No. Somebody has to hold the BitCoin long term. Think of the game Hot Potatoes. So it takes a second for you and another party to transact. O.k. Now the other party has BitCoins. What are they going to do with it? Maybe they could contract out with a 3rd party – except now they are holding the BitCoins long term.
At the end of any one transaction somebody is going to be holding BitCoins that they purchased at a high value which could suddenly evaporate in a volatile market. If BitCoins are money then one of the characteristics of money is that it is a store of value. Volatile items are not stores of value.
What about the housing bubble? The value of land soared then fell – and they are not making any new land.
There are lots of bubbles that have formed where the assets are fixed. The South Sea Bubble where the number of shares was fixed. Limited edition pound puppies. The Nifty 50.
Or maybe the Hunt Brothers trying to corner the silver market. Could more silver be produced? Opening a new mine takes 10 years and would only add a very small fraction to the total supply of silver. Most mining of precious metals have almost zero effect on the overall supply. The last time a gold find had an impact on the price of gold was, IIRC, 1890 in South Africa.
I could go on.
No, it is a bubble when the price of a thing because disassociated with the intrinsic value of a thing and BitCoin has no intrinsic value. Of course, no money has any intrinsic value because it is the yardstick by which things are measured. You can only get relative measures, BitCoin vs. USD vs. Gold.
So I might point to Shiller’s checklist for bubbles. (He won the Nobel Prize for his work with bubbles.)
Check and Bingo - “New era” theories to justify unprecedented price increases Check - Sharp increases in the price of an asset like real estate or dot-com shares Check - Great public excitement about said increases Check -An accompanying media frenzy Check - Stories of people earning a lot of money, causing envy among people who aren’t Check - Growing interest in the asset class among the general public No Check - A decline in lending standards
One can as easily short currency as one can short stock. Or wheat, bonds, etc. I suggested looking up stocks because there is more and clearer information out there then on bonds. Let me see if I can make my point clearer. Remember, I am only going through the mechanics of a short sale.
Example #1: I sell 1 BitCoin for $1,000. This is your example. It assumes you have $1,000 and are interested in a finial sale.
Example #2: I borrow 1 BitCoin today from Party A and promise to pay back the 1 BitCoin plus interest sometime in the future. Party A does not trust me and asks for collateral so I post the $1,000 as collateral plus some extra amount as a buffer. I then sell the borrowed BitCoin for $1,000 to Party B. Under this scenario we don’t have to assume I have $1,000. Maybe I only have $5 or $10.
And I am not sure what technical point you are making. Yes, the number of shares sold in a IPO is arbitrary. So was the choice for the number of BitCoins.
As long as I can borrow BitCoins I can short BitCoins.
Can somebody explain why this line of argument is repeated? I can’t figure out the logic on why this limitation is important? BitCoins can go to 8 digits contrasted to most other investments which are infinitely divisible. Seems more like a drawback to me.
On a more serious note, I think the OP got the issue almost right. Bubbles happen when everybody has the same time scale – and that scale would be now. (i.e. that they can sell their investment to somebody else who can sell that investment to somebody else.) Most mature markets have people with different time horizons. A jump of 10% is a huge move for a day trader but means almost nothing for somebody with a 10 year time horizon. This heterogeneous mix of risk tolerances, opinions, and time scales is what makes for well working (and semi-stable) markets.
What you do is borrow BitCoins from party A, exchanging your cash for their BitCcoins. Then sell those BitCoins for cash to party B. You now owe BitCoins and own cash. When BitCoins crash you buy back those BitCoins at a lower price to satisfy your loan to Party A.
There are people who claim that short selling can drive the price down. I don’t think you can. Or rather, a very large group can temporally drive the price down by short selling. But in the long run it balances out - as you said for every short seller there is a long buyer. So I don’t give the OP much credence. But then again I think he was trying to make a joke.
A word of warning - there is a old saying that the markets can stay rational longer then you can stay solvent.
And you would still have been better off investing in the NASDAQ – once you factor in dividends. The bad thing about these indexes is that forget to factor in dividends.
For the past 13 years (11/30/2000) inflation has averaged about 2.3% NASDAQ has gone up about 3.3%. Once you factored in dividends it goes up to 4.2% which is a bit more respectable. Still lower than from the peak, but still.
Your right, it does not have to be and in the case of strong boards it’s not.
