Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The madness of the bailout in Cyprus

maximise.dk

Post reply on HN
Print view View original

241–250 of 252 posts

Re: The madness of the bailout in Cyprus

#241

Post by A1kmm »

gasull wrote: post #169
A1kmm wrote: post #66

Earlier quoted context omitted.

Even if you keep your cash in fiat currency cash (i.e. euro notes) you would be safe from this. Keeping your money in some form of cash (whether bank notes or Bitcoin) generally puts you in a worse position than low risk (i.e. diversified) investing. An investment bank which kept accounts in Bitcoin and paid out in Bitcoin would still be at risk of government seizures (unless they operated illegally and hid their ide…

You don't need a bank for your bitcoins. You can keep them in your laptop or smartphone and the Government wouldn't even know you have it there. And even if they did they cannot force you to decrypt your hard drive. You can even keep you bitcoins in your brain. No joke. You can just memorize a passphrase that would recreate an encrypted bitcoin wallet: https://en.bitcoin.it/wiki/Brainwallet

As I said in my comment, keeping Bitcoins is like keeping cash - you can keep either and hide them. Yes, you can secure Bitcoins better than cash if you want to, but that is irrelevant to my point.

My point was that you can generally earn interest from a bank at better than inflation rates, and if Bitcoin becomes more mainstream, people will do exactly the same thing Bitcoin they do with cash - give control of it over to a bank, and get an account denominated in that currency (i.e. Bitcoin). Once you give the cash or Bitcoin, as applicable, to the bank, you no longer have it in your wallet / Bitcoin address, but instead, the bank promises that it will give you back that amount of Bitcoins, plus interest.

The bank promises to give you back a certain number of Bitcoins, but you don't have any physical way of enforcing that - it is the bank's Bitcoin address that holds them, not yours.

Other people borrow Bitcoins from the bank and have to pay back interest at a higher rate than the bank borrows it. Because of interest, banks collectively are owed more than actually exists in circulation at any one time, so Bitcoin becomes fractional reserve system.

Under this scenario, the government can still tell banks to reduce your balance (which is a number on your servers, and not physically enforced by the Bitcoin protocol). It doesn't affect BitCoins you hold in your own addresses (just like the Cypriot tax doesn't take a cut of money held as cash by individuals in Cyprus), but that might be only a small fraction of the Bitcoin economy in a future under a fractional reserve system.

Re: The madness of the bailout in Cyprus

#242

Post by lotsofcows »

tatsuke95 wrote: post #163
omgyeah wrote: post #133

Earlier quoted context omitted.

If you think that Greece and Cyprus are sovereigns, think again. And Iceland chose not to receive "economic help". Greece and Cyprus were forced to receive "economic help".

Iceland has 300,000 people and a GDP of $12BB. Their economic "choices" and ensuing trajectory are, for practical purposes, irrelevant.

You are aware we're discussing Cyprus here...

Re: The madness of the bailout in Cyprus

#243

Post by seanmcdirmid »

wintersFright wrote: post #234
seanmcdirmid wrote: post #192

Earlier quoted context omitted.

If I bought land, I could develop it and make it productive, I could also invest in science to grow more food, or whatever. If we want to hedge against economic collapse, I could invest in assets that are likely to survive the collapse, or better yet, are useful in helping a recovery along. So machinery, tools, a factory, a bakery? Or just upgrade my skills a bit. But gold just sits there and does nothing, you are at…

The fact that gold is so useless is what makes it so perfect as a sink for deferred wealth. Savers do not infringe on anyone else. If savers decided to hoard farm land...then farm produce would go up. Bakeries...same effect. Note I'm not arguing against investment but there is a difference between investment and saving. Saving is trying to maintain purchasing power that you have earned today and want to spend in the…

> The fact that gold is so useless is what makes it so perfect as a sink for deferred wealth. Savers do not infringe on anyone else. If savers decided to hoard farm land...then farm produce would go up.

True, this is also why the Chinese continue to lend to us at basically a negative interest rate. Turns out gold doesn't really work that well for sovereigns (though China is #1 or #2 in gold mining).

> What the savers currently do is hoard currency.

Or they buy treasury notes, which is a bit better on returns (but not much).

