wow what a commie /sComment removed from /Economics - test822 - Created on 07/18/18 00:06:16 UTC - permalink
Very troubling.... That people are catching onComment removed from /Economics - wtf_is_taken - Created on 07/18/18 00:15:11 UTC - permalink
I'm certain that the Fed's concern is authentic!Comment removed from /Economics - Tranejam - Created on 07/18/18 00:25:51 UTC - permalink
Our area has been a hot market, growing for the last 6-7 years, but it’s slowed down significantly this summer. Last summer, houses had several offers the day they went up for sale, but this summer there’s not much movement. We’re either in a bubble or just reached the max price in my area.Comment removed from /Economics - BiffyMcGillicutty1 - Created on 07/18/18 00:33:54 UTC - permalink
Still, our house “value” (theoretical until someone actually forks over the money) is 43% higher than when we bought it 5 years ago. Can’t say we would fork over that kinda cash if we were just buying now.
I've got a house for ya..Comment removed from /Economics - MrPractical1 - Created on 07/18/18 00:47:44 UTC - permalink
I wonder if that means they’ll renege some of these planned interest hikes? Probably not.Comment removed from /Economics - GortonFishman - Created on 07/18/18 00:48:44 UTC - permalink
I’ll bet he also talks about how poor food service employees are treated as he tips 2%.
Incredible! I look forward to nothing being done about it.Comment removed from /Economics - Yolo420dab - Created on 07/18/18 00:51:59 UTC - permalink
Really? And you are just now realizing this? Oh, that’s right...you are are a card-carrying member of the elite, so your life has been minimally impacted, unlike most of ours.Comment removed from /Economics - smitty637 - Created on 07/18/18 01:11:29 UTC - permalink
The greatest period of economic growth in U.S. history was when there was no central bank. The Fed Reserve is a ponzi scheme.Comment removed from /Economics - s4mu8l - Created on 07/18/18 01:11:59 UTC - permalink
they hurt more than they help. tax policy should take more into account than just the government's budgetComment removed from /Economics - ThereIsReallyNoPun - Created on 07/18/18 01:22:13 UTC - permalink
Were? Latest round has just begun.Comment removed from /Economics - guisar - Created on 07/18/18 01:41:32 UTC - permalink
You're right still today people are on some bad shit.Comment removed from /Economics - SporkydaDork - Created on 07/18/18 01:42:53 UTC - permalink
No my friend, there isn’t. Eventually global wages will reach an equilibrium point. It may take 50 years to happen, but if businesses are shopping for the cheapest combination of labor and production costs, their tendency to minimize costs will force wages lower.Comment removed from /Economics - StormCrow1986 - Created on 07/18/18 01:48:40 UTC - permalink
Compare this to workers seeking better wages with limited mobility (i.e. they may or may not be able to travel for better pay) and you can see pressure to keep wages higher.
The interplay of these two forces will always mean that eventually wages will be similar everywhere.
It'll be real troubling when the guillotines come outComment removed from /Economics - maahhkus - Created on 07/18/18 01:57:34 UTC - permalink
That assumes social factors won't interfere. Inefficiencies in the economic development of some countries will negatively affect wages, wars will change the economic standing of some countries and facilitate migration, someone in a particular country will develop technology that drives their economy, etc. Economies are not static, and there will always be outside forces that prevent an equilibrium from forming naturally. On its own, the ocean would eventually stop making waves: but external forces like the tide or geothermal vents will continue influencing it for the foreseeable future. Same thing with economics.Comment removed from /Economics - lordderpingtonthe3rd - Created on 07/18/18 02:04:19 UTC - permalink
But muh trickle downsComment removed from /Economics - antman152 - Created on 07/18/18 02:09:40 UTC - permalink
Heck, this keeps up and they may have to downgrade to 'Concerning'.Comment removed from /Economics - alanthar - Created on 07/18/18 02:13:34 UTC - permalink
Heck, we may even see, in our lifetime, a drop to Vexing.
Truely, a historic moment in time.
Douglas Holtz-Eakin; Former Chairman of the Presidential Council of Economic Advisors (Bush) & Former Director of the Congressional Budget Office (Republican Congress) said in 2014 that income inequality needed to be addressed at the national level but it wouldn't happen because it had become a partisan political issue - making compromise impossible.Comment removed from /Economics - meauho - Created on 07/18/18 02:13:56 UTC - permalink
In 2014 Alan Greenspan (Former Chairman of Fed Reserve) & Christine Lagarde (Director of the International Monetary Fund) both addressed income inequality at the National Association for Business Economists.
Greenspan called income inequality "the most dangerous trend affecting the US", and Legarde said "rising inequality and economic exclusion can have pernicious effects"
The NABE's own membership have called for government economic policy to address income inequality because several large businesses refused to acknowledge its existence and were spending more money trying to fight it than a solution would cost.
