Bit-Crash: Bits Bite / Coins Collapse

I don’t often share Peoplenomics.com content on the UrbanSurvival side of thing, but sometimes when we get it right…and timely…as BTC’s crashed to under $3,000 each this morning before the “buy the dippers” came in…

We also said: “Meantime, we’re not alone in our assessment of Bitcoin.  “Jamie Dimon Slams Bitcoin as a ‘Fraud’ – Bloomberg Jamie Dimon Slams Bitcoin as a ‘Fraud’. He is also reported to have said that if he was looking to hire someone, he wouldn’t hire someone who believes in Bitcoins because ‘they’re stupid.’
An assessment that we heartily agree with and, for the record, I hold that despite what the charlatans and poor prognosticators claim, it STILL makes more sense to own some tiny, fractional share of a company than to place faith and savings in made-up money.

(Continues Below)

 

This is not to say that this is the end of the line for the crypto-currency promoters.  I know are lots of people who “foretell the future” and have been promoting BTCs since they were a under a buck.

Sometimes, though, you can skip the herd’s group-think, though by asking simple economic questions.

Like “What is the utility value of a BTC?

“Depending on which theory of utility is used, the interpretation of marginal utility can be meaningful or not. Economists have commonly described utility as if it were quantifiable, that is, as if different levels of utility could be compared along a numerical scale.[2][3] This has affected the development and reception of theories of marginal utility. Quantitative concepts of utility allow familiar arithmetic operations, and further assumptions of continuity and differentiability greatly increase tractability.

Contemporary mainstream economic theory frequently defers metaphysical questions, and merely notes or assumes that preference structures conforming to certain rules can be usefully proxied by associating goods, services, or their uses with quantities, and defines “utility” as such a quantification.”

Please note that classical economics (I like “old school”) is very pragmatic.  Yet the modern “revisionist” view says there is utility in being a proxy (substitute) for value.

Which is not quite true.

In order to be a storehouse of value there is the little matter of durability.  Good money (of any sort) must be durable, convertible to goods of value, transportable, divisible,  and some other things that slip this old addled brain.

You do understand that the lack of divisibility is what we don’t have diamond-based money, right?  A 6 carat rock has plenty of bling value.  But smash it with a hammer often enough, and Oilman2 will buy it for fractions of pennies on the dollar to coat his latest oil drilling bit.  That industrial app will be all that’s left of bling, you see.

In an internal combustion-based world? Oil is a fine storehouse of value.  Gold and silver meet some of our tests, too.

One solar flare, one “grid hard down” as my .mil friends call it…and BTCs are gone.

If there’s a soft underbelly to stocks (and there really IS) it is exactly this same notion:  That a fraction ownership position represented by a share of stock is only notional and electronic because everyone is trusting the Depository Trust Corp.  Ever try to get paper copies of stock shares, lately?

Back in the day, the stock market was more durable.  My first investment was in a convertible subordinated debenture in a company stock symbol EMF, long since vanished. (Symbol is presently Templeton Emerging Markets Fund,  but in not way related.  This was in 1970…)

But back in the day, when bought as “units” I got both shares and a debenture which entitled me to future shares at a favorable price.

Speaking of “old school” we don’t see debentures as being popular, anymore:

“A debenture is thus like a certificate of loan or a loan bond evidencing the fact that the company is liable to pay a specified amount with interest and although the money raised by the debentures becomes a part of the company’s capital structure, it does not become share capital.[2] Senior debentures get paid before subordinate debentures, and there are varying rates of risk and payoff for these categories.”

And by “convertible” it means I could convert the debenture to stock, at a low price ($4-bucks a share if I recall) when the current market price was higher.  I sold and converted then sold when the price was $7.35.

The disappearance of debentures, as part of the art of finance, is symptomatic of many things.  First is that computer systems like massive (but essentially simple) problems.

It’s easy to change the social security number from George’s to someone else’s for xx,xxx,xxx shares of something.  But think about the algorithm design for:  George buys xx,xxx units of a convertible subordinated debenture, then sells off the shares and then hangs on to the debenture for a year or two, then converts to shares and… (See the problem is mark-to-market for the debentures at time of exercise…where is a computer going to get that?)

