Bitcoin Forum

Economy => Economics => Topic started by: Red on August 19, 2010, 07:49:35 PM



Title: Bitcoin as a GET System
Post by: Red on August 19, 2010, 07:49:35 PM
There has been much discussion on this site about how best to describe bitcoin to the uninitiated. Some people, favor currency metaphors, others alude to commodity metaphors. Others caution either of these as dangerous taunts to authority.

I posted the following in another thread and there was a suggestion that I write an extended article about my simile. It seems likely that my suggestion is as polarizing as any other. So to avoid any unnecessary aggravation, I'm soliciting comments in advance.

Any thoughts are appreciated.

------
I'd like to submit that I think the most apt description of bitcoin is that it is most like a Global Exchange Trading System (GETS) which is a variation on the LETS (http://en.wikipedia.org/wiki/Local_Exchange_Trading_Systems) concept that isn't for hippies.

Descriptively it differs because it's community is loosely knit and global rather than an intertwined small-town. As such, there can be no commonly trusted party to operate and monitor the system, so that function is trusted to redundancy and mathematics. (block list)

LETS communities can rely on "local knowledge" of peoples historical behavior and intentions. As such it is perfectly reasonable for them to advance credit to people (negative balances) in certain situations. In a GETS community advanced knowledge of all parties and intentions is not practical or even preferred. As such, GETS operates on a zero credit policy. (no negative balances)

Also, since GETS trade globally, there is no "national currency" that can be used for equivalence. As such, GETS defines it's own unit for accounting purposes. Since this currency must necessarily vary against some national currencies, the LETS strict "no interest" principle cannot be preserved.

----
I think if people understood LETS they would intuitively understand GETS. The rest of the bitcoin details are just one possible GETS monetary policy.


Title: Re: Bitcoin as a GET System
Post by: FreeMoney on August 19, 2010, 07:55:23 PM
I think it's a good comparison and nice to understand the differences.

I didn't realize "no interest" was integral to LETS. It's pretty silly to tell people that they can't value work now more highly than work in the future.

 


Title: Re: Bitcoin as a GET System
Post by: Red on August 19, 2010, 08:13:42 PM
It's pretty silly to tell people that they can't value work now more highly than work in the future.

This is more common than you think and not arbitrarily non-sensical. Suppose you work for a fixed salary and generally work 5 week days and get 2 weekend days off. Now if you happened to work one weekend extra it is clear that you are "owed" two days of not working as compensation. If you take those two days the next week that seems perfectly reasonable.

However, what if you decided to "bank" those two days and to not take them for five years? Say over those five years your salary increases 50%. So when you take those two days, they are equivalent to three days of work at the rate you banked them. Is this fair to the company? What if there is a recession and your salary falls 50%? Do you have the right to demand four days off-work instead of two?

More and more companies in the US are employing a use your vacation (this year) or lose your vacation strategy whenever possible to avoid these issues.

The LETS philosophy adopts this concept for everything since everything is basically "work" to them. According to the founder there is no point at all in saving in LETS credits. Credis should remain fixed in value. If you want to save in something that changes in value choose one of the numerous commodities produced and traded by members of the LETS community. That is why they stress keeping everyone's balances close to zero.

-----

Bitcoin differs greatly from LETS in this philosophy but only because of the 21,000,000 fixed bitcoin policy. Bitcoin's monetary policy could be varied (in theory) to bring it closer to LETS, but that is definitely NOT a priority of the bitcoin community.


Title: Re: Bitcoin as a GET System
Post by: fresno on August 19, 2010, 10:10:11 PM
I'd like to factor Bitcoin the method from Bitcoin the useage.

Bitcoin should be a convenience owned, used, and maintained by the community.

The community can grow around Bitcoin, to be a web payment system, or an auction, or a commodity exchange, or whatever. But it must be understood that these enterprises are independent of Bitcoin. They should not be owned, operated, controlled, or promoted by Bitcoin in any way.

Keep it simple!



Title: Re: Bitcoin as a GET System
Post by: Red on August 19, 2010, 11:20:54 PM
Bitcoin should be a convenience owned, used, and maintained by the community.
LETS is an accounting convenience owned, used, and maintained by the community. It is used to facilitate trade and wikipedia defines it as a full fledged monetary system (not barter).

I don't find the noun "convenience" used alone to be descriptive enough to be useful in this situation.

In the US there is nothing wrong with trading using whatever token you want. I use frequent flyer miles, credit card rebates, hotel and untold other points systems, karma, coupons, and many other things listed as "foo dollars" or "foo bucks". There really is no threat.

If I used any to avoid taxes or send money to terrorists they would hunt me down and ask why. But I don't do those things so I'm unconcerned.

And legally speaking, your intentions matter but your vocabulary usually don't. You can be convicted of having someone "offed" just as easily easily as if you had said "killed".
   


Title: Re: Bitcoin as a GET System
Post by: FreeMoney on August 19, 2010, 11:27:09 PM
It's pretty silly to tell people that they can't value work now more highly than work in the future.

This is more common than you think and not arbitrarily non-sensical. Suppose you work for a fixed salary and generally work 5 week days and get 2 weekend days off. Now if you happened to work one weekend extra it is clear that you are "owed" two days of not working as compensation. If you take those two days the next week that seems perfectly reasonable.

However, what if you decided to "bank" those two days and to not take them for five years? Say over those five years your salary increases 50%. So when you take those two days, they are equivalent to three days of work at the rate you banked them. Is this fair to the company? What if there is a recession and your salary falls 50%? Do you have the right to demand four days off-work instead of two?

More and more companies in the US are employing a use your vacation (this year) or lose your vacation strategy whenever possible to avoid these issues.

The LETS philosophy adopts this concept for everything since everything is basically "work" to them. According to the founder there is no point at all in saving in LETS credits. Credis should remain fixed in value. If you want to save in something that changes in value choose one of the numerous commodities produced and traded by members of the LETS community. That is why they stress keeping everyone's balances close to zero.

-----

Bitcoin differs greatly from LETS in this philosophy but only because of the 21,000,000 fixed bitcoin policy. Bitcoin's monetary policy could be varied (in theory) to bring it closer to LETS, but that is definitely NOT a priority of the bitcoin community.

The employee and employer have some agreement. It doesn't concern me whatever they decide to do. It would be wierd if 'dollars' told them what they could agree to. Likewise it would be odd if LETS told someone what agreements they could make concerning how many LETS were owed.

I mean what happens anyway?

I tell a guy that if he mows my lawn I'll give him 10 LETS, but that if he doesn't mind waiting to get paid till next month I can give him 11. How does LETS stop me form offering to 'borrow' LETS at interest (over 100% APR even)?


Title: Re: Bitcoin as a GET System
Post by: FreeMoney on August 19, 2010, 11:29:27 PM
I'd like to factor Bitcoin the method from Bitcoin the useage.

Bitcoin should be a convenience owned, used, and maintained by the community.

The community can grow around Bitcoin, to be a web payment system, or an auction, or a commodity exchange, or whatever. But it must be understood that these enterprises are independent of Bitcoin. They should not be owned, operated, controlled, or promoted by Bitcoin in any way.

Keep it simple!


Does Bitcoin own anything? How would I even tell?

So appearing on the Bitcoin wiki is promotion by Bitcoin or not?


