Financial topics

Investments, gold, currencies, surviving after a financial meltdown
Higgenbotham
Posts: 7983
Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Cool Breeze wrote: Wed Mar 31, 2021 8:14 pm Like Peter Schiff, you are going on year 12 of being wrong, again.

One more time:
Higgenbotham wrote: Thu Mar 25, 2021 1:43 pm Here we go again...copy and paste the facts until the end of time.

Higgenbotham wrote: Fri Mar 19, 2021 5:36 pm
Two things I understand:

1. You weren't here promoting Bitcoin in 2010. Or 2011, 2012, or in 2013 when John first mentioned it. Or 2014, 2015, 2016, 2017, 2018, 2019, or 2020. But you want to talk a whole lot about what Bitcoin did in those years as if you had some involvement in it or knowledge of it.

You post the same bogus Bitcoin Bubble Talking Points again and again and again and again...
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
Higgenbotham
Posts: 7983
Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Hussman on Bitcoin - Hilarious!
While we’re on the subject of bubbles, I’ll add a few comments on Bitcoin, just for fun. I’d write more, but my sides still hurt from laughing.

Objects like tulip bulbs and Bitcoin differ from securities in that they do not deliver a stream of cash flows to the holder. Instead, what objects like tulips and currencies provide is a little stream of services over time, for example, as a perennial thing of beauty or as a means of payment. What people sometimes forget is that it is not just scarcity that defines the value of an object, but the stream of useful “services” that it provides (for some reason, nobody wants to buy my unique, limited edition, digitally-signed porcupine seat covers). The price of the object, and the stream of services it provides, should be commensurate.

U.S. dollars, for example, have value primarily because they are tethered to the real economy by fiat (they legally must be accepted as a means of payment, as noted on the face of any dollar bill), and they represent the entire substrate of the banking system – nearly every payment that goes back and forth in the U.S. economy represents a transfer of base money. Base money (currency and bank reserves) provides billions of little “services” over time. With every transaction, reserves move electronically from bank to bank between one account holder and another. That combination of legal fiat and constant use as a substrate of the payments system is what gives money “value.” That value also means that the U.S. government essentially obtains revenue as “seigniorage” for producing the stuff. For those who imagine that governments are going to surrender that revenue in favor of using Bitcoin, I’ve got a non-fungible token to sell you.

As I’ve noted before, blockchain is a brilliant algorithm, and I expect that it will have a great number of uses for secure transactions and inventory management. Bitcoin, however, is a token generated by an energy-inefficient, replicable blockchain app. Ultimately, its value rests on the capacity to provide transactions services, yet without fiat to require its use, and with strikingly narrow bandwidth – one block of roughly 2000 transactions every 10 minutes – that I expect will prove to be a wildly limiting feature. That’s a problem in in a world where speculators now value the stock of bitcoin at one-fifth the value of the entire U.S. monetary base.
If you think about how money is valued, it’s clear that people accept it because they believe it will provide a claim on the future output of others. Of course, that expectation requires that future producers will also give away their output and accept the money, on the belief that yet other future producers will do the same. That expectation has to continue indefinitely. Like the question ‘What holds up Atlas when Atlas holds up the world?’ it’s not enough to answer that he’s standing on a turtle. It’s got to be turtles all the way down. The value of money has an enormous psychological component.”
– John P. Hussman, Ph.D., Turtles All the Way Down, February 2019

Of course, Bitcoin may have a certain user base as a vehicle for money laundering and black market transactions, but that’s an undesirable investment thesis. The vast majority of transactions are to exchange Bitcoin itself, though the New York Times did recently report that “pornography, patio furniture, and an at-home coronavirus test are among the odd assortment of goods and services that people are purchasing with the cryptocurrency.” So, basically, if your typical day consists of surfing porn on your patio while testing yourself for COVID, you’re gonna want to look into Bitcoin.

My largest concern is that people are actually forking over hard-earned savings in exchange for these tokens, which allows early “miners” to cash out. That’s essentially the defining feature of a Ponzi scheme. Like all speculative bubbles that rely on increases in price, rather than cash flows generated by the production of value-added goods and services, Bitcoin isn’t actually creating “wealth.” It’s only creating the opportunity for wealth transfer, primarily from those who will end up holding the bag.