They aren't "just now realizing" it, they just know that it's political suicide to bring it up while Republicans are in charge - even if they are Republicans.
NAFTA had a negligible effect on employment and wages while it improved net economic welfare.Comment removed from /Economics - lalze123 - Created on 07/18/18 02:14:32 UTC - permalink
Today is the 100th anniversary of the logical outcome of extreme income disparity: a small number of people shot and thrown down a mineshaft.Comment removed from /Economics - tomdarch - Created on 07/18/18 02:16:00 UTC - permalink
I'm not saying that's an ethical or good way of responding to this problem, but it's certainly one standard outcome when it's allowed to go on too long and to a great extent.
What is the Federal Reserve saying?Comment removed from /Economics - cyber_rigger - Created on 07/18/18 02:18:06 UTC - permalink
Mercantilism is the only way! /sComment removed from /Economics - mustdashgaming - Created on 07/18/18 02:30:02 UTC - permalink
Wow. Does the federal reserve chair have any thoughts on massively devaluing our currency, bailing out big banks, or fucking with the US economy over and over again with decisions made from unelected officials?Comment removed from /Economics - waffleezz - Created on 07/18/18 02:32:50 UTC - permalink
I live in Iowa - it's a sellers market on the Iowa side of the river. There are a lot of people moving out of Illinois - something about taxes and unfunded government liabilities...Comment removed from /Economics - Sam_Fear - Created on 07/18/18 02:37:50 UTC - permalink
Jerome Powell: Man of the People. I guess they did the math and figured out they've screwed the workers so bad there's nothing left to steal from them.Comment removed from /Economics - wwwwho - Created on 07/18/18 02:44:36 UTC - permalink
Come on the Fed Chair not understanding basic economics isn't news.Comment removed from /Economics - beyond_hate - Created on 07/18/18 02:59:22 UTC - permalink
really nowComment removed from /Economics - DapperMasquerade - Created on 07/18/18 03:01:06 UTC - permalink
i'm shocked, this is new information to me
I hate long-run equilibrium arguments for two reason:Comment removed from /Economics - nerdponx - Created on 07/18/18 03:04:18 UTC - permalink
- Perot makes a good point that I think many people would miss. In 15-20 years, wages would equalize. But in the meantime, you've "wrecked the country" (his words, not mine). If harm is done to the country in that 15-20 year period, it's possible that the short-term harm is actually greater than the long-term gain. This is not NAFTA-specific. It applies to a lot of cases.
- By the time equilibrium would have been reached after one particular adjustment to some part of the system, many other adjustments, shocks, and changes will have occurred. Therefore, unless equilibrium will be reached quickly (my guess is less than 1 year is probably safe) then you run the risk of the equilibrium you planned for never materializing at all, and something else taking its place. The global economy is a big, chaotic, dynamical system. Shit happens outside of the one particular market you happen to be looking at.
I'm sorry. Just trying to maximize efficiency and remove that deadweight loss yknowComment removed from /Economics - WMSTEOOPAAFFWC - Created on 07/18/18 03:22:43 UTC - permalink
Yes, many of us are very troubled. Now what?Comment removed from /Economics - neomech - Created on 07/18/18 03:25:25 UTC - permalink
Average annual wages for workers has increased almost every year, who cares if they make a smaller share if they’re making more money?Comment removed from /Economics - HitemwiththeMilton - Created on 07/18/18 03:37:55 UTC - permalink
economics by the way 😬
LOLComment removed from /Economics - Anon48529 - Created on 07/18/18 03:52:26 UTC - permalink
Federal Reserve chair comments about ANYTHING regarding the state of the USA is ridiculous. -98% value of the dollar since the fed was established to add debt to every dollar printed. But its okay cuz no one is paid in USA currency, right?
You begin to see why cocaine wasn't just a rich person's drug back thenComment removed from /Economics - SuperHighDeas - Created on 07/18/18 04:23:56 UTC - permalink
yes, but clearly we went the other direction for over 100 years, I'm asking how.Comment removed from /Economics - SamSlate - Created on 07/18/18 04:24:15 UTC - permalink
Don’t suck Bilderberg, Rothschild and Soros dick then. These guys own most of the money in the world and just want to build a global government, single market, and take 100%. Federal reserve serves the Rothschild, the Rockefellers, not the people.Comment removed from /Economics - boomBoomcandydoom - Created on 07/18/18 04:30:54 UTC - permalink
Its against the rules to point out the federal reserve has attached debt to every dollar printed, resulting in -98% value of the dollar since 1913?Comment removed from /Economics - Anon48529 - Created on 07/18/18 04:53:12 UTC - permalink
i mean thats fine but how the fuck do you have a "substantive contribution" to a thread that pretty much says "hey this really obvious thing is really obvious"Comment removed from /Economics - DapperMasquerade - Created on 07/18/18 04:55:17 UTC - permalink
You know you’re on Reddit when the “economics” sub starts pushing socialist propaganda.Comment removed from /Economics - HitemwiththeMilton - Created on 07/18/18 05:45:06 UTC - permalink
Shut the fuck up Federal Reserve chair you literal fucking vermin.Comment removed from /Economics - sweden_person - Created on 07/18/18 06:16:01 UTC - permalink
I bet America would find things "very troubling" if we ever audited you.
