Financial topics

[richard5za]

I have found the various views on Bitcoin very interesting and my thank you to all the contributors.

However my views are unchanged; I still think that Bitcoin won't end well at all. I have never invested in crypto and never will. This is because a successful outcome for Bitcoin is beyond my understanding and therefore left well alone.

It's well to remember that the markets make fools of us all from time to time.

[richard5za]

Back to the subject of S&P 500 I note that the market continues to make higher lows so must raise the question of making news highs. Where will it be, perhaps 4xxx something? And will it be the final blow off top? One of the technical chartists I follow reckons that the final top is not far away. I really thought that the crash would come in early 2018. Its now 3 years later and the market continues to "out-fox" this human being.

[aeden]

https://www.youtube.com/watch?v=aVdjP8XfU_0

https://seekingalpha.com/filings/pdf/14774456.pdf

[vincecate]

The US dollar has been around for 250 years.
It's the world's reserve currency.
[...]
By contrast, bitcoin has been around for 15 years.

From Article I, Section 8, there is “Congress shall have Power…to coin Money, regulate the Value thereof, and of foreign Coin.” And from Section 10, “no state…shall make any Thing but gold and silver Coin a Tender in Payment of Debts.”

https://www.forbes.com/sites/briandomit ... 44414d5cd2

The paper money used to say "The United States Government will pay to the bearer on demand":
https://en.wikipedia.org/wiki/Federal_R ... r.898a.jpg


It is only since 1971 that the US dollar was not redeemable for gold. Only since 1971 can they print trillions without limit.
Before 1971 gold was money and the paper was just a convenience.

So really it is 50 years as unbacked, no limit, fiat dollar vs 15 years for Bitcoin. But Internet years are worth more than 5 regular years. Really. Things move much faster.

And if you really look at the trends during this time, it should be clear how this ends. They will print so many trillions of dollars that the value goes down in a death spiral. Bitcoin does not have this fatal flaw.

I don't think the dollar gets another 15 years as the world reserve currency. Maybe not 5. Assume for the moment that the dollar loses reserve currency status, what is your top bet for replacing it?

[vincecate]

In an initial discussion of bitcoin, I had pointed out that it is structured as and trades as an asset, not a currency. Asset based currencies work well in an agricultural age economy (in other words, a commodity based economy) but not so well in an industrial or information age economy.

With Lightning layer on top of core Bitcoin you can move value at a cost of a penny or two. This is overhead is so small that it really works as a currency. In fact, I can send all over the world in 2 seconds for a couple pennies, so it is the least costly to move currency. It is really the information age currency.

Generally speakng, the large currency blocks such as the EU and the US are running into trouble partly because one centralized economic policy and currency cannot fit the needs of a highly diverse area.

I think the economists paid by the governments are saying the government needs to print money because their job depends on it. I don't think it really helps the economy overall when the government prints money. The individuals holding dollar or long term bonds lose when the government prints.

Somewhere in this forum I laid out my vision of how I think the future worldwide monetary system will work. I think the main feature will be that a balance of trade will be required around small economic units or zones, where the units or zones have their own currency and are required to be productive. I think it will be a time of great experimention. Many units or zones will fail and be absorbed into successful models. There will probably be a worldwide currency, but it won't be "owned" by any certain geographic area. Central banking will be abolished and the currency system will be run by markets and intelligent computers.

Well, we already have computers trading currencies. I think the odds of the dollar failing are so high that it is good to have some vision of what the future world could look like without the dollar as king. If the US paper money fails, and other paper money has US dollars backing them, then I think all the paper money is toast.

I agree there will be at least partial sovereign debt defaults.

I don't agree. Government's that can print money do not default on their bonds, they just print to pay them. So the money can become worthless, but officially everyone gets paid.

My guess has been that during this fourth turning the US will break apart into loosely associated pieces that will eventually have their own currencies.

The US central government is spending more than twice what they get in taxes. So you can sort of say that more than half their "power" comes from printing money. If that source of power fails then the central government could well fail.

2. The currencies would not be regulated by the equivalent of Federal Reserve decisions on interest rates or repo operations, but by intelligent computers. intelligent computers can replicate and improve on Federal Reserve decision making processes by automating them, adjusting them automatically as needed (not just a few times per year, in other words), and taking the human error and politics out of them. Bitcoin doesn't solve that, but again, electronic currencies and artificial intelligence can certainly work toward solving that in the future.

Your faith in "intelligent computers" sounds like the faith in "central planning" that never seems to work for long term. I don't think you should have any more faith in computers doing central planning than humans, at least for some time yet.

Since writing some of these ideas in 2010, I think a window of opportunity was missed. instead of the above happening on any near term time line the world will collapse into a dark age. Bitcoin will actually help bring about that process of collapse and is not the answer at all. Bitcoin is sort of like the crude steam engine that the Romans invented. They didn't go headlong into an industrial revolution but instead collapsed and the industrial revolution happened 14 centuries later. From the ashes, an intelligent currency system will eventually emerge from the ground up. My guess is that it will take about 10 centuries for it to happen, no less than 3 or 4.

