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AutomaticEarth<>Debt Rattle December 4 2017

Posted by Raúl Ilargi Meijer at 9:46 am

• The Bitcoin Ramp – Is It Sustainable? (Lebowitz)

• UK, EU Plan Regulatory Crackdown On Cryptocurrencies (ZH)

• Venezuela To Launch Cryptocurrency To Combat US ‘Blockade’ (G.)

• Today’s Central Bank Vol Suppression Will End In Spectacular Fashion (Peters)

• Market Is Reminiscent Of 1999 Bubble, On Verge Of Significant Change (ZH)

• BIS Joins Chorus Saying Stock Valuations Are Looking ‘Frothy’ (BBG)

• Financial Markets Could Be Over-Heating – BIS (G.)

• Strong Leadership Across Europe Now Looks Like Wishful Thinking (CNBC)

• Theresa May Fails To Strike Border Deal With Irish Government (G.)

• Nigel Farage Refuses To Give Up EU Pension (Ind.)

• Tony Blair Confirms He Is Working To Reverse Brexit (G.)

• Fifth of UK Population Now Live In Poverty (Ind.)

• David Attenborough Issues Appeal To Save ‘The Future Of Humanity’ (Ind.)

Wherever you stand on the issue, that is quite the graph. We’ll do a series on BTC soon

• The Bitcoin Ramp – Is It Sustainable? (Lebowitz)

Believers in BTC claim it is quickly becoming a widely accepted global currency. To better understand their view let’s see how BTC meets the definition of a currency, both as a means of transacting (money) as well as a store of value. Money: money is anything that two parties can agree is acceptable in exchange for goods and services. For example, if I pay you a case of beer to mow my lawn, the beer, in this instance, is money. However, for “money” to be widely accepted, the masses must ascribe similar value to it. While there is an increasing number of vendors accepting BTC, it is nearly impossible to use BTC to meet your everyday needs. Further, the value, or price of money, needs to be relatively stable to be effective. If a dollar bill bought you a case of beer today, but only a single bottle tomorrow and a keg the following week, few consumer or vendors would trust the dollar’s value. BTC’s value can fluctuate 5-10% on an hourly basis.

Store of value: a store of value is something that allows one to save money and retain its value. When we save money we want comfort in knowing the money we earned can buy us the same amount of goods and services tomorrow that it can buy today. Again, the extreme volatility of the price of BTC makes it difficult to project how much purchasing power a BTC will buy you in the future. All currencies fluctuate but typically nowhere near the degree we are witnessing in BTC. If the extreme price movements of BTC subside it is possible that BTC can serve as a widely accepted currency and the believers could be correct.

A second camp believes BTC is a financial bubble. The chart below compares BTC to other recent investment fads. You will notice in all instances above the bubbles rise steadily in price before transitioning to an exponential increase prior to collapse. Often, in the so-called euphoric phase, prices go well beyond the point most investors think is reasonable. In this respect, BTC is following the path of prior bubbles. Bubbles are not solely defined by price movements, but more importantly by a lack of supporting fundamental value. If you subscribe to the value of BTC as does the first camp, the rapid increase in price may well be justified. If you believe there is no value, BTC is showing the classic pattern of most bubbles.

READ more briefs or use link to access Full articles:
https://www.theautomaticearth.com/2017/12/debt-rattle-december-4-2017/