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House Price Crash Forum


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Everything posted by dgul

  1. How can people write (or read) this rubbish. eg, Right from the start they claim that 'higher supply = lower volatility'. 'Supply' is irrelevant in currencies -- so long as it is sufficiently divisible to cope with the smallest expected payment it really doesn't impact on things at all. Yen isn't 'less valuable' or 'more volatile' as a currency* compared with £s (say) just because there's a 100x more of them in existence than £s. [*obviously each individual Yen is worth less, but it doesn't impact on whether it is a successful currency or not.]
  2. Yes. It assumes that house prices don't have fundamentals, but that rents must always be fully market driven (and thus sensible). There is a certain logic in this, but it ignores really important factors such as government policy affecting rents (eg, the rent floor created by 'housing benefit').
  3. As most people could guess by now I'm generally anti crypto, but for fundamental reasons (well, pragmatic), not because there's dodgy stuff going on. But the whole crypto space in the last 24 hours has reeked (well, Litecoin and BCash, for sure).
  4. Yet other stats sites give the transaction volume at $2billion. I don't think anyone actually knows what is going on. But they are interesting stats nonetheless. See, market cap is $300 billion. About 30% of bitcoins are very strongly held (Whales, Satoshi, etc) and so don't get traded ever*. About 30% are lost (apparently). So, that leaves about $100Billion held that could be traded. Do you really believe that 30% of free-float Bitcoins are traded daily? The vast majority of people that I know with Bitcoin buys and holds. And the few remaining people I know that trade Bitcoin don't trade that much -- they mainly hold but with occasional (well, not daily) trading for a lowish % of their total holdings. Then there's the actual value of these transactions -- there are about 400,000 transactions per day recorded on the Bitcoin blockchain. At $25billion per day that's averaging at about $60,000 per transaction. Even with $2billion per day that is still $5k per transaction. I find even that very difficult to believe. Frankly, I don't even believe that trading volumes are about 3% of free-float. It sounds sort-of plausible when compared with shares, say -- but, as I say, too many people are buying and holding (compared to trading). I believe there is an absolutely massive amount of dodgy false-trading going on, bidding up the price. I doubt that the true figure is above $1billion. I wonder sometimes if it is actually above $125 million (the current new coins entering supply) -- but there is such a mania that I can probably believe that. [* and if they are traded it will be a neon lit sign that something is up. There are people (well, sites) that are all about checking those blocks to make sure the coins aren't traded. BTW, see what Carlie Lee did today?]
  5. I'll take the other side of that. Bitcoin exists. Has done for some time. Yet extraordinarily few transactions are made using it. Everything in Bitcoin is just speculation. Pretty much all $2billion (or whatever it is today) of daily trades is just people squabbling over how great it is. None is people actually transacting (bar a couple of instances that are usually done for marketing reasons). Oh, but all that is for the future! What we've got now is people who know better than those idiots in financial institutions! Do you really believe that the 80% of global transactions are going to go to Bitcoin? Doesn't it sound bonkers to you? That everyone will just change? What we've got now (essentially a $ economy) doesn't make sense or help the little guy or anything -- but it does work and it works right now. There is very little incentive to actually change. [Let alone the reasons why the people who actually make the decisions don't like Bitcoin (KYC, tax, etc) and how they might step in to stop it. But it wouldn't work even without that interference.] [and Lightning -- I just can't see how it would work, legally. It is worse (better!) for laundering than actual cash.]
  6. Interesting. They're trying to tame the PCP beast by transferring risk to the PCP buyer. But the consequence to this will actually be that fewer cars are bought. Sounds dangerous to me. Dunno how they're going to resolve it this time.
  7. Innocent until investigated by HMRC. Quite easy to do it -- just ask the banks for details of people that have had transfers > about £5k from the exchanges. They could use money laundering rules to get this info, so easily done. They'll wait for you to not declare it first, so I'd expect knocks on doors in about Summer 2019.
  8. Possibly. I think the relevant point is that sort of thing never gets cheap; they're a good store of value. I know that that's the thread title, but you're less likely to find a bargain that way. There is also value in stuff that goes through a 'zero value' point before appreciating again. I find those things very much of interest.
  9. I think that's probably right. And they have the advantage of taking up less space and being easier to move if you need to (eg, use a tail-lift). I've got a 1st gen GSXR (might be about '86?), which is probably worth next to nothing but I can dream... (I've only kept it because when I tried to sell it in 2000 no-one would buy it, so it migrated to the back of the garage).