I think when the existing money and financial system collapses only Bitcoin will be left standing. A number of my customers in Anguilla are sending Bitcoin to family in Venezuela because Bitcoin "works" there when the local money has nearly failed.

[richard5za]

The US dollar has been around for 250 years.
It's the world's reserve currency.
[...]

I don't think the dollar gets another 15 years as the world reserve currency. Maybe not 5. Assume for the moment that the dollar loses reserve currency status, what is your top bet for replacing it?

There is for sure a debt crisis on the way. The inflation / deflation argument continues without resolution. So inflation by printing dollars might easily turn to deflation with the dollar becoming the store of value. Its very unclear; maybe gold gets its day. What I do know from historical analysis is that more than 90% of experts will be less accurate than a dart throwing chimp!
So I think we need to be flexible enough to change options, don't put too many eggs in one basket, and watch intelligently.

[Higgenbotham]

2. The currencies would not be regulated by the equivalent of Federal Reserve decisions on interest rates or repo operations, but by intelligent computers. intelligent computers can replicate and improve on Federal Reserve decision making processes by automating them, adjusting them automatically as needed (not just a few times per year, in other words), and taking the human error and politics out of them. Bitcoin doesn't solve that, but again, electronic currencies and artificial intelligence can certainly work toward solving that in the future.

Your faith in "intelligent computers" sounds like the faith in "central planning" that never seems to work for long term. I don't think you should have any more faith in computers doing central planning than humans, at least for some time yet.

I agree with this at this time or, like you said, "at least for some time yet." We'll never see this, and our children and grandchildren won't either. If things continue advancing at some point in the future, I believe it will be seen.

Bitcoin will work in situations like Venezuela at present because the rest of the system hasn't collapsed yet.

[vincecate]

Bitcoin will work in situations like Venezuela at present because the rest of the system hasn't collapsed yet.

You could blow up 90% of the computers using/mining Bitcoin and it would keep working.

As the dollar and rest of the normal financial system collapses I think we will see a rush of people moving into Bitcoin, so really the number of users/miners will surge.

You would have to break the Internet for Bitcoin to break. Once Elon/SpaceX get Starlink covering the whole world it will be hard for anything to really break the Internet. This is in the next couple years. But the Internet is really designed to handle all kinds of failures and keep working. And if the Internet is really broken, the world is really far gone. I don't expect it to get so bad we don't have Internet.

[Higgenbotham]

Bitcoin will work in situations like Venezuela at present because the rest of the system hasn't collapsed yet.

You could blow up 90% of the computers using/mining Bitcoin and it would keep working.

As the dollar and rest of the normal financial system collapses I think we will see a rush of people moving into Bitcoin, so really the number of users/miners will surge.

You would have to break the Internet for Bitcoin to break. Once Elon/SpaceX get Starlink covering the whole world it will be hard for anything to really break the Internet. This is in the next couple years. But the Internet is really designed to handle all kinds of failures and keep working. And if the Internet is really broken, the world is really far gone. I don't expect it to get so bad we don't have Internet.

The Internet doesn't have to break. When the Roman Empire fell, the gold hoards were useless because there were no surpluses. With close to 5 billion people packed into cities worldwide versus something like a million in Rome when the Roman Empire fell, there will be no surpluses this time either, so money in any form will be useless. Even if there are some surpluses here and there, no farmer is going to trade Bitcoin for food when he realizes there may be no surpluses next year and he has more critical items to stock up on. Anybody who has anything of value will want the goods on the barrelhead so to speak and that means barter.

This is the world of no surpluses.

My more specific predictions would be:

• There will be a major global financial panic and crisis. Supply chains will break, resulting in unavailability of critical raw materials and components. Global trade will begin to shut down. As it begins to become apparent that the supply chain linkages are permanently broken, the global interlinked financial markets will shut down and cease to exist. This will all happen very quickly. It will not take years from the initial panic.
• The focus of governments will turn to controlling their panicked and hungry populations. Due to lack of availability of imported goods and adequate storage "sufficient to reconstitute" a system consistent with nation state government, this will prove to be too little too late and most government will devolve to the local level as populations lose faith in their national governments and the national governments lose the resources and ability to control their populations.
• There will be no large scale nuclear war. Instead, the population will be culled through starvation, local strife (including settling of long-standing scores) and disease. Wave after wave of pandemics will sweep the world.
• Similar to national economies and governments, centralized utilities will fail or become so decrepit as to be unsafe and unusable. All centralized utilities including the power grid will shut down permanently.
• The initial worldwide kill rate during the first couple decades following the financial panic will exceed 90%. The global population will be in the range of a few tens of millions when the bottom is hit in two or three centuries. Similar to the last dark age, the world's largest cities will have a population on the order of 25,000 and a large town will be 1,000.
• Life during the coming dark age will be similar to the last dark age but worse due to environmental damage and pollution.

[Cool Breeze]

Just because something has a price right now doesn't give it intrinsic value.

Why do you keep saying this? I don't, and never have appealed to it. You guys are obsessed with arguments that I don't make. They are stupid arguments, beyond that. Just stop.

I'm glad to hear that on the other topics you are honest. I don't blame you for trading, it's all a game at this point of the clown world policy and FED cycle, for sure.