It’s referencing and addressing the public figure whom the title quote belongs to. Public figures are not immune to insult or criticism per Reddit rules, Steve Huffman said.Comment removed from /Economics - boomBoomcandydoom - Created on 07/18/18 07:37:01 UTC - permalink
Comment removed from /Economics - AJGrayTay - Created on 07/18/18 13:18:11 UTC - permalinkknuckle dragging NeanderthalsYou're goddamn right there.
No.Comment removed from /AskEconomics - microgrower40799 - Created on 07/18/18 13:48:55 UTC - permalink
You mentioned the word 'joke'. Chuck Norris doesn't joke. Here is a fact about Chuck Norris:Comment removed from /badeconomics - Chuck_Norris_Jokebot - Created on 07/18/18 17:36:30 UTC - permalink
Chuck Norris does not need to know about class factory pattern. He can instantiate interfaces.
I'm pretty sure I'm going to have to offer myself of if I ever want to retire.Comment removed from /Economics - stumpdawg - Created on 07/18/18 17:40:05 UTC - permalink
Terriers and Bariffs everywhere.Comment removed from /Economics - stumpdawg - Created on 07/18/18 18:21:57 UTC - permalink
So does this mean whirlpool is sick of winning?
According to the article, LG's retail price went up by ~11% and Samsung's ~18%, while Whirlpool's prices shot up by 30% at Lowes. Consumers are looking at the higher prices and are opting to just not buy washing machines rather than buying Whirlpool's, so yeah, I think they're sick of winning, especially if additional tariffs on components continue to raise the MSRP.Comment removed from /Economics - ddhboy - Created on 07/18/18 18:33:58 UTC - permalink
Or move to a cheaper place for retirement? Damn man, there are plenty of options better than killing yourself.Comment removed from /Economics - zaccus - Created on 07/18/18 18:56:49 UTC - permalink
Cheaper place? That's not going to do me shit when I'm still working at 80Comment removed from /Economics - stumpdawg - Created on 07/18/18 19:09:10 UTC - permalink
The COL of rural America is low. Its a lot lower than you think. A dollar goes so much further in rural America than it does in San Francisco.Comment removed from /Economics - Hyndis - Created on 07/18/18 19:18:26 UTC - permalink
My grandparents are almost 90 and they live very comfortably on Social Security alone. Just Social Security and nothing else. They recently bought a house. A very lovely home with a nice yard and garden. They're able to do that because rural Oregon is a very cheap place to live.
And if social security goes private like the Republican party so desperately wants, then I lose everything?Comment removed from /Economics - stumpdawg - Created on 07/18/18 19:30:09 UTC - permalink
My comment was hyperbole...but not by much.
Who could have known economics was so complicated?!Comment removed from /Economics - ZmeiOtPirin - Created on 07/18/18 19:30:38 UTC - permalink
Social Security is a question of votes, not economics. Old people get Social Security. They would like to continue receiving Social Security. Old people all vote.Comment removed from /Economics - Hyndis - Created on 07/18/18 19:33:27 UTC - permalink
Any politician who wants to win an election (which is every politician) needs to pander to that voting block. This means don't touch Social Security. Its called the third rail of American politics for a reason. Touch it and die.
Still getting my head around why people would want to retire...Comment removed from /Economics - DxR77 - Created on 07/18/18 19:45:40 UTC - permalink
https://www.nirsonline.org/wp-content/uploads/2018/02/Millennials-Report-1.pdfComment removed from /Economics - whathe2016 - Created on 07/18/18 19:46:23 UTC - permalink
From the report itself, 8.8% of Asian millennials have > $100k saved for retirement. Far more than other racial groups.
I guess doing your homework and listening to your parents about what to major in does pay off*.
*Even though college acceptance boards discriminate against you, the odds are good you had to learn to speak English late in life, and your parents probably aren't college educated.
Mass genocide?Comment removed from /Economics - Magic_Leather_Jacket - Created on 07/18/18 19:46:38 UTC - permalink
But it's going insolvent by 2030-2040, right after the average Boomer being statistically dead. It's a problem, but they're literally fighting to the death to keep unfunded entitlements that their children both have to pay for and likely won't see.Comment removed from /Economics - cavscout43 - Created on 07/18/18 19:46:53 UTC - permalink
I was thinking old age.Comment removed from /Economics - HTownian25 - Created on 07/18/18 19:47:51 UTC - permalink
Funny enough, this likely plays into why rural areas tend to be more conservative (as well as the educational differences).Comment removed from /Economics - cavscout43 - Created on 07/18/18 19:48:30 UTC - permalink
That being said, I absolutely would ditch large urban metros when retirement age rolled around. Save for a Manhattan/Hawaii retirement, then move to rural Idaho or something when the day comes. Live like relative royalty.
wait...18 year olds don't have anything saved for retirement?? What a bunch of idiots.Comment removed from /Economics - TDual - Created on 07/18/18 19:52:52 UTC - permalink
Lumping a bunch of 18-37 year olds together and talking about statistics across that group is asinine.
