Bitcoin Forum

From, "The Peter Schiff Show."  He doesn't discuss BTC often but I thought I would start compiling clips from his shows and post them as they appear.  It's been discussed on the show many times in the past but I have no idea when.  I never thought to compile it.  But I will from here on.  Peter does not think bitcoin has any intrinsic value.  He doesn't believe in it because you can't hold it and use it for anything else like gold/silver can.  But he does believe in the principle and idea governing it.

April 31, 2013.  Discussing Liberty Reserve and bitcoin.
http://db.tt/eZQSGXNa

Enjoy.

Looking in the archives, found this interview with Erik Voorhees by Guest host Tom Woods on March 8, 2013.
http://db.tt/mOmyDEb2

From June 20, 2011
http://www.youtube.com/watch?v=vTr_hTC90oQ - part 1
http://www.youtube.com/watch?v=uUxyr7cI0Zw - part 2

From June 21, 2011
http://youtu.be/QoopVDjXydE

Europac newsletter June, 2013
See article, "The Bitcoin Phoenix."
By: Andrew Schiff (sounds very bullish on BTC)
http://www.europac.net/research_analysis/newsletters/global_investor_newsletter_june_2013

June 25th, 2013 Peter Schiff show: - Peter is still skeptical...(~1:50 into audio)
https://dl.dropboxusercontent.com/u/21580995/pa_20130625kusg_low_01.mp3

July 2nd, 2013 Peter Schiff show: Peter talks about the Winkle twins and their new BTC ETF, funny at end.
https://dl.dropboxusercontent.com/u/21580995/BTC%20Winkle%20and%20Peter.mp3

Oct. 4th, 20134 Peter talks about the Silk Road seizure
https://dl.dropboxusercontent.com/u/21580995/pa_20131004jghf_low.mp3

Nov 1st, 2013 Peter gives his bitcoin bubble speech.
https://dl.dropboxusercontent.com/u/21580995/Peter%20Schiff.bitcoin.11.1.13.mp3

Nov 13, 2013 Peter is at the Money Show in New Orleans.  He opens his show talking about bitcoin.  I just put the whole show up.  Talk continues with callers at 1:13:20.
https://dl.dropboxusercontent.com/u/21580995/PeterShiffShow.btc.11.13.13.mp3

Added 11/13/13
http://youtu.be/0VrB1Ae3xqs

Nov 14, 2013 Today's show had the best caller challenge yet.  But he waits until the end of the show and they have no time.  Please listen to the end.  He goes on an amusing tangent about Janet Yellen then back to bitcoin.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.11.14.13.mp3

Nov 15, 2013  I cut this show up.  Two callers here.  The first is anti-BTC, 2nd is pro-BTC.  The first tries to say the media promotes BTC, LOL!  I'm not sure what media he's listening to.  Judge for yourself.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.11.15.13.bitcoin.mp3

Nov. 18th, 2013  Two segments cut here.  First is Peter talking about it.  Second he's talking to a caller.  
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.11.18.13.mp3

Nov. 19th, 2013  Peter describes why gold is real money and bitcoin is a ponzi scheme...in Peter Schiff fashion.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.11.19.13.mp3

Peter made a Bitcoin vs. Gold Video today 11/21/13
http://www.youtube.com/watch?v=0L7SOPDOvvI

Nov. 22nd, 2013.  Peter talks about the news that Virgin Galactic is accepting bitcoin as payment for trips to outer space.  He has audio clips of Richard Branson.  Also takes calls on bitcoin.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.11.22.13.mp3

Nov. 24th, 2013
Peter Schiff and Erik Voorhees
http://youtu.be/IaBREg5rzlI

Nov. 25th, 2013
Peter Schiff debates Stefan Molyneux
http://youtu.be/mFcTJAQ7zc4

Dec. 2nd, 2013
Peter debates with Erik Voorhees
http://youtu.be/7mUn-d8R98k

Dec. 11th, 2013
Eric Voorhees talks with Tom Woods on his show.  
Eric was The Tom Woods show Dec 11th too.
http://www.schiffradio.com/pg/jsp/verticals/archive.jsp?dispid=310&pid=63335

Jan. 10th, 2014
Peter on Overstock.com
https://app.box.com/s/g10742faolbkeq07ih6g

Jan. 27th, 2014
Peter talks about Charlie Shrem and bitcoin taxes
https://dl.dropboxusercontent.com/u/21580995/PeterSchiff.bitcoin.1.27.14.mp3

Feb. 10th, 2014
Another anti-bitcoin rant.  Talks about Mt. Gox bug and how newcomers may be turned off during bust cycles.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.10.2014.mp3

Feb. 13th, 2014
Peter talks about some technical support levels of bitcoin, etc.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.13.2014.mp3

Feb. 14th, 2014
Peter talks about btc prices on Mt. Gox vs Bitstamp.  He admittedly doesn't understand why they're different.  He takes some calls on it.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.14.2014.mp3

Feb. 20th, 21st, & 25th, 2014
Mt. Gox and Peter...
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.20.2014.mp3
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.21.2014.mp3
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.25.2014.mp3

Feb. 28th, 2014
Peter talks about the closing of Mt. Gox.  Plus a caller at the end.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.28.2014.mp3

July 24th, 2014
Naomi Brockwell, aka "BitcoinGirl", is on Peter's show.  Nothing new.
https://dl.dropboxusercontent.com/u/21580995/NaomiBrockwell_072414.mp3

Sept 20th, 2014
Peter talking bitcoin on his new podcast:
http://youtu.be/lMfoFlJhcck?t=1h5m45s

Added Oct. 19th 2014
Since Peter started doing his weekly podcasts he's talked about bitcoin a few times.  On his YouTube video descriptions are links to when he talks about it.

Podcast #5 @ 30:49
http://youtu.be/nYiyQl7O6HI

Podcast #6 @ 45:00
http://youtu.be/Ob8stmxfbFg

Bitcoins have value, but it is a USE value determined by market forces; he is correct in asserting that the value of bitcoin is NOT intrinsic since the digital substance of the blockchains has no other use than as a medium of exchange and store of value. Were bitcoin to cease being used as money it would have no INTRINSIC value outside of this function, and in this respect it differs from gold and silver which do have substantial intrinsic value.

The vast majority of the valuations of gold and silver is from their usefulness as a store of value (this is the only monetary aspect they do well).  Consumptive uses are a very small percentage of their value.  However, talking about how the value of something changes if it magically losses it's moneyness seems kind of pointless.  By what mechanism would Bitcoin suddenly no longer be money?

Speaking as someone who is a learning JEWELLER notme I can tell you these guys are right :D metals have all sorts of properties like heating points and conductivity, you'll find gold in small amounts on many of the electronics you use and silver is used in dentistry and other places too because of how soft but strong the metal is. Bitcoin has been designed very well and I can't think of much better features to add for it but it only does one thing, if you tried to use it for anything else, it just wouldn't work. You couldn't use Bitcoins for industry and you couldn't even really use them for recreation, they've been specifically designed for the task of being a currency.

Bitcoins do the job of being a currency extremely well but that's the only thing they can do, I think if Bitcoin were introduced in an age where everyone was using Gold/Silver for currency like the old days then it would mostly be ignored save for the convenience of doing international transactions.

Yes, there are consumptive uses, particularly for silver.  However, they are a small part.

See the cart here: http://www.gold.org/investment/statistics/demand_and_supply_statistics/
If you exclude investments and jewelry (which I consider nonconsumptive) only 11% of gold demand is for consumption.

I bought some gold recently and as I held it in my hand I thought to myself "How do I REALLY know this hasn't been counterfeited, or filled with tungsten or something like that?"

Bitcoin cannot be counterfeited.  That has intrinsic value.
Bitcoin can be stored somewhere secure AND somewhere that is convenient to access.  That has intrinsic value.
Bitcoin can be easily divided down to make a smaller transaction.  That has intrinsic value.

One day I hope I can throw away all my gold because bitcoin made it worthless.

jag2k2 you could take it to an assay office or something and have it evaluated if you're unsure, but this is why I acknowledge Bitcoin, even though it's really been designed for one thing it does what it's designed for extremely well without help.

Right.  Bitcoin was designed to be money.  Gold and silver was not.

I got a question to counter this.

What is the intrinsic value of fiat money? It is made of paper, some coins of different metals, but most of it is digital.

The M16.

peter schiff is an idiot who has been pumping precious metals and is heavily invested in them. I knew about him before bitcoin and I would have told you the exact same thing, because it's obvious. end of discussion.

Suddenly?
1) Cryptography shown to be vulnerable.
2) Technical innovation by bitcoin haters.

Less Sudden
3) persistent 51% attacks
4) Persistent legal attacks with cooperation of network providers.

Fairly slowly
5) People decide that it is more trouble than its worth.
6) Something we haven't thought of yet.

Personally, I think these are not highly likely but still they are a greater than zero chance.
Much depends on the growth of legitimate use, which is why, like Amagi, am backing the Bitcoins with precious metals, gold and silver. 
Physical may always be better for physical transactions, CryptoCurrency has the clear advantage for online transactions.

Worthless troll is worthless.

His mortgage bankers speech will forever be one of my favorite financial speeches.

Those properties could be said of some now defunct cryptocurrencies too.

Or I could invent some digital bits that have those properties too. There is an infinite supply of those bits and encoding schemes, hence that does not add intrinsic value outside of a store-value ledger.

Those defunct cryptocurrencies had intrinsic value as well.  If you are wondering why bitcoins have more value than other cryptocurrencies well that is a different question.

Perhaps distinguishing between utility value and intrinsic value might serve us. 
Can any software have value that is intrinsic or must all its value be use based?
For value to be intrinsic, it ought come from the thing itself.

The predictions of mainstream economists are pretty bad, but they look like geniuses compared to famous Perma-Bears like Schiff and Prechter who lose money even when they are right.  Peter Schiff reportedly lost some investors 40-70% during 2008.  There are plenty of bears who made billions in 2008 betting against the housing bubble, and you should listen to them instead.  Austrian Robert Prechter's newsletter has the worst track record of anyone on Wall St over 30 years.  These people are salesmen who pitch simplistic ideas that are easy to understand and play to people's fear.  Following their advice is a good way to lose money.
/rant

http://www.businessinsider.com/2009/1/peter-schiffs-clients-got-hosed-this-year-too (http://www.businessinsider.com/2009/1/peter-schiffs-clients-got-hosed-this-year-too)
http://avaresearch.com/avanew/articles/713/The-Embarrassing-Track-Record-of-Robert-Prechter-Part-1.html (http://avaresearch.com/avanew/articles/713/The-Embarrassing-Track-Record-of-Robert-Prechter-Part-1.html)
http://avaresearch.com/avanew/articles/302/Peter-Schiff-Wrong-on-the-Economy-Wrong-on-Healthcare-Part-1.html (http://avaresearch.com/avanew/articles/302/Peter-Schiff-Wrong-on-the-Economy-Wrong-on-Healthcare-Part-1.html)
http://www.youtube.com/watch?v=8oJCOlwZUic (http://www.youtube.com/watch?v=8oJCOlwZUic)
http://www.youtube.com/watch?v=H2D3J8Jq9hw (http://www.youtube.com/watch?v=H2D3J8Jq9hw)
http://www.youtube.com/watch?v=oUbhAbqKjOo (http://www.youtube.com/watch?v=oUbhAbqKjOo)

You say "had intrinsic value". Well, I respectfully do not agree once again. Intrinsic value means something inseparable from the whole or part of the property of that thing. So the private keys of "ReplicaCoin (tm)" still exist, yet they possess no value today, hence it's not intrinsic to those bits of data themselves.

The value, if any, was transient, and derived from its speculative use as a potential currency.

Would you argue then that gold has intrinsic value?  Wheat has intrinsic value which satisfies our natural need for hunger, it isn't very good though as a currency.  I think Gold and Bitcoin have similar values that make them good currencies and currencies satisfy an intrinsic (or natural) need that humanity has to trade things.  If people decided not to use gold as a currency then its value would plummet as well.

I would argue yes Gold has intrinsic value which satisfies humanity's natural or intrinsic need to trade.  Bitcoin (or any cryptocurrency for that matter) satisfies the same need.  Fiat money satisfies that need (albeit poorly).  Silver and Platinum and copper and other metals live side by side with gold because they offer something unique that gold doesn't.  Bitcoin was first and no competing cryptocurrency has offered anything substantially better thus far. 

There is no something like "intrinsic value".
Nothing ha intrinsic value.
There is "personal use value", the value you give to something for the personal use you do or could do without need anyone else.

The industrial use value of gold is pretty low (this can be proved because people pay to acquire gold and put in in vaults and very few use it in industrial applications where it is consumed or it would not have a supply/consumption ratio so high).

There is quite a bit reclaimed gold as well from industrial uses.
Those old computer components have a bit here and there.
http://www.ebay.com/itm/6-lbs-5-oz-of-computer-scrap-for-gold-recovery-/300915675630

I suppose a pure utilitarian philosopher could suggest that the only values that exist are use values and that nothing is intrinsic, but those folks are pretty rare these days.

There is the "indirect exchange value" and liquid assets like gold, silver and bitcoin are used for this.
They are needed because you need to obtain things from people uninterested in your goods and services.
The more resellable, liquid, etc. commodity is useful for indirect exchange and they are considered money or quasi-money.

You can wipe your butt with paper dollars (will hurt tho), burn it as fuel for a fire, make paper airplanes, snort cocaine, melt down coins into bullets, throw coins as weapons, use them in chance games (heads/tales), etc.  That would be intrinsic value.  Gold/silver have many industrial applications, they're scarce, can't be created without blowing up a star, and are divisible.  The problem Peter has with bitcoin is it only serves one purpose and you can't hold them in your hand.  He's old school, but he'll come around when the market proves itself. 

I see where you're coming from. Actually i agree with Peter Schiff on the current economic situation and what will eventually happen. The difficult thing is, how long it will take. Schiff Recommends buying gold. However if you had followed this advice from the beginning of the year, you'd be underwater. It could conceivabley take a long time for these economic predictions to play out. In the mean time, you could be loosing money.

Right, The current Fed induced high our markets feel is temporary.  Its the same as the instant gradification felt by a gambler or drug user.  Its temporary.  To truly profit from the current clinate you must be patient and let things play out. Peter supports the fundamentals for the long haul.  The only obstacles Peter's philosophy faces is government regulation and market restrictions.  He cannot predict the stupid decisions politicians make.  He does have a few small connections, like Rand Paul who listens to Peters views.

On another note.  Does anyone know about the legitimacy of these gold for bitcoin companies?  Like http://www.coinabul.com ?

The point to own physical gold is not to gain, but as insurance in case of economic collapse.
The "wealth transfer" is a side effect of it, because if you do not lose when all are losing, you are becoming wealthier compared to them.
And after the tempest is past, you are able to convert gold in productive assets (houses, shares of companies, land and so on).

^
Right, you maintain your purchasing power as the dollar loses value.  1 oz of gold always has and always will buy 1 good suit.

Coinabul are good folks.
My prices are better, but coinabul provide a much better retail experience.

If I may ask here, what's your typical markup over spot for a Perth Mint 1oz bar?  Coinabul around 8% for 1 oz bars.  http://www.amagimetals.com/ is ~3%, WOW!  Love the John Galt and Ron Paul coins, HAHA!

edit:  I could buy some gold, max out my credit cards and disappear hehe!

I will write some stuff to reply to this,.

What is the point of investing? To increase the value of your assets, right? It's a money making exercise (and hopefully not money loosing). Buying gold is an investment therefore u are looking to make money.

Also, when the tempest is past, it is a bad time to convert , I guess u mean sell , your gold because everybody else will be doing the Same. To be successful in investing u need to be ahead of everybody else . You need to be different, but also to be right when others are wrong . So the best time to sell would be when everybody is buying .

There is no such thing as insurance in investing. Investing is about making bets on the future. It is about predicting the future basically. It's also about avoiding doing stupid things and loosing your savings.

/rant

interesting

I have to agree with Xavier here on this.  Gold is not an investment.  It's a hedge against inflation.  And so is bitcoin imho.  Gold is a store of wealth.  When the tempest comes to pass, everybody and their mother is going to try to buy gold at the same time.  And its going to Skyrocket.  Similar to Bitcoin and Cyprus.  Only the real fat lady has yet to sing her song.

At some stage people come to believe there is too much risk in investing in traditional markets. We see that now with currency & monetary manipulation. People are on the stocks and RE express but it is increasingly seen as fragile. Gold is then a hedge for part of your wealth, but the timing is difficult. Ideally the end game is to escape fiat death. It becomes as much a way of not losing in times of chaos as storing wealth. This is a big shift in mindset.

Gold has an intrinsic value because it:

Is rarer than most metals (if Gold were plentiful and Iron was rare, we would be hedging with Iron instead)

Takes a lot of time and energy to mine


Bitcoin is modeled after this.

They have integrated rarity

They take a lot of time and energy to "mine"



Usually I like what Schiff has to say, but I don't think he is quite right on this one. Like most firmly stuck in Fiat world they don't quite seem to get the concept completely but feel at home talking about it anyway as some kind of curiosity but not "real money", whatever the hell that means.

Liberty Reserve was a sloppy enterprise and got what it deserved

Economic disaster /= everyone tries to buy gold.  The gold price dropped during the 2008 crash along with everything else.  Gold is also a terrible inflation hedge.  The 1980's saw periods of double digit inflation, during which the gold price was falling.  The US is only 21% of the world's economic activity, so it makes little sense to think that this globally traded commodity is going to reflect the policy of a single government.

There are WAY better ways to profit if you think a crash or hyperinflation is coming than just buying gold.  People like Kyle Bass became billionaires in 2008 betting against the housing bubble.  Peter Schiff was not one of them.  You can safely ignore anything he has to say because he makes his money by selling gold.

Obviously gold performs better in the very long run (>20 years) than something that targets an inflation rate of 2-3% with periods of double digit inflation in the 1980's.  In the long run, fiat currency is the worst investment around.  It goes to zero by design.  To think this matters, you have to ignore the fact that no one "invests" in USD.  People invest in productive assets like stocks.  Not only do stock prices beat inflation, they get a dividend every year.

