Historical bitcoin vs Usd Part II – Bitcoin Epic Kick ass!

Historical bitcoin vs Usd Part II – Bitcoin Epic Kick ass!

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Cryptocurrency Epic Kick ass!

ImagePercent Increase 80,000%

Dear Traders, 

Awesome to all the bitcoin traders out there, you have made life time earnings!!!!

I must admit that i did not participate in this unique bull run, even though i followed it, I didn’t fully understand its profile and monetary impact. My sincere congratulations if you put money in this external instrument, awesome epic returns, once in a life time!!!

Personally, I will not participate at this level ($801 USD) because the Risk:Reward does not fit my profile at this level. Lets see some charts and simulations of investment! it’s mind-blowing! 🙂

Mexican Peso Simulation 

(Initial Investment – $25,000 MXN / USD ($13.00) Exchange Rate) x $5 usd vs bitcoin = 384 Bitcoins 

384 Bitcoins  x current USD x bitcoin price ($801 USD per Bitcoin (Closing Price Nov 18, 2013.)

384 Bitcoins x $801 USD = $307,584 USD 

$307,584 USD X MXN (13.00) = $3,998,592 MXN

EPIC INVESTMENT!

Mexican Peso Simulation

$25,000 MXN vs $5 bitcoin 384 Bitcoins

$801 USD vs Bitcoin = $307,584 USD 

$307,584 USD x 13.00$3,998,592 MXN

You can Buy an awesome apartment in cash with these returns!

Dear Traders, 

Awesome to all the bitcoin traders out there, you have made life time earnings!!!!

I must admit that i did not participate in this unique bull run, even though i followed it, I didn’t fully understand its profile and monetary impact. My sincere congratulations if you put money in this external instrument, awesome epic returns, once in a life time!!!

Personally, I will not participate at this level ($801 USD) because the Risk:Reward does not fit my profile at this level. Lets see some charts and simulations of investment! it’s mind-blowing! 🙂

 

Take care, use stops and all the best!

Dimitri Feria Kislaja

Snap 2013-11-18 at 18.39.12


Hyperinflation – Zimbabwe (6.5 Sextillion % at peak) Fotos & Video

Hyperinflation – Zimbabwe (6.5 Sextillion % at peak) Fotos & Video

89,700,000,000,000,000,000,000% INFLATION

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Hyperinflation in Zimbabwe began shortly after destruction of productive capacity inZimbabwe‘s civil war and confiscation of private farms. During the height of inflation from 2008 to 2009, it was difficult to measure Zimbabwe’s hyperinflation because the government of Zimbabwe stopped filing official inflation statistics.[1] However, Zimbabwe’s peak month of inflation is estimated at 6.5 sextillion percent in mid-November 2008.[1]

In 2009, Zimbabwe abandoned its currency. As of 2013, Zimbabwe still has no national currency; currencies from other countries are used.[2]

Historical context

On 18 April 1980, the Republic of Zimbabwe was born from the former British colony of Southern Rhodesia. The Rhodesian Dollar was replaced by the Zimbabwe dollar at par value. When Zimbabwe gained independence, the Zimbabwean dollar was more valuable than the US dollar.[3] In its early years, Zimbabwe experienced strong growth and development. Wheat production for non-drought years was proportionally higher than in the past. The tobacco industry was thriving as well. Economic indicators for the country were strong.

From 1991–1996, the Zimbabwean Zanu-PF government of president Robert Mugabe embarked on an Economic Structural Adjustment Programme (ESAP), designed by the IMF and the World Bank, that had serious negative effects on Zimbabwe’s economy. In the late 1990s, the government instituted land reforms intended to redistribute land from white landowners to black farmers to correct the injustices of colonialism. However, many of these farmers had no experience or training in farming.[citation needed] From 1999 to 2009, the country experienced a sharp drop in food production and in all other sectors. The banking sector also collapsed, with farmers unable to obtain loans for capital development. Food output capacity fell 45%, manufacturing output 29% in 2005, 26% in 2006 and 28% in 2007, and unemployment rose to 80%.[4] Life expectancy dropped.[5]

The government blames most of Zimbabwe’s economic woes on economic sanctions imposed by the United States of America and theEuropean Union.[6] These sanctions affect the government of Zimbabwe,[7] and asset freezes and visa denials targeted at 200 specific Zimbabweans closely tied to the Mugabe regime.[8] There are also restrictions placed on trade with Zimbabwe, by both individual businesses and the USTreasury Department’s Office of Foreign Asset Control.[9]

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ImageONE BEER… YOU WOULD NEED THIS….

