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G M
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« Reply #950 on: October 12, 2017, 11:03:39 AM »

I just forwarded that to Scott Grannis. Let's see what he says.


I look forward to his response.
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Crafty_Dog
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« Reply #951 on: October 12, 2017, 11:07:12 AM »

________________________________________
The Producer Price Index Rose 0.4% in September To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 10/12/2017

The Producer Price Index (PPI) rose 0.4% in September, matching consensus expectations. Producer prices are up 2.6% versus a year ago.

Energy prices rose 3.4% in September, while food prices were unchanged. Producer prices excluding food and energy rose 0.4%.

In the past year, prices for goods are up 3.3%, while prices for services are up 2.1%. Private capital equipment prices rose 0.4% in September and are up 2.5% in the past year.

Prices for intermediate processed goods rose 0.5% in September and are up 4.3% versus a year ago. Prices for intermediate unprocessed goods declined 0.4% in September but are up 7.0% versus a year ago.

Implications: The impact of Hurricane's Harvey and Irma can be felt throughout today's report on producer prices. The most significant impact from the storms was on supply chains, where increased demand for machine and equipment parts, paired with a limited supply, pushed up margins to wholesalers. Meanwhile storm-related refinery shutdowns along the Gulf Coast led energy prices 3.4% higher in September, including a 10.9% jump in gasoline prices. Food prices, however, showed little impact, unchanged in September and down at a 0.5% annual rate in the past six months. Looking beyond food and energy, "core" prices rose 0.4% in September. In addition to higher wholesaler margins, most major categories of goods and services also rose in September. In the past year, producer prices have increased 2.6%, the largest twelve month rise since early 2012. This is certainly elevated in September by the hurricanes, but producer prices have been at or above 2% on a year-to-year basis in seven of the last eight months. And a look further down the pipeline shows the trend higher should continue in the months to come. Intermediate processed goods rose 0.5% in September and are up 4.3% from a year ago, while unprocessed goods declined 0.4% in September but remain up 7.0% in the past year. In other words, the "data dependent" Fed has clear evidence that inflation has met or exceeded their 2% target. In employment news this morning, new claims for unemployment benefits declined 15,000 last week to 243,000, while continuing claims fell 32,000 to 1.89 million, the lowest level since 1973. The temporary storm-related dip in employment looks to have passed, and we expect a very strong rebound in payrolls in October.
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DougMacG
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« Reply #952 on: October 12, 2017, 11:36:42 AM »

Or else?!  They will buy their oil from the US?  Venezuela (Venezuelan Bolívar)?  Japan, lol.
Maybe Russia, which of these countries needs a flood of Yuan for their consumer purchases?  Angola?

If they partner up with Iran, how 'bout we do the same with Taiwan?

Does anyone remember when over-reliance on unreliable oil sources was a finance and national security nightmare - for the importer?

http://dailycaller.com/2016/03/21/china-buying-lots-of-oil-from-saudi-arabia-iran-and-russia/
China surpassed the United States as the world’s largest net importer of petroleum in 2013. Within the next few decades, it is expected to buy roughly 70 percent of its oil from foreign sources, much of which will come from countries known for instability. Sudan alone provides 7 percent of China’s oil imports, and over one-third of Chinese oil imports come from Sub-Saharan Africa. Some of China’s largest oil suppliers are Angola, Sudan, Nigeria, and Equatorial Guinea, which are all known for political instability.

“Iran could also be a big supplier to Beijing in the months and years to come, as well as a partner that Tehran could call on to supply important loans, technology, and resources to develop Iran’s oil and natural resource sectors,” Kazianis concluded.

China is already heavily investing in Iranian oil, according to The New York Times and has been Iran’s largest trading partner for six years in a row. The two largest suppliers of Chinese oil, Russia and Saudi Arabia, are politically stable but are involved in Middle Eastern conflicts. China prefers to avoid being drawn into such confrontations, especially given recent tensions with its own Muslim minorities.

-------------------

Let's see what Scott G says.  It seems to me that:  a) none of these countries were using the US$ by choice.  They used it because it was in their best interest to do so.  If so, then switching makes them worse off.  b) Currency is a medium of exchange, doesn't change underlying fundamentals.
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Crafty_Dog
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« Reply #953 on: October 13, 2017, 12:18:58 PM »

Can’t see how this will make much of a difference. Money is fungible. The value of the dollar is determined not by transactional demand for oil, but for by the demand to hold dollars.

On Oct 12, 2017, at 12:59 PM, Marc Denny <craftydog@dogbrothers.com> wrote:

https://www.cnbc.com/2017/10/11/china-will-compel-saudi-arabia-to-trade-oil-in-yuan--and-thats-going-to-affect-the-us-dollar.html
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DougMacG
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« Reply #954 on: October 28, 2017, 09:46:16 AM »

https://www.realclearpolitics.com/articles/2017/10/28/president_trump_needs_a_stable_dollar_along_with_tax_cuts_to_maximize_growth_135392.html

He compares Taylor and rules based monetary policy to Volcker.  This is not about high versus low rates; it is about getting it right.

"President Trump Needs a Stable Dollar Along With Tax Cuts to Maximize Growth"
...
" Taylor is working on a study that argues for a return to a rules-based international currency system. Several years ago, former Fed Chair Paul Volcker, who used gold and commodities as leading inflation indicators while appointed, argued for a rules-based monetary policy at home and new international currency cooperation abroad."
...
« Last Edit: October 30, 2017, 11:38:36 PM by Crafty_Dog » Logged
DougMacG
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« Reply #955 on: November 03, 2017, 12:07:46 PM »

I predicted Trump would pick Taylor and I was wrong.  Trump picked the less qualified alternative although he is already a member of the Fed Board of Governors.  The result of this pick will probably be okay, no worse than Yellen.  Powell was one who argued with Yellen to ease off of quantitative easing.  The Trump camp thinks Powell will be slower to raise interest rates, giving his economy continued, nominal and  artificial boost, like Yellen did for Obama, and not be too obsessed or pure with what is right and responsible for the dollar and interest rates.  Powell will be easier for the administration to influence, they think.