> which leads to cheap credit which leads to malinvestment.

Definitely that's what we've seen so far. In that case, we are only arguing about the validity of gold as a store of value vs. other investments (including straight currency holds). There is nothing particularly special about gold, the only difference is that mining companies can decide the rate of inflation vs. governments (but Australia...).

BitCoin is much more fair in this case as the rate of mining is basically fixed by complexity. There is not much difference between accepting someone's bitcoin vs. their gold, in either case its about trust that you can exchange the currency down the line for something else.

Re: The madness of the bailout in Cyprus

#244

Post by wintersFright »

seanmcdirmid wrote: post #243
wintersFright wrote: post #234

Earlier quoted context omitted.

The fact that gold is so useless is what makes it so perfect as a sink for deferred wealth. Savers do not infringe on anyone else. If savers decided to hoard farm land...then farm produce would go up. Bakeries...same effect. Note I'm not arguing against investment but there is a difference between investment and saving. Saving is trying to maintain purchasing power that you have earned today and want to spend in the…

> The fact that gold is so useless is what makes it so perfect as a sink for deferred wealth. Savers do not infringe on anyone else. If savers decided to hoard farm land...then farm produce would go up. True, this is also why the Chinese continue to lend to us at basically a negative interest rate. Turns out gold doesn't really work that well for sovereigns (though China is #1 or #2 in gold mining). > What the savers…

ha. looks like we are actually mostly in agreement then. Lets meet back here in a year to review our respective plays :)

Re: The madness of the bailout in Cyprus

#245

Post by gasull »

A1kmm wrote: post #241
gasull wrote: post #169

Earlier quoted context omitted.

You don't need a bank for your bitcoins. You can keep them in your laptop or smartphone and the Government wouldn't even know you have it there. And even if they did they cannot force you to decrypt your hard drive. You can even keep you bitcoins in your brain. No joke. You can just memorize a passphrase that would recreate an encrypted bitcoin wallet: https://en.bitcoin.it/wiki/Brainwallet

As I said in my comment, keeping Bitcoins is like keeping cash - you can keep either and hide them. Yes, you can secure Bitcoins better than cash if you want to, but that is irrelevant to my point. My point was that you can generally earn interest from a bank at better than inflation rates, and if Bitcoin becomes more mainstream, people will do exactly the same thing Bitcoin they do with cash - give control of it ove…

> My point was that you can generally earn interest from a bank at better than inflation rates

That isn't true today in the US or most of the EU.

I see your point on people trusting their bitcoin wallet to a bank or another service. True, but with bitcoin you don't need your bitcoin wallet service to be in your country, and using an online wallet isn't that much easier than using a desktop client so a lot of people will use it. The power of Government to seize assets will be almost null.

Re: The madness of the bailout in Cyprus

#246

Post by herdrick »

omgyeah wrote: post #129
st0p wrote: post #73

Earlier quoted context omitted.

I can't agree with your last sentence. We've all had the profits of having banks providing liquidity (common, all that Russian money into the Cyprian economy has been great for all of Cyprus). Now that system has failed and the big guys aka the banks are just as clueless as the little guys. Do we need to rethink how our economy works? Yes. Do we need to help Cyprus, Italy, Spain? Yes. Partially because it is in out b…

Nobody blamed you for being consistent, organized, eager to work more and getting rightfully rewarded for it. This is the way it's supposed to be. Also the problem is not losing 6.75 of ours savings. For most Greek people it's 0 * 6.75 anyway. The problem is that I am poor. My country is poor. My country was born poor. My country was funded from the beginning of its existence because of being born poor. My country ha…

    My country has always been and will always be poor.
You feel no connection to ancient Greece? Your ancestors created astonishing wealth - you don't think you can anymore?

Re: The madness of the bailout in Cyprus

#247

Post by tatsuke95 »

angersock wrote: post #224
tatsuke95 wrote: post #178

Earlier quoted context omitted.

> "the simple fact that the banks fucked up" The banks are run by citizens and funded by citizens. So when the banks "fuck up", it's going to end up on those same citizens. There is no way to isolate losses to some "bank" entity.