BTW, Schiff only recommends 15-20% gold in portfolio, or at least he did a couple years ago.

Aspiring gold bugs should read this: http://bilbo.economicoutlook.net/blog/?p=2562

Here is some more stuff:
http://online.barrons.com/article/SB50001424052748704372504578289922761002366.html#articleTabs_article%3D1
http://www.zerohedge.com/contributed/2012-12-07/hidden-dangers-gold

Gold dropped in '08 because the dollar didn't drop. People still had faith in the dollar.   But that sentiment is slowly changing.  I notice customers at work, through conversation, we look for the rare silver dimes/quarters.  Then again this libro girl I'm kinda dating has no clue.  She gets mad when I try to explain it all to her.

Anyway I live how we're all preaching to the choir here.

Thus my point about their superior retail experience.  We don't take credit, but we do take Bitcoin, and other non-reversible transactions.

Links added on first post.

"Intrinsic value" is a misnomer, intentionally designed to mislead people. The only legitimate use of the term is in futures/options trading as there is a "present value".

Case in point, answer these three questions:
1) What is the intrinsic value of water?
2) What is the intrinsic value of water if you are lost in a desert?
3) What is the intrinsic value of water if you are drowning?

One's answer will always be different for all three cases, indicating there is no such thing as "objective value". In the case of #2, the average person may be willing to lose a limb to avoid dying of thirst. In the case of #3, the average person may be willing to lose a limb to see enough water removed that they could obtain another breath.

Value is always "subjective", no matter what adjectives are added to it. To argue there is some inherent property of an entity that provides an objective value to it, is to purposely mislead people.

Bitcoin is money (or can be used as such) because it is like gold and other precious metals. They are all scarce, which gives them *some* value, even if it's not always a stable one. Even fiat money has scarcity, regardless of inflation, it is not infinite, even if some might be trying to make it infinite even today.

There's an old saying that goes: "Money is a matter of functions four: a medium, a measure, a standard, a store."

Gold and other precious metals have problems with the second of these: measure (AKA unit of account).

A good unit of account has to be divisible, fungible, and countable.

Precious metals meet the fungible and countable requirements, but have struggled over the years with meeting divisibility. After all, suppose you were to do work that is the equivalent of 5.1 grams of gold. The individual you did the work for reaches into their pocket and gives you 6 grams and asks for .9 of a gram in change. How do you provide it?

Bitcoin solves the divisibility problem of scare goods, while still meeting all the other requirements of money.

So if you wanted to say there was any sort of "objective value" of Bitcoin, it would be the following: Bitcoin is a medium, a measure (divisible, fungible, & countable), a standard, and a store.

From there you can argue whether or not it fits these attributes better than fiat money, but it almost certainly meets these attributes at least as well as precious metals.

I agree with most of what you say here, except your description of "intrinsic" as "objective". Intrinsic value, when used in the money domain, means the value that is not echange value. It is not objective by any means, it is defined by supply and demand as everything else.

Imagine that gold is unsellable as a used item, like an opened bag of potato chips. What is the value? You could make things out of it, use it in electronics and so on. A piece of jewelry is nice, but the wearer (and everybody else) is also conscient of its exhange value, so lets take that out. I would say that it is worth far less than the current gold price, driving its use up and the mining down. This is the intrinsic value (intrinsic used in the money domain).

Money is the stuff that is used for indirect exhange. Gold, silver, fiat, bitcoin. The quality of a sort of money is decided by its traits like fungibility, scarcity, divisibility and some others. In fact, the best money has no intrinsic value. Gold having intrinsic value means that its use as money displaces its use in electronics. Imagine food being money - saving would make somebody hungry.  Anything can aquire some moneyness, or exchange value, especially in times of hyperinflation or when use of the best money is restricted.

If you don't like the word "intrinsic", which, outside of the money domain, means inherent, fundamental or genuine, use either "direct use-value" or "value apart from its exchange value"

Present value is the value calculated using some future value and some interest rate.

btw, saving bitcoins does not make anybody hungry. The effect of saving bitcoin is that it drives the value up, prompting others to spend or buy capital goods.

Σ(N * (% of time N applies))

If everything had the same value to everyone else at all times there would be no trade.

How does any of this refute the notion of things having intrinsic value when it seems to  indicate the opposite?

Please compute the example above and give us the solution.
The explain why  it so.

There is no something "intrinsic value" and using fuzzy words cause just fuzzy thinking.
Substitute "intrinsic value" with "direct use value".
Direct use value is the value of gold (for example) when it started to be used as a mean of indirect exchange (like many others).
There is nothing "intrinsic" in "direct use value", because the subjective value change with the quantity available and its direct uses.

Certainly true.  Nothing has value without someone valuing it, so there is no "intrinsic" value, it is semantic slight of hand.
It is elementary to philosophy of perception.

Though when we climb out of the ivory tower and enter the town, there are things that have value without a law giving it value enforced by a state, and there are things that do not.  The things that do, we have adopted the convention of calling that value, intrinsic.  

So sure, it is not strictly true, in that water has no value unless there is something to value it, but it also does not rely on a legal tender law to get that value, or being useful for paying a tax to a government.

One of the core requirements of bitcoin was that it not have a value as something other than "money".  This way it does not compete with a market for its use as money.  It is designed to have no intrinsic value or backing, other than what we the people choose to back it with.

I back it with gold and silver, others with their time, everyone that uses it for trade backs it with something.

I will leave the computation and explanation to the reader as an exercise.
Stuff has had the value people give it, over time, each in their own situation.

I know it's not Peter Schiff, but Erik Voorhees was on the Gold Money podcasts last Wed.

http://www.goldmoney.com/podcast/erik-voorhees-financial-independence-through-gold-and-bitcoin.html

New links added to initial post.  An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.

Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.

Hells yeah!  The laws of supply/demand, aka common sense, say gold is going to skyrocket. When gold gets so low that mining companies can't produce it at a profit, supply diminishes.  But demand is the same or higher, do naturally the price will go up.  It's a no brainer.  Good stuff! Price could go lower too. Maybe 1100.

Don't be ridiculous.  Saying gold demand is always the same or higher is like saying the demand for bitcoin is always the same or higher while the price was going down from $30 to $2.  Almost the entire market cap of gold and bitcoin is speculative and monetary value.

Also, the price of gold is capped because there is $150t worth of it that is recoverable on the ocean floor using technology that is not cost effective at current price levels.

I would highly recommend quitting listening to the Schiff if you are getting these ideas from him.

Yeah, and there's infinite gold in space too, that should drive the price to the floor.  The transformers are going to come with quantum technology and produce fake bitcoins that are valid.  Ocean mining is the future, yes, and that's bullish for gold. It will require more capital and drive the price up.  You can't compare gold with bitcoin when talking about current supply/demand economics.  Bitcoin is too new, too volatile.  Gold is predictable...in the long run.

So I am to understand that you think the demand for gold was constant while it was losing value for the 2 decades prior to the turn of the century, and that the demand was also still constant during the price increase of this last decade?

Consumer demand has been pretty constant, but that is a very tiny fraction of the demand.  Almost the entire market is central banks.

Right, people are not selling their physical gold.  All the selling is in the futures, derivative, and ETF markets etc.  All of the "dumb" money is getting out of gold.  More smart buyers are buying more physical (me.) :P

Soon, smart countries will be buying more physical gold, i.e. China.  Once the price gets low enough, it will slingshot back to the old highs and beyond.  So the demand is still the same, if not higher, within the physical market.  Gold is going to go up so fast when the s*it storm comes.  Those who sold in the recent correction will probably stay out and not rebuy, that's how fast it's going to move.  imho

Im all for, buying up gold & precious metals. Solid investment. But I sure hope you all have a means to secure your armory.  Whether it is a vault, hidden vault and/or weaponry. I am not a doomsday guy by any means but just a thought as I was reading through....

hidden and locked up. Not even in the same country some if it

China has been scooping up retail gold.  A lot of it.  The Chinese new generation very much like the bling factor, and nothing has the bling factor like gold.

http://shtfplan.com/wp-content/uploads/2013/06/china-gold6.jpghttp://shtfplan.com/wp-content/uploads/2013/06/china-gold7.jpg

Also Chinese government is encouraging it.  They have removed the tax on gold panda coins this year.
http://numismaster.com/ta/numis/Article.jsp?ArticleId=26693

India did last year
http://online.wsj.com/article/SB10001424052702304363104577389443337247370.html
but raised it again this year.

China is one of the top miners, and exports almost none of it.

Peter Schiff has written some good books, but what he is probably missing:

Debt money is unstable because the lender has to trust the loaner. If trust generally disappears, the money also disappears.

On the other hand, the central bank can regulate the wider money supply easily by changing the banks' reserve requirements.

As long as bonds are trusted, the government can loan money indefinitely, and also continually expand the loans forever. A government lives for ever.

Continualy increasing loans has the same effect as printing money. The effect of printing money is more resources to the government and their friends, including voting cattle.

The printing moves resources from the rest of the world to USA. As other money system tanks, and rising economies partially wants to use USD, the user base increases and also the value of the USD increases.

In sum, this can lead to price deflation in the area where dollar is used.

This might be countered, as it is always easy for a central bank to take down the value of its money unit.

In short, there can be heavy deflation before the onset of hyperinflation. This Schiff does not take into account.

It is a possibility. With heavy regulation from a single person who only reads the data, but never depend on fundamental principles, anything can happen. It is an extraordinarily extraordinar situation.

This is, almost word for word, Mish's complaint with Schiff and other hyperinflationists today.

http://globaleconomicanalysis.blogspot.com/2011/05/hyperinflation-nonsense-in-multiple.html
http://globaleconomicanalysis.blogspot.com/2012/08/reader-questions-on-hyperinflation.html

Yes, it was buried in there.

Hyperinflation is dire tragedy on a massive scale.
High inflation is bad enough without raising the boogeyman of hyperinflation.

Peter is talking about the Winklevoss twins and Bitcoins right now.  Will post audio later.

Edit:
https://dl.dropboxusercontent.com/u/21580995/BTC%20Winkle%20and%20Peter.mp3

new audio link posted

Ahhh, Peter Schiff :D Always gives people a slap in the face with reality.

I'm surprised Peter Schiff still has so many followers, considering there was no hyperinflation in 2012 or 2013, no 5000 or 10000$ gold that he predicted, .. Actually gold and silver both lost a lot of value compared to FIAT, so I don't see him as anything else but a paid p&d troll for hyping up gold price.

I can see that he has many devoted followers, and guys, I don't want to argue. I expressed my opinion and I think people should not listen to him, at least not believe him on his words. He is just another cult leader type of guy. ...

And his father is in prison for tax evasion strategies that do not work in reality :pp




Just to clarify... I have not listened to him in more than 1 year now. Maybe I should listen to him about bitcoin..

Nice to hear Peter pointing out how galactically stupid a BTC ETF is.

My guess is these Winklevoss freaks are part of some inbred bloodline and have been so pampered their whole lives they have no idea just how stupid they really are.

Remember how people were persecuted for saying the earth is round?  Well it's kind of like that.

I heard a listener's question today, "Do you think "crypto-currencies" (like BitCoin) will be generally accepted as a method of payment in the future?"

I'm not going to post the audio.  He basically says, "I don't know," then promotes his gold credit card company.

It's true, I think he did get a bit ahead of himself on this one, the problem is that he was trying to predict an exact price movement and that's extremely difficult to do, he's been entirely right about what has been happening in general though, but I think even he underestimated just how far the central banks are willing to go to keep their system running.

Well, Schiff is predominately an Austrian economist, but they don't always see things the same way either.  I've been following the predictions and blogs of both him & Mish for many years, approaching a decade now.  While Schiff has had some misses, Mish has been a freaking oracle.  I know for a fact that Mish has been aware of bitcoin for a number of years, because I pointed it out to him myself, but his first impression was just like mine, very skeptical.  I don't believe that he has ever commented on bitcoin.

Mish is on the latest Gold Money podcast and he talks about bitcoin towards the end.  He's just like Peter.

Schiff is part of the problem he espouses. He talks (quite entertainingly) about productive capitalism etc yet he himself operates in the finance sector skimming margins from financial products.

He's a fraud because he's honest about it?  Rich Mayberry is pretty darn honest about it also, investing (and advising same) is a crapload easier than teaching middle schoolers economics.  Why the hell do you think that Schiff does it?  Moral obligations?

Bitcoin mentioned on today's show. Will post more later.

Okay, I listened to it.  It's an interview with Scott Cleland.  It's a pretty interesting interview if you'd like to listen.  They talk about how google controls everything, they mention Snowden a little, and net neutrality.  They talk about bitcoin in the last 2 minutes.  It's pretty pathetic.  He calls it an "app."  So retarded.  Peter didn't really challenge it.  I think Peter needs to have a real bitcoin expert on his show.  Who could be on his show that really knows about it and can speak in terms of Austrian economics?

Link here:  Is 20:30 long, skip to 19:00 for bitcoin discussion.  Warning: Really lame!
ScottCleland_082713.mp3 (https://dl.dropboxusercontent.com/u/21580995/ScottCleland_082713.mp3)

Truly horrible lies and misleading.
"Currency is legal tender" - wrong
"Its a scam" - wrong
"Its a ponzi scheme" - wrong


That said, it is an art to "dumb it down" for mainstream without introducing inaccuracies or making their eyes glaze over by using unfamiliar terms of art, or explaining things that they don't need to know.

There are wallet apps, but to say Bitcoin is an app is wrong.... BUT... For the general population, it may be ok for them to think of it that way if that is the main way they use it daily.  All this behind-the-scenes stuff is not going to help them, all they really care about is that it is better money.  They need the benefits, not the features, and not the specifications. 
For them...
It is money that can let them buy things less expensively and more privately, carry more on hand safely without fear of theft, inflation-proof, etc. 

The average person is not prone to bring their world philosophy into their shopping trip and we don't have to expect that of them.  So long as they get what they want, which may be "an app that works like a coupon for discounts on everything". :)  The philosophy just happens as a result of making it that easy, making it better than the alternatives.  We each have a role to play in that.

Okay, it's been a while, but last Friday, Oct. 4th (the 100th anniversary of the US income tax) Peter talked about the Silk Road seizure and bitcoin.

https://dl.dropboxusercontent.com/u/21580995/pa_20131004jghf_low.mp3

Also, later this week (thurs/fri) on The Tom Woods Show (new.)  He's going to be interviewing Erik Voorhees.
Check here:  http://www.schiffradio.com/f/Tom-Woods
I'll also try and post audio too.

@ joae1975
Thanks for the clip(s).
Interesting.

In the year -400 (more or less) Aristoteles defined the characteristics that should have money, durable, portable, divisible, intrinsically value, scarce, difficult to falsify. Fiat currency does not meet them and it is a very bad money. Gold meet those criteria but its obsolete and not practical. Bitcoin meet Aristoteles criteria much better. Franklin Roosevelt stole the gold but he could not have stolen bitcoins.

Gold has been used during thousands of years that is why some people like Peter Schiff or Mike Maloney are very stubborn and do not accept new technologies, bitcoin is a big threat to them and do not want to accept this change.
At the end of world war I british invented the tank and it was a threat to the cavalry because it would replace it. The members of cavalry said that tanks were a shit, not practical and could not replace the cavalry which existed for thousands of year. When world war II started the german tanks won very very easily the polish cavalry. Bitcoin will do the same that did the tank.

I believe you and I understand what your saying.  But bitcoin is only good for one thing.  Au/Ag have industrial purposes.  I think that's the difference.  They have a very long history.  So until bitcoin can prove itself through history, people will remain skeptical.

tweet Tom Woods today

Talking to @ErikVoorhees later this week about the future of Bitcoin after Silk Road. Got any good questions? #tlot

https://twitter.com/thomasewoods/status/387944160944087040

I just listened to the Tom Woods interview with Eric Voorhees and you didn't miss anything.

I finally convinced an Austrian friend to dump some of his silver and buy bitcoin with it.  He found out that EuroPacific capital charges 3% to cash out of his silver position.  Yes, that's right.  Peter Schiff's company charges THREE PERCENT to get out of a position.  Of course he is never going to promote bitcoin when he can rape people that hard by plugging metals.

Buying bitcoin is probably a good investment. But I'd be dumping fiat long before dumping PMs.

IMO buying PMs should be for the long term, one should own physical gold or silver in the hand, and do so because one wants the gold or silver. For short-term speculation there are better tools to play with.

Why dump silver now, its only going up. It has to. Bad advice, especially with that 3% haircut. I'd try my best to find other assets to unload.

Agreed. I respect what Peter Schiff says about precious metals and bitcoin. If you don't understand bitcoin, DO NOT buy it as an investment.

Well if foggyb says there is 100% chance silver is going to go up now, how can anyone think differently?

The 3% fee is a sunk cost.  The 3% will have to be paid at some point, so it doesn't matter if it is paid now, and does not affect a buying or selling decision.  He could have dumped the silver, lost the 3%, bought 1000oz silver bars for the spot price, and been in basically the same position but with much easier options to liquidate it without waiting around for a check in the mail.

I bought silver/gold from europac and they told me there's 0 fee to liquidate gold and silver is 0.65 cents per oz.  That equates to ~3% at current price. 

I like Peter Schiff, but he's not a super human. He admits himself, that he's just a normal person making simple observations about the economy. It's not that Peter Schiff is super smart, it's that mainstream economists are totally lost.

Peter Schiff doesn't understand bitcoin, and therefore he doesn't trust it. That is OK! If everyone trusted bitcoin, the world would already be different and it would be too late to profit from the wealth transfer. Take the thinking from Peter Schiff, not his conclusions. Apply that to bitcoin together with the knowledge you have. The result is a no-brainer at all :)

Peter's great, but he doesn't understand bitcoin or any of the technicalities behind it and why it's so great. He has a vested interest in promoting his metals business and that's all well and good. I think hes a great advocate for libertarians and is right on most things, he just needs to stick to what he knows.

https://dl.dropboxusercontent.com/u/21580995/Peter%20Schiff.bitcoin.11.1.13.mp3

Another Peter Schiff bitcoin bubble speech.  I don't think he understands it.  He's a free market guy.  The bitcoin economy is full of free market forces.  I wish someone would call him on this point.  I'd do it but I suck at articulating my thoughts on the spot.

