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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

#131

Post by defen »

ubernostrum wrote: post #107
defen wrote: post #65

Earlier quoted context omitted.

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.)

And I don't think you're disagreeing with him. I think you're trying to say "well, this other thing that doesn't get used as money anymore also doesn't fit his definition of money" and then implying that this somehow disproves his argument. When, in fact, it lends support to his argument.

I'm not saying it disproves his argument, just that BitCoin could theoretically be useful even if it's not money. Which is sort of tangential to his point - I'm suggesting that the money angle is perhaps overrated or a red herring.

Re: Bitcoin and positive vs. normative economics

#132

Post by etjossem »

greyman wrote: post #116
etjossem wrote: post #67

It's great that Krugman is trying to to make a purely positive analysis of the potential impacts of Bitcoin. He's entirely correct in saying Bitcoin has zero inherent value, as opposed to gold and USD. But that's missing the point. Most of us don't think about owning gold in terms of how readily we can make pretty things out of it, or dollars in terms of how easily we can pay our taxes. We hold onto them because both…

> He's entirely correct in saying Bitcoin has zero inherent value, as opposed to gold and USD. No, no, he is NOT correct on that. Bitcoin's inherent value is in the Bitcoin technology. Inherent value of USD is that government declared it has value (by fiat). You can actually create "pretty things" with bitcoin technology, the same way you can create pretty things with gold - those are just other things.

The United States is a superpower that many people enjoy calling home (you may even be among them), and it will probably be around for a good long while. If you chose to live there, you have a civic obligation to pay taxes, which are accepted in USD. If that's not inherent value, I'm really not sure what is.

Nobody believes the Bitcoin protocol itself is beautiful in the same sense as gold, although I do know a few computer scientists who might find it intriguing. I suppose you could make the case that the ability to make anonymous transfers has some inherent value - but even that depends on how well BTC is adopted as a medium of exchange.

Re: Bitcoin and positive vs. normative economics

#133

Post by seiji »

asciimo wrote: post #91
seiji wrote: post #47

Earlier quoted context omitted.

The other systems aren't based around grinding CPUs at 100% power utilization for days/weeks/months doing worthless busy work. Unless your power comes from a zero-carbon-footprint renewable resource, it's pretty ugly.

The Bitcoin network doesn't require CEOs to burn jet fuel to visit their associates for catered meals; it doesn't require metal to be pressed into little discs, or trees to be pressed into little rectangles, and then distributed via combustion engine; it doesn't require receipts to be printed, duplicated, stored, and finally destroyed; it doesn't require millions of humans to commute to HVAC supported cubes to keep t…

So we're all back to hoarding money under our mattresses?

There will always be central banking infrastructure controlled by billionaires who are more socially important than you. We can't just "go decentralized." An average person is too busy to even remember their password to gmail is "password456" and not "password123."

Re: Bitcoin and positive vs. normative economics

#134

Post by prutschman »

seiji wrote: post #77
sans-serif wrote: post #64

Earlier quoted context omitted.

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.

Nor can one have a rational discussion with people declining to have one in favor of dismissing a side out of hand.

Re: Bitcoin and positive vs. normative economics

#135

Post by ansible »

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…

It's not simply throwing energy away into solving useless math problems; it's spending energy to create infrastructure.

I don't see how it is not the case that mining Bitcoins is throwing away energy.

If someone had made a crypto currency based on, say, protein folding [1], I could get behind that.

We could just create a crypto currency where we just hand out 100 units to every person. That certainly wouldn't require ASIC farms and such.

[1] Yes, I realize that the whole 'hard to do, easy to verify' bit is not completely obvious in the case of protein folding or SETI signals.

Re: Bitcoin and positive vs. normative economics

#136

Post by ChristianMarks »

Krugman is somewhat like Bishop Berkeley, no fool, arguing against infinitesimals before they acquired--in the 20th Century--a rigorous basis. The auditability of Bitcoins distinguishes them from the inaccessibility of the highly mathematized and virtually untraceable instruments of the financial crisis.

