Krugman on BitCoin • Hacker News Board

Re: Krugman on BitCoin

#241

Post by gamble » Thu, Sep 08, 2011, 2:01 AM UTC

SkyMarshal wrote: post #236

maratd wrote: post #84

Earlier quoted context omitted.

> 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…

>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. Everyone has an opinion about BTC's deflationary nature, but few people seem to consider the possibility that BTC might be the first currency that works su…

> The precision, and hence the quantity of BTC, can be increased in the future if necessary.

The ability to subdivide BTC is irrelevant to the question of depreciation. If 1 BTC goes from $10 USD to $20 USD, then 0.5 BTC goes from $5 USD to $10 USD. It doesn't change the money supply any more than slicing up a gold nugget creates more gold. Bitcoin is still inherently deflationary. All subdivision does is avoid imposing a minimum transaction size.

Bitcoin is also unique in that a substantial portion of the total BTC that will ever exist have already been destroyed, as many early adopters abandoned or lost their wallets.

Re: Krugman on BitCoin

#242

Post by jarek » Thu, Sep 08, 2011, 2:08 AM UTC

msbarnett wrote: post #195

stevenwagner wrote: post #184

Earlier quoted context omitted.

I would not short gold or Apple either, the risk would be huge! So are you agreeing that bitcoins will become worth more then? So I shouldnt take a bitcoin loan out, I should take a dollar loan out and buy bitcoins with it. Or you are saying bitcoins are bad so they will go down in value ... and I should... whaaat?

He's saying that the characteristics of bitcoins make it a lousy currency (people have little incentive to spend or loan it). Whether or not it's an asset worthy of investing in is a separate question. (I'd argue that it isn't, but that's a separate issue from the characteristics that make it a bad currency).

As an investment, it's like gold but without the intrinsic value part and the "historically used as an investment for the past couple of millenia" part.

Re: Krugman on BitCoin

#243

Post by BarkMore » Thu, Sep 08, 2011, 2:23 AM UTC

sneak wrote: post #131

BarkMore wrote: post #104

Earlier quoted context omitted.

A counter-argument is that people invest in new enterprises even when the banking real interest rate is positive.

To paraphrase jwz (like that's never been done before), "When the rebuttal to your argument is 'The Industrial Revolution', generally that means that you've lost the argument." :)

My snark decoder is broken. Please explain the parent comment.

Re: Krugman on BitCoin

#244

Post by narkee » Thu, Sep 08, 2011, 2:29 AM UTC

dredmorbius wrote: post #65

narkee wrote: post #28

Earlier quoted context omitted.

>And most economic theory says that the more people spend money the healthier the economy becomes Doesn't that seem like a bizarre theory since the economy is in shambles and debt-financed spending seems to be getting higher and higher (consumer/credit card debt, etc.) I thought people were supposed to be encouraged to save, pensions, 401k and Roth IRAs, etc. Is overall economic health inversely related to individual…

Money is a wealth transfer medium. If you're familiar with physics, think of exchange particles associated with forces. In biology, it's similar to blood. I'm not sure a transportation analog works but it might (I need to think about that). Money works when it is exchanged for goods and services. When money stops moving, the economy "stops". There isn't any exchange going on (or there's far less than before). Economi…

Really informative, thanks!

Re: Krugman on BitCoin

#245

Post by arvinds » Thu, Sep 08, 2011, 2:33 AM UTC

scrollbar wrote: post #227

arvinds wrote: post #170

Earlier quoted context omitted.

Yeah - it always amuses me to read these long detailed arguments on these threads from people who seem to not have understood basic macroeconomics.

Econ isn't a science. There are schools of economic thought that completely contradict "basic economics" taught in schools today, and you can't possibly prove that one or the other method is correct. Hence, Economics: the dismal science.

I have to disagree here. Yes there are schools of thought, but questions like "how does a market work?", "what causes deflation?" are pretty well studied and agreed upon. This is one of those very basic settled questions with a very clear accessible explanation.

Re: Krugman on BitCoin

#246

Post by r4vik » Thu, Sep 08, 2011, 2:35 AM UTC

He's totally overlooked one aspect of bitcoin, it doesn't matter if it's deflationary if all I'm using it for is selling drugs and converting bitcoins into cash straight away or using it as an intermediary step in sending large amounts currency around the world anonymously. Who cares if it doesn't work great as a currency (if you believe deflation is a bad thing), it still has a lot of utility.

Re: Krugman on BitCoin

#247

Post by webXL » Thu, Sep 08, 2011, 2:53 AM UTC

pessimizer wrote: post #228

webXL wrote: post #68

Earlier quoted context omitted.