Bitcoin has certain characteristics of base money in the sense that it’s exchanged on an electronic ledger, but by design, transactions are limited to an average of about 2000 per block, with one block successfully validated, on average, every 10 minutes. In order to validate a transaction block, CPU farms across the world grind out terahashes of random SHA256 validation attempts in order to discover a sufficiently small binary that matches the cryptographic hash of the block. All of this “mining” burns up about as much energy as it takes to run a modest-sized country. Validating a block of transactions produces a reward to the miner (and dilution of the coinbase) of 6.25 Bitcoin per block, which currently works out to nearly $200 per transaction. Yet the value of the median transaction in Bitcoin is only about $1000 in the first place.

There’s a rather primitive regression analysis floating around (tagged as “sophisticated” by some observers who apparently go numb at the word “logarithm”) that attempts to relate the log price of bitcoin to the log “stock/flow” ratio, as if it represents some mechanistic supply-demand relationship. Aside from the fact that the correlation between two diagonal lines is always about 0.9-something, I find that one can obtain a better fit just by regressing the log price of Bitcoin on the log ratio of block difficulty/block reward, which is basically a measure of how much energy one needs to waste in order to mine a new bitcoin. So the “value” of Bitcoin is partially linked to the backward-looking sunk cost of the energy wasted to mine these tokens. Still, I wouldn’t dream of using this sort of “model” to trade an object whose “value” is primarily in the heads of speculators. Use it if you like. If you happen make money on it, feel free send me a check, preferably in U.S. dollars.

Undoubtedly, this view of Bitcoin will be unpopular among those who associate holding Bitcoin with superpowers like laser eyes and diamond hands. “Not surprised Hussman doesn’t get Bitcoin. Few do.” M’kay. Look, there’s certainly a case to be made that a speculative mindset creates its own reality, and while it does, there’s an opportunity to obtain wealth transfers from frantic late-comers who can no longer tolerate missing out. Tulips gonna tulip. Not my gig, thanks.
In the short run, it will be said to be an attack, motivated by either deficient understanding or uncontrolled envy, of the wonderful process of enrichment. Those involved with the speculation are experiencing an increase in wealth – getting rich or being further enriched. No one wishes to believe that this is fortuitous or undeserved; all wish to think that it is the result of their own superior insight or intuition. As long as they are in, they have a strong pecuniary commitment to belief in the unique personal intelligence that tells them there will be yet more. Accordingly, possession must be associated with some special genius. Speculation buys up, in a very practical way, the intelligence of those involved. Only after the speculative collapse does the truth emerge. What was thought to be unusual acuity turns out to be only a fortuitous and unfortunate association with the assets.
– John Kenneth Galbraith, A Brief History of Financial Euphoria
https://www.hussmanfunds.com/comment/mc210315/
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
Cool Breeze
Posts: 3040
Joined: Sun Jul 26, 2020 10:19 pm

Re: Financial topics

Post by Cool Breeze »

False narratives on the energy stuff have been disproven.

Hussman isn't Paul Tudor Jones, Michael Saylor, Elon Musk, Mark Cuban, or the casts of other billionaires that actually put their money where their mouths are.

You still haven't said why it's a bubble. Perhaps it's because you don't actually have any reasons to give?
Higgenbotham
Posts: 7983
Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Cool Breeze wrote: Wed Mar 31, 2021 11:34 pm Hussman isn't Paul Tudor Jones, Michael Saylor, Elon Musk, Mark Cuban, or the casts of other billionaires that actually put their money where their mouths are.

World's Real Time Billionaires with Net Worth Over $10 Billion. Only 1 out of the 225 on the list is in Bitcoin.

https://www.forbes.com/real-time-billionaires/

Jones - NOT ON LIST
Saylor - NOT ON LIST
Musk - Number 3
Cuban - NOT ON LIST

Good grief, you can probably find more billionaires who say they own Coca-Cola stock than this stuff.