With real paper, it works.  With real paper, I can own/control the shares and I’m a real fractional owner.  It still works with computers, too, but it becomes a big-ass database and that means a lot more potential for troubles.

Today?  Oh, sure, I have 200,000 shares of a little tech stock down in Austin (still in the “pinks” lol), but since I don’t have any paper (except for the trade slip from the online trading outfit) where is my proof that as a shareholder I would have “standing” as a fractional owner of a company?

In today’s world we have just “made up the answers of convenience.”  We call it all kinds of gobbledygook like “Modern Monetary Theory” and brand those who question each asymptote as cretins, throw-backs, conspiracy theorists, and worse.

Yet as another weekend appears at “Miller time” tonight, we have to wonder how many virtual financial virgins are being sacrificed on the Alter of Free Lunch with the BitCrash?

I have warned time, and time-again it was coming.  I thought the drop to below $3,000 would take longer (October November based on the slope of the curve).  But we see that in today’s world of skeptics and high-speed knowledge that the angle of price increases is lower and the speed of declines is faster.

Yet,  as an angle,  people are still wired pretty much the same.

Our Economics Concept du Jour looks like this:

Gosh, are we having fun yet, or not?

Stepping over to the white board (and taking a huff of the marker pen), Professor Ure continues:

“We hope that unlike Katrina-Rita, we do not see a market decline of 5% in the next few months, but what that would mean is a decline to 2,400 on the S&P can not be ruled out…”

And thanks to the crazy professors brainamp.xls Elliott wave tool, tomorrow’s Peoplenomics becomes a short, almost self-writing exercise today.  Because remember, kiddies, whatever happens this fall on the downside may be only an A wave.  The  location and magnitude of the B wave rally would be instructive in that it will point to the magnitude of our capital gains problems that will result from all the money made in the C wave downside.

Or, so we hope, lol.

No denying one thing:  Why the cast of clowns was selling Bitcoins, once again, UrbanSurvival was dead-to-nuts right and our long-term view was correct.

The rest of the ignorant financial media…the ones who have been pimping Bitcoin?  Not a peep.  40% drop inside two weeks and it’s like farts in church.  No one talks about them.  UREly amazing.

Retail Sales

Hot off the…

“Advance estimates of U.S. retail and food services sales for August 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $474.8 billion, a decrease of 0.2 percent (±0.5 percent)* from the previous month, and 3.2 percent (±0.7 percent) above August 2016.

Total sales for the June 2017 through August 2017 period were up 3.2 percent (±0.7 percent) from the same period a year ago. The June 2017 to July 2017 percent change was revised from up 0.6 percent (±0.5 percent) to up 0.3 percent (±0.1 percent).

Retail trade sales were down 0.3 percent (±0.5 percent)* from July 2017, and up 3.3 percent (±0.7 percent) from last year. Nonstore Retailers were up 8.4 percent (±1.6 percent) from August 2016, while Building Materials and Garden Equipment and Supplies Dealers were up 7.5 percent (±1.9 percent) from last year. ”

And if you don’t have an auto graphing plug-in for your cerebral cortex yet:

We expect the cerebral auto graphing module will be available with the iPhone 31 when it’s released for $42-million each in 2029.  Line forms over that way…

Terrorism is Back

Tubed in London.

But let’s turn it into a Trump bash, shall we? Trump’s Tweet Condemning the ‘Loser Terrorist’ in the London Attack Is Causing Some Confusion.

Jeez…next we will have shocking revelations about how Trump brushes his teeth…

From BBC Global News

Doesn’t impact anyone we know, does it? British man dies in Sri Lanka crocodile attack.

Almost as life-changing as Fox’s Ancient toys unearthed.

Still too many channels, too much “news capacity” for actual deliverables.

Where my cynical pills…need another handful.

Testing, Testing

North Korea fires missile.  Japan learns duck & cover.

NYT on it with North Korea’s Threat Pushes Japan to Reassess Its Might and Rights.

Comments

Bit-Crash: Bits Bite / Coins Collapse — 27 Comments

  1. After proclaiming bitcoin as a fraud, Mr Dimons company purchased 68 Million dollars in bitcoin on a swiss exchange. Cheaply too as his comments helped to lower the price considerably just before he bought.

