Running_Man
Thinks s/he gets paid by the post
- Joined
- Sep 25, 2006
- Messages
- 2,844
I have been watching Bitcoin and have watched the parabolic move which sure acts like a bubble and I keep waiting for it to pop. But today I saw an explanation that to me explains why this move is occurring.
The other bubble I have expected to pop that was in a parabolic move was Government debt, whether US, Europe or China. At some point I expected that Central Banks could not continue to grow currencies. Since 2007 the supply of money has been growing greater than 8 percent on average while the economy chugs along at 2-3 percent.
In previous times the only outlet for the expanse of money was to either spend the money or buy gold if you didn't want it, but now there is a third alternative - Bitcoin and all the other crypto-currencies. Bitcoin could be the bubble central banks have created in a digital world where people of means wish to deposit money that cannot be tracked. Today Bitcoin's market cap is about 200 Billion. If it continues to enlarge it becomes a currency unregulated by central banks that is going to cause them major headaches.
Unlike stock market and precious metals that can be propped up Bitcoin is going to be a hard investment for Central Banks to manipulate in the coming middle term (3-5 years). The advantage of Bitcoin not being able to be issued by Central Banks is it's major advantage and as size gets large enough that means it is being accepted as a currency, whether Jamie Dimon likes it or not.
Bitcoin jumping for 40 billion to 200 billion is seen as a bubble, while US currency being jumped by Fed from 4 trillion to 12 trillion over 12 years is viewed as prudence. In most cases properties of math flows to the offset, even if the equation is not understood.
It is possible what we are witnessing is the total depreciation of conventional currency as a result of years of unbridled quantitative easing. If, and it is a big if Bitcoin continues to gain in price, conversion of bonds to bitcoins could lead in years to come of the end of central banks. And the only weapon central banks appear to have against it is to call it a bubble -- ironically one I think they created.
The other bubble I have expected to pop that was in a parabolic move was Government debt, whether US, Europe or China. At some point I expected that Central Banks could not continue to grow currencies. Since 2007 the supply of money has been growing greater than 8 percent on average while the economy chugs along at 2-3 percent.
In previous times the only outlet for the expanse of money was to either spend the money or buy gold if you didn't want it, but now there is a third alternative - Bitcoin and all the other crypto-currencies. Bitcoin could be the bubble central banks have created in a digital world where people of means wish to deposit money that cannot be tracked. Today Bitcoin's market cap is about 200 Billion. If it continues to enlarge it becomes a currency unregulated by central banks that is going to cause them major headaches.
Unlike stock market and precious metals that can be propped up Bitcoin is going to be a hard investment for Central Banks to manipulate in the coming middle term (3-5 years). The advantage of Bitcoin not being able to be issued by Central Banks is it's major advantage and as size gets large enough that means it is being accepted as a currency, whether Jamie Dimon likes it or not.
Bitcoin jumping for 40 billion to 200 billion is seen as a bubble, while US currency being jumped by Fed from 4 trillion to 12 trillion over 12 years is viewed as prudence. In most cases properties of math flows to the offset, even if the equation is not understood.
It is possible what we are witnessing is the total depreciation of conventional currency as a result of years of unbridled quantitative easing. If, and it is a big if Bitcoin continues to gain in price, conversion of bonds to bitcoins could lead in years to come of the end of central banks. And the only weapon central banks appear to have against it is to call it a bubble -- ironically one I think they created.