Krugman is right, I agree with him 100% on this, but almost every time I tried to make any sensible argument about bitcoin with people actually holding bitcoin, I hit a wall. Most people confuse currencies with assets, storage-medium with exchange, etc. While at the same they are just hoarding. I think that BTC will stick around because it has some unique qualities that are requested by the market such as partial ano…
I dealt with virtual game currency before I really started messing around with banks. There was a ton of, "What do you mean I can't do this", and "What do you mean this takes longer than five seconds.. four DAYS?!", and "they're closed? So I can't? What? You're joking with me, right?" I understand that dealing with money is incredibly hard due to regulation, but I would like something to use as a medium of exchange w…
Bitcoin and positive vs. normative economics
311–320 of 520 posts
Re: Bitcoin and positive vs. normative economics
#312"Stross doesn’t like that agenda, and neither do I" Statists gonna hate bitcoin, no matter what.
In particular, I think a mixed economy half run by the state, half free markets works pretty well.
There is no contradiction between Bitcoin and the existence of a state. There are lots of ways of regulating and taxing. Sure, Bitcoin might change the details of them - that's just growing pains.
e.g. I would make it compulsory for any company granted limited liability to register the public keys of all Bitcoin wallets it has the private keys of with the tax office.
Or, if necessary later because that's too hard to track, tax either land or carbon emissions directly (rather than income or exchange of goods).
Re: Bitcoin and positive vs. normative economics
#313Earlier quoted context omitted.
It is amazing how one word "COIN" added to this word has shaped everyone's thinking. Would we treat it the same if the guys behind it named it "Bitcard" or "Bitpoint?" That one word is what set apparently most people to speak of it, and treat it as money. BC is nothing like Money. BC is a card trading game where the players make the cards, the difficulty to make cards increases , and the value of the cards is decided…
Bitcoin has a funnel, just like any other business or technology platform. Branding is a form of marketing, and it's marketing's job to raise interest. This is the first tier of the funnel. Interest gives way to being able to understand how a given technology is important to us. This is the second tier. Next, those of us that fully understand how Bitcoin works begin to spread the word about how it's reliable and how…
Re: Bitcoin and positive vs. normative economics
#314Earlier quoted context omitted.
I am not a libertarian and do not have a political agenda, but it is imaginable that certain parts of the government could be replaced with the structure like this one. I don't know how the transition could happen, but at the end, the mining in the network will be done by citizens, bitcoins will be named "bitvotes", and every citizen will mine those bitvotes, or they could be distributed fairy (one bitvote to each ci…
Such a scheme has a huge flaw: it allows extortion/coercion. Suppose I am a mob boss and I wish to become (insert position here). I send my goons to inform you that voting for me is a wise decision because I can offer you protection from the vicious thugs in the area. It would be a shame if the vicious thugs burned your house down, wouldn't it? So, you'd be forced to reveal your bitvote address to me under threat of…
Re: Bitcoin and positive vs. normative economics
#315Earlier quoted context omitted.
Whoever who convinces 50+% of the miners to adopt their version of the software wins. The core developers can commit code and make releases that do whatever they want, but if they e.g. tried to pay all transaction fees to themselves, miners wouldn't install the new version and someone would fork the project. How much control does any open source developer have over the projects they work on? Linus seems to have prett…
How many of the miners know how to evaluate updates? Most of these miners I read about, they bought some expensive hardware and just plugged it in. Is there some evaluation period before updates go live? Also, what if a seemingly innocuous change has unforeseen consequences? Nothing like Bitcoin has ever existed.
If the developers tried to push something through that many miners wouldn't like, I'm confident people would notice and it would cause a large outcry.
> Seemingly innocuous changes can indeed have unforseen consequences.
The core Bitcoin developers seem conservative, reasonable, skilled, and they test things quite heavily. That said, changes are risky, and they've caused problems in the past. Bitcoin is risky!
Re: Bitcoin and positive vs. normative economics
#316Earlier quoted context omitted.
> it allows extortion/coercion. Suppose I am a mob boss and I wish to become (insert position here). I send my goons to inform you that voting for me is a wise decision because I can offer you protection from the vicious thugs in the area. It would be a shame if the vicious thugs burned your house down, wouldn't it? How is this different than what currently happens?
Our current voting system has an emphasis on the secret ballot. There are records of which polling place a person voted at, and whether they showed up to vote, but (in theory) there's no way to tell which of the thousands of ballots from that polling place match to which individual voter.
Re: Bitcoin and positive vs. normative economics
#317Earlier quoted context omitted.
> If blockchain currencies are the future, central banking is over, and our society will have to figure out how to make the economy work with endemic deflation. Good luck with that. You've just said something along the lines of, "we'll just have to figure out how to live with terminal cancer." Now, I'm no economist, but deflation is standardly seen as really, really bad, and for good reason. It's not just 'the opposi…
> Ask yourself: why buy today what can be bought tomorrow cheaper? I know the the correct, rational answer to this question: "I won't buy it today, or ever, because it will always be cheaper the next day." (And then the deflationary spiral begins!) But if this is really true, why has anyone bought a Playstation 4 or Xbox One? They will undoubtedly be cheaper in two or three or ten years. Well, consumers might be tota…
The problem is that the economic theories often cited by Bitcoin supporters presume certain fanciful behaviors.