Well where’s the fun in thatComment removed from /Economics - Magic_Leather_Jacket - Created on 07/18/18 19:53:27 UTC - permalink
You can still piss on their graves when they're gone.Comment removed from /Economics - HTownian25 - Created on 07/18/18 19:57:12 UTC - permalink
I started saving at 25, wish I had started at 18, only one other person in my friend group is saving, a lot of them see it as something they don't have to worry about till they're older, I keep trying to tell them the earlier you start the easier it is, put away what you can afford to now so you're not playing catch up in the future but many people are more interested in spending now and saving later.Comment removed from /Economics - redsalmon67 - Created on 07/18/18 20:07:43 UTC - permalink
Personally, I'll be defecating. Will save quite the sensory-overloading log for them. Palpably aromatic.Comment removed from /Economics - Amplifeye - Created on 07/18/18 20:10:01 UTC - permalink
Not a fair comparison. Asian millennials are still from a demographic that was pre-selected coming to the USA from already well off families.Comment removed from /Economics - ameriveaux - Created on 07/18/18 20:10:59 UTC - permalink
Thats like saying nigerian americans are better off because they are "Better". No, they come from families that are already doctors engineers and lawyers to get to the USA anyway
fewerComment removed from /Economics - MrFrode - Created on 07/18/18 20:11:28 UTC - permalink
Eliminating Medicare & Medicaid, maybe.Comment removed from /Economics - Poguemohon - Created on 07/18/18 20:14:40 UTC - permalink
Basically this.Comment removed from /Economics - deepredsky - Created on 07/18/18 20:17:43 UTC - permalink
I’m a millennial. Born late 80s. Most people I know eat out almost every meal, go out drinking a lot, and travel internationally once or twice a year.
I think retirement is the last thing on their mind.
Most of these people don’t really understand the effects of compound interest. 6% a year ain’t no joke.
Op trying to be racist lolComment removed from /Economics - edwardkirk1231 - Created on 07/18/18 20:18:07 UTC - permalink
yes good point, world population is therefore lower than 40 years ago, and our conundrum can be explained by bad boomers, not population crushComment removed from /Economics - pbrettb - Created on 07/18/18 20:20:19 UTC - permalink
Comment removed from /Economics - whathe2016 - Created on 07/18/18 20:22:57 UTC - permalinkfrom already well off families.Holy shit you are clueless about the circumstance under which most Asians came to USA!
Educate meComment removed from /Economics - ameriveaux - Created on 07/18/18 20:26:51 UTC - permalink
6% is very, very easy to achieve as well. Buy an S&P fund blindly and let it ride for 6%. If you buy dips strategically, maybe you get 8 or 9%, which is the historic average for the S&P anyways.Comment removed from /Economics - daviddavidson29 - Created on 07/18/18 20:28:36 UTC - permalink
That's a well known cognitive bias - we all think that our future self is much more virtuous and will have much more willpower (and money) to save.Comment removed from /Economics - bullpup1337 - Created on 07/18/18 20:29:48 UTC - permalink
Of course, fast forward 10 years, and you are still the same old you, still no money, but less time to save.
No, just pointing out the fact that personal choices make a huge difference where one ends up in life.Comment removed from /Economics - whathe2016 - Created on 07/18/18 20:34:40 UTC - permalink
And that it's not boomers, the rich or fill in the blank _________ scheming to impoverish millenials.
Yeah, but the guy above already explained how your sampling method is highly biased.Comment removed from /Economics - edwardkirk1231 - Created on 07/18/18 20:36:43 UTC - permalink
That's what Google and Wikipedia is for.Comment removed from /Economics - whathe2016 - Created on 07/18/18 20:39:00 UTC - permalink
Whew at least there’s thatComment removed from /Economics - Magic_Leather_Jacket - Created on 07/18/18 20:42:03 UTC - permalink
More than one way to skin a catComment removed from /Economics - Magic_Leather_Jacket - Created on 07/18/18 20:42:38 UTC - permalink
Lol no one can “buy dips strategically” repeatedly. Your overall returns will drop because your capital is underutilized (holding too much cash to wait for the dips), even if it appears your stock portfolio itself is doing 8-9%.Comment removed from /Economics - deepredsky - Created on 07/18/18 20:44:04 UTC - permalink
Just gotta hope the boomers don't ruin the world any more than they already have before we can affect some change.Comment removed from /Economics - wangofjenus - Created on 07/18/18 20:44:19 UTC - permalink
I've been fighting this battle since I was 22 making $40,000. I contributed from my first eligible paycheck and never stopped. I certainly do well now but I'm not making crazy money. But I'll hit $100k in retirement savings next month. I also never contributed a double digit percentage of my income.Comment removed from /Economics - x888x - Created on 07/18/18 20:48:41 UTC - permalink
I've been preaching for 9 working years now. Pale just don't get it. Many of my peers say "I can't afford to contribute." No you don't choose to. There's a big difference. It's pre tax money that you're getting taxed on. More importantly, it's almost always eligible to be doubled (or more) by their employer.
