Gold collapsing. Bitcoin UP.

[cypherdoc]

interesting take from AEP:

The Fed is the world’s superpower central bank. Having flooded the international system with cheap dollar liquidity during the era of quantitative easing, it cannot lightly walk away from its global responsibilities - both as a duty to all those countries that were destabilized by dollar credit, and in its own enlightened self-interest.

Headline CPI inflation in the US is just 0.2pc. Prices fell in August. East Asian is transmitting a deflationary shock to the West, and it is not yet clear whether the trade depression in the Far East is safely over.

However, the Fed is damned if it does, and damned if it does not, for by recoiling yet again it may well be storing up a different kind of crisis next year.

http://www.telegraph.co.uk/finance/economics/11874484/Fed-is-riding-the-tail-of-a-dangerous-global-tiger.html

 

[Melbustus]

"...it’s simply hard to believe the Fed won’t try and clarify itself, to provide a new set of guideposts and path forward."
http://blogs.wsj.com/moneybeat/2015/09/18/markets-flummoxed-by-uncertain-federal-reserve/

Monetary policy as immutable code would provide the most clarity, now wouldn't it?

I'm skeptical that the instantaneously supply of currency is the thing that matters. Perhaps the important thing is simply transparency, credibility, and predictability.

 

[cypherdoc]

financials extending yesterday's loss with a gap down. that's not good.

the question is, what happens to Bitcoin in a deflation? paradoxically, i think it goes up. we already had our 90% pullback and 200 is looking like the new 2. in fact, if you believe that Bitcoin has a chance to become a new form of money, like i do (if we don't allow it to be highjacked), then perhaps what we're witnessing is the early days of a transition to a first ever worldwide digital money. "software eats the world" and Bitcoin is that kind of software:

 

[cypherdoc]

"...it’s simply hard to believe the Fed won’t try and clarify itself, to provide a new set of guideposts and path forward."
http://blogs.wsj.com/moneybeat/2015/09/18/markets-flummoxed-by-uncertain-federal-reserve/

Monetary policy as immutable code would provide the most clarity, now wouldn't it?

I'm skeptical that the instantaneously supply of currency is the thing that matters. Perhaps the important thing is simply transparency, credibility, and predictability.

Gavin talks about his emphasis on predictability in blocks size progression built into 101. i can't emphasize enough the importance of that, as i have multiple times in the past. markets/investors/speculators would love the predictability of 101. it would allow the exchange price to take off like a bullet, facilitating all sorts of growth across the space. 100 is not it.

 

[Justus Ranvier]

I'm skeptical that the instantaneously supply of currency is the thing that matters. Perhaps the important thing is simply transparency, credibility, and predictability.

The most important thing is the method via which one obtains currency before it is spent.

The ideal currency can only be obtained by trading products or services, because doing ensures that for every product or service consumed, one of equal value had to first be produced.

If anyone in an economy can create currency ex nihilo, they damage the economy when they spend that money because their act of spending creates demand which is not preceded by an equal act of supply and thus destroys price signals.

Given that currencies can not start existing without at some point being issued, some amount of damage is inevitable.

The question is whether or not that damage is going to be finite, or infinite.

 

[cypherdoc]

@Justus Ranvier

>Given that currencies can not start existing without at some point being issued, some amount of damage is inevitable.

if you're arguing that Bitcoin is in this category, i'd argue that Bitcoin is not indiscriminately being issued as the cost of POW mining is not zero.

 

[cypherdoc]

The Black Hole keeps sucking:

 

[Justus Ranvier]

if you're arguing that Bitcoin is in this category, i'd argue that Bitcoin is not indiscriminately being issued as the cost of POW mining is not zero.

The economic damage caused by issuing new btc is lower than most (maybe all) alternatives, but it is not zero.

Miners are performing a POW service to Bitcoin users, but the amount they are paid for this service is not completely set by supply and demand.

The block reward is similar to a minimum wage in terms of its economic effects.

The good news is that it's designed to be phased out, and that process happens on a predictable schedule. This allows people to decide ahead of time how much dilution they are willing to accept without worrying about surprise changes in currency issuance policy in the future.

 

[cypherdoc]

@Justus Ranvier

As a miner for almost 3y, I can guarantee you that I wasn't being paid a minimum wage; the pay did nothing but go down with time.

 

[cypherdoc]

-258

Remember, escalator up, elevator down.

 

[cypherdoc]

-295

 

[solex]

Maybe I've been listening to Marc Andreessen too much, but perhaps the deflationary pressures are not simply due to accumulated debt and the current deleveraging cycle. Maybe it's far more structural...and not a bad thing. The oft-repeated thesis being that as "software eats the world", industry after industry becomes an order of magnitude (or more) more efficient, and therefore prices for corresponding goods or services drastically drop. That shows up as very strong deflationary pressure in traditional CPI/PPI measures.