Re: Bitcoin and positive vs. normative economics

#137

Post by TheLoneWolfling »

HarryHirsch wrote: post #115
cynicalkane wrote: post #62

Earlier quoted context omitted.

The rich are not exempt from tax monitoring and transaction monitoring. Actually, a lot of monitoring targets exclusively large accounts and transactions.

As far as tax monitoring goes, I'm not sure that account and transaction monitoring is helpful. If you have a stated income near the median, yet own a palace, a Porsche and a Lamborghini for the wife, a yacht &c something just has to be off. Apparently you can see the phenomenon in at work in Greece. If you have undeclared income, at some point the funds have to enter the regular economy, and from then on it's just o…

Not necessarily.

The funds from your undeclared income could be going to other people' undeclared incomes.

Re: Bitcoin and positive vs. normative economics

#138

Post by seiji »

twoodfin wrote: post #111
seiji wrote: post #80

Earlier quoted context omitted.

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

To be fair, there's also a strong contingent within the U.S. political right that believes paying taxes should be made as explicit (and, potentially, annoying) as possible, lest the citizenry fail to appreciate how much of their income is being extracted to fund the government. This kind of thinking has popped up on the left from time to time as well, around things like military spending.

The solution there is just to get a receipt showing the breakdown. W-2's are kinda that already at a very coarse-grained scale.

We don't have any system in place to show military spending breakdowns or get people upset about it or give people who are upset about it a way to influence changes shrinking it in the future.

Re: Bitcoin and positive vs. normative economics

#139

Post by hfttrader »

natrius wrote: post #92
mapgrep wrote: post #70

Earlier quoted context omitted.

Bitcoin went up more than tenfold in less than six months. Then if fell by more than half in less than one month. So I strongly disagree that most people would want to use that for their checking account, paycheck, etc. I am also baffled by "they're easier to transfer" than dollars. Yes you can email BTC. But I can literally hand you dollars. No smartphone needed! And large amounts are trivially easier - I squiggle s…

You can hand me dollar bills, but how many dollar bills do you have? I just counted. I have $36 in bills in my possession. I should to go to the ATM today to get more in case I run out. Eventually, Bitcoin will be similar in that most of our wealth won't be stored in the actual currency, but in bank deposits. I could withdraw actual currency from a Bitcoin bank with the tap of a button and have it on my phone in 10 m…

But why does transferring large amounts of dollars take days? There is nothing physical preventing banks from supporting fast transfers. They can do fast transfers with BTC or USD.

Transfers are slow because there is little need to transfer large amounts of money quickly, and slower transactions help address issues with fraud. If you are buying a car, or paying for a house there is little need for a fast transactions. So with BTC or USD, transferring large amounts of money will take days.

Re: Bitcoin and positive vs. normative economics

#140

Post by sausman »

atmosx wrote: post #45
Aqueous wrote: post #21

I'm a liberal, a Keynesian, but my interest in BitCoin is completely non-ideological. And I resent being painted with an ideological brush by Krugman because I can see the elegance in BitCoin, and I can see the possibility that one day, in spite of my ideological beliefs that unregulated markets are susceptible to bubbles and destructive volatility, BitCoin or something like it might still be able to function as a st…

You seem pretty accustomed to economics. Can you explain how exactly or why would anyone buy any items (that's what currencies are for after all) using a deflationary currency? Then again, it's not a design a flaw - as I once thought - it's a clear choice: Why would anyone would want to own a non-deflationary asset? :-) So actually, in my view, BTC as a currency is already failed. No one will be eager to buy online (…

If your assumption were true, I wouldn't have bought a computer because I could have delayed my purchase and bought a cheaper+better one later. Even if I forecast computers falling from the sky in a year I would still buy one now if I didn't have one already. Wouldn't you?
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