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Print 30 comment(s) - last by EricMartello.. on Nov 26 at 4:50 PM


  (Source: Virgin Galactic)
Meanwhile Bitcoin hits $900 USD earlier this week

A day of grilling in a special Senate session didn't sink the Bitcoin -- the popular nation agnostic peer-to-peer cryptocurrency.  If anything the U.S. Senate's ponderings on whether to ban the third-party currency ignited more public awareness and interest sending Bitcoins to new highs.  After only htting $400 USD per Bitcoin for the first time last week, on Monday speculators drove Bitcoins up to a new high of $900+ USD per Bitcoin, before things fell back down to Earth at around $450-500 USD.

In the past few days since, Bitcoin has been back on the rise, creeping upwards to its present value of around $770 USD.

And on Friday the Bitcoin received a nice boost from an unlike source -- Sir Richard Branson, owner of Britain's Virgin Group empire.  Sir Branson outed himself as a Bitcoin enthusiast on Friday, announcing that he would allow customers to pay for flights aboard his upcoming Virgin Galactic suborbital spaceflight service.

Virgin Galactic
Sir Richard Branson

He writes:

Two years ago, one bitcoin was valued at less than $10. Earlier this week  one bitcoin’s value reached $900, tripling in the past month, and a US Senate committee hearing deemed it a legitimate financial service.
 
I have invested in some bitcoins myself, and find it fascinating how a whole new global currency has been created. For people who can afford to invest a little in bitcoins, it’s worth looking into. Many people and organisations are - today a Cyprus university is allowing students to pay their tuition fees with bitcoins.


The lack of transparency from Bitcoin’s founders has attracted some criticism, but its open source nature means anyone can audit the code. It is a brilliantly conceived idea to allow users to power the peer-to-peer payment network themselves, providing control and freedom for consumers.

Bitcoins aren’t yet formally recognized by governments as a currency but with some regulation I hope that it will become more widely accepted. A few years ago many people had doubts about whether Virgin Galactic would ever get off the ground. Now we have gone supersonic, are a long way along the testing process, and are looking forward to launching commercial space travel.

Whether his comments are shameless promotion (looking to tie his service to a hot news item and/or to inflate the value of his own Bitcoin investment) or simply earnest enthusiasm is impossible to discern, but one thing's for sure -- he's likely made some Bitcoin miners/investors' days.

Virgin Galactic Spaceship II
Virgin Galactic Spaceship II on a September test flight

At their current rate it would take around 260 to 335 Bitcoins to pay for a Virgin Galactic flight, which is expected to cost around $200-250K USD.  The upcoming suborbital craft -- the Spaceship Two -- was fitted with its new rocket engine and this April it saw its first supersonic test.  In September it completed another powered flight test.  These tests follow the 2008 unveiling of the second-generation aerial launch platform, the White Knight II.

Source: Richard Branson



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True Intentions
By EricMartello on 11/22/2013 4:09:43 PM , Rating: 1
quote:
Whether his comments are shameless promotion (looking to tie his service to a hot news item and/or to inflate the value of his own Bitcoin investment


This is probably his plan and it could very well be the reason the LOLcoins "value" is as high as it is right now.




RE: True Intentions
By Argon18 on 11/22/2013 4:17:28 PM , Rating: 4
I think it's safe to assume that by "LOLcoins" what you really mean is "I don't have any coins".


RE: True Intentions
By martyrant on 11/22/2013 4:28:46 PM , Rating: 2
Of course he doesn't have any coins--anyone bashing crypto obviously doesn't have anything invested, else they would be lauding it with praise.

Regardless of whether he's trying to pump it up to make money, that is generally the name of the game and in my opinion it would make sense for these guys to start taking ads out for Bitcoin in India if they want it to blow up beyond belief.


RE: True Intentions
By EricMartello on 11/23/2013 2:42:25 PM , Rating: 1
quote:
Of course he doesn't have any coins--anyone bashing crypto obviously doesn't have anything invested, else they would be lauding it with praise.


LOLcoins are not an investment. Their value is entirely imaginary because one of their fundamental flaws is they have no backing from a credible, solvent entity. If all LOLcoins were already in circulation, that would mean a market cap of 21 million x $900, or $18.9 billion USD.

