held an uncharacteristically high amount in reserve, partly because the fed pays them interest for reserved they keep on overnight deposit at the Fed itself. This is why we haven't (yet) seen as much inflation as many have predicted.

The "absolute increase" in money you mention is canceled out when the fed sells the bonds or whatever it put on it's balance sheet when the money was created. So it's no more absolute than any other kind of credit. They are effectively the same thing.

Sure it will hit $10K+ one day. Even if it hits that mark in 2-3 years that is one steller ROI.  Probably the best you can get.

By the time all 21m coins are mined there will be 10 billion plus people crawling around this planet. Most will have smartphones and will be connected.  Ecommerce will be the dominate form of shopping.  With arial logistics we'll get our stuff faster too.  Not to mention all the unforeseen economic and political turmoil the world will go through. There is tremendous room for growth but expect it gradually.

The boost you got so excited about in November was because of China. He second biggest economy working it's way to that number one spot. A country with a smartphone userbase twice the entire US population. With growth that outpaces anyone. And a culture generally geekier than the US.

Also I'm not sure what the hell your talk about but 100BTC can buy you a descent small house somewhere.  Anyway like maletovon said, your not accounting for all those people that will sell their precious coin for some of their shitty fiat when it hits $2k. Oh and then they'll try to do more of that. Like a gambling addict.

you need to review the fed balance sheet to see how this works.. the fed can take junk assets and hand out money with ZIRP but then they don't have control of that money..  you won't see that balance sheet money really come into lending until interest rates rise so it is worth it for lending to occur.. (besides the ultra safe loans)

but this is one of those long 80 year cycles instead of the normal recession cycles..  this usually leads to depressions and wars as many have said since there is no real way out except these are strange times with the massive amount of handouts and globalization.

bankruptcy doesn't seem to exist anymore except for targeted things (cities and companies use it to flush out unions/pensions) but fundamentals aren't really driving when it happens or it would be widespread already

Yes, government debt is up. Corporate debt is up. Housing debt is down. Student debt is up. Car debt is up. Overall, slightly up but not for much longer. The US has not hit escape velocity nor will it.

we have also seen a rise in debt.... huge debt.

the banks own the credit.....
people own the debt....

I don't believe money printing is debt creation because we have seen a commensurate rise in bank reserves.

the money that is printed is for lending......
lending = debt
debt=credit

no, it isn't directly..  credit creation creates more debt money that gets cancelled out when debt paid, money printing is an absolute increase

 

Money printing IS credit creation. When the Fed expands its balance sheet, dollars are loaned into existence. Further credit creation occurs when private banks re-lend, and the Fed has tools to encourage that, one being to stop paying interest for bank deposits held at the Fed. Private banks aren't going to sit on that money. They are going to lend it out. Yellen could also INCREASE QE rather than continue or taper. I think this is likely because most of the inflationary effects will be offset by lower import prices as the dollar strengthens relative to other national currencies. The government can and likely will encourage more consumer debt also, in the form of student loans, tax breaks like mortgage deductions, etc. And of course the government itself will likely increase it's borrowing. This isn't mere speculation. There are numerous historical precedents.

Yellen will be forced to print because every other central bank has an even greater incentive than she does to print. They will then she will. If she doesn't go along, exports will plunge, imports will explode and current accounts deficits will bring the whole damn thing to a grinding halt. China most likely will correct. They may try to print their way out of it, in which case the above scenario plays out. If they are uncharacteristically smart, they'll have massive deflation, bank runs, bankruptcies en masse and then get into a war to distract everybody and prevent the civil unrest from reaching critical mass. Wars are never deflationary.

LOL. Central bankers warning of ponzi schemes. Reminds me of the pickpocket in the movie Casablanca warning of "vultures, vultures everywhere!"

Ok. Lets say Yellen prints but China's economy corrects, then what? Without credit creation we are still facing deflation, no?

The media are still pushing for ponzi scheme.....
http://www.bloomberg.com/news/2014-01-30/bitcoin-ponzi-scheme-worry-sparks-estonia-central-bank-caution.html
we are far from the top and it aint gonna come back.

You're like the guy in the street proclaiming the end of the world. You're no longer just wrong. You're becoming a joke. Bitcoin price periodically goes through manias, but the four year log trend is remarkably clear. This is a technology with utility and it's being adopted at an exponential growth rate. This will continue (and the price will reflect that) until a superior technology is developed and deployed or until adoption approaches saturation level.