Bitcoin Could Rise By 165% To $2,000 in 2017 Driven by Trump's 'Spending Binge' and Dollar Rally (cnbc.com)

The price of Bitcoin could hit more than $2,000 in 2017 driven by expectations that U.S. President-elect Donald Trump may introduce economic stimulus policies, which could send inflation soaring and propel the dollar to record highs, a report from Saxo Bank claims. An anonymous reader shares a CNBC report: Bitcoin is currently trading around $754.51, according to CoinDesk data. A handle of over $2,000 would represent 165 percent appreciation. During his election campaign Trump has talked about an increase in fiscal spending. Saxo Bank's note said that this could increase the roughly $20 trillion of U.S. national debt and triple the current budget deficit from approximately $600 billion to $1.2-1.8 trillion, or some 6-10 percent of the country's current $18.6 trillion economy. As a result, the economy will grow and inflation will "sky rocket," forcing the U.S. Federal Reserve to hike interest rates at a faster pace and causing the U.S. dollar "to hit the moon." When inflation rises the Federal Reserve may raise interest rates to bring it under control. This causes the dollar to appreciate because it would be seen as an attractive currency for foreign investors.

Comments

Trump will tax it

[Joe_Dragon]

Trump will tax it

Re:Trump will tax it

[PRMan]

He already is. He's talking about increasing long term capital gains taxes, which taxes investments like bitcoin.

Re:Trump will tax it

[Enigma2175]

He already is. He's talking about increasing long term capital gains taxes, which taxes investments like bitcoin.

Don't worry, he will repeal the estate tax so that billionaires can pass on all their money to their children (instead of just most of it) so that the new generation of bosses are the same as the old generation of bosses. Meanwhile, the people who voted for him because they are getting screwed economically will still get screwed. What did you think would happen when you elected a billionaire?

Also, where do you get that he is planning on raising capital gains taxes? His site says:

The Trump Plan will retain the existing capital gains rate structure (maximum rate of 20 percent) with tax brackets shown above.

So his plan is to lower income taxes on the ultra-rich and increase spending. I hope all the Tea Party representatives that shut the government down during the Obama administration will stop his attempt to run up the debt but I doubt that will happen.

Re:Trump will tax it

[Pfhorrest]

No see, to preserve the budget in the face of lower taxes and increased (military) spending, he'll just cut all social programs. Bam. Problem solved.

Re:Trump will tax it

[arglebargle_xiv]

When inflation rises the Federal Reserve may raise interest rates to bring it under control. This causes the dollar to appreciate because it would be seen as an attractive currency for foreign investors.

Oddly enough, that didn't work when Mugabe tried it, no matter how high the inflation went. I guess the Donald has some better, faster, more impressive way to do it that'll work.

Re:Trump will tax it

[arglebargle_xiv]

What did you think would happen when you elected a billionaire?

Actually y'all have elected a multiple bankrupt. What do you think will happen when you elect a multiple bankrupt?

Wrong even if correct

[shaitand]

Even if correct about Trump, fed rates are currently extremely low and the last hike was only because the market expected rates couldn't stay there forever not due to any kind of inflation. If anything we are close to deflation which is far far worse with a fiat currency. We actually NEED inflation in the US economy.

This is not a statement against a deflationary currency, I honestly think the math works out about the same but the US dollar is not deflationary and fiat systems depend on inflation to function properly.

Re:Wrong even if correct

[Archangel Michael]

Actually, Deflation is neither good or bad. Inflation is neither good nor bad. Excessive amounts of either are generally bad. What people want is a stable currency. Unstable currencies are bad. Especially Fiat Currencies.

BitCoin is deflationary currency by default. There is no way to inflate BitCoin, short of massive amounts of CPU time.

If we are trading one FIAT currency for another, one that is immune to Government interference is probably the better one.

Re:Wrong even if correct

[JoeMerchant]

Bitcoin, lacking government interference, seems to be a bit less stable than the government controlled currencies.

Re:Wrong even if correct

[medv4380]

I'm sure if ANY currency were used for REAL banking it would inflate. Inflation is from banking Borrowing and Lending. There is no real Borrowing and Lending of bitcoin mostly due to most, if not all, of the Bitcoin 'Banks' being Ponzi scams not backed by FDIC, or other Gov Entity, to stop runs. And Certain types of Deflation is ALWAYS bad like deflation caused by a credit crunch because the direct result will be massive amounts of defaults from people being unable to pay their loans. Certain types of Deflation is ALWAYS good like deflation caused by increases in efficiency like how a Low to Mid Grade PC isn't 1500 like it was in the 90's.

Re:Wrong even if correct

[houghi]

Ans please tell me why it is needed in the US economy. Also why not in others, like the EU, Russian or Australian ones.

The best I can come up with is that we are used to it. We have money, we put it in the bank and after a time we have a higher amount. That makes us feel good as we think we have increased our wealth. We have not. (Yes, for simplification I leave interest out of it)

0% inflation would be the be the best, because it will be a lot easier to notice if prices increased or not. If you pay 100 for your bread and suddenly it is 102, you know it has increased. If it goes to 98, you know it is cheaper.

Re:Wrong even if correct

[Comrade Ogilvy]

I agree that people tend to overestimate both the positives of inflation and the negatives of deflation. As long as money is highly predictable in value and the inflation or deflation quite small, it probably does not matter much either way.

That said, deflation during a financial/economic crisis can very bad and can lead to a self-reinforcing economic downward spiral as crisis encourages avoiding risk, avoiding risk encourages hoarding cash, hoarding cash lowers prices, and tumbling prices causes severe risk for all new economic activity that might bring growth. Deflation during a crisis is sufficiently bad that it is worthwhile to intervene to cause some inflation.

However, this argument has been abused to justify inflation as some dire necessity at all times. For example, we could have weathered a small bout of deflation in the later 90s, due to low oil prices and declining consumer good costs from Chinese sources, with no ill effects; instead the Fed intervened to stop deflation and thereby helped magnify two bubbles.

Re:Wrong even if correct

[Solandri]

Deflation is worse than inflation. Inflation devalues your savings, thus encouraging (forcing) you to go out there are do more work to earn more money (generate more productivity). Deflation increases the value of your savings, thus discouraging you from working - why bother doing something productive when the money you have stuffed under your mattress is increasing in value enough to pay for your living expenses?

Currencies are stable when the money supply expands at about the same rate as the productivity of the country's citizens (basically GDP - a combination of population growth and increased productivity due to technological advances). That causes prices to remain stable when measured in the currency. Ideally, a government with a fiat currency moderates their money supply to slightly exceed this productivity growth rate, which causes a slight amount of inflation (prices slowly climb). Yes it's true that when a government screws things up (e.g. Venezuela right now), it can cause massive problems. But like regular oil changes for your car, there's a huge incentive for all governments to maintain their own economy.

The whole reason we abandoned the gold standard is that it's really stupid to base your economy's health on the gamble that the amount of gold miners dug out of the ground each year would match the rate of growth of your country's GDP. Historically, the amount of gold mined each year did not keep pace with economic growth, resulting in deflation, which led to higher economic instability. If you look at the history of recessions in the U.S., in the 45 years since 1971 when we went off the gold standard, there have been 6 recessions, or 1 per 7.5 years. In the 45 years prior (1926-1971) there were 9 recessions, or 1 per 5 years. The 50 years before that (1875-1925) saw 13 recessions, or 1 per 3.8 years. And the 50 years before that (1825-1875) saw 13 recessions as well. The amount of economic contraction during recessions has also been smaller since we went off the gold standard.

Unfortunately, bitcoin perpetuates this stupidity. Its value is based on (1) the rate at which people are able to "mine" bitcoins by solving increasingly difficult math problems, and (2) its total supply is capped at about 21 million coins. The very fact that bitcoins are appreciating in value is evidence that it's a terrible choice of a currency. You want the prices of staple goods to remain relatively stable in a currency. Instead, bitcoins are so deflationary that early adopters are literally able to live off of bitcoins they've stuffed under the mattress, instead of actually doing any productive work. A currency which enables that behavior is fatal to an economy. I'm not saying all crypto-currencies are flawed, or that there's no benefit to taking a currency out of government control. Only that bitcoin is fatally flawed in that it accomplishes the latter in the worst possible way. The huge increase in the value of bitcoins since its inception is not an indicator of its strength, it's an indicator of its unsuitability as a currency. It proves that bitcoin is incapable of scaling properly with the number of people using it (productivity growth due to population increase). In that respect it's more like real estate - where people who were born earlier were able to buy up most of it cheaply, leaving the current generation unable to afford to buy a home.

Re:Wrong even if correct

[mjtaylor24601]

Deflation is bad. I will leave it as an exercise to the reader. I will feed you a couple of hints. What if you did nothing with your money and it increased in value? Would you buy anything?

Yes. Otherwise I'd starve to death.

Re:Wrong even if correct

[thebigmacd]

I believe the idea that people stop spending money because of deflation is a logical fallacy. People need food, housing & utilities, healthcare, vehicles & fuel, entertainment etc. These are ongoing needs that need to be serviced in the present. All consumers look at is the price NOW. As we can see from consumer debt levels, people don't consider the future regardless of inflation or deflation.

Technology is an inherently deflationary market (today's money would buy something better tomorrow), and it drives economic growth more than anything.

Re:Wrong even if correct

[PRMan]

Gold has all the negative qualities you cite about bitcoin, and was used as currency for a long time.

Re:Wrong even if correct

[shaitand]

Actually you are incorrect. Currency systems must either inflate or deflate because actual economies grow and shrink. Currency is the representation of an economy, it's design goes hand in hand with the success of the actual economy it represents. These structures are based on greed, in order for currency to function correctly it must flow. A small amount of inflation or deflation isn't something a currency can't recover from but a currency designed to inflate can't continue to function in the face of extended deflation even at a low rate similarly a deflationary currency that inflates.

A currency that is designed to introduce more units is an inflationary currency, a currency where existing units increase in value is deflationary. Inflationary currencies require a system of distributing new units, in the case of fiat currencies that system is generally credit based. Deflationary currencies have a problem with scarcity of trading units, there may not be enough for all who need them to facilitate trade to actually be able to possess enough to easily do so. Gold units ran into this issue, bitcoin solves this issue by being a purely logical unit and thus theoretically infinitely divisible into smaller trade units (although there is currently a practical limit as well a technical limit in the implementation meant to reflect it).

Inflationary currencies require the free flow of credit to distribute new units in order to facilitate free movement of the value that currency represents, the minimum motivating factor in distributing currency into circulation is beating the inflation rate + expenses or else your currency will devalue. You must assume some sort of risk in order to generate returns greater than inflation + your expenses and continue to do to offset that inflation over time which creates the pressure in the currency. Inflation in such a system is accounted for in the design and essential but out of control inflation can contribute too much pressure which a large portion of the economy can not keep pace with creating rapid disparity leaving spenders unable to afford goods. Money stops being worth much. This is a short term problem if the source is resolved reasonably quickly because debts can be paid more easily and overall debt will be reduced.

Deflation in such a currency eliminates motivation at the top to exchange trade units reducing their distribution on all levels while at the same time increasing demand. The biggest problem is that because an economy based on credit is filled with outstanding credit those loans now all have be paid back with greater value units at the same rate. Prices and income will adjust to the deflated rate but existing debt will not, meaning you'll have less dollars in your pocket but owe just as much and more importantly everyone who might be a source of more dollars will be in the same position including retailers. Creditors will have a boom at first as the increased returns leave them flush and without need to take on new debt but the lack of demand for new credit, reduced willingness to extend it, and growing default rates will create a boom/bust pendulum and like all pendulums it would eventually grind to a halt.