Title: Re: Bitcoin as a GET System
Post by: fresno on August 20, 2010, 01:13:38 AM

... The employee and employer have some agreement. ... It would be wierd if 'dollars' told them what they could agree to.


I am not sure how this is done on other countries, but in the United States the contract is written on a federal form W-4, and documents the employee and his Social Security account number and the employer and his Taxpayer Identification number. It contracts both parties with the federal government to abide by a set of rules called the United States Code, the Code of Federal Regulations, and a host of others.

You cannot have the kid down the street mow your lawn as an "employee" outside of this system. Impossible.

My point: These words have consequences.




Title: Re: Bitcoin as a GET System
Post by: fresno on August 20, 2010, 01:23:46 AM
I'd like to factor Bitcoin the method from Bitcoin the useage.

Bitcoin should be a convenience owned, used, and maintained by the community.

The community can grow around Bitcoin, to be a web payment system, or an auction, or a commodity exchange, or whatever. But it must be understood that these enterprises are independent of Bitcoin. They should not be owned, operated, controlled, or promoted by Bitcoin in any way.

Keep it simple!


Does Bitcoin own anything? How would I even tell?

So appearing on the Bitcoin wiki is promotion by Bitcoin or not?

Some versions of our letter to the EFF, and of the magazine article being considered have buzzwords prejudicial to Bitcoin. They are being prepared on a Bitcoin website, by bitcoin people. A reasonable and prudent observer would be able to rely on the ill-advised claims. A grand jury can certainly accept these at face value. An ambitious prosecutor can and will have a field day, using our own statements against ourselves.







Title: Re: Bitcoin as a GET System
Post by: mizerydearia on August 20, 2010, 01:31:04 AM
I'd like to factor Bitcoin the method from Bitcoin the useage.

Bitcoin should be a convenience owned, used, and maintained by the community.

The community can grow around Bitcoin, to be a web payment system, or an auction, or a commodity exchange, or whatever. But it must be understood that these enterprises are independent of Bitcoin. They should not be owned, operated, controlled, or promoted by Bitcoin in any way.

Keep it simple!


Does Bitcoin own anything? How would I even tell?

So appearing on the Bitcoin wiki is promotion by Bitcoin or not?

Some versions of our letter to the EFF, and of the magazine article being considered have buzzwords prejudicial to Bitcoin. They are being prepared on a Bitcoin website, by bitcoin people. A reasonable and prudent observer would be able to rely on the ill-advised claims. A grand jury can certainly accept these at face value. An ambitious prosecutor can and will have a field day, using our own statements against ourselves.

Perhaps in the context of "Does Bitcoin own anything?" it should be clear whether there is an additional meaning for "Bitcoin" in this case or if it is a misinterpreted usage and "Bitcoin" doesn't fit or belong in such a statement.  e.g. similarly to say "Does this USD1 bill own anything?" or "Do dollars own anything?"


Title: Re: Bitcoin as a GET System
Post by: FreeMoney on August 20, 2010, 02:01:48 AM

... The employee and employer have some agreement. ... It would be wierd if 'dollars' told them what they could agree to.


I am not sure how this is done on other countries, but in the United States the contract is written on a federal form W-4, and documents the employee and his Social Security account number and the employer and his Taxpayer Identification number. It contracts both parties with the federal government to abide by a set of rules called the United States Code, the Code of Federal Regulations, and a host of others.

You cannot have the kid down the street mow your lawn as an "employee" outside of this system. Impossible.

My point: These words have consequences.




I don't think we use words in remotely the same way. Impossible things have never been done. Hiring a boy to mow your lawn illegally has definitely been done.


Title: Re: Bitcoin as a GET System
Post by: fresno on August 20, 2010, 02:39:02 AM

... The employee and employer have some agreement. ... It would be wierd if 'dollars' told them what they could agree to.


I am not sure how this is done on other countries, but in the United States the contract is written on a federal form W-4, and documents the employee and his Social Security account number and the employer and his Taxpayer Identification number. It contracts both parties with the federal government to abide by a set of rules called the United States Code, the Code of Federal Regulations, and a host of others.

You cannot have the kid down the street mow your lawn as an "employee" outside of this system. Impossible.

My point: These words have consequences.




I don't think we use words in remotely the same way. Impossible things have never been done. Hiring a boy to mow your lawn illegally has definitely been done.

First you falsely claim an employer-employee relationship, then you admit to engaging in an illegal activity. I sure as hell don't want you managing my business!

You could have simply side-stepped the whole issue as I advised earlier, but you chose otherwise. I hope you will show better judgment when you're out on parole.



Title: Re: Bitcoin as a GET System
Post by: Red on August 20, 2010, 02:55:12 AM
The employee and employer have some agreement. It doesn't concern me whatever they decide to do. It would be wierd if 'dollars' told them what they could agree to. Likewise it would be odd if LETS told someone what agreements they could make concerning how many LETS were owed.
You ducked the question by saying people can agree to whatever they want.
I suggested that it simply doesn't make sense to pay someone extra for their "delayed gratification". While you might think that delaying your own gratification is somehow noble. It doesn't benefit me at all.

Moreover, in the context of a LETS system it negatively effects the community. If someone hoards a positive balance, then others' balances by definition have to remain negative.

I mean what happens anyway?

I tell a guy that if he mows my lawn I'll give him 10 LETS, but that if he doesn't mind waiting to get paid till next month I can give him 11. How does LETS stop me form offering to 'borrow' LETS at interest (over 100% APR even)?
A LETS system is a shared credit system (according to wikipedia). Suppose a system starts everyone out with a zero balance and allows people to have up to a positive or negative 500 credit balance. So in your case if you had a zero balance you could easily pay the lawn guy 10 or 11 credits. Whatever you negotiate. The community is lending you those credits at zero interest in the hope that you will use your skills to benefit the community. The only reason you could not pay the lawn guy, is if your balance was already -490 (Which is publicly known by definition). At that point the lawn guy could have the community accept the risk for your -10 credits, or he personally could take the risk for your -11 credits. That would be up to him if he wanted to trust you for it. He would have a lot more evidence from the LETS system than most people have making those sorts of decisions today (unless they run a credit report).

The community risk in a LETS system is that people run up a negative balance and then exit the community. This means they took services from the community but did not repay with services of their own.

Say a person died with a -500 credit balance. Then by definition, there are +500 credits out there that can never be balanced. That would be the equivalent to "inflation" in other monetary systems. To bring the system into balance either someone has to take responsibility for working off the -500 credits, maybe other family members. Or the community as a whole would have to "write off" +500 credits of their expectations.


Title: Re: Bitcoin as a GET System
Post by: Red on August 20, 2010, 03:14:51 AM
I am not sure how this is done on other countries, but in the United States the contract is written on a federal form W-4, and documents the employee and his Social Security account number and the employer and his Taxpayer Identification number. It contracts both parties with the federal government to abide by a set of rules called the United States Code, the Code of Federal Regulations, and a host of others.
For anyone outside the US, the above statement is basically silliness. W-4 form is the form employees fill out specifying how much salary withholding they are ALLOWING the employer to withhold. There are mandatory withholding laws that apply to all employer/employee relationships. There are certain responsibilities each party MUST comply with, like it or not. The W-4 form is a form that shows compliance. It is not a contract. If you refuse to sign and W-4 and the employer still wants to employ you, he must still comply with the law. You must also still comply with the law whether you sign or not. It says so right on the form:

Quote
Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. Internal Revenue Code sections 3402(f)(2) and 6109 and their regulations require you to provide this information; your employer uses it to determine your federal income tax withholding. Failure to provide a properly completed form will result in your being treated as a single person who claims no withholding allowances; providing fraudulent information may subject you to penalties.
http://www.irs.gov/pub/irs-pdf/fw4.pdf

The W-4 form is not a contract. That should be clear to any observer as the required part is only half a page long.