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2008 

89,700,000,000,000,000,000,000% INFLATION

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Causes

monetarist view[10] is that a general increase in the prices of things is less a commentary on the worth of those things than on the worth of the money. This has objective and subjective components:

  • Objectively, that the money has no firm basis to give it a value.
  • Subjectively, that the people holding the money lack confidence in its ability to retain its value.

Crucial to both components is discipline over the creation of additional money. However, the Mugabe government was printing money to finance involvement in the Democratic Republic of the Congo and, in 2000, in the Second Congo War, including higher salaries for army and government officials. Zimbabwe was under-reporting its war spending to the International Monetary Fund by perhaps $22 million a month.[11]

Another motive for excessive money creation has been self-dealing. Transparency International ranks Zimbabwe’s government 134th of 176 in terms of institutionalised corruption.[12] The resulting lack of confidence in government undermines confidence in the future and faith in the currency.

Economic mis-steps by government can create shortages and occupy people with workarounds rather than productivity. Though this harms the economy, it does not necessarily undermine the value of the currency, but may harm confidence in the future. Widespread poverty and violence, including government violence to stifle political opposition, also undermines confidence in the future.[13] Land reform lowered agricultural output, especially in tobacco, which accounted for one-third of Zimbabwe’s foreign-exchange earnings. Manufacturing and mining also declined. An objective reason was, again, that farms were put in the hands of inexperienced people; and subjectively, that the move undermined the security of property.

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Government instability and civic unrest were evident in other areas.[14] Zimbabwean troops, trained by North Korean soldiers, conducteda massacre in the 1980s in the southern provinces of Matabeleland and Midlands, though Mugabe’s government cites guerrilla attacks on civilian and state targets. Conflicts between the Ndebele ethnic minority and Mugabe’s majority Shona people have led to many clashes,[15] and there is also unrest between blacks and whites, in which the land reform was a factor. An aspect of this reform that seeks to bar whites from business ownership induced many to leave the country.[16]

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Self-perpetuation

Lack of confidence in government to practice fiscal restraint feeds on itself. In Zimbabwe, neither the issuance of banknotes of higher denominations nor proclamation of new currency regimes led holders of the currency to expect that the new money would be more stable than the old. Remedies announced by the government never included a believable basis for monetary stability.[17][18] Thus, one reason the currency continued to lose value, causing hyperinflation, is that so many people expected it to.[19]

Adaptations

Use of foreign currencies

In 2007, the government declared inflation illegal. Anyone who raised the prices for goods and services was subject to arrest. This amounted to a price freeze, which is usually ineffective in halting inflation.[25] Officials arrested numerous corporate executives for changing their prices.[26]

In December 2008, the Central Bank of Zimbabwe licensed around 1,000 shops to deal in foreign currency.[27][28] Citizens had increasingly been using foreign currency in daily exchanges, as local shops stated fewer prices in Zimbabwe dollars because they needed foreign currency to import foreign goods. Many businesses and street vendors continued to do so without getting the license.[29]

In January 2009, acting Finance Minister Patrick Chinamasa lifted the restriction to use only Zimbabwean dollars. This too acknowledged what many were already doing. Citizens were allowed to use the US dollar, the euro, and the South African rand. However, teachers and civil servants were still being paid in Zimbabwean dollars. Even though their salaries were in the trillions per month, this amounted to around US$1, or half the daily bus fare.[30] The government also used a restriction on bank withdrawals to try to limit the amount of money that was in circulation. It limited cash withdrawals to $Z500,000, which was around US$0.25.[31]

The Black Market

File:ZWDvUSDchart.png

Living with hyperinflation was a challenge for Zimbabweans. Prices in shops and restaurants were still quoted in Zimbabwean dollars, but were adjusted several times a day. Any Zimbabwean dollars acquired needed to be exchanged for foreign currency on the parallel market immediately,[32] or the holder would suffer a significant loss of value. For example, a mini-bus driver charged riders in Zimbabwean dollars, but different rates throughout the day: The evening commute was highest-priced. He sometimes exchanged money three times a day, not in banks but in back office rooms and parking lots.

