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Bitcoin and positive vs. normative economics

krugman.blogs.nytimes.com

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Re: Bitcoin and positive vs. normative economics

#71

Post by randyrand »

mapgrep wrote: post #14
wcummings wrote: post #4

I have a really hard time taking a column called "The Conscience of a Liberal" seriously, even more so when he claims: "Stross doesn’t like that agenda, and neither do I; but I am trying not to let that tilt my positive analysis of BitCoin one way or the other." in a piece titled "Bitcoin is Evil".

On the contrary, I'd rather listen to an economist who is upfront about his political viewpoints and transparent about how he tries to keep them from influencing what he here terms the "positive economics" -- i.e. the practical economic impact -- of Bitcoin or any other problem. As opposed to economists who conceal their political viewpoints to cover the fact that their supposedly scientific economic conclusions are…

You act like those are the only options. What about a moderate economist that actually considers both sides before creating an opinion?

Re: Bitcoin and positive vs. normative economics

#72

Post by hershel »

username223 wrote: post #29
smtddr wrote: post #9

>>BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions. So basically it brings an ability to the middle-class that normally only the top 1% have. We know wealthy people use tax loopholes(and a few of them, laundering) and... why do…

"why do the states need to monitor financial transactions?" I hate the "terrorism" BS as much as you, but money laundering and large-scale scamming ( https://news.ycombinator.com/item?id=6972139 ) are actual threats.

I wonder: with the power of the NSA and the right laws ,maybe it's really easier to track and control bitcoin transactions than control international banks?

Re: Bitcoin and positive vs. normative economics

#73

Post by rch »

mikeryan wrote: post #42
smtddr wrote: post #9

>>BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions. So basically it brings an ability to the middle-class that normally only the top 1% have. We know wealthy people use tax loopholes(and a few of them, laundering) and... why do…

The state monitors financial transactions primarily for tax purposes. I'm guessing a very substantial amount of data they collect is around payroll and sales.

So why don't they just invoice me in April? I shouldn't have to be bothered with tracking things on my end as well, right?

Re: Bitcoin and positive vs. normative economics

#74

Post by pathy »

defen wrote: post #65
ubernostrum wrote: post #54

Earlier quoted context omitted.

Gold is no longer widely used as money, but in the past it was, and was quite successful as a medium of exchange. His argument seems to be that if you want something to be genuinely useful as money, it has to do both reliably, and BitCoin only seems able to do one.

In the past yes, but I'm talking about today. Gold is a stable store of value that is not really used as money (at least in the U.S.)

Gold is also a lot more volatile than most currencies, which in turn makes it less suitable as a currency than dollars or euros.

A trait gold shares with bitcoin. The volatility makes it terrible as a currency, not to mention the expected rise in value. That makes BTC even worse as a currency - there is no sane reason to spend bitcoin if you believe in the concept.

Re: Bitcoin and positive vs. normative economics

#75

Post by ashray »

vixen99 wrote: post #61
ashray wrote: post #18

This title of this post does a disservice to its contents. "Bitcoin is evil' makes it sound like it's a propaganda piece. I went in expecting some of the usual poorly researched allegations that we've been seeing over the past few weeks. But surprisingly, the post does make a few good points. > Placing a ceiling on the value of bitcoins is computer technology and the form of the hash function… until the limit of 21 m…

"its contents", "its value", "its utility". "It's" is an abbreviation for "it is" or "it has".

Right, I've edited the post. Thanks for pointing that out.

Re: Bitcoin and positive vs. normative economics

#76

Post by vijayboyapati »

There is perhaps no compliment greater than a criticism from the econostrologist in chief, Paul Krugman.

He is right about one thing tho. Bitcoin IS a bubble. But that is not a pejorative. Any good that becomes money will have a price that is far higher than is warranted by its use demand. It doesn't matter whether the floor price is 10% of the monetary premium, 1% or 0%. The monetary premium is based not on the good's use value, but its serviceability as money. I.e., is it fungible, divisible, transportable, verifiable etc. And along all these attributes bitcoin shines - even more than gold.

The best explanation of this so-called "bubble theory of money" is proffered by Moldbug. To wit:

http://unqualified-reservations.blogspot.com/2011/04/on-mone...

and

http://unqualified-reservations.blogspot.com/2013/04/bitcoin...

Re: Bitcoin and positive vs. normative economics

#77

Post by seiji »

sans-serif wrote: post #64
seiji wrote: post #38

Earlier quoted context omitted.

If r/bitcoin could speak, it would collectively say: "All tax is theft. It is our job to stop being stolen from. All money belongs to me for the benefit of myself. I am all that matters in society."

I will not comment on how much value this kind of snark is not adding to the conversation, but note that fairer forms of tax e.g. property taxes exist and don't require state to track financial transactions.

The underlying point is: you can't have a rational discussion with people who live out in fantasy cuckoo land.

Re: Bitcoin and positive vs. normative economics

#78

Post by sans-serif »

jamroom wrote: post #48
mortenjorck wrote: post #31

Krugman is to Bitcoin as Ebert was to video games. The central failure of Krugman's understanding of cryptocurrencies is in the value of mining. It's not simply throwing energy away into solving useless math problems; it's spending energy to create infrastructure. That infrastructure is the part that does have intrinsic value, that can be used for something else in the same way gold can be made into useful things. Lo…

But does Bitcoin really have a floor related to the energy put into the mining? Since the energy cost is paid for by the miners, do other players in Bitcoin "respect" that floor? I don't see that - there's nothing keeping a Bitcoin from going all the way to zero - regardless of the energy consumed in it's production, and Krugman argues that gold (and the feds) have a bottom that is greater than zero. My understanding…

No, the floor is unrelated to the energy put into mining. The intrinsic value of Bitcoin is the ability to facilitate financial transactions.

Brinks' entire CIT vehicle business is based upon just a subset of this function, and we can agree their value is not zero.

Re: Bitcoin and positive vs. normative economics

#79

Post by wcummings »

ubernostrum wrote: post #43
wcummings wrote: post #40

Earlier quoted context omitted.

The answer I've heard is that Bitcoin has utility as a payment network somewhat independent of its usefulness as a value store. This is most of how Bitcoin is used currently (save speculation)

And yet, Krugman is probably right to suggest that, as a currency, BitCoin will need to also be a store of value. Which it currently does not seem to be, and I don't see how it will become one.

He could be right, he'd just be missing the point. He's trying to jam a square peg into a circular hole and calling it "evil" for not fitting.

What I'd actually be interested in reading is a proposal from Krugman (or someone else) for a hashcash/cryptocoin/digital money scheme that addresses their concerns.

It would be hugely more interesting to hear economists discuss how new technology can advance antiquated, federated payment networks rather than pointing out well-known flaws in a very immature technology (that I'm still not entirely convinced they understand, technologically speaking).

Re: Bitcoin and positive vs. normative economics

#80

Post by seiji »

rch wrote: post #73
mikeryan wrote: post #42

Earlier quoted context omitted.

The state monitors financial transactions primarily for tax purposes. I'm guessing a very substantial amount of data they collect is around payroll and sales.

So why don't they just invoice me in April? I shouldn't have to be bothered with tracking things on my end as well, right?

Lobbying by the tax accountant and tax software industry: http://www.propublica.org/article/how-the-maker-of-turbotax-...
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