Re: The fiat-money bubble!

Right now it is (for the most part, at least)

Bitcoin and other cryptocurrencies fit well into the definition of a financial bubble. I could even claim that Bitcoin is a sort of tulipomania. Just like tulips, bitcoins are useful for some purpose, namely, for transferring value around the world while completely bypassing centralized (real controlled) entities like banks, but Bitcoin current price is by no means determined by this utility. Most of Bitcoin value today comes from sheer speculation. Whether Bitcoin bubble is going to pop eventually or its real use as a currency will finally match its use as a speculative vehicle is not clear as of yet

Good answer, always fun to hear others opinion. =)
I agree with you, bitcoin does fit well in the definition of a bubble as it is completly speculative. But what about fiat money? We have seen again and again trough history how fiat money has just blew up in a bubble, happend with the german mark after world war 2 and then the zimbabwean dollar. Does this not show that fiat moneys value also comes trough speculation? the only diffrence being that it can much more easily be controlled, manipulated and abused to hurt individuals, while cryptocurrencies also are speculative in there value, it does have the security fiat-money does not against corruption and protecting the individual

I think that no, the fiat money value doesn't come about via speculation

But I'm still curious how you can even imagine that. It is more or less clear how people speculate with bitcoins (basically, "buy low, sell high"). It is possible as long as Bitcoin price is rising, i.e. new users constantly bringing their hard-earned dollars, euro, or whatever to the market and buy bitcoins in the hope of selling them at a higher price. I suspect there cannot be bubbles of that kind with fiat currencies. The examples you give refer to severe currency devaluations. Obviously, the latter have nothing to do with speculative bubbles, though the end result is essentially the same (i.e. dramatic loss of value)

Well you are assuming two things here and i will try to give you my opinion. Let me try and explain why i can imagine fiat money being a speculative bubble, english is second language so give me a break on the spelling. =)

Your first assumption that fiat money value is not a result of market speculation, could you elaborate what you believe are the true factors for a currencies value? You seem like you now your economics and i am always eager to hear everyone opinion

Sorry, I didn't read the rest of your post

And I hope that someone did that (instead of me) so your efforts haven't been spent in vain (though I may still read it later). Regarding this question, specifically, I already answered it before, and I think that the answer can be reduced to how value of a currency is determined as such. In fact, it is determined arbitrarily when the currency is first bootstrapped. To make it handy and usable, its basic units as well as the number of these units in total are chosen in such a way that the lowest possible denomination (say, halfpenny or cent) would be enough to buy an item which has the lowest possible value. A box of matches is often used as such an item. After bootstrapping the currency, the long term value of its unit (i.e. how much you can buy with, say, 1 dollar) basically depends on the relationship between total amount of that currency in circulation and the quantity of goods produced as well as the amount of services provided

Well it's to bad you didn't read it you could have learned someting, it isnt that long

like Germany and Zimbawe never had a devaluation, but hyperinflation, kind of important fact you got wrong and you can always learn something!

Could you please give me your sources that show that goods and money circulation have been the deciding factor for currency value? I have to say that i am almost daily discussing currency moves with banks and hedge funds, and i have never acctually talked to someone that believes these factors truly determine currency value in the practical world, perhaps it works in theory but i am speaking of what ACCTUALLY happends with the value, not what should happend.
I have tough read quite a few that prove them wrong, i would recommend Engels research work, ill return with the exact papers and provide you my sources that i base my opinion on, mostly swedish unfortuntly but for now i'll just show the english one's..

If currency value truly is free of speculative impact, this correlation you describe should be relatively easy to prove with a econometric model as goods, services and money supply are pretty easily followed(GDP etc). If this were the case, predicting the forex market would be quite easy.

I am always open to learning and can easily accept when i am wrong, but i need more proof then you just saying it like a fact and not a opinion as i have read very much on the disappoving of currency value being solely effected by goods, services and money supply.

I also recommend you read what i wrote earlier, no point discussing if you wont even read the discussion, and please dont forget to supply your sources, thanks m8! =)

My sources i recommend you check out. I have more i just plucked the most recent ones i read that speak against your theory of money supply, goods and services.

Jean-Philippe Cayen, Donald Coletti, René Lalonde, Philipp Maier What Drives Exchange Rates? New Evidence from a Panel of U.S. Dollar Bilateral Exchange Rates, June 9, 2009

Jeannine Bailliu,Michael R. King What Drives Movements in Exchange Rates?, 2005

David Hauner, Jaewoo Lee, and Hajime Takizawa, IMF Working Paper: In Which Exchange Rate Models Do Forecasters Trust?, 2011

Neroli Austin and Geordie Reid, RBNZ: NZSIM, A model of the New Zealand economyfor forecasting and policy analysis, 2017