You cannot have the kid down the street mow your lawn as an "employee" outside of this system. Impossible.
Of course you can have the kid down the street mow your lawn! This is the stupidest statement I've seen on this site.

The lawn guy that cuts my lawn is NOT my employee. He is an independent contractor. If he has employees then he has to comply with the law. I certainly don't have to. Nor is the guy at the grocery store my employee because he carries my groceries to the car. Nor the waiter because he brings me my food. Please don't make Americans look like idiots.

My point: These words have consequences.
Obviously they do. Sometimes people use them to point out you are spouting nonsense.


Title: Re: Bitcoin as a GET System
Post by: Anonymous on August 20, 2010, 03:30:25 AM
"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance."
President James Madison

Bitcoin actually resembles a monetary system called tally sticks which was in use for 800 years pre 1694.
Bitcoin is a distributed tally stick system.The block chain functions as the tally stick serving as the proof against counterfeiting and bitcoin addresses function as the notches which are denominations.

Quote
THE TALLY STICKS (1100 - 1854)


King Henry the First produced sticks of polished wood, with notches cut along one edge to signify the denominations. The stick was then split full length so each piece still had a record of the notches.

The King kept one half for proof against counterfeiting, and then spent the other half into the market place where it would continue to circulate as money.

Because only Tally Sticks were accepted by Henry for payment of taxes, there was a built in demand for them, which gave people confidence to accept these as money.

He could have used anything really, so long as the people agreed it had value, and his willingness to accept these sticks as legal tender made it easy for the people to agree. Money is only as valuable as peoples faith in it, and without that faith even today's money is just paper.

The tally stick system worked really well for 726 years. It was the most successful form of currency in recent history and the British Empire was actually built under the Tally Stick system, but how is it that most of us are not aware of its existence?

Perhaps the fact that in 1694 the Bank of England at its formation attacked the Tally Stick System gives us a clue as to why most of us have never heard of them. They realised it was money outside the power of the money changers, (the very thing King Henry had intended).

What better way to eliminate the vital faith people had in this rival currency than to pretend it simply never existed and not discuss it. That seems to be what happened when the first shareholder's in the Bank of England bought their original shares with notched pieces of wood and retired the system. You heard correctly, they bought shares. The Bank of England was set up as a privately owned bank through investors buying shares. Even the Banks resent nationalisation is not what it at first may appear, as its independent resources unceasingly multiply and dividends continue to be produced for its shareholder's.

These investors, who's names were kept secret, were meant to invest one and a quarter million pounds, but only three quarters of a million was received when it was chartered in 1694.

It then began to lend out many times more than it had in reserve, collecting interest on the lot.

This is not something you could just impose on people without preparation. The money changers needed to created the climate to make the formation of this private concern seem acceptable.

Here's how they did it.

With King Henry VIII relaxing the Usury Laws in the 1500's, the money changers flooded the market with their gold and silver coins becoming richer by the minute.

The English Revolution of 1642 was financed by the money changers backing Oliver Cromwell's successful attempt to purge the parliament and kill King Charles. What followed was 50 years of costly wars. Costly to those fighting them and profitable to those financing them.

So profitable that it allowed the money changers to take over a square mile of property still known as the City of London, which remains one of the three main financial centres in the world today.

The 50 years of war left England in financial ruin. The government officials went begging for loans from guess who, and the deal proposed resulted in a government sanctioned, privately owned bank which could produce money from nothing, essentially legally counterfeiting a national currency for private gain.

Now the politicians had a source from which to borrow all the money they wanted to borrow, and the debt created was secured against public taxes.

You would think someone would have seen through this, and realised they could produce their own money and owe no interest, but instead the Bank of England has been used as a model and now nearly every nation has a Central Bank with fractional reserve banking at its core.

These central banks have the power to take over a nations economy and become that nations real governing force. What we have here is a scam of mammoth proportions covering what is actually a hidden tax, being collected by private concerns.

The country sells bonds to the bank in return for money it cannot raise in taxes. The bonds are paid for by money produced from thin air. The government pays interest on the money it borrowed by borrowing more money in the same way. There is no way this debt can ever be paid, it has and will continue to increase.

If the government did find a way to pay off the debt, the result would be that there would be no bonds to back the currency, so to pay the debt would be to kill the currency.

With its formation the Bank of England soon flooded Britain with money. With no quality control and no insistence on value for money, prices doubled with money being thrown in every direction.

One company was even offering to drain the Red Sea to find Egyptian gold lost when the sea closed in on their pursuit of Moses.

By1698 the national debt expanded from 1,250,000 to 16,000,000 and up went the taxes the debt was secured on.

As hard as it might be to believe, in times of economic upheaval, wealth is rarely destroyed and instead is often only transferred. And who benefits the most when money is scarce? You may have guessed. It's those controlling what everyone else wants, the money changer's.

When the majority of people are suffering through economic depression, you can be sure that a minority of people are continuing to get rich.

Even today the Bank of England expresses its determination to prevent the ups and downs of booms and depressions, yet there have been nothing but ups and downs since its formation with the British pound rarely being stable.



....and so we begin the system again using bitcoin.Will it go down the same path as the original Tally Stick system?Who can tell.One thing is for sure and that is there are powerful interests out there who would shut it down as soon as they realise its revolutionary value.


Title: Re: Bitcoin as a GET System
Post by: FreeMoney on August 20, 2010, 03:36:27 AM

Moreover, in the context of a LETS system it negatively effects the community. If someone hoards a positive balance, then others' balances by definition have to remain negative.


I move to town, mow a few lawns, take a few credits, move away or die. And people are hurt?

What if I sell them all bullion and fancy cars and then move or die or hoard?

A positive balance means that you have on balance helped people, zero is neutral, and negative means you owe. It is not bad to be owed favors or services or items and not cash them in.


Title: Re: Bitcoin as a GET System
Post by: Red on August 20, 2010, 04:09:08 AM
I move to town, mow a few lawns, take a few credits, move away or die. And people are hurt?

What if I sell them all bullion and fancy cars and then move or die or hoard?

A positive balance means that you have on balance helped people, zero is neutral, and negative means you owe. It is not bad to be owed favors or services or items and not cash them in.
I understand your point of view. It makes perfect sense in reality. Say I come into a community and I teach basket weaving. If I leave and take nothing the community is richer. 

However in the case of a formal monetary system it does have consequences. A LET system is equivalent to a fixed currency system in the sense that coins, bullion or tally sticks, it someone enters the community than leaves taking the currency, then there is less currency to go around. It is monetary deflation. It makes it harder to trade.

In LETS as others' balances go more negative you have to either allow more credit to compensate for the unspent credits or change prices to compensate for the hoarded currency.