Using that hypothetical, you'd either think George W. Bush was the next coming of Jesus or Hitler. There was very little unbiased economic information in either opinion section. On his blog, Krugman is much less biased and inflammatory (perhaps because he doesn't feel the need to help sell newspapers there) and in this case, he brings up some valid points about the intentionally deflationary currency.

You're missing the point of the frumforum post. It was: if you were planning for the future, which source of predictions (the WSJ editorial page or Krugman's column) would have been a more accurate guide? It's about whether the horse would win, place, show, or be in the money at all - not whether the horse was pretty. Biased or unbiased doesn't matter. The truth is biased. If the WSJ or Krugman says the passage of X…

And my point was that there was more opinion than useful information or predictions on those op-ed pages.

Can you or Frum point out specific examples that might make one conclude that one op-ed page was more reliable than the other?

BTW, truth is not biased. 2 + 2 = 4 is not biased. Only people can be biased. Using throw away cliches like that doesn't get us anywhere.

Re: Krugman on BitCoin

#248

Post by nandemo » Thu, Sep 08, 2011, 3:03 AM UTC

jbooth wrote: post #22

nandemo wrote: post #17

Earlier quoted context omitted.

If Bitcoin ever becomes a successful, liquid currency, it will have been partly thanks to the current speculators. They're the ones "mining" the bitcoins. They're taking the risk. In a way, it's similar to gold miners of old. They would invest money in digging and mining for the chance of finding gold. They were in it for the profit. Still, it did benefit other people since there was more gold available for both util…

I think the point isn't about speculators, it's about hoarders. If it becomes a successful, liquid currency, it will be in spite of those hoarding. Coincidentally, with the market looking like it does, at an individual level it's absolutely the right thing to do to hold them, or at best to slowly diversify out, while still not using it for much purchasing. As long as it seems like the right move to hoard them, and th…

Hoarders are also speculators! They're betting bitcoin will go up in value.

By the way, "hoarder" is a loaded term. One man's "hoarder" is another man's "saver". Without people who save, there's no way people can borrow, and so on.

Re: Krugman on BitCoin

#249

Post by nandemo » Thu, Sep 08, 2011, 3:21 AM UTC

anigbrowl wrote: post #78

nandemo wrote: post #17

Earlier quoted context omitted.

If Bitcoin ever becomes a successful, liquid currency, it will have been partly thanks to the current speculators. They're the ones "mining" the bitcoins. They're taking the risk. In a way, it's similar to gold miners of old. They would invest money in digging and mining for the chance of finding gold. They were in it for the profit. Still, it did benefit other people since there was more gold available for both util…

What risk? All the Bitcoin miners I know are patting each other on the back on how much mining their fancy GPU is doing. Risk: one or more graphics cards (that are also used to play videogames) and a slightly elevated electricity bill from leaving the computer on all day and night. There isn't a lot of effort or ingenuity going on here, just an information asymmetry.

There's exchange risk as with any currency. If you exchange US dollars for Mexican pesos, there's a risk that the pesos will lose value relative to the dollar. Of course, the risk of keeping bitcoins is much higher than that of Mexican pesos.

By the way, you seem misinformed about the way people are mining bitcoins. Nowadays it's done mostly by professionals running rigs with tons of GPUs, not by individuals who put an extra graphic card on their gaming PCs.

Re: Krugman on BitCoin

#250

Post by pessimizer » Thu, Sep 08, 2011, 3:44 AM UTC

webXL wrote: post #247

pessimizer wrote: post #228

Earlier quoted context omitted.

You're missing the point of the frumforum post. It was: if you were planning for the future, which source of predictions (the WSJ editorial page or Krugman's column) would have been a more accurate guide? It's about whether the horse would win, place, show, or be in the money at all - not whether the horse was pretty. Biased or unbiased doesn't matter. The truth is biased. If the WSJ or Krugman says the passage of X…

And my point was that there was more opinion than useful information or predictions on those op-ed pages. Can you or Frum point out specific examples that might make one conclude that one op-ed page was more reliable than the other? BTW, truth is not biased. 2 + 2 = 4 is not biased. Only people can be biased. Using throw away cliches like that doesn't get us anywhere.

I'm not going to do your research for you, I'm just saying that whether either demonised or praised Bush is irrelevant to the claim that was being made - unless you're making specific claims that Bush will verifiably exhibit the ability to possess a little girl, or to drive the demons out of a little girl into a herd of pigs.

Truth is biased; it will ignore every argument you make that contradicts what it knows to be true. 2 + 2 = 4 is irredeemably biased against 2 + 2 = 5. Disturbingly partisan.