Bitcoin and positive vs. normative economics • Hacker News Board

Re: Bitcoin and positive vs. normative economics

#321

Post by roblev » Sun, Dec 29, 2013, 1:17 AM UTC

slurry wrote: post #125

natrius wrote: post #51

Earlier quoted context omitted.

We weren't in imminent danger of hyperinflation. I think mass adoption of Bitcoin will cause hyperinflation. If every merchant you patronize today accepted Bitcoin, would you rather have Bitcoin in your bank account or dollars? I'd rather have Bitcoin. They're easier to transfer, they can't be counterfeited, and their supply can't be manipulated. If every merchant accepts Bitcoin and every consumer agrees with my log…

Inflation is a function of money supply and velocity. If everyone adopted bitcoin, the velocity of the dollar would approach zero. Which means that inflation would go down, not up. And yes, I would rather have my [savings] account in a hard, non-inflationary currency. On the other hand, I can only earn interest when someone is willing to take a loan in the currency and pay interest on it. And I am not about to take o…

>I am not about to take out a loan in a hard currency when perfectly good inflationary currencies are easily at hand.

Sadly it is not so easy to make money this way, the forward exchange rates will cancel out any gain from the interest earned in the inflationary currency. Otherwise everyone would do this.

You can make money doing this but really you are just taking a bet on exchange rates, you can easily lose money as well if the fx goes the wrong way during your investment period.

There are very few risk free ways to make more money than investing in US Treasuries.

Re: Bitcoin and positive vs. normative economics

#322

Post by username223 » Sun, Dec 29, 2013, 1:24 AM UTC

etjossem wrote: post #174

username223 wrote: post #157

Earlier quoted context omitted.

"...making exploiting the poor trivially easy.... you already support redistributionist taxation and the welfare state." Judging by the clichés you use, exploiting the poor is probably a good thing in your Libertarian utopia.

I'm not a libertarian. I am using the correct terms that apply to those policies. I don't think of the phrase "welfare state" as pejorative, nor was it originally intended to be so. A combination of redistributionist tax code and generous healthcare/education/benefits are working out really well for Scandinavia right now, and in my opinion we could learn quite a bit from what we're seeing in those countries. In my ex…

My bad. Also, in my experience, strong libertarians believe that the way things are is the way they ought to be -- if you're poor, it's your fault.

Re: Bitcoin and positive vs. normative economics

#323

Post by jellicle » Sun, Dec 29, 2013, 1:35 AM UTC

ReidZB wrote: post #251

jellicle wrote: post #236

Earlier quoted context omitted.

It's not a huge flaw, since our current voting system (in any country you care to name) allows exactly that, and your scenario is not observed in the wild, since it is illegal.

The typical US voting system allows coercion? When I voted, I went into a publicly visible booth, recorded my vote, pressed submit, and went about my business. I suppose I could have been forced to take a picture with a cellphone, but I could have just selected the option they wanted, taken the picture, and then swapped back to the candidate I wanted. Is there something I'm missing here? Any way you slice it, even if…

You perhaps are not aware of absentee voting.

Re: Bitcoin and positive vs. normative economics

#324

Post by icelancer » Sun, Dec 29, 2013, 1:38 AM UTC

jshen wrote: post #289

icelancer wrote: post #284

Earlier quoted context omitted.

This is not, strictly speaking, totally accurate. Praxeology doesn't necessarily agree with this viewpoint.

That's why you shouldn't follow Austrian economics. Edit: also, Austrian economics is like pseudoscience, it isn't representative of real economics

Some would say that the Keynesian model is psuedoscience for having untestable priors. I don't have a dog in the fight but neither do I think your screed against Austrian economics is an airtight argument.

Re: Bitcoin and positive vs. normative economics

#325

Post by ubernostrum » Sun, Dec 29, 2013, 1:39 AM UTC

dnautics wrote: post #320

ubernostrum wrote: post #308

Earlier quoted context omitted.

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…

Thus, we can just as easily argue that slavery is correlated with economic growth. Or that disregard for the intellectual-property laws of other countries is associated with growth (see the US in the 19th century, China in the 20th and early 21st) 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 sl…

The bimetallic argument was basically a fight between those who already were wealthy and wished to preserve their position, and those who were not yet wealthy but wanted to improve their position.

Backers of a gold-only standard (mostly in the eastern US) wanted it because their fortunes were already amassed, and denominated in gold or gold-backed currency, and they did not want this diluted by the influx of silver from mines in the western US. Backers of the bimetallic standard had access to silver mines, or to the resulting silver, and wanted the ability to either have silver coined, or to present it and receive in return legal tender (which had been taken away in 1873).