Although I'll agree that Peter doesn't understand Bitcoin, I'll also say that he doesn't really need to understand bitcoin to make a reasonable assessment of speculation risk.  In this clip, he remains skeptical of bitcoins, and thinks that they have many halmarks of a bubble.  That's quite true from a traditional investment perspective.  Perhaps traditional investment perspectives don't apply (yet) to Bitcoin.  Who am I to disagree?  Anyone rational will go through all these same stages of distrust, although many of us proceeded much faster through the darkness than Peter has been.  I, for one, had real trouble believing that it was anything more than a scam in the early days; I just couldn't shake that idea that it could work.  And so I kept coming back and re-reading the white paper until it all 'clicked'.  I can now honestly claim that I understand how bitcoin functions, on a low/process level as well as a macro-economic level, better than 95%+ of the membership of this forum.  One day it will 'click' for Peter as well, along with the rest of humanity.  The vast majority of people will not know, nor need to know, how Bitcoin actually does what it claims to do; eventually they will just trust that it does it, in the same way that the public generally 'trusts' that the central banks know what they are doing and have much to lose by screwing it up.  (This is the real source of the "faith and credit" of the average Joe, the belief that the rich guys running the game have more to lose than Joe does if things go sideways; bitcoin will not alter the root source of the public trust either, most will simply start to trust bitcoin because they can see more and more big players who have much to lose puting their faith into it)

In short, Peter's distrust is rational at his own stage; and therefore warning callers (asking for his opinion) against bitcoin investing is also rational.

At the same time I think Peter has a vested interest in not supporting bitcoin.  It steals customers from his gold silver business.  I've personally invested thousands into bitcoin where I would normally buy gold silver from Peter.  I don't think you can use the analogy of people blindly trusting central bankers the same as they trust bitcoin.  I think a better analogy would be trusting gold because of the chemistry that backs gold.  I.e.  It's molecular weight, atomic mass, etc.  Bitcoin's trust is within the realm of mathematics and gold with physics.  Central banking is all emotion, human, and full of error.  Understandably bitcoin was created by a human and physics have been created by humans, but they serve as boundaries for bitcoin & gold whereas central banking has no boundaries.

Saying bitcoins have no intrinsic value is like saying that freighters or trains have no value because they only transport the goods.
On that note gold and silver is more like the trucking industry vs the freight

Peter Schiff is speaking on what he doesn't understanding. He is speculating on what people are or aren't doing with bitcoin.

If two people agree that bitcoin has a price it has a price. He is not addressing the actual use of evading government intervention into one's finances when it comes to border control and banking and how those tools control the populace in a financial means.

Gold and silver can be confiscated at the border(s). Bitcoin is able to go around this.

Just because you can't hold it doesn't mean it isn't viable.

Math is not tangible yet we believe in it. Bitcoin is based on math.

Saying bitcoin has no intrinsic value reveals how poorly he understands the most important concept in economics.

Nothing has intrinsic value, value is subjective. Goldbugs who criticizes the lack of intrinsic value of bitcoin are borderline retards.

This ^.

Peter does spout truth but the ultimate truth is that everyone will think in their best interests.

Peter missed the boat (so far) and doesn't really understand what "intrinsic" value bitcoin adds as a medium of exchange (not money as he so eloquently likes to claim Bitcoin is trying to be).

Bitcoin adds legitimacy to the currency in circulation. You can't really have tungesten filled bitcoins as you can have with gold and silver etc.

Bitcoin isn't better than gold necessarily. But it fills a demand for something that Gold and other PMs can't fill. The distance and speed issue with exchanging gold and silver etc bitcoin fills is what makes Bitcoin have "intrinsic" value or just value.

Of course Peter misses all of this. He only really looks at the possible bubble portion of the price mechanism of bit coin which is not that important. The price is in FIAT government created toilet paper which is meaningless really (in the end game).

We already had the intrinsic value argument back on page one of this thread.  If you think Peter is spouting nonsense about intrinsic value, consider that this might be a clue that he doesn't know what he's talking about in quite a few areas.  How much longer do you want to wait for him to be "right"?  The way he phrases his predictions, he will certainly be right one day and the dollar will go to zero, but that is just useless information without a time-frame, and he is losing his clients tons of money by getting his timing off by decades.  While he is sitting around talking about how bad the US economy is, the Dow is up 134% since the bottom in '08, and US companies are outperforming Europe, emerging markets, and the entire world.  If you still think he is "right" after watching these videos....

http://www.youtube.com/watch?v=4h_mEK91FWs
http://www.businessinsider.com/2009/1/peter-schiffs-clients-got-hosed-this-year-too
http://avaresearch.com/avanew/articles/713/The-Embarrassing-Track-Record-of-Robert-Prechter-Part-1.html
http://avaresearch.com/avanew/articles/302/Peter-Schiff-Wrong-on-the-Economy-Wrong-on-Healthcare-Part-1.html
http://www.youtube.com/watch?v=EBNbdqp0-TI
http://www.youtube.com/watch?v=oUbhAbqKjOo
http://www.youtube.com/user/AntiSchiff

You will learn a lot more by firing up the intro to economics course on Khan Academy:
https://www.khanacademy.org/economics-finance-domain/macroeconomics/gdp-topic/econ-intro-in-macro-tutorial/v/introduction-to-economics

I think Peter, like Chris Duane, is just trying to talk down bitcoin to help his precious metal sales. A lot of the money that is buying cryptocoins would be buying gold and silver if bitcoin never existed.

1. Take the Peter Schiff's logic when he talks about the economy, US dollar and precious metals as future money.
2. Apply that to your knowledge of bitcoin.
3. Arrive at the conclusion that bitcoin is a screaming buy. If you don't see it yet, go to (1).
4. ???
5. Profit.

He is wrong about a lot of things too. For example when the first QE was announced he kept saying that interests will surge.

He was wrong about hyperinflation too. And when inflation didn't come he said that he was right but nobody can see it because CPI number is false.

It seems Austrian economists nowadays don't understand money multiplier and don't have ever heard about what happened in Japan this last 20 years.

He's wrong a lot more often than he's right.  Everyone would be better served listening to someone else who knows what he's talking about.  This should be very obvious to bitcoiners.

http://globaleconomicanalysis.blogspot.com/2009/01/peter-schiff-was-wrong.html

What the right answer here is really depends upon how one defines inflation.  Most people think of price inflation, particularly at the supermarket.  True inflation is the expansion of the monetary supply relative to the user base.  We have undoubtedly had that, but the CPI does not now, and long has not, considered the costs of food stocks or energy into it's caluculations; however it does (sort of) include a calculated value of housing.  So while the actual pump costs of a gallon of gasoline has risen by more than 50% in the past 6 years, the real estate market is still way below the peak value in 2007.  The real estate market crash "destroyed" a lot of credit availability (i.e. money supply for many consumers) and has overwelmed the inflationary policies of the US Federal Reserve in the meantime.  So, in reality, the CPI number published by the government fails to represent the amount of monetary expansion during that time.  This cannot continue forever, however, and eventually we will get our inflationary period.  I still doubt it would be "hyperinflationary" because hyperinflationary destruction of a currency is a vicious cycle of the loss of public trust in a currency, almost always triggered by a political event (war, invasion, revolt, revolution, etc.) and not a fiscal policy event.


Austrian economists understand the money multiplyer theories just fine, they are just bullshit.  The government like to claim this stuff to justify it's own entitilement programs, but consider this...

If the "money multiplyer" of food stamp program funds really was $1.73 of economic "benefit" (defined how, exactly? It's never said) for every $1 of aid, and that multiplier is both consitant across time and consistant across a range of largesss (two things left up to the public to assume although this is never actually stated), then it would be easy to permantly avoid recessions by simply dialing up or down the monthly food stamp benefits in order to match the largess to the target level of economic growth.  It would be an immoral action to do anything else.  The fact that this is not happening, and never really has (it has been tried, so we know it doesn't really work) is proof enough that multiplyer theory is false.  All of the multiplyers presented in the media are the calculated results of past events, not current economic conditions.  If past events really provided significant insight to future economic trends, then "ideal" stock prices would be easy enough to caluculate for just about everyone, and any significant diversion from that expectation would be newsworthy, offering a huge profit opprotunity for the quick.

No matter how you cut it, inflation is low.  If you want to use the stupid niche definition of inflation as an expansion of the money supply, it is still low.  The Fed has printed 3t into a USD money supply of 30t.  10% inflation OVER FIVE YEARS.  2% per year.  If you want to use the standard inflation definition, it is low too.  You can't make a big deal out of how highly volatile gas prices are going up fast when they are STILL WAY BELOW 2008 PRICES.

Inflation-bugs typically forget the things which go up slow (or fall) and only notice the volatile stuff like gas and food when they are on an upswing.  I just went down to Wal-Mart and bought 10 pairs of high quality crew socks for $8.50.  I haven't seen a price that low EVER IN MY LIFE.  10-15 years ago they were always over $1/pair.  Clothing has been deflationary for decades due to the move to Chinese (and more recently LatAm) manufacturing, but you'll never hear that from Peter Schiff.  When the US becomes the world's #1 oil producer in 2020 and a net exporter in 2030, causing the price of your gas and food to plummet, are you going to estimate inflation being negative?  Here's a blog post that explains why inflation is 2%, and not 7-10% like you'll hear from Peter Schiff:

Lazy Inflation Estimates Will Cost You Money (http://sethotterstad.quora.com/Lazy-Inflation-Estimates-Will-Cost-You-Money/)

Granted, I was cherry picking, but monetary expansion is not low.  It's closer to 4.5%.  You miss this because you assume that the federal reserve is the only institution in the nation that creates currency, which is not so.  The Fed is the only institution that has a mission statement and supporting legal structure to create new currency at will.  The entire fractional reserve banking system is designed to distribute the creation of new money across the many member banks.  They do so every time they create a new loan, and that loan is repaid.

Yet, you are cherry picking your examples also.  $8.50 for a ten pack of tube socks is high to me, I'm used to getting them for about $6.50.

I don't have a huge problem with 4.5% inflation estimates.  It's these guys like Schiff running around saying inflation is "north of 10%" that get me pissed off.

I just cherry-picked to illustrate that it can support either side.  The better way to do an inflation estimate is to make a weighted spreadsheet of your estimates based on this chart.  With 41% of it weighted to housing, which inflates very slowly, it is really hard to get it to show a real high inflation figure.
http://www.advisorperspectives.com/dshort/charts/inflation/CPI-categories.gif

You do know that pie chart is a lie, don't you?

Come up with your own pie chart then.  It is not going to look that different.  There is no way around the fact that a huge percentage of the average American's income goes to housing, and a tiny percent goes to the stuff that inflates super fast that Schiff likes to constantly talk about, like college tuition.

I am interested to see your pie chart if you make one, as long as it has data to back up the changes.

Regarding the claims that Peter has been wrong.  Peter's predictions are based upon a long term view.  He looks far into the future.  To say he's wrong is premature.  I believe he is right about the USD etc.  I compare Peter to Galileo.  Galileo was persecuted and highly ridiculed for his idea that the earth revolves around the sun.  Peter's ridiculed for his predictions as well, the difference being, Peter is not being arrested and jailed.  Peter uses "economic physics" to make his predictions.  His ideas are based upon math/physics.  The USD will crash, it's not a matter of if, it's when.

Regarding bitcoin, Peter has a hard time understanding/recognising it.  I'd like to explain it to him like this:

A new "precious metal" has been discovered using new technology.  This "precious metal" has unique properties unlike any other.  It can only be viewed using this new technology and can only be created with this new technology.  The intrinsic value of this new "precious metal" only visible using this new technology.  etc. etc.

Peter argues that gold/silver have stood the test of time and have always been real money.  But what he has a hard time wrapping his head around is how a new technology can create a new form of real money.

Investors have to have a time-frame to make any money at investing.  Saying "the US dollar will go to zero" is like saying "the sun is going to burn out".  No one will disagree with you if you give an infinite time-frame for it to happen.  The dollar is SUPPOSED to go to zero eventually.  Continuing to listen to Peter Schiff because "he'll be right eventually" will cause you to lose a lot of money.  How long will Schiff listeners keep listening to his bearish rants while ignoring 134% stock market heaters and 10,000% bitcoin price increases?  Just listen to someone else.  Find someone who knows when to be bearish and bullish on various assets, instead of a permabear who might lose for 100 years before he makes money.  Even better, watch an economics course on Khan Academy for free.

Yeah the sun will burn out in a billion years.  But USD is gonna crash in our life time, very soon.  It's not gonna go to zero. Right now USD index is ~80.  It'll prob drop to ~50 in a matter of days when it happens, or lower.  

Well at least now you added a time-frame.  But betting on something happening "in our lifetime" is still lol.  Shorting the dollar because you think it might crash in 60 years is dumb.  Austrians like Schiff don't make useful predictions in reasonable time-frames, because if they say something like "the dollar will crash within 5 years" or put any sort of reasonable time-frame on their estimates like all good analysts do, they look like even bigger idiots.  The fact that people still listen to him when he says "I don't know when it's going to happen, but IT'S GONNA HAPPEN" blows my mind, although it does appear to me that some listeners are starting to think something is wrong with the gloom-and-doom theory now that US companies are crushing the world just 5 years after the crash.

They're crushing it because of the Fed stimulus/QE.  There's no other reason.  There are more Americans on welfare than Americans working a full time job.  There's no way it's sustainable.  It will happen before Obama leaves office.  That I'm sure of.  I think O is counting on it.  I think he'll usher in Martial Law, declare a national emergency, and try to remain president.  But that's just my own crazy theory.

The percentages are not the lie, how they are included into the total calculation is.  Housing prices are not included at all, only "owner's equivalent rent" (i.e. an assumed to be calculatable amount of rent that the owner would be charging himself, if he was renting from himself.  Only a nutter could believe that this BS is based upon any reality, it's only an organized guess).  That's one example, as each catergory is factored in differently.  Food isn't factored in directly either, there is an assumption of a change of buying habits, with the net effect of suppressing the significance of food on the CPI.  For example; as the cost of beef goes up, there is an assumption that those who would have bought steak, are now buying ground beef, those who were buying ground beef, are now buying chicken.  This is bs on it's face.

If you go ahead and make a spreadsheet with your own data, you will see it is low.  I kinda doubt you would want to use housing prices instead of rent, since that would cause your estimate to show massive deflation for the last five years instead of inflation, but go ahead.  You can factor in all the huge food price increases you want over the last decade and it won't change anything.

There you have it, folks.  Apple, Exxon, Wal-Mart, Google, and Microsoft rule the world SOLELY DUE TO QE.  Might want to leave out the 3-year time frame or you have a really high chance of looking like an idiot as Peter Schiff does in this video:

http://www.youtube.com/watch?v=Nv-Q9NxKWKI
"I think sometime in 2011, if we make it out of 2011 maybe 2012, that we're going to have a crisis.... Interest rates are going to rise sharply in the US."

I can imagine the doomsday crowd ten years from now, when the DOW crashes from 75,000 to 45,000 saying "SEE WE WERE RIGHT ALL ALONG!"  Please get educated and quit listening to idiots to spare the rest of us.

Out of curiosity, what is gold's intrinsic value?

Naval Ravikant put $200/ounce out there on a tech crunch disrupt video I saw

Does that sound about right?

Value is in many ways symbolic. Bitcoin just takes that symbolism to the extreme but if bitcoin is not real so aren't dollars or yens or any other currency except if we go back to trade with gold exclusively but that won't happen and even then the value of gold is after all symbolic, it's a tacit consensus basically.

Schiff is not shorting the dollar. He is mainly investing in high-yielding stocks in other countries he believe will be coming out of top after a dollar collapse. That doesn't mean he is losing money every year the dollar doesn't collapse.

As far as I know, the only thing Schiff ever shorted was the sub-prime bubble. But I admit I don't follow him as close as I used to do.

The only reason that economists use the term 'intrinsic value' with regard to commodity based hard currencies is because there isn't really a better term in English.  It shouldn't be taken as a literal statement that gold or silver have value because of their scientific properties.  Gold and silver are valued by humans because of their particular scientific properties, but to what degree any particular person values those properties depends mostly upon what their own experiences and needs might be.

You're techincally correct.  He's not literally borrowing dollars and selling them short. 

His thesis in 2008 revolved around 4 thing:


He was right about 1, wrong about 3, and lost huge.  His idea that the rest of the world would decouple and be immune to a US slowdown was wrong.  When the US gets in trouble, the rest of the world gets in more trouble.  The US does 20% of the world's manufacturing with only 4% of the world's population.  Find someone else to follow who isn't constantly wrong.
http://globaleconomicanalysis.blogspot.com/2009/01/peter-schiff-was-wrong.html

2013-11-12 on CNBC. "Bitcoin isn't gold 2.0 — it's tulip mania 2.0"
http://www.cnbc.com/id/101192216

Also mentioning how bitcoin is infinite because it's divisible. However, gold is also divisible and here's him advertising it: http://www.youtube.com/watch?v=0cNwaA5sNr8

I lost all respect for him. He's either stupid to talk about something he doesn't understand or he is lying.

Peter 'failed loser' Schiff again:

  http://www.cnbc.com/id/101192216

edit:  Oops.  Didn't see the above.  Sorry.  Anyway, one has to wonder if Schiff has lost his customers more with his bets on the Euro or by talking them out of taking a BTC position an order of two of magnitude ago.

+1 Exactly. Well said. And Schiff is not alone. He is just one of many. There are plenty gurus who claim they are still right about their predictions, "but it just has not happened yet". That kind of advice is worse than useless. It makes me think about the "end of the world" folks who predict the rapture on some date, and then when it does not come, they argue that they were still right, but slightly premature on the date.  No different. And just as profitable for their followers.  ;)

Nov 13, 2013 Peter is at the Money Show in New Orleans.  He opens his show talking about bitcoin.  I just put the whole show up.
https://dl.dropboxusercontent.com/u/21580995/PeterShiffShow.btc.11.13.13.mp3

Edit: Talk continues with callers at 1:13:20.