1 Jeff Bezos
2 Bernard Arnault & family
3 Elon Musk
4 Bill Gates
5 Mark Zuckerberg
6 Warren Buffett
7 Larry Ellison
8 Larry Page
9 Sergey Brin
10 Amancio Ortega
11 Mukesh Ambani
12 Francoise Bettencourt Meyers & family
13 Steve Ballmer
14 Zhong Shanshan
15 Carlos Slim Helu & family
16 Ma Huateng
17 Alice Walton
18 Jim Walton
19 Rob Walton
20 Michael Bloomberg
21 MacKenzie Scott
22 Phil Knight & family
23 Colin Zheng Huang
24 Gautam Adani & family
25 Jack Ma
26 Daniel Gilbert
27 François Pinault & family
28 Charles Koch
28 Julia Koch & family
30 Michael Dell
31 Masayoshi Son
32 Tadashi Yanai & family
33 David Thomson & family
34 Beate Heister & Karl Albrecht Jr.
35 Dieter Schwarz
36 Wang Wei
37 He Xiangjian
38 Zhang Yiming
39 Giovanni Ferrero
40 Alain Wertheimer
40 Gerard Wertheimer
42 Li Ka-shing
43 Qin Yinglin & family
44 William Lei Ding
45 Yang Huiyan & family
46 Lee Shau Kee
47 Len Blavatnik
48 John Mars
48 Jacqueline Mars
50 Alexey Mordashov & family
51 Robin Zeng
52 Klaus-Michael Kuehne
53 Susanne Klatten
54 Hui Ka Yan
55 German Larrea Mota Velasco & family
56 Vladimir Potanin
57 Dietrich Mateschitz
58 Vladimir Lisin
59 Wang Xing
60 Leonardo Del Vecchio & family
61 Thomas Peterffy
62 Takemitsu Takizaki
63 Leonid Mikhelson
64 Leonard Lauder
65 Pang Kang
66 Jim Simons
67 Vagit Alekperov
68 Lei Jun
69 Jiang Rensheng & family
70 Goh Cheng Liang
71 Rupert Murdoch & family
72 Iris Fontbona & family
73 Gina Rinehart
74 Shiv Nadar
75 Stefan Quandt
76 Stephen Schwarzman
77 Zhang Yong
78 Gennady Timchenko
79 Stefan Persson
80 Zhang Zhidong
81 Pierre Omidyar
82 Li Xiting
83 Richard Qiangdong Liu
84 Abigail Johnson
85 Ray Dalio
86 Lui Che Woo & family
87 R. Budi Hartono
88 Li Shufu
89 Su Hua
90 Zhong Huijuan
91 Robert Pera
92 Michael Hartono
93 Xu Hang
94 Emmanuel Besnier
95 Laurene Powell Jobs & family
96 Andrew Forrest
97 Theo Albrecht Jr & family
98 Donald Newhouse
99 Dustin Moskovitz
100 Alisher Usmanov
101 Peter Woo
102 Eric Schmidt
103 Dhanin Chearavanont
104 Fan Hongwei & family
105 Zuo Hui
106 Andrey Melnichenko
107 Petr Kellner
108 Jorge Paulo Lemann & family
109 Wu Yajun
110 Chen Zhiping
111 Lee Man Tat
112 Pavel Durov
113 Chen Bang
114 Charlene de Carvalho-Heineken & family
115 James Ratcliffe
116 Reinhold Wuerth & family
117 Sun Piaoyang
118 Lakshmi Mittal
119 Ernest Garcia II
120 Ken Griffin
121 Steve Cohen
122 Thomas Frist Jr & family
123 Lukas Walton
124 Mikhail Fridman
125 Cheng Yixiao
126 Suleiman Kerimov & family
127 Carl Icahn
128 Eduardo Saverin
129 Uday Kotak
130 Donald Bren
131 Wang Jianlin
132 Georg Schaeffler
133 Robin Li
134 Wang Chuanfu
135 Wei Jianjun & family
136 Pallonji Mistry
137 Dang Yanbao
138 Brian Chesky
139 Kwong Siu-hing
140 Hinduja brothers
141 David Tepper
142 Roman Abramovich
143 John Menard Jr
144 David Duffield
145 Kim Jung-ju
146 Jorn Rausing
146 Finn Rausing
146 Kirsten Rausing
149 Eric Yuan & family
150 Seo Jung-jin
151 Charoen Sirivadhanabhakdi
152 Gong Hongjia & family
153 Mike Cannon-Brookes
154 Joseph Lau
155 Anders Holch Povlsen
156 Scott Farquhar
157 Huang Shilin
158 Ricardo Salinas Pliego & family
159 Ma Jianrong & family
160 Robert & Philip Ng
161 Nathan Blecharczyk
162 Joe Gebbia
163 Wang Wenyin
164 Tatyana Bakalchuk
165 Liang Wengen
166 Michael Platt
167 Wang Liping & family
168 Jack Dorsey
169 Kumar Birla
170 Zhou Qunfei & family
171 Cyrus Poonawalla
172 Robert Kuok
173 Gordon Moore
174 Hank & Doug Meijer
175 Zhang Tao
176 Jensen Huang
177 Bobby Murphy
178 Yu Renrong
179 Patrick Drahi
180 Marcel Herrmann Telles
181 Joseph Tsai
182 Alexander Otto
183 Aliko Dangote
184 John Doerr
185 Zhang Bangxin
186 Liu Yonghao & family
187 Leng Youbin
188 Lu Zhongfang
189 Andreas Struengmann & family
189 Thomas Struengmann & family
191 Mikhail Prokhorov
192 Forrest Li
193 Melker Schorling & family
194 Harry Triguboff
195 Evan Spiegel
196 Viktor Rashnikov
197 Eyal Ofer
198 Leonid Fedun & family
199 Luis Carlos Sarmiento
200 Hui Wing Mau
201 Rodolphe Saadé & family
202 Anthony Pratt
203 Tom & Judy Love
204 Charles Schwab
205 Jorge Moll Filho & family
206 Gianluigi & Rafaela Aponte
207 Charles Ergen
208 Dietmar Hopp & family
209 John Fredriksen
210 Carl Cook
211 Stefano Pessina
212 Chen Jianhua
213 Sunil Mittal & family
214 Chase Coleman III
215 Dilip Shanghvi
216 Edward Johnson III
217 German Khan
218 Cen Junda
219 Jay Chaudhry
220 Li Ge
221 Philip Anschutz
222 Zheng Shuliang & family
223 Eric Wittouck
224 Cai Kui
225 Jan Koum
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
Higgenbotham
Posts: 7983
Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Cool Breeze wrote: Wed Mar 31, 2021 11:34 pm You still haven't said why it's a bubble. Perhaps it's because you don't actually have any reasons to give?
This is a duck. Prove that it's not a duck.

