Whats everyone's prediction on a second market crash/dip?

I don’t imagine a big second crash will occur, but I do expect a dip come the second wave and as the furlough scheme ends. I expect what we’re riding currently is somewhat temporary.

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As I’ve said above it does have intrinsic value because it is supported by government tax revenue. Owning a US dollar or US government debt is the equivalent of owning a claim on future tax revenue. The problem comes when the amount of debt or the value of a currency is not supported by the value of the claims which support it (i.e. future tax revenue). If these claims seem unlikely to support the currency then it will fall in value.

Bitcoin does not serve the main function of a currency and that is paying tax. If I hold US dollars and owe US dollars in tax then I know they will most likely be worth the same (in nominal terms) at the end of the year and so can meet any claims upon me. With Bitcoin you can’t be certain it will be worth the same (in nominal terms) tomorrow let alone when you come to pay taxes (which can’t be paid in Bitcoin anyway and so you incur extra fees to exchange).

There are plenty of books on the relationship between national debt, currencies and inflation. Martin Slater has written a very good one on the history of UK debt.

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It’s impossible to know what anything will be worth in the future or else we would all be millionaires.

All we can do is speculate.

I’m bullish on the thought that the gold standard will return.

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Again if you read any half decent economic history book you can unpick the issues around a gold standard. Lack of surplus recycling, inability for central banks to provide liquidity alongside a natural tendency towards deflation seems to me a poor solution for our current woes.

Potentially a global currency unit backed by a basket of SDR currencies might work but again it would have to be reactionary not inflexible like previous standards.

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More good technical analysis here. He make the point in this video that it’s not a prediction of the future it’s analysis of how traders behaved in the past. That the thing that most people don’t get about TA

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Deflation should not be feared !

Those that fear it are almost always over leveraged and own things that they actually cannot afford - in short the world is bankrupt anyway!

The gap between rich and poor would be reduced.

The system we have at the moment is no better than a pyramid Ponzi scheme.

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I tend to disagree with your statement that they have no inherent value, but understandable given if you’re not very much into the economics or technicalities of them.

The time/energy/money it takes to generate them has value, and it is inherently build into most cryptocurrencies this way, may it be through mining or staking. Just as you cannot have gold or silver without effort, so you cannot have these stores of value without it. Adding that most of these are finite in amout (and provably so), you have indeed a tool that could be compared to a safe haven asset.

Granted, we’re still a long way from getting past the volatile nature of the entire industry, and it still is very much like a wild west out there, as nobody knows exactly how much anything is worth, but that is not different from the exploration of how much a stock is really worth (hello Tesla). It doesn’t seem much different to me from the current stock-market situation, which is also wildly volatile and will probably be so in the coming months.

What does certainly not have any intrinisic value is the paper money of today, there I hope we can all agree upon. We don’t know how much the dollar will be worth tomorrow, and seeing the unrest and the stimulus packages given, it is similar to creating millions of bitcoins, but this will never happen, due to cryptographical security and mathematical certainty.

Any fiat curreny will have value until the government starts struggling, as can be seen in many countries where inflation has taken over. To belief that any major first world country is safe from this, given the current times, simply because it’s backed by government, is just as speculative as saying that crypto is not a safe hedge.

I think we all have to understand here that we cannot count on empirical and historical data anymore, as we are living in an age that is decoupled from historical events, as we have new tools and processes in place never seen or heard of before. We shouldn’t be foolish and hold on to outdated concepts simply for the sake of it. If, after careful evaluation, we deem something to be sub-par to a new concept, we should all adapt to the new concept, as painful as it might be for some people.

If we wouldn’t follow this process, we would still be in the stone age today.

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I disagree that because something takes effort to produce it has an inherent value. The value comes from supply and demand. The energy used is irrelevant. I can use up mega joules of energy digging dirt out of the ground, but that doesn’t make the dirt valuable because there isn’t the demand for it.

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First of all I just want to say it is replies like this which explain why I enjoy being a part of this community.

Economically just because money/time/energy has been spent to produce something does not mean it has any inherent value. Inherent value comes form the very properties of the good itself and so these expenditures should normally be considered investments which, in this case, are sunk costs. The value of gold and silver does not come from the time/energy/money that was needed to produce them but rather the inherent properties of the goods themselves. Your point is backwards. The inherent value of these metals are the reason people will invest to dig them out of the ground. The price of Bitcoin is also what encourages people to speculate and mine more. Your arguments seems to be a confusing amalgamation of the microeconomics of production alongside the value of goods theory.

The volatility of the stock market cannot be compared to Bitcoin, the data does not support this. For example, there is no realistic scenario where the VWRL ETF would ever reach a value of 0 whereas with Bitcoin this could very reasonably happen. The intraday moves are also not comparable with Bitcoin producing a far more volatile and disperse set of data points than global stock markets.