If die or formally leave the community and return your unused credits, you have the same issue as someone dying with negative credits. You still have to redistribute the good fortune, or the burden. It is much easier in a LETS system since there is central control of the accounting.


Title: Re: Bitcoin as a GET System
Post by: ichi on August 20, 2010, 06:05:37 AM
Ah, this must be the thread  ;)

Red, as an old hippie, I do like the sound of GETS  :)

OTOH, based on my (admittedly nontechnical) understanding of both Bitcoin and economics, Bitcoin is in fact money.  If it's not, and not just inconvenient to admit that it is, I invite explanation.  Implore, even.

Although Bitcoin have no inherent worth, they resemble commodity money in that they can't be created at will through financial BS.  Or, at least, that's how I read the Bitcoin FAQs.

As I've noted, I really don't get the value of semantics here.  Bitcoin is either going to be uncontrollable, or it's going to be controlled and/or absorbed (or just shut down).  What we call it means nothing.  Indeed, pretending that it's something innocuous might be considered irresponsible.


Title: Re: Bitcoin as a GET System
Post by: FreeMoney on August 20, 2010, 07:05:36 AM
I move to town, mow a few lawns, take a few credits, move away or die. And people are hurt?

What if I sell them all bullion and fancy cars and then move or die or hoard?

A positive balance means that you have on balance helped people, zero is neutral, and negative means you owe. It is not bad to be owed favors or services or items and not cash them in.
I understand your point of view. It makes perfect sense in reality. Say I come into a community and I teach basket weaving. If I leave and take nothing the community is richer. 

However in the case of a formal monetary system it does have consequences. A LET system is equivalent to a fixed currency system in the sense that coins, bullion or tally sticks, it someone enters the community than leaves taking the currency, then there is less currency to go around. It is monetary deflation. It makes it harder to trade.

In LETS as others' balances go more negative you have to either allow more credit to compensate for the unspent credits or change prices to compensate for the hoarded currency.

If die or formally leave the community and return your unused credits, you have the same issue as someone dying with negative credits. You still have to redistribute the good fortune, or the burden. It is much easier in a LETS system since there is central control of the accounting.

It is not harder to trade if LETS are worth more unless there is some divisibility issue.

Imagine this even! Instead of one crazy old man peddling bullion and cars there is a whole stream of them. Every time before they leave they distribute the LETS back to everyone in whatever eccentric randomish method the man wants. There won't be a decrease in the money supply, but having tons of bullion and cars up for sale in LETS will surely increase their value (just in case, I'm going to say each man brings 3x the number off goods as were previously in the LETS economy).

In this case there is not less money, but it is worth more. Is it still a problem?


Title: Re: Bitcoin as a GET System
Post by: fresno on August 20, 2010, 01:19:58 PM
I like the tally system analogy. I think this is the closest description so far of what we are trying to do with Bitcoin. But the tally system of old needed the power of the King to make it effective. How is this done with Bitcoin? By relying on logic.

The King can be deposed, logic cannot. It will always be either true or not true. And that makes it more reliable.

I'm afraid that I don't get the GETS system. It's an exchange, it's global, and so what? Does something like this actually exist? Who is the King that insures its stability? Do I even care now that we have a logical King in Bitcoin?





Title: Re: Bitcoin as a GET System
Post by: Red on August 20, 2010, 04:44:41 PM
In this case there is not less money, but it is worth more. Is it still a problem?
That is not a problem. It is the intended way of dealing with value using a LETS approach.

In fact if you are simply bringing charity, you do not have to be part of the system at all. Or you could barter one Lincoln Towncar for one authentic string friendship bracelet. That does not require participation in a system intended to tie you to the community.

One of the things I have been struggling with is the basis for "the value of money". You allude to the equation (fixed total currency)*(currency value)=(total value of non-currency commodities).

So if total value increases and currency remains fixed then, currency value must increase. However this equation does not really apply to LETS. I've convinced myself it doesn't apply to money in general.

If a potter and a baker join a LETS community, the system doesn't record how much bread or pots they own. Nor does the system take note when they bake more bread or create more pots.

The currency quantity is bounded but elastic so it need not vary in value. So if both the baker and the potter start with zero balances, then if the baker needs a pot, he simply takes one and tallies the LETS credits to reflect this. Potter +=1, Baker -= 1.

Now if the clay digger is hungry he gets bread from the baker and he tallies his actions. Baker += 1, Digger -= 1. Eventually the potter will need more clay so he gets it from the digger and updates the tallies. Digger += 1, Potter -= 1.

Now everyone's balances are zero again. Meaning the total amount of credit/currency circulating = zero. However, there is an increase in total commodities (pots).

Therefore commodities can increase without price deflation. Credit/currency can increase without causing price inflation.


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 20, 2010, 06:28:31 PM
I like the tally system analogy. I think this is the closest description so far of what we are trying to do with Bitcoin.

I'm afraid that I don't get the GETS system.



You claim that a tally system is the best analogy while in the same post admit that you don't understand the LETS/GETS analogy.  You invalidate yourself, as your statement that a tally system is the best cannot be considered authoritiative in any sense because you don't understand at least one alternative.

The tally system is basicly a system of national debt, closer to US Treasury Bonds than even a currency.  The king would need gold & silver to fund an army, but experience tells him that soldiers don't take kindly to paper promises, so he would need to get that gold and silver somewhere.  The treasury almost never had enough, so ultimately he would take a loan from the goldsmiths of the country.  The accounting would involve the etching of the sum of the debt on two ends of a stick, and then the stick would be broken in half.  Traditionally, the goldsmith would keep whichever end was shorter in his vault as proof that a debt had incurred, and the treasury would keep the other end as proof of the debt.  The debt could be claimed, eventually, by anyone who had the proper stick that fit with the end that the treasury held.  It was a bearer bond.

Here's the problem.  As you mentioned, kings sometimes lost, and when they didn't they were often to broke to repay.  So, being the soverign, he would just declare 'ursury' illegal and the debts void.  There was nothing that the goldsmiths could do about it, and they would be bankrupted because they probably lent gold that was  being held for others, not just his own.  This is literally where we, in or modern English speaking world, get the phrase "he got the short end of the stick".

In a LETS system, credit is created between two parties with a set value in a local or familiar unit, and that credit can be thus traded away in the same way as a tally system could, with or without a physical symbol of that debt.  However, it is also possible that someone could fail to repay the LETS debt.  This is not realisticly possible in the basic design of Bitcoin, since a good or service must be provided first.  The only way for a default is if the Bitcoin system itself were to fail, and thus all positive account holders would see their value drop to zero.  Any banking or debt system imposed upon the system would be a third party add-on.


Title: Re: Bitcoin as a GET System
Post by: Red on August 20, 2010, 06:39:00 PM
Noagenda, I like the tally stick as metaphor. However it suffers from the same limitation as GETS/LETS. If you don't already know what they are, you have to look them up first. :-)

I really think bitcoin is two concepts merged into one term.

1) the global distributed tally system (currency-ness)
2) the fixed quantity policy (commodity-ness)

I created the GETS concept as a way to talk about the currency aspects independent of the commodity aspects. I think your tally system fits here appropriately but I need to study more.