Drawbacks to this:
a) artificially low interest rates are killing off savings and have other bad effects.  
b) Instead of having the leading mind on monetary policy at the top, the new chair of this most crucial organization will mostly rely the advice of outsiders and underlings, aka the swamp.
« Last Edit: November 03, 2017, 03:27:11 PM by DougMacG » Logged
Crafty_Dog
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« Reply #956 on: November 04, 2017, 09:57:36 AM »

True digital currencies were more common in science fiction than in reality until quite recently. The big stumbling block for electronic money that doesn't have a physical form is the issue of ownership. How can you truly possess something of intrinsic value that can be effectively copied ad nauseam? In 2008, a paper published under a pseudonym, Satoshi Nakamoto, introduced the world to the digital currency bitcoin, a groundbreaking development in its own right. But more important, however, was the underlying algorithm that made the cryptocurrency work.
 
The technology that anchors bitcoin, known as the blockchain, was the truly revolutionary development. Commonly referred to as distributed ledger technology, blockchain is already considered to be a disruptive technology and will affect a number of different industries beyond the financial sector, including but not limited to shipping and logistics, aerospace and defense, retail, health care, and manufacturing.

Distributed ledger technology is a truly revolutionary development.

In the case of digital currencies such as bitcoin, which pioneered the technology, transactions are recorded in a shared public ledger — the ubiquitous blockchain. The currency (or contract or other exchange of information) is not controlled by a central entity like a bank but is instead managed by an online community. Members with powerful computers are encouraged to maintain the transactional register by "verifying the blockchain" — in other words, by solving complex mathematical equations and adding another "block" of transactions to the existing chain. With bitcoin, the process is known as "mining" because the verifier is rewarded with new bitcoins.

 
Ultimately, the key attribute of the technology is its ability to ensure and enshrine an often undervalued commodity: trust. The only way the protocol itself can be hacked and a false transaction entered is if a group of actors control more than 50 percent of the nodes verifying the blockchain in order to collude with one another.
 
To be quite clear, first-mover offerings such as bitcoin, Ethereum or Ripple that are popular today might easily die a quick death tomorrow. For now, the technology remains in its infancy and new applications are still being developed. There are a number of technological challenges to be surmounted as well as regulatory hurdles to overcome before potential sectors of the economy adopt this technology — or not, as the case may be.
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G M
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« Reply #957 on: November 04, 2017, 11:21:01 AM »

True digital currencies were more common in science fiction than in reality until quite recently. The big stumbling block for electronic money that doesn't have a physical form is the issue of ownership. How can you truly possess something of intrinsic value that can be effectively copied ad nauseam? In 2008, a paper published under a pseudonym, Satoshi Nakamoto, introduced the world to the digital currency bitcoin, a groundbreaking development in its own right. But more important, however, was the underlying algorithm that made the cryptocurrency work.
 
The technology that anchors bitcoin, known as the blockchain, was the truly revolutionary development. Commonly referred to as distributed ledger technology, blockchain is already considered to be a disruptive technology and will affect a number of different industries beyond the financial sector, including but not limited to shipping and logistics, aerospace and defense, retail, health care, and manufacturing.

Distributed ledger technology is a truly revolutionary development.

In the case of digital currencies such as bitcoin, which pioneered the technology, transactions are recorded in a shared public ledger — the ubiquitous blockchain. The currency (or contract or other exchange of information) is not controlled by a central entity like a bank but is instead managed by an online community. Members with powerful computers are encouraged to maintain the transactional register by "verifying the blockchain" — in other words, by solving complex mathematical equations and adding another "block" of transactions to the existing chain. With bitcoin, the process is known as "mining" because the verifier is rewarded with new bitcoins.

 
Ultimately, the key attribute of the technology is its ability to ensure and enshrine an often undervalued commodity: trust. The only way the protocol itself can be hacked and a false transaction entered is if a group of actors control more than 50 percent of the nodes verifying the blockchain in order to collude with one another.
 
To be quite clear, first-mover offerings such as bitcoin, Ethereum or Ripple that are popular today might easily die a quick death tomorrow. For now, the technology remains in its infancy and new applications are still being developed. There are a number of technological challenges to be surmounted as well as regulatory hurdles to overcome before potential sectors of the economy adopt this technology — or not, as the case may be.

Digital currencies are just another fiat currency, and can be killed off quite easily by nation-states. I'm not adverse to using them, but I wouldn't store much in that format that I couldn't afford to lose.



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Crafty_Dog
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« Reply #958 on: November 04, 2017, 04:30:17 PM »

https://www.alt-m.org/2017/10/26/blockchain-gold/

=========================================

Also see:

Cyrptocurrencies aren't currencies. They have become speculative vehicles bought on credit. The growth rate of Bitcoin, or any individual "currency," is convincingly limited by the technology, but the number of "currencies" has exploded.

"All of this should make it very plain to buyers of any cryptocurrency that it’s greatest selling point, it’s limited supply, has been completely debunked and in the most preposterous way possible. In fact, the growth rate in the creation of new cryptocurrencies makes central bank money printing in recent years look utterly conservative by comparison."

