Prices, Inflation/Deflation, Interest Rates & The Fed

C-Note

Hummingbird
Other Christian
Gold Member
It's almost as if God provided gold to the world to serve as the base or default currency. Gold doesn't serve many industrial uses. Most of it is used for jewelry or as a currency, if I understand correctly. The amount of gold produced or available has been fairly steady throughout human history, so people know how much is out there and that's why it works so well as money when all else fails. Contrast gold with diamonds, of which there are so many that DeBeers hoards them in a vault in Russia to make sure they retain a manipulated value. Has there been any society in human history that didn't value gold as a currency?

If the electrical grid fails for a significant amount of time, how are you going to use crypto to buy things? You can hand someone a gold coin. What value will crypto have unless you live in some kind of cyberpunk reality when society breaks down?
 

NoMoreTO

Hummingbird
Catholic
It's almost as if God provided gold to the world to serve as the base or default currency. Gold doesn't serve many industrial uses. Most of it is used for jewelry or as a currency, if I understand correctly. The amount of gold produced or available has been fairly steady throughout human history, so people know how much is out there and that's why it works so well as money when all else fails. Contrast gold with diamonds, of which there are so many that DeBeers hoards them in a vault in Russia to make sure they retain a manipulated value. Has there been any society in human history that didn't value gold as a currency?

If the electrical grid fails for a significant amount of time, how are you going to use crypto to buy things? You can hand someone a gold coin. What value will crypto have unless you live in some kind of cyberpunk reality when society breaks down?

I agree totally.

Gold is for a crisis. And when in a crisis people will go back to what they trust. As much as the case for bitcoin is amazing to listen to, and people on here have made boatloads of money with it, and may very well it isn't what I would trust in a crisis.
 

gat

Robin
Protestant
Lightning can be run by anyone. No big centralized nodes need to be run, the overwhelming majority of lightning nodes (20k?) have less than 1 BTC of liquidity. Something is necessary to scale transactions....if every person on Earth were transacting on main chain, they would be able to make only 1 transaction in a lifetime. Lightning offers limitless transactions, in seconds rather than hours, and is still a bearer instrument,
Running a lightning network is much more complicated than transacting on the main chain. If we went to big blocks there would have been millions (billions) transacting on main chain. It is incredibly easy and cheap. Lightning network made it more complex. Strategic move from the elites. They hate simplicity and elegance because it empowers the average man.
.if every person on Earth were transacting on main chain, they would be able to make only 1 transaction in a lifetime
I'd like to dig into this more because this is debatable but I don't have a clear technical answer. My gut tells me (when I ran some of the math years ago) that this is because of the tiny blocks. Have big blocks and the average person could purchase a hard drive with the blockchain already loaded on it. Catch up 1 month's of transactions in an hour and be off to the races. Storage is cheap.
t was the large 10 BTC+ nodes that were getting relentlessly attacked DDoS style, but transactions just routed through smaller nodes
This wouldn't even be on the radar if we were on big blocks.

gold is expensive to move
It is expensive to move compared to Bitcoin - comparing physical world to digital world. In the digital world, Bitcoin is the MOST expensive thing to move. (especially since the war for big blocks was lost)
 

gat

Robin
Protestant
I'm pro crypto, but more as an asset that gains in value, hard to preduct if it's really a store of value.
I'm with you here. I think the dark horse over the next 10 years is gold because:

1. The west is betting on crypto. They are embracing it and it will replace the current fiat money system. The usual suspects will attempt to subvert it because it is at least subvert-able.
2. The east is betting on gold. Look at all their large buys - both China and Russia. They will back a digital money with gold in the next 10 years in my opinion. This will be a declaration of war though so they won't do it until they are strong enough. If they do it a digital war will break out and China will attempt to knock out our networks - to hurt the functionality of crypto. Their digital money backed by gold will then be in a strong position because it can live in 3 worlds - physical (gold), paper (paper backed by gold), digital (digital backed by gold). It will be a master stroke if it happens but they have to be in a strong war position to defend it.

I would avoid fiat completely. Buy Bitcoin, gold, and online 'real estate'. I'm not a fan of physical real estate personally as an investment anymore. Buy what you need for yourself and independence but the digital 'real estate' is where the next fortunes will be made. The other stuff is going to be taxed away by marxists and their ilk.
 

DeusLuxMeaEst

Pelican
Orthodox Catechumen
Gold Member
Agree with the above comments on gold. A lot of the gripes are the gold price hasn't skyrocketed, but I see gold as more of an insurance policy.

Gold can be passed down 10 generations and still hold value, you can't say that about crypto.

Regarding gat's comments I agree. What's stopping China or Russia from creating "Russiacoin" or "Pandacoin" backed by gold and the full faith of their goverment?

How would Bitcoin or other crypto compete since they are backed by nothing?
 

vstk

Robin
Catholic
I'm pro crypto, but more as an asset that gains in value, hard to preduct if it's really a store of value.
It has survived some severe bear markets thanks to a group of hardcore believers so I would say it is not going away anytime soon. But the fact a lot of the people who are not passionate about crypto buy it in order to get rich makes it more fragile and prone to crashes. A decent store of value doesn’t lose 10% in 2 minutes as it happened yesterday. That does not happen to gold.
I would not be surprised if BTC were down 90+% at some point within a decade. That risk is ok to bear for a single speculator, if one has a family and kids it is more prudent to hold gold for capital preservation.
 

EndlessGravity

 
Banned
Protestant
Q: Have you not wondered why "inflation" only affects some prices but not others?
A: No - inflation is a generalized phenomenon. Individual markets may vary item to item as the economy and supply chain is very complex and there are many products. The general them is rising prices.

The price of chicken is up 15% in the last 2 years.

If we measure from the dip, when the inflation really began, we can see that the price has risen considerably more than that.

I believe this is a combination of supply chain issues , lower production, and inflation of the money supply.

The price of chicken in 2017 and 2018 spiked above the current price. We are looking at a single commodity, so I can't explain what happened to Chicken prices at that moment, but there are many things which have reached new highs. Chicken constitutes about $30 of my monthly food budget.

Could you explain the pump and dump in more detail. Your idea is that the entire economy is being pumped so that it can then be dumped and retail investors lose? I was speaking of a bubble popping, is that different than a pump and dump? My understanding is a pump and dump is a little more intentional, whereas a bubble is more of a widespread phenomena.

I'm very open to prices crashing and us receiving a serious dose of inflation, but I can't agree that we've had deflation in the last 2 years.

Think about what your saying for five minutes. I honestly can't believe you're being serious.

I'm no longer commenting here. It's a waste of time and effort.
 

chance vought

Woodpecker
Protestant
It's almost as if God provided gold to the world to serve as the base or default currency. Gold doesn't serve many industrial uses. Most of it is used for jewelry or as a currency, if I understand correctly. The amount of gold produced or available has been fairly steady throughout human history, so people know how much is out there and that's why it works so well as money when all else fails. Contrast gold with diamonds, of which there are so many that DeBeers hoards them in a vault in Russia to make sure they retain a manipulated value. Has there been any society in human history that didn't value gold as a currency?
Gold will have value but it won’t work to settle accounts in 21st century. Too slow.
If the electrical grid fails for a significant amount of time, how are you going to use crypto to buy things? You can hand someone a gold coin. What value will crypto have unless you live in some kind of cyberpunk reality when society breaks down?
Bitcoin works just fine with solar panels, raspberry pi, and a satellite antenna, no grid required. In a bad situation, its much harder to steal than gold.
 

chance vought

Woodpecker
Protestant
Running a lightning network is much more complicated than transacting on the main chain. If we went to big blocks there would have been millions (billions) transacting on main chain. It is incredibly easy and cheap. Lightning network made it more complex. Strategic move from the elites. They hate simplicity and elegance because it empowers the average man.
How long does the initial block download take on BCH? BSV is already breaking due to lag. Small blocks are the only way to ensure cheap hardware and a short download for maximum decentralization and cockroach survivability….the most important thing BTC has to do.
I'd like to dig into this more because this is debatable but I don't have a clear technical answer. My gut tells me (when I ran some of the math years ago) that this is because of the tiny blocks. Have big blocks and the average person could purchase a hard drive with the blockchain already loaded on it. Catch up 1 month's of transactions in an hour and be off to the races. Storage is cheap.
A pre downloaded blockchain is not trustless.
This wouldn't even be on the radar if we were on big blocks.


It is expensive to move compared to Bitcoin - comparing physical world to digital world. In the digital world, Bitcoin is the MOST expensive thing to move. (especially since the war for big blocks was lost)
You can move a billion dollars worth for a dollar on main, or 10 dollars for 1/20th cents on Lightning…
 

Blade Runner

Hummingbird
Orthodox
The attack vector for Bitcoin is going to be similar to their attack vector on gold. They will paper-ize it.

They can do this by solving for the incovenience of buying/selling/storing Bitcoin - just like they did with gold. With gold they did this first through banks and then ultimately through centralized paper 'markets'. With Bitcoin I think they will do it by venture funding wallet companies and inventing and funding things like lightning (lightning was unnecessary to scale Bitcoin and actually made it less decentralized) at first. Eventually they will somehow move these various mechanisms of custody to a more central 'market'. Then they can print their CBDCs as they wish.

I'm also pretty convinced they already gained influence over the core developers - leading to things like the lightning network. The people who make decisions on Bitcoin are a small group of developers, miners, and large owners. It's highly likely they were bought off. Look into the history of Tether, the people behind Tether, and also the battle between Bitcoin Cash and Bitcoin/Lightning Network and you'll likely come to a similar conclusion.

All that said, this attack vector will cause the price to go up because it is an 'if you can't beat them, join them' investment model. They are going to embrace Bitcoin, pump it, and slowly usurp it for their CBDCs. Then they can get back to their good old days of money printer go brrr.
This is one of the few valid criticisms I have seen and thought about - derivatives markets pop up with humans regardless of the asset, as gat points out. As for paragraphs 2 and 3, I'm not sure, but it's possible. Those are pure speculation, however.
 

Blade Runner

Hummingbird
Orthodox
Agree with the above comments on gold. A lot of the gripes are the gold price hasn't skyrocketed, but I see gold as more of an insurance policy.

Gold can be passed down 10 generations and still hold value, you can't say that about crypto.

Regarding gat's comments I agree. What's stopping China or Russia from creating "Russiacoin" or "Pandacoin" backed by gold and the full faith of their goverment?

How would Bitcoin or other crypto compete since they are backed by nothing?
I can say this about crypto, and will. Gold isn't backed by anything but time. Most of the BTC criticisms, I've noticed, are based on the fallacy of nascence.
 

Blade Runner

Hummingbird
Orthodox
Gold will have value but it won’t work to settle accounts in 21st century. Too slow.

Bitcoin works just fine with solar panels, raspberry pi, and a satellite antenna, no grid required. In a bad situation, its much harder to steal than gold.
The crisis situations don't suit gold well either, if you are really honest about it. Guns, ammo, booze and smokes rule the day. This is one of the myths of gold to boot.
 

chance vought

Woodpecker
Protestant
Thoughts on China repegging a new digital currency to actual confirmed gold reserves? Do you think that would outperform Bitcoin? Would it compete in terms of settling transactions?
If it is backed by gold, the only way to achieve final settlement would be to transact with the physical gold... Otherwise the BoC still has the asset.

Bitcoin itself IS the asset.

Currencies were "pegged" to gold in order to limit supply... Bitcoin does this with code... No gold necessary.

Gold backed currencies are good in theory, but never last in the long run. The temptation for a few that control the currency is too great. It’s better if no one controls it.
754B39A8-B280-458A-879F-1C64E799C27B.jpeg
 

chance vought

Woodpecker
Protestant
From New York Times bestselling author Lionel Shriver, a near-future novel that explores the aftershocks of an economically devastating U.S. sovereign debt default on four generations of a once-prosperous American family

The Mandibles: A Family, 2029-2047​

4714503D-E5A9-4B25-BD62-17E7AE51EF2A.jpeg
“Anyone in a position of authority telling you something unpalatable is ‘temporary’ is a red flag. The quick fix of capital controls can seem so alluring: ‘We’ll simply make the rabble keep their money here. We’ll pass a law!’ The hard part is lifting capital controls, which becomes unthinkable the moment they’re instituted. Who wants to keep funds in a country that confuses a bank account with a bear trap? The moment you remove the constraints, the nation is broke. So you can be sure that at least the freeze on making monetary transfers out of the US will stay in place for some time to come. Look at Cyprus. The capital controls levied in 2013 weren’t entirely rescinded until two years later. Know how long those controls were meant to stay in place at their inception? Four days.”
“But this is the United States. Here, they can’t—”
“They can. And will. There’s nothing the Fed can’t do.”

Excerpt From
The Mandibles
Lionel Shriver
 
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Maddox

Kingfisher
Protestant
Bear with me as I have a hard time wrapping my head around inflation/hyperinflation, etc. So this will probably be a dumb question...

Would it be a good idea to take a loan out now and make an investment while the dollar is still reasonably strong and before hyperinflation eventually hits?
 

chance vought

Woodpecker
Protestant
Bear with me as I have a hard time wrapping my head around inflation/hyperinflation, etc. So this will probably be a dumb question...

Would it be a good idea to take a loan out now and make an investment while the dollar is still reasonably strong and before hyperinflation eventually hits?
Depends on your financial position... The dollar will strengthen when the rest of the world starts imploding. (dollar milkshake theory). Also is the loan for an income producing asset, or appreciating asset, or is it for a depreciating asset. If it's a home loan or something else with a fixed low interest it might be smart, but otoh when the dollar strengthens its price will fall... but if you plan to live there long term that doesn't matter. So many variables to consider.
 

chance vought

Woodpecker
Protestant
Michael Saylor is betting the farm on that strategy. Large companies, banks, and institutions can borrow millions of fiat at interest rates below inflation, and invest that money in assets that keep up with (real estate) or outpace (BTC) inflation. Cantillon effect: those closest to the money printer effectively have their own money printer...
Zombie corporations can borrow at interest rates below inflation, and make a profit from borrowing money... That's why the market is so crazy and so fragile.
 
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