Invest in crypto currencies now, and you’re set. When bitcoin hits a million USD, you’ll be scratching your head, or living the life.Comment removed from /Economics - xvult - Created on 07/18/18 20:50:44 UTC - permalink
Why would anyone brag about having China's tentacles all over them? Good luck.Comment removed from /Economics - InTheWhaleRoom - Created on 07/18/18 20:53:55 UTC - permalink
Wrong. My mother and her 6 siblings came here with less than $500 each (they were capped at that amount I believe). The 7 kids and my grandmother lived in name one room house in Taiwan. They worked hard and built their wealth. They all emphasized education in their kids. Almost all of the second gen went to good schools and made good careers.Comment removed from /Economics - optimus_maximus - Created on 07/18/18 20:54:59 UTC - permalink
It's a culture thing. When your family immigrates for economic opportunity, they don't easily take for granted their roots. It's not that "all Asians are good at math" as much as "Asians do math so they don't have to work in a Chinese restaurant like their first gen parents."
So is this what winning feels like? Trump said we winning right?Comment removed from /Economics - edwardkirk1231 - Created on 07/18/18 20:55:11 UTC - permalink
I sold most of my portfolio early 2017 to position myself to “buy the inevitable dip”. Instead, I missed an amazing year. I’m mostly all invested again, and who knows? Maybe now the dip comes and I get double whammied.Comment removed from /Economics - Williale - Created on 07/18/18 20:55:43 UTC - permalink
As they say, time in the market beats timing the market.
On January 3, 2009, Satoshi was busy from afternoon to dusk, creating, compiling and packaging the first open source code in a small server in Helsinki, Finland. After running SH A 256 operation, RIPEM D-160 operation, and writing version type, Base 58 coding, the first BLOCK of the BTC world was created at 18:15 on January 3, 2009. This day was called “Creation Day” by BTC believers, and this BLOCK is also called “Creation block." On this day, Bitcoin (hereinafter referred to as "BTC") was born. www.fmz.comsubmitted by FmzQuant to u/FmzQuant [link] [comments]
THE recent surge in the price of Bitcoins has created an unprecedented wave of interest in the cryptocurrency. Once the domain of computer geeks and speculative investors, the meteoric rise in the price has forced Bitcoin into the public spotlight and it has become the hot topic of debate around the water coolers as well as in the bars, restaurants and hair salons.
Some dismiss it as a passing fad, a bubble waiting to burst and an elaborate Ponzi scheme, while others claim it the greatest innovation since the internet, the currency of the future and a great way to make quick money. Who is right and who is wrong?
Bitcoins are traded on a number of exchanges around the world and, as with any other market, whether it is oil, wheat futures, share options or the price of bagels in downtown Manhattan, the price is determined by supply and demand.
Some investment gurus such as Warren Buffett believe the hockey stick shape of the Bitcoin price cannot be explained by traditional supply and demand dynamics. The meteoric rise in the Bitcoin price has been caused by an investment frenzy triggered by the hype surrounding the cryptocurrency concept which has gripped the imagination of the public.
It has all the hallmarks of a speculative bubble which they believe could burst at any moment. An investment bubble occurs when the price of a commodity rises way beyond the intrinsic value of the item. The sudden rise in price creates a lot of publicity and tales of instant wealth and overnight millionaires lure new investors into the market.
As the price continues to rise, the fear of missing out (the Fomo factor) attracts even more investors, driving prices up further. The cycle repeats itself until the price reaches a tipping point and the market collapses overnight. There have been a number of well documented examples in the past, from the Tulip Mania that gripped the Dutch in the 17th Century to the tech boom in the late 1990s, the housing crash of 2006 and the commodities bust in 2009.
During the tech boom in the 1990s, for example, the share prices of web-based businesses reached astronomical proportions. Gripped by what the US Federal Reserve Board chairperson at the time, Alan Greenspan, called “irrational exuberance”, seasoned investors and regular consumers clambered to get a piece of the action and make a quick buck.
At the time, nobody really understood what the internet was, let alone what its long-term implications were, but this did not deter people from selling the proverbial farm and buying tech stocks at almost any price. As share prices soared, some of the most obscure, and often unprofitable, internet based companies had market capitalizations in the millions and sometimes billions of dollars.
