China Bans Cryptocurrency Transactions

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Re: China Bans Cryptocurrency Transactions

Post by bitcoininthevp » Mon Oct 18, 2021 8:43 am

glennds wrote:
Mon Oct 18, 2021 8:24 am
Beyond that level, self interest can lead to bad outcomes. My example would be the years leading up to 2008. Alan Greenspan, being a student of Ayn Rand, was a huge believer in the invisible hand.
Then when the mortgage lenders, borrowers, Wall Street banks, appraisers, and every other invested party took their self interest into recklessness, we both know what happened.
There are of course many considerations to 2008. But to bring up Greenspan (the Fed) in the 2008 context and not see how the Fed controlling interest rates lower and the price of the money during a real estate bubble is a bit misleading.

What had more impact in that market: the Fed, a state constructed monopoly, controlling the price of money and thus the price of all good and services in the market, or some subtle <unnamed-in-this-thread> laissez-faire regulation?
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Re: China Bans Cryptocurrency Transactions

Post by Kbg » Tue Oct 19, 2021 9:40 am

Stable no change money guys...make the case why a Snickers bar, a gallon of gas or whatever should perpetually stay the same price? What is wonderful about that? If grandma's bread loaf goes up 10% and if her SS check goes up 10%, in real terms grandma just has to be able to deal with larger numbers...the real effect is zero.

Side note: Printing money most definitely is not the definition of inflation. As I've said a ton of times on this board, more money does not equal inflation. Two other factors are involved. The most important is scarcity, the second is the velocity of money.

"The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy. The frequency of currency exchange can be used to determine the velocity of a given component of the money supply, providing some insight into whether consumers and businesses are saving or spending their money. There are several components of the money supply,: M1, M2, and MZM (M3 is no longer tracked by the Federal Reserve); these components are arranged on a spectrum of narrowest to broadest. Consider M1, the narrowest component. M1 is the money supply of currency in circulation (notes and coins, traveler's checks [non-bank issuers], demand deposits, and checkable deposits). A decreasing velocity of M1 might indicate fewer short- term consumption transactions are taking place. We can think of shorter- term transactions as consumption we might make on an everyday basis."

https://fred.stlouisfed.org/series/M2V

https://fred.stlouisfed.org/series/M2SL

Made simple...money printed and not spent means no inflation.

Again, the Japanese are printing up a veritable money storm and they can't force inflation no matter how hard they try (and oh my how they've tried). Their problem is they have a declining population base which means there is less demand for real goods and they are simply printing money that isn't used.

If you can't explain why Japan isn't having hyperinflation, then you need to admit you're just flat wrong. (and you are)
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Re: China Bans Cryptocurrency Transactions

Post by Xan » Tue Oct 19, 2021 10:04 am

Kbg wrote:
Tue Oct 19, 2021 9:40 am
Stable no change money guys...make the case why a Snickers bar, a gallon of gas or whatever should perpetually stay the same price? What is wonderful about that? If grandma's bread loaf goes up 10% and if her SS check goes up 10%, in real terms grandma just has to be able to deal with larger numbers...the real effect is zero.
This is a tangential point, but it's relevant I think: we all pay taxes on our nominal earnings, not our real earnings. So inflation makes everyone's taxes go up.
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Re: China Bans Cryptocurrency Transactions

Post by vincent_c » Tue Oct 19, 2021 1:33 pm

People can debate forever on how to measure inflation.

Look, I understand what KBG is saying and arguably it is the most practical way to look at it. But the reason inflation is so confusing is because the same word is used to describe so many different things. Sometimes theoretical, sometimes technical, sometimes practical, sometimes subjective.

I agree with KBG if inflation means "making things more expensive to buy in nominal dollars".
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Re: China Bans Cryptocurrency Transactions

Post by Xan » Tue Oct 19, 2021 1:34 pm

vincent_c wrote:
Tue Oct 19, 2021 1:33 pm
People can debate forever on how to measure inflation.

Look, I understand what KBG is saying and arguably it is the most practical way to look at it. But the reason inflation is so confusing is because the same word is used to describe so many different things. Sometimes theoretical, sometimes technical, sometimes practical, sometimes subjective.

I agree with KBG if inflation means "making things more expensive to buy in nominal dollars".
I thought the technical definition of inflation was expansion of the money supply. But that might not be the most useful definition.
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Re: China Bans Cryptocurrency Transactions

Post by vincent_c » Tue Oct 19, 2021 1:41 pm

Seriously crypto is great for understanding how currencies and inflation works.