Which LOLcoin exchange can even come close to backing that kind of dollar amount? NONE OF THEM CAN BECAUSE THERE IS NO ENTITY THAT BACKS LOLCOINS.

LOLcoin "traders" have driven the price up to wherever it is now - but what is the basis for that price? Hint: there is none - the LOLcoin to USD rate is entirely rooted in hype.

Currency is little more than a standardized IOU. It is no different than writing up a contract that says you will pay the seller X amount in the future for goods/services received now...in fact, I'd rather accept such a contract written on a soiled napkin as payment for something rather than a LOLcoin.

LOLcoins are driven entirely by a community of idiots with a "get rich quick" mentality. Go ahead and amass 50,000 LOLcoins and try to cash them out at $900+ a pop on any of those pathetic, insolvent 'exchanges' - that's $45 million USD they'd be transferring...but no, that will not happen.

quote:
Regardless of whether he's trying to pump it up to make money, that is generally the name of the game and in my opinion it would make sense for these guys to start taking ads out for Bitcoin in India if they want it to blow up beyond belief.


Inflation does not add value do a currency and the value of LOLcoins is entirely inflationary. LOLcoins have no real currency value beyond what a small group of individuals arbitrarily deem it to be.

The value of USD or EUR is derived from the countries that back said currencies. The US and European countries produce goods and provide services that have an intrinsic value to other people and companies. What goods or services of real world value is the LOLcoin network providing to anyone? None, because LOLcoins have no foundation - they simply consume massive amounts of electricity.

You go ahead and invest in LOLcoins - there's a reason the LOL is all caps.


RE: True Intentions
By chris2618 on 11/24/2013 4:15:51 AM , Rating: 2
All currency value is imaginary.All fiat currencies have no value apart from what people believes it has.

"Inflation does not add value do a currency"
Therefore i can't use gold as a currency.



RE: True Intentions
By EricMartello on 11/24/2013 1:08:39 PM , Rating: 2
quote:
All currency value is imaginary.All fiat currencies have no value apart from what people believes it has.


That is incorrect. Currency represents a debt instrument and gains value from being backed by a credible, solvent entity like a stable government.

The very idea that you can "decentralize" currency, i.e. disconnect it from an entity that backs the debt it represents, is fundamentally flawed.

LOLcoins are no more of a currency than poker chips at a casino - you can exchange real money for poker chips, but said chips have no value outside of the casino...in fact, even within the casino it is unlikely that you would find people willing to accept the chips as payment in lieu of a true currency like the dollar.


RE: True Intentions
By BansheeX on 11/25/2013 5:24:13 AM , Rating: 2
It could obviously be argued that "no backer" is actually a benefit of bitcoins. As far as I know, every fiat currency in history has ended in hyperinflation because the temptation to counterfeit/inflate what everyone else has to work for is ultimately abused to the breaking point.

Even when we were on a gold standard, it was more convenient dealing in the redeemable notes, far more notes got printed than gold existed, and the charade finally ended.

Even the world reserve dollar could soon lose its luster since our debt has become so massive that interest rates can never be raised anymore. Interest rates are where real savings and prudent loans originate, so our economy is pretty much 100% reliant on foreigners continuing the stack our paper in their vaults in exchange for goods. Bernanke and now Yellen threaten tapers that never happen and never will.

A casino issues chips, but Bitcoin has no issuer and is clearly easier to transact with than a physical object. Though it's true that it's not widely accepted yet, people are clearly betting on its potential that it will be.


RE: True Intentions
By EricMartello on 11/25/2013 1:13:28 PM , Rating: 2
quote:
It could obviously be argued that "no backer" is actually a benefit of bitcoins. As far as I know, every fiat currency in history has ended in hyperinflation because the temptation to counterfeit/inflate what everyone else has to work for is ultimately abused to the breaking point.


A lot of times, the devaluation of currency is quite intentional and occurs when the dictator/oligarch wants to consolidate wealth along with their political power. Pre- and Post- war Vietnam is a great example of this in action. Their currency was quite strong before the communist takeover...and after the war, the currency was purposely devalued so that the only people with wealth were the ones who owned real property.

quote:
Even when we were on a gold standard, it was more convenient dealing in the redeemable notes, far more notes got printed than gold existed, and the charade finally ended.