(And I don't need to hear that both can be avoided by saying "it's just a convenience, Fresno)

A zero based LETS system doesn't suffer from the "tyranny of timing" that I've pointed out and Galuel seems to have devoted his life to. That means hiding "progressivism" in the monetary policy is unnecessary. That was why he had to lock the UD topic. It simply isn't a universal necessity.

----

However, the key thrust of all banker/money changer arguments seems to be that these people get something that they are not deserving of because they did not do an amount of work proportional to the benefit they receive. They all seem to be "fairness" arguments.

LETS groups solve this problem in the most generalized way possible. They simply say, the point is not for you to compile credits so you can stop working and retire. The point is to keep us all working together for our common benefit. That's its hippie-ness. There is no subsidy/tax for delayed gratification.

Bitcoin is decidedly not hippie. The community loves bitcoins limited commodity-ness. As such they are almost giddy at its delayed gratification subsidy. (price deflation) It is supposedly fairer because anyone can get free stuff like bankers. They don't even have to understand banking.

Galuel, interestingly was proposing a monetary policy with a built in tax on delayed gratification. (monetary inflation to cause redistribution of wealth) It is supposedly fairer because it penalizes bankers to support workers.   


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 20, 2010, 06:53:29 PM
So if total value increases and currency remains fixed then, currency value must increase. However this equation does not really apply to LETS. I've convinced myself it doesn't apply to money in general.



You would make a fine economics student.  You are correct on your basic observation, there are many variables that affect the perception of value of a currency.  However, despite the common usage, "money" and "currency" are not interchangable terms within economic theory.  Money has a certain set of characteristics, most of which a currency also has, but with a notable exception.  Money can be a currency, but not all currencies are money.  The reason is that currencies represent a debt of whatever trusted institution that created them, usually a government (fiat) but sometimes a private entity (banks can issue banknotes, private companies issue bonds).  However, if the currency is itself devised of a material that has value unto itself, it's money.  Although a minted silver coin issued by an institution can still represent a debt of that institution, and therefore trade with a unit value greater than the silver itself, the silver coin represents a minimum value by virtue of the silver content of the coin itself.  A silver certificate, however, represents a debt because it is a promise to exchange a note (another name for a loan contract) for the exact amount of silver that is printed onto it's face.  Yet a silver certificate will become worthless in the absence of that promise whereas the silver coin will not.

Since Bitcoin is neither an object with value unto itself, nor does it represent a definable debt of anyone or any institution; Bitcoin is technically neither money nor a currency, even though both those terms are convient for expressing the *function* of Bitcoin.  This is why I noted in another thread that Bitcoin was something altogether different and new in the realm of economics.  To call it a 'cryptocurrency' is as good a term as any, provided that we are willing to note that word means that it is a system with the *function* of a currency within a realm that currencies don't function well.  We would be wise to note, also, that 'cryptocurrency' does not imply that the system shares the common accepted characteristics of a currency.  It is some of those very same characteristics that make existing currency regimes unsuited to online commerce.


Title: Re: Bitcoin as a GET System
Post by: Red on August 20, 2010, 07:06:04 PM
These are great definitions. Here as in the rest of my life I struggle with naming things appropriately. I will try to use these definitions consistently in the future.

How would you describe LETS credits? The have long ends and short ends like split tally sticks, so currency seems superficially appropriate.

I'd never given two seconds thought to economics before I came here! :-)


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 20, 2010, 07:18:05 PM
These are great definitions. Here as in the rest of my life I struggle with naming things appropriately. I will try to use these definitions consistently in the future.

How would you describe LETS credits? The have long ends and short ends like split tally sticks, so currency seems superficially appropriate.

I'd never given two seconds thought to economics before I came here! :-)


LETS credits are, indeed, 'currency-like' in function; yet are not a currency.  This is why the LETS communities had to define the term 'mutual credit' first.  LETS is like a unified standard for private bearer bonds, where all the bonds are defined in an agreed upon unit and agreed upon rules.  LETS is also, at the same time, a market and clearinghouse for those same standardized bonds.  This is why the 'market capitalization' equation that you referred to before fails with regard to LETS.  The regular creation and destruction of the LETS credits are an intended function of the system, and therefore are not a destablizing economic force.  As you mentioned, LETS is intended only to be a means of trade and not of savings, and is therefore not well suited towards savings.  It is the design of currencies in general to be a unit of both trade and savings value, and it is the future expectation of value that drives the increase in a currency's value during times of deflation of the monetary base.


Title: Re: Bitcoin as a GET System
Post by: Anonymous on August 21, 2010, 04:36:01 AM
LETS is a favour based currency. :D


Title: Re: Bitcoin as a GET System
Post by: mizerydearia on August 24, 2010, 07:12:26 AM
....and so we begin the system again using bitcoin.Will it go down the same path as the original Tally Stick system?Who can tell.One thing is for sure and that is there are powerful interests out there who would shut it down as soon as they realise its revolutionary value.

Quote
<necrodearia> What methods can be pursued to "shut it down" or to cause Bitcoin currency to fail or cease to continue/exist?
<necrodearia> What safeguards exist if any/necessary to prevent such from happening?
<necrodearia> Perhaps it is fairly simple in that someone can create infinite amount of USD and use that to buy all Bitcoins?
<necrodearia> Perhaps allowing the exchange of Bitcoins to other currencies is its weakest link?


Title: Re: Bitcoin as a GET System
Post by: hugolp on August 24, 2010, 07:23:32 AM
....and so we begin the system again using bitcoin.Will it go down the same path as the original Tally Stick system?Who can tell.One thing is for sure and that is there are powerful interests out there who would shut it down as soon as they realise its revolutionary value.

I agree with the others that say that the tally stick and bitcoins are not similar at all. In fact, they are opposites. The tally stick was a government imposed currency. Bitcoin is a voluntary currency. Nobody forces you to accept it like the tally sticks.

A better analogy for bitcoin could be the private mints of the UK XVII century.

PS: The fact that the king used tally sticks to fight powerfull people in England does not make them legit. The king wanted the power to keep his authoritative regime, to fund wars, etc... There is nothing noble in tally sticks, just another government forcing a currency on the people because it had the swords.


Title: Re: Bitcoin as a GET System
Post by: Anonymous on August 24, 2010, 11:16:53 AM
....and so we begin the system again using bitcoin.Will it go down the same path as the original Tally Stick system?Who can tell.One thing is for sure and that is there are powerful interests out there who would shut it down as soon as they realise its revolutionary value.

I agree with the others that say that the tally stick and bitcoins are not similar at all. In fact, they are opposites. The tally stick was a government imposed currency. Bitcoin is a voluntary currency. Nobody forces you to accept it like the tally sticks.

A better analogy for bitcoin could be the private mints of the UK XVII century.

PS: The fact that the king used tally sticks to fight powerfull people in England does not make them legit. The king wanted the power to keep his authoritative regime, to fund wars, etc... There is nothing noble in tally sticks, just another government forcing a currency on the people because it had the swords.

They are similar in that they are almost impossible to counterfeit and they keep a record of value.I did not say I agreed with government force or that it is legitimate.


Title: Re: Bitcoin as a GET System
Post by: hugolp on August 24, 2010, 12:21:50 PM
I agree with the others that say that the tally stick and bitcoins are not similar at all. In fact, they are opposites. The tally stick was a government imposed currency. Bitcoin is a voluntary currency. Nobody forces you to accept it like the tally sticks.