I think people confuse this idea of paper money having no intrinsic value with a national currency having no intrinsic value. A paper (often now plastic) banknote is worth next to nothing and has no intrinsic value I agree. However, a national currency does. This is because holding this currency grants you access to the interest rate it is possible to earn on said currency (unlike Bitcoin where there is none and you are relying on the currency inflating above inflation for it to hold its value). Money has not been ‘created’ as people claim. Yes digitally money has appeared in bank accounts but it is backed now by assets (for example government bonds) and so the balance sheets of central banks, whilst inflated, are balanced. Granted this is on the proviso that you believe a national government is capable of paying back vast sums of debt but we have seen this happen 2-3 times in the case of the UK so again we have data to support this.

People talk about inflation like it is a problem. Run away inflation is an issue but reasonable levels of inflation are crucial to the erosion of debt. How on earth do you think the US bankrolled the whole Second World War and then managed to pay the debt back? It was by allowing nominal GBP growth (growth + inflation) to erode the debt away. Besides, the ability for a government to default, a currency to collapse etc. are all normal and should not be seen as a failure but as a correction.

I completely disagree with your point on history. I believe it is an extremely foolish person who disregards what history has to say. The big push with the fall of the USSR was that history was over. However he we are three decades later on the verge of a new Cold War, suffering a global pandemic and possible Global Depression. History does not repeat itself but it does rhyme.

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That’s what I was trying to say, but you put it far more eloquently :+1:

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Sorry I meant to add your point in, it’s exactly the main problem with the argument about value.

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A well thought out argument however…

…Separating national currency from bitcoin on the ability to earn interest on national currencies but not bitcoin is a false premise. BTC has evolved over the years to function more like a fiat currency in lots of ways. It is possible to earn interest on BTC, so does it now have value?

Great write up but what happens when people stop buying the bonds - that’s the real issue here - it’s a Ponzi scheme!

Inflation erodes the debt correct … but inflation can only happen if peoples wages go up aswell - Inflation - commonly described as too much money chasing too few goods.

The government has desperately tried to create inflation - the money goes to the wrong places companies buying back overvalued shares and pffft the moneys gone.

I think you’ll find the choice we have today in respect of EVERYTHING is huge - and so the opposite is in fact true we are heading for deflation and that scares the pants off the gov because so many companies will go bankrupt and perhaps indeed themselves.

Gold standard with a certain % is the only way to stabilise our economies and safeguard our children’s children’s future.

In the case this doesn’t happen kick the can down the road for the next generation to sort out.

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I predict that Freetrade should add a sizeable amount of sector etf’s so that users can actually benefit from events like this. 9/10 times I logged in to invest during this crash, the stock or etf was not available here. Yet when using an isa it’s like… well… one per tax year…

I can only imagine how much more pleased I would be if FreeTrade had etf’s on:

• semiconductors
• cyber security
• healthcare

… … … …

Reluctantly I have come to the conclusion that a legacy broker would have benefitted myself 10 fold during this crash and all the fees would have been worth it because they had the etf’s and stocks to actually purchase at ridiculously low valuations at the time.

Lots & lots of catching up to do FreeTrade.

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How does moving to a gold standard help with any of the major issues we are facing today?

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Yes but, and please correct me if I’m wrong, that interest comes from directly lending and shorting crypto currencies correct? In which case it is not really comparable as the risks are huge and, as with all shorts, potentially unlimited.

Because the amount of money in circulation today would be backed in terms of a nominated % by a real thing such as gold - so therefore any money that is created would FIRST have to be backed by physical gold.

Yes this would stifle the SPEED of growth but what an earth do we need growth for- only for our own greedy need and so as the government can pay off its debts in preparation to release MORE money - it’s a classic classic Ponzi !!!

Governments would not be able to make FAKE promises knowing that they can just print more money because in order to print more money they would first of had to physically repaid the last debt in order for more debt to be created.

YES they could manipulate the gold price to suit their agendas BUT the point is there is only so much of the stuff knocking about so they would have to be more CAREFUL with how they behave! And not just print loads of money to cover up their own losses.

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What happens if Greatland Gold find so much gold it doubles the supply of the globe?

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If we had a gold standard then that would be great for governments.

I get the point you are making but there really is only so much gold in the world - unless you can create more world.

Okay so say we have a government who backs their currency with 40% gold. What happens when people get scared, as we tend to do, and people attempt to convert 41% of the money into gold?

Oh wait… we’ve seen this before haven’t we. Then the governments either devalue their currency or cease the convertibility. This causes panic and then the economy begins to collapse.

I’m all for a new system but we moved away from the old one for a reason.

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