  10. funny thing is, there are always rather nice cars available for very little money. You've just got to look -- probably starting with about 10 years old. And, also funny, they often become the things that have value after another 10 years. See, they've got to get from the 'lots and crap' stage, to the 'few about, and it was my dream car when I was 20 stage' -- and all that takes is time. The problem is people have a dream of exactly what they want, perhaps thinking they'd be cheap (because they were 10 years before), when they've already gone into the 'few and desirable' stage.
  11. It isn't the cash - that's irrelevant. It is the additional paperwork and the time required to do it. Everything on its own is sort-of fine, but with it all it just keeps the business owner faffing with paper rather than growing the business. The time/effort is the same for 1 employee as 8, as 80 (when you'll be employing someone to do it). Frankly, the paperwork threshold going from 0 to 1 employee is getting larger and larger.
  12. You have to differentiate between actual investments and people buying stuff for nostalgia. The investments type tend to be sort-of robust. The nostalgia stuff tends to move with the economy much more. So the showroom Rx7 doesn't sound like an investment to me. I suppose it might be, but it is IMO just a pander to middle aged people buying the stuff they wanted when they were younger. 'Showroom' has a more difficult time -- these things tend to be driven, so the value of the 'showroom' is lost -- just keeping it at 'showroom condition will cost a reasonable £ks per year. Compare this with a Ferrari (or whatever) -- the £3k it costs just to keep it in a shiny white room with heating etc is worth it given its value and the hopeful increase in value in keeping it in good condition. Anyway, there's loads of stuff on ebay at inflated prices. I think they've got a reasonable business model -- hope that some idiot comes along and pays the inflated price. Easier than actually doing lots of transactions to make the same money. I guess it works, eventually, as they don't seem to ever do the 'drop the price a bit' thing, which would be the obvious way to proceed if they actually wanted to have a higher turnover.
  13. Just to point out from a SME point of view -- You have no choice but to set up a pension, give them all the info, let them make the decision on their own (no influencing), then they opt out, then the pension provider lets you know. I have 5 employees at the moment. None of them have taken up the pension (most are in their 50s and wealthy enough). All of the hassles are still there.
  14. The automatic pension rules are absolutely crucifying. IMO they should exempt businesses with fewer than 4ish employees.
  15. They can't manipulate it easily using the futures, at this point. The manipulation comes when the paper market is >> physical. Then you can (secretly, perhaps) get a position in a smaller, less liquid market, while setting up a much larger position in the paper market. Then you aggressively sell (say) the physical, and reap a multiplied return on the paper. This is the sort of thing that is meant to be happening in precious, for example. Anyway, regarding this particular issue. The contracts will almost certainly trade at a premium. This is because the short/long side aren't symmetrical (eg, in their requirement for margin), so they have to have a higher price to match contract buyers to sellers (ie, shorts/longs). This premium also means that the futures are thinly traded. To return to 'manipulation' -- the current worry about the paper Bitcoin market is that some whales will be shorting Bitcoin on the paper market. See, they can't just sell as the actual sales will give too much supply and drive the price down before they'd got rid of it all. And, their holdings are observed and if they were to be seen to be selling it would be a huge red-flag to the rest of the market. So, eventually, when their short position is full, they'll sell physical and crash the market (both because of the supply and because they're selling). Thus the futures market gives them a way out of Bitcoin with their full (sort-of) investment.
  16. I've lost a job in Europe. There was absolutely no compassion -- there were no benefits (worth having) to be had, and I pretty much had to leave. I suppose I could have just become homeless, but that would have been a bonkers thing to do. I had some savings so I suppose I could have stuck it out and got another job there... but why? I just got back to the UK and got another job (oh, and I wasn't eligible for UK benefits at that point (so didn't get any), but it was okay because there are jobs to be had if you're prepared to work). And, you know what? I don't think that any of it was particularly unfair.
  17. Surely it's irrelevant. You just look at the market cap and how much you think that'll move. To look at issue independently of price, or price independent of issue is bonkers.