A better analogy for bitcoin could be the private mints of the UK XVII century.

PS: The fact that the king used tally sticks to fight powerfull people in England does not make them legit. The king wanted the power to keep his authoritative regime, to fund wars, etc... There is nothing noble in tally sticks, just another government forcing a currency on the people because it had the swords.

They are similar in that they are almost impossible to counterfeit and they keep a record of value.I did not say I agreed with government force or that it is legitimate.

Agreed then. I misread what you were trying to say.


Title: Re: Bitcoin as a GET System
Post by: mizerydearia on August 24, 2010, 09:30:54 PM
I posted this thread to my roommate, intending to show them http://bitcointalk.org/index.php?topic=872.msg10356#msg10356
but instead the link converted to http://bitcointalk.org/index.php?topic=872.0%3Btopicseen and they instead maybe read parts of that.

Their response (at the time knowing nothing about Bitcoin until reading it):

Quote
hmm. it's very interesting. a global 'micro' currency. i'm happy for it. but at this point in time, i'm more interested in things that increase inflation for the dollar - things that can overburden the current economy - it's nice to know that people are coming up with options, but the status quo needs to change significantly before any solutions can be concretely implemented.

I'm not sure how to respond.  Anyone care to respond to the quoted part and I'll relay to him since I highly doubt he will have any interest to post on this forum.


Title: Re: Bitcoin as a GET System
Post by: Red on August 24, 2010, 10:02:31 PM
Quote
but at this point in time, i'm more interested in things that increase inflation for the dollar - things that can overburden the current economy
What type of political bent is interested in increasing inflation? Seems either an extreme progressive, or just a crash everything because I want to need me to save it type.


Title: Re: Bitcoin as a GET System
Post by: ichi on August 24, 2010, 10:10:10 PM
Actually, many governments are counting on inflation to shed their debt  ;)


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 24, 2010, 11:50:03 PM
Quote
but at this point in time, i'm more interested in things that increase inflation for the dollar - things that can overburden the current economy
What type of political bent is interested in increasing inflation? Seems either an extreme progressive, or just a crash everything because I want to need me to save it type.

Currently there is international trade pressures to devalue national currencies everywhere to favor export oriented industries.  This is a temporary effect, and one not likely to work just now even in the short term if every major trade nation is trying to do the same thing for the same reason.  Reality, however, rarely gets in the way of a bad economic idea, so on some level it is happening in the US and the EU.  In the long term, such pressures ultimately result in a long term increase of the monetary base in absolute currency numbers, which is the economic root cause of inflation.  This *usually* leads to "price inflation" on an 18 month lag, but may not be evenly distributed across all industries for various reasons, and usually doesn't lead to "excessive" inflation in any case.  Yet, inflation it is, and it has the effect of being a regressive tax on savings, as it slows rots away the buying power of all the currency in circulation without regard to who owns it or why they may be holding onto it.


Title: Re: Bitcoin as a GET System
Post by: mizerydearia on August 25, 2010, 01:28:06 AM
Quote from: roommate
hyperinflation, from a political perspective rather than an economic perspective, could destabilize the united states towards decentralization, lead to the collapse of the federal reserve, incite riots against the dollar and fiat currency and capitalism in general, generate necessity-forced dependance on local and sustainable systems, and, as an antidote to apathy, contribute to a massive increase in collective awareness.


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 25, 2010, 01:55:56 AM
Quote from: roommate
hyperinflation, from a political perspective rather than an economic perspective, could destabilize the united states towards decentralization, lead to the collapse of the federal reserve, incite riots against the dollar and fiat currency and capitalism in general, generate necessity-forced dependance on local and sustainable systems, and, as an antidote to apathy, contribute to a massive increase in collective awareness.

Hyperinflation also has the bad history of resulting in oppressive regimes.  Why anyone would *desire* the hyperinflationary death of the US FRN in the absence of a probable replacement I do not know.  The very idea of it brings up verses from Revelations in my mind.  Neither gold nor silver would likely become an easy replacement for a FRN, as such changes require intentional (and preferablely prior) planning, and *never* occur smoothly.  Perhaps Bitcoin could become such a probable replacement for the FRN and every other fiat currency as predicted in "Snow Crash", but that remains to be seen.


Title: Re: Bitcoin as a GET System
Post by: Red on August 25, 2010, 03:14:52 AM
Quote from: roommate
hyperinflation, from a political perspective rather than an economic perspective, could destabilize the united states towards decentralization, lead to the collapse of the federal reserve, incite riots against the dollar and fiat currency and capitalism in general, generate necessity-forced dependance on local and sustainable systems, and, as an antidote to apathy, contribute to a massive increase in collective awareness.

Thank you for that quote.

It sounds just ordinarily anti-social until you get to "contribute to a massive increase in collective awareness" then it gets implausible and silly. No offense to your roommate, it's just not my first trip to the enlightenment rodeo.   


Title: Re: Bitcoin as a GET System
Post by: ichi on August 25, 2010, 05:47:03 AM
Right.  Consider the consequences of the Great Depression in the USA vs those of Weimar hyperinflation.

We're perhaps heading for a hyperinflationary great depression  :o


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 25, 2010, 06:04:18 AM
Right.  Consider the consequences of the Great Depression in the USA vs those of Weimar hyperinflation.

We're perhaps heading for a hyperinflationary great depression  :o

Perhaps, but I doubt it.  Hyperinflation always and everywhere requires the willfull participation of those who control the printing presses. In every case that I can think of, that required that the political class have the authority to create new currency, and would do so for political reasons not economic reasons.  In the US the  federal government does not control the Federal Reserve.  It's more like the other way around.  And since hyperinflation, once begun, is a death spiral; those who do have control over the monetary base have a vested interest in the continuance of the status quo.  To allow, or even risk, a hyperinflationary event would be so catastrophic to their personal fiefdoms that few would be willing to go along quietly, even if there was much to be gained politically.

Far more likely is an old fashioned deflationary Greater Depression, the great 'they' have less to lose that way.


Title: Re: Bitcoin as a GET System
Post by: hugolp on August 25, 2010, 06:23:50 AM
Perhaps, but I doubt it.  Hyperinflation always and everywhere requires the willfull participation of those who control the printing presses. In every case that I can think of, that required that the political class have the authority to create new currency, and would do so for political reasons not economic reasons.

The IMF published a paper recently about the necessity of a global currency and speculated about how to make it work. One of the main arguments were the demise of the dollar and its possible collapse. So there you have a reason to make the dollar collapse.

Quote
In the US the  federal government does not control the Federal Reserve.  It's more like the other way around.  And since hyperinflation, once begun, is a death spiral; those who do have control over the monetary base have a vested interest in the continuance of the status quo.  To allow, or even risk, a hyperinflationary event would be so catastrophic to their personal fiefdoms that few would be willing to go along quietly, even if there was much to be gained politically.

The Board of Governors of the Federal Reserve (Bernanke and the rest of the gang) is nominated by the president and ratified by congress. If you say that the government is corrupt and benefits special interests I will agree with you (its a government...), but I dont see how someone can say that the Fed controls government when its the other way arround. You have to think that politicians benefit from the expansionary policies of the Fed, because they get to spend more than they would without the Fed.

Quote
Far more likely is an old fashioned deflationary Greater Depression, the great 'they' have less to lose that way.