However, when shareholdings are defuse it is the current board who nominates who will be their replacements, and can be influenced by the CEO. Thus the current board tends to be captured by current management. It’s particularly bad when the same person is the CEO and chairmen of the board or when the board is packed with insiders. They like to choose docile people.
You might even have issues with a strong board. Often there are close personal ties between the CEO and the board. It is human nature to be influenced by lobbying and politicking.
Well, most execs are employed at will – so no change there. The issue that golden parachutes are supposed to fix is that the person who can fire the executive at will is that executive. Who is going to fire themselves?
Most of the time it is not that bad, but in almost all cases there is a complex (and I would say incestuous) relationship between the executive and the person doing the firing. In most cases the person who would fire the executive was hired by that executive.
Is it a health or medical test? Or are they just an information provider? I mean they are not telling me if I have diabetes or heart disease – Just that my genes mark me at a greater risk to get those diseases – in combination with lifestyle and environmental factors.
I know you are trying to be funny, but you are half-right.
It is not to attract high level talent, it is kick them out. If I am a high level executive and I have a choice – quite my job for the benefit or the firm or fight to keep my job (which means being a distraction, promoting infighting, etc.) I am going to choose to fight for my job.
Unless, of course, I have a golden parachute. Parachutes tend to be less lucrative then having a job but they can be used to ease people out of their positions.
American here. I have a question for you – I know the Queen is the head of state and theoretically has vast powers. However, she seems to have delegated most of those powers. Beyond a tourist attraction what does she do? I live close enough to Canada, another one of her domains, but I can’t figure out what she does.
Years of searching & investigations after we invaded it was proven beyond all doubt that the WMD claims were completely unfounded
Well, yes, hindsight is 20/20. But what about before the war? Did we know then?
I mean the UN weapons inspectors though that Iraq probably did not have WMD – but wanted another 7 years to prove it. We know that they played a game of “Cat and Moue”, according to Hans Blix. At that point we knew that Hussein has lied twice about destroying his weapons. And then lied about lying.
I am deeply confused. Where are you getting this idea that this is to generate revenue? A carbon tax would hit lower incomes more then higher incomes. The way to fix that is to cut income taxes by the amount collected by the carbon tax.
The most efficient way of reducing green houses gases is a different issues on the appropriate level of taxation. It is o.k. To want to lower expenses instead of increase revenue. That is my position too. But let us not have a negative reaction to any new idea that is suggested.
So, there are political aspects. That would be true of any system. Is there any particular reason why you would suspect that a carbon tax would be more prone to this? I think it would be less prone. Can you tell me the impact of the ethanol subsidy? If solar is getting more or subsidy then wind? Etc. If friends were to get special deals we could figure out exactly how much that deal is.
The two party system is protected by “First Past the Post” method. 2 parties is the only stable system according to game theory. It further suggests that the 2 parties will be center left and center right.
While there is deadweight loss from taxes there is also deadweight losses from negative externalities. The question is what is the most efficient way of handling the negative externalities.
I don't know of anybody who has suggested that externalities have to be tangible verse intangible. Can you point me to your source?
A valid criticism of externalities is that they are hard to measure and the value (or negative value) is subjective. What is the cost of dirty water, polluted water, noise pollution from airplanes, etc. Some of the factors can be quantified. Others can not.
For example, we know that global warming will have a impact. There is a low chance that the impact will be minimal, and a low chance that it will be devastating, and a range of outcomes in the middle. Different people have different levels of how they value the environment and the risks they are willing to take.
But once a society has decided on the impact of a negative externality, a usage tax causes the least amount of distribution and distortion. Consider the sewage fee you pay. The more you sewage, the higher your fee will be. It encourages the rational allocation of a scarce resource. Or consider the extra cost the government has to pay for lung cancer. Tobacco taxes cover the (approximate) extra amount the government has to spend.
You are right – unless there is a negative externality – which there is. And where there is a negative externality, the overwhelming consensus is that a tax is the best choice. A carbon tax would cause less of a distortion than any other option. If it an action is causing $1.00 worth of harm then tax that action for $1.00 Taxing is better than regulation, subsidies, cap and trade, etc.
Not necessarily. Almost every economist – left or right – suggests that the right answer is to levy a carbon tax. That way capitalism kicks in are reduces greenhouse gasses in a more efficient manner then government subsidies.
