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Dogecoin's inventor looks to the past for insight into the future

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Re: Dogecoin's inventor looks to the past for insight into the future

#241

Post by peterjlee »

openasocket wrote: post #229
peterjlee wrote: post #214

Earlier quoted context omitted.

Isn't it already a common knowledge when someone says "the Fed prints money", they're flipping digits in their computers and not actually printing paper bills? The Fed doesn't print the paper bills anyways. The Treasury does it.

But the point is that they could still do this with bitcoin. Even if they don't have the ability to create a bunch of bitcoins out of thin air, they do have the ability to credit their accounts. As you said, "So that's how the bitcoin came about to make a currency where there are no central governing body that can just print more whenever it wants," but the bailouts absolutely could still occur, because you don't hav…

What do you mean by "they do have the ability to credit their accounts"? So the Fed will print more dollars and buy bitcoin? The total number of Bitcoin still doesn't change and it will raise the value of Bitcoin while devaluing dollars. The bailouts can still occur but it will occur in dollars since that's the only currency the Fed can print. If the Fed prints more dollars, it will devalue the dollar and everyone who holds dollar will have less purchasing power while if you had Bitcoin (or gold or any other currency), you're purchasing power won't be affected.

Re: Dogecoin's inventor looks to the past for insight into the future

#242

Post by dragonwriter »

peterjlee wrote: post #113
meri_dian wrote: post #2

>"To deliver a peer-to-peer alternative to cash that, through decentralization, did away with the need for trust in financial institutions, which the 2008 crisis showed to be unscrupulous, and often corrupt." The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency. Decentralization would not do away with the need for financial institutions (or the…

It wasn't "The sort of activity which led to the financial crisis" that inspired bitcoin. After the crisis happened the US government funded the massive bailout by printing more money. It turned out to be a "good" decision since it prevented a catastrophic economic failure but it did cause more inflation and some people weren't happy that a government can just print more money on a whim. So that's how the bitcoin cam…

> After the crisis happened the US government funded the massive bailout by printing more money. It turned out to be a "good" decision since it prevented a catastrophic economic failure but it did cause more inflation

Inflation was near zero for the whole time.

Also, Bitcoin was released in January 2009, before anything but the very earliest trivial reactions to the collapse, it absolutely was not inspired by the much later criticisms of the reactions that largely hadn't yet occurred when it was released, no matter how amusing your theory is that the motivation for Bitcoin was literally people pissed off that an entity existed which had power to act to prevent a catastrophic economic collapse.

Re: Dogecoin's inventor looks to the past for insight into the future

#243

Post by wellboy »

ummjackson wrote: post #4
meri_dian wrote: post #2

>"To deliver a peer-to-peer alternative to cash that, through decentralization, did away with the need for trust in financial institutions, which the 2008 crisis showed to be unscrupulous, and often corrupt." The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency. Decentralization would not do away with the need for financial institutions (or the…

(author here) I agree! I was calling out Bitcoin's initial goals in the article but don't 100% align with them myself. Financial institutions came to exist for a reason and I'm really not on board with everyone "being their own bank" as I feel it'd be a step backwards from what we have today. What I do agree with is the need for more audit-able, accountable systems so the institutions we trust are less susceptible to…

Also in yhe case of the dozens of countries with incredible inflation, Venezuela, African countries?

Re: Dogecoin's inventor looks to the past for insight into the future

#244

Post by cornyNetHandle »

chrisco255 wrote: post #209
cornyNetHandle wrote: post #183

Earlier quoted context omitted.

Satoshi worked online with a group of developers for more than a year while keeping perfect operational security. Developed a solution to the byzantine generals problem, but has no published maths papers, otherwise something would have come up through text analysis. Designed bitcoin as a financial instrument, indicating inside knowledge of the banking industry. Has mined enough bitcoin to be on the list of the world'…

What incentives would a government have to undermine their own monetary system?

Governments undermining their own monetary systems is hardly novel, both for stupid reasons and occasionally for clever ones. Governments often implement new economic systems or currencies, with fairly mixed results.

Re: Dogecoin's inventor looks to the past for insight into the future

#245

Post by jhwang5 »

trevelyan wrote: post #240
jhwang5 wrote: post #220

Earlier quoted context omitted.

See, every CDO trader already knew where things were trading, and could already derive all implied default rates already. Information dissemination / transparency wasn't the issue. It was people's wrong model assumptions that were the issue...

The problem with this is that overall losses were nowhere near 65 cents on the dollar -- only 20 percent of US mortgages were subprime at the peak of the GFC. If the market was rational and had full insight into the performance of its securities, losses would have been no more than 20-35 cents on the dollar. That is enough to cause a major crisis, but it wouldn't trigger the paralysis of the global financial system.

So now you are shifting the argument to a market information problem to a market irrationality problem. Typical.