Well, that radio show completely undermines my own faith in Peter.

http://youtu.be/0VrB1Ae3xqs

That's not what I'm talking about at all.  On that point, Peter is correct.  Bitcoin is not gold, but nor is it fiat.  It's something altogether new and different from either, that is designed to do the best job of either. 

What I'm talking about is Peter's talk about intrinsic value.  Not only is gold's "intrinsic value" such a small part of it's market value as to be practically irrelevent, he argues that bitcoin's don't have an intrinsic value economicly.  I can easily prove that they do.  The only kind of intrinsic value of anything, is how useful it is to the marketplace. While gold does have physical properties that are useful to industry, and silver has chemical properties useful to both industry and medicine; neither of these 'intrinsic' uses have value to the market to compete with their monetary uses, because the market will always be looking for methods of achieving the same ends using cheaper inputs.  A great example is the use of silver in antibacterial products; while it works great and has been well known to medicine for over a century, silver is not often used in medicine except in the most dire of applications, wherein our modern anti-bacterial sciences fail us too regularly.  I.E. Methicillin-resistant Staphylococcus Aureus  While bitcoins have no physical properties to exploit, they were designed to significantly uncut the market costs of the transfer of value over distances.  This 'feature' alone provides bitcoin's "intrinsic value", even if it's next least expensive competitor in kind is what most determines what that "intrinsic value" should actually be.  Neither Visa nor Western-Union have the power to undercut Bitcoin in this market, without first becoming Bitcoin themselves.

And that is not even considering the "intrinsic value" of blockchain enforcible digital contracts, should they ever become common.

Man, Peter sound but-hurt.  I almost feel a little sorry for him.

The guy at least gets that 'one Bitcoin' is just a matter of setting a decimal point so he beats about 90% of people, but that's definitely a 'thinnest kid at fat camp' sort of a thing.  He has yet to put a little arithmetic into the problem though.

Yo, Pete:  Try this:

  Fiat: backed by law.
  Gold: backed by physics.
  Bitcoin: backed by mathematics.

Gold and Bitcoin are very similar when compared to fiat.

BTW, it is true that Bitcoin has all kinds of potential failure modes.  Any smart person will have a plan to diversify and stay diversified as we ride.  The trouble is that you clearly have no clue about what any of the failure modes are.  You should shut up about it and watch from the sidelines until you do or you will keep sounding like a jackass...mainly because you are being a jackass.

the intrinsic value of fiat currency is the btu's you can extract when you burn it. (that is about 3-5% of our currency supply. the rest is just pixels on a screen. btw fiat is not money . money is defined by the US constitution as specie of gold and silver.
there have been over 3000 fiat currencies that have gone the way of the dodo

peter schiff is a smart guy but he is comparing apples to oranges when he compares bitcoin to gold. no one uses gold as money anymore.

While that's a cute little retort, it's not actually true.  A great many people, both wealthy and otherwise, do use gold as money, or at least as a "store of value".  http://www.marketoracle.co.uk/Article43069.html

And India is far from the only group to continue to value gold for it's monetary properties.  The "western" nations are fairly unique in the total abandonment of hard currency principles in favor of ever increasing abstractions.  While the average, middle classs American adult has near zero experience with gold or silver coins, that's not true for the average, middle class Chinese adult or the average middle class South American adult.  There is a high, and perhaps even deserved, trust in the US federal reserver note as well as the Euro.  That trust can turn in an instant.

So who here (btc community) will step up and call his radio show and debate his position on bitcoin?  I can't do it, I suck.  I get it but I'll choke up on the air.  Who can best debate Peter?  Max Keiser?  Peter was just on Max's show in London.
http://youtu.be/MNXmL771mBA
 I'm sure Max would return the favor.

Maybe this guy:
http://www.reddit.com/r/Bitcoin/comments/1qkqjr/peter_schiff_has_requested_a_bitcoiner_to_debate/cddt2c5

Awesome! Eric Voorhees has been on the Peter Schiff Show.  This is going to be good.  I forwarded the link to Peter. He's responded to my messages (or his rep) before so I know he gets them.

People are calling Peter's show on bitcoin today.  I'll post later.  I'm really curious what Peter will say when he gets his "ah huh" moment.

You can choose as money what you want. It was always valued in debt and debt is backed by the law of the state mafia.
No state: no debt. No debt: no value of FIAT/Gold/Bitcoin.

Peter Schiff debated Trace Mayer already, or had the chance, video:
http://fmtblog.com/?p=12141

Actually, this (misconception) points out very clearly why Bitcoin/Gold are on the same side opposite modern day fiat.

Modern day fiat monetary systems are almost all 'debt based'.  The currency is actually created by someone going into debt and extinguished by someone going out of debt through one means or another.  The paradox is that if there were not debt, there would be no money.  This explains, among other things, why pretty much everyone and every corporate and government is in debt.

Bitcoin and PM's (physically held) are not created this way.  They have no 'counter-party'.  Nobody can default and make the holder lose their value.

Today's show had the best caller challenge yet.  But he waits until the end of the show and they have no time.  Please listen to the end.  He goes on an amusing tangent about Janet Yellen then back to bitcoin.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.11.14.13.mp3

The bitcoin defenders are poor in understanding here, particularly the first one, but Peter does make some good points here.  Gold cannot go to a use value of zero, while it's possible that Bitcoins can.  Granted, if gold were to drop to it's 'intrinsic value' it would be somewhat comparable to the value of lead, maybe slightly more due to much lower toxicity, but close.  Considering that refined lead is under a dollar a pound right now, that would represent something on the order of a 99.99% loss in value.  "You didn't lose everything, you've still got .01% of your life savings!  Don't Jump!"

While it's possible for bitcoins to go to zero, the only way that happens now is if there is some tragic & unfixable flaw discovered in the protocol that gives Bitcoin it's 'intrinsic value' to start with.  Again, possible; but the tragic and unfixable flaws with using electronic precious metal deposit receipts as an online trade currency are, if not altogether obvious, already demonstrated by the folding of both Egold.com and the persecution of the Liberty Dollar.  Governments will not suffer any competitor to exist if they can help it, but they can't help it with Bitcoin.

That last caller seemed to know his stuff, but was cut off by Peter before he could actually finish the argument.

goody goody

Strongly disagree. Mining was designed to be cartelized. Coin rewards diminish asymptotically towards 0 (1/2 of all coins to be issued were in first 4 years) thus the masses can never get into this coin, because wealthy don't spend rather they accumulate more by investing. Mining can't be done with the PCs that the masses already own.

Bitcoin is the dystopian outcome (https://bitcointalk.org/index.php?topic=180798.msg3585673#msg3585673) if it succeeds to suck in $trillions of market cap around the $1,000,000 price point. I think don't think it will get that far. The logical conclusion is there can't be possibly be only one. There must arise competition.

So in that sense, Peter Schiff is correct. The coin supply will not remain limited at Bitcoin's dystopian choice. Competition will debase Bitcoin and add more supply via liquid exchanges between coins. This can't happen with physical gold and silver, yet these have disadvantages when used in trade over distance especially.


Yes I found that flaw. Can't be fixed because of the vested interests in Bitcoin and the uber critical need to maintain consensus to keep the exponential price trend intact.

Bitcoin will not go to zero tomorrow (or possibly ever) and the exponential price trend will continue for a while.

Prove it. There are some scenario's where gold would become of no use (say a global catastrophic event that wipes out most of the population and technology sending us back to the cave man days, basically).

Max would rip Peter to shreds on the topic of bitcoin.

Trace Mayer already did.  :D

It is because he has special interests for his business and his customers which most of it is Precious Metals related.

Peter has claimed bitcoin is fiat on many occasions. This proves wither he has no clue what he is talking about or he is trying to recoup the credibility he lost on ALL of his "bitcoin is going to crash and people will lose money" claims.

I'm listening to Peter Schiff's radio shows (http://www.schiffradio.com/).

He understands that bitcoin is complex. There are people want to explain it to him and his audience, yet he does not give them time on purpose. That's how he wins. By giving 1-2 minutes to explain bitcoin. We all know it's not possible.

Very disappointing. If bitcoin catches on, he will have lost his audience millions of USD just because he's butthurt about his gold investments.

I've yet to hear him 'win' at all.  To people who have some technical grasp, or even a grasp of generic logic for that matter, most of his points are rather absurd.

If he 'wins', it's in a obtuse loudmouth bully kind of way popularize by the mainstream media.  Many mouth-breather types may well come away with the impression that he has 'won', but who cares?  It's their loss.  That's why such people typically do not have nice things.

Schiff's show seems to be a cut-out of Fox news with idiotic sound effect and the like.  I can only visualize some fat fuck listening from his trailer house in between rounds of substance abuse and wife-beating.

I wonder if he realizes why he is correct? I doubt it (he probably thinks Bitcoin's decentralized technology can be stopped with regulation alone, which is unlikely)

After 2033 (<1%) and 2040 (<0.2%), then coin rewards for Bitcoin diminish asymptotically towards 0. Thus there is no funding for miners, if a cartel of miners does the well-known "transactions withholding attack".

In other words, Amazon.com supplies a downloadable or online client (that merchants all over the web adopt because Amazon pays them to) and Amazon might even juice up the offer with 0% tx fees (to entice more transactions to them), then they do not forward these transactions to other independent miners who are not part of their cartel. Thus those other miners do not get sufficient funding to pay their electricity and hardware amortization costs.

This is just one way that Bitcoin can be taken over by cartels. And actually Satoshi wrote about this and thought this was fine. And the core devs know this too and think it is fine.

There a new attack released this month (https://bitcointalk.org/index.php?topic=330230.msg3593885#msg3593885). Read that linked post, I am not against Bitcoin, I may even buy some.

So once Bitcoin is in the hands of cartels, then the government can regulate the cartels. So then they can easily change the protocol to anything they want.

If you believe in the theory that network effects are insurmountable, then it would be too late at that time to launch an altcoin (or fork Bitcoin) to compete.

Sorry to bust your fantasy bubble about Bitcoin. Better to be knowledgeable and realistic. Bitcoin is a great advance (https://bitcointalk.org/index.php?topic=323988.msg3590405#msg3590405), but it is not yet perfected and the core devs will refuse any such necessary changes.

No, it just shows his bias.  Since it's not gold, and to him that is a bad thing, then bitcoin is substandard.  Calling it fiat is a shortcut to his audience.  He knows it's not fiat, really.

Can someone just please respond to him by stating gold is infinitely divisible? Has anyone tried that with him?

Yes, there are some astronomicly unlikely disaster scenarios that gold would not be of any use.  Neither would anything else be, for that matter.  Returning to a gold standard without any central banking or fractional reserve lending is vastly more likely, however.  No matter how advanced a society we become, and no matter how successful Bitcoin (or other cryptocurrency) ever becomes, gold & silver will have a value.  Peter's point is that, in the absence of that modern industrial society, wherein trustless transfer of value over distances no longer has it's own use value, that it's possible that Bitcoin will not have an another use value.  

Even then, if the human species has not been wiped out, I can think of several non-monetary uses for gold.  If you lived 500 years ago (assuming gold had no monetary value) what would you do with it?  That exact scenario played out with platinum, since it was so uncommon that the Spanish had no experience or understanding of it, they used it as if it was common scrap metal.  They made cannons and ship ballasts out of it.  If I were to survive a complete breakdown of modern industrial society, and lived anywhere near the ocean, the first thing that I'd be trying to get is a boat.  And gold plating would not only make a wonderful external ballast, but since it cannot corrode it would also make a great hull skin to protect a wooden hull from rot and barnacles.  Anyone with a seaworthy boat can scratch a living from the sea today, as the somewhat famous boat peoples of asia have well proven.  Athough it'd be wise to keep one's distance from the island of Japan.

Gold is NOT infinitely divisible:

  Molar mass of Au = 196.96655 g/mol

It is true both that:

 - Bitcoin is much less divisible that Au.

 - Bitcoin could be more divisible than Au with some coding changes.

---

But the whole argument of divisibility is silly and stupid and exposes a complete lack of understanding about much of anything.

Schiff's point is that a portion of Bitcoin is worthless because Bitcoin itself is worthless and zero divided by anything is still zero.  I'm starting to re-balance, and my bank account paints a starkly different picture that what Schiff is asserting.  I intend to re-balance into PM's in fact. 

Bitcoin and PM's have a remarkable level of potential symbiosis for someone who is not a closed-minded and ignorant doofus.

Yes, the second bitcoin caller on that link tried it, but Peter just talked over him and wouldn't let him finish that point; declaring that it's not true and/or not the same.  Which, of course, is bullshit on Peter's part.

You are conflating divisibility with mass.

No one can create 84 million new mass units of physical gold out-of-thin-air, but Litecoin did w.r.t. to Bitcoin.

There is a liquid exchange between LTC and BTC. Thus LTC expanded the money supply. Only a fraction so far, because the value of LTC is so low relative to BTC. I read today that at least one person is just waiting for the hashrate of the LTC network to reach critical mass (to be sure the network is secure) before buying in.

Yes that diluted the overall share of bitcoin in the cryptocurrency 'sector' from say 100% to 99%, but so what. Better a smaller share of a larger pie right?

Any valuable technology sector has multiple actors in it, not just one monopoly. Alts like ltc provide redundancy in case of a catastrophe or an alternative if bitcoin becomes idealogically unsound to some people causing large divides in the community (see the heated debate about Mike Hearn and blacklisting).

Anyone who thinks that the bitcoin community will remain totally in agreement in the future is simply either an idiot or protecting their btc holdings with their fanatically closed minded preaching (a la Goldbugs).

'Just fork bitcoin instead' I hear you cry. That isn't going to work as well. Too much confusion. Also you might get a new power struggle etc with the forking teams. Better to have competing alts in parallel the whole time. Ltc and its highly competent dev team (or someone else) can snap at Bitcoins heels continuously 'keeping them in line' and doing a good honest job.

BlackBison our logic is the same on all your points. Thanks.

Yes we are aware of the issue with coin taint and the bizarre solution proposed by Google (http://www.nestmann.com/the-nsa-has-nothing-on-these-guys) (ahem I mean Mike Hearn who only works for Google):

https://bitcointalk.org/index.php?topic=330230.msg3593844#msg3593844

I was entirely unfair above. Mike Hearn adamantly claims Google does not influence what he does with his "20% time", i.e. you probably know Google employees get one day a week to do what ever they want.

I think the most salient point is diversification. Monolithic anything is Antifragile:

https://bitcointalk.org/index.php?topic=330230.msg3595067#msg3595067
https://bitcointalk.org/index.php?topic=180798.msg3594370#msg3594370

Decentralized competition is where we are headed (I hope). And very much agreed that separate entities can compete whereas trying to compete within a centralized consensus requirement is not competition.

Funny thing is, while Peter bashes bitcoin on his talk show thousands of new people are introduced to BTC.  These listeners will do their own research and come to conclusions on their own.  I see a lot of BTC converts just from his show!    More news the better.......

Money has always been debt based. The state mafia indebted the people from the very beginning with a tax (debt ex nihilo).
To pay this debt you had to produce more than a stateless, selfsufficient community, and that enforces the nationalized people (society) to borrow more and more.
The state mafia itself is also indebted from the very beginning. The henchmen get a promise by the state mafia to be paid with the money they have to collect.
Debt is always the base of the money, wheter it is backed by metal, grain or any other property, which is the case today. Private debt is backed by private property.

This is a falsehood. 

And that will never change. But there is a very important distinction.

When the base money (that the debt or fractional receipts are based on) can't be created by a power center, then the debt write-downs (defaults and bank runs) are more frequent and self-liquidating. This is what we had in the 1800s. When the free market is allowed to run, the downturns only last about 2 years, e.g. the 1919 depression that no one remembers. Whereas when government tries to stop the write-down, then it drags on for decades, e.g. 1929 to 1946. And 2007 - 2024.

With a central bank that can create base money out-of-thin-air (or authorize banks to do it by lowering reserve ratios), they can just prevent write-downs for decades until we reach for example now 550% total debt-to-GDP in the UK we are facing now. Then the implosions are horrific as what is coming to the world after 2016. Find the link to that debt data for all countries in the following post I wrote:

http://blog.mpettis.com/2013/10/hidden-debt-must-still-be-repayed/#comment-3179

So decentralized crypto-currencies have the potential to bring us back to a more sane system as what we had in the 1800s. But realize society doesn't like the frequent mini-depressions and recessions of the 1800s. Humans want everything safe and guaranteed without volatility and risk.


Ignore this guy. I read his posts upthread and he is suffering the goldbug delusion. I don't have time to correct all his wrong thinking.

Dude, you don't even know who you're talking about.  I'm no goldbug, for one.  It's a falsehood that is easily provable.  Money predates nation-states, it's only the advent of nation-states that has permitted debt based money.  Credit is something a bit different.  Gold & Silver (not a gold standard paper currency) are two monies that have no counterparty risk, there are others also.  When you pay with gold, real gold coins and not warehouse receipts, the debt is immediately settled.  Without counterparty risk, debt based currencies cannot exist.  With regard to modern fiat currencies, the counterparty is the government that issues the currency.  I.E., "The full faith and credit of the United States..." (or, in the case of Britian, the Crown)

All goldbugs, please educate yourself (https://bitcointalk.org/index.php?topic=331325.msg3571527#msg3571527) and here (https://bitcointalk.org/index.php?topic=195275.msg3350891#msg3350891) and here (https://bitcointalk.org/index.php?topic=195275.msg3371529#msg3371529) also.

I was once a goldbug, sigh.  :-[

That doesn't mean I don't use gold and silver as an asset when they are undervalued.

Here is a very relevant point against the selfishness of goldbugs and the coin supply design of Bitcoin:

https://bitcointalk.org/index.php?topic=323988.msg3582346#msg3582346



The above is referring to Bitcoin's Dystopian Future (https://bitcointalk.org/index.php?topic=180798).

Credit has existed since the time of Mesopotamia. Martin Armstrong has images of clay tablet credit contracts on his blog to prove it.

Credit, yes.  Debt based currencies, no.  The difference is not trivial.