Banks hate deflation. If they can avoid it they will. And they can, so I highly doubt we will see any meaningful price deflation.


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 25, 2010, 06:26:17 PM


The Board of Governors of the Federal Reserve (Bernanke and the rest of the gang) is nominated by the president and ratified by congress. If you say that the government is corrupt and benefits special interests I will agree with you (its a government...), but I dont see how someone can say that the Fed controls government when its the other way arround. You have to think that politicians benefit from the expansionary policies of the Fed, because they get to spend more than they would without the Fed.


The board is is nominated for 14 year terms, and they are just nominations.  The sitting board is not subject to the will of any branch of the US federal government in any official capacity, and they don't have to accept the president's nominations.  They don't have to worry about political backlash once appointed because they *will* out last the president that nominated them.  Also, no sitting president can ever get the chance to nominate a majority of the board.  The idea that the board of the Federal Reserve is subject to political control is a convient fiction.  I said that it's more like the other way around because the power to regulate the national currency is the power to destroy same, and that power is far greater than any of the branches of the federal government.  The only real power that the government has to check this is the power to revoke the charter of the Federal Reserve, and remove it's monopoly control of the currency.

This, of course, would destroy the currency in short order, but it would also destroy a large number of the legistlators' own personal fortunes.  So there is a strong incentive to not choose this 'nuclear option'.


Title: Re: Bitcoin as a GET System
Post by: hugolp on August 25, 2010, 08:49:39 PM
The board is is nominated for 14 year terms, and they are just nominations.  The sitting board is not subject to the will of any branch of the US federal government in any official capacity, and they don't have to accept the president's nominations.  They don't have to worry about political backlash once appointed because they *will* out last the president that nominated them.  Also, no sitting president can ever get the chance to nominate a majority of the board.  The idea that the board of the Federal Reserve is subject to political control is a convient fiction.  I said that it's more like the other way around because the power to regulate the national currency is the power to destroy same, and that power is far greater than any of the branches of the federal government.  The only real power that the government has to check this is the power to revoke the charter of the Federal Reserve, and remove it's monopoly control of the currency.

No, I am not saying that the Board of Governors does a good job or anything similar. I am just saying that the Board of Governors, the one who takes the decisions in the Fed, is a federal government agency. Supposedly, the system is the way you describe it so the members are independent. I dont believe that for a moment, but it is the justification. Having a independent or honest politician or bureaucrat with that level of power is an utopia, a lie. But the decisions about monetary policy are already taken by a federal government agency. That is what I wanted to say, not that it worked. If I could I would abolish the Fed, and put an end to the money monopoly.

Quote
This, of course, would destroy the currency in short order, but it would also destroy a large number of the legistlators' own personal fortunes.  So there is a strong incentive to not choose this 'nuclear option'.

I think that the real reason politicians support the central bank is because the central bank finances government and allows politicians to spend more than they could by direct taxation only.


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 25, 2010, 09:02:44 PM
The board is is nominated for 14 year terms, and they are just nominations.  The sitting board is not subject to the will of any branch of the US federal government in any official capacity, and they don't have to accept the president's nominations.  They don't have to worry about political backlash once appointed because they *will* out last the president that nominated them.  Also, no sitting president can ever get the chance to nominate a majority of the board.  The idea that the board of the Federal Reserve is subject to political control is a convient fiction.  I said that it's more like the other way around because the power to regulate the national currency is the power to destroy same, and that power is far greater than any of the branches of the federal government.  The only real power that the government has to check this is the power to revoke the charter of the Federal Reserve, and remove it's monopoly control of the currency.

No, I am not saying that the Board of Governors does a good job or anything similar.


I didn't say anything about the quality of work of the board.  Nor did I take any such claim from any other post.

Quote

 I am just saying that the Board of Governors, the one who takes the decisions in the Fed, is a federal government agency.



No, it is not.  The Federal Reserve Bank is a privately founded bank with monopoly powers by virtue of a government charter.  This is comparable to the federal government hiring a private merc army for operations overseas a la Blackwater.  Government is the customer, and has sway, but does not make the executive decisions and was never designed to be able to influence those executive decisions to any large degree.

Quote

 Supposedly, the system is the way you describe it so the members are independent. I dont believe that for a moment, but it is the justification. Having a independent or honest politician or bureaucrat with that level of power is an utopia, a lie. But the decisions about monetary policy are already taken by a federal government agency. That is what I wanted to say, not that it worked. If I could I would abolish the Fed, and put an end to the money monopoly.


I think we agree upon the net effects and usefulness of the Fed, and only disagree upon which end is the tail and which is the dog.  Who controls whom is really a matter of degree.  In reality, neither is independent and neither is in command in any absolute sense.
Quote

Quote
This, of course, would destroy the currency in short order, but it would also destroy a large number of the legistlators' own personal fortunes.  So there is a strong incentive to not choose this 'nuclear option'.

I think that the real reason politicians support the central bank is because the central bank finances government and allows politicians to spend more than they could by direct taxation only.


Um, yes.  That's what I said.  How else do you think that a politician builds and maintains a personal fortune except by "taxation"?  (institutionalized theft)


Title: Re: Bitcoin as a GET System
Post by: mizerydearia on August 25, 2010, 09:10:41 PM
Quote from: roommate
hyperinflation, from a political perspective rather than an economic perspective, could destabilize the united states towards decentralization, lead to the collapse of the federal reserve, incite riots against the dollar and fiat currency and capitalism in general, generate necessity-forced dependance on local and sustainable systems, and, as an antidote to apathy, contribute to a massive increase in collective awareness.

Thank you for that quote.

It sounds just ordinarily anti-social until you get to "contribute to a massive increase in collective awareness" then it gets implausible and silly. No offense to your roommate, it's just not my first trip to the enlightenment rodeo.  

From my roommate:
Quote from: roommate
'ordinarily anti-social' suggests a complete misunderstanding, and a massive
increase in collective consciousness in no way implies 'enlightenment'.

to begin with, the problems inherent in the system make solutions to those
problems impossible within the framework of the system. therefore, for the
'economy' or anything else to 'get better', the inert baggage of corporatism and
the fractional reserve system must be cleared away somehow. the chaos and panic
that accompanies hyperinflation would do more, at once, to destabilize the
system, than any attempts to reform or curtail or deconstruct it from within.
one of the most significant obstacles to improvement of the status quo is a
pervasive attitude of apathy that the corporate empire entrenches (through
complacency, distractions, and exhausting workforce conditions, among other
things). hyperinflation could potentially "contribute to a massive increase in
collective awareness" in the sense that it would wake massive amounts of people
all at once out of their apathy-trance, presenting them with immediate
situations to address rather than persistent
disappointment/hopelessness/disillusion to try to ignore as they struggle to pay
for food and housing. for example, lonely individuals struggling to pay the rent
month after month, working 40+ hours a week, are not going to challenge the
system or initiate its deconstruction. a whole neighbourhood of people finding
empty grocery shelves, or finding that prices suddenly jumped 600%, are going to
be angry and lash out. "collective awareness" as i used it in my initial
statement refers specifically to BEING AWARE OF THE CURRENT PROBLEMS WE FACE, it
has nothing to do with flimsy fanciful notions of 'enlightenment' or theories of
qualitative states of mind.


