Gold collapsing. Bitcoin UP.

cypherdoc

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Aug 26, 2015
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@Justus Ranvier

it's hard to believe so much money can be made thru those drug sites.
 

rocks

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Sep 24, 2015
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Those are big questions worth discussing.

Regarding the bolded one about concentration of wealth, I'm usually arguing the opposite: with sound money being in prevalent use, wealth (and hence power) would tend to disperse rather than concentrate. I would like to argue the concentration of power is a more-or-less direct result of the type of monetary system we use (think bailouts, corruption, deficit spending, misallocations of capital, hidden inflation tax moving wealth from the 99 to the 0.01 percent, privatization of gains, socialization of risks and so on).

A world where debt is money that is created out of thin air by a small elite and their institutions is very different from a world where money is allowed to emerge privately. Quite fundamentally different and I'm guessing we probably got used to take some things for granted that are actually a result of that type of system being used (like "the rich get richer, the poor get poorer").

In a world of sound money (I'm assuming that's the type of money that will emerge to be used if people are left to make their own decisions (or just take that power back)) people have to suffer the consequences of their actions as should be. Risks are real and hence the concentration of wealth (supposedly happening by lending/borrowing for interest) is kept in check and made more careful by the possibility of default with no lender of last resort or taxpayer to do bailouts in cases of black (or even just gray) swans. Money will flow from those who spend to those who offer products and services. It will flow from the rich to the productive. At least that's what I'm trying to convince myself of and I know it's rather easy to argue against that (in the form of "xyz will still be the case", e.g: "means of production still in the hands of the elite" and so on)

Now for the other question wether a series of jubilees by adoption of yet other cryptocurrencies by the people would be the norm... well, maybe. Seems to me if this first 'revolution' works out and a 'jubilee by Bitcoin' happens, there's nothing holding back the people from doing it again should the need arise for some reason, right? Maybe a new type of "check and balance" can emerge here?

With all the questions not clearly answered it seems to me that the separation of money and state should in aggregate be good for society (the people). I draw that conclusion (invalidly, I know) simply by looking at all the bad that is produced by the state-sponsored fiat system.
I agree with all of this. The concern that a Bitcoin monetary system might concentrate wealth is an understandable concern, but one that I do not share.

The history of western societies since the renaissance shows that the combination of sound money and free market capitalism is more effective at distributing and decentralizing wealth than any other system I've seen. In Europe this was the mechanism which slowly drew wealth and power out of the feudal system and into the hands of those who were productive.

In the US the banking system is an excellent example of how sound money distributes wealth. In the 1800's under the gold standard the US banking system was highly decentralized and distributed. The vast majority of banks were small regional entities, and the total wealth stored in the small banks exceeded the total wealth in the larger banks (which by today's standards would be considered small). This this was quite different from Europe where large banking houses, that were historically connected feudal rulers, dominated the industry.

However since the FED was created, the banking industry rapidly started a consolidation process, to the point where we have just 4 large banks that control most of the nation's wealth. This concentration was made possible for two reasons: 1) The FED's insurance policies which guarantees deposits removed the need for depositors to evaluate the health of a bank, enabling banks to rapidly grow in a risky manner without concern of losing clients (which they did in the 1800s). 2) The FED's Too Big to Fail policy actually incentives banks to grow as large as possible, simply because if they do then the government will protect them against failure.

Under a sound money system, every single large bank we have today would be insolvent in a matter of hours (which is what happened to lehman after the FED announced they would not protect lehman anymore).

Yes under a sound money system some capitalists will grow extremely wealthy (think Standard Oil or Rockefeller), but these entities become wealthy by providing productive services, not leaching from the system (and anti-monopoly laws address this, by not stealing money from those who were successful but by ensuring a continued level playing field).
 

cypherdoc

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Aug 26, 2015
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@rocks

we have just 4 large banks that control most of the nation's wealth.
this is the greatest threat we face in the next downturn. the country missed a great opportunity to pair down these entities but instead they did the opposite of what was necessary; they concentrated the risk even further.

what interests me most is that the 3/09 low violated the low of 9/02. what that means for the next downturn is unclear:

 
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cypherdoc

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Gold collapsing. Bitcoin UP.
 