I was thinking more about productivity from technology. Justus mentioned this a few months ago: the "success" of fiat systems in lasting for many years since the gold standard is because the rapid growth of science and technology has masked a lot of the downsides of unsound money.

This is the deflationary impact of productivity improvements off-setting the worst of CB-backed FRB and government money-printing fever. If tech had stayed still for the 20th Century then the worldwide experiment with fiat would have imploded back to a gold standard soon after it started, like in John Law's days.

It is relevant to technology making work obsolete. Looking at the 50% youth unemployment numbers in Greece and Spain, finds a developing structural change. These countries had a lot of local manufacturing which has disappeared in the maw of Asia in the last 25 years. It is unlikely to come back, so are those young people ever going to work in the conventional sense, or will they be on some kind of government support forever? Support like the 40 million people in the SNAP. Will those numbers ever seriously decline?

Asia isn't safe long-term either. Nanotechnology, self-assembly, robotics, design by AI and 3D printing can decentralise manufacturing, throwing the massive investment in Asian factories into obsolescence. A future with 50% youth unemployment in China or India? It's on the cards.

This might seem to be a global cultural disaster for humanity, that most people cannot find work as it is conventionally known; but it does open the door for more creativity, invention, arts, small entrepreneurial pursuits, alternative lifestyles.

 

[Melbustus]

I was thinking more about productivity from technology. Justus mentioned this a few months ago: the "success" of fiat systems in lasting for many years since the gold standard is because the rapid growth of science and technology has masked a lot of the downsides of unsound money.

Yes, indeed. And if you look at the tech on the horizon, we may very well have another 50-100yrs of totally unprecedented advancement and growth. Consider that we are *just now* putting down the core compute layers/infrastructure for the world (have you guys read Filament's Declaration of Device Independence?)... Just the obvious stuff (driverless cars, solar, biotech, etc) will probably unlock enormous economic growth and efficiency.

The downside here is that I think growth will indeed mask the effects of the debts run up by governments the world over. It will therefore look like everything's fine - and indeed it will be - due to the growth. That's really what CBs are hoping for; grow our way out; which does indeed seem like a possibility on a multi-decade timescale. The problem, of course, is that govs will only continue down the same unsound path, robbing humanity of the *even greater* growth it could've had. ...and of course if no tech-driven miracle boom period develops, all bets are off.

It is relevant to technology making work obsolete. Looking at the 50% youth unemployment numbers in Greece and Spain, finds a developing structural change. These countries had a lot of local manufacturing which has disappeared in the maw of Asia in the last 25 years. It is unlikely to come back, so are those young people ever going to work in the conventional sense, or will they be on some kind of government support forever? Support like the 40 million people in the SNAP. Will those numbers ever seriously decline?

I'm with Andreessen on this one too... This process is opening up massive opportunity globally, as everyone on the planet becomes connected, with access to smartphones, and therefore each other, global markets, the world's information, education, etc, etc. It seems unlikely when looking at this at a high-level (and over a several decade timespan) that somehow huge masses of people will sit idle against this backdrop. Of course, governments can certainly make things more difficult.

 

[theZerg]

With incredible surpluses people will always find something to keep them busy. Unfortunately this may recreate the class society in the 1700's western world as being served by actual people becomes a status symbol like a pricey car is today. And because a single person can get insanely rich by projecting a successful idea across a global market with almost no additional human help.

But the more optimistic view is that what people call "work" changes dramatically. People will have more time to consume each other's "leisure" by purchasing homegrown food, dining out as performance art, attending more live performances, and purchasing custom crafts like clothes, furniture, jewelry.

But for sure the transition is going to be a bitch...

especially going into it with such high consumer debt levels.

 

[Melbustus]

@Peter R - Your paper as hosted on scalingbitcoin.org goes to a 404: https://scalingbitcoin.org/papers/feemarket.pdf

(every other paper loads fine, btw: https://scalingbitcoin.org/papers )

 

[Inca]

Who was it who said paranoia?

 

[yrral86]

Me

The video is up and the paper is widely available elsewhere.

If it is intentional censorship, it is the least effective censorship ever.

 

[Peter R]

@Peter R - Your paper as hosted on scalingbitcoin.org goes to a 404: https://scalingbitcoin.org/papers/feemarket.pdf

(every other paper loads fine, btw: https://scalingbitcoin.org/papers )

Thanks for catching that, Melbustus. I have sent an email to Anton (the tech guy for the conference) and Jeremy Rubin to hopefully get to the bottom of it.

UPDATE: Anton responded:

"Sorry, just realized that file was accidentally misplaced during site upgrade (as we are putting up Hong Kong info). I'll fix this tonight (afk atm)"

 

[cypherdoc]

Articles like these, especially from the likes of Casey, border on irresponsible without at least mentioning Bitcoin:

http://www.internationalman.com/articles/crossing-borders-with-gold-and-silver-coins-a-glimpse-of-things-to-come

 

[Kupsi]

New volume records again this week. Both in bitcoins and fiat value.