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Bitcoin vs. Ben Bernanke
71–80 of 94 posts
Re: Bitcoin vs. Ben Bernanke
#72Earlier quoted context omitted.
Have you atudied economics? The OP reads like someone who has and is utterly incredulous at the statements being made by Bitcoin's proponents. In fairness, the gentleman interviewed in this article insisted it was all an experiment. But the WSJ editorial board has a long time habit of being very non-mainstream and almost Austrian with its economic views, so this interview was likely intended to play into a political…
I really don't get why people who call themselves 'mainstream' economists can't see or choose not to acknowledge the issues the Austrians bring up. It strikes me as quite odd. Not everything the Austrian school preaches is correct, but they do have some valid points that I would expect most smart people to understand. To bring up just a few big ones: Printing money and low interest rate policy of the Fed influences m…
I think you have a point on these two observations, though I would question (or flip) the specific groups helped/hindered by actvist government policy.
The challenge is the broader policy implications of reversing course. For example, if the intent of the economy is to encourage activity and growth, then wealth transfer should be away from savers to spenders in a liquidity trap, for example (through increased inflationary expectations).
Re: Bitcoin vs. Ben Bernanke
#73Earlier quoted context omitted.
Rant much? I wanted to actually learn something from your post but it reads like a madman wrote it. I own exactly zero bitcoins, but following the market since 2011 has proven that it is getting easier to use and more prevalent. People will be putting down bitcoin as a serious entity even after PayPal is accepting them.
Have you atudied economics? The OP reads like someone who has and is utterly incredulous at the statements being made by Bitcoin's proponents. In fairness, the gentleman interviewed in this article insisted it was all an experiment. But the WSJ editorial board has a long time habit of being very non-mainstream and almost Austrian with its economic views, so this interview was likely intended to play into a political…
"An economy is a closed system - if some are saving, others have to spend to keep the music going."
You mean they have to spend more than they can afford? Otherwise, what exactly do you mean by they have to spend? Obviously they have to buy a house, a car, a phone, a computer, electricity, etc. I would think most people save what is left over if you like.
Re: Bitcoin vs. Ben Bernanke
#74Earlier quoted context omitted.
On your point 2. Saving doesn't have to mean saving money. It can mean investing in stocks, bond, or funding start ups.
Yes, but deflationary currency discourages that sort of saving, because holding on to the currency works as an investment.
Yes but, regardless of the nature of the currency, investing in stocks etc is an investment with a higher return than simply holding.
Re: Bitcoin vs. Ben Bernanke
#75Interesting point: "And for those who wish to avoid both inflation and deflation, what about a digital currency programmed to maintain stable prices, avoiding mischief by central bankers as well as the possibility of deflation?" My gut is that this is not possible. Enforcing stable prices requires constant data about price levels, and with decentralized markets there doesn't seem to be an accurate way to get that dat…
Historically speaking, the free market will gravitate to a currency that has a stable price and appreciates at least a little bit over time. No one wants to hold a depreciating currency. We use that fact to drive people to spend by driving interest rates down. Hence the lack of savings and the high levels of consumer spending.
The "historically" is a bit misplaced. Historically speaking, people almost universally ended up using whichever currency was used for taxation and in use by other significant institutions for practical purposes. Inflation basically never had anything to do with that.
Rich people might have been able to use other things as a store of value though, but things can only become lasting stores of value if they start out having some initial use.
Re: Bitcoin vs. Ben Bernanke
#76Earlier quoted context omitted.
Regarding your point about the lending vs borrowing: The use of the word "encouraged" makes sense to me. If people are "encouraged" to lend vs borrow, that means they will have more desire to lend vs borrow. This has an important effect on the supply vs. demand equation. Supply of loans, ie. people willing to borrow, goes down and the demand, ie. people willing to pay money now for interest later, goes up, causing pr…
A deflationary currency doesn't encourage people to lend , it encourages them to save . If currency is deflating at a low, constant rate (say, 2-3%, comparable to the normal rate of inflation), then the interest rate -- in real terms -- must be strictly higher than this. A 0% loan with 2% deflation the equivalent of a 2% real interest rate. But no one will ever lend money in this situation. You take on risk, but have…
I don't think your maths is correct. If the currency is deflating at 2%, it is deflating regardless of whether it is the lender or the borrower holding it. If therefore this is lent at 1%, the real return is 3%, 2% by deflation, 1% through the interest rate. Hence it is more profitable to lend than hold.
Re: Bitcoin vs. Ben Bernanke
#77Earlier quoted context omitted.
famously insane according to who? The founding mantra of the editorial board: "We are united by the mantra 'free markets and free people', the principles, if you will, marked in the watershed year of 1776 by Thomas Jefferson's Declaration of Independence and Adam Smith's Wealth of Nations. So over the past century and into the next, the Journal stands for free trade and sound money; against confiscatory taxation and…
Despite their professed editorial line, in practice they're much more conservative than libertarian. For example, they are strong supporters of the War on Terror, both in terms of an interventionist foreign policy and ramping up domestic security measures. They also lean towards some support for Christian and social conservatism, though that part is weaker. On politics, they are pretty openly partisan in a pro-GOP di…
lol, being republican is insane now?
Re: Bitcoin vs. Ben Bernanke
#78Earlier quoted context omitted.
No. It's not like saying that at all. All it means is that you can trivially have any number of wallets and it's up to you how you use them. Same as with cash.
Except cash isn't trackable. How are you going to do this in a world where undeclared wallets are illegal?
Well, the government could make undeclared cash illegal.
Re: Bitcoin vs. Ben Bernanke
#79Earlier quoted context omitted.
Except cash isn't trackable. How are you going to do this in a world where undeclared wallets are illegal?
Well, the government could make undeclared cash illegal.
It might even work, if they had a way to track all your cash. Unfortunately, unlike with Bitcoin, they don't. This is pretty much what I said in my original comment?
I don't understand all the apologism, it's pretty clear that governments can exert an unprecedented amount of control on money with Bitcoin (all your transactions are public), and no amount of burying our heads in the sand will change that.
Re: Bitcoin vs. Ben Bernanke
#80I'll admit that the WSJ here is not as laughably bad as some quotations from their infamous op-eds had led me to believe. Maybe I was too harsh with them. They seem to do the balance thing, or more correctly here, the common sense and economics thing, at least passably well. Either way, there are some real pieces of work here, misconceptions about economics that were dispelled before, again and again. You're going to…
Rant much? I wanted to actually learn something from your post but it reads like a madman wrote it. I own exactly zero bitcoins, but following the market since 2011 has proven that it is getting easier to use and more prevalent. People will be putting down bitcoin as a serious entity even after PayPal is accepting them.
* it is getting easier to use and more prevalent.*
Yep. I'm seeing more and more of these signs in my neighbourhood:
https://plus.google.com/100751105859582805241/posts/RpQ5adUF...