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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.
Here we go again.
your thin skin doesn't make me a troll
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?
-- Sometimes you have to turn the lights off in order to see.
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?
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).
In Soviet Washington the swamp drains you.
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.
Good people go to bed earlier.
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.
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.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
IMHO, this is nothing short of a slashvertisment for a Pump n Dump Scheme.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
Wish I had mod points for you today.
Hey, Windows users, there is no such thing as "forward" slash, there is only slash and backslash.
Bitcoin, lacking government interference, seems to be a bit less stable than the government controlled currencies.
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.
Don't fight for your country, if your country does not fight for you.
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!
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.
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.
I wish I were as sure of anything as some people are of everything
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.
Gold has all the negative qualities you cite about bitcoin, and was used as currency for a long time.
Peter predicted that you would "deliberately forget" creation 2000 years ago...
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.
Socialism: a lie told by totalitarians and believed by fools.
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?
-Styopa
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%.
[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.
love is just extroverted narcissism
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:
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.
Enigma
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.
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
Enjoy life! This is not a dress rehearsal.
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).
Socialism: a lie told by totalitarians and believed by fools.
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.
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.
"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.
| 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.