In those cases, either the base money was a fractional receipt or it was a fractional purity.

Never has there been a non-fractional, hard assets currency. Never. Not even in the Byzantine Empire as some think.

Because humans require debt.

Try outlawing debt, you will enter another 600 year Dark Age and feudalism

Yes, there has been.  Regression theory requires it, and takes it as a given.  Evidence of same isn't even a requirement.  Or are you contesting the regression theory?


Prove it.



Maybe, but irrelevent.  Commerce often requires debt, even if momentary in nature.  That does not imply that commecre requires a debt based currency.  Think about what it is that you are really advocating here.  If you owe fiat to anyone, you owe a debt; but when you pay for it in fiat, you're paying for it by transfering debt to another party.  You are never actually settling the debt.  Yes, modern fiat currencies work this way, and they will continue to work so long as the public continues to trust that the issuing government will continue to exist & continue to honor it's own debts.  (which is one reason that an outright & open default on foregn debts is never acceptable to an idebted nation)  This does not conclude that all mediums of exchange are, themselves, a debt of another party.  Physical gold rounds, silver bullion, trade barter in canned goods and bullets, etc. is not the exchange of a debt unless you're the creditor.  All that is required for you to see the difference between a two party consumer debt and that of a debt based currency system is to reason it out a bit.

Debt and debasement (in various forms of regimes ranging from debt-issued fiat as we have now to fractional reserves of gold in the 1800s to fractional purity of coins in Rome) have always been required and will always be required, because otherwise dumbass wanna-be elite capitalists (e.g. gold fever "goldbugs" greed) go create a ButtCon that puts 98% of the coins (of the world's wealth if ButtCon becomes ubiquitous which thus it won't) in 2% of the hands.

And the 2% doesn't spend, they invest to gain more coins.

So the 98% has no choice but to accept debt to survive.

Then the base money is debased to accommodate the required money supply expansion to accommodate the interest on the debt.

Note due to the Quantity Theory of Money (http://en.wikipedia.org/wiki/Quantity_theory_of_money#Equation_of_exchange), M x V = P x Q ≈ GDP, increases in monetary velocity substitute for money supply increases until the downturn and drop in velocity by -50% as we have since 2007.

Debt is required because there is a tension between the incentives of capitalists and the masses. Neither is wrong, this tension exists as the way nature works. The masses gain their limited wealth via using the currency for spending. The capitalists gain their outsized wealth by saving and investing. See the research paper I linked upthread.

This is why you must have debt and regular debasement to keep this ying and yang tension in balance. Nature is composed of relativity waves, not linear nor constant nor absolute frame of reference. You need to understand the nature of the universe, what it is fundamentally composed of.

http://unheresy.com/The%20Universe.html (my blog)

The key improvement we can hope for is to prevent a power center from manipulating the base money supply curve. And thus have more frequent write-downs of debt, to avoid those horrific implosions like the one coming for us after 2016.

The decentralized nature of Bitcoin is excellent. The chosen coin supply curve is idiotic and cruel, because it stops expanding and thus is static with a small percent of the world accumulating all wealth. It will not work out well, if we have only Bitcoin. Thus there is no way Bitcoin will be the only one. There are several scenarios that are possible:

1. Altcoins emerge and rectify the problem
2. Bitcoin reaches the dystopian outcome alone, thus society goes to war against Bitcoin.
3. Bitcoin never captures any where near all the world's wealth.

And some of the permutations of partial outcomes of the above.

This is not an argument.  Whatever you think, or feel, is correct is not an argument.  It's bullshit.  This sounds like the distorted (and wrong) economic education that marxists try to tell me about whenever I'm forced by circumstances to interact with them.

BTW, you really have misunderstood the meaning behind the Quantity Theory.  Changes in velocity do not support your position that debasement is an economic requirement, it contradicts it.  The very notable fact that velocity of money is able to change in response to the demand for money implies that hard currencies are more flexible in practice than is often touted by academtic economists.  You metioned that you live in England, perhaps you do or have attended Cambridge?  Or, perhaps, like to echo the bullshit of someone who has for strangers on the Internet?

Your inability to comprehend is not a rebuttal.


That demonstrates you did not comprehend what I wrote. I wrote that velocity can increase as a substitute for debasement. But remember velocity eventually has to decline when the economy does. So it does not absolve the necessity of debasement.


I never wrote I live in England and I don't. I live in a backwater, third world country. You apparently have low comprehension skills. I did write the UK has a total debt-to-GDP ratio of 550%. And many other countries have near that level too.

Dude I used to be a goldbug and believed that shit. At one time I owned 18,000oz of silver. I even minted 15,000 rounds of 1oz silver coins from 1000oz bars. Don't you want to learn from what I figured out over the years?

I wasn't trying to rebut a non-argument.  You may continue to live your life believing that anyone who disagrees with your bullshit doesn't comprehend.  You have my permission.  However, you are far from the smartst person in this room.  I'm one of the nicer lot here, and eventually you're going to hit one of the not-nice and have your virtual arse handed to you in public.  I don't have the time or inclination, and suspect that you'd just bail if I should try, but I will enjoy that day.


By your own logic, it doesn't need to resolve anything.  Like all thinkgs, demand for money comes in waves, and recedes the same way.  We call it the business cycle.  Debasement is not required, although it is often beneficial for certain parties.


And I quote...

"With a central bank that can create base money out-of-thin-air (or authorize banks to do it by lowering reserve ratios), they can just prevent write-downs for decades until we reach for example now 550% total debt-to-GDP in the UK we are facing now"

Considering that I live in teh US, I'm not "facing" anything that happens in the UK.  By including yourself (by way of the "we" above) in that group, you betray that either you identify with Britons, or you have a poor understanding of English grammer rules with regard to context.  I don't believe that I'm the one with poor comprehension skills, but at least one of us has poor communication skills.  I'm dyslexic, so that's my excuse.

You apparently did not read the links I provided. I told you I don't have time to repeat all the past discussion I had already at those links.

Those links PROVE why debt requires debasement. Essentially it is because if 97% use debt, then the money supply (or temporarily the velocity but then it must decline eventually which then requires the central bank to step in and debase) has to increase by the prevalent rate of interest. That is mathematically unarguable. The lenders are protected against default by the central banks, which was my point after all, of what we can actually improve upon.

Indeed removing the ability to print the base money out-of-thin air, could attempt to force all defaults on lenders. But if you go for that with strict 0% debasement, you will find that society hates you and will spite you because the debt will never expand enough and defaults will be so frequent as to keep the economy in a Dark Age. There has to be some acceptance and forgiveness and flexibility, otherwise with a static money supply the most successful capitalists just can accumulate larger and larger percentage of the money supply until they own it all. And this will just drive the capitalists to buy off the government to force a fiat. You've got to have your base money at least somewhat close to the trendline debasement rate need for the waves to revolve around, otherwise you end up with war.

In proof-of-work, without debasement, you end up with a transactions withholding attack and cartelization of the mining, thus you lose the decentralization and back at fiat again.

Hard money people see the world as flat and absolute. They are not realistic.


And again you did not read the link I provided which (contains a link which) shows all the countries in the world have a similar level of debt. Thus we are all facing the same outcome. I mentioned that. I guess you also didn't read the "for example" above.

Sorry I don't have time to reorganize a whitepaper every time I get into a debate with another hard money fanatic.

I care not at all about your past bullshit.


Bullshit.  You can't prove anything.  If you had any education in the dismal field, you would know this much.



I agree that the above highlighted part is mathmaticly correct.  However, your unstated premise is that the average inflation rate is the only variable force on the demand for money.  This is not supportable, and is easily disproven.  For example, bankruptcy is a countervailing force.  Anohter unstated premise youseem to have is that, because this effect is evident under the current fiat currency systems (i.e. central bankng, farctional reserve) that it must always have been this way or cannot be any other way under a different monetary system.  While it's possible that that second statement is still true, it's still unsupportable.  Just because it's true in every case that you (or I) could be aware of does not condlucde that it must be true under any system.

You would have already failed my class.


Again, no we are not.  It's actually impossible for all nations to face the same outcome even if allnations have similar issues (which they don't).  Once the first major nation defaults, the situation on the international stage has changed, and the next must fail in another manner.  The cascade probably makes it worse for the late nations, so the best time to default is early.  Iceland has proven this already, as they don't really have any lingering effects of telling Euopean banks to poiund sand.

I notice, also, that you really never did say why you identify with Britons in particular.  From whom do you draw your economic education & understanding?



Again, I'm not a hard money fanatic.  I would assume that a fanatic would actually own some, at least a little.  I don't own any.  However, I do understand the difference between a debt owed betweeen contracting parties and a debt based currency.

Realize that the money supply is always accumulating to the capitalists.

Thus our big opportunity with crypto-currencies was to get the wealth distributed back out to the people with a decentralized control over the coin supply. But not in a socialist method of distribution of course, as that would be counter-productive.

Bitcoin fucked up both aspects of the design.

1. It puts roughly 98% of the coins in 2% of the hands.

2. It ends debasement, so the mining and thus the control over the coin supply ends up in a cartel.

More neo-marxist, monetarist bullshit.  Just because you can imagine it, does not make it so.  It's actually impossible for the money supply to always accumulate to any group.  Eventually the distribution must drop below a functional level for a medium of exchange, at which point a free market chooses something else less scarce to be the new medium of exchange.  This crap has Cambridge written all over it, it's somewhat suprising that the UK is still a first world nation. 


Citations?  Fail.


Show your work, child.  How do you arrive at this conclusion?  Make sure that you explain how such a cartel could maintain loyalty among it's ranks when mining services are distributable with relatively low cost of market entry.

If you won't read cited references, we can't have a meaningful discussion. I am not going to repeat everything for you. You are not worth it to me.


Sigh. You have not refuted.


That is not my premise and not even a possible unstated mathematical relationship to my premise.

Feel free to attempt to write down an equation. I will be waiting.



Do you always fail to read? I wrote that central banks prevent defaults, which is the main improvement we can make with a decentralized currency.


I attempted to distill the information content of that and ended up with the empty set.


hahaha. I wouldn't waste my time if you were the "teacher".



It is always best to default sooner (but not every week! see point below), as you stop the further misallocation of capital.

All nations are in the same boat in terms of contagion effects, because global trade will implode and all nations are reliant on it. The USA is the least reliant, and has even become energy independent recently.

But the USA is facing the worst regime in terms of tracking down all wealth with the NSA and confiscating anything that tries to move abroad, e.g. with the FATCA. Europeans currently are not taxed when they are abroad nor on capital gains whereas the Americans are (I am a US citizen too), thus if that remains, they can go take advantage of all the opportunities the coming global implosion will create, but Americans will be locked inside.


I was not referring to the political differences in monetary systems. Loaning the base fiat from the Fed to the Treasury, and the creation of money as debt by the banks due to fractional reserves is basically a political issue of how the power center is structured.

I was talking about the fractional nature of ALL money systems, whether which form they take (in various forms of regimes ranging from debt-issued fiat as we have now to fractional reserves of gold in the 1800s to fractional purity of coins in Rome).

I am getting more fundamental to the root of the nature of money, which is that it has to be compatible with debt regardless of which political form it takes.

If we set the debasement of money at 0%, then it means the capitalists can accumulate the total money supply faster. There has to be a   balance between the 2% and 98%.

And the benefit we can get with a decentralized currency is that the control over the debasement can't be centralized and manipulated. But if we set the debasement to 0%, then the mining isn't funded (tx fees don't work due to transaction withholding attack), thus the decentralized benefit is lost.

You are thinking it doesn't matter if the money is debased, because the credit contracts can fall where they may in terms of success or bankruptcy. But you forget that people demand insurance. And then they demand the government to backstop the insurance.

A 0% debasement means the money velocity has to be exponential in order to keep up with the issuance of debt and thus demand for money, thus the debt expansions and collapses are too frequent, perhaps on the order of a couple of years or months or even weeks.

So then the public will of course demand to debase that money by demanding the government backstop and stop those too frequent corrections.

So for 3 reasons above, the debasement needs to be higher.

Since the 1800s, the data is that the debasment has averaged 5%. And the incomes have risen 5%. The 98% did not lose from debasment.

They lose from the power centers taking control of the government.

So the debasement rate has to be designed with the 3 factors I mentioned above in mind.

See sir, I am just thinking at a much higher and deeper level than you are.  :P

Indeed that is my point. If you don't design Bitcoin to be distributive in supply and thus a medium-of-exchange, it will fail.


I have cited both and explained them both ad nauseum in the past few days. Just click my name and read the past few pages of my posts.

I don't have any time nor desire to repeat it ALL again for you. If you are not interested to know the truth, then go on your blissful ignorance way.

This ends here.

I take it that you really don't know how bitcoin actually works, do you?


I'm surprised this lasted this long.

Haha. You don't know who I am. Very funny. That is like telling the President he has never run the country. Wait I will get an embarrassing link for you.

I will grant you this. Money is not always a debt, but that is just semantic weasel words, because it is always compatible with debt. Hard money that presumes that money and debt are orthogonal (as you claim) has never been a reality. I've presented the logic upthread. You have not refuted it.

Professor MoonShadow, read this and weep.

---

Oh, this is going to be fun...


I've made no such claim.


I don't have to, really.  You're here trying to argue (prove) a negative.  It can never happen.  I don't have to disprove your premise, your premise is false on it's face.

Read it upthread and weep. You just ate your words.


So you don't claim that money is orthogonal to debt now?

What happened professor? Did the cat get your tongue? hahaha. Idiot.

Again, proving that you don't understand how bitcoin works.  While this does show (roughly) 98% of coins are kept in 2% of addresses, I never contested that.  I contested the claim that 98% of coins were "in 2% of the hands".  There is no provable corrolary from the number of addresses with balances to the number of actual people who own bitcoins.  To demonstrate, I have a client that has 1000+ addresses, and maintains a distribution of funds.  Nor am I unusual in this regard.  Furthermore, MtGox uses four distinct wallets for it's internal user wallets.  Some addresses could have tens of thousands of bitcoins pooled from several users, others can have next to nothing at any given time.  It's actually unusuall for an online wallet service to use individiual addresses linked to individual users; because it's cheaper and easier to account for member to member transfers internally without using the blockchain.  While it's still possible that every address with a balance is realtive to the number of users who own those coins, that is almost certainly not the case.  Even the mainline client makes no effort to consolidate funds into single addresses, so the most obvious 'guess' regarding the distribution your data represents is that that is the distribution of the size of individual transactions, not the distributions of individual users' wealth.  The later is deliberately unkowable, by design.


BTW, for a long time the top address was the coin mixer pool for The Silk Road.  The Silk Road had tens of thousands of registered users, many thousands of which were regularly active.  That little factiod alone shatteres your presumptive wealth distribution.

Epic Fail.

I guess you can't do blockchain math either.

1/2 of coins were minted in the first 4 years. 350,000 users. 7 billion people in the world.

Go figure.

Wait, I thought you didn't have time to educate me?  I'm starting to have fun with this.

Lets see if you can do basic division. Apparently not.

I don't see an argument here.  You do realise that those people who don't own any bitcoins at all cannot rationally be considered in the wealth distribution, right?  Or do you consider all your British compatriots to be tragicly poor due to the fact that incrediblely few of them own any US $ denominated account balances?

You do realize that Bitcoin can never become the single global currency without having a very skewed ratio of have and have nots. The math is unarguable.

---

Separately I hope you know how to divide 10.5 million by 350,000. So that means an average Bitcoin wealth of very roughly $10,000.

And we assume Bitcoin will rise at least another 10X in price, so make that $100,000 each.

And that is if Bitcoin was uniformly distributed, which we both know it isn't even close to being uniformly distributed.

We could safely assume the top 20% owns 80% of the Bitcoin wealth.

And very likely Bitcoin will rise 100X in price from here, since it already has risen multiples of that.

So where does that place them on the distribution of world wealth? Hint: in the 98% realm.

Now I shouldn't have had to teach a professor that. That is a very basic level of research.

It means it is failing as a currency. It is becoming a mania asset speculation.

And with no debasement in the future, there is no way to reverse that effect.

Believe it or not, I'm doing more than just sitting here waiting for your responses.  I will have to concede one thing however, as it's become apparent that there is no way you're actually old enough to have attended Cambridge.

Why do you assume that bitcoin will, or must, become "the single global currency"?  That would be quite a victory, but is far from necessary or predictable.

Why do you assume that any wealth distribution is abnormal?  The US $ denominated wealth distribution in the US is far worsh than what you presume to state for bitcoin.

Why do you assume that you have structured your math problem correctly?  The math may be inarguable, but the application of same is not.

You presume a lot, I notice.


Why?  Where do you get such numbers from?  I've already shown that neither the absolute number of bitcoiners, nor the precise wealth of any particular bitcoiner, is knowable.  So your application of simple division is bullshit.

And why do we assume this?  I don't.  Even if I were to take such a presumption as a given, that does not imply that the curernt distribution, whatever it may be, will remain constant.  There is no reaons that it would.


Who cares?  The answer to your bullshit ssumptive questions are still bullshit assumptions.  Garbage in, garbage out.


Again, so what?  There is no example of any currency, in the history of mankind, that has ever been evenly distributed.  Why must bitcoin be different in this regard?


I'll concede that your level of research is very basic.

You still don't understand what's happening here, do you?

Can't think of a witty response, Mr. President?  Or have you finally decided you have better things to do than attend class?

You are cluttering this thread with noise.


I never assumed that. How many times have you failed to read during this debate.

I am not going to continue wasting my time on an idiot.


Well that proves you aren't worth speaking to.


Relative size of the float my idiot. And the fact that Bitcoin wants to become the global online currency.

But I am not going to spell it out for you. Because you will never stop with your nonsense.


Do some research.


 ???  :'(


 :-X


And you really thought I was making an argument that Bitcoin should be uniformly distributed.  ::)  :'(


I don't know whether to  :D or  :'(

I am no longer interested. I've made my points already.

I saved this one for last because it is so humiliating.

The really funny part is where you argued that users have more than one coin account, then used that to argue that the coin distribution would skew from the chart I showed towards better than worse.