There really was no good reason to limit the amount of dollars in circulation to whatever stockpile of gold happened to be in the treasury. In fact, the gold standard itself was a charade to instill confidence in the dollar. Gold is not the currency of the USA - the dollar was and still is.

In terms of macro economics, inflation in line with the growth of commerce and population ensures that relative buying power remains steady. It is only when inflation surpasses growth that it becomes a problem.

quote:
Even the world reserve dollar could soon lose its luster since our debt has become so massive that interest rates can never be raised anymore. Interest rates are where real savings and prudent loans originate, so our economy is pretty much 100% reliant on foreigners continuing the stack our paper in their vaults in exchange for goods. Bernanke and now Yellen threaten tapers that never happen and never will.


I agree that the obama admin is doing a terrible job of managing the US Dollar along with our economy in general, and that the effects of QE are going to result in a long-term detriment to the US economy as a whole...but that doesn't mean the damage cannot be undone. In order for that to happen, some institutions that are being propped up need to fail so that the rest of our economy can recover. In other words, things are going to have to get worse before they can get better.

quote:
A casino issues chips, but Bitcoin has no issuer and is clearly easier to transact with than a physical object. Though it's true that it's not widely accepted yet, people are clearly betting on its potential that it will be.


Clearly they are betting, aka gambling, but due to the issues I raised there is no logical reason to put real money into LOLcoins unless you do like gambling - because it's not a currency and without backing it can never be one.

- Currency is an IOU

- An IOU is a type of contract

- For a contract to be valid it requires underlying and enforceable law.

- For there to be law, there needs to be a society with some type of widely recognized legal structure.

- When you transact with LOLcoins you have NONE of these things, therefore, it's not a currency.


RE: True Intentions
By BansheeX on 11/25/2013 11:49:19 PM , Rating: 2
quote:
There really was no good reason to limit the amount of dollars in circulation to whatever stockpile of gold happened to be in the treasury. In fact, the gold standard itself was a charade to instill confidence in the dollar.


Given what happened with the Continental Dollar when the country was founded, there was a very good reason to back currency with gold: prevent hyperinflation and debt monetization. Which, deja vu, appears to be where we're headed again. Unless you can somehow explain how our central bank is going to hold rates down at 0% with eternal foreign support or raise them and wreak havoc on mortgages while simultaneously causing tax revenue to be eaten by alive by our short national debt maturity.


RE: True Intentions
By EricMartello on 11/26/2013 1:04:14 AM , Rating: 2
quote:
Given what happened with the Continental Dollar when the country was founded, there was a very good reason to back currency with gold: prevent hyperinflation and debt monetization. Which, deja vu, appears to be where we're headed again. Unless you can somehow explain how our central bank is going to hold rates down at 0% with eternal foreign support or raise them and wreak havoc on mortgages while simultaneously causing tax revenue to be eaten by alive by our short national debt maturity.


Except that you're not actually "backing" anything with gold or other metals and the reason is simple: If you want to have a "gold standard" then the price of gold has to be fixed to the currency, meaning that $1.00 is worth a specific mass of gold - let's say 1 ounce.

Additionally, the currency issuer - typically the government - must agree to buy gold at the rate it set as well as sell gold for the same rate ($1 / 1 oz) to maintain parity.

Now tell me what happens if a major cache of gold is unearthed in China or some other part of the world? If the market value of gold suddenly decreases due to an increase in supply, the currency that is "backed by gold" follows suit and loses value. If the value of gold plummets, the value of the currency would tank along with it regardless of our country's economic performance, causing prices for goods rise across the board.

On the other hand, if the value of gold spiked and citizens decided they'd rather have gold than currency, the government would be obliged by law to sell its gold at the parity rate of $1 / 1 oz, effectively losing millions in the process, possibly even bankrupting the treasury.

The gold standard was a generally bad idea and would not work in today's global economy and I'd much rather have the US Dollar's value be a reflection of our country's economic performance and not some arbitrary pairing with shiny metal that makes ignorant people feel good.

Lastly, this does nothing to make a case for LOLcoins.


RE: True Intentions
By BansheeX on 11/26/2013 11:15:16 AM , Rating: 2
quote:
If the value of gold plummets, the value of the currency would tank along with it regardless of our country's economic performance, causing prices for goods rise across the board.