Despite some spectacular failures and the poor financial results published by those who managed to survive for longer than a year, the investment frenzy continued unabated. In early 2000, however, the market seemed to come to its senses. Prices began to decline and then started plummeting as panic swept through the market. The tech market eventually collapsed, leaving many investors penniless and the world economy in a recession.
A number of investment gurus see many similarities between the tech boom and bust of the ’90s and the Bitcoin market at the moment.
At the current price level, Bitcoin has a market capitalization of over $200 billion, which is $70bn more than the value of General Electric and greater than the gross domestic product of some countries.
As Buffett put it in 2014: “The idea that (Bitcoin) has some huge intrinsic value is just a joke in my view. Bitcoin is not backed by a company’s earnings or the strength of a government and rule of law. There’s also no interest or dividends.”
At the time Bitcoin was priced at about $600 and is now trading above $14 000, but he is sticking to his guns and in October 2017 stated that Bitcoin “is a real bubble”.
On the other side of the argument, there are those who believe that the internet and social media have created a new mindset in modern society which makes the concept of a global currency that cannot be controlled by any government an alluring concept that has caught the imagination of the public.
Anyone who owns Bitcoin achieves a degree of economic freedom which was not possible before. They can send value across the world without having to ask for permission from a bank or government body and Bitcoin cannot be taxed, controlled, destroyed or confiscated.
A central bank cannot print more Bitcoins to control the money supply and manipulate the price either. It is free from global recessions, government financial mismanagement and unfair taxpayer-funded bailouts.
This utopian view of an international currency free of interference by big government is the primary reason for the high value placed on Bitcoin by the public. Demand is being driven not by traditional investors, but by a wave of internet-savvy pundits who believe that Bitcoin will become the de facto method of payment in the future. In a digital age we need a digital currency and the current price, they claim, reflects the future expectations of the market. The high prices are not a reflection of Bitcoin’s current value, they say, but rather its potential value. Another factor driving up the Bitcoin price is the expectation that big financial players are set to wade into the market. The Chicago Mercantile Exchange (CME) recently introduced Bitcoin derivatives – a bet on the future value of the currency – which allows hedge funds to enter the market.
Some speculate that big players such as JP Morgan, Goldman Sachs and Merrill Lynch could enter the market in 2018 and offer Bitcoin as part of a high-risk portfolio to clients. Once the large investment houses start buying Bitcoins, demand will skyrocket and the price will rise to even greater heights.
If Bitcoin fulfils its original purpose and becomes the medium of exchange on the internet and is accepted in more brick and mortar stores, the demand will rise even further. Bitcoin enthusiasts believe it is likely to fulfil that role and the high Bitcoin price indicates the market agrees.
The Bitcoin market, however, is still in its infancy and is extremely volatile as widely differing opinions about its future cause the price to fluctuate wildly.
Those who got in early are making huge returns on their investment and it may be tempting to jump on the bandwagon and get a slice of the action, but Bitcoin should still be considered a risky investment.
Some say Bitcoin is a solution looking for a problem. It could become the next global payment system, but it could just as easily fail or fall away. It would be wise to adopt a rational and cautious approach and as with any prudent investment strategy – only invest as much as you are willing to lose.
THREATS & CHALLENGES
BITCOIN faces a number of challenges which detractors believe could reduce demand in the short term and threaten its existence in the long term:
Ironically, Bitcoin’s is its own worst enemy. Rapidly rising prices are not a desirable feature of a currency. If someone believes the Bitcoin price is likely to rise and will be worth more in the future, they would be reluctant to spend it on something now. Its success undermines its usefulness. Some analysts believe that market volatility and continually rising prices will prevent Bitcoin from fulfilling its purpose as a global payment system.
The blockchain itself is considered totally secure and virtually hack-proof. It has withstood intense scrutiny by mathematical and computer experts and to date there haven’t been attacks on the blockchain itself that has led to money being stolen.
Bitcoin’s biggest vulnerability is the integrity and security of the exchanges and wallet programs that store Bitcoins on behalf of users. Some have gone bust while others have suffered cyber-attacks in which hackers have made off with huge sums.
Further reports of successful cyber heists could shake investors’ confidence in the cryptocurrency, causing a sell-off and a sharp decline in its price.
The blockchain is spread over thousands of computers globally, which compete with each other to verify transactions. Although this is at the core of its security, it is a highly inefficient system and means Bitcoin can only process a handful of transactions a second.
Centralised payment processors, like Visa, process thousands of transactions a second, which makes it more attractive to large retailers as a payment system. Amazon, for example, processed 600 transactions a second during last year’s Amazon prime sale.
If even a fraction of their traffic decided to pay with cryptocurrency, consumers would be stuck for hours waiting for their transactions to be processed.