Math is not your strong suite (nor is reading comprehension). You got the ratio direction reversed  ;)

Let's see if you can figure that out.

The lack of comprehension, probably willful, is palatable.  It's also bitter.

Sorry but I didn't like how you were making one sentence proclamations upthread as if you were some authority on the subject matter.

Yeah I was pretty harsh by saying "ignore this guy". I am just tired of dealing with all the people who don't understand that money is intimately related with debt and you can't just put a wall between the two and pretend it is not the case.

And all those don't realize that Bitcoin's coin supply is really fucked up.

Having said that I am glad we are moving towards decentralized currencies, if we can get some competition for Bitcoin that corrects the design errors.

Yes, but 'free market' is an oxymoron. The market has always been a state bastard; organized, enforced and controlled by the state (mafia).
The state is the player in the game that makes the game (supracommunal collectivism) dysfunctional from the very beginning.
The state doesn't write down its own debt and therefore the state is growing in the long run in relation to the private part of the economy. Collapse of society is always predetermined as soon as a society is established (transformation of the human into a cartoon of itself: the citizen, by organized violence through the eternal complicity of military and church).
Historically and empirically there is only one alternative to the society (collectivism): the self-sufficient community beyond the state and the market. In the rainforest, some communities are living self-sufficient until today: beyond the state and beyond the market. Beyond the state there is no need for a market.

Sorry for my poor english.


I already had a long discussion with him and others about anarchy vs. patriarchy ...

https://bitcointalk.org/index.php?topic=155570.msg2311170#msg2311170
https://bitcointalk.org/index.php?topic=155570.msg2311504#msg2311504
https://bitcointalk.org/index.php?topic=155570.msg2316060#msg2316060
https://bitcointalk.org/index.php?topic=155570.msg2360803#msg2360803
https://bitcointalk.org/index.php?topic=155570.msg2365513#msg2365513
https://bitcointalk.org/index.php?topic=155570.msg2370741#msg2370741
https://bitcointalk.org/index.php?topic=155570.msg2376880#msg2376880
https://bitcointalk.org/index.php?topic=155570.msg2379142#msg2379142

... and the fairytales of the aristocrats from Vienna. Austrians are not anarchists, they are minarchists (=collectivists).

https://bitcointalk.org/index.php?topic=239609.msg2573373#msg2573373
https://bitcointalk.org/index.php?topic=239609.msg2601822#msg2601822
https://bitcointalk.org/index.php?topic=239609.msg2611507#msg2611507

I regret entering the earlier immature tit-for-tat debate.

It would be better for me to phrase my view succinctly and unarguably.

Fact:

In the Quantity Theory of Money a constant money supply requires that the economy can grow only if the velocity-of-money circulation rises exponentially or the price level declines exponentially, neither of which are plausible for a healthy economy.

Goldbugs give up. You have no argument.

Fixed that for you :)

Defend your argument.

Exponentially falling price levels leads to hoarding and Dark Age.

Exponentially rising velocity leads to a bubble and massive misallocation of resources as people take on debt faster and faster.

Even if you dispute the above two, you have the problem that exponential trends can not continue forever.

Thus you mathematically require that all growth has to be taken back at some point.

Sorry you have no argument.

Fact :
USA had several periods of concomitant growth and deflation in the 19th.

Corollary :
Any economic theory which state that deflation is bad for economy is false and should be rejected.

Corollary :
Any argument against Bitcoin which involve its deflationary charateristic is inoperative.

The USA has never had a period where the only circulating money was a constant supply. Even gold (ignoring that it also expands in supply) was debased by fractional reserve receipts (which were traded as money) the private banks were creating on bank deposits.

So that deflation was kept in reasonable balance by an expanding money supply. And that is why it didn't devolve immediately into the unhealthy outcome.

The mathematical conclusions of my original statement are irrefutable. You can only try to refute the Quantity Theory of Money.

By definition deflation is contraction of money supply, and actually the US banking sector reduced its production of money. You describe exactly the contrary of what actually happened.

But I could also speak about the IT sector which is under ongoing deflation since the outset and yet thriving.

Deflation is not only that always. Learn the Quantity Theory of Money. Deflation can also be a drop in the velocity or a rise in productivity which causes prices to decline.

The banking sector did not reduce its production of money. I have the data since the 1800s. The money supply always increased at roughly 5% since the 1800s until the 1970s.

What was actually happening is the productivity was increasing at such a fast rate, because the government was only < 10% of the economy. Now it is > 50% probably 70+%.

What you want is small government, not a constant money supply.

You've been fooled!

That's not what Rothbard wrote in The Mystery of Banking.
His number say that money supply was decreasing during deflationary period.

Which is consistant with the theory of Austrian business cycles.

Wait I will go find my data source.

Armstrong claims before his death Rothbard admitted that Armstrong had insight he didn't. Martin Armstrong also explains why the money can be constant.

I see my ignores increased after posting this. Goldbugs are very hard-headed even in the face of math.

By the way fractional reserve is possible with Bitcoin too. So money supply will not necessarily be constant.

And Bitcoin is not doomed to be a monopole, other currencies will still exist and they well have an adjustment role of money supply.

And who will control that? The whole point was to create something sustainable that is decentralized and does not end up in the lap of the government every time there is a bank run and it fails and the people demand to be protected.

Fractional reserves are what leads to the bad outcome we have now. Look how JP Morgan bailed out the USA then got his central bank in 1913.


Agreed. But we need to recognize the desirable features such altcoins should have. And diminishing coin rewards means Bitcoin is subject to the "transactions withholding attack" (https://bitcointalk.org/index.php?topic=318001.msg3607709#msg3607709) and thus will end up a fiat.


I found my data source, but while I am reviewing that here is a quote the shows Austrian economics never said that a constant money supply is desired.

Okay my recollection about my data source was incorrect, but I don't think it invalidates my point.

It was nominal GDP that was increasing by 5% since 1790.

Nominal GDP is a rough proxy for P x Q in the Quantity Theory of Money. Thus it means either velocity or money supply was expanding or both.

Do you have any number from Rothbard on the rate of decrease in the money supply from that period? Although base money (gold) may have been stagnant or decreasing, the private banks were expanding credit and the money supply by printing fractional reserve receipts for that gold, i.e. bank notes.

It is not near to -5% then it was not the most significant factor causing deflation at that time. Rather it would the rise in productivity which would have been reflected in rising Q possibly falling or moderated P and a rising V with either a slightly rising or falling M.

See I don't think you can argue that a declining or constant money supply had anything to do with the deflation at that time, unless you can show it was near to -5% and velocity was thus going radically exponential and staying there (which we know isn't true because there were numerous recessions in the 1800s), which I claim would not be a healthy economy.

In short, the velocity V does not stay continuously high without expansion of the money supply because the rich would aggregate all of the money via usury since they spend a negligible (minute) percentage of their income. Wealth and income is power-law distributed [1]. Thus debasement is required else there is no money for the working class to use.

[1] Dragulescu, Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States

If we know that prices P were declining or rising significantly less than P x Q at roughly 5%, then it is impossible to argue that large increases in productivity Q was not the cause of deflation. The other side of the equation M x V must balance, but isn't a cause.

The question is whether exponentially rising V was sustainable, assuming you are correct that M was constant or declining.

Clearly it was not. We had numerous frequent bank failures and short duration depressions throughout the 1800s, because the demand for money was exceeding the supply and the banks were writing fractional reserves to meet that demand. If the banks had not been able to do that, then the corrections would have been even more frequent (the monetary leash would have been shorter).

And the high level of V was correlated with very much instability in the economy.

And where did that end up? Ultimately the banking system had to be bailed out by the elite and they created a central bank to backstop the banking system so that instability could be prevented (the monetary leash was extended to be MUCH longer as in $trillions of printing we are seeing now).

What they accomplished was the ability to delay corrections and to increase debt levels to astronomical levels as what we have now with 300+% total debt-to-GDP levels for every major country in the world today and government at 50 - 70% of the GDP in every developed country (except maybe Switzerland).

So I want to see someone make an cogent argument based on the evidence and math, that constant money supplies accomplish anything good.

They seem to just exacerbate fractional reserves and thus the trend towards fiat.

That is what I was trying to explain to MoonShadow yesterday.

P.S. Gold also has an expanding money supply. God apparently wasn't so myopic.

The velocity is not relevant. If you sell a bitcoin to me and buy it back tomorrow, we won't have additional GDP. Additional credit (debt) leads to additional GDP.

Velocity is relevant when the trades are in exchange for goods and services, which applies to everything I wrote in the posts upthread.

A bitcoin is a goody. If you sell a bitcoin to me and buy it back tomorrow, we won't have additional GDP. Additional credit (debt) leads to additional GDP.

Added:

Nov 15, 2013  I cut this show up.  Two callers here.  The first is anti-BTC, 2nd is pro-BTC.  The first tries to say the media promotes BTC, LOL!  I'm not sure what media he's listening to.  Judge for yourself.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.11.15.13.bitcoin.mp3

Fact:
The Quantity Theory of Money is circular logic. It basically says that the velocity of money determines the value of money which determines the velocity. It treats velocity as a cause of human action, when it actually is the result.

https://mises.org/daily/2916

It depends on how you compute the GDP. As far as I know, currency exchanges are not counted as goods and services in the computation of GDP. However, purchases and sales of assets I believe are counted. When you buy and sell a house, this indeed does cause people in the economy to earn salaries and commissions, and thus does increase the GDP. Buy and selling BTC does also to some extent.

Sorry if you are arguing that velocity of money has no relationship to GDP, then I should just ignore you as being retarded. It is quite obvious that the rate at which money changes hands in the economy, effects the amount of salaries and commissions earned by humans and thus the level of the economic activity.

Math is not the strong suite of most people. See below...


Okay you have accepted my challenge upthread, wherein I stated the only way you could challenge my argument is to attempt to refute the Quantity Theory of Money (http://en.wikipedia.org/wiki/Quantity_theory_of_money) (QTM), M x V = P x Q.

Above Mises is not arguing that the velocity V has no mathematical relationship to the P x Q ≅ nominal GDP. Rather he is arguing that P x Q ÷ V is the demand for M.

Thus he is not refuting the QTM, rather he is interpreting it one way. And that is one correct way of characterizing the effects of the QTM. However it is not the only way to interpret the QTM.

What he is essentially saying (which is correct), is that the QTM does not guarantee a cause and effect relationship between M x V and P x Q. Rather they just match, but it can't say which variable item in that equation caused the changes in the others.

Duh! That is what the algebraic equation says. It just relates the quantities, it doesn't mathematically say much about cause and effect. It is not like Mises said anything that wasn't already obvious from looking at the QTM equation.

However as I explained upthread, since nominal GDP increased by 5% per annum in the 1800s, then P x Q ≅ nominal GDP, so we can conclude that if P was not rising by 5%, then Q was rising. And Q is the quantity of goods and services produced. If Q is rising faster than the percentage of additional workers per annum, then productivity per capita is rising.

So clearly we can conclude that productivity was rising in the 1800s very fast, because the price level P was not rising nearly as fast as the nominal GDP was. And I have claimed that the productivity was rising fast, because the government was 5 - 10X smaller (http://grandfather-economic-report.com/#govt)! Small government is what leads to prosperity, and fooling yourself about money supply won't help you. The outrageous increases in money supply now, are because the government is huge and has control over the issuance of money and has a huge socialism bill to pay.

There is no way to argue directly from the QTM that M had anything to do with P x Q. You could argue that increasing M while holding V constant would have increased P perhaps, yet then P x Q would have also increased and still Q would be the factor responsible for increase of the real GDP, i.e. nominal GDP minus the increase in P.

We can conclude that if P x Q ≅ nominal GDP is rising by 5% per annum, then either M or V or some combination must also rise by 5% per annum. So if M were constant or falling, then V would have to rise exponentially faster than 5%. And then you re-read my upthread posts on why that is not a normally functioning economy. In short, exponential growth of velocity can not physically continue forever. And the faster it is growing, the faster the economy must overheat and correct.

So we can conclude that those who are argue for benefits of a constant money supply have no mathematical acumen. Mises never argued for that, as I quoted him upthread. And gold never had a constant money supply God wasn't that stupid. Even the Parable of the Talents explains what burying capital in hole (i.e. money that is never diluted and increases in value from doing nothing) gets you with God (your talents are taken and given to someone who will use them more productively which is what is going to happen to most of you in Bitcoin, e.g. one reason is many of you will not exit before the final peak and crash some 18 - 48 months from now because Bitcoin is not a currency).

Complete nonsense that a constant money supply is good for Bitcoin, other than it perhaps causes "gold fever" which may increase the price faster into a bubble. It is worse for many reasons. One is it enables the Transactions Withholding Attack (https://bitcointalk.org/index.php?topic=336350.0). Secondly is eliminates the ability to distribute the coins widespread throughout the economy (https://bitcointalk.org/index.php?topic=323988.msg3611217#msg3611217) via a CPU-only proof-of-work algorithm (which no crypto-currency currently has either), and thus Bitcoin is doomed to the dystopian failure for thus due to lack of widespread distribution it can never become a currency (https://bitcointalk.org/index.php?topic=318046.msg3611517#msg3611517) due to the chicken-and-egg dilemma.

It is up to you. Make your decision and buy the coin you think is better for our future. If all of you are math retards, then so help us God, we are headed for 666 dystopia then.

I have faith that not all of you are stupid and stubborn. And some of you can learn and make a wise decision.

I don't have time to discuss this more. I am busy programming. Leave me alone. Go on with your individual decisions. That is a free market.

I have told you. I can lead a thirsty horse to water, but I can't force it to drink from a blue colored aquifer because it thinks all water is colorless.

http://i1.ytimg.com/vi/4PjtWqLDfAE/hqdefault.jpg

Schiff the Shiller has been at it all year round, and he's being found out.  I think he might turn a corner soon on his stance.

You ever heard of "Gold Backwardation?"  I've only heard about. Someone brought it up in Peter's show and Peter blew him off.

See here:
http://www.professorfekete.com/articles/AEFTheDailyBellinterview2013.pdf

I've debated Fekete before in private email. It is all nonsense.

http://armstrongeconomics.com/2013/03/06/gold-backwardation-the-real-story/

http://armstrongeconomics.com/2013/10/24/gold-perpetual-propaganda/

What is nonsense regarding backwardation? (My guess - markets are so rigged that nothing just matters)

I figured as much.  So what's the difference between new and old school Austrian economists?  Is new school just a term for Keynsians posing as Austrians?

Armstrong explained it:

http://armstrongeconomics.com/2013/03/06/gold-backwardation-the-real-story/




The carrying cost of gold in a future's contract is related to the cost of short-term borrowing. Armstrong claims that he showed the Islamists how to earn "interest rates" by selling gold forward in futures, since they could not religiously earn interest in normal ways.

This is (at least one reason) why the $quadrillion derivatives credit-swaps are holding up the financial system. This is how the Arabs get the oil money into the gold futures markets and keep the western central banks ZIRP policy going.

You've just read something that nobody else ever published (as far as I know). ;)

Now you know why I know there is a global implosion coming.

It is not wise to ignore me.


I don't know anything about that. Fekete is a well intentioned person and also very smart. He just doesn't have the big picture that Armstrong can see, because Armstrong is actually in all the markets. He had a $3 trillion hedge fund, the largest ever before they shut him down and threw him in maximum security prison for 7 years for contempt of court.

Experience trumps and refines theory. Armstrong has experience trading in all markets on a global scale, including gold.

Oh, definately not.  Peter is no keynsian, although me might be a bit of a moneterist.

Added:

Nov. 18th, 2013  Two segments cut here.  First is Peter talking about it.  Second he's talking to a caller. 
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.11.18.13.mp3

Crypto-currencies could be used to give gold some of the modern day transmission advantages without even going through a medium with counter-party risk such as an ETF or whatever.

To bad that Peter is to much of a simp to grasp such a thing.

Here is Trace Mayer discussing Bitcoin with Peter Schiff (http://www.youtube.com/watch?v=JfC_9ZMOWPw) in Feb 2013.

LOL!  He's so funny when he's honest which is why I like him.  Well that was last Feb.  I would assume he's learned more sense then.  Thanks!

He's probably doubling down on a losing bet and hoping for something to bail him out.  The funny thing is that he seems quite unable to comprehend what the various things which could save him might be.  Or maybe he does but does not want to pick one.

To bad the people he influences might end up co-lateral damage, but I guess that is what happens when one bets on the wrong horse.

I never considered him 'funny'.  He's had the same spiel ever since I've heard of him and I used to listen to his views regularly many years ago.  Pre-2008 IIRC.  He's one of those 'every squirrel finds a nut sometimes' sorts of guys in my opinion and his only real source of success is a shrill tone which appeals to a certain class of listeners.

Care to explain how?

Bitcoin cuts out the middle man.

Peter Schiff wants to create an electronic gold currency backed by physical gold. He wants to be the middle man.

No because a cartel will own buttCON (https://bitcointalk.org/index.php?topic=336350.0).

It doesn't matter how many times you say it, AnonyMint.  Just because you can say it, or even that you have a link to someone else saying it, doesn't  make it so.  You are welcome to your opinion, but I've read over the theory of that mining cartel attack, and I think it's just FUD.  There is more to Bitcoin than either you or him understand.  More than I understand, and I'm one of the people who actually understands how it works at the protocol level. 

Read the linked thread on the Transactions Withholding Attack. I am the one who discovered the attack, and I have defended against everyone who has tried to refute it. No one can refute it. Read the thread and try to refute it (post over there in the thread). You can't.

What's his business, though? If he's just a retail seller and then talking-up gold on the radio, then he doesn't give a shit. I find all this "intrinsic value" crap unconvincing -- anyone who cares enough can do their due diligence and google "value" and find out what the different theories are. Disclaimer: I bought a tiny amount of gold coinz right at the peak of the bubble, after listening to guys like Peter Schiff yelling "zomg dollar collapse imminent! Get ze gold while it's cheap." Now I'm a starving artist, so I'm not making that mistake again. Ohh cheap bitcoins! :D

Thank you very much for these clips! Please continue doing them.

I just did.  And you're not the first, either.