Er, I'd be rather surprised if some of the banking entities were not established by foreigners and monies not actually coming from their country of operation. Hell, Harris Bank in Chicago is owned by Bank of Montreal--so, unless I'm grossly misunderstanding the situation, it would be entirely possible for Canadian executives to set policies that could affect clients in the US. That's not those citizens' faults. I thi…

>"I think you have an incorrect view here."

The majority of shares are owned by American citizens and the executive and board are mostly Americans.

Re: The madness of the bailout in Cyprus

#248

Post by tatsuke95 »

moe wrote: post #213
tatsuke95 wrote: post #176

Earlier quoted context omitted.

> "They have many (natural) resources standing still on the earth. Which can be used to pay back loan." Like the German war reparations after WWI? That worked out well for everyone.

If you feel a need to invoke Godwin you should at least try to be intellectually honest. The citizens in the tumbling EU-nations are paying what they perceive as unfair reparations already (Justification: "You lived beyond your means" - most citizens most certainly didn't). The radicalization is already happening (cf. elections in Greece and Italy). You make it sound like taking 6.75% out of the small guy's savings a…

Do you just wait around for people to mention Germany so you can talk about this stuff? Godwin's Law is about Hitler. So, in essence, you have invoked Godwin's Law.

Can I not talk about Germany in the historical context of WWI?

The parent comment said that these countries have resources in the ground, we can take those resources, hence these countries will always be able to pay their bills. I said that didn't work very well when we tried to force Germans to "pay the bill" after WWI; they simply inflated the currency away.

But thanks for your arrogance and lesson on intellectual honesty.

Re: The madness of the bailout in Cyprus

#249

Post by moe »

tatsuke95 wrote: post #248
moe wrote: post #213

Earlier quoted context omitted.

If you feel a need to invoke Godwin you should at least try to be intellectually honest. The citizens in the tumbling EU-nations are paying what they perceive as unfair reparations already (Justification: "You lived beyond your means" - most citizens most certainly didn't). The radicalization is already happening (cf. elections in Greece and Italy). You make it sound like taking 6.75% out of the small guy's savings a…

Do you just wait around for people to mention Germany so you can talk about this stuff? Godwin's Law is about Hitler. So, in essence, you have invoked Godwin's Law. Can I not talk about Germany in the historical context of WWI? The parent comment said that these countries have resources in the ground, we can take those resources, hence these countries will always be able to pay their bills. I said that didn't work ve…

Well, Godwin's Law is about "someone inevitably makes a comparison to Hitler or the Nazis" (see Wikipedia). If mentioning WWI/WWII does not qualify for you then we must have quite a different interpretation.

The argument in this thread was that there must be alternatives to the current move, such as making some of the creditors wait or default, rather than taking it out of the small guy's pocket. Discarding such alternatives for the fear of consequences that are already happening just makes no sense.

Cyprus is effectively inflating the Euro for their citizens right now, that's the whole purpose of this stunt.

Re: The madness of the bailout in Cyprus

#250

Post by omgyeah »

herdrick wrote: post #246
omgyeah wrote: post #129

Earlier quoted context omitted.

Nobody blamed you for being consistent, organized, eager to work more and getting rightfully rewarded for it. This is the way it's supposed to be. Also the problem is not losing 6.75 of ours savings. For most Greek people it's 0 * 6.75 anyway. The problem is that I am poor. My country is poor. My country was born poor. My country was funded from the beginning of its existence because of being born poor. My country ha…

My country has always been and will always be poor. You feel no connection to ancient Greece? Your ancestors created astonishing wealth - you don't think you can anymore?

HA!

My ancient ancestors...

They were selfish imperialists that built their legacy with wars and slaves.

Even if we could do it again in the present day, personally I wouldn't want it. But there is no other way, is there?

And let's just think about it:

We could build today a monument that it would still be there in 3,000 years. But it would take the lives of 10,000 slaves. Should we do it? Shamelessly exploit people that will die anyway some day, so that we can show off in 3,000 years?

I vote for no.

And by "my country" I refer to the modern version created in the mid 19th century. There is no continuity with the ancient times (at least in political terms). And there was no country in the ancient times to begin with. Only city-states. A few rich and many poor :)

Therefore, I think that my country is definitely poor. Forever and ever.

Post reply on HN