Re: Dogecoin's inventor looks to the past for insight into the future

#246

Post by cornyNetHandle »

Demiurge wrote: post #238
Certhas wrote: post #121

Earlier quoted context omitted.

It should be a bonanza for them. Unregulated market. Every trade/contract they want.

I don't think anyone wants unregulated markets for everyone, just like no one really wants anarchy. There are criminal, or rebellious elements in every group, but co-beneficial arbitrage is what we've evolved to.

Do you mean anomie? I know a few Kropotkin fans who are fairly certain that they want anarchy.

Re: Dogecoin's inventor looks to the past for insight into the future

#247

Post by erispoe »

UncleEntity wrote: post #138
erispoe wrote: post #104

Earlier quoted context omitted.

In modern systems money can be created by banks lending money. That's an interesting property as money creation is tied to the course of the economy. However, this can lead to inflation if the amount of money created actually exceeds the growth in economic activity. In the gold standard model where the amount of money is completely uncorrelated with economic activity, you have inherent deflation. Deflation is a serio…

> Deflation is a serious threat, as it pushed people to hold onto their currency (as the real value automatically rises) instead of spending or investing it. Why would people not invest (or spend for that matter)? It's not like people wouldn't take deflation into account the same way they do with inflation today. If you loan out a dollar today and at the end of the loan its worth $1.03 then you simply adjust the inte…

Lending dynamics are different in a gold standard economy, with a fixed amount of currency, because banks do not have leverage on lending.

Today, banks need only have ~10% of the money they lend in deposits. The rest is new money. With a fixed money supply, banks can't do that. You divide by 10 the amount of money available to lend. In a gold standard economy, money supply available for financing is much, much more restricted.

The modern economy is a constant bet on future economic growth. Failed bets translate into inflation on a macro-scale, and painful leveraged losses for banks on a micro-scale. With fixed money supply, you cannot bet at all and potential growth is, by definition, much slower.

Re: Dogecoin's inventor looks to the past for insight into the future

#248

Post by ric2b »

meri_dian wrote: post #16
ummjackson wrote: post #4

Earlier quoted context omitted.

(author here) I agree! I was calling out Bitcoin's initial goals in the article but don't 100% align with them myself. Financial institutions came to exist for a reason and I'm really not on board with everyone "being their own bank" as I feel it'd be a step backwards from what we have today. What I do agree with is the need for more audit-able, accountable systems so the institutions we trust are less susceptible to…

Hey! I definitely agree that accountability is important. How do we improve accountability though? I'm skeptical about bitcoin or any other cryptocurrency doing so. From what I know about the financial crisis, it wasn't the nature of fiat currencies that led to the crisis, but rather the complexity of financial instruments obscuring the weakness of underlying mortgage assets combined with incentives driving industry…

> From what I know about the financial crisis, it wasn't the nature of fiat currencies that led to the crisis, but rather the complexity of financial instruments obscuring the weakness of underlying mortgage assets combined with incentives driving industry players that turned out to be toxic in the long term.

Bitcoin wouldn't prevent the mortgage fraud, it would prevent the immoral bailouts that happened after that and that told the industry "don't worry, you're too big to fail, feel free to try harder next time".

Re: Dogecoin's inventor looks to the past for insight into the future

#249

Post by ric2b »

trevelyan wrote: post #81
meri_dian wrote: post #2

>"To deliver a peer-to-peer alternative to cash that, through decentralization, did away with the need for trust in financial institutions, which the 2008 crisis showed to be unscrupulous, and often corrupt." The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency. Decentralization would not do away with the need for financial institutions (or the…

> The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency. It actually would deal with the issue that led to the GFC. Remember --- the problem wasn't that there were fraudulent mortgages -- it is that these mortgages were packaged and repackaged in ways that deliberately obscured the risk involved so that people were buying stuff that had no under…

Bitcoin wouldn't prevent the GFC, it would prevent the immoral bailouts that happened after that and that told the industry "don't worry, you're too big to fail, feel free to try harder next time".

Re: Dogecoin's inventor looks to the past for insight into the future

#250

Post by ric2b »

Certhas wrote: post #114
trevelyan wrote: post #81

Earlier quoted context omitted.

> The sort of activity which led to the financial crisis would not be mitigated by the establishment of a decentralized currency. It actually would deal with the issue that led to the GFC. Remember --- the problem wasn't that there were fraudulent mortgages -- it is that these mortgages were packaged and repackaged in ways that deliberately obscured the risk involved so that people were buying stuff that had no under…

This seems to me to be naive at best. Risks were obscured due to the mathematical structure of CDOs, not by hiding money transactions. You could spend all day real time looking at the fact that few of the mortgages in your CDO are failing, and then when they fail systemically, you could watch in real time that a lot of assets that were thought to be pretty robust are not. Your argument seems to be simply that radical…

Bitcoin would prevent the immoral bailouts that happened after the burst and that told the industry "don't worry, you're too big to fail, feel free to try harder next time".
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