A currency designed to deflate, such as bitcoin, reacts quite differently. The greed motivation is to assume risk for a return above deflation. Because currency is deflationary and a currency such as bitcoin allows trading infinitely smaller units, once established such a currency has no unit exchange problem. Such a thing is new but there still may be a need for a central organization to set the current standard unit of trade relative to another target (although a market and algorithm would actually be used to determine this unit there needs to be a common reference). A sort of floating bitdollar if you will that refers to the current decimal place that is the highest unit required in the purchase of a barrel of crude or a gram of gold or some such. Provided such a "bitdollar" is what wallet balances reflect and what is traded on exchanges you'd see far less wild fluctuations on exchanges and skepticism of the value of the currency because it would create a more unified perception of value.

Re:Wrong even if correct

[lgw]

Inflation is a symptom of a healthy economy. The money supply should be increasing as the economy increases. The causation doesn't work the other way though - no one has ever spurred economy growth by trying to cause inflation (though Japan tried for 20+ years without success). You can't push on a rope.

Another nice feature of low inflation is that it avoids annoying negatives. Safe ways to park your money (e.g., savings account) pay a bit less than inflation, which gets very awkward if inflation is 0 or negative. Similarly, the graceful way to handle employees paid more than the market value of their work is to give them a raise smaller than inflation, and let it equalize over time - which, again, stops being graceful if inflation is 0 or negative.

Re:Wrong even if correct

[shaitand]

On the contrary, the purchasing power of any major government fiat currency shifts by far more daily than the purchasing power of bitcoin. If you held half the worlds bitcoin and half the worlds US dollars in your pocket the bitcoin would have moved by a greater percentage value relative to euros but your actual wealth would change far more dramatically on a down dollar day than bitcoin day.

Bitcoin needs two things to be perceived as more stable. The first and biggest is a floating unit of exchange call it a bitdollar. 1.0 BTC is not A bitcoin, it's just a 1 in a decimal place. As long as that unit roughly correlates a relative point such as typical single unit major fiat values or a commodity such as the largest unit required to purchase a gram of gold or barrel of oil at a given moment. If the currency deflates by a factor of ten relative to that point, the bitdollar would shift a decimal place so your wallet that held 1 bitdollar before now holds 10 bitdollars. So long as fiat is in major use 1 bitdollar should always be able to purchase more than zero but less than two of any major fiat currency. This and wider adoption would create a better perception of the stability of bitcoin. The value of bitcoin relative to anything is just perception, but we know it is mathematically always more over time so while there should probably be a cooking period before the value shifts and a central reference to check the status, maybe a month cooking before the bitdollar shifts, once it has shifted it should not go backwards. It also means the stability problem with bitcoin is a perception problem.

Re:Wrong even if correct

[JoeMerchant]

I know that I collected 1 BTC in exchange for a product in 2010, at that time I could have re-exchanged it for half of a lunch. Three years later, I did exchange it for the equivalent of about 8 lunches. While that's a nice change, it's not stable. A year or so later, it would have exchanged for 40 lunches, then it came back down to 20 or so lunches.

Meanwhile, I can buy a lunch for $8-12 depending on where I go, same price in dollars for the last 5 years or so - give or take 10%, not 1000%.

Re:Wrong even if correct

[mvdwege]

And Solandri just explained to you that's exactly why we're no longer using gold as a currency.

Re:Wrong even if correct

[shaitand]

You are missing the most important aspect of a currency and it isn't prices. It is how units are distributed because if the smallest units of gold you can get are quarter grams and gold is worth $1000 a gram what will you use to buy bread in a gold based currency? Fiat currencies use credit, so don't forget the impact on existing credit in the event of deflation or inflation. Deflation is devastating in a fiat system because the entire system is based on debt and suddenly the value owed is substantially higher than it was yesterday and the debts are structured on the assumption the currency used to pay them will be more plentiful and worth less tomorrow and suddenly it is worth more. Prices will have to drop because people will be getting fewer units of currency, but businesses generally run off credit what happens when they have to pay the same number of dollars tomorrow but take in less due to lower prices and can't successfully sell goods at higher prices to offset it because the entire market for their goods is now worth less each day? New costs will be lower so that will help but they'll have to cut wages and/or layoff staff to meet existing debts. Next year they won't be able to do either, etc. The number of years is of course made up but the pattern is not.

In a system mathematically guaranteed to deflate deflation is not such an issue, overly rapid deflation is similar to inflation in a fiat system since a floating unit of trade should exist suddenly your 1.0 btc is worth dramatically more bitdollars and prices would increase. You don't have such a large issue with credit freezing because the system isn't based on using credit to distribute currency. Really there is no inflation in such a system, only deflation rate. A severe reduction in deflation rate relative what any creditor anticipated would mean paying back more value than expected which might be huge for certain borrowers but would far less dramatic across the whole economy since there would be far less debt in the first place.

Re:Wrong even if correct

[avandesande]

[quote]Deflation increases the value of your savings, thus discouraging you from working[/quote]

Really? So I just got a 'raise' at work from deflation, somehow that is demotivating? I am not going to bother with the rest of what you are saying.
Inflation is a hidden tax that is destructive to savings and the economy.

Re:Wrong even if correct

[lgw]

If both increase at the same rate, there is no inflation, you economically ignorant fuck

Ah, such reasoned discourse is what makes Slashdot special. In the simplest model, sure, we have 4% more money and 4% more stuff, so prices should be stable, right? But instead demand leads supply in a growing economy, so prices go up.

Plus, economic growth tends to be more in areas where people have a choice whether or not to buy (or purchases can at least be delayed), while measuring inflation is weighted towards basic staples where people buy more-or-less the same amount in good times and in bad. So we have 2% more money, but the same amount of deodorant being produced and consumed.

So, yeah, we don't get 4% inflation - it's not a direct measure of the derivative of the money supply - but we get typically 2-3% inflation when the economy growths 4%.

Re:Wrong even if correct

[AthanasiusKircher]

Really? So I just got a 'raise' at work from deflation, somehow that is demotivating?

Here's the fallacy -- how long do you think that "raise" will last in a persistent deflationary economy? Prices are going down, because monetary value is going up. That means corporate revenues go down. People with large amounts of money invest much less, because an investment would have to have a LARGE rate of return to actually be worthwhile... otherwise, you just hide your money under your mattress.

So, fewer investors, decreasing prices... corporate revenues go down. And somehow you think get to keep you "raise" at your current salary in deflated dollars?? Fat chance. Eventually, they need to start decreasing your salary -- probably even more than to keep "pace" with deflation, because of the decreased revenues. Or they just start laying people off.

But that's only the tip of the iceberg. Why would you buy property in a deflationary economy, when it is likely to be a depreciating asset? Loans become nearly impossible to justify -- banks would still have to charge interest on them to justify them, which means you're throwing money at a depreciating asset, while the principal of your loan and your payment sizes effectively grow due to deflation. And given the depreciating value of assets, banks are likely to require additional insurance fees in case of default (a lot more than they have on risky mortgages today).

People stop trying to get loans to open new businesses. Investors stop financing them, unless it's basically a "sure thing," since they can "make money" just stashing their cash away. People stop taking out loans for basic things like real estate and houses.

"But," you say, "Maybe that's a good thing. Maybe people should learn to save up more before buying a large purchase." Okay, except who do they rent from in the meantime if they don't take out a mortgage on a house? The people owning rental property face the same difficulties in maintaining a rationale for owning it. If it's decreasing in value, along with other goods, rents will eventually be driven down too (along with the decreasing salaries). Why invest in maintaining property? -- it's just throwing money at a continuously depreciating asset.

If you're a landlord in such an economy, the best strategy is probably to dump your property now and get more money out of it while you still can before its value decreases further.

And we can go on and on. People hoarding cash and dumping most other investments leads to economic stagnation, then worse. Eventually this results in a deflationary "spiral" and the economy tanks.

Oh sure, throughout all of this SOME people will still invest and spend money, but it becomes increasingly hard to justify.

People who support deflation generally never think through even the basic next steps in their logic. They just think they'll magically have "higher salaries" coming from somewhere to spend on cheaper goods. That doesn't happen in real economies. The only people steady deflation is good for are people who have giant money bins already. For everybody else, you'd be much better off with the 1-2% mild inflation and actually having a more active economy.

Re:Wrong even if correct

[Archangel Michael]

Fluctuation in BTC is due to perception, not reality. But since perception is reality, if you buy BTC whenever there is a huge problem with BTC and the exchange prices drop, you'll be correctly interpreting the value of BTC. Those people who buy High and Sell Low are those that have a desire to be popular, but never are.

Re: Wrong even if correct

[Archangel Michael]

You are correct. Real deflation is caused by money supply not increasing at an appropriate rate to counter increases in productivity and commerce (velocity). BTC is deflationary since most of the Inflation period has long since past. It was HIGHLY inflationary at the beginning, Long term, it was always designed to be deflationary.

Re:Wrong even if correct

[Archangel Michael]

He doesn't understand the benefits of Deflationary currency. The benefits include less (or no) need for Government support programs (welfare, SS etc). It would require less in taxes, allowing people to keep their earnings (and wealth). It would increase a whole slew of things we really haven't seen in a very long time. Working hard as a youth (when it is easier to "work hard") would pay huge dividends long term for society.

The assumption is that rich people wouldn't spend their Coin, and horde it. This is largely false, as really rich people would buy the comforts that they desire. Catering to the wealthy would be a way to acquire wealth. As opposed to today, working as wage slaves to the wealthy class, buying everything on credit and depending on debt for a lifestyle.

Re:Wrong even if correct

[JoeMerchant]

Perception is all there is. Reference: Wall Street.

Re:Wrong even if correct

[geekmux]

Gold has all the negative qualities you cite about bitcoin, and was used as currency for a long time.

The inherent security with Gold lies within a specific composition of elements measured against a purity standard. Outside of conning (fools gold), it's rather impossible to "hack" Gold itself.

The inherent security with Bitcoin lies within a specific mathematical function. I wonder how long that will take to be hacked or destroyed? There's a reason we're not still perpetuating WEP for WiFi security, and we've already seen considerable attacks against Bitcoin exchanges.

Somehow I doubt that integrity will last another 100 years until mining is done. I doubt it will last another 10.

Re:Wrong even if correct

[ShanghaiBill]

Bitcoin, lacking government interference, seems to be a bit less stable than the government controlled currencies.

Bitcoin is far more thinly traded. If the Bitcoin market expands, it will become less volatile.

Re:Wrong even if correct

[avandesande]

Nobody is arguing for a permanent deflationary economy, just that the FED unwillingness to follow it's mandate for a stable currency and permit chronic inflation is nothing but theft. https://www.youtube.com/watch?...

Re:Wrong even if correct

[JoeMerchant]

If the bitcoin market expands to anything like cash/credit card transaction volume in even a small European country, it will implode under its own computational requirements.

Re:Wrong even if correct

[shaitand]

Don't confuse fluctuations caused by day trading and a small market that can be moved by many players with instability of system itself to be able to function as a unit of trade. Some types of jet engine aren't able to produce sustained thrust until brought up to full speed. Also don't confuse the current price of speculators with the actual value. Just because a handful of people were willing to give away an island like Manhattan for a handful of beads and trinkets doesn't mean that is the actual value either islands or beads and trinkets. In a small pocket market it is possible to make or lose a great deal of money speculating and for things to be greatly overvalued or undervalued. That has nothing to do with government regulation and everything to do with the size of the market.

I guess what I'm saying isn't that bitcoin price stability isn't a real problem today, it is. But given the size of the market this is expected. If dollars were exchanged in a similar market you'd see similar stability. If you'd sat on a trillion dollars over that 5 year period you'd have lost as much as the total value of all the bitcoin while others would point and say that you still have a trillion dollars. Where would that value have gone? It would have been given away to other people who already have more than they know what to do with by that government you are so fond of.