The following article, of course, is now wildly out of date, having been posted about 35 days ago, but consider the arguments. The extremes have only become more extreme and the insanity more insane.

Tom



(Bold highlighting below is mine. Tom)

This is not the store of value you are looking for

Posted by Jesse Felder on 9/1/2017

[Omitting a lot of talk about Warren Buffett and Ben Gramham's thinking about bubbles]

Essentially, a bubble starts with a compelling premise and then the prices start going up and greed takes over. And I think this is exactly what is going on with Bitcoin today.It all started with a compelling premise. Out of the depths of the financial crisis a group of cyber punks came up with the idea of a decentralized, digital form of cryptocurrency with limited supply that could not be manipulated by any central authority. The idea really had its foundations a decade or so earlier but it took the financial crisis to precipitate its actual creation in early 2009. As central banks around the world began to pursue incredible amounts of money printing the premise only became that much more compelling. Then the price started to take off and greed took over.

Eight years later and Bitcoin is now worth nearly $100 billion. It has soared 20-fold to $4,800 per Bitcoin over just the past two years, since Buffett’s partner Charlie Munger called it, “rat poison.” To get a sense of just how overvalued this is, the Wall Street Journal surmised if Bitcoin took over the entire credit card transaction market, putting Visa and MasterCard out of business, it would be worth about $100. Even more egregious, the Bitcoin Investment Trust (GBTC) now trades at more than a 115% premium to the underlying value of its Bitcoin assets. Buyers here thus need Bitcoin to trade over $10,000 to begin to break even on today’s purchases.

Bitcoin is only part of the story. There are now more than 800 different cryptocurrencies with a combined market cap of $166 billion. “ICO Unicorns” are now a thing (companies whose initial coin offerings are now worth more than a billion dollars). Burger King introduced the Whopper Coin last week and Doge Coin, which was created as a joke based upon a popular internet meme, is now worth nearly a quarter billion dollars. There’s now a Dentacoin for patients to use in paying their dentists. There’s a Titcoin for porn and a Potcoin for marijuana.

All of this should make it very plain to buyers of any cryptocurrency that it’s greatest selling point, it’s limited supply, has been completely debunked and in the most preposterous way possible. In fact, the growth rate in the creation of new cryptocurrencies makes central bank money printing in recent years look utterly conservative by comparison. And all of this still ignores the fact that a bitcoin is even less tangible than a tulip bulb. There is literally nothing to it.

That hasn’t stopped investors from buying in, however. More than 50 hedge funds have been formed to take advantage of the crypto gold rush. And it’s not just high net worth, folks, either. NBC news ran a story recently carrying this headline: “Middle America Is Crazy In Love With Bitcoin.” The first line reads, “If you’re not buying Bitcoin, you’re not keeping up with the Joneses.” And when you run a google search for “buy bitcoin with” the first suggested result is “PayPal.” The second is “credit card.” Middle America now famously has no savings to speak of so they are buying Bitcoin in their credit cards.

If this doesn’t fit Mr. Buffett’s criteria of a bubble, I don’t know what does. Much of this is just your standard bubble greed but it’s interesting that the premise, the story of Bitcoin, has resonated with people so much. They are clearly buying into the proposition that central banks have gone nuts and they need something to act as a store of value amid the madness. It’s just another signpost in the anti-technocrat, anti-elitist movement. Sadly, these folks have been deceived as to the merits of their chosen store of value.

And it’s terribly ironic that the store of value they have chosen is simply a bad knock-off one that has been around for as long as humans have needed one. I am, of course, referring to gold. In fact, one of the early predecessors of Bitcoin was called Bitgold and it was essentially a digital currency that attempted to mimic gold’s virtues. Think back to the Bitcoin premise presented at the beginning of this discuss: “a decentralized, digital form of cryptocurrency with limited supply that could not be manipulated by any central authority.” The only difference between Bitcoin and gold is that the latter is not digital or encrypted; it’s tangible. Oh, and unlike cryptocurrencies it’s supply is truly limited.

It’s almost as if, in the aftermath of the financial crisis, investors went looking for gold, stared directly at it and then were somehow hypnotized into thinking, “this is not the store of value you’re looking for.” A painful bear market, like that we have witnessed in gold since 2011, can have just that sort of effect. And the most powerful bull market in history in what is plainly a digital pyramid scheme played a not insignificant role, as well.

Still, the popularity of the Bitcoin premise will eventually be very bullish for gold. When the bubble in the former bursts (which will likely coincide with a bursting of the bubbles in other risk assets), investors will realize their error and rush once again to the latter, understanding that it is the genuine article and truly fulfills the promise of a “store of value.” At that point, prices will rise and we will start to see greed at work again in the gold markets.
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Crafty_Dog
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« Reply #959 on: November 14, 2017, 11:57:32 AM »

Data Watch
________________________________________
The Producer Price Index Increased 0.4% in October To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 11/14/2017

The Producer Price Index (PPI) increased 0.4% in October, well above the consensus expected rise of 0.1%. Producer prices are up 2.8% versus a year ago.

Food prices rose 0.5% in October, while energy prices were unchanged. Producer prices excluding food and energy rose 0.4%.

In the past year, prices for goods are up 3.2%, while prices for services are up 2.4%. Private capital equipment prices rose 0.3% in October and are up 2.7% in the past year.

Prices for intermediate processed goods rose 1.0% in October and are up 5.0% versus a year ago. Prices for intermediate unprocessed goods were unchanged in October but are up 7.7% versus a year ago.