Image
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
vincecate
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Joined: Mon May 10, 2010 7:11 am
Location: Anguilla
Contact:

Re: Financial topics

Post by vincecate »

Higgenbotham wrote: Wed Mar 31, 2021 10:29 pm Hussman on Bitcoin - Hilarious!
Ultimately, its value rests on the capacity to provide transactions services, yet without fiat to require its use, and with strikingly narrow bandwidth – one block of roughly 2000 transactions every 10 minutes – that I expect will prove to be a wildly limiting feature.
https://www.hussmanfunds.com/comment/mc210315/
In 2016 this was a valid concern. After July 21, 2017 with the Seqwit change and Lightning, this is no longer accurate. There really is no limit on the number of Lightning transactions. This is why Bitcoin Dominance was going down and got to a low of about 30% before the change but then went back up to about 60% these days. Hussman is about 4 years behind on this issue.

Yes, "Ultimately, its value rests on the capacity to provide transactions services" and really the capacity is huge. :-)

https://en.wikipedia.org/wiki/SegWit
https://coinmarketcap.com/charts/#dominance-percentage
vincecate
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Re: Financial topics

Post by vincecate »

Look at the Dollar and the World Reserve Currency as a "Game Theory" thing. What is the best move for individuals in the face of the likely destruction of the US dollar as they print trillions of new dollars? What will the new Nash Equilibrium be?

https://en.wikipedia.org/wiki/Nash_equilibrium

They did $1.9 trillion this past month and are working on another $2 trillion with another $1 trillion after that. They will keep doing this till something breaks. It will break as a "death spiral" or "positive feedback loop" that can not be stopped. Can you see this going any other way? What will break? What will happen after that?

http://howfiatdies.blogspot.com/2013/09 ... -many.html

To me it looks like the best move for individuals is to sell dollars and buy Bitcoin. If everyone does this the dollar will become worthless and we will all use Bitcoin. What other ways can people imagine the game going?
Higgenbotham
Posts: 7983
Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Cool Breeze wrote: Wed Mar 31, 2021 6:49 pmGlobalists don't want you in BTC. You brain is fried my man, you can't think straight about many things regarding the world and finance.
Cool Breeze wrote: Wed Mar 31, 2021 6:55 pm He's a fossil. I'm betting he is at least 58 years old, and probably close to mid 60s or 70. Many oldies won't allow themselves to think outside the box. Not all, but it's fascinating when you interact with stubborn people who refuse to recognize reality.