Is the island that is bitcoin being sold for trinkets or is the box of trinkets that is bitcoin valued like an island? The truth is probably somewhere in between but the concrete determining factor of supply only moves in one direction with bitcoin, demand can go either way but as the total amount of demand grows so with the constant and always present demand that does not fluctuate. I think that a floating unit bitdollar traded to five decimal places would help perception because there is a long long way for bitcoin to go and that is going to mean the common unit of trade will need to shifted several decimal places over. Eventually 1.0 BTC can and should be a unit that nations might trade not people, so people flinching at having trouble to understand $2,000 or even $10,000 for "just one bitcoin" are going to do nothing but get in the way as more and more bitcoin transactions occur and more units of trade worth about a dollar are needed.

Greed eventually gets you. Investing in bitcoin early paid off for you, will you hold a grudge against others bought the same BTC and risked holding it against instability, fluctuation, competing digital currencies, etc and sell it for $100,000 or even a million some day? Eventually you sold and eventually they will too and that BTC will go in circulation because it will eventually be too tempting to have what that BTC can buy. They will spend it, and then it will circulate, rinse and repeat which is what debunks the early adopters ponzi scheme nonsense. Early adopters are essentially early investors. What they pull out is no worse than a Zuckerburg or a Gates.

Re:Wrong even if correct

[JoeMerchant]

When Bitcoin starts to get "real market traction" and tries to serve a few million transactions per hour, it will collapse under its own computational weight.

It was a great experiment, especially on the social side. Any "security" that is built into Bitcoin by the blockchain is absolutely useless for many to many broad population small cash style transactions. Any band-aid that's spread on top of it to make it able to handle high volume transactions won't be Bitcoin anymore. Most of the security problems encountered with Bitcoin to-date have been in the exchanges, wallets, and other "accessories" that allow convenient use of Bitcoins.

Re:Wrong even if correct

[Anonymous Coward]

Try to be a wage slave on debt with a deflationary currency. Middle class on debt worked fine when there was inflation and ordinary workers bought a house in 10 years, now inflation rates inbetween 0 to 2% and this means debt peonage and/or be a renter till your death.

Re:Wrong even if correct

[Comrade Ogilvy]

A growing economy has a natural tendency towards mild inflation while reasonably managed. What I arguing against is what I see as an ideologically blinkered opposition to all deflation all the time always, always, always, always. Mild and temporary bouts of deflation are entirely harmless, as long as the deflation/inflation trend is quite predictable. A growing economy has an opportunity cost of money, which implies a positive interest rate which tends to keep inflation towards the positive (not always, but that is the tendency). So whether inflation is -0.5% or +0.5% matters is just folded into opportunity costs over the long haul.

As I said, deflation during crises is potentially very bad. That is why we need a gov't that keeps its books in good order during good times, so there is breathing room for fiscal stimulus and enforced inflation during bad times.

Re:Wrong even if correct

[avandesande]

This makes no sense at all. People could save money and live at a subsistence level but they don't. They end up buying more stuff. Do you really think living in deflation will change this behavior?

Re:Wrong even if correct

[lgw]

If you're trying to make a point, or explain an argument, it's lost in your noise. If you're talking about "demand for money" in the usual economic sense, that of demand for borrowed money, then that directly affects interest rates, but affects inflation only indirectly. (If you're talking about demand for physical currency to stuff in a mattress, that's something different.) Obviously, money supply can affect inflation but it's elastic - inflation really isn't the time derivative of the money supply, unless the currency has already collapsed.

Re:Wrong even if correct

[Anonymous Coward]

You wouldn't get a "raise". You'd see your wages go down. Meanwhile any credit liabilities you have become harder to meet until you renegotiate them. And they don't make sense. You're paying interest on a devaluating currency, making it all that more painful. As the banks around you begin to fail, there's runs on them and people withdraw their money, demanding cash. Once a bank goes under, it takes YOUR money with it, which is why we have the FDIC. But that only covers you to 100K. Credit seizes and so does the economy. This is what happened to a small degree in 2008.

Deflation is much worse. Contrast to inflation: My parents bought the house I grew up in in the 1970s for 40K. Nearly bankrupted them. It was paid off 15 years early because inflation kept wages increasing while that expense was fixed. Imagine it like this: You signed up for something in 1982 that allows you to buy food at 1982's prices for 30 years. You're still paying $50 but getting $125 worth of food by 2012.

Re:Wrong even if correct

[mbkennel]

"The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates."

The point is that targeting 0% inflation results in much more harm to employment than targeting 2% inflation as is done.

And given that people have the opportunity to invest in all sorts of instruments that take this into account, it is not theft.

Re:Wrong even if correct

[roman_mir]

Deflation is worse than inflation.

- nonsense, that's an unqualified statement. Deflation is not worse than inflation, it is only inconvenient for the debtors and of-course USA government is the biggest debtor out there, but in general USA federal, state, municipal governments are all debtors, also USA corporations and individual are debtors. Of-course now that USA is this unproductive and cannot feed itself without 500Billion/year trade deficit deflation is worse for USA that inflation because Americans want to write off the value of the debt without paying for it.

Deflation increases the value of your savings, thus discouraging you from working

- and yet in the 19th century, on the gold (not standard, just on the gold), USA economy was actually growing and became the most productive economy, turning USA into a net exporter nation from being an importer and an afterthought to the European countries.

Currencies are stable when the money supply expands at about the same rate as the productivity of the country's citizens

- nice try, Orwell, currencies are stable when their value does not fall over time.

This completely Orwellian nonsense redefinition of stability as of something that is losing value at a constant rate is complete garbage that the mainstream and government propaganda has pushed over the last half a century to produce completely economically illiterate population (such as I am observing here now).

The other reason why Orwell would be proud of you today is that you actually bought into the 'increasing productivity of citizens' from your nonsensical government. USA productivity is so ridiculously low that it cannot feed itself without a yearly injection of over 500 Billion USD, which has been more or less the trade deficit for at least 20 years now.

The whole reason we abandoned the gold standard is that it's really stupid to base your economy's health on the gamble that the amount of gold miners dug out of the ground each year would match the rate of growth of your country's GDP.

- Ha ha ha ha, you abandoned the gold standard because your expenses have grown so far beyond your ability to produce that you had to *default* on the dollar and completely get away from the principle of sound money so that you could print your debts away, not for any other reason whatsoever.

As to the amount of gold, it's absolutely irrelevant, the year to year global production increases the total amount of accessible gold by about 1.5%. If USA actually wanted a *STABLE* inflation rate, it could *EASILY* stick to the global gold mining rate.

As to the number of recessions per year, all of them were due to government manipulation of the money supply, introduction/going of off of fiat (talking about the 19th century), introduction of the Federal reserve in 1913 and allowing the Fed to monetize Treasury debt in 1917, printing crazy amounts of money to buy bad UK debt from France in the late 1920s, which caused the bubble that blew up and that recession was turned into depression by Hoover's and FDR's policies of more monetary expansion and other intervention policies.

1971 default simply removed the remaining pretence to any form of stable money and allowed the government to increase inflation to the levels that businesses found it no longer acceptable to try and work within that system and moved production out of the country (and of-course the government growth became unstoppable with the unlimited printing powers, so taxes, laws, regulations became unstoppable as well, normal businesses could not compete with government connected and sponsored ones).

As to Bitcoin, it acts purely as money and has 0 intrinsic value (it has no value beyond being money), so it cannot replace real money that has value whether it is used as money or not. However this does not mean that Bitcoin cannot be used as a very interesting speculative instrument.

Re:Wrong even if correct

[limaxray]

Right, price deflation has been so terrible in the technology market, bringing the price of goods down so low that even members of the working class in the poorest of nations can now afford pocket sized super computers. Prices on tech have fallen at incredible rates while the products have gotten increasingly better, yet the demand for goods is still high and the increase in standard of living because of it has been incredible.

And price inflation has been so great for college students as education prices have shot up due to federally subsidized and non-dischargable student loans. Kids are now straddled with ever increasing amounts of debt for increasingly worthless pieces of paper. Yep, price inflation is working great there. And lets not even mention the price inflation the drove the housing bubble!

Your argument is basically that inflation is good because it makes the working class poorer so they have to work harder to maintain a given standard of living, and that's somehow good for the economy. Like seriously, who voted you insightful? Deflation just means people can afford to buy more with their money over time and the standard of living increases without wage increases. I would argue that the price inflation over the past 50 or so years is one of the greatest drivers of market inequality - workers are stuck with 'sticky wages' that don't increase as quickly as inflation making people poorer over time unless they constantly switch jobs. Meanwhile, those who depend on capital gains - AKA the rich - are much more well hedged against inflation so their savings and earnings aren't hurt as much as the rest of us. Furthermore, when inflation is driven by loose monetary policy or excessive government spending, the initial holders of this new money - ie banks and large corporations - get to spend it at the old, discounted, pre-inflation rate, and by the time the money gets to the workers it is worth less.

Oh, and besides all that, it's not just an effective hidden tax, it is THE tax that makes endless war (AKA mass murder) possible. Why did the US close the gold exchange window and go off the gold standard? Oh right, to pay for the Vietnam war!

And the economic loss of recessions has increased sharply between the period before and after the 1920's. Banking and market failures used to be much more localized and relative losses were much smaller than what we see today. They might have happened more frequently, but they weren't nearly as bad. Like seriously, we just lived through two horrible economic down turns, both far far worse than anything that ever happened pre-1920s (relatively of course, as % of GDP). Don't have time to look up the numbers right now, but you're free to do so.

TL;DR; Inflation makes the working class poorer, the rich richer, it is the life blood of war, and our economy is actually more unstable now than it was under a sound monetary policy. Please put down the Keynes, he wasn't an economist and had no idea what he was talking about - this whole school of economic thought is only accepted because it appears plausible to the plebs while giving limitless economic power to the ruling class.

Re:Wrong even if correct

[limaxray]

First of all, look at the technology sector to see that most of your claims about a consistently deflationary market are flat out wrong in real world practice. Costs are constantly falling and products are constantly improving, yet we don't see any of the horrors you predict. Instead, the result is more people have access to technology than ever before and the explosion in standard of living AROUND THE WORLD has been enormous. Even though devices get cheaper and quickly become obsolete, people still gladly throw their money at both consuming goods and investing in capital. Strange how the most successful market today is extremely deflationary, huh?

I would also argue that a deflationary economy would most likely have interest rates set by the market - the supply vs demand of real money - and just some board of elites from the ruling class. In this case, you are absolutely crazy if you think people won't invest. If people start hording their money under their mattresses instead of investing, interest rates will naturally go up to spur investment. The reality is people are greedy and most certainly will still invest, just with a higher effective ROI - the horror. Furthermore, I would argue the currently inflationary market makes every Tom, Dick, and Harry trying to save for their retirement a speculator - if you want to accumulate wealth today, you have to 'play the markets' in addition to whatever your day job is. If a working stiff can just throw his money under his mattress and not have to worry about it losing value or what the markets are doing, that's excellent and a good thing. Everyone like to bitch and moan about speculators being horrible yet fail to realize inflation makes speculators out of the bulk middle class.

You're also confusing money and wealth. Just because you have less money doesn't mean you have less wealth. This is hard to understand for someone who has lived their entire lives in an inflationary market. The real goal of a capitalist market is to increase wealth - AKA standard of living - the size of the number in your bank account is irrelevant. Money is just an IOU to consume some real good or service.

Wages aren't set by how much an employer can afford to pay - you should be embarrassed for even making the suggestion - they are set by supply and demand like any other price. Unlike other capital goods, you can't just manufacture more people, instead you have to enable them be able to produce more with less time and effort if you want to increase your wealth. Price deflation actually comes from improving production efficiency and increasing worker productivity through capital investment, thus enabling businesses to actually be able to afford higher wages.