  18. It really isn't. It is more like having to bid now to enter the 2040 F1, and having the choice to either: give Ferrari (or whoever -- car tech is a bad analogy from the start) $100 million, on the assumption that it sort-of works now and it is a fairly reasonable bet that they'd have something competitive in 20 years time. give some startup $100 million, because they've got a new technology that they claim will be loads and loads better, but they've not actually proved it properly, and every time they test it it craps out at 0.01% of the race distance because of a fundamental problem with the tech, and they're promising that x,y,z tech will actually solve that problem, but they've not actually proved it yet. Oh, and it might turn out that the F1 regulations will pretty much disallow that alternative tech in the next 12 months.
  19. The Vereenigde Oostindische Compagnie was a real company selling real things to real people. By the late 1630s it had existed for decades and had a strong record of rewarding investors in real money as dividend. After the 1630s it continued to exist, paying out reasonable dividends in real money for another 150 years. If you want an equivalent mania, consider the South Sea Company in the early 18th century. That is more like Bitcoin, as the investment was all about how great the future would be, with no immediate return on the investment and a value of zero if the future didn't come about (which it didn't). So, that went to $4billion, which would be $250,00 or so each. Still, at a $120k target you'll be out, right? Oh, but then there was the dot-com bubble. That is commonly considered to be worth about $2 billion. So each bitcoin would be $125,000 each. Oh, getting close to your exit point now... The truth is that you don't know at what point it'll break, or if it ever will, or if in the future your coins will be worth a gazillion. Your exit point is arbitrary (your DEIC example is not a predictor of the future) and might well result in you having nothing.
  20. But these things don't hold fiat. They hold things of value that are priced in fiat. Things that produce a return, again, currently priced in fiat. But if a pension fund holds assets like companies that sell real stuff that real people need, that gives a return that then provides an income for its members in terms of 'enough money for the average member to have a normal life, enough food, a holiday in Tenerife every winter, a decent second-hand car' -- then if the economy turns to Bitcoin that pension fund will still offer that same benefit to its members, albeit quantified in units of Bitcoin rather than units of fiat. In that Bitcoin economy, that fund would each month receive Bitcoins from its assets which, each month, it would distribute to its members, who would, each month, spend all of it. The only way that the pension fund starts paying people much lower returns is is the broad array of things that it is invested in collectively stop paying such a large dividend (in real-world-utility/value terms, not fiat terms). But that would only happen if the world declined into a deep recession -- and that wouldn't be a good thing for anyone. There is no race to convert all wealth to Bitcoin. The unit of account might change to Bitcoin, but that's just a nuance. Sure, some people might hold £s ($s, etc) which then expire worthless in that new economy - but it really isn't many people at all.
  21. Yes -- but you don't say why Bitcoin increases in value by that much. Oh, I suppose it increases by that in fiat terms, but that's irrelevant (you're defining inflation with respect to another currency -- that isn't inflation). Inflation is measured against purchasing power of a currency -- for Bitcoin to gain in value it can only be because you can buy more stuff with a Bitcoin, which (given currency supply constraints) can only mean because said stuff is easier to make or has lost value itself (like what happens with old IP). Your end-point is that fiat doesn't matter any more. Bitcoin becomes measured in 'ability to buy stuff'. If storing Bitcoin isn't something that will 'buy you more stuff' then you'll invest in things that will, like lending to a company making a new gadget that people will want to buy (and we're back to shares, bonds and property to store wealth). Fiat came along in the 19th century (with a few false starts before early 20th). Before that ruinous deflation, followed by ruinous inflation was typical for the economy. Well, yes. But your chosen solution is to allow you (actually Chinese and Korean miners) to capture almost all of the new wealth created. There doesn't seem to be an advantage for the average guy.
  22. The purpose of gold reserves isn't to store wealth, it is to allow the state to sell gold as the price rises to keep the price under control and to stop it forming a refuge, which then results in runaway deflation as described for Bitcoin earlier. The state (or a coalition of states) could do the same with Bitcoin by buying it up during normal periods and then selling into price rises to stop it forming a refuge. But -- they needed to do this with gold because it was historically (since the dawn of history) used as a store of wealth, and the state had previously actually used it as currency. Still, eventually the problem has more-or-less gone away, because few people will turn to gold these days as a store of wealth (maybe some, but not my mum, say). Hence GB selling all the gold reserves in the BoE. They don't need to do this with crypto. They can nip Bitcoin (and the other currents) in the bud by declaring it as incompatible with money laundering regs, except under very exacting circumstances. They could manage this by stopping people from depositing / withdrawing from anything but approved exchanges. Anyway, I don't think they'll need to do this as the vast majority of people will just carry on using fiat. The benefits of Bitcoin (and others) just don't really migrate into real-world use. [They will do the KYC constraints for Bitcoin anyway, as it is currently mainly used for illegal purposes (you know, pretty much the only actual purchases using Bitcoin).]
