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Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 07, 2021 8:21 am
by Kbg
Really, truly, hard money people need to read up on what happened during the Great Depression...but I'll try to make it as simple as possible.

1. You lost your job, meaning you have no way to obtain currency

2. Prices are plummeting, meaning a second other person is incentivized to hold gold backed money because the longer they do, the better it is for them in real terms.

3. The effect of both together is a cycle of continuous downturn...fewer people are spending therefore more people are out of work and down we go

Even JP Morgan and the banker boys in the early 1900s knew understood this and basically flooded the economy with private money.

Perhaps, just perhaps, the fact the EVERY country on the planet has a fiat system should tell you that you are flat wrong and not for conspiratorial reasons.

The lessons of the GD for the US, fiat money is stupid (and we went back to it and it broke again) and we need unemployment insurance.

If you are a hard money guy answer this question? What is the basic problem with mild inflation? In advance, I can tell you you won't have a good answer other than you have to change your pricing reference point. Gas was .25 cents in the early 70s, now it's over $3.00, so what other than the number changed...I'll bet your paycheck has kept pace, therefore it means nothing.

Finally, inflation only happens when there is excess money AND scarcity. Scarcity due to supply chain disruptions is why now we are having inflation and from 2008 to 2020 there wasn't any inflation and the Fed was printing money at unprecedented rates.

A hard money philosophy is a religion, not a good way to run a monetary system.

This stuff is nothing but a leftover from the mercantile system.

Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 07, 2021 8:26 am
by bitcoininthevp
Kbg wrote:
Wed Oct 06, 2021 5:54 pm
In all of human history there is not a single example of a fixed quantity currency that has been stable under economic duress. As I've mentioned numerous times on the board...that is the tradeoff. Instability is baked into the approach...it's mathematical as to why.

Currency stability is created by the ability to print and withdraw paper money from the system. The concept is not wrong and has been proven to work multiple times since the Great Depression. Now I will grant you that humans can and have screwed things up, but the difference is that mathematically, you can basically prove how stability is achieved.

In sum, instability is guaranteed in the former. We at least have "hope" in the latter. One may not like hope as an option, but it's better than knowingly having something that WILL be unstable.
Bitcoins volatility is decreasing over time. I believe it will continue to do so, as long as the price/market cap/liquidity goes up. While volatility will decrease, I dont think the value of anything will be fixed/perfectly stable over time.

A floating money supply is a problem as you mention. But I think you seem to underplay the issues of such fiat currencies. Of all fiat currencies the vast majority have ended in spectacularly high volatility, going to ZERO and ruining the holders of it. Its hard for me to reconcile ~all fiat currencies ending in such a way as "better" or "more hopeful" than what has occurred under a gold standard or might occur under a bitcoin standard. I admit this is not something Im really familiar with, so if someone can illustrate that fiat currencies base cases of ending is better than a gold base case of "having some volatility during economic duress", I would love to learn more here.

Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 07, 2021 8:36 am
by Kbg
bitcoininthevp wrote:
Thu Oct 07, 2021 8:26 am
Kbg wrote:
Wed Oct 06, 2021 5:54 pm
In all of human history there is not a single example of a fixed quantity currency that has been stable under economic duress. As I've mentioned numerous times on the board...that is the tradeoff. Instability is baked into the approach...it's mathematical as to why.

Currency stability is created by the ability to print and withdraw paper money from the system. The concept is not wrong and has been proven to work multiple times since the Great Depression. Now I will grant you that humans can and have screwed things up, but the difference is that mathematically, you can basically prove how stability is achieved.

In sum, instability is guaranteed in the former. We at least have "hope" in the latter. One may not like hope as an option, but it's better than knowingly having something that WILL be unstable.
Bitcoins volatility is decreasing over time. I believe it will continue to do so, as long as the price/market cap/liquidity goes up. While volatility will decrease, I dont think the value of anything will be fixed/perfectly stable over time.