If you inflate the supply of a crypto far beyond the demand for that crypto, you'd have to be a fool to think that the price can hold its ground.
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Re: China Bans Cryptocurrency Transactions

Post by Jack Jones » Tue Oct 19, 2021 2:22 pm

glennds wrote:
Mon Oct 18, 2021 8:24 am
Beyond that level, self interest can lead to bad outcomes. My example would be the years leading up to 2008. Alan Greenspan, being a student of Ayn Rand, was a huge believer in the invisible hand.
Then when the mortgage lenders, borrowers, Wall Street banks, appraisers, and every other invested party took their self interest into recklessness, we both know what happened.
I believe Bitcoin was created in response to these events.
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks[1]
The issue wasn't self-interest. It was cronyism.
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Re: China Bans Cryptocurrency Transactions

Post by vincent_c » Tue Oct 19, 2021 4:14 pm

Xan wrote:
Tue Oct 19, 2021 1:34 pm
I thought the technical definition of inflation was expansion of the money supply. But that might not be the most useful definition.
I think what KBG's point would be is that inflation is the expansion of available for exchange money supply, that which would cause a decrease in the exchange rate of one's currency relative to others.
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Re: China Bans Cryptocurrency Transactions

Post by Desert » Tue Oct 19, 2021 5:13 pm

Xan wrote:
Tue Oct 19, 2021 1:34 pm
I thought the technical definition of inflation was expansion of the money supply. But that might not be the most useful definition.
I'm not saying that it's the only valid definition, but I believe the most widely accepted definition of inflation is:

"Inflation is the decline of purchasing power of a given currency over time."

https://www.investopedia.com/terms/i/inflation.asp

And CPI is the most accepted measure of inflation. Indeed, when we calculate inflation-adjusted returns, we adjust them using CPI, not a measure of money supply.

I think the inputs of monetary and fiscal policy do affect the level of inflation, but they are just that, inputs, and the measured inflation (CPI) is the output.
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Re: China Bans Cryptocurrency Transactions

Post by glennds » Tue Oct 19, 2021 11:33 pm

Desert wrote:
Tue Oct 19, 2021 5:13 pm

And CPI is the most accepted measure of inflation. Indeed, when we calculate inflation-adjusted returns, we adjust them using CPI, not a measure of money supply.
As I understand it, CPI is a measure of the change in price over time of a market basket of consumer goods and services.
So what about assets and asset price inflation?
CPI does not measure the change in prices over time of assets such as stocks, bonds, real estate, commodities and other assets.

If we ignore the recent supply chain related disruption to consumer goods and services, I would say we have seen a period of significant asset price inflation, but not a lot of CPI type inflation.
So is it fair to say the two types of inflation are disconnected?

Which one of the two would be most affected by money supply change, demand change, scarcity of goods, money velocity or interest rate manipulation?
IMO consumer prices would be most affected by scarcity of goods and changes in consumer demand, both of which we have right now, ostensibly as a result of the pandemic supply chain disruptions.

However asset prices may be more affected by money supply, money velocity and interest rate manipulation, which we have experienced in varying escalated degrees since 2009 and in the Greenspan years before that. Created money is chasing yield, and zero/near zero interest rates are forcing savers into risk assets but more importantly influencing cap rates which in turn influence valuations. I have had firsthand experience where the latter has had an undeniable and significant impact on commercial real estate valuations.

So when we look at a case study like Japan and say they've had no or little inflation, are we talking about CPI type inflation, or asset price inflation, or both?
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Re: China Bans Cryptocurrency Transactions

Post by boglerdude » Wed Oct 20, 2021 12:47 am

Wars and casedemics are much harder to pull off if they are financed by taxes instead of inflation.

https://wolfstreet.com/2020/03/23/what- ... -and-spvs/
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Re: China Bans Cryptocurrency Transactions

Post by Jack Jones » Wed Oct 20, 2021 8:27 am

Old head, gold bug, sound money advocate, Ron Paul supporter, Larry Lepard discusses gold, bitcoin, and the deflationary utopia that awaits.

https://talesfromthecrypt.libsyn.com/27 ... rry-lepard
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Re: China Bans Cryptocurrency Transactions

Post by gaddyslapper007 » Wed Oct 20, 2021 10:44 am

back to the point of this thread........you've just seen what happens when a Government comes down hard on Bitcoin. Money / Wealth is liquidus and flows to path of least resistance...free nations! Who won?...Bitcoin did. (money / wealth goes where its treated best.) Nothing is as powerful as Bitcoin! Please understand what is about to transpire here worldwide.