  23. There's about $5 trillion worth of gold in the world. Most of that is in jewellery etc. About 1% is in the form of 'casual invested gold' like ETFs. So, about $50 billion. Total wealth in the world $250 trillion. The wealth stored in gold ETFs is minimal. I don't get your logic. There is no such thing as 'absorbing fiat inflation'. I guess you mean that there's a 'baseline nominal appreciation', as the world's economy grows by 3-5%, which means that we have more stuff being produced, or stuff is produced more economically, so that each Bitcoin can buy more stuff (everything else being equal). Anyway, I hope that's what you mean because it is sort-of positive, even though it is a flawed logic based on the Bitcoin economy being as good as the fiat economy, only with Bitcoins. I think the opposite is true. As people store wealth in Bitcoin (a good thing, from your logic), there are fewer Bitcoins available to use in transactions. Assuming that the transaction 'value' is constant, and transaction numbers are constant, this reduction in 'floating' Bitcoins available would mean that each transaction would have a lower available share of Bitcoins, which is the same as 'cost fewer Bitcoins'*. This would be called 'deflation'. Now, in a deflation you don't want to spend your stored wealth as it gets worth more (can buy more goods) each year. So everyone that can saves more. This eventually results in a new economic equilibrium, where the transactions keep getting lower in order to keep the deflation (and incentive to save) under control. The point being that this economic equilibrium isn't as high as it is now (because transaction levels are driven down) -- so you don't get the 3-5% in appreciation as the economy grows. This is why fiat currencies were invented -- to stop runaway deflation. They might be dealing with problems badly at the moment (because they mucked up in 2000, essentially), but IMO they're absolutely desperate to avoid deflation as that really is the monster you can't control. [You also get a deflation that comes from lost crypto. This is actually a significant effect (so far lost coins runs at about 3% pa), but I'm ignoring it in this analysis, as it might be that everyone will use special tech that makes loss much less likely]
  24. No-one stores millions. Well, maybe bank robbers or drug barons or something. Some people might store money in the bank (not many at the millions level). But that is just the other side of the trade of the money being lent out to people, who then pay it back with interest (I know that with reserve banking that is nowhere near at 1:1, but that is a nuance -- the cash clearly isn't being held in the form of notes in a bank vault, keeping them out of the economy) Most 'wealth' isn't in the form of money, but is in the form of assets, such as bonds, shares, property, etc. And that is the 'safe' place to store wealth, because in the long term it at least maintains a value -- cash doesn't necessarily maintain value. To suggest that 'storing wealth as Bitcoin is the only logical store of value' is a perverse anti-logic, that would only make sense during the most dreadful of recessions. And there it would actually have the effect of removing currency from circulation (as there is a limited supply), which would itself feed a positive-feedback of massive inflation (in essentials) / deflation (in stuff you can't afford) situation that would kill the world economy. Your 'rush to the exit to exchange fiat for Bitcoin' doesn't make sense either. There isn't wealth in fiat to convert. The assets underlying that wealth would merely start to be valued in Bitcoin rather than fiat, 'automatically' transferring the 'wealth' into a Bitcoin equivalent value. Similarly, in the 'Bitcoin takes over scenario' income just starts being paid in Bitcoin, the vast majority of which is then spent in month (just like now with fiat). No-one fights for the exit. They just start exchanging Bitcoins at every point in the income/expenditure cycle. I can see that there is a perceived value in Bitcoin -- a decentralised currency that is outside of the control of TPTB, but the end result would, for the vast majority of people the vast majority of the time, be exactly the same as it is now. It doesn't matter if the monthly pay is 1Bitcoin or 20,000 Satoshi -- it just gets exchanged for goods in month. The thing that I do think is, TPTB don't like Bitcoin because it removes their power. They'll do things to remove it from circulation. Frankly, I believe that the current explosion in value is part of that removal. (that is, when/if it crashes there'll be such revulsion amongst the general population that it'll kill crypto for a generation).
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