Higster doesn't even understand this. Vince, it's going to be funny when this thing is worth 200k and Higster is still calling it a bubble, it'll literally be on nearly ever businesses' balance sheet at that point, and he'll still be yelling "get off my lawn."

The Speculative Episode

This is a brief glance at the rules governing the events that are chronicled on the pages that follow.

Anyone taken as an individual is tolerably sensible and reasonable — as a member of a crowd, he at once becomes a blockhead.

—friedrich von schiller, as quoted by bernard baruch


Strongly reinforcing the vested interest in euphoria is the condemnation that the reputable public and financial opinion directs at those who express doubt or dissent. It is said that they are unable, because of defective imagination or other mental inadequacy, to grasp the new and rewarding circumstances that sustain and secure the increase in values. Or their motivation is deeply suspect. In the winter of 1929, Paul M. Warburg, the most respected banker of his time and one of the founding parents of the Federal Reserve System, spoke critically of the then-current orgy of “unrestrained speculation” and said that if it continued, there would ultimately be a disastrous collapse, and the country would face a serious depression. The reaction to his statement was bitter, even vicious. He was held to be obsolete in his views; he was “sandbagging American prosperity”; quite possibly, he was himself short in the market. There was more than a shadow of anti-Semitism in this response.

Later, in September of that year, Roger Babson, a considerable figure of the time who was diversely interested in statistics, market forecasting, economics, theology and the law of gravity, specifically foresaw a crash and said, “It may be terrific.” There would be a 60-to 80-point drop in the Dow, and, in consequence, “Factories will shut down . . .men will be thrown out of work . . . the vicious circle will get in full swing and the result will be a serious business depression.” Babson’s forecast caused a sharp break in the market, and the reaction to it was even more furious than that to Warburg’s. Barron’s said he should not be taken seriously by anyone acquainted with the “notorious inaccuracy” of his past statements. The great New York Stock Exchange house of Hornblower and Weeks told its customers, in a remarkably resonant sentence, that “we would not be stampeded into selling stocks because of a gratuitous forecast of a bad break in the market by a well-known statistician.” Even Professor Irving Fisher of Yale University, a pioneer in the construction of index numbers and otherwise the most innovative economist of his day, spoke out sharply against Babson.

It was a lesson to all to keep quiet and give tacit support to those indulging their euphoric vision.

The top of the "all one market" bubble appears to be at hand. Bitcoin is the poster child for this bubble.

I have not been able to "keep quiet and give tacit support to those indulging their euphoric vision."

Those who are wise will heed the quotes from John Kenneth Galbraith at this time and ignore the speculative herd.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
Cool Breeze
Posts: 3040
Joined: Sun Jul 26, 2020 10:19 pm

Re: Financial topics

Post by Cool Breeze »

Higgenbotham wrote: Wed Mar 31, 2021 11:46 pm
Cool Breeze wrote: Wed Mar 31, 2021 11:34 pm You still haven't said why it's a bubble. Perhaps it's because you don't actually have any reasons to give?
This is a duck. Prove that it's not a duck.

Image
You just proved my point for months. Do you know how stupid it is to not even recognize what you are doing, especially when I have pointed it out.

Prove to me that X isn't anything I say it is. Then I just reply no, no, no. Are you really this retarded?
Cool Breeze
Posts: 3040
Joined: Sun Jul 26, 2020 10:19 pm

Re: Financial topics

Post by Cool Breeze »

Higgenbotham wrote: Thu Apr 01, 2021 9:29 am The top of the "all one market" bubble appears to be at hand. Bitcoin is the poster child for this bubble.
Prove it. Oh wait, you won't answer again? Great job, Higgy. The onus is on YOU to prove your assertions. Not anyone else.

How many years will it take get through to you? You can't be this dumb.
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