Bitcoin CRASH: Cryptocurrency PLUMMETS 60 per cent in MONTH as market continues to tumble

[AshleyAshes]

11 minutes ago, Misanthrope said:

1) You spend waaaay to much to attend anime conventions

2) Thanks for the info that's also the way I look at it: cryptos as some sort of anarcho-capitalist wet dream. And it's ending up like most of those: controlled by criminal enterprises.

I do a lot of shopping at the con, though I did not use the entire $1000 budget last year.

[SpaceGhostC2C]

1 hour ago, Unimportant said:

And we've had government meddling for equally long.

"Meddling" is vague enough. The way in which governments intervened in the economy has changed a lot over time and space. If you want to get that vague (at the cost of being meaningless), "governments meddling" is a requisite of market economies (since there is no market without private property, and there is no private property without enforcement).

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Even the Roman empire diluted the gold content of their coins to artificially expand their currency supply and pay for their big government with inflation. (The Austrian definition of inflation: expansion of the money supply).

Inflation is the generalized increase in prices. There is only so much rational discussion that can be had when the strategy is to re-define concepts to mean something else.

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I see no counter cyclical policies. We have low rates when times are good and even lower rates when times are bad.

No. We have low rates when inflation and growth are low, and we have high rates when inflation and growth are high. We have debt to GDP ratios increasing in recessions and declining in expansions. The US has gone it's own path in terms of debt during the last few years before the crisis, but that's linked to its current account (which, by definition, has to have the opposite sign elsewhere, so it simply can't happen everywhere at the same time). That hardly applies to every modern economy with an independent central bank.

That's what's called "coutnercyclical policy": contractionary fiscal-monetary policy mixes in the face of inflation, expansionary fiscal-monetrary policy mixes in the face of recessions. If you don't see those, you are simply not looking.

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The fact one raises rates from 2 to 4% during a expansion, for example, means nothing if the true market rate would've been 5% at that time. You're still artificially too low.

Yes, but you can always claim the interest rate is "artificially low" by coming up with a "true, unobserved interest rate" that only you can see. I can also say I'm not alone, I have my imaginary friend by my side, you just can't see him...

The thing is, "too low' should show up somewhere, and since inflation is kept at bay, it pretty much looks like an adequate interest rate.

 

 

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This "Golden Age" you speak off started off with the US cheating the Bretton Woods semi gold standard by printing more dollars then they had gold to back it with in order pay for the Vietnam war and the war against poverty at home.

Abandoning. The word you look for is "abandon" the Bretton Woods agreement, which unfortunately lasted far more that the zero days it should have, because it was just terrible. The gold standard is a disgrace we got rid of, hopefully forever - needless exchange rate crisis. It was actually an obstacle to stability in the early post war (the first half of the "golden age"), and was absent in the second half. Hard pegs are just a commitment to bad monetary policy - a commitment that sooner or later loses all credibility.

 

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The result was rising inflation which, despite rate hikes along the way, kept moving up - It took Volcker massively hiking rates in one fell swoop to kill off inflation. The lesson here is that once inflation is out of the bottle, it requires hiking rates fast and hard above the inflation level and get in front of the curve. If you study other cases of inflation that managed to be controlled before turning into hyperinflation you'll see this keep coming up.

Yes. So basically: monetary policy controls inflation, just as in standard macroeconomics, and the require policy rate for disinflation is in line with the expectation-augmented Phillips Curve. Economics 1, Voodoonomics 0?

 

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That's relevant to me because it limits what can be done to choke off inflation this time around.

Which inflation? We barely avoided Japanese or Great Depression style deflation.

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Should inflation rise to 3 -4% with momentum, do you honestly think central banks will move their funds rate to 5 - 6 %, let alone 20% if need be like in the seventies?

Should inflation rise anywehre near twice teh Fed target (good luck seeing that happen overnight), interest rates are bearely coming off from the ZLB, so increasing them is the easiest thing to do. It's not even a thing. And no, you don't need 20% interest rates to curb 4% inflation rates. But I'll gladly read the econometrics behind a different argument.

 

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 I think you'll be surprised at how addicted economies all over the world have become to these low rates and the collapse that would follow.

I think that's more Nostradamus without an actual argument behind.