There are other cryptocurrencies already on the market which are a lot faster. Ripple, for example, can process 1500 transactions a second.
Bitcoin wields first-mover advantage, accounting for about 61% of the cryptocurrencies, but there is nothing to prevent any of the alternative coins from usurping Bitcoin.
Amazon is an innovative tech giant with huge clout in the internet industry and there are rumours they are looking into developing their own cryptocurrency, which could provide a serious challenge to Bitcoin.
Some experts believe an environmental crisis is looming if Bitcoin continues on its c...
|Certain people have postulated that the abundance of outstanding student loan debt could be the next "bubble to burst" potentially causing financial turmoil in the future, do you think this will be the case?||Arthur...I'm not certain what the next bubble will be or what will cause it. I am certain that there will be a bubble because that's the nature of our economy. There are no perfect cures and I wish the small investor was not the first to get hurt. But ultimately we must each protect ourselves by investing knowledgably not emotionally and buying low expense ratio funds rather than individual stocks.|
|Hardeep: I am worried about student loans. From a financial perspective and a personal perspective.|
|I wrote a piece on Forbes on the topic.|
|Here it is: Link to www.forbes.com|
|How has the financial – tech / financial start-up space evolved since your early days at Shearson/Shearson Lehmann Brothers/Smith Barney Shearson to today?||Arthur...It sure has. I feel so fortunate to be advising seven hi tech companies in different parts of America and in different technologies. Today it's a large part of the American economy rather than the back water business it was in the 70's. The number of success stories are greater than just Apple and Microsoft and they span the whole gamut of American enterprise. What a difference! In the Sheraton days it was Tech Aerofoam (retirement) and Topper (toys)|
|How can a lower to middle class person navigate the intricacies of the financial market (to earn for retirement by investing) without devoting their lives to the process? Also, do you see the financial sector as over regulated, under regulated, or just right?||Arthur...No I do not believe that the financial sector is over regulated. It's based on full disclosure and that's the best way to protect investors. But nothing is better for investors than being certain they know what they are doing and put emotionalism aside. Remember that most individuals are better off investing in passive, low price ration funds than picking stocks. I am dead set against stock picking except for the most experienced investors.|
|Does Motif have plans to trade on international (non-US) exchanges? What I mean: will it be possible (eventually) to include stocks in my Motif that are only traded on these non-US exchanges? There are many solar stocks for example that are traded in HK exchange only.||We are starting opening up Motif to international residents by late summer i am hoping. it depends on international regulators.|
|Opening up international markets to US residents will depend on how the first phase goes. Hopefully next year in specific markets.|
|Right now markets on our first wave are Hong Kong, UK and Australia.|
|You can invest in international markets through US listed international stocks and ETFs.|
|Thanks for doing this AMA. What's your biggest regret during your time as SEC chairman, what was the one thing that you wish you had done differently or wanted to do but couldn't to shape or change the financial community?||Arthur...What a great question and what an easy answer. I greatly regret not supporting Brooksley Borne (Chairman of the CFTC) when, in the President's working group she called for regulating derivatives. I was persuaded by the Secty of the Treasury and Alan Greenspan that this was a very disruptive step. I should have held my ground and called for the regulation that is just being rolled out sixteen years too late.|
|Arthur, Hardeep, Which stock has been your best investment ever? Which motif right now are you personally most bullish on?||Arthur...Probably the best investment I ever made was in the stock of the M& T Bank corporation which has one of the best managers in American business. I like "On the Road" and "Vice"|
|Hardeep: Rising Interest Rates and Sharebuybacks.|
|Compliance: this does not constitute advice please consult your financial advisor.|
|What exactly caused the financial melt down 07-08?||Lots of people have lots of responses and no one I believe is absolutely certain. Clearly our markets were out of kilter. Expectations were ridiculous and banks were lending to much to too many. Personally I believe the change from Glass Steagall played a real role . This is Arthur.|
|When do you plan on supporting trading securities like bonds (not bond ETFs) and mutual funds on Motif Investing? Thanks.||We just received permission to do mutual funds from FINRA.|
|Honestly i am not a big fan of mutual funds but our customers have been asking for them so we are looking into right now.|
|Bonds will come later--we need to do this. We need some scale here to be competitive. Lots of opportunity here.|
|Which way do you think the supreme court will judge on expensive mutual funds and employee accounts?||I think so much innovation is needed in 401K space. Something i am personally very passionate about.|
|I am hoping the Supreme Court rules in favor of the employees. It will shake up the industry and make it even easier for motif to play in this space. I am watching closely.|
|Arthur, Hardeep, which is your favourite book to learn about investing? Whats your biggest personal learning in investing?||Unconventional Success by Dave Swensen.|
|He was my professor Yale and i did my senior thesis with him.|