And don't give me the nonsense about automation replacing jobs - automation has always resulted in greater total employment as the demand for goods is driven up by their now reduced scarcity, or the demand for some new good is driven by the extra money left in everyone's pockets because of the now cheaper original good. Greater productivity also means people need to work less to maintain a given standard of living reducing the supply of labor and further driving up the price.

Forget all of that - the greatest problem with inflation is that it is not just a hidden tax, but it is what enables the warfare state. The state's ability to just inflate the money supply as it sees fit is what allows countries like the US to pay for its endless mass murder. They are effectively leaching productivity from the market so instead of producing food, housing, and gadgets for us plebs, they're STEALING capital to manufacture bombs and guns to SLAUGHTER brown people on the other side of the world. When people see their wealth being taken by the war machine, war becomes incredibly unpopular as it was in the US before the world wars - inflation elegantly hides that making war seem clean and easy. This is just fascism with a different name - you and your other Keynesian ilk are no-shit-there-I-was Nazis and the blood is on your hands. I'm sorry to break congeniality, but seriously, fuck you, go die.

Re:Wrong even if correct

[limaxray]

And ending slavery also had a negative impact on employment rates. I bet North Korea is damn near full employment too! Rates of employment are meaningless if they are achieved in exchange for a lower standard of living - you're much better off wealthy and unemployed than poor and working 7 days a week. But you're absolutely wrong anyway - tech markets have been incredibly deflationary yet unemployment rates in STEM have been consistently low driving wages through the roof.

Right, so because the wealthy can hedge against inflation, it's not theft, even though the bulk of the working class who depend on wages see their purchasing power constantly reduced over time. And if I try to create or use a competing non-inflationary currency in the US, men with guns will come and throw me in a cage or murder me if I don't comply. Nope, definitely not theft.

Re:Wrong even if correct

[scatbomb]

Thank you for this post, I'm glad there is somebody else out there who hasn't drank the "inflation is great" cool-aid.

Re:Wrong even if correct

[petermgreen]

Fundamentally inflation happens when the money supply in circulation grows faster than the economy, deflation happens when the money supply grows slower than the economy.

Fractional reserve banking increases the effective money supply. A proportion of customers deposits are kept as central bank money in reserve. The rest is loaned or invested. The result is that the total customer deposits (which as far as the customer is concerned are effectively money) is greater than the totl ammount of "central bank money" in the system.

In our current system governments/central banks can control the effective money supply in a couple of ways. They can put in place minimum reserve requirements on banks and they can control the ammount of "central bank money" money in circulation.

For fractional reserve banking to work customers must have high confidence in the safety of the banking system. This is ensured through a cobination of government-backed "insurance" schemes and stract regulations on bank investment practices.

So what about bitcoin. The rules for the supply of real bitcoins (analogous to central bank money) are largely fixed. Afaict there is currently no significant fractional reserve bitcoin banking going on. So the inflation and deflation is largely tied to the size of the bitcoin economy and the proportion of bitcoin that is hoarded by speculators rather than circulatin in the bitcoin economy.

A successful introduction of fractional reseve banking would cause a sudden increase in the effective money suppy and with it a burst of inflation.

So the question is would fractionl reserve bitcoin banking be successful? My bet is NO.

The problem is how is the fractional reserve bitcoin bank going to invest the money that they aren't keeping in reserve. There are two options I see both bad.

1. They could make bitcoin denominated loans. However given bitcoins's overall deflationary tendancies and massive volatility only an idiot would take out such a loan.
2. They could invest in something non-bitcoin denominated but then the bank is taking on the risk from bitcoins deflation and volatility.

Either way I expect any fractional reserve bitcoin bank to find themselves bankrupt fairly quickly.

Re:Wrong even if correct

[thebigmacd]

If it means anything to economists, the longest period of sustained US deflation (1873 - 1879) was a period of high economic growth (>7%). This in spite of some economists of the time predicting inflation would occur because of the increase in gold supply. There's evidence that the period from 1800 to 1900 experienced an overall deflation of around 50%, while the country's economy expanded immensely. Whether deflation is bad or good depends more on the context and reaction than any mathematical model. That's why I am a contrarian. If most experts say it will be a certain way, it probably won't be.

Re:Wrong even if correct

[dywolf]

belief in insane conspiracy theories rather than rational logical historically founded facts....why am I not surprised?

It could... but probably not.

[supremebob]

I've been hearing promises of $2,000 Bitcoin due to $BIGECONOMICNEWSEVENT for awhile now. It never seems to pan out.

Honestly, I'd be impressed if it gets back to $1,000 like it did during the 2013 bubble.

Re:It could... but probably not.

[Archangel Michael]

IMHO, this is nothing short of a slashvertisment for a Pump n Dump Scheme.

Re:It could... but probably not.

[Anonymous Coward]

The US dollar is a pump and dump scheme.

Re:It could... but probably not.

[TheRealMindChild]

Except for the fact that these stupid "articles" never cause the price to go up

Re:It could... but probably not.

[Khyber]

Life is a 'pump and dump' scheme. Long-term, but still one and the same.

Re:It could... but probably not.

[Carewolf]

It is called ads. Bitcoin is starting to acquire pyramid scheme like traits, though thankfully it is not pyramid shaped, holders doesn't like the fact air is going out of the baloon, and does anything to try to start a new buying craze to reinflate it.

Re:It could... but probably not.

[Troed]

air is going out of the baloon

Really?

https://bitcoincharts.com/char...

(Note: Log scale)

Re:It could... but probably not.

[Carewolf]

air is going out of the baloon

Really?

https://bitcoincharts.com/char...

(Note: Log scale)

Yeap. Thanks for proving my point. It is still not close to the 2014 high where the last craze ended..

Re:It could... but probably not.

[Troed]

I'd say it's pretty close - and considering it's a steady upwards evolution over its 7 years in existence I think you have a completely different agenda than to report facts when you wrote "air going out of the balloon"

I like facts. Thus the chart.

Pump 'n Dump

[poity]

Here we go again.

Re:Pump 'n Dump

[Anonymous Coward]

If anyone invests their money based upon stories like this, they deserve what they get . And I'd add that they'd be better off going to Las Vegas because they'd getting better odds.

Re:Pump 'n Dump

[Anonymous Coward]

'n Trump

Re:Pump 'n Dump

[fustakrakich]

You're not kidding... *Buy gold now!*

I think we can expect a lot more of these scams. Panic is a great motivator. And what better is there than the fear of Trump right now? Fun times ahead...

Re:Pump 'n Dump

[Tablizer]

If anyone invests their money based upon stories like this, they deserve what they get.

Well, there's little evidence Trump is into austerity, he has a better Congressional chance of passing an infrastructure bill than Obama did, and both GOP and Trump like a really large military.

All investments are guesses, and even not investing is typically based on guesses of events or lack of. Therefore, it makes sense to see where the stars are aligned and aim your boat that way.

(I myself am investing in pussy guards.)

Re:Pump 'n Dump

[Bing Tsher E]

On the subject of gold, it always strikes me that the people running expensive advertising campaigns to convince us that "it is time to buy gold" are making THEIR money in that time period by selling gold.

Now we have investment spam as news

[sl3xd]

You know, the headline looks identical to the thousands of "this investment will go through the roof!" spam I've been receiving for decades.

How is this any different?

Re:Now we have investment spam as news

[PvtVoid]

How is this any different?

Because this time it's different!

Re:Now we have investment spam as news

[Archangel Michael]

"With BITCOIN!!!!!" makes it different.

Kind of like patents that are "____________ on the INTERNET!!!!!" are different.

Re:Now we have investment spam as news

[PvtVoid]

Kind of like patents that are "____________ on the INTERNET!!!!!" are different.

That's obsolete. It's about apps now.

Re:Now we have investment spam as news

[JoeMerchant]

Because it's Bitcoin, on Slashdot. People will react - and that's what makes the pump side of pump and dump work, getting people to think about it - for every million readers who think this is utter worthless trash, there's one who will go out and invest serious money in the market, helping pump it up - the millions who don't care are irrelevant.

As PT Barnum said: "there's a sucker born every minute." Current world birth rate is about 250 people per minute, a 0.4% sucker rate seems pretty accurate to me.

Re: Now we have investment spam as news

[demonlapin]

Some did. I have a friend who dropped $1000 or so into Btc just on a lark when it was trading in the 25c range. He made a hell of a lot of money.

Re:Now we have investment spam as news

[Archangel Michael]

appy app app guy post here

Re: Now we have investment spam as news

[Bryan Ischo]

How brave was he in holding onto the bitcoins? I bought mine at $30 but got too nervous when they hit $600 and cashed out. I only had about three so it's not like it was a huge windfall. But if I had 1000 bought at 25 cents apiece ... man I am not sure I would have had the guts to stay in past even $10.

Re: Now we have investment spam as news

[demonlapin]

Very, very brave. It was a gamble, nothing more or less. He made at least $2M on the deal. He's still got plenty left. He's a firm believer in the underlying tech and the blockchain as a source of value in itself, but given the buying prices he faced, he had at least 5000 bitcoins. I've bought a few from him here and there for my own amusement, in cash. I paid a lot more than 25 cents, though. Still, they've held their value. It's not a life-changingly-good gamble anymore, but I'm not worried about them going to nothing any time soon. I'll probably get as much out as I put in.

But it paid for his house, his entertainment room remodel, and his Tesla.

Re: Now we have investment spam as news

[Bryan Ischo]

"He's a firm believer in the underlying tech and the blockchain as a source of value in itself"

Hm, therein lies perhaps some of the difference between him and me. I was enamoured with the tech early but when I saw the problem of ever increasing blockchain sizes and the pretty much unsustainable quantity of bytes that needs to be shuffled around once the number of transactions increases to anything even approaching a globally accepted scale, and when I wrote a white paper proposing some mechanisms for mitigating this that went completely ignored by the bitcoin developers, I decided that the whole thing, while a great idea in principle, was going to collapse under the weight of the mostly intractible problem of bandwidth.

I still think it's not likely to succeed in the long term, but man was it a clever idea.

Inflation or Rally?

[mi]

Driven by Trump's 'Spending Binge' and Dollar Rally

The two offered reasons seem to be mutually exclusive... Either we see inflation — as Trump's government prints money to finance the feared "binge" (which is oh so different from the wise Government Spending of the Obama era). Such printing may cause an inflation with dollar falling against other currencies — including BitCoin. In this case, BitCoin may, indeed, rise in value.

Or we see dollar "rally" — rise in value against other currencies, including BitCoin.

So, which is it?

When inflation rises the Federal Reserve may raise interest rates to bring it under control. This causes the dollar to appreciate because it would be seen as an attractive currency for foreign investors.

I don't think, a raising of rates ever reversed inflation in the history of Federal Reserve — it can only slow it down. They would not even seek to stop it, considering the value of 1-2% per year "normal" (that's a tax on wealth, BTW).

Re:Inflation or Rally?

[GLMDesigns]

Nobody - especially religious people brought Jesus into the equation.

Remember the shovel ready jobs? Never happened. The monies went to cronies - whether it was Bank of America or the teacher's union. The monies did not go to infrastructure.

Trump and Republicans are going to capitalize on the Democrats foolish aversion to pipelines, fracking and drilling. (Yes it ought to be regulated and yes no eminent domain atrocities and yes monies need to be put into escrow for potential damages)

But the jobs; the hopes for even more jobs; the defunding of the Saudi religious nuts and the good will (in the US flyover states) may very well hurt the Democrats for quite a while. If labor joins the Republicans because the Democrats have deserted them then ... the balance of power will have been changed.

Re:Inflation or Rally?