For example, in economic-theorist world, a frictionless spherical perfectly-informed perfectly-rational actor does not buy a six-pack of beer. Instead, the actor makes decisions:
* I will buy one beer at this unit price. Will I buy two?
* I will buy two beers at this unit price. Will I buy three?
* I will buy three beers at this unit price. Will I buy four?
* I will buy four beers at this unit price. Will I buy five?
* I will buy five beers at this unit price. Will I buy six?
* I will buy six beers at this unit price. Will I buy seven?
* I will not buy seven beers at this unit price.
* Therefore I will buy six beers.
I've long assumed that all the people who actually make decisions in this way are locked up in the laboratories of mad economists, who observe their behaviors in the way a biologist might observe a terrarium.
Re: Bitcoin and positive vs. normative economics
#318Earlier quoted context omitted.
> 1) Bitcoin mining has a pretty horrible carbon footprint. ("but so does ..." doesn't eradicate this argument) From a logical standpoint, "so does X" (e.g gold mining) very much does eradicate this as an argument against BitCoin, unless there is some Y which has less carbon footprint than either. If there is not, then the carbon footprint it's an necessary evil, and a constant through all similar systems.
What's the carbon footprint of an elected government creating more money?
Re: Bitcoin and positive vs. normative economics
#319Earlier quoted context omitted.
The reality is inevitably more complicated than stylised examples: most obviously because wages tend to be directly or indirectly linked to inflation. In general, a person tending to spend virtually all their income within a month of earning it will lose out less than someone who hoards their wealth; if they're due a 2% annual pay rise and the Central Bank is pretty good at keeping inflation within a 2% range they're…
one, you're crazy thinking that wealthy people hoard their wealth in dollars. two, if you think people won't consume if the money is deflationary, you're crazy. The US had net deflation for most of its history (except during wars) from 1600-1910, and certainly there was plenty of growth. Also, analogous to the "why do you ever bother buying computers knowing that they depreciate rapidly". three. If you think laborers…
Obviously if I thought wealthy people actually did hoard their wealth in dollars I wouldn't have made the point about inflation inducing people not to hold their wealth in dollars. Wealthy people could, would, and probably should hoard large portions of their wealth in dollars in the absence of inflation though.
I didn't making any points about people not wanting to consume if the money is deflationary, because obviously there are limits to how far one would want to defer consumption. Consumption /= investment. Investment is based around getting returns, and if average return is zero then there's very little incentive to invest instead of hoarding coins for those neither certain of beating the market nor particularly enthralled by taking risks. US prices oscillated wildly between 1600-1910 so it was hardly a sustained deflation in which burying dollars in the ground was the most reliable way of ensuring continued purchasing power in a couple of years time, but it's worth noting that growth was a bit more impressive after 1910...
Three. The whole point of the "sticky wages" argument for inflation - one I didn't actually make - is that as relative prices in an economy shift, the real value of some workers' contribution falls, but they still have bargaining power sufficient to ensure this subset of the labour force doesn't accept wage cuts (they take job losses instead). A corollary of this is that productive workers in growing industries can and do have sufficient power to demand higher annual wage escalators, and inflationary increases to payscales are commonplace in normal economic climates. Nothing about the sticky wages problem implies that wages relative to labour productivity of a segment of the economy can't catch up with inflation, in which case the median worker can ask for and get accept their annual inflationary pay rise. But I haven't mentioned the sticky wages argument. Actually I went out of my way not to mention the sticky wages argument, by giving a theoretical examples where wages were all indexed, and emphasising the importance of inflation in providing investment stimulus was far more significant than its distributional effects.
As for point four, I'm honestly not sure whether you're deliberately misunderstanding me to make a rhetorical attack or genuinely don't understand that "investment strategy" and "encouraging people to ... spend more money on stuff they don't need" are not the same thing, and the poor generally benefit a lot more from the rich investing in job creation than the rich buying nice little cabinets full of gold.
Re: Bitcoin and positive vs. normative economics
#320Earlier quoted context omitted.
one, you're crazy thinking that wealthy people hoard their wealth in dollars. two, if you think people won't consume if the money is deflationary, you're crazy. The US had net deflation for most of its history (except during wars) from 1600-1910, and certainly there was plenty of growth. Also, analogous to the "why do you ever bother buying computers knowing that they depreciate rapidly". three. If you think laborers…
The US had net deflation for most of its history (except during wars) from 1600-1910, and certainly there was plenty of growth. And for all but the last 45 years of that 410-year period, the US also had the ability to obtain labor by force and without compensation. And even afterward, for many decades and well beyond the 1910 cutoff, the US had labor arrangements which only were not classified as slavery due to legal…
I am sympathetic to both claims, given that it's possible that economic growth in the modern era is only made possible by massive credit expansion (voluntary, fractional slavery.
boom/bust cycles are normal, what's so bad about them? If the claim is that people get hurt then the question we have to ask is why aren't we stepping forward to help them? As for single or bimetallic standard, those are of course political issues, I'm not as well versed to the reasons for them but it appears to me to basically be a pre-hashing (if you will) of the same arguments we're having now about inflationary vs. deflationary currency, except with more of granularity concern (not an issue with bitcoins).