Implications: Producer prices rose much faster than expected in October, with nearly every category moving higher. Prices for services led the way, rising 0.5% in October as margins for fuel and lubricant dealers surged 24.9% (it's not unusual to see large swings in this category from month-to-month). In fact, nearly every category in today's report shows inflation pressures that are likely to flow through to consumer prices in the months ahead. Goods prices rose 0.3% in October, with pharmaceuticals and industrial chemicals leading the way. Food prices rose 0.5% following three months of flat or declining prices, while energy prices (typically one of the more volatile components month-to-month) was unchanged in October. "Core" producer prices – which exclude both food and energy – rose 0.4% in October and are up 2.4% in the past year. That represents the fastest twelve-month rise since early 2012. There may still be remnants of hurricane impacts in the pricing data, but that's starting to subside, and producer prices have now been at or above 2% on a year-to-year basis in seven of the last nine months. In other words, prices were moving higher well before the storms touched down in Texas and Florida. A look further down the pipeline shows the trend higher should continue in the months to come. Intermediate processed goods rose 1.0% in October and are up 5.0% from a year ago, while unprocessed goods were unchanged in October but remain up 7.7% in the past year. Given these figures, it would be difficult for the "data dependent" Fed to cite current inflation trends as a reason to hold off on continued rate hikes. And with employment growth remaining strong, Chairwoman Yellen, and her successor Jerome Powell, look to have a clear runway for gradual but steady rate hikes into 2018.
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Crafty_Dog
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« Reply #960 on: December 08, 2017, 06:45:28 AM »




By Steven Russolillo
Updated Dec. 7, 2017 7:15 p.m. ET
126 COMMENTS

More than $70 million worth of bitcoin was stolen from a cryptocurrency-mining service called NiceHash following a security breach, causing the company to halt operations for at least 24 hours.

Andrej P. Škraba, head of marketing at NiceHash, said to The Wall Street Journal that approximately 4,700 bitcoin had been stolen from a bitcoin wallet, an online account that stores the digital currency. Bitcoin wallets, like other online bank accounts, have been targets of hackers in the past.

“It was a professional attack,” Mr. Škraba said. He declined to elaborate further, saying more information will be revealed at a later date.

In a six-minute video posted on Facebook, Marko Kobal, chief executive and co-founder of NiceHash, said either a hacker or group of hackers started infiltrating its internal systems through a compromised company computer on Tuesday at 6:18 p.m. Eastern Time. Within two hours, funds were stolen from accounts, he said.

NiceHash has notified major exchanges and mining pools about the breach “to help us track and possibly even recover the stolen funds,” Mr. Kobal said.

“We are doing really everything we can right now. However, this will take time,” he said. “As soon as we have a solution in place, we’ll reach out, hopefully in the next few days.”

The hack came as the price of bitcoin surged yet again to new highs. Through Thursday morning in New York, the digital currency soared 40% in about 40 hours, hurdling through five separate $1,000 barriers. It recently traded near its all-time high, at about $16,600, according to research site CoinDesk. At current levels, those stolen bitcoin would be worth about $78 million.

“It’s a bad thing to happen, but I think it’s going to be forgotten about pretty quickly,” said Arthur Hayes, founder and chief executive of BitMEX, a bitcoin-derivatives exchange in Hong Kong, of the theft. “Everyone is still high-fiving each other” over the recent gains.

Bitcoin’s rise from around $1,000 at the start of the year has attracted crowds of eager small-time investors to what had originally been a curiosity for techies. Several exchanges in the U.S. are set to offer derivatives contracts on bitcoin such as futures, another step toward building a traditional market around the stateless digital currency.

NiceHash, which markets itself as the largest crypto-mining marketplace, said it is investigating the breach and cooperating with authorities as it seeks to restore the service “with the highest security measures at the earliest opportunity.”

Based in Slovenia, NiceHash matches people in need of computer-processing power to “mine” cryptocurrencies with people who have power to spare. Payment is made to miners in bitcoin and other cryptocurrencies as an incentive for their processing and verifying transactions through complex algorithms.

Should You Buy Bitcoin?

The price of the digital currency has soared, but experts say you should be wary.

“We are truly sorry for any inconvenience that this may have caused and are committing every resource towards solving this issue as soon as possible,” NiceHash said in a separate statement on its Facebook page. The company also advised users to change their passwords.

Security has been an issue with bitcoin for years. One of the best-known cautionary tales is that of Mt. Gox, once the world’s largest bitcoin exchange. It collapsed and filed for bankruptcy protection after losing virtual currency valued at hundreds of millions of dollars in 2014.

The NiceHash hack represents a far-smaller portion of bitcoin’s overall market capitalization, Mr. Hayes notes.

“It just goes to show that bitcoin is a really valuable asset and when you have valuable assets, people are going to try to steal them,” said Mr. Hayes, who predicts bitcoin could hit $50,000 by the end of next year. “So it’s important to be prudent and protect it the best you can.”
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ccp
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« Reply #961 on: December 08, 2017, 07:47:57 AM »

https://finance.yahoo.com/quote/BTCUSD=X/
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Crafty_Dog
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« Reply #962 on: December 29, 2017, 02:35:59 PM »

See Decade Forecast: 2015-2025

While the world focuses on the ups and downs of bitcoin, another cryptocurrency, ripple (XRP), is making a splash. Since Dec. 27, the value of one XRP has increased by over 50 percent to as high as $1.83. This briefly pushed XRP to become the second largest cryptocurrency by market capitalization, and it's now relatively even with ethereum. Bitcoin, on the other hand, has fallen by over 10 percent since the Dec. 27 announcement by South Korea that it would increase regulations on cryptocurrency trading and could close some of the country's cryptocurrency exchanges.

