- Aug 28, 2015
- 517
- 1,679
As the Chinese proverb goes, 'May you live in interesting times'. I feel this applies today more than ever with central banks intervening in the markets, buying government debt and now openly buying US stocks with freshly printed monies.
I was attracted to bitcoin at first because I saw the beauty of hard money secured by a global network of nodes/miners and secured by the power of unbreakable cryptography. I was terribly excited by the concept of a peer-to-peer network functioning as a global payments network and store of value, a completely new asset class and system, one that was untouched by the hands of central bankers or private banking institutions.
Since 2008 I have struggled with the concept of how to value assets when most of the general public do not realise that indices are buoyed by a silent massive buyer in the markets, one who cannot go bankrupt. QE programs have ballooned the balance sheets of the major central banks, bailed out the insolvent financial institutions around the world and supported global asset prices whilst keeping interest rates near zero. In recent days there has been significant volatility in the global markets - ostensibly due to the China slowdown - and again the silent hand of our friendly central bankers was felt with prices immediately recovering most of their ground only to gradually give it away yesterday.
Are we at an inflection point where central bankers must decide to "double down" and increase their public (and likely silent) asset purchase programs and unleash a shock and awe QE4 which will lift all markets and crush commodities, precious metals and gold to levels not thought possible? What will bitcoin do in this scenario? Is there a limit to how effective such a program would be? Especially given the negative economic indicators coming out of the US and China.
If we listen to the Fed they are talking about raising rates and Quantitative Tightening in an attempt to return the world to something approaching economic normality. In reality such a program would lead to a spike in interest rates and a global market rout of the like not seen since 2008. So I think we need to look at the actions of the central bankers instead.
Traditionally in times of deep uncertainty precious metals are thought of as an economic safe haven. A quick glance at the price shows that it has failed in that regard - ever since QE was initiated it has illogically fallen in price. Whether this is gold working off it's bubble or simply being managed by the paper gold market I don't know. Bonds such as US treasuries have been a rock solid run to position in the past but now China is beginning to divest it's horde accumulated over the last decade. Bond values would also be eviscerated if rates rise in an uncontrolled fashion.
I am interested to know what role the forum members feel bitcoin has to play in the ongoing global disaster that is unfolding. Will it rally from the ashes of a global market crash? Will it be punished as an alternative to fiat currency by central banks (it would be/is trivial to do so)?
I will continue to hold my bitcoins in cold storage in any case..
EDIT: oh and congratulations on the new forum..excellent work.
I was attracted to bitcoin at first because I saw the beauty of hard money secured by a global network of nodes/miners and secured by the power of unbreakable cryptography. I was terribly excited by the concept of a peer-to-peer network functioning as a global payments network and store of value, a completely new asset class and system, one that was untouched by the hands of central bankers or private banking institutions.
Since 2008 I have struggled with the concept of how to value assets when most of the general public do not realise that indices are buoyed by a silent massive buyer in the markets, one who cannot go bankrupt. QE programs have ballooned the balance sheets of the major central banks, bailed out the insolvent financial institutions around the world and supported global asset prices whilst keeping interest rates near zero. In recent days there has been significant volatility in the global markets - ostensibly due to the China slowdown - and again the silent hand of our friendly central bankers was felt with prices immediately recovering most of their ground only to gradually give it away yesterday.
Are we at an inflection point where central bankers must decide to "double down" and increase their public (and likely silent) asset purchase programs and unleash a shock and awe QE4 which will lift all markets and crush commodities, precious metals and gold to levels not thought possible? What will bitcoin do in this scenario? Is there a limit to how effective such a program would be? Especially given the negative economic indicators coming out of the US and China.
If we listen to the Fed they are talking about raising rates and Quantitative Tightening in an attempt to return the world to something approaching economic normality. In reality such a program would lead to a spike in interest rates and a global market rout of the like not seen since 2008. So I think we need to look at the actions of the central bankers instead.
Traditionally in times of deep uncertainty precious metals are thought of as an economic safe haven. A quick glance at the price shows that it has failed in that regard - ever since QE was initiated it has illogically fallen in price. Whether this is gold working off it's bubble or simply being managed by the paper gold market I don't know. Bonds such as US treasuries have been a rock solid run to position in the past but now China is beginning to divest it's horde accumulated over the last decade. Bond values would also be eviscerated if rates rise in an uncontrolled fashion.
I am interested to know what role the forum members feel bitcoin has to play in the ongoing global disaster that is unfolding. Will it rally from the ashes of a global market crash? Will it be punished as an alternative to fiat currency by central banks (it would be/is trivial to do so)?
I will continue to hold my bitcoins in cold storage in any case..
EDIT: oh and congratulations on the new forum..excellent work.