You might then want to read up on it. The Christian Science Monitor has been around for a long time and has a strong record of integrity and high quality reporting. While owned by the CS the news side is segregated from the editorial side like most reputable newspapers. And the news side dominates. One of the better national newspapers of the US.
First, you don’t invest in $200 electronic gadgets, you consume $200 worth of electronic gadgets. Unless you in business, in which case you would expect those electronic gadgets to earn more than $200 over those 2 years.
Second, in response to TacoBill, when you start hearing people saying that you should invest in a investment because it is going to go up because more people are buying it – instead of its intrinsic worth, that is a classic signal that one is in bubble territory.
I am taking my cue for the animal world, generally mammals, but in particular primates. Generally speaking one sees more “compassion”, favor giving, etc. the more sociable the group is. Only sociable animals form large communities.
If it is a fairly small group that limits the ability to store up favors and cash them in at a later date. And by favors, I mean, “Help me out today and I will help you unborn child in the future” type of favor. Also, with a smaller group, the lines of kinship are clearer, so individuals are more likely to discriminate for their blood relatives over the group as a whole.
Classic problem of game theory, the prisoner’s dilemma. Yes, a few selfish people can get ahead if the majority and compassionate. Of course, if everybody is greedy then the whole system falls apart. Which is why there exist ideas like fairness and retribution. Abusers are identified and are kicked out of society at large.
Compassion is one of those things needed if you are going to live in a society of over 50 individuals. Compassion is a form of trust, that any good deed you do today will be reciprocated to you or your offspring in the future. From a selfish standpoint it is a net gain to live in a compassionate society. And if you want to live in a compassion society you have to act compassionately.
As to your question, where there multiple living historians at the time. And the answer is yes – kind of. As I have stated before, few documents from professional objective records are few and far between. What we do have is multiple different traditions. The 4 official gospels have at least 2. But there are a dozen other gospels which implies more and different sources.
Which goes back to my earlier comment that the gospels having differences and contradictions. These differences are within the normal bonds of different oral traditions. If they were very similar this would imply a single source with all of the basis that come with stories from a single source.
Slashdot Mirror
Good catch. I did drop the "ir" from the quote. My bad.
No. Somebody has to hold the BitCoin long term. Think of the game Hot Potatoes. So it takes a second for you and another party to transact. O.k. Now the other party has BitCoins. What are they going to do with it? Maybe they could contract out with a 3rd party – except now they are holding the BitCoins long term.
At the end of any one transaction somebody is going to be holding BitCoins that they purchased at a high value which could suddenly evaporate in a volatile market. If BitCoins are money then one of the characteristics of money is that it is a store of value. Volatile items are not stores of value.
What about the housing bubble? The value of land soared then fell – and they are not making any new land.
There are lots of bubbles that have formed where the assets are fixed. The South Sea Bubble where the number of shares was fixed. Limited edition pound puppies. The Nifty 50.
Or maybe the Hunt Brothers trying to corner the silver market. Could more silver be produced? Opening a new mine takes 10 years and would only add a very small fraction to the total supply of silver. Most mining of precious metals have almost zero effect on the overall supply. The last time a gold find had an impact on the price of gold was, IIRC, 1890 in South Africa.
I could go on.
No, it is a bubble when the price of a thing because disassociated with the intrinsic value of a thing and BitCoin has no intrinsic value. Of course, no money has any intrinsic value because it is the yardstick by which things are measured. You can only get relative measures, BitCoin vs. USD vs. Gold.
So I might point to Shiller’s checklist for bubbles. (He won the Nobel Prize for his work with bubbles.)
Check and Bingo - “New era” theories to justify unprecedented price increases
Check - Sharp increases in the price of an asset like real estate or dot-com shares
Check - Great public excitement about said increases
Check -An accompanying media frenzy
Check - Stories of people earning a lot of money, causing envy among people who aren’t
Check - Growing interest in the asset class among the general public
No Check - A decline in lending standards
One can as easily short currency as one can short stock. Or wheat, bonds, etc. I suggested looking up stocks because there is more and clearer information out there then on bonds. Let me see if I can make my point clearer. Remember, I am only going through the mechanics of a short sale.
Example #1: I sell 1 BitCoin for $1,000. This is your example. It assumes you have $1,000 and are interested in a finial sale.