What's the reason for the fascination with bitcoin and the lack of it for XRP? The answer is in the intent and purpose behind the two cryptocurrencies. In the emerging cryptocurrency and blockchain technology sphere, bitcoin is the established market leader as a currency, but it's just that: a currency. It's the first-generation application of blockchain technology. However, others, such as ripple and ethereum, are second- or even third-generation applications, which take the blockchain and cryptocurrency mechanism and build it beyond mere currency. The company behind XRP, Silicon Valley's Ripple, has designed its ripple platform as a way to clear and process payments and transactions, including cross-border transactions, using XRP and the ripple protocol as the conduit, thus lowering the costs of transactions.

These applications have caught the attention of the financial sector, and there have been a slew of announcements supporting the platform over the last two months. In November, Santander and American Express said they were working with Ripple to route payments between their respective customers in the United Kingdom and the United States. On Dec. 14, the Japan Bank Consortium, which comprises 61 banks in Japan, said that it had agreed to pilot programs with two South Korean banks to test cross-border transactions. This was followed by an announcement on Dec. 27 by SBI Ripple Asia, Ripple's branch in Asia, that it was forming a consortium with Japanese credit card companies to use the platform for payment processing. The latter has been the bigger driver in the rise in XRP's value, which has made Ripple one of Silicon Valley's largest private companies when taking into account the value the currency holds.

The idea of using blockchain technology for processing cross-border payments will continue to gain traction, through ripple or its potential successors. Cross-border payments today are typically done using the SWIFT network, which is the international mechanism that most banks communicate through to conduct transactions. Ripple would allow companies to get around that system. Moreover, ripple isn't tied to the dollar when making transactions in different currencies. The ripple platform looks for the shortest path through a number of customers both buying and selling their different currencies to complete a transaction seamlessly. This could weaken one aspect of the dollar's global pre-eminence.

So, while bitcoin continues to rise in value (though its rise has tempered over the last few weeks), newer generations of cryptocurrencies are gaining traction as they offer more promise and potential beyond what bitcoin can offer. That will be bitcoin's most important legacy in geopolitics — kicking off the process of finding new platforms and applications for blockchain technology.
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ccp
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« Reply #963 on: December 29, 2017, 06:50:02 PM »

Ripple's chart is more then nuts
makes Qualcomm of 2000 look like Minnesota Mining and Manufacturing's  chart:

https://finance.yahoo.com/quote/XRP-USD?ql=1&p=XRP-USD

up 40 x in ~ 8 months !

up 8 times in 1 month !

somebodies are getting fabulously rich -> FAST !
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Crafty_Dog
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« Reply #964 on: January 02, 2018, 11:31:43 PM »



https://www.wsj.com/articles/peter-thiels-founders-fund-makes-big-bet-on-bitcoin-1514917433
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Crafty_Dog
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« Reply #965 on: January 12, 2018, 01:56:17 PM »

The Consumer Price Index Rose 0.1% in December To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 1/12/2018

The Consumer Price Index (CPI) rose 0.1% in December, matching consensus expectations. The CPI is up 2.1% from a year ago.

Food prices rose 0.2% in December, while energy prices declined 1.2%. The "core" CPI, which excludes food and energy, increased 0.3% in December, above the consensus expected rise of 0.2%. Core prices are up 1.8% versus a year ago.

Real average hourly earnings – the cash earnings of all workers, adjusted for inflation – rose 0.2% in December and are up 0.4% in the past year. Real average weekly earnings are up 0.7% in the past year.

Implications: Consumer prices rose 0.1% in December, ending 2017 up 2.1% for the year, exactly the same as the increase seen in 2016. However, in the past three months CPI is up at a 2.6% annual rate, signaling that inflation is accelerating further above the Fed's 2% target. A look at the details of today's report shows energy prices declined 1.2% in December, tempering increased prices seen across nearly all other categories. Food prices increased 0.2%, while "core" prices – which exclude the typically volatile food and energy components – rose 0.3% in December. "Core" prices are up 1.8% in the past year, but are showing acceleration in recent months, up at a 2.2% annual rate over the past six-months and 2.5% annualized in the past three months. In other words, both headline and "core" inflation stand near or above the Fed's 2% inflation target, and both have been rising of late. Housing costs led the increase in "core" prices in December, rising 0.3%, and are up 2.9% in the past year. Meanwhile prices for services also rose 0.3% in December and are up 2.6% over the past twelve months. Both remain key components pushing "core" prices higher and should maintain that role in the year ahead. Add in yesterday's report on producer prices that showed rising inflation in the pipeline and we expect consumer price inflation to move to around 2.5% or higher by the end of 2018. Given the strength of the labor market, with the unemployment at the lowest level in more than a decade and headed lower, paired with a pickup in the pace of economic activity thanks to improved policy out of Washington, the Fed is on track to raise rates at least three times in 2018, with a fourth hike looking increasingly likely.
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DougMacG
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« Reply #966 on: January 12, 2018, 04:02:05 PM »

"The Consumer Price Index (CPI) rose 0.1% in December, matching consensus expectations. The CPI is up 2.1% from a year ago."

That sounds great - compared to Venezuela - but it is inexcusable that 2% inflation is our 'target', nearly 50% higher than the interest rate for savings.  What could possibly go wrong with that!  With the magic of compounding interest, our dollar loses half its value in less than 30 years at the current rate.  Just like the places with hyperinflation, any long term investment needs to be deflated constantly with a calculator to compensate for the ever-declining value of the dollar.

https://www.bls.gov/data/inflation_calculator.htm
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Crafty_Dog
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« Reply #967 on: January 31, 2018, 09:01:23 AM »

Bitcoin gripped the investing world last year like no other asset class in recent memory, minting new millionaires, sparking a pivot to blockchain technology and attracting a new wave of interest from institutional investors.