    Bitcoin will kill the bankers. He knows it. He’s is frightened by it, and now he is loading up to protect his wealth from the coming culling.

    • Malc: Get real.
      1. He bought a trading stock, not the cryptos.
      2. I should have bought it, too.
      3. BTC SHOULD rally to 4,300 this week – when, I expect, the coiners will laugh when JPM takes a 25-30% gain off the table.
      4. And then when BTC heads down to the $1,000 or lower level? Dimon will say “See, I was right.”
      We forecast this top run-up back in June. We have seen A down, we are in B up, Dimon will sell at the top of B, then C down will silence the True Believers for a while.
      Dimon might even go for a naked short at the top of B… that’s why he makes a little more than me.
      You did see the piece in Forbes today about dimming BTC prospects and how China is closing in on coins?

    • I don’t know about ‘fraid of the miss, but it’s always wise to be ‘fraid of the missus.

  2. North Korea is proxie for China who wants a greater prosperity sphere like old britan. Only issue is they don’t copy Australia socialism to creat internal post demographic boom, bust consumption. Aka post Nixon still communists, not happy Dutchman money makers. Well was worth a try, good liberal try.

  3. One story I haven’t heard from anyone yet. Our whole economy is based on credit and debt. What if the hack on Equifax was only the beginning? What if the other credit reporting agencies are hacked? And EVERYONE freezes their credit accounts? It will build slowly, but eventually we will have a complete consumer credit lockdown.

    • Freezing credit does not protect anyone, it just slows down legitimate purchases that need credit checks. Many illegitimate vendors and operators will gladly open up credit in your name, even multiple accounts, like Sprint, for example, without even checking credit. They just need the SS number. This breach is huge, it literally signals an end to credit, as far as I am concerned, unless steps are finally taken across all fronts, (SS Administration, IRS, banking, etc.,to not only protect us against these predators but punish the companies who open up accounts illegally. Good luck with that, our government doesn’t enforce the laws on the books now. They already are aware that American citizens are having their SS numbers stolen and used fraudulently on tax returns, but refuse to fix the problem. Those that got their info stolen are ripe for pilfering, from all directions, until past the end of their lives. Haven’t you read how many dead people still file returns and get benefits???

  4. George
    Had a thought this afternoon about the Equifax debacle and whose ox gets gored.
    Equifax (EFX, 93.31/-3.32/-3.5%) executes a “taking” of our personal info, does not keep it secure, and sells it to banking/retail outfits seeking info on us. As you probably know “taking” is a term with a legal definition.
    Equifux (Spelling intentionally incorrect) also
    sells our personal data to any number of entities wanting to know how to market to us.
    They received notification of the backdoor, and a fix, from their software vendor in March, didn’t install it (sorry, can’t be bothered)
    and the breach occurs in May.
    They also store many inaccurate files and info, and send this out slandering your name and reputation w/o your permission or knowledge. (Sounds like a Pinto Situation, did it cost more to shut down to upgrade, than to take the risk? Did they do a calculation of cost verses risk? is there a file with that data in their records?)
    Anyway, they sound like they are a company and industry heading for new oversight and regulation, but not the worst victim.
    That may be LifeLock (LOCK, 23.99/-0.01/-0.04%)
    They may get a bunch of new customers short term, but their business model is providing a service for a fee, that I think Equifux, and the others, are going to get to provide us for free, for the use of our taken data, and their lack of error correction.

    Thoughts, yours or others?

  5. When a Trump supporter mowed down 20 people using his car as a weapon in broad daylight, an act of terrorism filmed from multiple angles, D Trump was strangely silent, and offered the following excuse for saying nothing when asked about it two days later:

    “I wanted to make sure, unlike most politicians, that what I said was correct, not make a quick statement,” Trump said, adding, “[Y]ou don’t make statements that direct unless you know the facts. It takes a little while to get the facts…. I don’t want to go quickly and just make a statement for the sake of making a political statement. I want to know the facts…. When I make a statement, I like to be correct. I want the facts…. This event just happened. Before I make a statement, I need the facts.”

    Contrast that with today, when an unknown assailant planted a bomb in London, and literally minutes after he read the headline, Trump announced to the world that Scotland Yard had blown it by having the perp in their sites and letting him get away with it, and that he knew, possibly by direct Divine inspiration, that the doer was associated with ISIS.