This is a hypothetical impossibility, gold just doesn't show up like that. Certainly no one single discovery could ever equal even 2% of existing supply. I would challenge you to look at how stable prices were under the duration we were under a gold standard. Not surprisingly, they were very stable and the country was never on foreign life support with garbage interest rates and 15% unemployment.

More to the point, money supply just doesn't matter that much unless we're talking really high swings. Prices adjust. The main problem with fiat is how new money comes into existence and where it flows. Government debt and social engineering appetites are endless. Without a wordly restriction to the money supply, that behavior cannot be reigned in.


RE: True Intentions
By EricMartello on 11/26/2013 4:50:25 PM , Rating: 2
quote:
This is a hypothetical impossibility, gold just doesn't show up like that.


Are you suggesting that gold mining efforts cannot increase, or that a way to synthesize gold may never be discovered? You are missing the point because you're more interested in believing something than looking objectively at the facts. LOLcoin is not a currency and will never be as it is right now. It will only have a shot at being a currency if it is backed by a credible entity and regulated - both elements that the LOLcoiners think are "bad".

quote:
Certainly no one single discovery could ever equal even 2% of existing supply.


Again, missing the point. You're attempting to assign value to a currency by indexing it to a physical item - an item whose value is also subject to market swings. The example I provided shows you why you're belief in the gold standard is misguided and you failed to respond directly, instead putting forth silly suppositions in an effort to shield yourself from the facts.

quote:
I would challenge you to look at how stable prices were under the duration we were under a gold standard. Not surprisingly, they were very stable and the country was never on foreign life support with garbage interest rates and 15% unemployment.


Stable? Really? Where are you getting this information from? Did you miss the part about the value of gold fluctuating on its own regardless of whether or not we arbitrarily index the USD against gold? Or are you choosing to ignore the fact that this already happened while the US was on the gold standard, during the gold rush era?

It's clear that you do not understand what you're talking about here and are simply looking to repeat something that "sounds good" to you.

A country's currency supply needs to scale proportionally with its economic performance - if things are booming and productivity is up, it's a GOOD THING to add more currency to the economy. Likewise, the reverse is true...and in both instances a gold standard would inhibit this process for no good reason.

We're not on "foreign life support" - but we do have a lot of foreign debt. The low interest rates along with QE devalue our currency, and in turn the debt held by foreign countries. A better policy would be to revise regulations to boost domestic economic performance - but that's not going happen under obama.

If you are so concerned with economic issues it would help to stop looking at LOLcoins as some kind of panacea and pay attention to the reality of our situation. A large portion of America is made up of lazy, selfish and unproductive individuals that expects government to pick up their slack. Over 40% of the money the US government taxes is spent on welfare, handouts and other entitlement programs - programs that are paying out A LOT more than they take in while providing zero benefit to society in general.

LOLcoins cater to this very person - the lazy, unproductive sack of sh1t who thinks running a 'mining' program on a computer is 'work' deserving of compensation.


RE: True Intentions
By chris2618 on 11/25/2013 2:01:54 PM , Rating: 2
A fiat currency is a debt instrument, a currency built on a commodity isn't.

No fiat currency is backed. It is support/endorsed by a government.


RE: True Intentions
By Captain Orgazmo on 11/22/2013 8:02:32 PM , Rating: 2
Can you please explain what is the "value" of a USD, or Euro, or any fiat currency?

Here, I'll help: the answer is, whatever the masses believe it is. Exact same as a crypto-currency (like bitcoins). Simple supply/demand. Main difference between central bankster issued fiat currency and crypto-currency is that the supply of fiat currency is controlled by the central bank and/or government, whereas crypto-currency has a limited, predictable supply.

I'm not sure how great these crypto-currencies will turn out to be in the future, but anything is better than a worthless piece of paper that can, and is being used for mass government-sanctioned inflationary theft (AKA money printing).


RE: True Intentions
By inperfectdarkness on 11/22/2013 8:27:00 PM , Rating: 2
Explain how the supply of bitcoins is regulated and thereby limited. Furthermore, explain how they are more impervious to fraud or counterfeiting than existing currencies.

From what I've seen, it is neither of the above.


RE: True Intentions
By Captain Orgazmo on 11/22/2013 11:21:01 PM , Rating: 3
If you knew anything about how bitcoins worked you would know the answer both of your questions. Why don't you find out for yourself.