In 2018, bitcoin has been a total dud.
Bad StartBitcoin is in the midst of its worst monthlydrop in three years.Bitcoin price performanceSource: Coindesk
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The price of the cryptocurrency is down by about 30% in January, on pace for its worst monthly drop in three years, according to research site Coindesk. It fell below $10,000 on Wednesday, a two-month low. And it‘s down by about half from its all-time high of close to $20,000, reached in mid-December.

The plunge is noteworthy even by bitcoin’s standards. While it’s been known to lose over a quarter of its market value in the span of a day, those declines have typically been short lived. Over the past five years, bitcoin has fallen by over 30% in a given month only three other times, the latest in January 2015.

Bitcoin recently traded at around $10,000 after earlier falling as low as $9,627, according to Coindesk.

While several factors are driving the decline, the regulatory clampdown occurring around the world is an important reason why bitcoin and the broader cryptocurrency market have fallen on tougher times.

Bitcoin vs. Regulators: Who Will Win?

As bitcoin has emerged from the underground world of nerds and criminals to become a mainstream investment, the risk of hacks and scandals has also blossomed. What's a government to do? The WSJ's Steven Russolillo travels the world (sort of) to see how regulators are responding to the remarkable rise of cryptocurrencies.

On Tuesday, the Securities and Exchange Commission halted a $600 million initial coin offering, one of the biggest U.S. interventions yet into the world of raising money by issuing digital tokens. And earlier this month, the top U.S. derivatives regulator brought charges in three cases involving virtual currencies.

Further hurting sentiment, Facebook Inc. said Tuesday that it would stop all ads on its platform that promote cryptocurrencies and initial coin offerings. The social media giant said it wanted to eliminate promotions of “financial products and services frequently associated with misleading or deceptive promotional practices.”

In Asia, the Chinese government has taken steps to limit bitcoin mining operations, a blow to a large market for minting new bitcoin. Japan, which has held a favorable stance on cryptocurrencies, was stung by a hack last week in which $530 million worth of the currencies were swiped from exchange Coincheck Inc. And South Korea has undertaken new legislation aimed at calming its red-hot bitcoin market.


    SEC Moves to Stop $600 Million Digital Coin Offering
    Japan’s Cryptocurrency Whiz Kid Faces $530 Million Reckoning
    Why Bitcoin? Why Now? (Dec. 9, 2017)

“All of this is frightening,” said Kim Sang-woo, a 29-year-old from Seoul who says he’s been trading cryptocurrencies for nearly a year.

Mr. Kim said he initially entered the crypto market with a $20,000 investment on local Korean exchanges, spread out over nine digital currencies including bitcoin and ethereum. Through trading in and out of these coins, he said he made 10 times his initial investment.

But now he said he’s cut his exposure to digital currencies, instead favoring Korean stocks.

“Valuations were way too high,” he said. “I still see positive catalysts and I’m sure all the regulation is just a way of eventually building up a bigger market. But it’s tough right now.”

For sure, bitcoin has still been a highly profitable investment for many investors. It remains up by some 900% from where it traded at the beginning of last year. And investors who bought bitcoin as recently as three months ago have more than doubled their money.

But in a further sign of the growing regulatory pressure, South Korea’s customs service on Wednesday said it had found illegal foreign exchange dealings amounting to 637.5 billion South Korean won ($592.9 million) carried out through cryptocurrencies.

Kim Yong-chul, a director at KSC’s Financial Investigation Division, said the figure is likely to increase as the investigation continues.

By South Korean law, any foreign remittances above $3,000 require supporting documentation, while cumulative overseas transactions that exceed $50,000 annually are also monitored carefully. Unlike flat currency remittances, which are carefully scrutinized by the country’s government, cryptocurrencies aren’t attached to any remittance restrictions.

The customs services’ findings came a day after South Korea’s government implemented stricter verification checks for cryptocurrency investors, who are now required to hold certified bank accounts in order to buy cryptocurrency using flat money.

Also Tuesday, a South Korean court for the first time made a ruling to confiscate bitcoin proceeds, as part of a judgment against an illegal pornography website. The court ruled that the website operator should forfeit some 191 bitcoin—about $1.91 million based on its current value—in addition to a separate flat money fine.

Write to Steven Russolillo at steven.russolillo@wsj.com and Eun-Young Jeong at Eun-Young.Jeong@wsj.com
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Crafty_Dog
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« Reply #968 on: January 31, 2018, 01:09:07 PM »

second post

SAN FRANCISCO — Creating a new Bitcoin requires electricity. A lot of it.

In the virtual currency world this creation process is called “mining.” There is no physical digging, since Bitcoins are purely digital. But the computer power needed to create each digital token consumes at least as much electricity as the average American household burns through in two years, according to figures from Morgan Stanley and Alex de Vries, an economist who tracks energy use in the industry.

The total network of computers plugged into the Bitcoin network consumes as much energy each day as some medium-size countries — which country depends on whose estimates you believe. And the network supporting Ethereum, the second-most valuable virtual currency, gobbles up another country’s worth of electricity each day.

The energy consumption of these systems has risen as the prices of virtual currencies have skyrocketed, leading to a vigorous debate among Bitcoin and Ethereum enthusiasts about burning so much electricity.

The creator of Ethereum, Vitalik Buterin, is leading an experiment with a more energy-efficient way to create tokens, in part because of his concern about the impact that the network’s electricity use could have on global warming.

