re: Stock markets vulnerable to hack - flash crash, about $100 billion disappears

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It needs to stabilize before it can truly be useful as a medium of exchange.

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If things are priced in USD, then the exchange rate of bitcoin is irrelevant. It can still be used to facilitate transactions.

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Wiki thinks 2019....

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But yes, I think it will stabilize around then. Bitcoin is still finding its value. I don't want to incur the wrath of the money board tattle tales, but if you accept that there is a place in the global market for bitcoin, then you have to guess how large it will be. Even if it only accounted for 1% of the global economy, then a single bitcoin would be worth a hell of a lot of money, and today's current price of $165 will look extremely cheap.

That's not an attempt to pump, although I'm sure I'll be accused of that. I'm simply demonstrating that bitcoin still has a ways to go to find its true value.

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I'm not sure you understand how large 1% of the global economy is. For example, one year ago the universe of fixed income securities was ~$100T. Market cap of US equities is ~$18T. If you want to look at global M3 then your 1% number becomes even more ridiculous. Just for perspective, the entire universe of non-agency mortgages isn't even 1% of the fixed income world. So saying that if it "even" accounted for 1% means that several large economies would use bitcoins exclusively. Sorry, that will never happen.

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It's going to be really fun to look back at all the academics and well educated economists who completely misjudged the game changing effects of crypto-currencies.


But fine, I'll play your game... What do you think a realistic potential market cap for bitcoin is?

Here is my question Wiki, why would I want to invest in a currency that's more volatile than a stock?

Maybe we should stop referring to Bitcoin as a legitimate currency.

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Here is my question Wiki, why would I want to invest in a currency that's more volatile than a stock?

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I don't recommend anyone invest in bitcoin.

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Don't lump any of us in with the ivory tower dwellars.

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It's hard not to.

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And on the flip side someone can easily say "It's going to be really funny to look back at all these bitcoin enthusiasts who completely misjudged their paper tiger currency".

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Sure. And I readily admit that bitcoin might be a failure. But a crypto-currency in some form will be revolutionary. Is it arrogant to say that? I don't know...maybe it is.

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I think you really misjudge the power of central authorities to keep power

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I disagree with you on this, but of course that could be a whole other thread altogether. I have no doubt that central authorities will attempt to keep power. I just think they will fail.

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Central banking exists to smooth out economic cycles for sustainable growth and a better end result

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Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again. -- Ben Bernanke 11/8/2002

So much for not doing it again, eh Ben?

If what you say is true, then they do a shite job at it and deserve to be dismantled.

But the truth is that what you say is simply the bullshite they feed people to convince people of their necessity. And you've ate it up.

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That's why if you look at Europe, all public and political rhetoric is nationalistic but all laws passed are basically movement towards more fiscal union. The trajectory of the US is to less individual liberties in exchange for more security (I know the TJ quote).

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All that is just short term. The general trend in human civilization has been towards more individual liberty. We can have this discussion on the poli board if you prefer.

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So keep in mind my prediction is not based on some elitist drive for power, but rather the public desire for stability.

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If that's true, then crypto-currencies will not catch on and the central authorities will have nothing to worry about, right???

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Also keep in mind I'm ignoring some of the technical aspects of bitcoin that trouble me

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I would love to discuss those concerns.

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If you just quote one or two sections of this post and respond with questions I'm done.

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Sometimes every part of a post doesn't need to be addressed.

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Was this flash crash due to computers at the NYSE reacting to a tweet about an assassination attempt on Obama?

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Just panicky sellers, as far as I know.

FWIW, the thread title was tongue-in-cheek, and was intended to show how silly the sensational headlines about bitcoin being hacked are when in reality bitcoin has never been hacked.

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It's hard not to.

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We work in the read world. Academia teaches CAPM and EMH. Economic forecasters are the only people that make meterologists look good. Nothing more needs to be said.

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If what you say is true, then they do a shite job at it and deserve to be dismantled. But the truth is that what you say is simply the bullshite they feed people to convince people of their necessity. And you've ate it up.

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We already had this discussion on the poli board one time. Pre-Fed recessions were much more frequent and in % of GDP terms much worse outside of the Great Depression. Even '08 wasn't as bad comparitively. Once again, I work in the indusry with a firm that has active talks with the Fed on a regular basis. I get to talk to old and current Fed members from time to time. They all understand they pros and cons of central banking and the effectiveness/ineffectiveness of it, and I'm sorry, but it's obvious from your posts that you don't. You think if you take out central banking that the economy would be less volatile and prone to recessions? Facts and history do not show that at all.

Also, you're taking Bernanke's quote out of context. His point was that the Federal Reserve didn't do enough, in fact the Fed did nothing in terms of providing liquidity to banks. Their actions actually shrunk the monetary supply. Bernanke is one of the greatest students of the Great Depression, and he took those lessons and prevented '08 from another depression. And make no mistake, it would've been a deep depression without the Federal Reserve's actions. That I can say with absolute certainty. It seems only one person here has been eating up bullshite.

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All that is just short term. The general trend in human civilization has been towards more individual liberty. We can have this discussion on the poli board if you prefer.

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Disagree completely, but I'd rather just stick to MT and economics/finance. I don't really want to go down that rabbit hole. That debate will be full of anecdotes and historical apples to oranges comparisons which will in the end solve nothing.

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If that's true, then crypto-currencies will not catch on and the central authorities will have nothing to worry about, right???

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That's my general thought, yes. Also, that other thread also took the economists thoughts out of context as well. 87% said that it had limited usefulness, which I agree with. They were not saying that it had no usefulness. I do believe a private currency can have usefulness, but I'm not sure about the current crypto structure.

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I would love to discuss those concerns.

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I don't make opinions on things until I feel like I have a strong grasp of them. Give me some time when quarter end ramps down and I'll go back to reviewing the code, I've studied enough programming that I have a general concept of it but once again, I don't like making opinions on things I feel I'm uneducated about. I have an opinion on the high level, theoretical, and philosophical points of bitcoin in the broad currency universe, but not the technical aspects yet.

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They all understand they pros and cons of central banking and the effectiveness/ineffectiveness of it

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All Central Bankers are Austrians Now?

I don't think so.

LINK

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Have you actually read the book or are you just posting the link?

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Yes, as well of a number of other books of his on central banking.

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He wants all loans to be backed completely by physical gold and silver and basically do away with leverage.

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I believe this is the one issue Rothbard faulted on. I believe in the Free Banking Austrian approach which says that Fractional-Reserve Banking shouldn't be illegal (But the free-bankers believed there is no way it would succeed against other banks).

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If you want America to be the "land of opportunity"

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I don't want that, I want to live in the "land of liberty" not "artificially engineered opportunity".

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then Rothbard's view of economics is not what you want for your economy.

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If Bitcoin takes off as a currency, you better hope that Rothbard's view of economics is what you want for the economy.

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If you want to read a book about the real facts of the Federal Reserve and how it works, here you go.

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Send me a PDF file and I'll take a look.

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ETA: That book can be easily read by beginners to people that are very well versed in economics, without angle. The Mystery of Banking unfortunately lets the angle show.

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All of Rothbard's book are that way. It's beautiful. I can get through Man, Economy, and State with no problem. Mises was hindered be his inability to produce easily read works. Human Action is almost unreadable, yet Rothbard's most provocative works are easily read.

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Do you actually think there is a Fed member that hasn't read that damn book? Or at least studied the arguements and points?

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I would be surprised if anyone outside of Greenspan and his peers even knew who Rothbard was.