Example #2: I borrow 1 BitCoin today from Party A and promise to pay back the 1 BitCoin plus interest sometime in the future. Party A does not trust me and asks for collateral so I post the $1,000 as collateral plus some extra amount as a buffer. I then sell the borrowed BitCoin for $1,000 to Party B. Under this scenario we don’t have to assume I have $1,000. Maybe I only have $5 or $10.
And I am not sure what technical point you are making. Yes, the number of shares sold in a IPO is arbitrary. So was the choice for the number of BitCoins.
As long as I can borrow BitCoins I can short BitCoins.
Can somebody explain why this line of argument is repeated? I can’t figure out the logic on why this limitation is important? BitCoins can go to 8 digits contrasted to most other investments which are infinitely divisible. Seems more like a drawback to me.
On a more serious note, I think the OP got the issue almost right. Bubbles happen when everybody has the same time scale – and that scale would be now. (i.e. that they can sell their investment to somebody else who can sell that investment to somebody else.) Most mature markets have people with different time horizons. A jump of 10% is a huge move for a day trader but means almost nothing for somebody with a 10 year time horizon. This heterogeneous mix of risk tolerances, opinions, and time scales is what makes for well working (and semi-stable) markets.
Read up on “Short Selling” in the stock market.
What you do is borrow BitCoins from party A, exchanging your cash for their BitCcoins. Then sell those BitCoins for cash to party B. You now owe BitCoins and own cash. When BitCoins crash you buy back those BitCoins at a lower price to satisfy your loan to Party A.
There are people who claim that short selling can drive the price down. I don’t think you can. Or rather, a very large group can temporally drive the price down by short selling. But in the long run it balances out - as you said for every short seller there is a long buyer. So I don’t give the OP much credence. But then again I think he was trying to make a joke.
A word of warning - there is a old saying that the markets can stay rational longer then you can stay solvent.
And you would still have been better off investing in the NASDAQ – once you factor in dividends. The bad thing about these indexes is that forget to factor in dividends.
For the past 13 years (11/30/2000) inflation has averaged about 2.3% NASDAQ has gone up about 3.3%. Once you factored in dividends it goes up to 4.2% which is a bit more respectable. Still lower than from the peak, but still.
Your right, it does not have to be and in the case of strong boards it’s not.
However, when shareholdings are defuse it is the current board who nominates who will be their replacements, and can be influenced by the CEO. Thus the current board tends to be captured by current management. It’s particularly bad when the same person is the CEO and chairmen of the board or when the board is packed with insiders. They like to choose docile people.
You might even have issues with a strong board. Often there are close personal ties between the CEO and the board. It is human nature to be influenced by lobbying and politicking.
Well, most execs are employed at will – so no change there. The issue that golden parachutes are supposed to fix is that the person who can fire the executive at will is that executive. Who is going to fire themselves?
Most of the time it is not that bad, but in almost all cases there is a complex (and I would say incestuous) relationship between the executive and the person doing the firing. In most cases the person who would fire the executive was hired by that executive.
Is it a health or medical test? Or are they just an information provider? I mean they are not telling me if I have diabetes or heart disease – Just that my genes mark me at a greater risk to get those diseases – in combination with lifestyle and environmental factors.
I know you are trying to be funny, but you are half-right.
It is not to attract high level talent, it is kick them out. If I am a high level executive and I have a choice – quite my job for the benefit or the firm or fight to keep my job (which means being a distraction, promoting infighting, etc.) I am going to choose to fight for my job.
Unless, of course, I have a golden parachute. Parachutes tend to be less lucrative then having a job but they can be used to ease people out of their positions.
American here. I have a question for you – I know the Queen is the head of state and theoretically has vast powers. However, she seems to have delegated most of those powers. Beyond a tourist attraction what does she do? I live close enough to Canada, another one of her domains, but I can’t figure out what she does.
Years of searching & investigations after we invaded it was proven beyond all doubt that the WMD claims were completely unfounded
Well, yes, hindsight is 20/20. But what about before the war? Did we know then?
I mean the UN weapons inspectors though that Iraq probably did not have WMD – but wanted another 7 years to prove it. We know that they played a game of “Cat and Moue”, according to Hans Blix. At that point we knew that Hussein has lied twice about destroying his weapons. And then lied about lying.