“I would personally feel very unhappy if my main contribution to the world was adding Cyprus’s worth of electricity consumption to global warming,” Mr. Buterin said in an interview.

But many virtual currency aficionados argue that the energy consumption is worth it for the grander cause of securing the Bitcoin and Ethereum networks and making a new kind of financial infrastructure, free from the meddling of banks or governments.

“The electricity usage is really essential,” said Peter Van Valkenburgh, the director of research at Coin Center, a group that advocates for virtual currency technology. “Because of the costs, we know the only people participating are serious, that they are economically invested. That creates the incentives for cooperation.”

This dispute has its foundations in the complex systems that produce tokens like Bitcoin; Ether, the currency on the Ethereum network; and many other new virtual currencies.

All of the computers trying to mine tokens are in a computational race, trying to find a particular, somewhat random answer to a math algorithm. The algorithm is so complicated that the only way to find the desired answer is to make lots of different guesses. The more guesses a computer makes, the better its chances of winning. But each time the computers try new guesses, they use computational power and electricity.

The lure of new Bitcoins encourages people to use lots of fast computers, and lots of electricity, to find the right answer and unlock the new Bitcoins that are distributed every 10 minutes or so.

This process was defined by the original Bitcoin software, released in 2009. The goal was to distribute new coins to people on the Bitcoin network without a central institution handing out the money.

Early on, it was possible to win the contest with just a laptop computer. But the rules of the network dictate that as more computers join in the race, the algorithm automatically adjusts to get harder, requiring anyone who wants to compete to use more computers and more electricity.

These days, the 12.5 Bitcoins that are handed out every 10 minutes or so are worth about $145,000, so people have been willing to invest astronomical sums to participate in this race, which has in turn made the race harder. This explains why there are now enormous server farms around the world dedicated to mining Bitcoin.

This process is central to Bitcoin’s existence because in the process of mining, all the computers are also serving as accountants for the Bitcoin network. The algorithm the computers solve requires them to also keep track of all the new transactions coming onto the network.
Photo
A computer server farm in Iceland, dedicated to mining Bitcoin. Credit Richard Perry/The New York Times

The mining race is meant to be hard so that no one can dominate the accounting and fudge the records. In the 2008 paper that first described Bitcoin, the mysterious creator of the virtual currency, Satoshi Nakamoto, wrote that the system was designed to thwart a “greedy attacker” who might want to alter the records and “defraud people by stealing back his payments.” Because of the mining and accounting rules, the attacker “ought to find it more profitable to play by the rules.”

The rules have kept attackers at bay in the nine years since the network got going. Without this process, most computer scientists agree, Bitcoin would not work.

But there is disagreement over the real value of Bitcoin and the network that supports it.

For people who consider Bitcoin nothing more than a speculative bubble — or a speculative bubble that has enabled online drug sales and ransom payments — any new contribution toward global warming is probably not worth it.


But Bitcoin aficionados counter that it has allowed for the creation of the first financial network with no government or company in charge. In countries like Zimbabwe and Argentina, Bitcoin has sometimes provided a more stable place to park money than the local currency. And in countries with more stable economies, Bitcoin has led to a flurry of new investments, jobs and start-up companies.

“Labeling Bitcoin mining as a ‘waste’ is a failure to look at the big picture,” Marc Bevand, a miner and analyst, wrote on his blog. The jobs alone, he added, “are a direct, measurable and positive impact that Bitcoin already made on the economy.”

But even some people who are interested in all that innovation have worried about the enormous electrical use.

Mr. de Vries, who keeps track of the use on the site Digiconomist, estimated that each Bitcoin transaction currently required 80,000 times more electricity to process than each Visa credit card transaction, for example.

“Visa is more centralized,” Mr. de Vries said. “If you really distrust the financial system, maybe that is unattractive. But is that difference really worth the additional energy cost? I think for most people that is probably not worth the case.”

The figures published by Mr. de Vries have been criticized by Mr. Bevand and other Bitcoin fans, who say they overstate the energy costs by a factor of about three. Many critics add that producing and securing physical money and gold also require lots of energy, in some cases as much as or more than Bitcoin uses.

Mr. Van Valkenburgh, of the Coin Center, has argued that Bitcoin miners, who can do the work anywhere, have an incentive to situate themselves near cheap, often green energy sources, especially now that coal-guzzling China appears to be exiting the mining business. Several mining companies have opened server farms near geothermal energy in Iceland and hydroelectric power in Washington State.

But the concerns about electricity use have still hit home with many in the industry. The virtual currencies known as Ripple and Stellar, which were created after Bitcoin, were designed not to require electrically demanding mining.

Perhaps the biggest change could come from the new mining process proposed by Mr. Buterin for Ethereum, a process that some smaller currencies are already using. Known as “proof of stake,” it distributes new coins to people who are able to prove their ownership of existing coins — their stake in the system. The current method, which relies so heavily on computational power, is called “proof of work.” Under that method, the accounts and people who get new coins don’t need existing tokens. They just need lots of computers to take part in the computational race.

Energy concerns are not the only factor encouraging the move. Mr. Buterin also believes that the new method, which is likely to be rolled out over the next year, will allow for a less centralized network of computers overseeing the system.

But it is far from clear that the method will be as secure as the one used by Bitcoin. Mr. Buterin has been fiercely attacked by Bitcoin advocates, who say his proposal will lose the qualities that make virtual currencies valuable.

Mr. Van Valkenburgh said that for now, throwing lots of computing power into the mix — and the electricity that it burns — was the only proven solution to the problems Bitcoin solves.