-Gold vs. BTC - which side will you choose?
- Government Bonds vs BTC - which side will you choose? (competing against negative / lows rates!?..really?...(EASY choice))
- Real Estate vs BTC - which side will you choose? (Historically wealth has been preserved in land / real estate. Values perpetuated by tax breaks, low money down financing, tax free gains via cash-out re-fi's, etc, ...all the while feeding the cancerous / irresponsible State through property taxes. (Which requires higher & higher housing pricing to increase revenue, to pay off old debt, yada yada, ...and we come full circle back to why the Fed / Government will do every kind of manipulation possible and tax / lending incentives to maintain and increase real estate / housing value.) (the Achilles heel of US economy is real estate (contraction in the money supply).... 2008 anyone?)...

Back to money / wealth being liquidus......since MOST real estate pricing is propped up by lending / speculation, and with 70% of US wealth tied into real estate....i ask you.... As an investor / wealth preserver.. Would you rather own Bitcoin or Real Estate? (which is less labor intensive? which is more fungible?, Which is less subjective in value? Which is taxed yearly at appraised value? ) you know the answer....can you admit it?

Bitcoin will be the savior of Fiat - instead of a fiat Hyperinflation collapse, BTC will consume it and bail it out at the same time.....be on the right side of history for your loved ones and heirs.
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Re: China Bans Cryptocurrency Transactions

Post by I Shrugged » Wed Oct 20, 2021 11:09 am

Jack Jones wrote:
Wed Oct 20, 2021 8:27 am
Old head, gold bug, sound money advocate, Ron Paul supporter, Larry Lepard discusses gold, bitcoin, and the deflationary utopia that awaits.

https://talesfromthecrypt.libsyn.com/27 ... rry-lepard
I wish podcasts had transcripts available. I am pretty sure I could skim a transcript of this 83 minute podcast in 10 minutes and get the gist of it.

So, why is gold demonetized?
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Re: China Bans Cryptocurrency Transactions

Post by I Shrugged » Wed Oct 20, 2021 11:10 am

gaddyslapper007 wrote:
Wed Oct 20, 2021 10:44 am
back to the point of this thread........you've just seen what happens when a Government comes down hard on Bitcoin. Money / Wealth is liquidus and flows to path of least resistance...free nations! Who won?...Bitcoin did. (money / wealth goes where its treated best.) Nothing is as powerful as Bitcoin! ....
Bitcoin won a battle. The war is not over.
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Re: China Bans Cryptocurrency Transactions

Post by gaddyslapper007 » Wed Oct 20, 2021 11:34 am

Nope…..escape velocity is too great at this point. (There will be more battles….but Bitcoin has already won). You just don’t realize it yet. (Spoiler alert - this isn’t a recent win this happened nearly 5 years ago……it takes time for the main populace to realize this and feel comfortable conforming). People are extremely sheepish. The higher the market cap BTC is the safer it is…..it’s science. No science deniers here I’m sure! ;)
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Re: China Bans Cryptocurrency Transactions

Post by bitcoininthevp » Wed Oct 20, 2021 1:20 pm

gaddyslapper007 wrote:
Wed Oct 20, 2021 11:34 am
Nope…..escape velocity is too great at this point. (There will be more battles….but Bitcoin has already won). You just don’t realize it yet. (Spoiler alert - this isn’t a recent win this happened nearly 5 years ago……it takes time for the main populace to realize this and feel comfortable conforming). People are extremely sheepish. The higher the market cap BTC is the safer it is…..it’s science. No science deniers here I’m sure! ;)
Id recommend staying vigilant. Advocates should continue to fight on all fronts (legal, financial, technical, social). Also, some bad bug could be lurking behind any corner.
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Re: China Bans Cryptocurrency Transactions

Post by vincent_c » Wed Oct 20, 2021 1:56 pm

Up until now, early adopters could withstand huge drawdowns in BTC and keep hodling or coming back next cycle.

The concern I have is that BTC is going mainstream too fast and too hot so that if it doesn't have shallower cycles it may burn the retail crowd so bad that they might never come back.