 

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Time will tell, but my point is, you can't claim success for a good flight before you've landed. If this multi-decade story ends well, then you-re right. But if we crash and burn on landing then it kinda ruins the whole flight. Except for the ppl who don't live long enough to see it.

OK, but strip-off the metaphore and reveal the actual economic argument, if any, because the way you are phrasing this sounds like "I will continue predicting doom forever, and if at any point in the history of the universe everything goes to hell, then that will just mean I was right all along". Which, you know...

 

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Perhaps that was Keynes's point when he said "In the end we're all dead?".

No, his point was that long-run models of economic equilibrium did not contain the forces shaping short-run fluctuations, and therefore don't provide any insight on how to deal with them. Which is true, since growth models abstract from many things that fluctuate quarter to quarter (like unemployment) and focus on the long run determinants of GDP per capita. People forcing those long term models to say something about the business cycle end up with very strange, usually harmful conclusions.

 

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To talk about multi-decade trends one looks at the long term, not every little 0.25% wobble up and down.

http://www.archershomes.com/wp-content/uploads/2015/03/Fed-Rates-since-1980.jpg

 

Yes, and you are conveniently missing like the 50 years before Volcker?

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Yes, before that graph starts rates were moving up, ending in the Volcker spike mentioned above.

Thanks for the quick answer

Also, as I said, you show the nominal policy rate, instead of the real interest rate (the one that ultimately matter for economic decisions).

 

 

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But like I said - that was to kill off a inflation train that was getting out of hand and I do not believe that same reaction capacity is available today.

Citation needed. What we certainly don't have is the inflation of the '70s (which, by the way, have a very standard explanation: expansionary policies were the right response to negative demand developments, while they are useless for negative supply shocks - exactly what the oil price shocks in the '70s were. The Keynesian response that worked so well before was not the right response to stagflation - so yes, governments trying to apply the same solution to a different problem were wrong. Generalizing it to any scenario has no basis).

 

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Important to note is that some countries can fund themselves today at multi-century (!!) low rates, despite having a worse fiscal situation. Heck, even Greece can borrow again at ridiculously low rates. Do you really think anything got actually fixed over there ?

Are you telling me the market participants are irrational and lend to Greece at an expected loss? I'm surprised to read an "Austrian" with so little confidence in the markets

 

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It is just the central bank putting a put beneath those bonds, if the central bank where to move away all those private investors would be gone in an instant. Don't mistake investors front-running a price insensitive buyer like a central bank for actual true investment demand. 

Well, you are proving not to be very informed about the Greek case and the Eurozone's institutions in that sentence, so I'd advice you get a bit more information about it before entering in a topic (we are way off topic already!) that you haven't scratched the surface of yet.

 

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In what world !? Nominal debt *never* goes down. The debt only goes down as a percentage of GDP when GDP grows faster then the debt, but actually nominally paying something off ? Never!

Which would be good enough. The absolute value of debt would be a very silly thing to look at, since $1 of debt when your income ios $1 means something very different than $1 of debt when your income is $1000. But even in absolute terms it has gone down in many instances. Just of the top of my head, you can look at Eurozone countries on their way to join the Euro in the 90s, and how Debt/GDP felt faster than GDP growth.

 

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And no, shrinking the debt as a percentage of GDP is not good enough.

See above.

 

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In a recession your GDP can plummet as we've seen last time, while the debt remains, making your percentage ratio spike.

In a recession, you GDP falls, and debt to gdp ratio increases, just like it decreases with booms. If GDP plummets, we are in a much more significan, less frequent event (a depression, or borderline that, like 2007). Something that can be avoided and mitigated with sound economic policy, of course.

 

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You might find creditors fleeing just as you want to borrow even more from them to do your countercyclical stimulus.

Yes. Not something that the US has experienced, but for more peripheral economies that's the reality: they don't have all policy tools at hand, sadly.

 

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Ah well, back to the central bank I guess ?

I wish that meant something, but it doesn't. Unless you mean the central bank doing expansionary monetary policy, which of course it has to in a recession, so...

 

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I hear this often, try having a few large central banks stop sucking up all the bonds for a few months, we'll see how stuck at the zero bound we are.

Yeah, the ZLB is a bound on monetary policy, so... You are telling me that the central bank can't lower interest rates further... because it tries to lower them too much? 