RE: True Intentions
By yomamafor1 on 11/22/2013 9:23:16 PM , Rating: 2
>Can you please explain what is the "value" of a USD, or Euro, or any fiat currency?

Sure, GDP, the demand and supply of said currency. Only the uneducated would believe "fiat" currency simply means "whatever the masses believe it is".


RE: True Intentions
By Captain Orgazmo on 11/22/2013 11:06:50 PM , Rating: 2
GDP has nothing to do with monetary value. You must be "educated" to completely miss my point that badly. I wrote supply and demand with supply controlled arbitrarily by the central bank. This is the main mechanic that governs money's perceived value. Interest rates control liquidity. Right now the Fed is inflating the money supply like crazy (monetary easing, aka printing money) while keeping interest rates artificially low. If you don't know why that is a problem, you clearly need a better education.

And yes, money is worth whatever the masses believe it is because money is a symbol. Nowadays, paper money is simply pieces of paper, most funds exist only on computers, and even coins have been robbed of their valuable metals. Money is no longer convertible to gold or silver, because our rulers decided they didn't want us noticing when they devalued the currency continually to try and cheat their way out of debt by robbing our savings.


RE: True Intentions
By EricMartello on 11/23/2013 3:01:08 PM , Rating: 2
quote:
GDP has nothing to do with monetary value. You must be "educated" to completely miss my point that badly. I wrote supply and demand with supply controlled arbitrarily by the central bank.


Actually it has a lot to do with a real currency's value. The supply of currency does not affect the value of the goods and services a country produces. Centralized banking does allow for the government to manipulate the relative buying power of said currency, and that's what happens when you vote for big government - aka liberals, democrats or anything from the left.

quote:
This is the main mechanic that governs money's perceived value. Interest rates control liquidity. Right now the Fed is inflating the money supply like crazy (monetary easing, aka printing money) while keeping interest rates artificially low. If you don't know why that is a problem, you clearly need a better education.


You don't seem to understand what that is either. Regardless of the relative buying power of a USD, the fact remains that there are physical goods and tangible services from which it derives value. Why? Because the US government guarantees that it will honor the currency in exchange for said goods/services - not just among its citizens, but internationally as well.

LOLcoins have no such backing because they have no foundation. LOLcoins represent nothing; they do not represent an entity that produces tangible goods and services and hence have no intrinsic value. They are like a credit line without a bank, and their value is explicitly derived from existing currencies.

Like I said in my other comment...if you really believe LOLcoins are worth $900 each, that would mean a current market cap of $18.9 billion - in other words, if you add up the bank accounts of the LOLcoin exchanges it should have enough USD to cover "current LOLcoins in circulation" times "stated exchange value".

As of this posting, there are 12M LOLcoins in circulation and the market cap is $9 billion USD - do you really think that if you added up the bank accounts of the exchanges they would total up to $9 billion USD? Keep dreaming, fool.


RE: True Intentions
By rodolfoC on 11/23/2013 6:26:46 PM , Rating: 2
Hello Eric.
Thank you, i registered here only to say that you are aggresive and fool.
Now : I have BTC from 2011. Guess the price.
I have sold this for 800 USD. .
And the money is in my account. SEPA transaction, common here in Europe. Do you know that are countries outside the US borders ?
Well, I have now mi new Mercedes E 350 CDI. And i have EUR left. Many.
So far so good fpr foolish currency.
Alles klar, arrogant ?
Regards.


RE: True Intentions
By EricMartello on 11/23/2013 11:30:59 PM , Rating: 2
Thanks for registering to prove just how gullible the LOLcoin believers are.

A handful of small transactions proves nothing. You can exchange USD to EUR or vice versa in millions or billions per transaction and have your money within a day. Try exchanging a million worth of LOLcoins in a single transaction...it won't happen.


RE: True Intentions
By Reclaimer77 on 11/24/2013 12:33:12 AM , Rating: 2
Dude we've all seen the story of the dude who invested $30 something bucks in Bitcoin and ended up practically rich.

It's not a perfect system, and the exchanges aren't as convenient as other real currencies. But I don't see how you can claim all the things about it you have in the face of the facts.