A floating money supply is a problem as you mention. But I think you seem to underplay the issues of such fiat currencies. Of all fiat currencies the vast majority have ended in spectacularly high volatility, going to ZERO and ruining the holders of it. Its hard for me to reconcile ~all fiat currencies ending in such a way as "better" or "more hopeful" than what has occurred under a gold standard or might occur under a bitcoin standard. I admit this is not something Im really familiar with, so if someone can illustrate that fiat currencies base cases of ending is better than a gold base case of "having some volatility during economic duress", I would love to learn more here.
BC, you're just wrong. Name a single currency where that has happened and the country wasn't totally jacked up politically. (This event is why gold does make some sense if one assumes it will be usable as a medium of exchange.)

Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 07, 2021 8:42 am
by bitcoininthevp
Kbg wrote:
Thu Oct 07, 2021 8:21 am
Really, truly, hard money people need to read up on what happened during the Great Depression...but I'll try to make it as simple as possible.

1. You lost your job, meaning you have no way to obtain currency

2. Prices are plummeting, meaning a second other person is incentivized to hold gold backed money because the longer they do, the better it is for them in real terms.

3. The effect of both together is a cycle of continuous downturn...fewer people are spending therefore more people are out of work and down we go

Even JP Morgan and the banker boys in the early 1900s knew understood this and basically flooded the economy with private money.

Perhaps, just perhaps, the fact the EVERY country on the planet has a fiat system should tell you that you are flat wrong and not for conspiratorial reasons.

The lessons of the GD for the US, fiat money is stupid (and we went back to it and it broke again) and we need unemployment insurance.

If you are a hard money guy answer this question? What is the basic problem with mild inflation? In advance, I can tell you you won't have a good answer other than you have to change your pricing reference point. Gas was .25 cents in the early 70s, now it's over $3.00, so what other than the number changed...I'll bet your paycheck has kept pace, therefore it means nothing.

Finally, inflation only happens when there is excess money AND scarcity. Scarcity due to supply chain disruptions is why now we are having inflation and from 2008 to 2020 there wasn't any inflation and the Fed was printing money at unprecedented rates.

A hard money philosophy is a religion, not a good way to run a monetary system.

This stuff is nothing but a leftover from the mercantile system.
I freely admit not being an expert here but I do have some thoughts.

The federal reserve existed during the GD and the money supply decreased by some large amount around the period of the crash and GD.

Two reasons come to mind why inflation might be bad:

1. If money is being debased, no one saves in the money. It pushes people to, instead of saving in money, to speculate in stocks, real estate, etc.

2. The new (inflated) money needs to appear somewhere, thus you get the Cantillon Effect and all the bad that results from politically connected government cronies getting new money.

"the fact the EVERY country on the planet has a fiat system should tell you that you are flat wrong" - Im not sure the conclusion follows logically from the premise here. I think that governments that are able to siphon the most from their economies have ended up as stronger and fiat partly enables such a scheme. (aside: I believe in The Sovereign Individual they outline that this is why capitalism "won" over communism in the cold war period, capitalism allowed for more government more access to the populations income to fund itself)

I think part of the discussion here is a difference between what is best for an "individual now" vs a "society in the future". To me its clear the benefits of Bitcoin to the individual now. Im not so sure about a utopian bitcoin standard for society in the future to be honest. I think many people gloss over the transition to such a standard as well as how different life might be on such a standard. But as the stoics say, focus on what you can control.

Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 07, 2021 8:46 am
by bitcoininthevp
Kbg wrote:
Thu Oct 07, 2021 8:36 am
BC, you're just wrong. Name a single currency where that has happened and the country wasn't totally jacked up politically. (This event is why gold does make some sense if one assumes it will be usable as a medium of exchange.)
Im not sure the point here. Most currencies implode and your retort is that’s because the people in charge of the currencies were jacked up? I suppose all we need is those non-corrupt good guy governments (central banks) that stay good indefinitely and then the money would be good?