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I think you'll see double digits and the first one not being a 0.

Again, I don't care about predictions you read in your tea leaves, and I don't think you understand the difference between nominal and real rates. But in any case, there is no "central bank pulling from" anything: if they do a more contractionary policy then we'll have higher real rates and more deflationary pressures. I don't see in which sense this is not mainstream economics.

 

 

 

OK, this is getting pontlessly long and ban-worthy off-topic, so I think I'll stop here and leave this thread alone. Just as a closure note:

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The responsible friend at the party that says you ought to stop drinking before you puke all over the place, the party pooper,

I've seen the EconStories video. It was fun, but hardly a rigorous assessment of scientific merits  

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is never popular. This is of course all highly personal.

Except it is not, you see? Science is not about "personal" or "popularity", and my statement was never about popularity, it was about having a scientific approach to things. "Austruans" refuse it, and those following don't find "Austrian" conclusions.

 

OK, I'm out, don't ban me yet!  

 

 

[AshleyAshes]

14 minutes ago, SpaceGhostC2C said:

OK, but strip-off the metaphore and reveal the actual economic argument, if any, because the way you are phrasing this sounds like "I will continue predicting doom forever, and if at any point in the history of the universe everything goes to hell, then that will just mean I was right all along". Which, you know...

*points at a baby*
"That child will DIE!  Mark my words!  Just you wait and see!"
*55 years later, after growing up, former baby gets hit by a bus*
"AH HAH!  I TOLD YOU!  DIDN'T I TELL  YOU!?  WHY DIDN'T ANYONE LISTEN TO ME!?"

[cj09beira]

1 hour ago, AshleyAshes said:

For the longest time the Neo-Libertarians said it would be a currency without government control that would be cheap and accessible.  ...That has not materialised at all.  You can't 'buy' things with Bitcoin almost anywhere.

 

Further more no one values Bitcoin like they would any other currency.  People only value bitcoin by how much of another currency it can buy, typically USD.  Obviously any currency can be compared to another currency but here in Canada I an look at $1000 CAD as 'Almost One Months Rent' or 'That'll cover that anime convention this year' or '3-4 months of groceries', useful, meaningful things and it's all off the top of my head.  No one can value Bitcoin for any utility unless they convert it for another currency first.

 

Even things like the 'BitPay Visa Debit Card' doesn't BUY things with Bitcoin.  You use BitCoin to buy USD and the card carries USD, not bitcoin, all purchases are done in USD, the only purchase made with bitcoin is the USD it's preloaded with.

 

Additionally, you'd be insane to accept Bitcoin as say, wages for labor.  Imagine if you got paid two weeks ago, in X amount of bit coin, and now your pay has significantly less buying power?  Not to mention an employer would be insane to offer to PAY someone in bitcoin, at least in terms of X BTC/Hour of labour.  Maybe 'X USD Worth If BTC/Hour Of Labour' but even would be far fetched.  It also goes back to my previous points of how Bitcoin isn't valued for anything other than the amount of another currency it can buy.

 

As an actual 'currency', Bitcoin is effectively stillborn.

bitcoin isnt a good coin but that doesnt mean that crypto-currencies in general suck, as there are many coins out there that resolve bitcoins problems, including the high transfer tax, slow speed, and some even have ways around volatility (some eth tokens for example) 

[Unimportant]

26 minutes ago, SpaceGhostC2C said:

OK, this is getting pontlessly long and ban-worthy off-topic, so I think I'll stop here and leave this thread alone.

Indeed, we're getting too far off-topic. This would be a subject better suited for discussion at a bar with a cold pint.

Let's agree to disagree and thanks for the conversation.

[Sakkura]

1 hour ago, Unimportant said:

In what world !? Nominal debt *never* goes down. The debt only goes down as a percentage of GDP when GDP grows faster then the debt, but actually nominally paying something off ? Never!

 

Oh really.

 

https://www.ft.com/content/2848ce2e-e640-11e7-97e2-916d4fbac0da

 

https://www.reuters.com/article/us-germany-economy-institutes/how-to-spend-it-merkel-can-count-on-record-budget-surplus-idUSKCN1C312B

[JoeCoke]

14 hours ago, elderago said:

I wish etherium would drop Id like to upgrade my 970 to a 1070 please

And I'd like to upgrade my 770 to a 970... I completely gace up hope of ever building my 1070+1700 build.