[Gavagai80]

I remember the shovel-ready infrastructure jobs. I remember tons of road construction with signs saying it was being done with stimulus funds. Frankly it just annoyed me though because re-paving roads doesn't give you the kind of long term benefits that other investments could. Invest in technology, science/medical research or education and it'll keep paying off for decades... invest in repaving a road and you'll just have to do it again in a few years (and it's not like they did the worst roads, they did the more popular roads that were decent already).

Re:Inflation or Rally?

[Comrade Ogilvy]

"Shovel ready" is a bit of a joke, I admit. Important infrastructure cannot be turned on like a spigot. We should be thinking about our infrastructure needs with an eye to 10 and 20 year trends, and spend accordingly, during both rain and shine.

Re:Inflation or Rally?

[necro81]

Either we see inflation — as Trump's government prints money to finance the feared "binge" (which is oh so different from the wise Government Spending of the Obama era).

Lots of otherwise "serious people" have been warning about soaring inflation as a result of fiscal proclivity for the whole of the Obama administration. This was a major argument against further stimulus spending, even during our lackluster recovery, and against investments in infrastructure. Guess what: rampant inflation hasn't happened, in large part because the dollar is still considered a haven against the rest of the world's crummy currency and economies.

that said, this situation probably won't last forever (economic situations never do), and inflation and servicing the debt will probably become problems to worry about eventually. And Trump's projected deficit spending dwarfs anything put forward by any president, ever, which will probably hasten any eventual reckoning.

I wouldn't personally place any bets on Bitcoin being a refuge, however.

Re:Inflation or Rally?

[mi]

One way or the other, only one of the two reasons proposed for BitCoin surge can be valid — it is an equivalent of a Climate Scientist "predicting", it may become hotter or colder in 10 years.

TFA and/or the submission are a blatant attempt to make money on BitCoint speculation, while blaming Trump for whatever he ends up causing: a drop or a rise in dollar's value.

Re:Inflation or Rally?

[lgw]

They would not even seek to stop it, considering the value of 1-2% per year "normal" (that's a tax on wealth, BTW).

Inflation is not a tax on wealth. Wealth is the ownership of the means of production, which has it's own value. If dollars have less value, the number of dollars needed to buy the means of production increases. However, deflation, or over-high inflation, can hurt the economy and thereby reduce the value of the means of production, but that's a very indirect effect (and usually temporary).

Inflation hurts existing (fixed-rate) debt-holders. If you have bonds, or CDs, or some other fixed-rate instrument, you're hurt when interest rates rise. But that's not wealth - it's either parked money or speculation (depending on how safe).

Re:Inflation or Rally?

[AthanasiusKircher]

They would not even seek to stop it, considering the value of 1-2% per year "normal" (that's a tax on wealth, BTW).

Small amounts of inflation are NOT a "tax on wealth." I suppose you might consider it a "tax on money you hide under your mattress."

But in the real world, mild inflation encourages people with wealth to get that money out from under their mattress and invest it somewhere or do something with it.

Deflation, on the other hand, encourages hoarding of money, which means investments have to have much larger returns to seem worthwhile, so most people prefer to just keep their money "under their mattress." And why buy anything unless you need it right NOW? If you wait a year, it will be effectively "cheaper" since the value of your money has grown.

Basically, deflation means economic activity decreases significantly, which means EVERYBODY loses except for those who have huge amounts stuffed under their mattresses.

There are some folks under the mistaken impression that deflation will be good even for normal folks, since their money will buy more. Except do you really think your salary can stay the same in a consistently deflationary economy? Fewer people are investing or buying anything, which means economic activity goes down, which means less revenue at a lot of companies. That means the average Joe either is looking at a salary decrease to "keep pace" with deflation (actually likely more than that, due to the effects of decreased economic activity overall, which depress revenues) or else they just start firing people.

Staying at a steady "0" (no inflation or deflation at all) is nearly impossible. So, yes, government policy tends to try to stay stable at a low inflation rate, which both gives a mild buffer to the rate (avoiding the dangers of deflation) and gives a mild encouragement to investors to keep pumping money out, rather than hiding it under the mattress. Having a slight preference for economic activity over inactivity benefits us all significantly.

Unless you have a giant money bin full of enough to keep you going for the rest of your life already, you likely would do much WORSE in a deflationary economy than having mild 1-2% inflation with its supposed "tax."

Re:Inflation or Rally?

[Areyoukiddingme]

Remember the shovel ready jobs? Never happened.

This varied wildly by state, and even by county within a state. I too remember shovel-ready infrastructure jobs. I remember tons of road construction, which also had signs citing stimulus funds. In the case of my county, they used it to accelerate existing plans to convert a multi-access divided highway into a limited access highway. They built tons of new overpasses and new pavement in new places, with new ramps, ripping out a dozen stoplights in the process, plus putting in a whole new road where there wasn't one before (but the land had been bought years before).

All of this was going to happen anyway, but completion dates for the various phases extended into the 2020s. My county executive is actually competent. They had plans to do the most important thing a government can do—improve the roads—with a sensible budget that was pay-as-you-go so it wouldn't saddle us with a ridiculous debt burden, and they were busily executing this plan before the crash, and would have continued more or less as planned. When the crash yielded stimulus, they grabbed it with both hands and cut 6-8 years off the schedule.

America's multi-tiered governmental system has its good points and bad points. The worst bad point is wildly varying competence levels at the local level across the country. There's lots of places where idiots are in charge, and those idiots, who are idiots because they don't know what government is for, didn't have anything shovel-ready. In those places, yeah, cronies in the financial sector sucked up all the money. Of course they did. Taking candy from a drooling moron who has way too much candy is just too much for some people to pass up. In other places, long-term economically useful things actually got done.

YMMV.

Re:Inflation or Rally?

[Tablizer]

as Trump's government prints money to finance the feared "binge"

I don't believe the president has direct control over the money supply, but it's kind of a murky area as it's designed with some checks and balances.

Re:Inflation or Rally?

[GLMDesigns]

good point.

My mileage definitely varied :-)

Re:Inflation or Rally?

[mi]

Small amounts of inflation are NOT a "tax on wealth." I suppose you might consider it a "tax on money you hide under your mattress."

Wherever I keep it — under mattress, in a sock, or in a savings account — inflation (small or large) taxes it away.

But in the real world, mild inflation encourages people with wealth to get that money out from under their mattress

And even then I am not gaining as much from my investment, as I should've. But, yeah, taxes are often used to discourage some behaviors while encouraging others — a regrettable practice, which itself is a government overreach, I might add.

Unless you have a giant money bin full of enough to keep you going for the rest of your life already, you likely would do much WORSE in a deflationary economy than having mild 1-2% inflation with its supposed "tax."

All of this is irrelevant to my point. Which was, and remains: inflation eats away at savings.

The $100 earned today would buy me 25 cartons of milk. I can not consume so much, so I buy only one carton and save the money. Well, a week later, when I go to buy another carton, it costs slightly more — through no fault of my own, I've lost some of the honestly earned $100.

Deflation may be bad, but that only reinforces, what I said: the two reasons offered by TFA for BitCoin's future rise contradict each other.

Re:Inflation or Rally?

[Bob the Super Hamste]

I remember tons of road construction with signs saying it was being done with stimulus funds.

I remember hearing about how those signs were quite expensive and paid for by the stimulus.

Re:Inflation or Rally?

[mi]

I don't believe the president has direct control over the money supply

Well, he does not spend money either, but TFA still blames him for the future "binge" anyway...

Re:Inflation or Rally?

[Zontar_Thing_From_Ve]

But the jobs; the hopes for even more jobs; the defunding of the Saudi religious nuts and the good will (in the US flyover states) may very well hurt the Democrats for quite a while. If labor joins the Republicans because the Democrats have deserted them then ... the balance of power will have been changed.

Organized labor isn't going to join the Republican Party. The Republicans will treat them just like they do the minorities - if your personal political philosophy makes you align with the Republicans then they will welcome your vote, but they're not going to push for anything that most people in those groups want. Republicans are very much anti-union and probably always will be. Organized labor is stuck with the Democrats and the Democrats did not abandon them but do note that a rather large number of Americans are not union members and have a pretty negative view of unions for a large variety of reasons. Many Americans see organized labor as self-serving to the point of borderline insanity.

Re:Inflation or Rally?

[GLMDesigns]

union /= labor.

Witness the dollars unions spend for one party but the percentage of union members voting for the other party.

Dollars may be 90% + for the democrats but the union members vote 60-40 and sometimes 50-50.

Re:Inflation or Rally?

[Tablizer]

Because a prez has veto power, he/she does have a lot of influence over spending, though.

Re:Inflation or Rally?

[h4ck7h3p14n37]

Republicans are very much anti-union and probably always will be.

I know Republicans typically are opposed to public-sector unions, but I didn't think they had a problem with private-sector unions?

magic internet money

[nimbius]

his could increase the roughly $20 trillion of U.S. national debt and triple the current budget deficit...

or you could sober and realize that no matter how unqualified, despised, ignorant and inappropriate you think he is, a president is merely a figurehead for the party. as an example: George W Bush rubber stamped everything his party wanted and spent most of his days on vacation. He had no grand vision or goals. Barack Obamas party managed to pass the ACA, but once they lost control of the house and senate, Republicans shut down the government twice, reduced the US Credit rating, stonewalled the supreme court electoral process, and managed to obstruct nearly all legislative activity that didnt include prosecuting benghazi or affirming 'god' in the US Dollar.

The worst a trump presidency means for the US is another foreign war, market deregulation, and more class warfare from the 1%. main street will have the same pot-holes in 8 years that it has today.

Re:magic internet money

[PvtVoid]

The worst a trump presidency means for the US is another foreign war

That won't spike the deficit or anything, just like it didn't under Dubya.

Besides, how bad that worst-case scenario is depends entirely on whom the war is with. If Fuckface von Clownstick manages to inadvertently goad China into invading Taiwan, and Kim Jong Un decides to take advantage of the distraction by attacking South Korea, we're in some pretty deep kimchee.

Re:magic internet money

[necro81]

The worst a trump presidency means for the US is another foreign war, market deregulation, and more class warfare from the 1%. main street will have the same pot-holes in 8 years that it has today.

I could think of other things to add to your list. A trade war that ignites a recession. Further delay, or even backward progress, in combating climate change and developing a cleaner economy. An unrestrained, reactionary judiciary that will last for a generation. Privatization of Medicare and Social Security that breaks a multi-generational social contract and leaves seniors in abject poverty. The loss of insurance for millions of Americans due to the repeal, but halfhearted or non-existent replacement, of the ACA.

Really, I could go on, but that seems plenty. If you think that these things won't make the situation on main street any worse in 4 or 8 years, you are in for a rude surprise.

And even if you think my list is farfetched or won't have much of an impact, the things you list certainly will. Another foreign war can do plenty of harm: who do you think fights those damn wars? certainly not the ones that start them. Market deregulation lead to the 2008 Financial Crisis, which resulted in plenty of pain for ordinary Americans.

Re:magic internet money

[Anonymous Coward]

his could increase the roughly $20 trillion of U.S. national debt and triple the current budget deficit...

or you could sober and realize that no matter how unqualified, despised, ignorant and inappropriate you think he is, a president is merely a figurehead for the party. as an example: George W Bush rubber stamped everything his party wanted and spent most of his days on vacation. He had no grand vision or goals. Barack Obamas party managed to pass the ACA, but once they lost control of the house and senate, Republicans shut down the government twice, reduced the US Credit rating, stonewalled the supreme court electoral process, and managed to obstruct nearly all legislative activity that didnt include prosecuting benghazi or affirming 'god' in the US Dollar.