No you didn't. Not even close. Read my rebuttal to what you wrote over there.

You are a sad, sad man.

I rebutted you again over at the other thread. And I don't appreciate the way you debate noisely by making provably false statements instead of presenting questions to be addressed. How is it sad to be correct?

If they are provablely false, then prove it.  It's your theory.

Done.

Dude, you're publicly failing in two threads at the same time.

Moonshadow is apparently the type of person who never realizes when he has been resoundingly refuted.

Oh, I know when I've been beaten.  I also know when that is not the case.  I've been bested by several of the older forum members, just search the archives and you will find many examples of people who know how to structure a premise and present an argument.  You might learn something while your there that will serve you well when you're old enough for college.

I appreciate MoonShadow latest posts in my Transactions Withholding Attack thread. He has presented some useful and helpful information.

The problem i have with precious metals:
1. We have to be constantly wasting huge resources mining for gold, this is not an eco friendly commodity and has the potential to destroy natural environments
2. Scientists may well in the future be able to produce gold (we can now but not efficiently) and thus ruin the economy
3. What if one day we space travel and find an abundance of gold, that would create a huge imbalance in the allocation of resources
4. Heavy to transport
5. Difficult to divide

I envision microbots that can burrow autonomously and mine gold much more efficiently (very low stripping ratio can follow the high grade veins without drilling holes and mapping, thus a massive increase in the supply of gold coming.

first make a machine that runs software that determines what physical gold chemical composition is; it will have to be a part of the blockchain; said machine destroys gold and reports to the blockchain and gives the person value that owns or is registered his address or whatknot in the machine blah blah

that's the best i could come up with. Theres just no way for counterparty risk in today's technology for an 'eGold' Theres bitcoin, or....bitcoin...or nothing

No there is emunie...

Additional Salaries and commissions can only be earned and payed, if somebody else creates additional debt/credit. No economy ever in history did bartering itself up. It's the (additional) debt, stupid.

Conflating increasing debt with increasing productivity is what you stupid socialists do. Sigh.

It's you, who is the collectivist. I am pro anarchism. Anarchist communities beyond the state do not have debt, and therefore no economy and no business. They are self-sufficient. No debt - no GDP. Monetarism and austrianism is mickey-mouse economics.

2 and 3 are very unlikely.

iam open to gold and silver and also to bitcoin and litecoin. its hard to compare gold and btc.

but to have a dogma in one thing is always bad.

Peter made a Bitcoin vs. Gold Video today 11/21/13
http://www.youtube.com/watch?v=0L7SOPDOvvI

Edit: I think he talked about it on 11/19's show too.  Same old same old.  I just can't keep up with it as of late.  He's been talking about it so much!  But it's the same message over and over.  If something new is added to the conversation, I'll let you all know.

I think Peter knows bitcoin is hurting his metals business so that's why he's so anti bitcoin.  I know I would have bought more gold/silver from him if it wasn't for bitcoin.  I would have invested lots more with him.  I still will in the future, but gotta get my ROI, lol!

At least he wisened up on the divisibility argument.

Now he is just saying "volatility", "intrinsic value", "regression theorem".  *yawn*  

I give it 2-3 years before he is a full-on bitcoin bull.

In 2-3 years Chinese rice farmers will be pricing their harvest in bitcoins.

He did make some good points, but I wonder if he thinks that anyone (himself?) actually knows what gold will be worth next year.

And he still seems completely ignorant of blockchain enforcable contracts.

Your penis has an intrinsic value, i.e. it can generate offspring.

Tangible things always have some intrinsic value, even if just as landfill.

Intangible things only have intrinsic value if the shared idea is factually true (e.g. whether Bitcoin is a currency (https://bitcointalk.org/index.php?topic=341594.msg3666870#msg3666870)) or if (e.g. religion) the shared idea can never be falsified.

This is incorrect.  All value is subjective, even nominally 'intrinsic' value.  Whatever value his penis has is only for him to decide, based upon how much he values offspring (or other uses for said penis).  His offspring have zero value to me, however.

See what I did just there?  The term 'intrinsic value' gets English speaking economics professors in trouble, simply because it conveys the wrong idea.  It's not that anything can have a value that is intrinsic, but that any given item can have intrinsic characteristics that we, both individually and as a society, value.  Said another way, we value the object because of it's intrinsic characteristics, but how much we value it depends upon our subjective preferences.  Value is never an intrinsic characteristic itself.

I guess he missed the word "shared". Selective comprehension is not comprehension.

Intrinsic means nominal in the shared context, mofo.

https://yourlogicalfallacyis.com/black-or-white

Sweet irony that your B&W fallacy link describes your misunderstanding of my non-B&W logic on this matter.

I already provided the link to the butt hurt report form, which you can submit to air your emotional grievances.

https://yourlogicalfallacyis.com/tu-quoque

I can do this all night,

True.  ;)

Added:

11/19/13  Sort of a run up to his lastest youtube video.  Same 'ol stuff.  I had to post to be consistant.  Nothing on 11/21's show.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.11.19.13.mp3

Added:

Nov. 22nd, 2013.  Peter talks about the news that Virgin Galactic is accepting bitcoin as payment for trips to outer space.  He has audio clips of Richard Branson.  Also takes calls on bitcoin.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.11.22.13.mp3

Btw, on a side note, I called that Virgin should take bitcoin for trips to space on Oct. 9th on the "Life on Bitcoin" facebook page.  I suggested that they ask Sir Richard Branson about it.  So maybe my comment sparked it.  Wishful thinking, LOL!

It is same as recording the ownership of paper rocks if Bitcoin isn't a currency.

Bitcoin is doomed to be a Ponzi-bubble because it can't scale distribution to be a currency:

https://bitcointalk.org/index.php?topic=341594.0


----------------------
Two ways Bitcoin is technologically doomed

I discovered both of these.

"Spiraling Transaction Fees Destruction" of bitcoin:

https://bitcointalk.org/index.php?topic=340686.msg3681159#msg3681159

Transactions Withholding Attack (takeover by Amazon or cartel):

https://bitcointalk.org/index.php?topic=336350.0

Yes, I agree.  The liberty and freedom bitcoin provides is part of its value.  So the fact that America is damned if they do and damned if they don't, with regard to accepting/outlawing bitcoin, says a lot about it's value.

How can it provide liberty and freedom if it is both certain to crash in price as a Ponzi-bubble and is doomed to fail technologically?

Your statement makes no sense to me at all, in light of the revelations I have revealed.

I can only assume you don't believe my revelations. Then go ahead and join the others over the cliff you go.

I'm done here. Enjoy.

I'm selling little blocks of BTC which I paid under $30 for a few years ago for the likes of $10,000 on my last sale.  Needless to say, I'm enjoying it hugely.  And I plan on sitting on a fair chunk if/when they collapse.

Sorry you missed the boat.  Better luck next time.  But if you have a limited ability to recognize potential opportunistic, and that appears to be the case, then I don't really expect that you will have much 'luck' going forward.

Of course not.  Why are you still here?


Oh, thank God!

Wait, are you saying that you bought uncirculated block rewards for $30 each?  And that you sold one of these 50 BTC blocks for $10K?

s/blocks/chunks/

At least! Bye bye!  ::)

Peter Schiff and Erik Voorhees

http://youtu.be/IaBREg5rzlI

http://www.youtube.com/watch?v=mFcTJAQ7zc4

Thanks!  Stefan sometimes guest host on Peter's show.

Everyone should listen to this!

Peter Schiff's repeats most all of my points, but he says a gold-backed private bank issued digital currency would be superior. Schiff misses the point that such a private bank issued digital currency isn't decentralized, and thus it is highly vulnerable to government control. Other than that, Schiff and I agree on most of his points, including the coming political threat:

http://www.activistpost.com/2013/11/social-logins-for-government-services.html

Schiff's main flaw is he thinks a backed-currency is better. If I debated him, I would demolish his logic on this point. You can see my upthread comments (I think starting on page 11) on why fractional reserves and gold-backed private bank issued notes was a failure. The intrinsic value of a decentralized currency is that it is a currency (unfortunately Bitcoin isn't). 100% pure physical gold has never been a currency and never will be-- was always either debased by shaving, impurity, or fractional reserves in order to distribute widely as a currency. Refer to my debate with MoonShadow before page 11.

We already demolished the "it is a standard" argument (https://bitcointalk.org/index.php?topic=279650.msg3495695#msg3495695).

Schiff is correct that it is much easier for the government to track on the internet, and anonymity is very, very difficult (http://blog.jim.com/category/crypto) (link is to James Donaldson's blog who was the very first person to interact with Satoshi in a public forum). That doesn't mean anonymity is impossible. But for example CoinJoin or coin mixers really won't work unless the other people you are mixing with never reveal their identity accidentally any time in the distant future.

It is true that all of us want a better option than fiat currency. We just don't have it yet.

OMG!  You see how LTC, PPC, NMC, & NVC are going up like mad!  I keep watching and listening to Peter talk about it.  Peter called this in the last video, but he probably doesn't really know the extent of it.  He has a valid point about how he confronted the .com and housing crowds.  Everyone thought he was crazy.  How is this any different?  There's a book called, "This time is different (http://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691152640)."  It's basically about how throughout history, it's never different.  For the record, I'm with Peter.  The bitcoin bubble will pop.  Question is, how long do we ride this wave.  I say sell weekly or biweekly.  Don't get caught standing when the music stops.

It's a sad state of affairs when we have to argue which is worth more, a shiny rock or a string of bits. Let's investigate a resource based economy.

The resource better be knowledge (https://bitcointalk.org/index.php?topic=322058.msg3718779#msg3718779), else you are proposing to resurrect the dinosaurs.

Peter Schiff is just some technical trader, he's not any kind of academic economist or philosopher.

Arguing about "intrinsic value" and the theory of money is way above his pay grade, when it comes to arguing these points he's just "some guy".

His father seemed some what knowledgeable about economic theory:

http://home.earthlink.net/~schiffeconomics/

Yeah, Peter and his brother based their book off of their dad's story.

Having a father that is a legendary income tax activist who wrote a comic book about a rudimentary theory of money is cool and all, but it doesn't suddenly mean that Schiff has any qualifications in this area of inquiry beyond any person on this board.

If end results mean anything, Schiff has demonstrably fewer qualifications than a lot of us who have made a boat-load by correctly analyzing things over the years while he sits there with his thumb up his ass sqealling like a stuck pig as his investments tank.

He was caught with his pants down when he was pushing emerging market economies right before the 2008 implosion.

He doesn't understand how global debt crises resolve:

http://www.foreignpolicy.com/articles/2001/09/01/will_globalization_go_bankrupt

http://armstrongeconomics.com/2013/11/23/real-estate-outside-usa/

Please leave and don't come back, like you've promised.

I like Peter, he was economic advisor to Ron Paul during his 2008 campaign. They are both great advocates of Austrian economics and ran with the intention of educating the public about the dangers of fiat currency. I know I wouldn't have understood the importance of Bitcoin if not for these guys, Ron Paul in particular.

However I do think he's wrong on this. I suppose I can't blame him, it's devastating to his business 8)

I really want Peter to be wrong on this.  But I keep thinking about it.  The more I do, the more I believe he's right.  Honestly, unless businesses keep bitcoin, save it, and pay wages, etc, it can't proliferate.  What if everyone accepted bitcoin?  That's only good if they keep it.  But the major majority of businesses sell it immediately after the transaction.  This is unsustainable and consistent with a pyramid like structure.  If Peter knows one thing, it's bubbles.  Everytime he comes out against something, he's attacked by its proponents to no avail.  The difference here is that it's the libertarian community, his community, that are attacking him.  He has great integrity to stand up to this.  We believe in the principles of bitcoin.  We want it to succeed.  But until the majority or businesses save them and pay wages in them, it will continue to be a bubble.

P.S.
I'm behind on listening to his show.  I know they've talked about bitcoin this week.  I'll listen in the next couple days.

Happy Thanksgiving!

Intrinsic material value is near worthless.  A $100 bill costs no more to produce than a $1 bill.  Intrinsic value is absolutely unrelated to the value of currency.

Fiat money has value because it is backed by the ability of governments to obtain wealth produced by productive people via taxation.

Productive people by definition, produce goods or services of value.  The government, by definition, has a monopoly on the legitimate use of force.  Therefore the government can always get a share of that value, so government-issued currency represents a share of the future productivity of the productive people who are subject to that government. 

That is not the reason why Bitcoin has value; Bitcoin has value because people doing transactions with it can do so more efficiently and are thereby enabled to produce or retain greater value than they could produce via use of fiat.  At that point bitcoin is "producing value" to the extent that it helps people to produce or retain more value than they could otherwise.

One of the most productive things to do in the 21st century is to cut middlemen out of all transactions, and that is what Bitcoin does.

I'll get to the rest in a minute, but I have to ask this question.  Concerning the claim I highlighted, why can't Bitcoin proliferate without businesses paying wages in it?  How many businesses pay their wages in silver or gold?  How many businesses pay their wages with Paypal or Western Union?  You've been looking at Bitcoin wrong, I think.  It's not a replacement for fiat currencies, although it could work for that.  It's a replacement for a significant part of the financial infrastucture that presently permits online commerce.  That's a multi-billion dollar a year industry that employs tens of thousands of people to produce nothing at all.


Why?



Yes, a majority do this.  That majority is (primarily) using Bitcoin as a payment method; as a replacement for credit cards & Paypal.  That leaves a minority of businesses that do not do this, or at least do not do this exclusively.  Some people are, indeed, saving in Bitcoins.


How?


First, he's not really being attacked by the Bitcoin community.  If he didn't have any respect here, there wouldn't be so much concern for his opinion.  And while Peter does know bubbles, he isn't without errors.  He's had his own misses, although his accuracy is far greater than the average Joe.  Furthermore, I don't think that anyone here is really claiming that Bitcoin couldn't be in a bubble.  It certainly could be.  Bitcoin has been through a half dozen bubbles and pops since I've been here, one more bubble is unlikely to destroy it.  Peter's complaints are that Bitcoin has neither any "intrinsic value" nor backing by a state as legal tender.  These are both (generally) true statements, but are both mostly true with gold as well, and yet gold persists as a monetary asset.  The answer is that many people have faith in Bitcoin for very different reasons than they might for gold.  Peter is a smart guy, but he's missing this one, and he's not alone.  It's perfectly fine that Bitcoin has detractors, if it was all roses with no complaints, I'd be worried that all of us were overlooking a potential problem.  Personally, I'm happy that Peter argues against it, and that others try to change his mind.  This kind of very public debate is healthy for Bitcoin. both technically and phsycologically.

But fiat has ubiquitous confidence (https://bitcointalk.org/index.php?topic=342848.msg3722657#msg3722657), otherwise society doesn't exist.

Society only has two choices (https://bitcointalk.org/index.php?topic=342848.msg3732767#msg3732767).


Correct and realize what the second choice is and realize Bitcoin isn't it (https://bitcointalk.org/index.php?topic=342848.msg3732767#msg3732767).


Bitcoin is not a transactions coin and can never be (at least not before a ponzi collapse and a government forced confiscation and redistribution (https://bitcointalk.org/index.php?topic=342848.msg3720078#msg3720078)). Refer to the above links.

Peter Schiff is correct about this point.

I'm with you about the Ponzi Collapse.  That's definitely going to happen.  A government-forced redistribution, I kinda doubt.

Bitcoin is and will be a coin for e-commerce, transfers, and remittances; that is what it does best  (Although I'm counting on the dev team to fix some scalability issues here).

Right now, people are holding it as an investment, just because it's been going up.  That isn't sustainable.  It already has a price *FAR* beyond the value that people are NOW getting from using it in e-commerce or to transfer money.  But we suppose that in the future more people will start using it for that, hence we suppose that its current price is far below the eventual value it will provide for those purposes.  

However, once it has the value correct for its role as a fully deployed, actually useful transfer and remittance coin, all further gains are pure Ponzi Bubble, and will collapse as the bubble comes to an end.  When that happens I expect Bitcoin to lose 90% or more of its price and *NOT* start going up again.   But I also expect that the final price will be at least two and possibly three orders of magnitude higher than where it is now, and the tip of the bubble to be an order of magnitude higher than that.  

Without redistribution, it can't become a currency without bankrupting the middle class, which of course will not be tolerated by society. Thus the value (note I didn't say price, as the price can go as high as the participants want to pay) you propose can't be reached before a massive redistribution event, and such event can't occur via market price transfer. There simply is no other way to get from here to there without a change to the Bitcoin protocol, government intervention, or a proliferation of altcoins (note Litecoin is now $36). See the first link below.

No way to do it without bankrupting the middle class?

Um, why?  If there is no redistribution (ie, Satoshi continues to sit on his money) the money that's not in circulation simply doesn't count -- ie, the value produced will be the same whether there are 100 coins in actual circulation, or 21 million.  The difference is that with just 100 coins we'd need a unit smaller than Satoshis.  But that's easy.

The market cap of coins in actual circulation, I expect to be about equal to the value it provides in its roles relative to the banking system now in place.  If 90% is held out of circulation by the earlier adopters, then that market cap will be spread over one-tenth as many coins and the equilibrium price will be ten times higher.  As oldtimers start using the coins that have been held out of circulation, the equilibrium price will simply go down.  But if the old timers aren't complete idiots who spend their coin all at once in unison, the price won't come down more than 5 or 10 percent a year.  And people are entirely used to that kind of inflation.  

Try reading the links I provided, as it is explained there why your logic is incorrect. In short, the masses don't have BTC yet, they have fiat, so the relative value does impact their net worth.

You could make an argument that most people are in debt or are subsistence laborers, thus they have no net worth any way. So all they care about is receiving BTC in payment for their ongoing labor.

However, it is the middle class which still has net worth that makes that decision because only they can buy and obtain Bitcoin (unless the rich hoarders spend all on labor, but that again is chicken and egg problem because the laborers can't accept BTC because they can't spend it).

I think it's also important to point out that in debates/commentary like the Schiff clips posted in this thread, the term "intrinsic value" is not being used in its strict financial definition. What Peter Schiff is talking about is "value" being modified by the general adjective "intrinsic".

