China Bans Cryptocurrency Transactions

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Re: China Bans Cryptocurrency Transactions

Post by Kbg » 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.
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Re: China Bans Cryptocurrency Transactions

Post by bitcoininthevp » 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.
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Re: China Bans Cryptocurrency Transactions

Post by Kbg » Thu Oct 07, 2021 8:36 am

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.)
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Re: China Bans Cryptocurrency Transactions

Post by bitcoininthevp » Thu Oct 07, 2021 8:42 am

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.
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Re: China Bans Cryptocurrency Transactions

Post by bitcoininthevp » 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.
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Re: China Bans Cryptocurrency Transactions

Post by vincent_c » Thu Oct 07, 2021 9:15 am

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
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Re: China Bans Cryptocurrency Transactions

Post by Kbg » Thu Oct 07, 2021 1:27 pm

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.
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Re: China Bans Cryptocurrency Transactions

Post by vincent_c » Thu Oct 07, 2021 1:32 pm

I don't think this is true, at least not a single government.
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Re: China Bans Cryptocurrency Transactions

Post by Kbg » Thu Oct 07, 2021 1:54 pm

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.
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Re: China Bans Cryptocurrency Transactions

Post by bitcoininthevp » Thu Oct 07, 2021 2:25 pm

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.
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Re: China Bans Cryptocurrency Transactions

Post by Kbg » 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.
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Re: China Bans Cryptocurrency Transactions

Post by vincent_c » 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?
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Re: China Bans Cryptocurrency Transactions

Post by bitcoininthevp » 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?
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Re: China Bans Cryptocurrency Transactions

Post by Kbg » 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
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Re: China Bans Cryptocurrency Transactions

Post by Kbg » Fri Oct 08, 2021 10:11 pm

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.
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Re: China Bans Cryptocurrency Transactions

Post by vnatale » Fri Oct 08, 2021 10:12 pm

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?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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Re: China Bans Cryptocurrency Transactions

Post by gaddyslapper007 » Tue Oct 12, 2021 2:35 pm

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!
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Re: China Bans Cryptocurrency Transactions

Post by Jack Jones » Wed Oct 13, 2021 10:40 am

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
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Re: China Bans Cryptocurrency Transactions

Post by Kbg » Thu Oct 14, 2021 9:11 am

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.
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Re: China Bans Cryptocurrency Transactions

Post by glennds » Sun Oct 17, 2021 3:20 pm

Kbg wrote:
Thu Oct 14, 2021 9:11 am


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.
Is it possible that Japan has plenty of inflation, but you and I can't see it because it's being canceled out by the persisting deflation that was present in their economy?
Deflation being the reason for inducing the inflation in the first place?
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Re: China Bans Cryptocurrency Transactions

Post by vincent_c » Sun Oct 17, 2021 8:36 pm

Printing money is the definition of inflation for whatever money in question.

Whether the printing of money affects how much it costs to purchase some other thing is a different story. If KBG means printing money != CPI inflation then I agree.
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Re: China Bans Cryptocurrency Transactions

Post by boglerdude » Sun Oct 17, 2021 10:06 pm

The Japanese dont riot. And have less property zoning. Check gold priced in Yen.
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Re: China Bans Cryptocurrency Transactions

Post by glennds » Sun Oct 17, 2021 10:37 pm

vincent_c wrote:
Sun Oct 17, 2021 8:36 pm
Printing money is the definition of inflation for whatever money in question.

Whether the printing of money affects how much it costs to purchase some other thing is a different story. If KBG means printing money != CPI inflation then I agree.
Right, but if you have an economy that is suffering from deflation, due to a shock or an asset bubble collapse, and the central bank creates inflation by printing money to counteract the deflation, is it necessarily a bad thing?

In 1929 when no such central bank action was taken, we know what happened; a devastating deflationary depression.
So if a central bank today induces inflation in order to stave off a deflationary depression, it may be a sound defensive measure. In such a case we may not actually see or feel the inflation, because it is being netted against the deflationary forces.
I don't claim to know enough about macroeconomics to say with certainty this is happening, but I'm putting forth the thesis.

They say in 2008 this is exactly the crusade that Bernanke led. I was among those that believed they had created an inflation monster that would get out of control, so I invested heavily in gold and convinced myself why there would not be a bull market in equities. Well the money printing inflation never came, and they successfully tapered off the action. In thinking about it, I concluded what I describe above is the reason why. The same may be the reason why Japan has not collapsed into hyperinflation from its even more aggressive action. Maybe we're in an age of central bank balancing that may have some merit so long as they do it right.

Note, I'm not talking about the "normal" historical 2-3%/year CPI inflation, I'm talking about excess inflation.
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Re: China Bans Cryptocurrency Transactions

Post by vincent_c » Mon Oct 18, 2021 1:16 am

glennds wrote:
Sun Oct 17, 2021 10:37 pm
Right, but if you have an economy that is suffering from deflation, due to a shock or an asset bubble collapse, and the central bank creates inflation by printing money to counteract the deflation, is it necessarily a bad thing?
Again, although a lot of people recognize that there are various forms of inflation, many times this is forgotten when we talk about deflation.

If the money that is being used is being deflated, then the holders of that money actually have more purchasing power.

I think we use the words shock or collapse to describe something we view as negative. I can't say I understand it well, but my hunch is that a deflationary shock is not going to affect everyone uniformly but perhaps the reason why it is considered so bad is that the Fed has made us accustomed to inflation so that most people are positioned to benefit from inflation which means that a deflationary environment may only benefit the few who are prepared.

If the central bank could act with precision then manipulation can be a good thing for society. I personally feel like if everyone is allowed to act in their best interests in an economy that isn't manipulated then things will work itself out, maybe harsh for some but who's to say what system is fair.
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Re: China Bans Cryptocurrency Transactions

Post by glennds » Mon Oct 18, 2021 8:24 am

vincent_c wrote:
Mon Oct 18, 2021 1:16 am
I personally feel like if everyone is allowed to act in their best interests in an economy that isn't manipulated then things will work itself out, maybe harsh for some but who's to say what system is fair.
I agree with you, but only up to some type of circuit breaker threshold.
Beyond that level, self interest can lead to bad outcomes. My example would be the years leading up to 2008. Alan Greenspan, being a student of Ayn Rand, was a huge believer in the invisible hand.
Then when the mortgage lenders, borrowers, Wall Street banks, appraisers, and every other invested party took their self interest into recklessness, we both know what happened.

OTOH, when the government is too involved, it's usually not a good thing either. The answers are never binary.

I'm not against some type of regulation of the crypto market. Here is a market that is big enough to be big, but not too big to be manipulated by whales, hedge funds, other bad actors. If that kind of manipulation happens and little guys get hurt, then the regulation that does eventually show up will be punitive and not the kind we had hoped for.
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