[AshleyAshes]

2 minutes ago, cj09beira said:

bitcoin isnt a good coin but that doesnt mean that crypto-currencies in general suck, as there are many coins out there that resolve bitcoins problems, including the high transfer tax, slow speed, and some even have ways around volatility (some eth tokens for example) 

There's still the bigger issue:
What do any of these coins do that I can't do with existing payment methods when I want to buy stuff?  (Ignoring that I can't even use them at most places, alt-coins are accepted less places than Bitcoin)

[Unimportant]

1 minute ago, Sakkura said:

 

Oh really.

 

https://www.ft.com/content/2848ce2e-e640-11e7-97e2-916d4fbac0da

Again, a blip in time - we're talking long term here.

Lets see how long it lasts for any socialist government to come in and blow the surplus, wanting even more after that and killing the surplus laying goose.

 

But We've called this off-topic walk quits so now I'm out as well.

[Sakkura]

Just now, Unimportant said:

Again, a blip in time - we're talking long term here.

Lets see how long it lasts for any socialist government to come in and blow the surplus, wanting even more after that and killing the surplus laying goose.

 

But We've called this off-topic walk quits so now I'm out as well.

That's moving the goalposts.

[cj09beira]

4 minutes ago, AshleyAshes said:

There's still the bigger issue:
What do any of these coins do that I can't do with existing payment methods when I want to buy stuff?  (Ignoring that I can't even use them at most places, alt-coins are accepted less places than Bitcoin)

 first of course you can't do much with them yet, we are just a few years into this it will take time before adoption starts,

2, you don't need banks to store as much as you want, as long as you follow simple security rules the money is really safe, it doesn't matter where you are in the world it just works, transactions should be faster and cheaper, and excluding pow, it should be a more efficient way of transferring money around 

[Jito463]

1 hour ago, Master Disaster said:

So I just did some googling and it seems like the alleged inventor of BTC, a Japanese person or persons (no one knows for sure) have roughly one million unspent BTC in their possession making them amongst the top 100 richest people on the planet.

Only if they could cash it out for something else.  Owning a made up currency (yes, I went there) doesn't make one rich, it only matters what it can be traded for.

[cj09beira]

3 minutes ago, Jito463 said:

Only if they could cash it out for something else.  Owning a made up currency (yes, I went there) doesn't make one rich, it only matters what it can be traded for.

how is it any different from any other currency, most countries did made up their currencies, thats like saying a guy with most of their money invested into real-state isn't rich unless he sells all his real-state.

 

[AshleyAshes]

12 minutes ago, cj09beira said:

 first of course you can't do much with them yet, we are just a few years into this it will take time before adoption starts,

2, you don't need banks to store as much as you want, as long as you follow simple security rules the money is really safe, it doesn't matter where you are in the world it just works, transactions should be faster and cheaper, and excluding pow, it should be a more efficient way of transferring money around 

You didn't answer anything with this post.  The question is, why should the consumer switch?  And I said we were IGNORING the lack of places you can even use it.

 

Cheaper?  Is it?  For consumers the cost of engaging in transactions can be minimal or faster.
Faster?  The consumer can just tap their card and whatever they want to buy is effectively paid for.  Maybe the money in the back-end moves faster but why care?  Tap ard, walk out of building with stuff.  Click 'Buy Now' and Amazon has your thing at your door by tomorrow.  For the consumer, transactions are already effectively instant.  And they aren't going to care how it works on the back end.

'Simple Security Rules'?  Consumers are MORONS and need to be protected from accidentally giving out card numbers and birthdates when the "Credit Card Repair Man" calls them up out of the blue.

 

How about consumer protections?  Without third party services, what protects a consumer from getting screwed?  If I want to buy something used online from an individual, I'm not just going to send money in an irreversible way but rather I want to know that if I don't get my stuff then I get my money back.  PayPal, credit card companies and the like offer consumer protections and have the means to reverse transactions should a consumer get scammed out of money without goods.  Can these altcoins do that or do I still need to use a third party service?