|Brilliant investor and more importantly a brilliant human being.|
|ARTHUR...My Book Take on the Street.|
|That too... :) Hardeep.|
|Motif Investing is truly evolutionary from all other online brokerages. It has been a financially disruptive technology. How are you going to make Motif Investing revolutionary?||We spent most of last year migrating our system to BNY's Pershing platform. It put is in a great position to scale in the US and globally. But it did slow down our product/feature launches.|
|You will start to see some revolutionary products launched in the next few months. Stay tuned...|
|Between your public sector / publicly traded private sector and start-up lives – which one (if you had to choose one) did you enjoy the most?||Arthur...I must say my public sector life and my high tech lives have brought me the most professional satisfaction. In both these areas I find that I am able to make a difference.In fairness I must say that over 60% of my life has been luck not genius. Probably true of all of us.|
|What steps is Motif taking for financial and investing education so that more people invest in an informed way understanding the risks and rewards?||We are going to be launching an investor education center this summer.|
|We are also going to be launching new products to help investors understand risk.|
|For all our motifs, we measure relative valuation and volatility.|
|We need to better here. thanks.|
|Where can i get more info on the investor education center and the new products? I am a trader / trainer and passionate about financial education and would like to contribute in any way I can.||Shoot me mail. or tweet me. hardeep.|
|We are already licensing our platform to teach 6-th graders investing for free.|
|Do you plan on providing support in Motif Investing for automatic dividend reinvestment?||Hardeep: Yes--we are working on it.|
|We have to solve the automated handling of corporate actions first. That is a REALLY hard problem.|
|We are very close to completing this. Dividend reinvestment is next.|
|Thanks for doing this AMA Arthur, really appreciate it! I enjoy following your twitter account and listening to your podcast, you have some fantastic economic insight. I was pleased to hear that you're bringing your expertise to the Bitcoin space as I believe your traditional finance background can help Bitcoin reach its enormous potential. I'm interested to know where you think Bitcoin will be in 5 years time?||Arthur. Thank you. I really love doing radio. As for the Bitcoin space. Its clearly here as an important vehicle. Cryptocurrency in some form or other is going to evolve . Im not certain whether it will be bitcoin as it is now or some evolutionary form but the banks are now buying in and international needs are growing. I am a strong supporter of bitcoin.|
|The rise to prominence of mortgage-backed securities obviously led to a vast crisis in the financial community for a variety of reasons. What do you see as the next financial instrument to pose such potential danger, in regards to lack of regulation and otherwise?||Arthur. It's hard to tell which product or group of products will contribute to the next meltdown. I have a feeling that b to B lending will play a role. Too many people are looking a lending as the open sesame to riches. This is important but we must be careful. This is Arthur.|
|What is your take on high frequency trading and some of the 'gaming the system' that comes along with it? Do you have an opinion on the future of where HFT will go? Thanks.||I believe that High Frequency trading is going to be quite different in several years Probably because of regulation and part because of changes in technology. There will be a new game. Arthur.|
|Of all the innovative companies out there why did you pick Motiff?||The major reason I agreed to advise and then serve on the board of Motif was because of the quality of the founder. His persistence made all the difference to me.|
|Hardeep, was it hard to find the 1st round investors for Motif?||Hardeep: We got super lucky. Took us about five weeks end to end.|
|Stressful but wasn't as hard as i thought.|
|Subsequent rounds are easier than your first.|
|You do a lot of charity work. How do you pick the causes you support?||Arthur...Again...its based on what I perceive to be the need as well as my personal interests and whether the work or funds I devote are used efficiently.|
|Respectfully, how much does Robinhood (new, fee-free stock trading brokerage) pose serious competition to Motif Investing?||Hardeep: I am always paranoid about competition.|
|I have seen us under-estimate competition too much at Microsoft.|
|Stay tuned. Lots of new products about to launch.|
Alan Greenspan: Bitcoin Is a Bubble. Former Fed Chairman Alan Greenspan was asked recently on Bloomberg TV whether he thought Bitcoin, which had an 80-fold run-up this year, was a bubble. Alan Greenspan: Bitcoin is a Bubble and Gold is Weak. Posted December 4, 2013 by Joshua M Brown. America’s foremost authority on bubbles, former Fed Chairman Alan Greenspan, weighed in on both Bitcoin and gold today in an interview for Bloomberg Television. Bask in the glory: Greenspan on whether Bitcoin is a bubble: “I guess so. Let me say that currencies to be exchangeable have to be ... Alan Greenspan, former chairman of the Federal Reserve, had something to say about the ever-rising price of Bitcoin. On Bloomberg TV, Greenspan called Bitcoin "a bubble." Greenspan's problem with ... Former Federal Reserve Chairman Alan Greenspan said Bitcoin prices are unsustainably high after surging 89-fold in a year and that the virtual money isn’t currency. Alan Greenspan, former chairman of the Federal Reserve, had something to say about the ever-rising price of Bitcoin. On Bloomberg TV, Greenspan called Bitcoin "a bubble."
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