Here's hoping that right now we're only seeing the "early adopters" from the ETF demographic.
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Re: China Bans Cryptocurrency Transactions

Post by Jack Jones » Wed Oct 20, 2021 2:56 pm

I Shrugged wrote:
Wed Oct 20, 2021 11:09 am
Jack Jones wrote:
Wed Oct 20, 2021 8:27 am
Old head, gold bug, sound money advocate, Ron Paul supporter, Larry Lepard discusses gold, bitcoin, and the deflationary utopia that awaits.

https://talesfromthecrypt.libsyn.com/27 ... rry-lepard
I wish podcasts had transcripts available. I am pretty sure I could skim a transcript of this 83 minute podcast in 10 minutes and get the gist of it.

So, why is gold demonetized?
"Paper gold has been created to great excess."

"There is no monetary premium in gold. If it was trading the way it used to in relation to the money supply it would be $10,000 right now. It costs $1000/oz to mine it, so there's not a big premium there."

Seems like he thinks the gold price is manipulated.
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Re: China Bans Cryptocurrency Transactions

Post by Kbg » Wed Oct 20, 2021 11:09 pm

Xan wrote:
Tue Oct 19, 2021 1:34 pm
vincent_c wrote:
Tue Oct 19, 2021 1:33 pm
People can debate forever on how to measure inflation.

Look, I understand what KBG is saying and arguably it is the most practical way to look at it. But the reason inflation is so confusing is because the same word is used to describe so many different things. Sometimes theoretical, sometimes technical, sometimes practical, sometimes subjective.

I agree with KBG if inflation means "making things more expensive to buy in nominal dollars".
I thought the technical definition of inflation was expansion of the money supply. But that might not be the most useful definition.
No Gyro Team...this is exactly the point I've been trying to make with the Japanese example. Here is the definition of inflation (from the Fed...and is a standard economics definition.)

"What is inflation and how does the Federal Reserve evaluate changes in the rate of inflation?

Inflation is the increase in the prices of goods and services over time. Inflation cannot be measured by an increase in the cost of one product or service, or even several products or services. Rather, inflation is a general increase in the overall price level of the goods and services in the economy."

How we get inflation is a bit complex, but what it is isn't complex at all...and a 1000x over, more money does not equal inflation for the reasons I mentioned earlier. Let me try inverting this and maybe that will help.

We live in an economy with a total of $10 of currency and 10lbs of flour. There is nothing else to buy. Now in our simple world half the flour was lost in a fire. Does the price stay the same because the currency remained unchanged...and we all know the answer to this question. It does not. Flour most likely doubled in price with the fire. And now for another example. The Fed prints $10 new dollars and our fire did not occur but it was found to be contaminated with flesh eating cockroaches and no one wants its. Does the flour double in price...we all know the answer to this question as well. No it does not because there is no demand for it.

A basic Econ 101 graph has two lines; one is supply and one is demand. People who think printing money causes inflation (alone) have a single graph with a supply line on it and that's it. Now to be very clear, I'm not saying money supply has no effect because if something gets scarce and there is more money available then the price can be bid up higher than it otherwise might have been...but pretty much my definition, if isolated, those dollars have been spread around so we are talking nominal vs. real...and if one of those dollars came to me then I don't really care. It's just a bigger number.
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Re: China Bans Cryptocurrency Transactions

Post by vincent_c » Wed Oct 20, 2021 11:48 pm

You're right if we make one key assumption, which is that inflation is defined by the Fed.

I think we were just stating that different people can use that word in different contexts to mean different things.

Now whether the definition by the Fed is the one that is relevant in the context of how we use inflation to normalize the PP, I think we can discuss this. I would agree that if we are normalizing the PP in a US dollar system then the definition of what is real and what is nominal should go by what the Fed defines as inflation.

However, in practice whether I use that as a ruler for how I measure how inflation affects me personally is a different story.
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Re: China Bans Cryptocurrency Transactions

Post by Kbg » Thu Oct 21, 2021 10:48 am

vincent_c wrote:
Wed Oct 20, 2021 11:48 pm
You're right if we make one key assumption, which is that inflation is defined by the Fed.

I think we were just stating that different people can use that word in different contexts to mean different things.

Now whether the definition by the Fed is the one that is relevant in the context of how we use inflation to normalize the PP, I think we can discuss this. I would agree that if we are normalizing the PP in a US dollar system then the definition of what is real and what is nominal should go by what the Fed defines as inflation.