Such business venues constituted a black market, an arena explicitly outside the law. Transactors could evade the price freezes and the mandate to use Zimbabwean dollars. But black-market transactions are not enforceable under law; moreover, transactors are free to flout any other Zimbabwean law.

The black market served the demand for daily goods such as soap and bread, as grocery stores operating within the law no longer sold items whose prices were strictly controlled, or charged customers more if they were paying in Zimbabwean dollars.[33] At one point, a loaf of bread was $Z550 million in the regular market, when bread was even available; apart from a trip to another country, the black market was the only option for almost all goods, and bread might cost $Z10 billion.[34]

Redenomination

At independence in 1980, the Zimbabwe dollar became the common currency. Originally, the paper notes were Z$20, 10, 5, and 2, and the coins were Z$1, and 50, 20, 10, 5, and 1 cents. As larger bills were needed to pay for menial amounts, the Central Bank of Zimbabwe planned to print and circulate denominations of up to Z$10, 20, 50, and 100 trillion.[35] Announcements of new denominations were increasingly frequent; the Z$200,000,000 bill was announced just days after the printing of the Z$100,000,000 bill.

The government did not attempt to fight inflation with fiscal and monetary policy. In 2006, before hyperinflation reached its peak, the bank announced it would print larger bills to buy foreign currencies. The Reserve Bank printed a Z$21 trillion bill to pay off debts owed to theInternational Monetary Fund.[citation needed]

On three occasions, the Central Bank of Zimbabwe redenominated the currency. First, in August 2006, the Central Bank recalled notes in exchange for new notes with three zeros slashed from the currency.[36] In July 2008, the governor of the Reserve Bank of Zimbabwe,Gideon Gono, announced a new Zimbabwean dollar, this time with 10 zeros removed. The Z$10 billion would be redenominated to be Z$1.[37] This move was not just to slow inflation but also to make computations more manageable.[38]

A third redenomination, producing the “fourth Zimbabwe dollar,” occurred in February 2009, and dropped 12 more zeros from the currency. It was thus worth 10 trillion trillion original dollars, as the three redenominations together reduced the value of an original dollar by 103 * 1010 * 1012 = 1025.

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Solutions

Hyperinflation has been halted within months when government takes the necessary steps. In the meantime, people patronise the black market and informal market for currencies in which they have more confidence.

The most direct solution is a credible promise to stop printing unlimited amounts of money. However, Zimbabwean inflation has lasted for five years[3] and the credibility of any promise is problematic.

Alternatively, the government could declare some foreign currency to be the nation’s official currency. To facilitate commerce, it is less important which currency is adopted than that the government standardise on a single currency. The US dollar, the euro, and the South African rand are candidates; the US dollar has the most credibility and is the most widely traded within Zimbabwe;[39] or Zimbabwe could join the nearby nations of LesothoNamibia, South Africa, and Swaziland, which constitute the Common Monetary Area, or “Rand Zone”[3] by formally deciding to use the rand to promote trade and stability.[40]

Short of abandoning the Zimbabwean dollar, Zimbabwe could enact a strict monetary policy. For example, the government would allow the exchange rate to float for a period of perhaps 30 days, so that the market would decide its true value, then declare a fixed exchange rate with the rand and declare the rand a currency simultaneous with the Zimbabwean dollar. The supply of Zimbabwean dollars would be limited, perhaps by a currency board such as in Hong Kong, which has no other constraint than to maintain the fixed exchange rate.

Currently Zimbabwe uses a combination of foreign currencies, but mostly US dollars. A solution has not been decided on as of 2012, and the economy is still in a slump.[39]

SOURCE

VIDEOS


Are you Traders prepared? Currency Wars Simulation Video

Are you Traders prepared? Currency Wars Simulation Video
Fantastic Video from the epic book from Jim Rickards


Historic Bubbles – Railway Mania (1840’s)

Historic Bubbles – Railway Mania (1840’s)

The Railway Mania was an instance of speculative frenzy in Britain in the 1840s. It followed a common pattern: as the price of railway shares increased, more and more money was poured in by speculators, until the inevitable collapse. It reached its zenith in 1846, when no fewer than 272 Acts of Parliament were passed, setting up new railway companies, and the proposed routes totalled 9,500 miles (15,300 km) of new railway. Around a third of the railways authorised were never built – the company either collapsed due to poor financial planning, was bought out by a larger competitor before it could build its line, or turned out to be a fraudulent enterprise to channel investors’ money into another business.