The actual technical term "intrinsic value" does not actually mean what he's talking about.

We've actually been over this point to a great deal.

http://armstrongeconomics.com/2013/11/11/keynesianism-monetarism/


In my haste (too busy on other thoughts) I was confusing Irving Fisher with Irwin Schiff.

That is an example of my highly expansive pattern searching engine failing me.

There is no middle class. Look it up, it is not defined properly. It is a politician non-word.

The money you have is either earned by labour, by interest or profit, or received as a gift.

There are wage earners, where wages varies depending on skill and other things, wages vary within a narrow band because labour is highly mobile.

Then there are savers. They hold money in reserve for the long run. They may lend it, earning extra money in the form of interest.

Then there are capitalists. They have used some of their savings to buy capital goods, earning extra money in the form of profit. The profit is somewhat larger than interest, due to risk.

Then there are entrepreneurs. That is people who have the knowledge and understanding to invest in new things, reeking profits greater than the standard profit. An entrepreneur can use loaned money, or his own. If he uses his own money, he is a capitalist-entrepreneur. An entrepreneur takes extra risk, and if he is unsuccessful, he will fall back to wage earning. If he is successful, he can continue his entrepreneurship.

Unsound money can completely distort this picture.

Bitcointalk has been down for a few days.  I lost track of all the Peter Schiff bitcoin talk.  There was a debate with him and Erik Voorhees.  It's on youtube.
http://youtu.be/7mUn-d8R98k

Peter knows better. I think he believes he has to make these arguments to sell gold.

Well, it's working on me.  I sold some bitcoins and wired him some USD for Au/Ag.  He does have the best premiums around and really good customer service. 

I'll be doing the same fairly soon if things remain more-or-less as they are now, but it has nothing to do with Peter's mindless blather and a damn sure won't be using his services.

If I had a lot of Au and few BTC in my portfolio, I'd be going the other way.  Indeed, that's what I did a few years ago (using excess fiat at least.)  Today I see the likelihood of Bitcoin 'paying off' as higher than a few years ago, but of course the potential payout is lower since we've already seen a few 10x's.

Why did nobody tell Peter Schiff that he can easily create digital currency backed by gold, if he just use Colored Coin and backed it with gold?

Thank you. I didn't think this would be released for free.

Cool!  Eric was The Tom Woods show Dec 11th too.

http://www.schiffradio.com/pg/jsp/verticals/archive.jsp?dispid=310&pid=63335

Let me know if you can't access it.

Lower premiums than tulving (http://www.tulving.com/)?

This would require him to actually understand something about what this is instead of jumping to immediate superficial conclusions and then punch that strawman.

Actually, on a 50g Valcambi bar, Europac is better.

It's mostly because they've stood the test of time throughout human history.

Gold and Silver have intrinsic value, yes. I think we ALL know why...

Bitcoin has intrinsic value, yes. To say it doesn't, is the same thing as saying "I don't understand what Bitcoin is"



They BOTH have intrinsic value in their own ways. It's not a "one or the other" conversation so why talk about it that way. We don't use gold and silver for money exchange, we use paper money (which we ALL know is NOT backed by gold anyways) so WHY the heck are comparing them like they are apples to apples?!?! Bitcoin basically represents intrinsic value, this is not a freaking opinion!!!!

On a side note, Peter Schiff is a drama queen, lets be serious (or practical for that matter).

Added:

Jan. 10th, 2014
Peter on Overstock.com
https://app.box.com/s/g10742faolbkeq07ih6g

It's syncing, taking forever, sorry.  Give it a few more hours.  I took out some really big files and it's just taking forever!!!

Had to use box.  Sync is really taking forever.  I took Gigs out of my dropbox.  Gotta let it simmer.
https://app.box.com/s/g10742faolbkeq07ih6g

Thanks!

If gold got the same success as a payment system, Peter Schiff would be ecstatic. Even though all the criticisms - gold getting instantly converted to USD on the market - would still apply, I bet you wouldn't hear ANY of that from him then.

Very dissapointing  view peter has . His point is possibly correct in the very short term but he just doesn't get the fact that more real world use bitcoin has the higher it will go.

 tsk tsk peter.

Peter Schiff talks about Charlie Shrem and bitcoin taxes
https://dl.dropboxusercontent.com/u/21580995/PeterSchiff.bitcoin.1.27.14.mp3

Peter never considers that bitcoin is more than a "currency."  I can't wait for Andreas Antonopoulos to be on his show.

Another anti-bitcoin rant on todays show.  Will post later.  He keeps stating how newcomers to bitcoin will get discouraged by the sudden price drop and be completely turned off and never come back to it.  I hope he's wrong, but Peter is the man.

Some will, some won't.  That's no differnent than a rally in gold attracting newcomers who get burned on the correction.  Strangely, there are still people who don't abandon that barbaric relic.

I didn't read the rest of the thread, but I think It would be more accurate to say that gold fell during the crash of 2008 (WAY less than everything else) because the MBS and other assets that the banks were getting margin calls on were/are denominated in USD.  So  they had to sell whatever assets they had that were still worth something to raise USD to cover their Margin calls.  People called the dollar rally a flight to quality, I think, it was more of a flight to raise the margin they needed to remain solvent.  If MBS were priced is Turkish Lira they would have sold their gold and bought that.  They didn't have a choice.

EDIT:  SCHIFF is just a gold bug talking his book, the same book he's been talking for a decade.  I used to really like schiff, when I was betting on a collapse and a rally in gold.  But when gold fell due to what I described above, I had to re-evaluate, focus on shorting equities, and then re-buy gold once the deleveraging was over.  I lost a lot of respect for him then when he kept charging ahead losing his clients tons of money in spite of new facts.  I thought gold would skyrocket and the dollar would go when the crash came, just like him.  But I was wrong, and adjusted my strategy.  Now with bitcoin, I've lost all respect for him.  BTC is like gold in all the good ways, and vastly better in the ways that made gold fall out of favor in exchange for deposit receipts, then eventually fiat.  BTC is the best of both worlds.

Schiff is a salesman, a marketing expert.
 
He broadcasts a daily radio show, as well as writing weekly articles and doing videos and media appearances and conferences etc etc. He'll speak at your meeting for a lousy $25k. 

And it's all very predictably the same old stuff about debt the Fed, it's basically his fine-tuned sales script.

When does he do any real economic research?

He has a gold company and he flogs gold. Simple.

He does not deserve the attention he gets and he certainly doesn't deserve a one on one with Anton A.

He quite often speaks for free. Yes he's a salesman, but all businessmen are. 

The fact that he has a vested interest in gold doesn't take anything away from what he says, the fact is he has chosen to risk his capital and invest in gold means he's willing to back up what he's saying which means I trust him more than any other academic economist. I'm not saying I agree with everything he's saying however and I do think he's wrong on cryptocurrencies.

Added:
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.10.2014.mp3

peter schiff is an idiot, bitcoin is the only good thing libertarians have ever done and he trashes it...

I don't give a crap about the libertarian ideology myself. 

Bitcoin is valuable for commercial reasons.  It's cheaper than processing credit card payments.

The fact that it has potential for reasonable privacy is just a bonus. 

I'd take some issue with the assumption that the 'libertarians did it'.  Hal doesn't seem to be one and has stated otherwise.  Satoshi is unknown and didn't talk about politics much.  Gavin says he's a libertarian, but doesn't back it up much beyond that.  Garzik and Maxwell have been beat up in the past for not bowing sufficiently to the Libertarian idols.  Hearn is a died-in-the-wool fascist/totalitarian type dude.  Dunno about Sipa and Lian.

Peter has addressed this point.  He says he knows that bitcoin is big amongst libertarians but he's not going to lie about it.  He says he's not going to sacrifice his principles to appeal to his fans ideology.  He said, "If there's one thing I know, it's bubbles.  If it walks like a duck, quacks like a duck, then it's probably a duck."  I wish I would have posted the audio where he addressed it.  It might be in my audio posts somewhere, I can't remember when he said it.  It was a good point.  He also addressed how people may think he's bashing bitcoin to sell more gold.  He's a very principled man.  I trust him and his philosophy.  Which is why I sold many of my mined bitcoin for gold/silver.  I sold bitcoin and invested fiat with his company.  I'm also holding more bitcoin/altcoins to hedge that.

Which is exactly what he wants. He is a salesman, and a good one. He sees digital currencies as a threat. I get his e-newsletter. The title of a recent one was something like "our new digital offerings." I believe he is principled but he's also looking out for his own interests.

Digital offering is a way for small investors to act as venture capitalists.  Small meaning upper middle class, not millionaires.  There's a minimum of like 100k I think.  But it's has nothing to do with cryptos.

edit:  http://digitaloffering.com/

I could be wrong about what I said above.

http://www.nakedcapitalism.com/2014/02/peter-schiff-wrong-everything.html (http://www.nakedcapitalism.com/2014/02/peter-schiff-wrong-everything.html)

Schiff is like the Jim Jones of money management.  Thank God they guy has stayed away from Bitcoin.  When he jumps on board I would take it as a sign that it's time to bail.

I remember him screaming for people to buy gold when it was dropping from 1800,1700, 1600 etc.   He called for $5000 to $10,000 per oz in few years.

I don't remember him saying anything about it when it was around $300.

Now, his Overstock argument is one sided.  He assumes that people who already have bitcoins will go on Overstock to spend it.  Effectively selling their coins.

IMHO, the retail acceptance is positive for bitcoin in terms of broader acceptance and an overall image.  The actual mechanics of bitcoin retail transactions should have no effect on the price of bitcoin.  If you want to buy something on Overstock with bitcoins, you have to buy bitcoins and spend them on Overstock site (they would sell bitcoins using bitpay).  

He might be right about one thing, the price of bitcoin cannot go up without new buyers coming in, but that is kinda obvious.

On the last drop, about 1M exchanged hands (if you add up volumes all the exchanges).  Assuming (I don't remember where I read it) that 3M are in inactive/lost wallets, that still leaves a large number of whales who did not participate in this drop.

So price pressures might still continue for a long time.  Looks like FBI has not dumped their holdings, if they do, expect the price to drop to <$50 because there is no liquidity to handle 100,000+ BTC type of trades.  I don't expect FBI to be picky about the price they get for their coins.  After all, it is not their own money.

Added:

Feb. 13th, 2014
Peter talks about some technical support levels of bitcoin, etc.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.13.2014.mp3

Feb. 14th, 2014
Peter talks about btc prices on Mt. Gox vs Bitstamp.  He admittedly doesn't understand why they're different.  He takes some calls on it.
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.14.2014.mp3

Both of those links are to the same audio.

Fixed.  Thank you.

Thanks!  Peter talked a little yesterday (2/17) about it but nothing new.  A couple callers on it but they had nothing to add.  Pointless for me to post it.

Eric Voorhees was on the Tom Woods show
http://www.schiffradio.com/pg/jsp/verticals/archive.jsp

Added more audio.  I got a little behind.  He ranted last Thurs/Fri.  But yesterday (2/25) was especially good.  There was a good caller on too.  Told Peter how he turned 10 btc into 300 by trading.  Peter quickly called it gambling, funny!

Feb. 20th, 21st, & 25th, 2014
Mt. Gox and Peter...
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.20.2014.mp3
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.21.2014.mp3
https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.25.2014.mp3

Added 2/28/2014

Peter talks about the downfall of Mt. Gox and there's a small I told ya so in there.  Also talks a little about gold vs bitcoin at the end.

https://dl.dropboxusercontent.com/u/21580995/Peter.Schiff.bitcoin.2.28.2014.mp3

Peter's gold company is accepting bitcoin now.  LOL!!

Peter is a salesman. He is pumping gold not much different than many people here pumping new coins.

I think I read somewhere that his company is now actually accepting bitcoin.

Added:
July 24th, 2014
Naomi Brockwell, aka "BitcoinGirl", is on Peter's show.
https://dl.dropboxusercontent.com/u/21580995/NaomiBrockwell_072414.mp3

Nothing new.  I haven't posted much recently because he keeps saying the same thing over and over.  Bitcoin is a bubble, it has no intrinsic value, etc...

I'm not following you?

This idiot copies other people's statements all over the place. Check his latest posts.

Peter Schiff and the mythological belief in "intrinsic value" that he and others have is discussed with Tuur Demeester on the most recent episode of the Ed and Ethan show:

https://www.youtube.com/watch?v=iLxNp44tRSE&list=UUX-pglnBfZBq9r-BxsLQznQ

Devils advocate.  What's backing bitcoin?

Read more.

Bitcoins, like precious metals, don't need backing because they are scarce.  It's paper, which is not scarce, that needs to be backed with something like gold or bitcoins that are limited in supply.

Has he change his view on bitcoin yet?

He was right on real estate, but dead wrong on bitcoin.

Everybody laughed at him all the way up until the housing crisis occurred.  People are laughing at him now regarding the crash of USD.  Now all of the people that laughed at him won't even talk to him.  The whole bitcoin community laughs at him.  I think he's right.  Bitcoin is a bubble.  Peter says, "If it looks like a bubble, walks like a bubble, and quacks like a bubble, it's probably a bubble.  And if there's one thing I know, it's bubbles."  When/if bitcoin goes main stream, all of the early adopters holding hundreds or thousands of bitcoins will cash out all at once.  Then it will crash.  Bitcoin is a means to something greater.  Only time and ingenuity will tell what that is.

And keep in mind that Peter doesn't really accept bitcoin for gold.  He uses bitpay. 

I don't think the whole community laughs at him, more like they are sad that he can't understand it. To him bitcoin is a ponzi scheme and he has long been an outspoken critic of it. He does not merely say it is in a bubble, which even some bitcoiners may at times agree with, but that it has no value at all.

He still believes in the political process and that the way to fix the system is to reform it from the inside.  He thinks the solution is to just get the right people into power.  He seems to prefer "top down" solutions over "bottom up" solutions.  He even flushed a lot of his own money down the toilet on a run for the Senate a few years ago.

He believes in limited government.  He believes in a gold standard.  He believes the only job of government is to protect life, liberty, and property.  No more, no less.  There are a lot of problems with our gov, no doubt.  But I think the fact that Peter consistently puts his money where his mouth is says a lot about his integrity.  He's no hypocrit, far from it.

No doubt bitcoin is in bubble. But that is true for just about any assets out there largely due to the printing press running non-stop.

I didn't accuse him of being a hypocrite.  I accused him of believing the fiat scam can be brought to an end via the political process.  His idea of a gold standard is "let's let the bankers hold all of the gold and issue paper to the people".  Fuck that.  That's already been tried.  It failed.  For some inexplicable reason he believes it will work out just fine if they just try it one more time.

He believe in paper gold because he is getting commission selling them.

If value is subjective, nothing can back anything and ideed it does.
Backing is just a promise waiting to be broken.

Right. And there is no such thing as "intrinsic value" that is not subjective.

Gold has value because we give it value. It is worthless to non-human.

Another great way of putting it and I completely agree.  I'm not interested in promises from bankers or politicians.

According to Jeffrey Tucker (speaking on LTB podcast), Schiff has had a complete change of heart re: bitcoin.

Tucker puts it down to experiencing bitcoin; he related the story of being ridiculed by Schiff for 18 months over his bitcoin stance until one day Schiff approached him, marvelling at how quick bitcoin transactions were completed and how it saved his company plenty on fee payments.

Slowly but surely, the gold bugs are turning.

Could not help a big, big  ;D ;D come over me, when I heard that story.

Haha, that's great. I knew Peter would come around sooner or later.

Fun fact: His father Irwin was a big figure in the tax protester movement and is currently serving time in Federal Prison for it. Of course Peter likes Bitcoin.

"He was right on real estate, but dead wrong on bitcoin."

Only if being right includes losing 40-70% of his client's money in 2008....

http://www.businessinsider.com/2009/1/peter-schiffs-clients-got-hosed-this-year-too

Peter's response to the assertions in that article can be found here:
http://www.schiffradio.com/b/Mish-Shedlock-Exposed/-99733001115235480.html

Another butt-hurt loser screed from Peter Schiff.  Yawn.  I still have him in my bookmarks from almost a decade ago, but fortunately I stopped paying any attention to him whatsoever before even the 2008 fiasco, much less before he had a chance to lose me a ton of money on Bitcoin.  Actually, the guy was way late on Bitcoin.  He'd yet to even hear about it by the time I'd made my move.

Schiff likes to pretend that he's the only one who foresaw the housing issues and such in the mid 00's.  Not true at all.  Many many bright people were shrieking from the roofs about it.  He was the only one that I remember who was yammering on about how the Euro-zone and APAC were the magic bullet.  Few others were that retarded.

Hardly an idiot! Any wise person would hold some physical precious metals as part of their portfolio.

Do you happen to have any links to the predictions that were made by a few of them?  I do remember seeing that Ron Paul predicted the housing collapse a few years in advance but don't recall seeing any others.  (www.youtube.com/watch?v=9S3lXDOQ7ec)

Mish Shedlock did.  I know there were at least a few more that I paid attention to.  Several at motleyfool.

Without a doubt, Mish did it with the most profound detail and accuracy of any I know of.  He was tracking the progression of the housing market over a silhouette of the graph of the rise and fall of the real estate market in Japan before and after it's great crash in the 80's.  It was odd how well it tracked. It's statistical corrolation was above 90% IIRC.

This guy should sell 50% of his Gold and buy BTC if he doesnt want to be seen as the biggest idiot in the next decade.

Yes , bitcoin is not intrinsic but its use and marketing power is way out of this world just imagine its network outreach up to date.

Bitcoin's price development since 2009-1-3 (the inception) correlates 0.935 with an exponential trendline.

If I had a medium sized investment portfolio (I do), I would allocate as follows:

Bitcoin 45%
Monero 5%
Real Estate 20%
Small Business & Projects 10%
Cash, financial instruments 10%
Gold 5%
Silver 5%.

If you don't want to invest 50% in crypto, just invest 5-10% and it will become 50% spontaneously in 1 year, should the trend continue.

So... not 95%? Damn... Maybe I'm being too risky. Then again, I do like to live dangerously vicariously  ;D

If I had a small portfolio, I would invest 50% in bitcoin, 50% in monero.

When will Monero explode?