  The worst a trump presidency means for the US is another foreign war, market deregulation, and more class warfare from the 1%. main street will have the same pot-holes in 8 years that it has today.

or you could realize that the President is a really big deal and can unilaterally do lots of things. For reference, see Obama's DACA, Obama's non-prosecution of marijuana possession, Jackson's Trail of Tears, and the Gulf of Tonkin Resolution which allowed Johnson (and future presidents) to engage in numerous non-war conflicts. My understanding is that the president can unilaterally launch a nuclear strike.

The president can be a rubber-stamping figurehead for the party (I doubt anybody gets to that position with such little ambition, mind you)... or the president can lead the party in new and novel ways... or the president can be a lone wolf. It's foolish to think the president can do no damage because "he's just the president, and there are checks and balances."

Just look what happened to Americans who happened to have Japanese ancestry during World War 2.

Re:magic internet money

[smooth wombat]

My understanding is that the president can unilaterally launch a nuclear strike.

Your understanding is wrong. The president can't simply press a button and launch missiles. There are numerous steps that have to be done and cross-checked by a series of different people who all have to give their approval.

If any one of them give a reason not to launch everything grinds to a halt. And I'm not talking about someone who doesn't want to do it simply because. They will be replaced. I mean a legitimate, military or other reason not to launch.

Re:magic internet money

[Grishnakh]

We can't do that when our stupid voters are electing "shitheads" like Hillary and Trump in the primaries.

Re:magic internet money

[Bing Tsher E]

If Fuckface von Clownstick manages to inadvertently goad China into invading Taiwan

He didn't and he's out of office in less than two months now.

Re:magic internet money

[Miser]

Do you really think they will "break" social security and leave seniors in poverty? That's a "nothing left to lose" situation and the government surely doesn't want that. Once thousands of grandmas and grandpas have nothing left to lose (going to be out on the street) it's time to get some weapons and go out in a blaze of glory. What kind of news headline would that be? Not very good .... that's a slippery slope into riots ....

Or...it could fall to $100

[DidgetMaster]

If I had a nickel for every time I got a 'hot tip' about how a stock, gold, oil futures, or bitcoin was going to double in the next year; I would already be filthy rich. This story is nothing but spam.

Re:Or...it could fall to $100

[rsmith-mac]

This story is nothing but spam.

A pump-and-dump, to be precise. Which is something Bitcoin has been subjected to a few different times now.

Re:Or...it could fall to $100

[h4ck7h3p14n37]

That may all be true, but the fact is that if you've been buying Bitcoin over the past 2 years, you've been making some pretty good money.

If you got really lucky and bought when Bitcoin was down around $200, then you've almost quadrupled your investment.

Re:Or...it could fall to $100

[Shimbo]

If you feel that way, go ahead and short the price of bitcoin.

That's missing the point: whether the price of Bitcoin is going to go up or down, the article is still spam. There are plenty of places you can go on the internet if you want to read [random person] says [random thing] is over|under valued articles.

Re:Or...it could fall to $100

[Tablizer]

How do I invest in chaos and confusion? I KNOW that's going up.

Re:Or...it could fall to $100

[h4ck7h3p14n37]

"Four Ways to Trade the Vix"

Re:ok so how do I cash in on this?

[tietokone-olmi]

Looks like you'll be the one of the people who get cashed in on.

+1 Insightful

[mccrew]

Wish I had mod points for you today.

Second Verse Same as the First

[medv4380]

Keep buying your tulip bulbs. When the bubble pops as it predictably will what will you blame? Will it be China sneezing? Some random nonsense scandal from Trump? Or will it be enough to cripple the players, so they realize it was themselves all along?

Pump-N-Trump(TM)

[product_bucket]

Who knows? I wouldn't say there's no chance of a price increase though, it'll do what it'll do.

Am I in some parallel universe?

[SmaryJerry]

Inflation makes a currency weaker not stronger. The rate hikes would be done to counteract the weaker dollar at best bringing it back to normal levels. To make a comparison, this article is like saying "Crime will go up so we will get more police, so an increase in crime makes us safer."

This makes no sense

[Anonymous Coward]

If inflation goes up, then the dollar goes down unless inflation is up more elsewhere. That's the way it works. Inflation cannot go up and have the dollar at record highs.

I love this kind of story

[Dunbal]

It usually means dump your bitcoin now, it's about to crash.

Re:pump and dump

[fustakrakich]

Who needs data when panic and speculation can drive the market up and down much faster and more reliably? Data requires long term investment. Panic can make or lose millions on any given day, or even any given moment (flash crash)

Net worth is over $86 trillion!!!

[RhettLivingston]

Stop it with the debt crap! And stop comparing the spending of money against the GDP instead of our overall total value!

Let's say you own property worth $1,000,000, you have $200,000 in total debt, and you make $180,000 a year. Would you worry about spending an extra $20,000 this year?

Those numbers are the US economic numbers translated to personal terms.

The NET worth of the US was over $86 trillion at the end of last year. That's value minus debt folks. Get real.

With value like that, the government could spend nearly $5 trillion per year over taxes (enough for a $15K / year universal basic income for every American rich or poor) and only be creating about a 6% inflationary load against our overall worth. The resultant increase in consumer spending (people with less money spend a large portion of what they get instead of banking it) would be like attaching solid rocket boosters to the economy. With proper management, deflationary pressures could be created using the greater economies of scale to counteract the inflation. A win for all!

Stop the fear mongering!

Re:Net worth is over $86 trillion!!!

[Oswald McWeany]

Stop it with the debt crap! And stop comparing the spending of money against the GDP instead of our overall total value!

Let's say you own property worth $1,000,000, you have $200,000 in total debt, and you make $180,000 a year. Would you worry about spending an extra $20,000 this year?

Uh, absolutely! Especially if I had $200,000k in debt. That's a huge amount of debt to repay already. Spending an extra $20k a year would be an outlandishly stupid thing to do.

Re:Net worth is over $86 trillion!!!

[RhettLivingston]

Wow. Then you need to do some more digging into the reality of the normal American.

A trivial search on "us debt to income ratio" yields an answer 370% for the the average U.S. household. Even assuming 300%, that individual above will normally be running a $540,000 debt. He's doing great to only be at $200K. If he reduces his spending to $100K per year (an unbelievable amount for someone who is only paying $24K per year on their mortgage), he'll be debt free within five years even giving 30% to taxes. With a mere 2% inflation, that $20K is matched by his net worth increase. A complete wash.

Frankly, if I were in the same situation, I'd cash out, quit my job, purchase a $150,000 house to live in, find an investment that guarantees about 3% on my money, and not worry about the rest of my life. I can easily make it on $20K per year with zero debt to pay.

We are rich beyond belief and completely misdiagnosing our problems. If the US's wealth and debt were evenly spread, every man, woman, and child would have over $300K in property with about $60,000 in debt. The middle class's success has not been given away to Mexico, China, and India. That is just misdirection. It is behind other doors within our own country.

But, back to the point. The inflationary pressure mentioned in the article is BS though it could be magically hyped into existence. The whole article is hype designed to boost someone's bitcoin investment.

Re:Net worth is over $86 trillion!!!

[Megane]

$200,000k in debt is huge? That's less than a typical mortgage in California, with $180,000 being a decent income.

Re:Net worth is over $86 trillion!!!

[Anonymous Coward]

Spending more than you take in in personal finance terms is INCREDIBLY STUPID, doing it EVERY YEAR is far worse! But I can't secure a loan for 0.5% ....best I can manage is 2-3% and that is with outstanding credit.

and if you have property that you can sell to make up the difference, then I guess you can sell it and get some cash to pay off your debts.... unless of course you CAN'T sell it because no one could ever afford to buy it, and even if they could once you sell it you need to replace it with something of similar cost...

Last I checked no one had floated the idea of selling Alaska back to Russia so we could pay off the national debt.

Re:Net worth is over $86 trillion!!!

[nitehawk214]

Stop it with the debt crap! And stop comparing the spending of money against the GDP instead of our overall total value!

Let's say you own property worth $1,000,000, you have $200,000 in total debt, and you make $180,000 a year. Would you worry about spending an extra $20,000 this year?

Yes, if I cared about keeping my $1,000,000 property.

Or, just maybe, country-wide debt finances do not scale to personal debt at all.

Re:Net worth is over $86 trillion!!!

[geekmux]

The NET worth of the US was over $86 trillion at the end of last year. That's value minus debt folks. Get real.

Speaking of getting real, I'd love to see you show up on Shark Tank with that valuation, and see who bites first...

Re:Net worth is over $86 trillion!!!

[King_TJ]

Huh? Why would you argue about our nation's "net worth" as having any relevance here?

In an example of personal debt and ownership, a person can get WAY over their head in debt, while still possessing quite a few things of value. If it gets out of control and they can't manage it any longer - they have the legal options to file for bankruptcy, including a Chapter 7 where most of the debts are simply washed away. Technically, they're *supposed* to itemize all of their possessions to determine their net worth, and then a court can order it be sold off or returned to lenders they owe money to. But realistically, we all know that almost never happens. People in personal bankruptcy are usually holding serious grudges against the entities that they borrowed from in the first place .... disputes over harassing collections efforts and unfair amounts of interest piled onto the unpaid portion of the debt they were struggling to pay back, etc. So they're going to make those assets temporarily disappear -- letting friends hang onto it for them for a while, liquidating some of it for cash, etc. etc.

When the NATION mismanages things by borrowing way too much, it can go bankrupt too -- but then EVERYONE suffers. The country's "net worth" involves all the businesses and natural resources here -- not just what government itself owns. It's NOT ok if government implodes the economy and then debtor nations come swooping in to claim what they're owed. They'll have to take it out of basic infrastructure and land. Maybe they'll just take over a portion of the country and run it their way?

Re:Net worth is over $86 trillion!!!

[Pfhorrest]

$180,000 is more than "decent", it's 300% the median household income for California, i.e. three typical California families would live off of that.

Of course, you're also right that $200k (I assume you made a typo) debt is tiny compared to the typical mortgage in California, namely about 50% of it.

(Those two things together just means it's fucking near impossible for anyone to stop renting in California).

Re:Net worth is over $86 trillion!!!

[roman_mir]

Except that the actual USA debt is over 221 Trillion (counting federal, State, municipal, corporate and personal). You are completely underestimating the actual debt, that's first, secondly you are greatly overestimating the earning potential (revenue that can be collected). You are also completely underestimating the inflation level and employment, basically the numbers you are playing with are nonsensical. Of-course the value of USA as a land mass, all of the untapped resources, companies that can still be bought out, things of that nature certainly are valuable, yet what exactly are you proposing to do at this point? USA already mortgaged all of that out, a person can be evicted from his house, will USA population be evicted from the Continent?

Re:Net worth is over $86 trillion!!!

[jezwel]

Stop it with the debt crap! And stop comparing the spending of money against the GDP instead of our overall total value!

Let's say you own property worth $1,000,000, you have $200,000 in total debt, and you make $180,000 a year. Would you worry about spending an extra $20,000 this year?

Those numbers are the US economic numbers translated to personal terms.

The NET worth of the US was over $86 trillion at the end of last year. That's value minus debt folks. Get real.

Federal income of $3.2T
Expenditure $3.7T
Deficit $0.5T, ~ 15% overspend.

If I'm making $180k, spending $210k and add another $20k on top of that to make $230k? Yes, I would be worrying about that.

Fiat currency is of course different to a home budget, so your analogy doesn't really work.

Re:Net worth is over $86 trillion!!!

[RhettLivingston]

Printing money is mathematically identical to an inflationary pressure. If deflationary pressures are enough to balance it, inflation does not have to occur. Because it removes an equal amount of value from every dollar in the nation and transfers that value to the initial spender (the government in this case), it is in fact the most perfectly flat means of taxation of wealth.

Re:Net worth is over $86 trillion!!!

