Is it really a significant factor in the economy? It sound like a lot of money, but in the larger picture it's pretty small. Cryptocurrency is basically gambling, and I don't think that many people are actually involved.

I'd be more worried about the overselling of something like gold. There is reasonable evidence there is a lot more gold sold on paper than actually exists.

Real estate is probably still over valued as well. Well, definitely in China. If that bubble pops, who knows what will happen.

I was just using Bitcoin/cryptos as an example of malinvestment. I didn't make that clear. A giant shopping center built in an area already oversaturated with commercial retail is in a similar boat. Cheap capital enables such boondoggles. That's not to say cheap capital is inherently bad. There are consequences of trying to replace the business cycle with a credit cycle however and that consequence is larger booms/busts and more malinvestment than we would otherwise have.

I believe this is wrong on two counts: bitcoin mining is not a search for prime numbers. It's a search for new "blocks." Searching for prime numbers is often used as analogy since the rate at which the difficulty of the computational complexity grows is analogous.

And secondly, the computation required of cryptocurrency is not absent economic value. The underlying computation helps continually verify the integrity of the currency, e.g. detecting alterations or inconsistencies. In a cryptocurrency maintenance of integrity is decentralized. So a fair comparison to the cost of electricity required would be to compare that with the costs of how those roles are performed with conventional currency or digital representation of conventional currency by some central authority. E.g. billions are spent to maintain the integrity of the U.S. dollar, e.g. detecting counterfeits, regulating supply, fabricating new currency that is difficult to copy, etc. In digital form billions are spent on their own forms of encryption, auditing, and backup systems. We pay taxes to the U.S. Treasury Dept, FBI, Secret Service, U.S. Mint, and other agencies to help maintain the integrity of U.S. currency. In addition to the overhead we pay to banks and retailers for their role in monitoring money. And of course the Fed.

Now that said, *speculation* can drive this to economically inefficient levels just like speculation on real estate drove economic inefficiency in real estate. But I'd argue that, generally speaking, the electricity costs required to maintain a cryptocurrency could be highly economically efficient compared to the maintenance of conventional currency. Particularly when using cryptocurrencies that overcome a lot of the issues with bitcoin.

I'd write a lengthy rebuttal but I'll let the BIS put together a rather succinct critique of cryptos this past summer: https://www.bis.org/publ/arpdf/ar2018e5.pdf

Besides the technological and regulatory critiques in that post, another issue you have with cryptos is that they are inherently deflationary. An ideal currency would expand exactly in proportion to the actual supply of economic utility. That's nearly impossible to do, however, so if you're going to err it's best to err on the side of inflation.

What do you think the market would have done if they did not hike rates? I would have thought that was pretty much a no confidence vote in the economy and could have caused a bigger drop. In a way it was a damned if you do, damned if you don’t choice IMO.

They also then would have less levers for the future.

"A person is smart. People are dumb, panicky dangerous animals and you know it."

The most significant problem that a social science like economics faces is that the data it has to work with is extremely noisy and it is all interconnected. To compound the problem, a person does not behave in the same fashion as people and a small group of people does not behave in the same fashion as a large group of people. There are emergent phenomenon and they are basically impossible to model.

Just watched Larry King interview Ron Paul. Paul predicted the 2008 market collapse, so you can judge for yourself on his credibility. I'd be sceptical about this downturn being as bad as 2008, but some predict it could be worse (60-70% loss). I just look at what the markets did from 2001 - 2008 and wonder how its any different from what the markets did since then. I ask myself, was there any REAL growth in the US economy over the last 10 years? Like was the US building factories and manufacturing things or were banks just feeding the stock market with FED donations and slowly things just spilled over into the general economy like trickle-down economics on steroids.

https://www.businessinsider.com/...john-hussman-2018-11

https://www.youtube.com/...lQnKIXhfI&t=985s

What do you think the market would have done if they did not hike rates? I would have thought that was pretty much a no confidence vote in the economy and could have caused a bigger drop. In a way it was a damned if you do, damned if you don’t choice IMO.

They also then would have less levers for the future. //


THIS^^^^^^

The market was going down either way, this one choice made by the Fed at least had it up for awhile. The choice not to raise would have been a straight down crash. The overall market is jumpy right now and looking for reasons to go down. There is some money bucking that trend, but it is still apparent that it is not done. And interest rate hikes are a tiny portion of what is going on, I think the broader political climate and the tariff war stuff is mostly to blame. And then you have people in both camps for the year, winners and losers. The winners are locking in small gains by selling, and the losers are locking in tax advantages by selling, a vicious cycle. And of course now we have the shutdown, depending on how long that lasts, just more fuel to the fire to sell.

I just bought some Apple, but it is still going down it seems, will buy some more to average down my base price. But that is it, not one other dollar in this market. I figure when it is all over, apple will lead the charge out and beat the S&P. They have so much dam cash and it seems that people still love their products, and the stock is valued now like a penny stock!!!(almost). (-;