Gold standard was bad, but Bitcoin standard is even worse • Hacker News Board

Re: Gold standard was bad, but Bitcoin standard is even worse

#21

Post by rtpg » Sat, Jan 11, 2014, 1:10 PM UTC

dcc1 wrote: post #6

kolinko wrote: post #3

tl;dr; gold standard was abandoned a long time ago, we survived, and therefore it was a good choice to do so. Or, in the words of the author: "no plans for its return have emerged across a large number of economical cycles" First of all - it's a weasel-talk. What is that large number of cycles he's talking about? Why is this number sufficient enough to come to the conclusion? Also, the plans to get back to the gold s…

I like how he ignores recent past of almost the whole global economy imploding due to debt based fiat system, and only being "resolved" by issuing even more debt and printing more dollars

Proponents of the gold standard also ignore the slightly-less recent past of currency crises in Europe and Asia in the 80s and 90s, all due to fixed currency exchanges (which is basically just a variant of the gold standard, with gold being replaced by whatever basket you're using). The fact that we were able to print our way out of a crisis of confidence is a good thing, because in a gold standard world we couldn't do anything of the sort. A credit freeze would have lasted a lot longer.

Re: Gold standard was bad, but Bitcoin standard is even worse

#22

Post by drcode » Sat, Jan 11, 2014, 1:15 PM UTC

kolinko wrote: post #3

tl;dr; gold standard was abandoned a long time ago, we survived, and therefore it was a good choice to do so. Or, in the words of the author: "no plans for its return have emerged across a large number of economical cycles" First of all - it's a weasel-talk. What is that large number of cycles he's talking about? Why is this number sufficient enough to come to the conclusion? Also, the plans to get back to the gold s…

Yeah, every business cycle except the current one, when bitcoin takes over :-)

Re: Gold standard was bad, but Bitcoin standard is even worse

#23

Post by josu » Sat, Jan 11, 2014, 1:15 PM UTC

>Fact is, without such freedom, banks would not exist.

Ok, if you say so. But wait, this is the next sentence:

>Or their functioning would be severely limited.

Oh, so the fact that banks would not exist is not a fact anymore?

Re: Gold standard was bad, but Bitcoin standard is even worse

#24

Post by hbbio » Sat, Jan 11, 2014, 1:19 PM UTC

There was a time when high-quality articles got upvoted on HN.

Re: Gold standard was bad, but Bitcoin standard is even worse

#25

Post by dcc1 » Sat, Jan 11, 2014, 1:21 PM UTC

rtpg wrote: post #21

dcc1 wrote: post #6

Earlier quoted context omitted.

I like how he ignores recent past of almost the whole global economy imploding due to debt based fiat system, and only being "resolved" by issuing even more debt and printing more dollars

Proponents of the gold standard also ignore the slightly-less recent past of currency crises in Europe and Asia in the 80s and 90s, all due to fixed currency exchanges (which is basically just a variant of the gold standard, with gold being replaced by whatever basket you're using). The fact that we were able to print our way out of a crisis of confidence is a good thing, because in a gold standard world we couldn't…

The confidence is not in the currency or the central bank.

The confidence (of the markets) is that the central bank (on behest of the government) will use currency as a tool in order to ensure that economies dont sink due due to negative outlook on the future.

There is nothing stopping central banks from creating their own cryptocurrency and controlling it by controlling all the mining (and hence being able to change the rules of deflation/inflation set into protocol). In fact a "bit-dolla" could probably be used much more effectively as such a tool since everyone would know what everyone else has as blockchain is public. Would these banks have gotten "too big too fail" if their "wallet addresses" were public?

Re: Gold standard was bad, but Bitcoin standard is even worse

#26

Post by jdreaver » Sat, Jan 11, 2014, 1:34 PM UTC

> ...I know no modern country that currently adheres to gold standard and no plans for its return have emerged across a large number of economical cycles. This leads us to believe that the decision to abandon it was backed by real economical incentives to do so, not emotional or political.

Most "modern" countries also want to spy on their citizens, curb free speech, and spend their way out of debt. Since most of them do it, their decisions must have been backed by real incentives, not emotional or political. /s

The gold standard at least kept the money almost sane, but now any government can print as much money as they want. Inflation created as a result is one of the biggest hidden taxes on the poor there is. Giving governments a monopoly on the money supply is part of the reason our current currencies are worth less and less every year.

