Bitcoin Mania Continues

[ecosophia]

You know that a speculative mania has entered its final stages, and bodies will start plummeting from windows in the measurably near future, when people begin doing the most obviously idiotic things to pile into the bubble. 

With Bitcoin, that moment has arrived. According to this recent article, people are using their credit cards to buy Bitcoin and carrying the balance. So -- ahem -- they're taking out loans, in effect, at whatever rate their credit card happens to charge, to buy a speculative investment, and paying the interest in the fond hope that their Bitcoins are going to make them rich anyway. 

In the immortal words of Keith Brand, "Dear God, this is going to end so badly." 

Any of my readers who have money in Bitcoin, or any other cryptocurrency, in any other spirit than the one that leads people to blow lots of money on slot machines in Vegas, will want to be ready to wave goodbye to their investment...

Comments

[peristaltor]

Let's see. According to Minsky (via Keen), there were four stages of speculative investment. IIRC, the Ponzi phase, where investors had to roll over the borrowed financing while hoping for the asset to appreciate, was the final stage before a speculative collapse.

I did enjoy this passage from the Wiki entry on Minsky:

"…his theories have not been incorporated into mainstream economic models, which do not include private debt as a factor."

That explains so much.

[ecosophia]

Don't...include...private...debt.

Okay, I knew that mainstream economics was living in a set of delusional fantasies at which florid schizophrenics can only gaze in envy, but I didn't think it went that far.

I'm reminded of one of those rules for evil overlords: "I will have as one of my advisers an average eight-year-old child. Any flaw he detects in my plans will be fixed before implementation."

[peristaltor]

Not only debt, but profit! In mainstream econ, all money a company collects goes to pay wages and costs; therefore all prices are "fair."

Keen's book was quite clear about how bad this debt blindness is. Once you include the debt-based monetary system (which is 97% of our currency), any debt deflation means actual money disappears from circulation.

Even eight-year-olds can understand that a debt disappears when it is repayed or defaulted on. Not a difficult concept. Yet it's only understood, as you say, by evil overlords….

[ecosophia]

That's fascinating, in much the same way that a really well-developed schizoid delusion is fascinating.