  6. Because there is the word coin in bit coin, all you folks get confused and start thinking its money, just like you still think a smart phone is a telephone and smart watch is to tell time. Nothing could be further from the truth. It’s like the term “flying saucer,” there is nothing in the language to represent it so descriptive words are used. Even UFO is descriptive. Did you know that there are languages that have words for different UFO’s just like Arabic has different words for different kinds of sand and eskimos have words for different kinds of snow?

    Because there is a dumbing down process ongoing in the English language, very few new words are added to the Oxford English Dictionary every year. 50 years ago the common American had the terminology of political science in their vocabulary, and they could actually discuss politics and vote intelligently and demand intelligent, rational actions from their representatives. Take a look at American politics today, which has been reduced to nothing more than being against an issue with the assumption that what that makes you in favor of must be a better thing. If you think a good government can ever evolve out of a situation like that, you are sadly mistaken. This note of hope or optimism I hear from intelligent people for good government or rule of law returning scares the hell out of me.

    The only difference between crypto currency and the stocks and bonds that you never take physical delivery of is that you cannot play crypto currency on margin. Yet. And margin trading when you do not intend to take possession is no different than betting on the winner of a prize fight.

    You have all been conditioned (entrained) to believe that something you do not take physical possession of is something that is actual wealth. This is simply not true. It is a phenomena of the noumena, the real thing. At one time, gold and silver were the noumena behind the USA currency. It is phenomena of wealth only as long as there are suckers out there that believe it. And anyone outside the USA who will take USA dollars for something of real value is one of those suckers. As a friend says here in Ecuador, “I am always amazed. I give them dirty pieces of paper (FRN’s), and they give me perfectly good objects in return!”

    Something that you own through physical possession never goes to zero. It always has at least the value of the labor required to produce it. If it is just digits or paper, well you can figure out exactly what that is worth on your own time.

  7. Dimon’s cya statement for missing a 1000% move(“…fraud…”). I don’t think he would have missed that much gain even if bitcoins are worthless garbage. Besides, hackers DO accept them for ransom-ware attacks.

    Now let’s talk about pulling $38 million per year out of a public company with $6.21mil in earnings. Dimon’s a efin genius.

  8. I agree with you on BTC but when discussing ownership of stawks, etc. being mere pieces of paper you forgot the biggest scam of them all, MERS (Mortgage Electronic Recording System). Remember all the faked paperwork during the housing crisis? THAT’S why I’ve avoided BTC or any type of crypto currency.

  9. I want my own money _ _ _ NOW!

    Since this post is about personal power and money, I do not consider it off-topic. You might. Your call — it’s your blog. It is, however, serious deep woo-woo. Ure into that too.

    Last night there was a long interview/webinar with a woman I met a decade ago, was fascinated by, and have kept up with ever since, to see what happens with her. Her name is Ellie Drew.

    She is a psychic medium with a scientific bent. She has also taught at length about ‘the architecture of reality’ and ‘the process of manifestation’ at the human level.

    Last night she explained, and led the audience through the shortest, most concise manifestation exercise that I have heard her give. Why don’t we try it and see what our results are?

    A replay of the webinar is up for free through Saturday night.

    https://vm173.infusionsoft.com/app/linkClick/191525/8200989c06055199/29137157/54b604cb389d2a4e

  10. “One solar flare, one “grid hard down” as my .mil friends call it…and BTCs are gone”

    One grid hard down and the entire banking system is down as well. Credit cards, on-line banking, locks on your “smart” home are all history.

    That small amount of paper currency in circulation might be of use for a few days, but doubtful for much longer.

    Both BTC and FRN’s are fictional in that they are both created from little or nothing and have no intrinsic value.

    But so what? Look at the history on “money” and you will find rocks, fish scales, marked wood, baskets of wheat, stocks and bonds, and most anything else you care to mention has been successfully used somewhere. In times and places with a high sense of personal honor, a persons word was “as good as gold”. Other times and the person was “worthless”.

    ALL the local form of currency requires is acceptance amoung the users. Lose that and you have nothing.

    The current mythology holds that governments and banksters are the arbiters of what is and is not money, but history is full of failed governments and banks, so why would anybody trust their existence to either?