I am deeply confused. Where are you getting this idea that this is to generate revenue? A carbon tax would hit lower incomes more then higher incomes. The way to fix that is to cut income taxes by the amount collected by the carbon tax.
The most efficient way of reducing green houses gases is a different issues on the appropriate level of taxation. It is o.k. To want to lower expenses instead of increase revenue. That is my position too. But let us not have a negative reaction to any new idea that is suggested.
So, there are political aspects. That would be true of any system. Is there any particular reason why you would suspect that a carbon tax would be more prone to this? I think it would be less prone. Can you tell me the impact of the ethanol subsidy? If solar is getting more or subsidy then wind? Etc. If friends were to get special deals we could figure out exactly how much that deal is.
The two party system is protected by “First Past the Post” method. 2 parties is the only stable system according to game theory. It further suggests that the 2 parties will be center left and center right.
While there is deadweight loss from taxes there is also deadweight losses from negative externalities. The question is what is the most efficient way of handling the negative externalities.
I don't know of anybody who has suggested that externalities have to be tangible verse intangible. Can you point me to your source?
A valid criticism of externalities is that they are hard to measure and the value (or negative value) is subjective. What is the cost of dirty water, polluted water, noise pollution from airplanes, etc. Some of the factors can be quantified. Others can not.
For example, we know that global warming will have a impact. There is a low chance that the impact will be minimal, and a low chance that it will be devastating, and a range of outcomes in the middle. Different people have different levels of how they value the environment and the risks they are willing to take.
But once a society has decided on the impact of a negative externality, a usage tax causes the least amount of distribution and distortion. Consider the sewage fee you pay. The more you sewage, the higher your fee will be. It encourages the rational allocation of a scarce resource. Or consider the extra cost the government has to pay for lung cancer. Tobacco taxes cover the (approximate) extra amount the government has to spend.
You are right – unless there is a negative externality – which there is. And where there is a negative externality, the overwhelming consensus is that a tax is the best choice. A carbon tax would cause less of a distortion than any other option. If it an action is causing $1.00 worth of harm then tax that action for $1.00 Taxing is better than regulation, subsidies, cap and trade, etc.
Not necessarily. Almost every economist – left or right – suggests that the right answer is to levy a carbon tax. That way capitalism kicks in are reduces greenhouse gasses in a more efficient manner then government subsidies.
You might then want to read up on it. The Christian Science Monitor has been around for a long time and has a strong record of integrity and high quality reporting. While owned by the CS the news side is segregated from the editorial side like most reputable newspapers. And the news side dominates. One of the better national newspapers of the US.
First, you don’t invest in $200 electronic gadgets, you consume $200 worth of electronic gadgets. Unless you in business, in which case you would expect those electronic gadgets to earn more than $200 over those 2 years.
Second, in response to TacoBill, when you start hearing people saying that you should invest in a investment because it is going to go up because more people are buying it – instead of its intrinsic worth, that is a classic signal that one is in bubble territory.
I am taking my cue for the animal world, generally mammals, but in particular primates. Generally speaking one sees more “compassion”, favor giving, etc. the more sociable the group is. Only sociable animals form large communities.
If it is a fairly small group that limits the ability to store up favors and cash them in at a later date. And by favors, I mean, “Help me out today and I will help you unborn child in the future” type of favor. Also, with a smaller group, the lines of kinship are clearer, so individuals are more likely to discriminate for their blood relatives over the group as a whole.
Classic problem of game theory, the prisoner’s dilemma. Yes, a few selfish people can get ahead if the majority and compassionate. Of course, if everybody is greedy then the whole system falls apart. Which is why there exist ideas like fairness and retribution. Abusers are identified and are kicked out of society at large.
Compassion is one of those things needed if you are going to live in a society of over 50 individuals. Compassion is a form of trust, that any good deed you do today will be reciprocated to you or your offspring in the future. From a selfish standpoint it is a net gain to live in a compassionate society. And if you want to live in a compassion society you have to act compassionately.
As to your question, where there multiple living historians at the time. And the answer is yes – kind of. As I have stated before, few documents from professional objective records are few and far between. What we do have is multiple different traditions. The 4 official gospels have at least 2. But there are a dozen other gospels which implies more and different sources.
Which goes back to my earlier comment that the gospels having differences and contradictions. These differences are within the normal bonds of different oral traditions. If they were very similar this would imply a single source with all of the basis that come with stories from a single source.