My favorite aspect of Bitcoin is that it isn't created by committee, and no secret team of government economists gets to control the supply. I personally think Bitcoin in particular will be supplanted by something better, but I can't wait until crypto-currencies become the norm and we look back to see that the naysayers were on the wrong side of history.

Re: Gold standard was bad, but Bitcoin standard is even worse

#27

Post by daveungerer » Sat, Jan 11, 2014, 1:35 PM UTC

yummyfajitas wrote: post #11

So much pop Keynesianism spreading real misunderstandings. I really wish people who argued against deflation would take the time to understand the underlying theories. Deflation means, that the most fundamental law of finance is broken. The law, that says: It is much better to be given one dollar today, than to have one dollar next year. Deflation does not break this law. It is always better to be given one bitcoin n…

> It is always better to be given one bitcoin now than one bitcoin in the future.

A counter-example: Your pot dealer says you can have 4 bags of pot now, and you have 1 year to pay the 1 BTC you owe him. Being a man of better impulse control than you, and a prudent financial manager of his drug enterprise, he values 1 BTC in a year more than 1 BTC today.

That is, of course, assuming the expected value (after applying the deflation and factoring in risk of non-payment) is greater than the value he could build by investing the 1 BTC in his business today - an open question until we have some real deflation figures.

> (If 1 BTC is worth 4 bags of pot today and 5 next year, 1 BTC in a year is worthless to me if I want to smoke now.)

As I tried to illustrate above, finance is not something that's based on your personal preferences - it's a complex inter-dependent system.

Re: Gold standard was bad, but Bitcoin standard is even worse

#28

Post by jnbiche » Sat, Jan 11, 2014, 1:36 PM UTC

OP points out the gold standard has disappeared from all modern countries and that this is a good reason to eschew a similar system in Bitcoin.

But could it be that the reason why the gold standard disappeared was that it acted as a check on political power? That is, that leaving the gold standard behind has permitted politicians to consolidate their power to a level heretofore unseen in "democratic" countries?

Just because a system has been left behind doesn't mean it's a bad system. Sometimes good systems are abandoned if they challenge/limit the authority of a powerful actor.

And I'm no gold bug, but I'm not convinced that a monetary standard is an entirely bad thing. I think there are trade-offs in each direction.

Re: Gold standard was bad, but Bitcoin standard is even worse

#29

Post by XorNot » Sat, Jan 11, 2014, 1:57 PM UTC

dcc1 wrote: post #4

Ah jebus another blogger who misunderstands bitcoin ecosystem, technology and its users. Who is looking for attention for his blog since its good linkbait. Well he/she got it. Economists (including the armchair variety like this blogger) should be delighted bitcoin exists, it gives them something to compare and measure and write about for their dismal "science" In meantime some of us continue to build for bitcoin and…

Why, why, would a central bank use the concept of "mining" in a cryptocurrency?

They're a central bank, and they want to be able to control the money supply. All they have to do is generate some suitably strong keys, and use regular PKI infrastructure to verify them and transactions with them.

Which you know, they've done - that's the modern credit card system (though I am open to the idea we could create something at a government level that was lower fee.

Re: Gold standard was bad, but Bitcoin standard is even worse

#30

Post by pikachu_is_cool » Sat, Jan 11, 2014, 2:02 PM UTC

daveungerer wrote: post #27

yummyfajitas wrote: post #11

So much pop Keynesianism spreading real misunderstandings. I really wish people who argued against deflation would take the time to understand the underlying theories. Deflation means, that the most fundamental law of finance is broken. The law, that says: It is much better to be given one dollar today, than to have one dollar next year. Deflation does not break this law. It is always better to be given one bitcoin n…

> It is always better to be given one bitcoin now than one bitcoin in the future. A counter-example: Your pot dealer says you can have 4 bags of pot now, and you have 1 year to pay the 1 BTC you owe him. Being a man of better impulse control than you, and a prudent financial manager of his drug enterprise, he values 1 BTC in a year more than 1 BTC today. That is, of course, assuming the expected value (after applying…

....that's called a loan.