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cypherdoc

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Dow Theory primary bear trend change in full force.
 

cypherdoc

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Aug 26, 2015
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Stocks collapsing. Bitcoin UP:

 

cypherdoc

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TLT continuing to call Yellen's bluff:


the dollar, gold, oil, and stocks are not supposed to all be down together.

-273

not good
 

rocks

Active Member
Sep 24, 2015
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@rocks
what interests me most is that the 3/09 low violated the low of 9/02. what that means for the next downturn is unclear:
It is even scarier if you do the following:

1) Show the chart in real, not nominal, terms. This shows an even greater fall in '08 over the valuations from the previous post dot com low.

2) Show the chart over the past 100 years in real terms. This shows just how much farther it can fall and still be within historical norms.

One of the biggest problems IMHO is how the central bank artificial inflation engine has encouraged everyone to ignore valuations "because things always go up". Under continuous inflation everything rises over time, housing, stocks, land, etc. Any bad investment can be made to look good by just waiting.

This has encouraged everyone to ignore risk and buy buy buy, which in turn has caused real prices to rise above their historic norms.

Once the artificial inflation engine stops, this "wait and be made whole" process will no longer work. The market will be forced to look at valuations, and the result will be much lower in real terms than what we see today.
 

cypherdoc

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oh my:


S&P looking even worse:


RUT looking even worser:

 

Justus Ranvier

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One of the biggest problems IMHO is how the central bank artificial inflation engine has encouraged everyone to ignore valuations "because things always go up". Under continuous inflation everything rises over time, housing, stocks, land, etc. Any bad investment can be made to look good by just waiting.
It was a great scam while it lasted.

Use inflation to hide real losses contained inside nominal gains.

Rely in increasing output caused by population growth and improved productivity from technological advancements to mask the effects of reduced purchasing power.

As long as natural market forces create wealth faster than you can destroy it, everything looks fine. Nobody will protest what they have lost because they never got to experience what could have been. They also won't immediately notice continual small underminings of the market's ability to continue this process.

This creates the conditions under which the State can grow faster than the host economy and thus exceed its capacity to sustain both itself and the parasite.

Game over.
 

sickpig

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Aug 28, 2015
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@molecular it seems unrelated to btc, in fact if you toggle "other crypto cash" suddenly the big red bubble over Ukraine disappear.
 

molecular

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Aug 31, 2015
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@sickpig I zoomed in and selected a single location and found this information about those "24nonstop" atm:

Total number of 24nonStop ATMs installed: 7005
About: BTCU.biz provides an option to buy bitcoins for cash at any of 24nonStop terminals.
also there's a bitcoin symbol next to "accepted coins":


sorry to spam the thread with this, I agree it could totally be a hoax.
 

sickpig

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Aug 28, 2015
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@molecular not spamming at all. unfortunately at the moment I cannot check it properly since I'm on my mobile, as soon as I'll get my hand on my workstation I will have a look
 

AdrianX

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Aug 28, 2015
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bitco.in
This is why we have block halving and the reason you don't want miners to vote on block size. Just because they probably know what they are doing over @ 21 inc

Just befor the Ukrainian experienced it's gold plunder and double digit monthly inflation a bank over there allowed bitcoin withdrawals on all ATMs.

It was from my perspective a macro economic experiment on a national level. Give all the happenings Bitcoin was positioned as a safe haven with pending capital controls and very accessible ATMs.

I think it was a flop because the ATMs were charging too high a markup or the idea of Bitcoin didn't go viral.

Anyway we live and learn.
 
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solex

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Aug 22, 2015
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the dollar, gold, oil, and stocks are not supposed to all be down together.

-273

not good
I think that what is happening here is distressed selling. Investors, funds, and some banks, are suffering from underwater leveraged positions. Glencore is like an Enron, a behemoth with lots of derivatives hanging off it. The distressed sellers dump good positions to make up for losses on the bad ones. Gold can get a temporary hammering in this scenario, but should recover quickly.

Gold is still a safe asset for some time to come, and I think, not affected by Bitcoin until volume reaches more like 300 tps instead of the current small 3 tps. Then we should see some negative effect on the gold price, and a sustained transfer of capital between them.
 

cypherdoc

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Aug 26, 2015
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moving up and out: