Bitcoin

[Andy Peters]

As for it not being "backed" I'd say 'so what?', the dollar isn't backed by anything any longer either. I think that 'battle' was lost a long time ago. I for one think it's a bit absurd to only have currency that 'floats' in the sense that it isn't backed by anything with intrinsic value, as far as that is possible in principle.

I say "so what?" as well.  And as far as being backed by something with "intrinsic value," what is the "value" of gold? Its value now is due to its use in industrial applications, in much the same was as diamonds have those uses. (Diamond values are where they are because of the DeBeers cartel has managed to convince millions of young women that their man "needs" to prove his love by going into debt to buy that big rock.) If utility in an industrial role is a measure of value, then why not back a currency with uranium or neodymium?

Gold was prized in the dark ages because it was shiny and rare, but when the end times come, I think that gold (and all fiat currencies) will be worthless and food and potable water will be the coins of the realm.

-a

 

[mattiasNYC]

As for it not being "backed" I'd say 'so what?', the dollar isn't backed by anything any longer either. I think that 'battle' was lost a long time ago. I for one think it's a bit absurd to only have currency that 'floats' in the sense that it isn't backed by anything with intrinsic value, as far as that is possible in principle.

I say "so what?" as well.  And as far as being backed by something with "intrinsic value," what is the "value" of gold? Its value now is due to its use in industrial applications, in much the same was as diamonds have those uses. (Diamond values are where they are because of the DeBeers cartel has managed to convince millions of young women that their man "needs" to prove his love by going into debt to buy that big rock.) If utility in an industrial role is a measure of value, then why not back a currency with uranium or neodymium?

Gold was prized in the dark ages because it was shiny and rare, but when the end times come, I think that gold (and all fiat currencies) will be worthless and food and potable water will be the coins of the realm.

-a

The only thing is though that I think it's better to back currency with something rather than nothing. Gold is better than nothing, regardless of whether or not potatoes will be more valuable if everything goes to hell. It's the lack of something tangible that enables some profit from the system without contributing anything intrinsically valuable to it.

 

[JohnRoberts]

As for it not being "backed" I'd say 'so what?', the dollar isn't backed by anything any longer either. I think that 'battle' was lost a long time ago. I for one think it's a bit absurd to only have currency that 'floats' in the sense that it isn't backed by anything with intrinsic value, as far as that is possible in principle.

I say "so what?" as well.  And as far as being backed by something with "intrinsic value," what is the "value" of gold? Its value now is due to its use in industrial applications, in much the same was as diamonds have those uses. (Diamond values are where they are because of the DeBeers cartel has managed to convince millions of young women that their man "needs" to prove his love by going into debt to buy that big rock.) If utility in an industrial role is a measure of value, then why not back a currency with uranium or neodymium?

Gold was prized in the dark ages because it was shiny and rare, but when the end times come, I think that gold (and all fiat currencies) will be worthless and food and potable water will be the coins of the realm.

-a

The only thing is though that I think it's better to back currency with something rather than nothing. Gold is better than nothing, regardless of whether or not potatoes will be more valuable if everything goes to hell. It's the lack of something tangible that enables some profit from the system without contributing anything intrinsically valuable to it.

The top ten holders of gold control something like 24,000 tons of gold. So governments are apparently still hedging their un-coupled currencies. (US has 8,000 tons).  Should the fiat currencies collapse, there is gold around, but not enough to support current world wide economic activity.

JR

PS I have a friend who accumulates  .22 cal ammo as his reserve currency for end times.

 

[mattiasNYC]

The top ten holders of gold control something like 24,000 tons of gold. So governments are apparently still hedging their un-coupled currencies. (US has 8,000 tons).  Should the fiat currencies collapse, there is gold around, but not enough to support current world wide economic activity.

JR

I think there's enough to support it, you just have to adjust the amount of gold relative to any particular currency. Or, as someone pointed out, it could be backed against something else.

I think the fundamental issue however is that the banks are controlling politics on this issue, practically speaking. So why would it change? It's essentially "free" profit since it takes close to no skill to charge an interest on simply conjuring up more money out of nothing - as opposed to, well, mining gold or anything else with intrinsic value. In other words; short of some sort of revolution it won't really change in any of the larger markets.

PS I have a friend who accumulates  .22 cal ammo as his reserve currency for end times.

Sounds reasonable.... lol....

Btw, doesn't some munition have a life-expectancy?

 

[bruno2000]

Off topic, but I have a friend who bought 75 cases of Jack Daniels to use as currency in "bad times".,...........
Best,
Joe Neil

 

[JohnRoberts]

I think the fundamental issue however is that the banks are controlling politics on this issue, practically speaking. So why would it change? It's essentially "free" profit since it takes close to no skill to charge an interest on simply conjuring up more money out of nothing - as opposed to, well, mining gold or anything else with intrinsic value. In other words; short of some sort of revolution it won't really change in any of the larger markets.

It's interesting to see how banks are doing, or not doing since Dodd-Frank. Some of the big investment banks ROI is down in the same ball park as utilities, and near zero interest rates hurt all bank profitability for lending.

I would entertain an argument for banking being a utility, but judging by how most utilities are run, that would probably hurt the economy even more.

It's interesting to see the battle over Fannie and Freddie's present profit stream that is currently being captured and swept into the treasury, long after they paid back the previous bail out.  This is perverse, since they were put into receivership years ago, and now are being used as a piggy bank by legislators.

Privatize, dissolve, whatever, do not make F & F a permanent arm of the government. We also need to unwind the implicit government guarantee that allows them to borrow so cheaply.

JR

 

[Script]

Quoting myself here:

... alternative way of electronic payment, I'd welcome it if it was transparent, backed and above all safe!

- TRANSPARENT: I want to know who set it up (or is running it)
- SAFE: I'd want things like Mt. Gox imploding and Bitcoins disappearing to never happen
- BACKED: I meant legally -- as in "deposit protection" (to the extent it [still] exists for classic bank deposits) or, better even, as an asset rather than a currency.

 

[thermionic]

Quoting myself here:

... alternative way of electronic payment, I'd welcome it if it was transparent, backed and above all safe!

- TRANSPARENT: I want to know who set it up (or is running it)
- SAFE: I'd want things like Mt. Gox imploding and Bitcoins disappearing to never happen
- BACKED: I meant legally -- as in "deposit protection" (to the extent it [still] exists for classic bank deposits) or, better even, as an asset rather than a currency.

Slightly OT, but how are you getting on since the Yen has been going ballistic? My business relies on some Japanese items, and by the time they're landed here in the UK I'm paying about 30% more than 6 months ago. Is it doing any favours for Japanese OEMs? 

 

[Script]

Sorry for late reply.

Can't really say as I get paid in different currencies. Overall it averages out. Rent has become much cheaper for me personally. Said differently: I should think about moving place.

As for components, well, generally not cheap here anyway. I often end up ordering from Mouser. They too have Japanese stuff. For a single cap or pot etc I visit local stores. But not cheap in the first place.

Not sure why Japanese items have become that expensive for you. I would have assumed the opposite be the case as the yen is devaluating with the idea to make Japanese produce cheaper for oversea's clients.

Is there anything special you need or are looking for? But as I said, unless bought in bulk, things are not cheap here. Not sure how OEM's are doing. Will keep it in mind and report if I come across any reliable information.

 

[JohnRoberts]

I'm old enough to remember when the yen was something like 240 to the dollar,,, now it's like 109, so a lot stronger then way back when (or dollar is a lot weaker).

I recall Alps moving manufacturing to South America (Brazil) back in the 90s(?) to help reduce their costs.  Now i suspect they are building stuff in China like everybody else.