 

This isn't a question of 'What is arguably technically better' it's 'What is on offer that makes things EASIER to consumers?'  Frankly, it seems that at BEST, cryptocoins offer a means to EQUAL existing payment methods but not do anything better.

[Jito463]

1 minute ago, cj09beira said:

how is it any different from any other currency, most countries did made up their currencies, thats like saying a guy with most of their money invested into real-state isn't rich unless he sells all his real-state.

Real estate is a truly limited resource.  There will always be a demand for real estate, therefore you will always be able to sell it (at what price is irrelevant, it will always be in demand).  As for paper currencies, there is an actual value behind them, as well.  It's backed by the economy of the country that produces it.  Not as good as having a physical backing (such as gold), but at least there's something of value behind it.  CC's are completely worthless, aside from what value people magically ascribe to it.  There is not one single, tangible thing behind any CC that would give it any real value.

[cj09beira]

3 minutes ago, Jito463 said:

Real estate is a truly limited resource.  There will always be a demand for real estate, therefore you will always be able to sell it (at what price is irrelevant, it will always be in demand).  As for paper currencies, there is an actual value behind them, as well.  It's backed by the economy of the country that produces it.  Not as good as having a physical backing (such as gold), but at least there's something of value behind it.  CC's are completely worthless, aside from what value people magically ascribe to it.  There is not one single, tangible thing behind any CC that would give it any real value.

its value come from people wanting it and there being a limited supply, as it becomes more useful with payment systems being created it will be less volatile and probably more valuable as well.

and i dont agree that paper money is backup by its economy at least not at the core, my opninion is that its value comes from the agrement that we will use said currency, some cuntries have in the past changed currency like that 

13 minutes ago, AshleyAshes said:

You didn't answer anything with this post.  The question is, why should the consumer switch?  And I said we were IGNORING the lack of places you can even use it.

 

Cheaper?  Is it?  For consumers the cost of engaging in transactions can be minimal or faster.
Faster?  The consumer can just tap their card and whatever they want to buy is effectively paid for.  Maybe the money in the back-end moves faster but why care?  Tap ard, walk out of building with stuff.  Click 'Buy Now' and Amazon has your thing at your door by tomorrow.  For the consumer, transactions are already effectively instant.  And they aren't going to care how it works on the back end.

'Simple Security Rules'?  Consumers are MORONS and need to be protected from accidentally giving out card numbers and birthdates when the "Credit Card Repair Man" calls them up out of the blue.

 

How about consumer protections?  Without third party services, what protects a consumer from getting screwed?  If I want to buy something used online from an individual, I'm not just going to send money in an irreversible way but rather I want to know that if I don't get my stuff then I get my money back.  PayPal, credit card companies and the like offer consumer protections and have the means to reverse transactions should a consumer get scammed out of money without goods.  Can these altcoins do that or do I still need to use a third party service?

 

This isn't a question of 'What is arguably technically better' it's 'What is on offer that makes things EASIER to consumers?'  Frankly, it seems that at BEST, cryptocoins offer a means to EQUAL existing payment methods but not do anything better.

crypto should help in some scenarios, one is being the backbone of money transfers.

now there is no currency where you can just have your money back if you decide to, those kinds of protection will probably always come from 3rd parties, actually this is a lie, with ethereum you can make contracts with no 3rd party where you can program cases where you get your money back if the other party didn't upheld their side of the contract.

crypto will probably represent 2 things

the ability to store your own currency if you decide to with little hassle (important in case that for example a bank declares bankruptcy).

increase of efficiency of backbone transfers, which in turn should mean lower transfer costs, no need for as many servers in banks, which in the end means less energy consumption, (excluding pow  ).

 

so i guess you are right in the sense that normal consumers shouldn't feel much difference (although it will be there)

[i_build_nanosuits]

it's down in the 6000US now i started lunch it was 7024 and now it's 6861 LOL

 

[Sauron]

4 hours ago, Misanthrope said:

Look here is an honest question: Whats bitcoin and all cryptos end-game strategy?

 

Because they must have known that as soon as they became profitable, bankers would complain and governments would ban cryptos and that'd be the end. They still don't have mass adoption by people and now that we have talks of banks refusing to even accept them or trade them at all well, I don't think you can sustain the crypto currency economy by just money laundering for Somali Pirates and Mexican Narcos.

