Bitcoin Forum

http://www.bbc.co.uk/news/world-europe-17680904


What are the chances of this Greek community, among others, reaching out to Bitcoin?

~Bruno~

You can't afford items in euro yet a TEM equals a Euro?  ::)

Too convoluted system. Not anonymous at all (you have to give your ID card to participate).

Their website is down for the last few days (maybe Orthodox Easter holidays). (www.tem-magnisia.gr). You could find some of their page in Google Cache and then translate them but many things will be lost in the translation.

It's a zero sum currency. There are as many TEM debits as there are TEM credits at any time. The fact that everyone has a 300 TEM credit limit (they cannot spend more than that without acquiring some), makes it inflationary by design.

Examples given suggest that this is a mediocre attempt to revitalize the local economy, without much of actual value. They suggest that shops should give a discount in Euros and collect the discounted amount in TEM. Too easy to cheat with this. Apart from personal barter of products and services, it doesn't offer much of a benefit.

No talk of security measures for their "centralised database" of transactions. If it grows enough it will soon be the target of the University of Volos Computer Department. Or the government itself. Too easy to kill.

That's my first view. I'll try to monitor it (f they come back online) and report more here.

It's nothing new. Either it is just the EUR with a mask on because they keep the EUR to cash people out or they don't keep it all and it's a bank in disguise.

People have no EUR because of too much debt? give them a 300 EUR loan and tell them its not really EUR its now called TEM!
that will fix the economy.

ok, i'm half-joking here because its an intrest-free loan which only circulates locally. maybe it helps some people to get food on the table for some time.

it's the helicopter effect of giving money away in a new system of money. a certain cryptocurrency you may or may not be familiar with is in the process of doing the same thing right now.


I have not delved into it, but it does not appear to be a loan.  "It works as an exchange system. If you have goods or services to offer, you gain credit, with one euro equivalent to one TEM."


Could you explain what you mean by zero sum? And perhaps expand on "inflationary by design"? If they had said, "we will start with 10 quadrillion TEM and give a 300 TEM credit to each person who signs up" is this system more or less inflationary than one that just adds 300 credits to the economy for each person that signs up?


Isn't this the absolute foundation for money?

Zero sum means this:

Every account starts at 0. Let's say we agree that I'm a plumber and I will clean your drainpipes for 30 TEM. Then your account balance will become -30 TEM (debit) and my account balance will become +30 TEM (credit which I can spend in another transaction).

I put it wrongly in my previous post, there is a maximum debit of 300 TEM that someone can have, not credit. Members can have unlimited credit.

There is no "starting amount" of TEM. It's zero for everyone and the total sum of member balances is always zero. It is still inflationary however.

Regarding your comment about the foundation of money, I would answer definitely yes, if we're talking about Ancient Greece. But if you just try to think about the economic forces that have contributed to the existence of this very forum and those that have made possible the 900,000 or so posts herein by people all over the world, I think you might agree that personal barter doesn't help much.

I know what zero sum means, but explain why you brought it up or why this is something significant to even mention, I guess.


Ok, I see that you just want to say "it's inflationary" because that's a dirty word around here.

zerohedge just brought this article:
http://www.zerohedge.com/news/birth-barter-how-one-greek-town-dropped-euro-and-moved
with a short video from BBC. they seem to absolutely not get it.
 
i made a comment about bitcoin at the video (http://www.youtube.com/watch?v=RI38zFz9WTM) , maybe some youtubers can "sticky" it by liking :)

Maybe someone should set up an exchange between Bitcoin and TEM.  If I were in Greece, I would want to turn some of my TEM into BTC.  Anyone have an idea of a TEM / BTC price?

Since TEM is pegged to EUR.. same as EUR. atm 3.9 EUR/BTC

So far the only evidence I see that this is "debt-based" is from the posters in this thread. In fact, the OP even quotes part of the article where it says "you earn credit by offering goods and services."

Telling people to buy bitcoin when they can't buy food because they have no euros has got to be some of the most short-sighted shit I've ever seen on here. And you claim somebody "doesn't get it."

Etlase2,

I would say that this is distributed debt (as opposed to centralised through the banking system). Now on its own, there is nothing wrong with debt, centralised or not. The problems are elsewhere. The problems, as I see them, are that its value is pegged to the euro, so it's affected by the problems of the euro. Second, it increases the elasticity of the money supply which causes a misallocation of resources.

Man I don't even know why I bother.


I would say you have absolutely no idea what you're talking about. There is no interest owed and there is no bank, centralized or not, that has to be repaid. Explain to me how this is a debt. Explain to me in what way you could bootstrap a currency without requiring work performed that isn't debt-based under this ridiculous definition. Helicopter dropping money? Ah well, here is the same helicopter except it is slightly more discerning about where it drops its money: to people who provide goods and services.


