Krugman on BitCoin • Hacker News Board

Re: Krugman on BitCoin

#31

Post by danenania » Wed, Sep 07, 2011, 3:50 PM UTC

FrojoS wrote: post #21

danenania wrote: post #13

He's just begging the question. That a fixed currency supply creates deflation is not a new insight. The idea that this causes 'hoarding' is highly questionable. Prices in consumer electronics fall significantly every year. Does this cause people to hold onto their money instead of buying computers, tvs, and iphones? Of course not. Why would other types of goods be any different? People still need what they need and…

I don't agree. The falling prices are holing me and many other frugale people back from buying electronics frequently. The reason people buy new electronics so often, is because there is so much improvement and innovation.

So you'd buy more electronics if the prices went up every year?

Re: Krugman on BitCoin

#32

Post by kokey » Wed, Sep 07, 2011, 3:51 PM UTC

I don't get the problem with hoarding. Most people don't hoard gold, property or tech stocks during times when the price looks like it's increasing constantly. There is a point where it makes sense to sell some after it has made some gains. In reality, unless buyers make a massive mistake in the valuation of BitCoins, the current gains in BitCoins value should taper off at some point.

Re: Krugman on BitCoin

#33

Post by snorkel » Wed, Sep 07, 2011, 3:54 PM UTC

"What we want from a monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. And that’s not at all what is happening in Bitcoin."

Spot friggin' on, Mr. Krugman. Bitcoin's supply limiting design has added a psychological dimension that encourages collecting. Perhaps when Bitcoin reaches supply maturity the value will stabilize but for now its value just too unstable to be used as a currency.

Re: Krugman on BitCoin

#34

Post by St-Clock » Wed, Sep 07, 2011, 3:55 PM UTC

gwright wrote: post #25

dasil003 wrote: post #6

Earlier quoted context omitted.

Uh, where are the BTC prices on that site? If you want to come across as anything other than a froth-mouthed crackpot hurling ad-hominems at a respected economist, you need to offer up some actual data. Granted, Krugman didn't either, but he's got a reputation to fall back on, you've got nothing.

I'm not sure Krugman's reputation is as reputable as you suggest. Some might even call him a "froth-mouthed crackpot hurling ad-hominems". Not me of course, I wouldn't want to hurl ad-hominems in place of a real argument. Better to appeal to authority.

> I'm not sure Krugman's reputation is as reputable as you suggest

I know that winning the Nobel Prize is not the end of the world and that there are often political motives behind these prizes (Obama anyone?), but between believing a guy who won a Nobel Prize in economics vs. believing a random guy on HN with no real argument, the choice is easy (to me at least).

To the best of my knowledge, Krugman rarely (if ever) hurls ad-hominems: he always tries to explain why he strongly disagrees with conservatives, tea party, or Obama. The adjective he uses for them almost always fit his explanations.

Re: Krugman on BitCoin

#35

Post by daedhel » Wed, Sep 07, 2011, 3:55 PM UTC

pnathan wrote: post #27

One thing that might be interesting to consider is wealth distribution over population growth. Thought experiment: Say our money supply is fixed (10 million dollars), and there are 1 million people in our economy. Everyone averages out to holding about 10 dollars. Everyone goes on a massive baby-making spree, and in 10 years, there are still 10 million dollars, but 2 million people in the economy. Average wealth is $…

But the absolute variation of the value the 5$ represent is based on systems that can't exist with a limited total amount of money.

What will hapen is that if the population doubles, then the 5$ will also double. Laws of demand and supply.

Re: Krugman on BitCoin

#36

Post by trevelyan » Wed, Sep 07, 2011, 3:55 PM UTC

dasil003 wrote: post #6

userulluipeste wrote: post #4

Had read it. It's not serious at all. The arguments there are out of touch with reality. For example: "What that means is that if you measure prices in Bitcoins, they have plunged; the Bitcoin economy has in effect experienced massive deflation." For this argument alone, one may look at https://www.bitcoinmarket.com and see exactly what kind of person Krugman is.

Uh, where are the BTC prices on that site? If you want to come across as anything other than a froth-mouthed crackpot hurling ad-hominems at a respected economist, you need to offer up some actual data. Granted, Krugman didn't either, but he's got a reputation to fall back on, you've got nothing.

The title is a reference to the book "Golden Fetters" by Barry Eichengreen which discusses the role the gold standard played in transmitting deflation during the Great Depression. Krugman isn't citing statistics because Eichengreen does the heavy lifting here. He's just reminding people that libertarians who attack the Fed because they want a new gold standard are basically crazy.

I agree with his assessment (bitcoin would be a disaster as a national currency), but don't think this is a problem since it is valuable as an asset store and transfer mechanism, and seems to be holding value.

Re: Krugman on BitCoin

#37

Post by jotto » Wed, Sep 07, 2011, 3:56 PM UTC

pnathan wrote: post #27

One thing that might be interesting to consider is wealth distribution over population growth. Thought experiment: Say our money supply is fixed (10 million dollars), and there are 1 million people in our economy. Everyone averages out to holding about 10 dollars. Everyone goes on a massive baby-making spree, and in 10 years, there are still 10 million dollars, but 2 million people in the economy. Average wealth is $…

in your thought experiment, the buying power of a unit of currency would go up so the prices would go down. a big reason for a non-fixed money supply is so the government has the ability to change the money supply to maximize employment

Re: Krugman on BitCoin

#38

Post by Duff » Wed, Sep 07, 2011, 3:57 PM UTC

endersshadow wrote: post #3

wgx wrote: post #2

tl;dr: The soaring value of bitcoin forces those holding currency to hoard it. The Bitcoin economy has, in effect, experienced massive deflation.

He also touches on a great point: What we want from a monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. This is where I think Bitcoin fails as a currency. While some people invest in currencies, the point of currencies is to allow goods and services to flow through the economy. Currency is and should not be primarily an investment vehi…

Exactly. Bitcoin is a commodity, not a currency.

Re: Krugman on BitCoin

#39

Post by RyanMcGreal » Wed, Sep 07, 2011, 3:58 PM UTC

gwright wrote: post #25

dasil003 wrote: post #6

Earlier quoted context omitted.

Uh, where are the BTC prices on that site? If you want to come across as anything other than a froth-mouthed crackpot hurling ad-hominems at a respected economist, you need to offer up some actual data. Granted, Krugman didn't either, but he's got a reputation to fall back on, you've got nothing.

I'm not sure Krugman's reputation is as reputable as you suggest. Some might even call him a "froth-mouthed crackpot hurling ad-hominems". Not me of course, I wouldn't want to hurl ad-hominems in place of a real argument. Better to appeal to authority.

I think David Frum put it best [1]:

> Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis?

[1] http://www.frumforum.com/were-our-enemies-right

Re: Krugman on BitCoin

#40

Post by Duff » Wed, Sep 07, 2011, 3:59 PM UTC

kokey wrote: post #32

I don't get the problem with hoarding. Most people don't hoard gold, property or tech stocks during times when the price looks like it's increasing constantly. There is a point where it makes sense to sell some after it has made some gains. In reality, unless buyers make a massive mistake in the valuation of BitCoins, the current gains in BitCoins value should taper off at some point.

What's the basis for that statement?

How many pre-1965 US Quarters and Dimes do you run into during daily commerce? Answer: Very few, since they are hoarded by collectors for their silver value.