    While I am no fan of BTC, I have yet to hear a single real objection that didn’t apply to some degree to every national currency currently in existence.

    I will say this for BTC. Some time ago a friend gave me $10 worth of BTC. Recently I returned that same amount of BTC to my friend so they could afford to fix a broken car. If I had simply returned $10, their car would still be broken. I know of no other investment which would have allowed that to happen.

    • Why would anyone buy $10 of bit coin & then give it away? How does one even buy & sell $10 of bit coin & gift it to another? Didn’t they buy $10 for themselves? Sounds tulippity.

    • The “small amount of paper currency” will be of use after a grid-down, exactly as it is now…

      …as long as people believe it has value. Once people believe it doesn’t, it will follow BTC into the realm of nothingness.

      The same rule applies to any fiat currency, regardless the side of the ether upon which its domain lies, BUT:

      An EMP, HEMP, all-out and pervasive worldwide router attack, or the NSA throwing the switch, and BTC is gone instantly. Currencies in-hand will retain their value for several weeks or months, until the sheeple realize they can’t eat paper. That few week or month window may well mean the difference between life and death, for those who’re suddenly thrust back to the 1700s…

      When Einstein posited that WW-IV would be fought with “sticks and stones,” no one thought to ask him with what currency or exchange medium the fighters would purchase said sticks or stones… ‘Bet it won’t be a crypto ;-)

    • Any investment, which goes parabolic would provide the same. Had your friend loaned the btc a month ago he’d now have $7.50. Just as it was a crazy good positive return, the downside has the same potential return.

  11. A point to ponder.

    Is a Federal Reserve Note known as a Dollar which is created by an unconstitutional entity out of thin air and backed by nothing meeting the standards of being called money??

    Curious minds want to know!

    • No.

      It meets the standard required to be called “currency.”

      Our edjumakashun system has bastardized the language to where people don’t know the difference between money and currency. However, as long as people believe it is money, and accept it as a medium for exchange which is equivalent to the USD, it will have the same exchange value as the stuff churned out by the Bureau of the Mint, which IS money…

  12. “Dig a hole deep enough and pretty soon everybody will want to jump in” – Firesign Theater circa 1970
    Pretty well describes our financial markets, including bitcoin as far as I’m concerned. Your prescience is appreciated George but it brings to mind a cartoon I have yet to draw; picture a rear view mirror with straight lines converging in the distance. Just outside the mirror in the foreground are bright signs “WARNING – BRIDGE OUT!!!”
    The caption is “this driving while looking backwards thing is easy”.

  13. FUD,FUD and more FUD.
    Digital dollars= Federal Reserve Notes, electronic entry Bonds, electronic entry all Mutual funds. All will be gone in event of EMP/Grid Down, without paper backup of account balances.. Gone. Utility value of a Fiat currency is based on FAITH in entity backing said currency, in the US case that would be the military, hmmm.
    Bitcoin is secure, anti fragile and limited to 20 Million, tell the Millenials “trust us we won’t water down the value of the dollar..anymore”. No other Government trusts the US government, why hell would today’s kids trust the US. Government or their funny money?

    I keep repeating myself here ..BTFD in Bitcoin and reward yourself for having some courage and intestinal fortitude.

    • Can I get a hallalujah brother? Bitcoin is just the vanguard of MUCH more to come and the PTB (read:banksters) are terrified, ergo attacking BTC while at the same time (hypocritically) investing in R & D for block chain tech. which cybercoins are based upon. Watch the sovereign governments flip flop all over on this issue, they too are in a tizzy as block chain technology MIGHT actually be the END of centralized control of economies. Cliff High sez commodity based (not backed) are in the offing in 2018 and will eff the IPO racket out of Wall Street, undercutting it by 40 + % – no wonder Jamie is wetting his depends…Like all new things diversify cuz there will be 80% failurs along the way – but such is the world of venture capitalism…

  14. Besides Bitcoin, look at the a U.S. dollar chart for 2017, it’s been going down since January.

  15. South Korea has asked the US for Nukes. Japan is completely capable of making their own. What say we all arm up, circle up and aim at the person across the circle? First one to sneeze gets it.
    Does this sound like a good plan?