No money has any "real" value in today's post-gold standard economies. The only value money has is what we have decided it has through manipulation. Bitcoin is no different.


RE: True Intentions
By EricMartello on 11/24/2013 1:30:30 PM , Rating: 2
quote:
Dude we've all seen the story of the dude who invested $30 something bucks in Bitcoin and ended up practically rich.


That would be likened to a gambling victory...you are ignoring the countless, often untold, stories of people who spent loads of legit currency on bitcoin mining and/or "investing" only to lose all of it.

quote:
It's not a perfect system, and the exchanges aren't as convenient as other real currencies. But I don't see how you can claim all the things about it you have in the face of the facts.


Read what I wrote and let me know where you think I'm going wrong...and if you're sure that I have no idea what I'm talking about then go ahead and bet your money on a LOLcoin mining rig, rack up a few coins per week and then try to exchange them for cash.

But let me ask you this - do you go to work each day with the expectation of receiving a paycheck issued in US dollars, only to take said paycheck and exchange it for some another currency?

quote:
No money has any "real" value in today's post-gold standard economies. The only value money has is what we have decided it has through manipulation. Bitcoin is no different.


A dollar itself has no value but it represents value. I know that I can spend my US Dollars anywhere in the country, without question...and that I have a consistent level of buying power that will not fluctuate wildly from day to day.

I also know that my US Dollars would also be accepted in other countries. This is possible due to US Dollars being backed and regulated by the US Government.

Who is backing LOLcoins? A network of anonymous individuals with gambling problems?

Do you think obama become a legitimate, competent leader simply because more people believed he was than believed he was not?

Just some things to consider...

I think LOLcoins should have obama's face on one side and a horse's a55 on the other.


RE: True Intentions
By rhangman on 11/25/2013 6:42:45 AM , Rating: 2
I'd say that currently a majority of people are trading as an investment. If they gain a much wider acceptance, then that means more general commerce and there should be much less fluctuation.

Also why does an exchange need to have the money? They are just an exchange and yes of course if you dumped a huge amount of coins the price will drop, same as it would with pretty much any other investment. For instance what do you think would happen to a companies share price if I owned 20% of their shares and dumped them all at once? Or if in a given neighbourhood <1% of the properties are on the market at any time, but all of a sudden 20% are up for sale/auction?


RE: True Intentions
By rodolfoC on 11/23/2013 6:30:47 PM , Rating: 2
"Because the US government guarantees that it will honor the currency in exchange for said goods/services - not just among its citizens, but internationally as well."

keep dreaming, fool.


RE: True Intentions
By Piiman on 11/23/2013 8:57:30 AM , Rating: 2
But aren't Bit Coins just another fiat currency?


RE: True Intentions
By mike8675309 on 11/23/2013 9:58:52 AM , Rating: 2
quote:
But aren't Bit Coins just another fiat currency?


yep. but far from "just another". do some research on what crypto currencies are. Their difference from other currencies is well documented.


RE: True Intentions
By TSS on 11/25/2013 2:38:22 AM , Rating: 2
So.. an imaginary piece of paper that costs real life fossil resources to generate (if bitcoin was pressed to paper but it's not even that) is better then a imaginary piece of paper which can be generated at a whim and at no resource cost to the world at all?

I'm sorry but i'd rather take a no-value euro over a negative-value bitcoin. And it truely is negative value because the energy expended to generate said bitcoin can never be recovered or used again in some other process. When you're talking gold, at the end of the day atleast you have a desirable resource that has multiple applications. When you're talking fiat currency, you might have something of no value, but also something that cost no value to produce.

It's a ponzi scheme. Many things are these days, sure (infact it's easyer to count things that aren't ponzi schemes) but for the above reason it definitly is one of the worser ones. If you think not, just ask yourself what people will be left with as soon as the demand for bitcoin dries up (hint - nothing, it requires a bigger fool to keep going). Because there's nobody to regulate it you're also going to get hit by the negative side of the free market very hard - once it goes into freefall there's nobody to stop it, no large party to soak up excess supply.