Causes

Britain’s (and the world’s) first recognisably modern inter-city railway, the Liverpool and Manchesteropened in 1830 and proved to be highly successful for transporting both passengers and freight. However, the late 1830s and early 1840s saw the British economy slow down. Interest rates rose, making it more attractive to invest money in government bonds – the main source of investment at the time, and political and social unrest deterred banks and businesses from investing the huge sums of money required to build railways (the L&M cost £637,000 (£52,680,000 as of 2012),[1])

However, by the mid-1840s the economy was improving vastly and the manufacturing industries were once again growing. The Bank of England cut interest rates, making government bonds less attractive investments, and existing railway companies’ shares began to boom as they moved ever-increasing amounts of cargo and people, making people willing to invest in new railways.

Crucially, there were more investors in British business. The Industrial Revolution was creating a new, increasingly affluent middle class. While earlier business ventures had relied on a small number of banks, businessmen and wealthy aristocrats for investment, a prospective railway company had (on top of these sources) a large, literate section of population with savings to invest. In 1825 the government had repealed the Bubble Act, brought in after the near-disastrous South Sea Bubble of 1720 which put close limits on the formation of new business ventures and, importantly, had limited joint stock companies to a maximum of five separate investors. With these limits removed anyone could invest money (and hopefully earn a return) on a new company and railways were heavily promoted as a foolproof venture. New media such as newspapers and the emergence of the modern stock marketmade it easy for companies to promote themselves and provide the means for the general public to invest. Shares could be purchased for a 10% deposit with the railway company holding the right to call in the remainder at any time. The railways were so heavily promoted as a foolproof venture that thousands of investors on modest incomes bought large numbers of shares whilst only being able to afford the deposit. Many families invested their entire savings in prospective railway companies – and many of those lost everything when the bubble collapsed and the companies called in the remainder of their due payments.

The British government promoted an almost totally ‘laissez-faire‘ system of non-regulation in the railways. Companies had to submit a Bill to Parliament to gain the right to acquire land for the line, which required the route of the proposed railway to be approved, but there were no limits on the number of companies and no real checks on the financial viability of a line. Anyone could form a company, gain investment and submit a Bill to Parliament. Since many MPs were heavy investors in such schemes, it was rare for a Bill to not pass during the peak of the Mania in 1846, although Parliament did reject schemes that were blatantly misleading or impossible to construct – at the Mania’s peak there were several schemes floated for ‘direct’ railways which ran in vast, straight lines across swathes of countryside that would have been difficult to construct and nearly impossible for the locomotives of the day to work on.

Magnates like George Hudson developed routes in the North and Midlands by amalgamating small railway companies and rationalising routes. He was also an MP, but ultimately failed owing to his fraudulent practices of, for example, paying dividends from capital.

The end of the Mania

As with other bubbles, the Railway Mania became a self-promoting cycle based purely on over-optimistic speculation. As the dozens of companies formed began to operate and the simple unviability of many of them became clear, investors began to realise that railways were not all as lucrative and as easy to build as they had been led to believe. Coupled to this, in late 1845 the Bank of England put up interest rates. As banks began to re-invest in bonds, the money began to flow out of railways, under-cutting the boom. The share prices of railways slowed in their rise, then levelled out. As they began to fall, investment stopped virtually overnight, leaving numerous companies without funding and numerous investors with no prospect of any return on their investment. The larger railway companies such as the Great Western Railway and the nascent Midland began to buy up strategic failed lines to expand their network. These lines could be purchased at a fraction of their real value as given a choice between a below-value offer for their shares or the total loss of their investment, shareholders naturally chose the former.

Many middle class families on modest (but comfortable) incomes had sunk their entire savings into new companies during the Mania, and lost everything when the speculation collapsed.