JR

 

[Script]

Yeah, that is the general trajectory. In 2016, the yen has gained 10%, troubling Japanese policy makers. They have already postponed the next VAT hike from 8% to 10%, as the last hike in 2014 from 5% to 8% brought consumer spending to a complete standstill (consumer spending accounts for 60% of Jap. GDP). So they will probably fire the next QE bazooka soon.

Still this doesn't explain your 30% increase in price for components. Maybe cut the mifflemen?

 

[thermionic]

Yeah, that is the general trajectory. In 2016, the yen has gained 10%, troubling Japanese policy makers. They have already postponed the next VAT hike from 8% to 10%, as the last hike in 2014 from 5% to 8% brought consumer spending to a complete standstill (consumer spending accounts for 60% of Jap. GDP). So they will probably fire the next QE bazooka soon.

Still this doesn't explain your 30% increase in price for components. Maybe cut the mifflemen?

The 30% price hike was for the same amount of Yen 6 months later. I have read that the Yen is being regarded as a 'fortress' currency, and being stockpiled as many believe there is a forthcoming financial armegeddon (i.e. 2008 didn't teach govts any lessons, and the current booms are off the back of access to credit and general alchemy, as opposed to anything of substance).

 

[Script]

The yen as a 'fortress' currency, hm, yeah, I read that too and it left me perplexed. I heard a similar story a few years back about the Indonesian rupih -- well. Personally, I don't think it's an overall clever idea to stockpile a currency. But who knows.

Japan was a relatively successful (stock) market from 2012 to 2015 (just like the US market or most European markets). But by the time such info hits the news or we hear it from banks, it's usually history. However, Japan is one of the world's biggst international creditors with very few international debtors. Maybe that's what they are referring to.

As for armageddon, the way I see it, there are those who see systemic problems in the financial system and want to change it , those who fuel "fear" talk because they /want/ an armageddon to happen , and those who talk about armageddon because it makes them richer .

 

[Script]

Bitfinex. Several millions stolen, customers pay for loss.

http://www.cnbc.com/2016/08/08/bitfinex-users-set-to-lose-36-of-their-holding-in-bitcoin-hack.html?__source=yahoonews&par=yahoonews

http://www.geek.com/news/bitfinex-bitcoin-exchange-decides-its-customers-should-help-pay-for-65-million-loss-1665169/

Exactly what I meant by saying: Bitcoins = no deposit protection.
BTW, is there anyone around who still thinks this is cool cos anti-establishment?
Not that I care much.

 

[JohnRoberts]

Bitcoin isn't the only virtual currency with problems... another one was hacked a while back with $ millions worth stolen, and their fix was to branch the software... effectively disappear the theft in software. However a number of users rejected the idea of doing that...

The bitcoin theft used an alternate "spread the pain" strategy, which if you think about it is what deposit insurance does (in theory).  In practice deposit insurance can not cover the full leverage in a fractional reserve banking system,  which is why there is so much effort by government regulators to keep banks well capitalized.

The banking crisis in Cyprus(?) this "bail-in" was the first recent collapse where some depositors took a haircut (didn't get 100%) 

JR

PS: In the 1930s over 600 US banks failed while depositors got back $0.83 on the dollar.

 

[Script]

The banking crisis in Cyprus(?) this "bail-in" was the first recent collapse where some depositors took a haircut (didn't get 100%) 

JR

Yeah, the Cyprus "bail in". Never understood it fully -- saying it half kiddingly. The way it's developing in Europe right now (not quite there yet, but I guess it won't be before long), the EZB could just as well have printed the money directly back then, "spreading the pain" on all shoulders with a return of 0,999 on every Euro in "cash" for all. Also half-kidding here.

---

In the 1930s over 600 US banks failed while depositors got back $0.83 on the dollar

Said differently, the Bitfinex (a telling name? ) incident was worse for individual depositors than the 1929/1930 "nightmare" would have had been for them.