[RhettLivingston]

The government of the US is a coop of its 330 million people. To separate it out is a distortion. We are it, and it is us.

Joke of a Presidency

[mi]

"Shovel ready" is a bit of a joke

What was not? "Cash for clunkers", perhaps?..

Meanwhile, gem cutters...

[Khyber]

...enjoy a historically reasonably-stable or rising price of goods, and don't have to rely upon this speculative bullshit.

I type this as I hold roughly fifteen thousand dollars of opal in my hands.

What I particularly enjoy

[argStyopa]

When Trump talks about spending, it's a "binge".

But a Democrat president can spend like there's no tomorrow and it gets names like "stimulus spending" or "quantitative easing".

No double standard, certainly.
Haven't the Democrats told us since 2008 that the ONLY way out of a recession is to spend money the government doesn't have?

Re:What I particularly enjoy

[Shane_Optima]

When Trump talks about spending, it's a "binge".

But a Democrat president can spend like there's no tomorrow and it gets names like "stimulus spending" or "quantitative easing".

No double standard, certainly.
Haven't the Democrats told us since 2008 that the ONLY way out of a recession is to spend money the government doesn't have?

Um, no. That's bullshit. In no particular order:

1. George W. Bush passed multi-billion dollar stimuluses on his watch as well. The crisis unfolded in the summer of 2008, remember.

2. In the face of a major downturn, "spending your way out" is the ONLY reliable way to ameliorate it, at least temporarily. You could argue this is just kicking the can down the road, but Democrats did not invert Keynesian economics, nor is it a major part of their platform, nor is the Republican platform particularly against it. (On the topic of fiscal responsibility, most of the time they appear to be stuck in the old, rather incoherent anti-Communist propaganda modes. I doubt the majority of them have ever used the word "Keynesian".)

3. Quantitative Easing: ...you do realize that the Federal Reserve of the United States of America answers to neither Congress nor the President, right? They can do whatever the hell they want and no one can veto it. They were the ones responsible for the QEs, and they were run by a Republican during all three QEs.

Nice try.

Re:What I particularly enjoy

[argStyopa]

Um, no. That's bullshit. In no particular order:

1. George W. Bush passed multi-billion dollar stimuluses on his watch as well. The crisis unfolded in the summer of 2008, remember.

2. In the face of a major downturn, "spending your way out" is the ONLY reliable way to ameliorate it, at least temporarily. You could argue this is just kicking the can down the road, but Democrats did not invert Keynesian economics [wikipedia.org], nor is it a major part of their platform, nor is the Republican platform particularly against it. (On the topic of fiscal responsibility, most of the time they appear to be stuck in the old, rather incoherent anti-Communist propaganda modes. I doubt the majority of them have ever used the word "Keynesian".)

3. Quantitative Easing: ...you do realize that the Federal Reserve of the United States of America answers to neither Congress nor the President, right? They can do whatever the hell they want and no one can veto it. They were the ones responsible for the QEs, and they were run by a Republican [wikipedia.org] during all three QEs.

1) I said nothing about Bush Jr. What does he even have to do with the conversation?
2) You understand that not everyone worships at the Holy Altar of Keynes, right? 'Broken Windows' is bullshit of the highest order, a perfect credo to justify politicians spending money on their pet projects.
3) If you think Fed policy isn't guided by the general policies who sits in the Oval Office, you're kidding yourself. You know who appoints the Fed, right?

Re:What I particularly enjoy

[Shane_Optima]

1) I said nothing about Bush Jr. What does he even have to do with the conversation?

Because your entire thesis was about Rs vs. Ds and you used the 2008 financial crisis as an example. If you cannot see how Bush Jr's decision to sign into law a 12 figure stimulus package (one that saw broad R support and saw virtually no criticism either at the time or years later, unlike the second stimulus package that Obama signed) is relevant to your ridiculous claim that Ds can get away with spending sprees with euphemisms while Rs get called on it...

2) You understand that not everyone worships at the Holy Altar of Keynes, right? 'Broken Windows' is bullshit of the highest order, a perfect credo to justify politicians spending money on their pet projects.

Re-read #2. I already explained why your own opinion of Keynesian economics is irrelevant to my point and indeed to your original point. Your claim was about Rs vs. Ds, and that's what I was responding do. I've heard libertarians (Ron Paul specifically) disparage Keynesian economics, but that isn't part of the regular R platform that I'm aware of.

3) If you think Fed policy isn't guided by the general policies who sits in the Oval Office, you're kidding yourself. You know who appoints the Fed, right?

George W. Bush appointed Bernake, a Republican. In 2008, while Bush was still in office, the Fed (under Bernake) executed QE1, which was the largest of the QEs. This was also when the term "Quantitative Easing" was widely popularized (though not coined.) It's true that later on, Obama re-appointed Bernake and the Fed conducted two other QEs. Obama is, of course, a centrist technocrat who repeatedly and naively sought to build bridges by appointing or nominating moderate Republicans to various positions.

But if you're tempted to quibble that point, please go back and read the bold part a couple times first, then re-read your original post. Don't you think it's the tiniest bit misleading to blame Ds for either the name "Quantitative Easing" or the action itself?

Re:What I particularly enjoy

[radarskiy]

"a Democrat president can spend like there's no tomorrow"

Which Democratic president are you thinking of? Government spending under our current Democratic president has increased at the slowest rate since the Eisenhower Administration.

Trump's spending binge??

[CrimsonAvenger]

As I recall, Congress is the one who spends money, not the President. All the President can do is ask Congress to spend money like a drunken sailor.

And with the general dislike of Trump on both sides of the aisle, I'm not seeing much inclination for Congress to let The Donald go on a spending binge....

Pumping on Trump

[Martin S.]

Still Pumping bitcoin, still no credibility.

Oh Good

[nitehawk214]

We can look forward to another six months of BUY BUY BUY BUY B1TC0INS NOW!!!1! spam posts on slashdot every day.

somebody please explain

[mad7777]

"When inflation rises the Federal Reserve may raise interest rates to bring it under control. This causes the dollar to appreciate because it would be seen as an attractive currency for foreign investors."

I'm so confused. Isn't that a bit like saying that shooting your hand off is good for your health, because you will be forced to see a doctor??

So Trump is devaluing the dollar?

[mmell]

Bitcoin may be currency, but it isn't money (a.k.a., legal tender). If Bitcoin is worth more, that means the dollar is worth less.

I'm sure Trump will be the first to say "Suck on that, China!".

Uh... FUD much?

[Jawnn]

FTFA, Bitcoin is currently trading around $754.51, according to fake news published by CoinDesk data..."
TFTFY. Don't you just love the new post-truth economy?

Seriously?

[bradley13]

What kindergarden did this journalist fail out of. There is so much factually wrong in TFA that it's hard to know where to start. Just off the top of my head:

- Massive spending binge = inflation = a decrease in the value of the dollar, not a "surge"

- "triple the current budget deficit from approximately $600 billion"...um, the current deficit is $1.4 trillion. The other figure comes from accounting tricks that would be illegal for anyone other than the government

- If the federal reserve dramatically raises interest rates, the interest on the massive national debt will skyrocket. The government will meet payments by issuing more debt (how else?). This will lead to more inflation, not to the dollar "hitting the moon"

- Anyway, if the dollar were to hit the moon, then BitCoin would be worth less in terms of dollars, not more. So the whole premise of the article is nonsense

How does an utterly ignorant article like this get published anywhere other than The Onion?????

Re:Seriously?

[EmagGeek]

"- If the federal reserve dramatically raises interest rates, the interest on the massive national debt will skyrocket. The government will meet payments by issuing more debt (how else?). This will lead to more inflation, not to the dollar "hitting the moon""

If the federal reserve dramatically raises interest rates, the interest on the existing massive national debt will not change one bit. The coupon rate on US Treasury bonds is fixed for the life of the bond and cannot be changed, not even by an act of congress.

The only thing that will change is the coupon rate on newly issued debt. The current coupon rate of newly issued short term bonds is 0.00%, and the only yield investors are realizing is that which is obtained by purchasing the bonds at a discount to face value.

Re:Seriously?

[TheSync]

Massive spending binge = inflation = a decrease in the value of the dollar, not a "surge"

You could have a rise in the value of the dollar relative to other currencies while at the same time domestic price levels rise.

But in general, that would be unusual with a floating currency, but it could happen with unusual capital controls and/or a pegged currency.

So you say, Solandri....

[King_TJ]

But by abandoning the gold standard and not coming up with anything concrete to replace gold, we effectively said our currency is no longer tied to anything tangible of any value, so only faith in our leaders managing everything keeps it afloat.

IMO, that's proven to be a terrible fiscal policy -- as we saw with the Federal Reserve running out of techniques or ideas to control things during the last economic crash. Interest rates were dropped to near 0% and none of the decreases were having the expected/desired effect on the economy.

Gold may not be the right material to back our currency with (probably isn't for several reasons, including the high costs and requirements to store enough of it to back the amount of currency in circulation). But the concept makes a whole lot of sense. If you don't possess enough of the raw material to back additional currency with, you can't just go crazy printing off money to pay whatever debts it's politically convenient in the short term to run up.

IMO, Bitcoin was never really suitable as a primary form of currency for everyone to use on a daily basis. If nothing else, the technology is just too complicated to facilitate easy enough, fast enough transactions. The beauty in it is its potential for universal acceptance while preserving anonymity. (Cash has always allowed anonymous transactions, but with the requirement that you physically hand it over from person A to B - creating difficulties in keeping it anonymous. If anyone video records you doing the transaction, for example? Then it's no longer truly anonymous.) When it was still really new, you had lots of people just experimenting with it -- buying pizzas with it and so forth. But as it's matured, it's clearly become something best used only when you need the advantages it brings to the table.

Re:So you say, Solandri....

[mbkennel]

| But by abandoning the gold standard and not coming up with anything concrete to replace gold, we effectively said our currency is no longer tied to anything tangible of any value, so only faith in our leaders managing everything keeps it afloat.

| IMO, that's proven to be a terrible fiscal policy

Monetary policy, not fiscal policy.

| -- as we saw with the Federal Reserve running out of techniques or ideas to control things during the last economic crash.

To the contrary, the Fed employed a large variety of new techniques.

| Interest rates were dropped to near 0% and none of the decreases were having the expected/desired effect on the economy.

To the contrary, they had the expected effect. The european central bank stayed more orthodox and less accomodative, and their recovery has been weaker and later, to the degree that their interest rates and growth is still extremely low and the US Fed is on a path of rising interest rates thanks to an economic recovery, far lower unemployment, higher output, and still moderate inflation.

Ben Bernanke is the best Fed Chairman in the history of the institution.

Re:So you say, Solandri....

[Pfhorrest]

But by abandoning the gold standard and not coming up with anything concrete to replace gold, we effectively said our currency is no longer tied to anything tangible of any value, so only faith in our leaders managing everything keeps it afloat.

This. Pinning a currency to one specific commodity is stupid, but pinning it to nothing at all is even more stupid. Currency should be pinned to a representative basket of investments -- some precious metals like gold sure, but a variety of them, and other valuable commodities, and shares of public companies, and so on -- that is continuously updated in a passive fashion (akin to the techniques underlying index funds) such that one unit of currency represents a stable amount of economic value over time.

Re:So you say, Solandri....

[roman_mir]

To the contrary, the Fed employed a large variety of new techniques.

- all of these so called 'new techniques' are the same old technique of printing money. The so called 'operation twist' (it should be called 'operation screw you' instead) was about the Fed taking upon itself to absorb the long side of the curve, buying long term bonds and selling short term bills, which means turning the US debt into short term, variable rate mortgage. Yeah, that worked so well in the housing market, why not do it for the entire government debt, right?

