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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.
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.
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.
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.
[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.