It is not affected by the problems of the euro because, newsflash, it's not the euro. Nor is it pegged to the euro by any matter other than convenience and as a way to bootstrap. Collapse of the euro would not cause a collapse in TEM.


This means you literally believe the following: the euro wealthy should be able to buy up as much property and other material wealth as possible while greece is in a recession and many people starve, all due to the incompetence of politicians. What a revolting statement. I can see why you're so fond of bitcoin. And I can see that your posts are not ever again worth reading.

Watching!

I don't have an alpaca in this race, yet, but am learning something new from reading the dialog. Thank you, both.

~Bruno~

Etlase2,

Debt is not defined by the presence of interest.

See wikipedia on Debt (http://en.wikipedia.org/wiki/Debt).

TEM has a fixed exchange rate with the Euro (1 TEM = 1 EUR), in other words, there is someone who promises to redeem them at a predefined rate. If the market price of euro collapses, so will the market price of TEM. This behaviour is the same as other money substitutes, such as bank notes (in case of a gold standard) or current accounts (except it's not controlled by the banks). An attempt to decouple them would cause arbitrageurs to equalise them again. This arbitrage also serves as a limit on the creation of additional units. Due to transaction costs and small size of LETS economies, this is imperfect, so there is a certain level of disparity. But as soon as the disparity increases sufficiently to overcome the transaction costs, arbitrageurs will appear.

Only if the redemption ceased for some reason (for example, due to lack of reserves or market power), then the price would decouple. I think that this would cause a more rapid increase in the amount of TEMs in circulation (because it's a creation of new money at a zero interest rate) and a relative fall in the market price of TEM compared to EUR, but I am not completely sure about this. I was unable to find Austrian writings about LETS, so the only variable I can somehow find relevant is the interest rate.

Just out of curiousity, can you show me an example of a system like TEM or LETS that does not have a predefined exchange rate in units of other currencies or commodities?

You are imagining things. I never said that people should not use TEM. Austrian economics is not about should (normative statements), it is about is (positive statements). I claim that systems like LETS or TEM do not fix what I perceive the main problems in the current monetary system. I also said in the past that such systems reduce the scope of the economies. This also decreases the specialisation of labour, and that will make the society poorer. If people want that, alas, let them have it. However, as explained above, on a free market, I don't expect such systems to play a significant role.

Most importantly though, you did not address my points. Rather you react as if I objected to your ideological goals or something. However, I am indifferent to your goals. I'm merely analysing the the economic foundations of your position and attempting to derive the consequences thereof.

No, it is defined by the fact that there is a creditor, which there is not here. Why you can't see that, I don't know. Probably because you breath from the mouth.


Link me to the evidence where this exchange rate is fixed. Because all I can find on google is the BBC article and it says no such thing. So unless you live in Volos and have experienced this system for yourself, or you have knowledge that I don't, you just made that up. Link me to any evidence where it is even exchangeable. What person in their right mind would ever exchange EUR for TEM?


You don't have any points. You have Ludwig von Mises spew.

The creditor is the person who sells the goods/services against a newly issued TEM. The debtor is the person issuing the TEM. Austrian school explains why: credit is an exchange of present goods for future goods.


http://www.nytimes.com/2011/10/02/world/europe/in-greece-barter-networks-surge.html?pagewanted=all (http://www.nytimes.com/2011/10/02/world/europe/in-greece-barter-networks-surge.html?pagewanted=all)

http://www.npr.org/2011/11/29/142908549/modern-greeks-return-to-ancient-system-of-barter (http://www.npr.org/2011/11/29/142908549/modern-greeks-return-to-ancient-system-of-barter)

http://www.bbc.co.uk/news/world-europe-17680904 (http://www.bbc.co.uk/news/world-europe-17680904)

(emphasis added)

If there is free market, it's exchangeable. The peg is just obfuscated because there is no central redemption instance and no specialised markets. But, as I said, once the price discrepancy exceeds transaction costs, arbitrageurs will appear.

The person that sees an arbitrage opportunity and wants to make a profit on that.

You just discredited yourself.

So what you're saying is all money is debt, including bitcoin. That's fine. It's completely useless information, but that's fine. It is a complete non-sequitur to the post I was replying to, but you don't care.


So you quoted a bunch of articles that say one TEM is equivalent to one euro. That does not mean that there is a fixed exchange rate, as you claim. So again, you made it up. No authority is backing TEM with EUR, so the equivalency is only in the minds of TEM owners. Ergo, any logic you try to produce from this made up connection is flawed and completely dismissible.


LOL with you maybe. With common sense, certainly not.