Bitcoin has no long term goal, which is why we should let it die in my opinion. It's only alive because of speculation, but the technology behind it is ancient at this point.

 

Other cryptos actually use the funds to improve blockchain technology for a wide variety of applications, like IOT communication, cryptography and more. As for bans, as far as I'm aware no government has outright banned cryptos, but some have banned trading or imposed other regulations, which makes sense and doesn't compromise the research. Bitcoin itself doesn't have much use other than being a tax loophole and a speculation sink though.

[dalekphalm]

8 minutes ago, Sauron said:

Bitcoin has no long term goal, which is why we should let it die in my opinion. It's only alive because of speculation, but the technology behind it is ancient at this point.

 

Other cryptos actually use the funds to improve blockchain technology for a wide variety of applications, like IOT communication, cryptography and more. As for bans, as far as I'm aware no government has outright banned cryptos, but some have banned trading or imposed other regulations, which makes sense and doesn't compromise the research. Bitcoin itself doesn't have much use other than being a tax loophole and a speculation sink though.

I'll put it this way: If people didn't "get rich" mining coins, they wouldn't use it at all.

 

But that's not sustainable. Everyone is "chasing" the big score, which in turn, simply drives up the mining difficulty needlessly, and drives up the price to speculative levels.

 

The whole thing is insane. And I admit without any guilt that I mined a bunch way back in like 2013-2014. I cashed out and made a little money - nothing crazy (under $1000), but still. I would damn well not have touched it, if there wasn't a chance to make money.

 

And that's the flaw in Crypto, that I see. The currencies are all designed to have a steady flow created and introduced into the system, over time, but people want to make money and become rich, so they try to game the system (rush in a bunch of hashing power before the difficulty spikes).

 

It's like a heroin fix. You're always chasing the dragon.

[Sauron]

22 minutes ago, dalekphalm said:

I'll put it this way: If people didn't "get rich" mining coins, they wouldn't use it at all.

 

But that's not sustainable. Everyone is "chasing" the big score, which in turn, simply drives up the mining difficulty needlessly, and drives up the price to speculative levels.

 

The whole thing is insane. And I admit without any guilt that I mined a bunch way back in like 2013-2014. I cashed out and made a little money - nothing crazy (under $1000), but still. I would damn well not have touched it, if there wasn't a chance to make money.

 

And that's the flaw in Crypto, that I see. The currencies are all designed to have a steady flow created and introduced into the system, over time, but people want to make money and become rich, so they try to game the system (rush in a bunch of hashing power before the difficulty spikes).

 

It's like a heroin fix. You're always chasing the dragon.

I think it's unfair to say that everyone involved is just looking for an easy profit. And sure, the monetary gain is a good reason to mine, but I think you should be invested in the technology if you choose to support it. Unfortunately people will be people and go for the cash grab, but there are some good applications for this technology.

[dalekphalm]

Just now, Sauron said:

I think it's unfair to say that everyone involved is just looking for an easy profit. And sure, the monetary gain is a good reason to mine, but I think you should be invested in the technology if you choose to support it. Unfortunately people will be people and go for the cash grab, but there are some good applications for this technology.

Not exactly the point I meant.

 

What I meant, is that without the people in it just for the money (driving mining), the rest of the system probably couldn't function, due to too few people seriously interested in BTC as a currency.

 

Speculation of course.

[Dissitesuxba11s]

I wonder if the crypto millionaires that were looking to make a "cypto utopia" in Puerto Rico are affected by this decline. 

[Sauron]

8 minutes ago, dalekphalm said:

Not exactly the point I meant.

 

What I meant, is that without the people in it just for the money (driving mining), the rest of the system probably couldn't function, due to too few people seriously interested in BTC as a currency.

 

Speculation of course.

That's possible, but that goes for normal jobs as well.

[dalekphalm]

Just now, Sauron said:

That's possible, but that goes for normal jobs as well.

True, but regular money and jobs contribute to the global economy. BTC mining and speculation have yet to prove their worth.

[Sauron]

3 minutes ago, dalekphalm said:

True, but regular money and jobs contribute to the global economy. BTC mining and speculation have yet to prove their worth.

Which is why I think it's a good thing if the speculation around it dies. BTC is a dinosaur at this point, there are much more interesting peojects around that deserve more attention.