If thats your point, I guess I agree, if governments were "good" forever, a fiat currency could be "ok":
bitcoininthevp wrote:
Wed Oct 06, 2021 11:42 am
Funny thing here is that Bitcoin only has value to the degree that governments mismanage the money.

If governments behaved, Bitcoin would have little or no value.

Why? (sorry for being repetitive)

Because Bitcoin is a censorship-resistant, inflation-resistant, seizure-resistant, pseudonymous digital asset.

If there was no censorship, inflation, confiscation, or surveillance, Bitcoin wouldn't have a value proposition.

China, the most misbehaving of the bunch, bans Bitcoin? Bitcoin goes up 20% in value. Of course other things are going on, maybe unrelated to China. But does make you think...
But, like, we live in reality.

Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 07, 2021 9:15 am
by vincent_c
bitcoininthevp wrote:
Thu Oct 07, 2021 8:17 am
vincent_c wrote:
Wed Oct 06, 2021 2:18 pm
I agree with almost everything except that anyone who buys BTC to hodl actually reduces its liquidity. Once it becomes more widely accepted the hope is that there will be greater market depth. More liquidity will make for a more stable price.
I said people buying and holding adds to liquidity.

Yeah and I am saying it reduces its liquidity

Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 07, 2021 1:27 pm
by Kbg
bitcoininthevp wrote:
Thu Oct 07, 2021 8:46 am
Kbg wrote:
Thu Oct 07, 2021 8:36 am
BC, you're just wrong. Name a single currency where that has happened and the country wasn't totally jacked up politically. (This event is why gold does make some sense if one assumes it will be usable as a medium of exchange.)
Im not sure the point here. Most currencies implode and your retort is that’s because the people in charge of the currencies were jacked up? I suppose all we need is those non-corrupt good guy governments (central banks) that stay good indefinitely and then the money would be good?

If thats your point, I guess I agree, if governments were "good" forever, a fiat currency could be "ok":
bitcoininthevp wrote:
Wed Oct 06, 2021 11:42 am
Funny thing here is that Bitcoin only has value to the degree that governments mismanage the money.

If governments behaved, Bitcoin would have little or no value.

Why? (sorry for being repetitive)

Because Bitcoin is a censorship-resistant, inflation-resistant, seizure-resistant, pseudonymous digital asset.

If there was no censorship, inflation, confiscation, or surveillance, Bitcoin wouldn't have a value proposition.

China, the most misbehaving of the bunch, bans Bitcoin? Bitcoin goes up 20% in value. Of course other things are going on, maybe unrelated to China. But does make you think...
But, like, we live in reality.
You do see the irony here, right? BTC is completely reliant on government acceptance (as is everything). For the majority of people in China, unless the have access to external finance markets, BTC's value is now zero in terms of goods and services. Given it is a financial asset, it has no inherent worth in and of itself, like a bond, or a swap, or an option or a paper dollar.

Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 07, 2021 1:32 pm
by vincent_c
I don't think this is true, at least not a single government.

Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 07, 2021 1:54 pm
by Kbg
vincent_c wrote:
Thu Oct 07, 2021 1:32 pm
I don't think this is true, at least not a single government.
So as BTC rightly pointed out I had a pretty big caveat, but if you don't think what I said isn't true, then find one that did. To be completely accurate I did forget to add wars where the ruling political structure was destroyed. Whether fiat money or BTC, it's only as "valuable" as human's have faith in it. If someone wants to buy something high in faith, then gold is the undisputed several millennium champ.

Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 07, 2021 2:25 pm
by bitcoininthevp
Kbg wrote:
Thu Oct 07, 2021 1:27 pm
You do see the irony here, right? BTC is completely reliant on government acceptance (as is everything). For the majority of people in China, unless the have access to external finance markets, BTC's value is now zero in terms of goods and services. Given it is a financial asset, it has no inherent worth in and of itself, like a bond, or a swap, or an option or a paper dollar.
While I do think countries banning Bitcoin can negatively affect adoption and price, neither Bitcoins operation nor it price is reliant (let alone "completely" reliant) on government acceptance. The largest country in the world just banned it and its price is up 20% and it continues to process transactions regularly.

