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Krugman on BitCoin

krugman.blogs.nytimes.com

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Re: Krugman on BitCoin

#211

Post by nerfhammer »

wmf wrote: post #165
zach wrote: post #106

Earlier quoted context omitted.

Wow, that's an excellent point. That doesn't happen easily with gold. People retrieve gold from ships sunk hundreds of years ago. Actually, is there an efficient way that physical gold or other precious metals can be intentionally destroyed or put beyond use? Has anyone tried to use this technique to corner a market? What would happen if Hugo Chávez actually got his hands on 211 tons of actual gold and announced he h…

Actually, is there an efficient way that physical gold or other precious metals can be intentionally destroyed or put beyond use? Has anyone tried to use this technique to corner a market? In Goldfinger , the eponymous villain tried to irradiate all the gold in Ft. Knox with a dirty bomb, making it worthless.

Wouldn't that actually not make it worthless? Wouldn't you just have to encase it in lead?

Re: Krugman on BitCoin

#212

Post by mrb »

rabidsnail wrote: post #98
euroclydon wrote: post #93

Earlier quoted context omitted.

How is it any better when prices keep going up? Imagine you're, gasp , a saver, and one day you decide to buy that hamburger, but now you need five or ten times the money to make the purchase as you did, when you stashed it away twenty years ago.

Inflation encourages the savers to put their money to work (by investing in the stock market, for example) so that the amount of money that they have increases in proportion to the growth of the overall economy. This is a benefit.

> Inflation encourages the savers to put their money to work.

And deflation encourages the sellers to sell today.

So, in theory, don't deflation and inflation both encourage economic activity?

Re: Krugman on BitCoin

#213

Post by hexis »

endersshadow wrote: post #14
hexis wrote: post #8

Earlier quoted context omitted.

Currencies are goods like any other goods and the people who own them have divergent purposes. When Krugman writes "we want [a monetary system] to facilitate transactions and make the economy as a whole rich", he's assuming a lot. Obviously, some of the people who own bitcoins right now are not interested in facilitating financial transactions to the detriment of their net worth. So, for people who want that facilita…

Currencies are not goods and should not be thought of as goods. They are mediums of exchange[1]. They may be backed by goods (such as gold), but currency itself should have no inherent value (otherwise, it's a terrible medium of exchange). What you're talking about are securities[2]. There is a distinct difference. Bitcoins are ostensibly a security masquerading as a currency. [1] http://en.wikipedia.org/wiki/Currenc…

No, I think I am correct. Currency exchange rates are prices and in that sense a currency is a good. The typical use of a currency is as a medium of exchange, but people use goods for different reasons. That was my point originally.

Re: Krugman on BitCoin

#214

Post by hexis »

brown9-2 wrote: post #53
hexis wrote: post #8

Earlier quoted context omitted.

Currencies are goods like any other goods and the people who own them have divergent purposes. When Krugman writes "we want [a monetary system] to facilitate transactions and make the economy as a whole rich", he's assuming a lot. Obviously, some of the people who own bitcoins right now are not interested in facilitating financial transactions to the detriment of their net worth. So, for people who want that facilita…

I don't think it's just an assumption - I think it is fair to state that a currency whose primary mission is not to facilitate transactions will fail to catch on. So far BitCoin has failed to catch on.

Part of my original point was that currencies don't have "missions", people do. A person may or may not wish to own a bitcoin in order to facilitate transactions. A person might also wish to own one as a speculative investment. Neither "mission" is necessarily better than the other. Krugman just assumes otherwise.

Re: Krugman on BitCoin

#216

Post by api »

maratd wrote: post #84
snorkel wrote: post #33

"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…

> Perhaps when Bitcoin reaches supply maturity the value will stabilize I absolutely hate Krugman, but this is Econ 101 and even he gets it right. Bitcoin was a flawed experiment from the start because it has an absolute supply limit. Reaching that limit won't help. It'll make things worse. The money supply needs to expand for healthy economic activity and growth. If it doesn't, weird shit starts to happen. Here's an…

"In a normal economy, the population is constantly expanding."

Exponential growth can never continue forever. We are probably at or near the practical limits to growth on this planet.

I think inflationary currency is an ugly hack to cope with the era of exponential growth.

Re: Krugman on BitCoin

#217

Post by nazgulnarsil »

maratd wrote: post #210
stevenwagner wrote: post #191

Earlier quoted context omitted.

Most people don't seem to realize that when your currency inflates, there are people who get the new money. Inflation=wealth redistribution

You're assuming the government turns on the printing press and then spends some money on some social programs? That really doesn't happen anymore (if it ever did). Various operations by the Treasury and Fed affect the banks. Then you get a shiny new credit card in the mail. I wouldn't call that wealth redistribution.

I've never seen anyone, including keynesians try to claim that newly created money goes directly to consumers. wow. read more.

Re: Krugman on BitCoin

#218

Post by api »

maratd wrote: post #210
stevenwagner wrote: post #191

Earlier quoted context omitted.

Most people don't seem to realize that when your currency inflates, there are people who get the new money. Inflation=wealth redistribution

You're assuming the government turns on the printing press and then spends some money on some social programs? That really doesn't happen anymore (if it ever did). Various operations by the Treasury and Fed affect the banks. Then you get a shiny new credit card in the mail. I wouldn't call that wealth redistribution.

It is. It's upward wealth redistribution.

Re: Krugman on BitCoin

#219

Post by nazgulnarsil »

Pro-inflationists a simple question for you.

Inflation creates an incentive to invest. Fine. But why should the level of inflation and thus the risk profile for investors be determined by a single authority? Why not multiple competing currencies whose rates float against each other? Let the market figure out an optimal rate of inflation. The wild guesses and uncertainty of the Fed resetting the rate is surely inferior.

Re: Krugman on BitCoin

#220

Post by tequilarection »

"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." Paul Krugman, 2002. (http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip...)
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