Not all money is debt, because some money is a present good and is not created by a credit transaction between two market participants. This is particularly true for commodity money, such as gold. Gold is retrieved from, say, mines. This retrieval increases its supply, but it's not a credit transaction. Rather, it's a production process that creates a new good.

Of course it does. As I said, it's just obfuscated due to a lack of a centralised system and specialised markets. Let's say that someone in the community is selling radios for 100 TEMs and someone else apples for 1 TEM each. If a radio costs 90 EUR outside of the community and apples 1 EUR, if we ignore transaction costs, someone could buy a radio for 90 EUR, sell it in the community for 100 TEM, buy 100 apples with them, and sell the apples outside for 100 EUR. This nets him an arbitrage profit of 10 EUR. This puts a pressure on the community radio seller to decrease the price, and on the community apple sellers to increase their price. Since money is what connects all transactions, an increased number of products will shift the pressure onto the price system.

Again, you ignore elementary economics.

The equivalency is also in their actions. They use it in trade for the equivalent value. There does not need to be a centralised authority for this (in fact, I explicity said that). But this is not automatic. If they deviate from the equilibrium (stop treating them as having the same value), either the arbitrageurs will reestablish the equilibrium again, or the whole system will collapse.

You have failed to provide a response to my points, and continue to ascribe to me positions which I never expressed.

How am I supposed to follow your logic of it being fixed when you set up an example where it floats. LOL.


How then has the world currency market not collapsed since the removal of the gold standard? No major world currency is backed or pegged, yet amazingly commerce still occurs.


You quite clearly expressed that you believe TEM is a bad idea. Bandied about terms like "misallocation of resources" even, all the while the majority of the "resources" are going to the banks as interest payments. Good spot for them to be.

Etlase2,

I don't understand your objection at all. My example showed that an attempt to deviate from the exchange rate will force it back, as long as some people treat TEM and EUR as having the same value. You contradict yourself, on one hand you claim that people do treat them as same value, on the other hand you deny that they are exchanged at a predefined exchange rate. It's an illogical construct. The referenced articles clearly explain that these people still use Euros for quoting prices and accounting, and merely use TEM as an alternative payment method.

Furthermore, you fail to address the economic issue: if person A does treat TEM and EUR at a particular exchange rate, and person B at another one, that creates an arbitrage opportunity.

The main reason is, in my opinion, that the amount of new money created by the credit system is still restricted, i.e. there are still certain limits to expansion of credit, be it through regulation or the fact that only banks rather than anyone, can create new money. Someone might claim that legal tender laws are also a factor, but I think that the credit restriction is a more important factor.

LETS systems are essentially a different way of how money enters the economy. It's a mix of being planned centrally (which has the obvious disadvantages of central planning) and allowing anyone to create new money. It only works because there is a peg to another currency, which prevents the expansion from occurring too quickly (again, arbitrage). If there is no peg, then either the economy will convert into a closed, increasingly centrally planned one, or the money supply will increase arbitrarily until it reaches hyperinflation and collapses. If the peg suffers from hyperinflation, the LETS is also affected by the problem. Theoretically, they can react by re-pegging it at a different exchange rate, essentially creating a new central bank.

It may be possible that LETS have a way of restricting the supply that I'm missing, i.e. that their supply cannot increase arbitrarily. If this is the case, then I consider it possible that something else than centralisation or collapse would follow a decoupling (i.e. I cannot logically exclude that).

"bad" is a normative term. I try to avoid making normative statements as much as I can. You on the other hand are obsessed by ideological baggage which I'm completely indifferent to. My main point is not that TEM is bad. I merely attempt to analyse the consequences thereof. The main consequence that I deduced is a decrease in the size of the economy (even though there could be, but not necessarily, an inflationary boom at the beginning). If that's what people want, let them have it. I'm the last person who would object to that.

In any case, once the EUR and USD collapse, we'll see how it affects the LETS systems on one hand, and gold/bitcoin on the other.

The problems the Euro caused in Greece was that it made international goods available cheap, killing the local economy. Wouldn't have been much different with Bitcoin.

Discussions about economic systems in general are mostly about how to optimize efficiency  (re "Misallocation of resources"). But we could say the problem is that today's global economy has already become too efficient.

That's why people like Bernard Lietaer (http://en.wikipedia.org/wiki/Bernard_Lietaer) do propose dual currency systems. There'd be "patriarchical" currencies for long distance trading (Bitcoin would be among the best we ever had in this regard), and local currencies.

http://www.scribd.com/tesasilvestre/d/34659324-The-Monetary-Blind-Spot-by-Bernard-Lietaer


http://www.scribd.com/doc/26248658/Is-Our-Monetary-Structure-a-Systemic-Cause-for-Financial-Instability-Bernard-Lietaer