The game theory is also such that while some countries ban it, that incentivizes others to become even more accepting of it. This is as simple as the US and countries surrounding China beefing up their bitcoin mining after China booted miners out a few months ago. But it could also take the form of countries holding BTC in strategic reserves.

Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 07, 2021 4:03 pm
by Kbg
BTC,

If a G20 country starts putting BTC in their official reserves that would be a game changer in terms of my current opinion. If you happen to see that please post.

Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 07, 2021 6:43 pm
by vincent_c
Wasn’t gold ownership banned in the US but kept its value and had a market price in other countries?

Re: China Bans Cryptocurrency Transactions

Posted: Fri Oct 08, 2021 9:25 am
by bitcoininthevp
Kbg wrote:
Thu Oct 07, 2021 4:03 pm
BTC,

If a G20 country starts putting BTC in their official reserves that would be a game changer in terms of my current opinion. If you happen to see that please post.
If that happens, Im sure youll hear about it!

Curious, but given Bitcoin's trajectory over the last 10 years, doesn’t such an event seem inevitable? Maybe this is the coolaid talking, but... from dorks mining it on their computers when it had zero value, to small investment funds then buying it, to companies putting it in their treasury, then to small countries considering it legal tender/buying&hodling it/distributing it to citizens, now US senators advocating for it, ETF potentially being approved, to.... whats next? I suppose an about face is possible and we stop the adoption curve here and reverse, but that almost seems less feasible at this point. Strong coolaid?

Also, what would you think if a US state, say Texas, announced BTC as part of their own strategic reserves?

Re: China Bans Cryptocurrency Transactions

Posted: Fri Oct 08, 2021 10:00 pm
by Kbg
vincent_c wrote:
Thu Oct 07, 2021 6:43 pm
Wasn’t gold ownership banned in the US but kept its value and had a market price in other countries?
Yes

Re: China Bans Cryptocurrency Transactions

Posted: Fri Oct 08, 2021 10:11 pm
by Kbg
bitcoininthevp wrote:
Fri Oct 08, 2021 9:25 am
Kbg wrote:
Thu Oct 07, 2021 4:03 pm
BTC,

If a G20 country starts putting BTC in their official reserves that would be a game changer in terms of my current opinion. If you happen to see that please post.
If that happens, Im sure youll hear about it!

Curious, but given Bitcoin's trajectory over the last 10 years, doesn’t such an event seem inevitable? Maybe this is the coolaid talking, but... from dorks mining it on their computers when it had zero value, to small investment funds then buying it, to companies putting it in their treasury, then to small countries considering it legal tender/buying&hodling it/distributing it to citizens, now US senators advocating for it, ETF potentially being approved, to.... whats next? I suppose an about face is possible and we stop the adoption curve here and reverse, but that almost seems less feasible at this point. Strong coolaid?

Also, what would you think if a US state, say Texas, announced BTC as part of their own strategic reserves?
Sorry no credit for a state as it would be pure gimmick. I have no clue about the world BTC scene but the fact the US appears to be heading down the regulatory road implies full government approval. And one can already transact for goods with it. My guess is that the aim here is to force reporting by institutions to peel off the anonymity part of it for criminal and taxing purposes. To me the ultimate test for BTC is when say the US, Japan or Europe rolls out a digital currency. Interestingly, there’s a lot of lobbying to prevent that happening as it gores the ox of many financial firms.

Re: China Bans Cryptocurrency Transactions

Posted: Fri Oct 08, 2021 10:12 pm
by vnatale
Kbg wrote:
Fri Oct 08, 2021 10:00 pm

vincent_c wrote:
Thu Oct 07, 2021 6:43 pm

Wasn’t gold ownership banned in the US but kept its value and had a market price in other countries?


Yes


Reading here....

When Owning Gold Was Illegal in America: And Why It Could Be Again

https://www.huffpost.com/entry/when-own ... b_10708196

"Then, in the 1970s, the U.S. government removed the last remaining restraint on federal government deficits.