For an edifying take on the populist/bimetallic position, consider reading William Jennings Bryan's "Cross of Gold" speech, which is full of eminently-quotable and still-relevant lines. For example, a rebuttal of what came to be known as the "trickle-down" theory:

Mr. Carlisle said in 1878 that this was a struggle between "the idle holders of idle capital" and "the struggling masses, who produce the wealth and pay the taxes of the country"; and, my friends, the question we are to decide is: Upon which side will the Democratic party fight; upon the side of "the idle holders of idle capital" or upon the side of "the struggling masses"? That is the question which the party must answer first, and then it must be answered by each individual hereafter. The sympathies of the Democratic party, as shown by the platform, are on the side of the struggling masses who have ever been the foundation of the Democratic party. There are two ideas of government. There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them.

Re: Bitcoin and positive vs. normative economics

#326

Post by james1071 » Sun, Dec 29, 2013, 1:40 AM UTC

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…

I am afraid that you have missed the point entirely. The only function that mining performs is a means of distributing the currency and encouraging its use.

Re: Bitcoin and positive vs. normative economics

#327

Post by A_COMPUTER » Sun, Dec 29, 2013, 1:41 AM UTC

etjossem wrote: post #86

Three cheers to the mod who changed the title from "Bitcoin is Evil", even though that's what NYT wants to call it. The author spends most of the piece explicitly telling us that he will not be making a morality judgement about the currency. One quote in the article caught my eye: > BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political…

I don't know enough about economics to know if it's possible to "de-politicize" it, separate a theorist from a particular type of government. But I perceive that Krugman, master of his intellectual domain, becomes deranged in the presence of the name "bitcoin" because technological innovations don't go in reverse, and disruptive ones change the facts on the ground. In those circumstances all government can do is either accept it or go full-on North Korea. In his world, the state must have at least the power, even if it must only judiciously decide when to apply it, to direct all human activity to maintain stability and order. If bitcoin really does threaten the power of the state to tax, the government's reaction is going to turn his utopian social contract "we're-all-in-it-together" paradise into a dystopian surveillance hell-state. and he, as the cheerleader of the State (if anyone remembers him) goes from being a good guy to a bad guy. I can understand how then that bitcoin presents a scary proposition.

I don't know how closely he's been paying attention to the rest of the news on how the government has been reacting to things on the Internet it can't control, like encrypted communications, but the government isn't taking the "acceptance" route, it's going the North Korea route. If he wrote a "PGP is evil" article about how it destroys the ability of the State to keep tabs on pedophiles and terrorists and tax cheaters, it would be derided here with a lot more force.

Re: Bitcoin and positive vs. normative economics

#328

Post by tlrobinson » Sun, Dec 29, 2013, 1:48 AM UTC

RoboTeddy wrote: post #269

pjbrunet wrote: post #261

Earlier quoted context omitted.

Seems it's only decentralized to a degree. Go to the Bitcoin Foundation website, they say they want to keep Bitcoin decentralized. So how much influence does this Bitcoin Foundation have over the future of Bitcoin? No idea. There's only one (unpaid) Bitcoin developer responsible for the whole thing? Sounds like a tremendous responsibility for one person, considering what's potentially at risk. How are changes rolled…

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…

Note that (in theory) it's the "economic majority", not the "miner majority" that matter: https://en.bitcoin.it/wiki/Economic_majority

If a bunch of miners decide to change the protocol but the majority of users stayed on the old protocol then those miners would be mining a worthless (or at least less valuable) fork of the blockchain.

Re: Bitcoin and positive vs. normative economics

#329

Post by brownbat » Sun, Dec 29, 2013, 1:48 AM UTC

rokhayakebe wrote: post #272

paul wrote: post #159

I'm most bullish on bitcoin when I read articles such as this one, and most skeptical when I read the thoughts of the bitcoin believers. It's truly the most interesting technological development in years, if only because it reveals how little anyone really understands money or economics. Here's another interesting (though imperfect) way of thinking about bitcoin: it's a decentralized corporation, where bitcoins are o…

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…

> It is amazing how one word "COIN" added to this word has shaped everyone's thinking.

Yeah, Bit-distributed-public-ledger doesn't have the same ring, but I feel like there are a million problems that can be solved with this technology that are barely being explored.

Namecoin is one example, a distributed DNS system, but it feels like that's just scratching the surface of problems that require allocating sparse control over many decisionmakers.

Re: Bitcoin and positive vs. normative economics

#330

Post by james1071 » Sun, Dec 29, 2013, 1:48 AM UTC

jellicle wrote: post #244

ansible wrote: post #135

Earlier quoted context omitted.

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…

Nearly 100% of the attractiveness of bitcoin is the promise of infinite rewards to the early investors in the Ponzi scheme. Bitcoin couldn't and wouldn't exist at all without that promise. So a simple system based on allocating 100 coins to everyone just wouldn't do at all.

Yes-it's a marketing trick.