The Role of Media 

The boom-and-bust cycle of early-industrial Britain was still in effect, and the boom that had created the conditions for Railway Mania began to cool and then a decline set in. The number of new railway companies fell away to almost nothing in the late 1840s and early 1850s, with the only new lines constructed being by the large companies. Economic upturns in the 1850s and 1860s saw smaller booms in railway construction, but these never reached anywhere near the scale of the Mania – partly due to more thoughtful (if still very limited) government control, partly due to more cautious investors and partly because the UK railway network was approaching maturity, with none of the ‘blank canvas’ available to numerous companies as in the 1840s.

Results

Unlike some stock market bubbles, however, there was actually a net tangible result from all the investment: a vast expansion of the British railway system, though perhaps at an inflated cost. Amongst the high number of impractical, overambitious and downright fraudulent schemes promoted during the Mania were a good number of practical trunk routes (most notably the initial part of the Great Northern Railway and the trans-Pennine Woodhead route) and important freight lines (such as large parts of what would become the North Eastern Railway). These projects all required vast amounts of capital all of which had to be raised from private enterprise. The speculative frenzy of the Mania made people much more willing to invest the large sums required for railway construction than they had been previously or would be in later years. Even many of the routes that failed when the Mania collapsed became viable (if not lucrative) when in the hands of the larger company that had purchased it. A total of 6,220 miles (10,010 km) of railway line were built as a result of projects authorised between 1844 and 1846 – by comparison, the total route mileage of the modern UK railway network is around 11,000 miles (18,000 km).

Comparisons

Railway and Canal Mania can be compared with a similar mania in the 1990s in the stock of telecom companies. The telecom mania resulted in the installation and deployment of a vast amount of fibre-optic telecommunications infrastructure, ironically spurred on from the realisation that the same railway rights-of-way could make affordable conduits for fibre optics. Yet another boom occurred in the period 1995-2000, during the development of the Internet, when many companies were established to promote new services on the growing network. The dotcom bubble soon collapsed, although some companies such as Google grew and prospered.

SOURCE:http://en.wikipedia.org/wiki/Railway_Mania

 

To analyse the dynamics of the Railway Mania, I have constructed a unique dataset consisting of daily share prices for all 863 railway equity securities listed on the London Stock Exchange between 1843 and 1850, and weekly share price data for the twenty largest non-railway companies. This data has been used to construct several market indices that are illustrated in Figure 1.

Figure 1. Market indices for all railways, established railways and non-railways, 1843-50

SOURCE:http://www.voxeu.eu/article/railway-mania-not-so-great-expectations


Historic Bubbles- Tipper and See-Saw Time – 1621

Historic Bubbles – Tipper and See-Saw Time 1621

Tipper and See-Saw Time (GermanKipper- und Wipperzeit) is name given to a financial crisis during the start of the Thirty Years’ War (1618–48).[1]Starting around 1621, city-states in the Holy Roman Empire began to heavily debase currency in order to raise revenue for the Thirty Years’ War, as effective taxation did not exist.

The name refers to the use of tipping scales to identify not-yet-debased coins, which were then taken out of circulation, melted, mixed with baser metals such as lead, copper or tin, and re-issued. Often the states did not debase their own currency, but instead manufactured low-value imitations of coins from other territories and then spent them in yet other territories as far as possible from their own lands, hoping that the resulting damage would then occur to the economy of those other regions rather than their own. This worked for a while; but after a time, the general public caught on to the manipulation, resulting in pamphlets denouncing the practice, local riots and the refusal of soldiers and mercenaries to fight unless paid in “real”, non-debased money. Also the states began to get back their own debased coins in taxes and customs fees. Due to these problems the practice largely stopped around 1623, however, the damage done was so large that it created financial disarray in almost all the city-states in the area. The same thing re-occurred on a smaller scale near the end of the century and again during the middle of the 18th century, however,

The debasement spread from Germany to AustriaHungaryBohemia, and Poland.

What is interesting about this financial crisis is that specie (metal coin) was debased, not paper money. In contrast, the “Tulip Mania” of 1636–37 related to speculation in the value of tulip bulbs.

More and more mints were established until the debased metal coins were so worthless that children played with them in the street, which became the basis for the short story by Leo Tolstoy “Ivan the Fool“.

SOURCE: http://en.wikipedia.org/wiki/Tipper_and_See-Saw_Time

Leo Tolstoy “Ivan the Fool” Video Book