“At the moment, if you want robust security, you need proof of work,” he said.
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Crafty_Dog
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« Reply #969 on: February 14, 2018, 10:47:43 AM »

The Consumer Price Index Rose 0.5% in January To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 2/14/2018

The Consumer Price Index (CPI) rose 0.5% in January, coming in above the consensus expected increase of 0.3%. The CPI is up 2.1% from a year ago.

Energy prices rose 3.0% in January, while food prices increased 0.2%. The "core" CPI, which excludes food and energy, increased 0.3% in December, above the consensus expected rise of 0.2%. Core prices are up 1.8% versus a year ago.

Real average hourly earnings – the cash earnings of all workers, adjusted for inflation – declined 0.2% in January but are up 0.8% in the past year. Real average weekly earnings are up 0.4% in the past year.

Implications: New Fed Chief Jerome Powell has his work cut out for him, with consumer prices in January rising at the fastest monthly pace in more than five years. The consumer price index rose 0.5% in January and is up 2.1% in the past year, marking a fifth consecutive month of year-to-year prices rising more than 2%. In the past three months, CPI is up at a 4.4% annual rate, showing clear acceleration above the Fed's 2% target. A look at the details of today's report shows rising prices across most major categories. Energy prices increased 3% in January, while food prices rose 0.2%. But even stripping out volatile food and energy prices shows rising inflation. "Core" prices rose 0.3% in January, the fastest monthly pace since 2005. Core prices are up 1.8% in the past year, but are showing acceleration in recent months, up at a 2.6% annual rate over the past six-months and a 2.9% rate in the past three months. In other words, both headline and core inflation stand above the Fed's 2% target, and both have been rising of late. Housing costs led the increase in "core" prices in January, rising 0.2%, and up 2.8% in the past year. Meanwhile prices for services rose 0.3% in January and are up 2.6% over the past twelve months. Both remain key components pushing "core" prices higher and should maintain that role in the year ahead. The most disappointing news in today's report is that real average hourly earnings declined 0.2% in January. However, these earnings are up 0.8% in the past year. And, given the strength of the labor market, with the unemployment rate at the lowest level in more than a decade and headed lower, paired with a pickup in the pace of economic activity thanks to improved policy out of Washington, expect upward pressure on wages in the months ahead. Add it all up, and the Fed is on track to raise rates at least three times in 2018, with a fourth rate hike more likely than not.
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« Reply #970 on: February 15, 2018, 01:45:10 PM »

The Producer Price Index Rose 0.4% in January To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 2/15/2018

The Producer Price Index (PPI) rose 0.4% in January, matching consensus expectations. Producer prices are up 2.7% versus a year ago.

Energy prices rose 3.4% in January, while food prices declined 0.2%. Producer prices excluding food and energy increased 0.4%.

In the past year, prices for goods are up 3.3%, while prices for services are up 2.3%. Private capital equipment prices increased 0.5% in January and are up 2.5% in the past year.

Prices for intermediate processed goods rose 0.7% in January and are up 4.6% versus a year ago. Prices for intermediate unprocessed goods increased 0.9% in January and are up 2.5% versus a year ago.

Implications: Producer prices jumped in January, rising 0.4% as nearly every major category showed increased prices. And producer prices are up 2.7% in the past year, exceeding the Fed's 2% inflation target. This follows suit with yesterday's CPI report that shows inflation pressures have been picking up of late, and it's not difficult to see why. The Federal Reserve is running an incredibly loose monetary policy. Yes, the Fed Funds rate is slowly and steadily on the rise, but there are still more than two trillion dollars of excess reserves in the banking system, and monetary policy won't be tight until that excess slack is removed. This is especially true because anti-bank attitudes and regulation have been reversed, which reduces the headwinds to monetary growth. To put it mildly, new Fed Chair Jerome Powell and the rest of the FOMC have their work cut out for them. Taking a look at the details of today's PPI report shows rising costs for hospital services, apparel, and gasoline leading the way. Energy, led by a 7.1% jump in gasoline prices, increased 3.4% in January. Meanwhile food prices declined 0.2% in January. Strip out the typically volatile food and energy groupings, and "core" producer prices rose 0.4% in January and are up 2.2% in the past year. For comparison, "core" prices rose 1.4% in the twelve months ending January 2017, and were up 0.8% in the twelve months ending January 2016. And a look further down the pipeline shows the trend higher should continue in the year to come. Intermediate processed goods rose 0.7% in January and are up 4.6% from a year ago, while unprocessed goods increased 0.9% in January and are up 2.5% in the past year. Both categories have seen a pickup in price increases over the past six and three-month periods. Given these figures, and with employment growth remaining strong and inflation rising, we expect four rate hikes in 2018. On the jobs front, initial jobless claims rose 7,000 last week to 230,000, while continuing claims rose 15,000 to 1.942 million. Both measures remain near the lowest levels seen in decades, so look for another solid jobs report in February, although heavy snow in parts of the country might put some temporary downward pressure on payrolls for the month. If so, don't fall into the trap of thinking the good times are over. Job gains should rebound in the following months.
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DougMacG
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« Reply #971 on: February 16, 2018, 02:26:34 PM »

[Wesbury] Energy prices rose 3.4% in January, while food prices declined 0.2%. Producer prices excluding food and energy increased 0.4%.

These sound like ordinary fluctuations to me.  Minimum wage increases however that went into effect Jan 1 in several states, more money for the same work value, are inflationary, IMHO.

https://www.usatoday.com/story/money/2017/12/19/minimum-wage-hikes-18-states-20-cities-lift-pay-floors-jan-1/961213001/

Our acceptance, goal, of 2% inflation, and willingness to drive it up further and faster than that is more damaging than we know.
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