Nixon Ends The Gold Standard

At that time, foreign countries could exchange dollars they received through international trade for gold held by the American government, at $32 per ounce. In 1971, gold started to pour out of the U.S. government's stockpile due to large deficits in both the federal budget and the trade balance. At 9 PM on August 15, 1971, President Richard Nixon gave a televised speech to the nation, announcing that he was taking the dollar off the "Gold Standard." This move enabled the dollar to float freely against other currencies, and removed the final obstacle to ballooning federal deficits and trade imbalances."

So while it may have had a market price in other countries when it came to converting it to dollars, the world currency, then it was a fixed price with no market adjustment?

Re: China Bans Cryptocurrency Transactions

Posted: Tue Oct 12, 2021 2:35 pm
by gaddyslapper007
Fiat brain washed! “tHeRe iS nO OtHeR WaY, ….HelP mE CenTRal BaNkERs, hELp me GOverNMenT, SaVe Us!” <— the very fallacy’s Harry Browne warned us about in regards to “experts” thinking a galaxy brain can predict the actions of individuals and pull monetary strings to make it “all better”

rules ….not rulers!

Re: China Bans Cryptocurrency Transactions

Posted: Wed Oct 13, 2021 10:40 am
by Jack Jones
bitcoininthevp wrote:
Thu Oct 07, 2021 8:46 am
I suppose all we need is those non-corrupt good guy governments (central banks) that stay good indefinitely and then the money would be good?
https://markets.businessinsider.com/new ... 21-09?op=1

Re: China Bans Cryptocurrency Transactions

Posted: Thu Oct 14, 2021 9:11 am
by Kbg
bitcoininthevp wrote:
Thu Oct 07, 2021 8:42 am
Two reasons come to mind why inflation might be bad:
1. If money is being debased, no one saves in the money. It pushes people to, instead of saving in money, to speculate in stocks, real estate, etc.

2. The new (inflated) money needs to appear somewhere, thus you get the Cantillon Effect and all the bad that results from politically connected government cronies getting new money.

"the fact the EVERY country on the planet has a fiat system should tell you that you are flat wrong" - I'm not sure the conclusion follows logically from the premise here. I think that governments that are able to siphon the most from their economies have ended up as stronger and fiat partly enables such a scheme. (aside: I believe in The Sovereign Individual they outline that this is why capitalism "won" over communism in the cold war period, capitalism allowed for more government more access to the populations income to fund itself)

I think part of the discussion here is a difference between what is best for an "individual now" vs a "society in the future". To me its clear the benefits of Bitcoin to the individual now. Im not so sure about a utopian bitcoin standard for society in the future to be honest. I think many people gloss over the transition to such a standard as well as how different life might be on such a standard. But as the stoics say, focus on what you can control.
Excessive inflation is bad, and particularly for those on fixed income sources. My argument is not and never has been that high inflation is good. My argument is mild inflation is a nothing burger and a non-fixed system is overall more economically sound and productive than a fixed system. Additionally, fixed systems have an in-built/organic economic death cycle which was jettisoned decades ago once it was understood.

Most people do not understand how macro money works. It's not easy to understand and it is, I think, kinda weird. Most people take their individual experience with money, debt and savings and extend it to the broader world. However, extending an individual's monetary economy to a nation state's is a completely wrong paradigm.

But here's something simple everyone can understand.

More printed money != inflation. We all just witnessed that for 13 straight years. Japan is going on 30+ years of big printing presses and no inflation.

Inflation = any amount of money + real scarcity. We are having inflation because it appears COVID jacked up every supply chain known to man.

Finally, inflation can be fixed in less than a year. Whether it will be is another matter all together. Time will tell if in fact it is "transitory." My guess is the Fed believes it is transitory because they are betting on the supply chain issue working itself out...and when it does, poof, serious inflation will go a way.

P.S. Enjoyed the link, thanks for posting.