USA is *not* on any path to increase interest rates. That's buying into the nonsensical government propaganda hook line and sinker. USA SHOULD have normal interest rates and should have NEVER went to 1% with Greenspan and to 0 with Bernanke.

Until Bernanke, Greenspan has proven himself to be the worst idiot and after him Bernanke has proven that no amount of idiocy can be unmatched a worse idiot and then Yellen has proven that gender doesn't matter at all, idiots come in all forms, sizes and genders.

Greenspan was an absolute disaster, Bernanke was an absolute disaster, Yellen is an absolute disaster in a skirt. What's funny is that at least Greenspan admits it *now*, maybe it will take Bernanke another 10 years to admit it as well. Yellen will never admit it.

Another tech journalist, riiiiight...

[bradley13]

Ok, I just answered my own question. This guy's article is so ignorant that I looked up his qualifications as a "technology correspondent". Here they are:

- News assistant at CNBC for 2 years

- Reporter for CNBC for 1 year

- Has a BA in English Literature, and as MA in Journalism

Yep, he's qualified to write about technology issues. Well, as well qualified as most journalists who do so, anyway... He clearly has deep qualification to prognosticate about financial issues as well. /sarc

Re:$20 trillion in debt?

[Tailhook]

I count no less than five blah blah

Three government shutdown hysteria stories, some Rand Paul "war on science" crap and a tangential NASA story from 2007, none of which have any mention of the scale of the deficit or debt. If that's the best you can come up with then I stand affirmed. Thanks.

Inflation is tax on savings

[mi]

Wealth is the ownership of the means of production

That's an interesting definition, could you cite, where you got it from? It seems wrong — as it totally ignores non-productive wealth, such as precious metals, Bitcoins, intellectual property, and currency. By your definition, an owner of, say, a shoe-repair shop is richer than a guy with a $10 mln bank-account...

If dollars have less value, the number of dollars needed to buy the means of production increases

Which means, that whoever earned those dollars lost some of their value. Where did it go — dollars aren't apples, they don't spoil? In a fiat-money situation, the government prints paper money — it gets to spend it first, before inflation diminishes it. When people lose wealth and government gains it — even if not all of it — how is it not tax?

Now, it is not tax on all forms of wealth, merely on savings held in dollars. You may think, you are earning by holding your monies in a saving account, but in reality you barely keep up with inflation — whatever profit you should be getting is taxed away from you. By inflation.

Re:Inflation is tax on savings

[lgw]

That's an interesting definition, could you cite, where you got it from?

It's the old-school definition, the definition one uses to become or remain wealthy. The means of production are really the only thing that has value by something other than convention.

it totally ignores non-productive wealth, such as precious metals, Bitcoins, intellectual property, and currency. By your definition, an owner of, say, a shoe-repair shop is richer than a guy with a $10 mln bank-account...

Many things have value, but not all valuable things are wealth. Roughly speaking, you have:
* "bling" - stuff that costs significant money to maintain, like a fancy car
* parked money - non-productive land, gold, safe loans, etc
* speculative gambling
* wealth - ownership of the means of production

Wealth is the thing that (long-term average) grows over time. Everything else is a (risk- and inflation-adjusted) loss on average. For centuries, wealth was "assets that produce income", which was basically only farmland. Land was valued not by it's purchase price (a newer notion than you'd think) but by its annual income. As economy theory grew up, "the means of production" became the more clear concept.

Note that there's a useful notion of wealth that includes your labor - you have a sort of inherent wealth because you can be productive. Sometimes that's a very useful notion of wealth.

Which means, that whoever earned those dollars lost some of their value. Where did it go

They had value only by convention and that convention changed.

Now, it is not tax on all forms of wealth, merely on savings held in dollars.

Assuming you shop around for savings accounts (instead of just getting taken by the place you happen to have a checking account with), you can consistently get a bit less interest than inflation. When inflation rises, the interest rate for the best savings accounts will rise as well (ditto new CDs). Rising inflation shouldn't really be a tax on savings, except people are too lazy to move their savings if needed when rates rise and banks take great advantage of this.

Of course, all that's out the windows when US savings interest rates hit the legal maximum of 5.25%, but that's how euro-dollars came to be (dollar savings accounts at a European bank - all the rage in the Carter years).

Re:Inflation is tax on savings

[mi]

It's the old-school definition

Which you would not cite despite an explicit request...

the definition one uses to become or remain wealthy.

Citing definitions rarely makes one wealthy. Given your cavalier attitude towards the meanings of the very words you are using, I'm beginning to doubt the value of continuing the conversation...

Which means, that whoever earned those dollars lost some of their value. Where did it go ...?

They had value only by convention and that convention changed.

That means, the money is failing in one of its primary purposes — being means of storing value.

When inflation rises, the interest rate for the best savings accounts will rise as well (ditto new CDs).

Whether you can still beat inflation or not, the point is, you are losing some of the wealth you had. The government, which spent the freshly-printed money before it loses value, gains gained what you lose — thus making it indistinguishable from tax. Whether that's good or bad, it is a form of taxation.

Your arguments make a case for it being a "good" form of taxation — you should stick to that and stop denying, that it is a tax...

Re:Inflation is tax on savings

[lgw]

If you prefer a different term for "assets that increase in value over time: the means of production", well, that's fine, but inflation is not a tax on that stuff, and that stuff is what "wealthy people" mostly own. Inflation is not a transfer of wealth from "wealthy people" to whomever the government sends money to, because "assets that increase in value over time: the means of production" hold value.

Even if you want to claim that savings accounts are wealth, the rate of inflation doesn't change the rate at which savings accounts lose value, except at the extremes. You pay for safety (you pay disproportionately to the actual risk). Higher inflation, in the 1-5% range where stable economies lie, is not a higher tax on savings accounts. Even if there were no inflation, savings accounts would have some fee structure (or negative interest rates), because people will pay for safety.

As far as money failing as a store of value, yep, what else is new? The only thing that holds value remains "assets that increase in value over time: the means of production".

Ridiculous

[Chalnoth]

There's no way that Trump's policies will substantially increase inflation, for a number of reasons.

The biggest reason is that it's very easy for the Fed to reign in inflation by increasing interest rates, and by all accounts a Trump presidency is likely to try to push the Fed to be more aggressive about doing this than the current Federal Reserve Board.

The next biggest reason is that Trump won't really be doing much of anything to increase spending. Trump and the Republicans will very likely blow the federal deficit wide open, but this will primarily be through tax cuts to the rich, which have very little impact on inflation.

I'm pretty sure that we can expect low inflation and decent economic growth over the next couple of years. But Trump, by removing financial regulation, will make another crash like the 2008 crash much more likely. When that next crash happens, then Bitcoin and gold will very likely spike in price (it'll be impossible to predict precisely when: sooner with Trump than it would have been with Clinton, but it could still be 5-10 years away).

Gold had a useful value once, but not any more

[mbkennel]

That value was proof in a low-information-velocity economy. Prior to the discovery of electromagnetism and its technology, there was no easy way to guarantee monetary payment over distances. I.e. payee didn't know for sure that payor was good for the money. In some limited areas where such thing could be checked and punishment made if found to be false (e.g. in a city or small political entity with reliable enforcement), you might be able to get away with more but in general, gold was the most effective and reliable transfer of that information.

That central advantage outweighed the other problems. And before the 19th century, economic growth rates were low all over the planet.

Today, electronic funds transfers can give notice of insufficient funds either immediately or with short notice, so the prime technological argument for gold is no longer applicable, and the monetary disadvantages are central.

The unsuitability of bitcoin as a currency for general economic use is the primary reason for its spontaneous popularity. Almost everybody who wants some is speculating on the possibility of instability in the 'shortage' direction. There is no bond market in bitcoin.

The other primary use case for bitcoin is of course enabling criminality---a means of clandestine monetary exchange outside the standard payment systems and their regulation.

My dick could rise by 165% in 2017

[swm]

My dick could hit more than 9 inches in 2017 driven by expectations that Trump will deliver a steady stream of hot women to my doorstep.

Or...uhhh...not...

Just for comparison...

[bsharma]

Just for comparison... What is the value of all the Gold in the world? $7,024,689,650,351 Yep - That's trillions Based on current spot gold price of $1,174.62 http://onlygold.com/Info/All-T... How many Bitcoins are currently in circulation? 15,873,063 BTC (as of October 4th 2016) Note that there’s a cap of 21,000,000 — there won’t ever be more than that! https://www.quora.com/How-many... So, value at $2000 per Bc is about $42 Billions U.S. GDP is about about $18 Trillions U.S. Federal Debt is about $20 Trillions

Re:I think you're mistaken about gold

[Bryan Ischo]

What do you say to the fundamental criticism that deflation decreases incentive to work? If I have a huge nugget of gold, there is little or no more being mined out of the ground, and the size of the economy is increasing, then effectively all I will need to do to live comfortably is shave off smaller and smaller pieces of gold each year to pay for my needs.

Deflation seems like it helps people who have already accumulated wealth. Inflation seems like it helps people who have not accumulated wealth.

I'm in preference of the latter.

BitCoin: A Pyramid Scam System

[ramorim]

In my understanding, Bitcoin is nothing more, nothing less than a Pyramid Scam system, and a self-limited and volatile one. Also, to make things even worse, the Bitcoin is a closed system, meaning that only exists a total amount of possible money that can be generated, and the only way to make it gain more value is to try to do nasty things like "market speculation"... things that will only help to create an "I-will-explode-soon" kind of market bubble, and (if you think it cannot be worse) inside a "glass ceiling". Also, from the start of its creation, all the big slots already had an owner, leaving only the little ones to "the rest of us" to try mining...

But the worst part is the amount of people encouraging this "system". The ones participating are already trapped in this scam and cannot leave without loosing everything invested (or try to sell to other people and helps perpetuate this insanity).

But, some day, when all this abomination "magically" disappears in thin air, everyone in it will loose all their "money" and (eventually) will cry a lot... but it will be too late :(

Re:BitCoin: A Pyramid Scam System

[TeknoHog]

Oh please. Bitcoin is like any other technology in the broad sense: early investors can make a huge profit, and casual users only need to pay a minimal fee in order to use the tech. Is it unfair that you didn't buy Apple or Microsoft shares in their early days?

It's also a constant source of amazement how people on Slashdot, a "tech" site, forget about the actual tech aspect of Bitcoin. Perhaps you should look up what it actually does in the real world, before bringing up the tulip analogy.

re: The Fed and "new techniques"

[King_TJ]

Umm... please enlighten me what effective new strategies The Fed used to fix our last economic crisis?

One of the techniques they DID try was Section 128 of the Emergency Economic Stabilization Act of 2008, allowing the Federal Reserve to pay interest on “excess reserves” that U.S. banks park at the Fed. This allowed banks to just send their money in to The Fed and earn money on it, rather than loan any of it to actual customers who needed loans. In other words, great for the banks themselves but screwed over the general public.

Or how about the government debt carry trade, where The Fed lends gigantic piles of nearly interest-free cash to the big Wall Street banks, and in turn those banks use the money to buy up huge amounts of government debt?

Oh yeah, this stuff made Ben Bernanke a real American hero.....

Re:I think you're mistaken about gold

[roman_mir]

Deflation seems like it helps people who have already accumulated wealth. Inflation seems like it helps people who have not accumulated wealth.

- completely wrong. Deflation favours savings and puts people on the right track to accumulate wealth and to use it productively while inflation favours spending *instead* of production, it gets the borrowers off the hook, because they don't have to give back what they actually borrowed, it hurts savers, encourages borrowing for spending and because it is done with the hand of the government (through the Treasury and the Fed and other banks working together) it moves new money to the preferred and connected people, while causing rising prices for everybody else.

Inflation favours the politically connected and hurts the rest.