There's nothing wrong with fiat currencies by the way. A little lesson in economics: When an economy expands, so too must the money supply to support said economic activity. Otherwise, the deflationary pressure of more value for less money would put a dampner on economic expansion. As long as inflation keeps up with economic expansion, it brings prosperity for all. Fiat currenies are actually better for this as it does not require an influx of a resource which costs more of said resource to produce (aka gold needed to dig up more gold to inflate the supply with) thus allowing for faster economic expansion rather then limiting it to the speed of which a underlying resource can be gathered (a gold standard does nothing to stop a manufacturered crisis by the way, such as the several bank caused crises in the late 19th century US which where the reason the Fed got approved in the first place).

The problem of todays fiat currencies, and really all fiat currencies have ever have had, is the lack of understanding by the people in control. Nobody likes a downturn. As there is inflation during expansion, so must there be deflation in a contraction. As this causes the money supply to tighten, the worst of ideas will no longer get the money they desire and the people employed by these ideas (AKA personell of bad performing companies) will be out of a job. This causes unrest amongst the population, which the politicians in control of the money (historically speaking) do not like as nobody wants to tell anybody that being out of a job is a good thing.

So, what always ends up happening, is the politicians diluting the money supply (by printing more), which increases the amount of money available and keeps the constituents happy. The problem comes later when said bad idea's implode anyway despite of the excess money for no other reasons then them being bad ideas. This doesn't cause the money to be destroyed - wealth is transferred not destroyed - but it does destroy the value underlying the money, meaning the value that was supposed to be added to the economy by the bad idea to compensate for the extra inflation added as a "loan on future additional value".

This means there's now excess inflation - more inflation then economic expansion. This then means there will be an even bigger contraction, as not only the bad idea has burst but now also the additional money has to be removed, which means even less money available and "not as bad" bad ideas also going bust. This is basically a "credit crunch", where too much credit - inflation as a loan on future value - blows up in our faces, tightening credit and make loans scarce.

Well, what happens next is pure logic. If printing more money fixed it once, why not twice? The politicians in response to their constituents print *even more* money, against even less available value.

When you repeat this process often enough, the amount of money available gets so large yet the value it buys gets so small, people just give up - they lose faith in the currency - and it gets destroyed in an inflationary spiral; where less people have even less faith thus more money is demanded by the rest to compensate for this additional loss in underlying value, or hyperinflation.

This is the whole reason bitcoin exists, to stop the above from happening. It can still, however, hyperinflate. When the prices are so high people are priced out of bitcoin alltogether (ain't nobody got time to work with 0,000001 fractions), or some other trigger happens which makes bitcoins less desirable, causing the price to finally drop, causing so much people to lose money they start to sell causing the price to drop even further etc.

People don't understand that if it wasn't for the central banks or trade limit breakers on the stock exchanges today, we'd already be in another great depression. Don't get me wrong, all they're doing is delaying the inevitable and making the great depression greater, they cannot prevent something of their own making. But at the end of the day, the "free market" as it used to exist in say, 1929, and emulated today by bitcoin, wasn't all it's cracked up to be. Once bitcoin goes, it goes so hard and fast everybody will lose. For an example of this just look at how fast it dropped to $700 a bitcoin as soon as it hit $900 per bitcoin - anybody jumping in at that $900 lost 20% of their wealth in less then 1 minute. It's up again now so i hope those people kept their coins, but that's only because of the "greater fools" jumping in hoping it'd still go higher. In a freefall, at some point people are going to cut their losses and run, causing it to go down even faster, causing more people to sell, hence the term "freefall".

In closing i'll say we will, one day, find a sollution to the problem of our own greed. But it is not this day.


RE: True Intentions
By BansheeX on 11/25/2013 6:36:13 AM , Rating: 2
I disagree with your assertion that monetary units must be "inflated" to create economic growth. Imagine if no additional gold had been discovered from 1800 to 1920. Gold simply would've gained value relative to goods and traded in increasingly smaller quantities. It made no difference that people could mine more of what was being used as money.

In fact, falling prices was the norm for centuries in America, including the industrial revolution. Nowadays, everything goes up in price except for electronics. History shows that deflation is not some evil thing. Rather, inflation is a false justification for money issuers to benefit from counterfeiting at your expense.


FIND NEW JOBS......
By clarisayjn053 on 11/23/2013 4:44:04 PM , Rating: 1
if you need a job try this site JOBS61 (dot)COM. Dan does it at home and makes $17.91 hourly just sitting and typing stuff all day...No experience needed too




"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer














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