However, in practice whether I use that as a ruler for how I measure how inflation affects me personally is a different story.
So what exactly is a PP contextual CPI (inflation index)? What are its components, how is it measured, how is it adjusted?

Should I even care if I spend 97% of my life living in the US?

And indeed, macroeconomics is not microeconomics.
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Re: China Bans Cryptocurrency Transactions

Post by vincent_c » Thu Oct 21, 2021 12:37 pm

Kbg wrote:
Thu Oct 21, 2021 10:48 am
So what exactly is a PP contextual CPI (inflation index)? What are its components, how is it measured, how is it adjusted?

Should I even care if I spend 97% of my life living in the US?

And indeed, macroeconomics is not microeconomics.
This forum has convinced me that the unit of account remains the USD, being a proxy for a stable currency that in the short term I can rely on to purchase most goods with the risks of short term movements in real purchasing power essentially shifted to vendors of the goods I want to purchase. In the same way, if I were to trade goods or services in the short term, I would be expected to price them relatively stable in USD terms, this means that my productivity has to be measured in dollars and so dollars going up or down relative to the things I am trying to accumulate defines inflation for me.

Since 99% of what I want to accumulate are a particular set of assets (the PP assets), I personally view inflation as the scenario where it requires more dollars to accumulate those assets. I would argue that the reason I wish to accumulate these assets is because I believe that it will in the long run provide me and my heirs with the highest probability of acquiring more actual goods and services (an unknown basket at an unknown time in the distant future).

I would further argue that even those who feel inflation in a different way are just unfortunate because although their cost of living may have gone up or down in an uncorrelated way to my accumulation of these assets, in the long run I am confident that the person who thought they felt things getting less expensive in the short run is actually worse off in the long run.
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Re: China Bans Cryptocurrency Transactions

Post by Kbg » Thu Oct 21, 2021 1:52 pm

vincent_c wrote:
Thu Oct 21, 2021 12:37 pm
Kbg wrote:
Thu Oct 21, 2021 10:48 am
So what exactly is a PP contextual CPI (inflation index)? What are its components, how is it measured, how is it adjusted?

Should I even care if I spend 97% of my life living in the US?

And indeed, macroeconomics is not microeconomics.
Since 99% of what I want to accumulate are a particular set of assets (the PP assets), I personally view inflation as the scenario where it requires more dollars to accumulate those assets. I would argue that the reason I wish to accumulate these assets is because I believe that it will in the long run provide me and my heirs with the highest probability of acquiring more actual goods and services (an unknown basket at an unknown time in the distant future).

I would further argue that even those who feel inflation in a different way are just unfortunate because although their cost of living may have gone up or down in an uncorrelated way to my accumulation of these assets, in the long run I am confident that the person who thought they felt things getting less expensive in the short run is actually worse off in the long run.
Trying to wrap my head around what you are saying, so if I got it wrong, apologies in advance.

On your first...I think you have it a bit backward. At a fundamental level saving/investing is nothing more the trading current consumption for future consumption. implicit in this statement is you want to use your money for something real and not to just collect it to see larger numbers in your account. Anyway, you WANT your PP (or whatever saving asset(s) you are putting $$$ into) to INCREASE in real terms every single year. This is the benefit received from saving. If they decreased or stayed flat, saving anything was counterproductive or pointless.

On your second, this is closely related to what I just wrote. You are assuming in this statement that you are getting a real return and thus beneficial to you. We who save ARE making that assumption and historically it's pretty close to fact over longer periods of time. However, in the short term it's strictly a function of deflation or inflation...deflation it pays to wait, inflation it pays to buy now.
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Re: China Bans Cryptocurrency Transactions

Post by Xan » Thu Oct 21, 2021 2:00 pm

Kbg wrote:
Thu Oct 21, 2021 1:52 pm
Anyway, you WANT your PP (or whatever saving asset(s) you are putting $$$ into) to INCREASE in real terms every single year. This is the benefit received from saving. If they decreased or stayed flat, saving anything was counterproductive or pointless.
Perhaps a nit, but even if all my savings options had negative real return, I would still be saving. I don't save in order to have my savings increase in value; I save because I don't have the option to do all my consuming right now. I will need to consume later. Even if it costs me something to consume later, I'll pay it, because I plan to eat in the future.

Now perhaps my "savings" could take the form of grain silos or something if financial saving no longer made sense.
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