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 25, 2010, 09:13:18 PM
the chaos and panic
that accompanies hyperinflation would do more, at once, to destabilize the
system, than any attempts to reform or curtail or deconstruct it from within.


I can certainly agree with that statement, but one should be careful what you wish for.


Title: Re: Bitcoin as a GET System
Post by: ichi on August 25, 2010, 10:29:34 PM
I don't know where mizerydearia and roommate live, and here in the US of A, it's the Tea Party that'd be the big winner in that scenario.  If necessary, to save my ass, I could blend.  Hell, I'm an NRA member, and on Tea Party mailing lists.  And I'd hate myself for it.


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 25, 2010, 10:30:59 PM
I don't know where mizerydearia and roommate live, and here in the US of A, it's the Tea Party that'd be the big winner in that scenario.  If necessary, to save my ass, I could blend.  Hell, I'm an NRA member, and on Tea Party mailing lists.  And I'd hate myself for it.


Why?  Where I live, the Tea Party is as libertarian as any random group that I have ever before seen.


Title: Re: Bitcoin as a GET System
Post by: ichi on August 25, 2010, 10:36:45 PM
NO !!!  The Tea Party is total astroturf.  They grew out of GGOOB, which was a tobacco-industry effort to block anti-smoking laws.  GGOOB became so popular (among it's target population, anyway) that many other industries demanded a piece.  Of course, corporations now have free speech (and spending) re the political process, and they of course buy politicians, but this is a nacent political party that's actually a covert corporate lobbying effort.


Title: Re: Bitcoin as a GET System
Post by: Red on August 25, 2010, 11:20:32 PM
From my roommate:
Quote from: roommate
BEING AWARE OF THE CURRENT PROBLEMS WE FACE, it
has nothing to do with flimsy fanciful notions of 'enlightenment' or theories of
qualitative states of mind.

It's not that I don't find your roommate's argument coherent. It is just that I don't find it compelling. And I really have been to this rodeo a number of times.

Each new generation makes the same points with a slight variation on the enemy. It is like an internet chain letter. The "people are corporate sheep" argument really hit its stride in the 60's. Ironically, the few people who ended up changing anything did so by started their own corporations. Producing things is a mighty force for change.

But the key point he is trying to make is: People are not going to change anything to be more like I want, until things really start to suck. Therefore, wouldn't it be nice if things really sucked?

Well as it turns out, "No". Things wouldn't be better if they really sucked. That's the grown-up answer to the very common adolescent question. Yes, I've been an adolescent and I've raised adolescents. And yes I'm well aware that adolescence lasts well into the late 20's now.

But where he is wrong is that if you see a potential problem you really can fix it. Or maybe you can try and fail. But either way, don't expect people to care unless you actually fix one of THEIR problems.

That is the problem Obama is having. He keeps asking for people to be impressed with all the problems he sees that he is fixing.


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 26, 2010, 12:43:34 AM
NO !!!  The Tea Party is total astroturf.  They grew out of GGOOB, which was a tobacco-industry effort to block anti-smoking laws.  GGOOB became so popular (among it's target population, anyway) that many other industries demanded a piece.  Of course, corporations now have free speech (and spending) re the political process, and they of course buy politicians, but this is a nacent political party that's actually a covert corporate lobbying effort.

The Tea Parties may have had an influx of Repubs since Obama's electoral victory, but they are not 'astroturf'.  They are a very real movement that had been going on for a couple of years before Fox News took notice.  I'm not really involved anymore, but during the GWB years the Tea Parties were small and ineffective, just like the Libertarian Party itself.  The Tea Parties took their name *directly* from the Boston Tea Party, and was not an acronym for "Taxed Enough Already" even though taxation was the theme even when libs were the *only* political ideology of the crowd.  The last one I attended was last year, and I would say that the mix was about 40% Republican, 40% libertarian and related flavors, 18% independents who had never really cared about politics before that year and 2% fiscally conservative Democrats.

If the Tea Parties near where you live are being funded by tobacco money, I can't speak to that.  Around here; however, I haven't heard anyone talk about corporate 'rights' in any capacity, and there is no evidence that the tobacco industry has any particular interests in the Tea Parties


Title: Re: Bitcoin as a GET System
Post by: mizerydearia on August 26, 2010, 12:57:48 AM
If the Tea Parties near where you live are being funded by tobacco money, I can't speak to that.  Around here; however, I haven't heard anyone talk about corporate 'rights' in any capacity, and there is no evidence that the tobacco industry has any particular interests in the Tea Parties

I would imagine that the tea industry wouldn't have any particular interest in tobacco parties either...unless there happened to be tea-flavored cigs/cloves or tobacco-flavored tea.   Then I imagine there would be quite a party.


Title: Re: Bitcoin as a GET System
Post by: ichi on August 26, 2010, 01:30:08 AM
Hey, creighto, no offense intended.  I'm sure that the Tea Party includes many good people with good ideas.  Hell, if it weren't for the rampant xenophobia and racism, I'd be one of them.  However, if you dig, what you'll find is the DCI Group -- founded by Thomas Synhorst, Douglas Goodyear and Timothy Hyde (all tied to RJR and the Republican Party).


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 26, 2010, 01:55:29 AM
Hey, creighto, no offense intended.  I'm sure that the Tea Party includes many good people with good ideas.  Hell, if it weren't for the rampant xenophobia and racism, I'd be one of them.  However, if you dig, what you'll find is the DCI Group -- founded by Thomas Synhorst, Douglas Goodyear and Timothy Hyde (all tied to RJR and the Republican Party).

You've been listening to CBS and CNN too much.  The only racism that I have encountered around the Tea Parties was prejudice against the demographic that actually attends those gatherings.

I think that you need to do some research yourself.  The Tea Parties predate Obama's political career, and perhaps even my adulthood.


Title: Re: Bitcoin as a GET System
Post by: ichi on August 26, 2010, 02:19:31 AM
DCI Group was founded in 1997.


Title: Re: Bitcoin as a GET System
Post by: Red on August 26, 2010, 03:26:09 AM
I have to agree with Creighto. I haven't seen any racism and there is barely any organization.

There are however, may people who have long been frustrated. If you live in a red state the tea party's themes have been common conversation for decades. The general public is very late to the concept.

I'm sure that a "public affairs" company does lots of media and takes lots of credit for doing things. I don't know if DCI has been hired at any point along the way. But I know they didn't start the conversation or the parties. But some PA/PR/Media buyer did arrange some radio spots at some point. I'd be hugely surprised if RJR paid for them!

I can guarantee however this is completely astroturf. It is also pretty unsuccessful!
http://www.coffeepartyusa.com/


Title: Re: Bitcoin as a GET System
Post by: ichi on August 26, 2010, 04:00:36 AM
OK, there's no point in arguing.  By nature, I'm basically an anarchist  ;)

I will take another look at them, though.


Title: Re: Bitcoin as a GET System
Post by: hugolp on August 26, 2010, 10:10:36 AM
creighto, yes we are discussing the exact tonality while we agree in the color. But for the sake of it:

No, it is not.  The Federal Reserve Bank is a privately founded bank with monopoly powers by virtue of a government charter.  This is comparable to the federal government hiring a private merc army for operations overseas a la Blackwater.  Government is the customer, and has sway, but does not make the executive decisions and was never designed to be able to influence those executive decisions to any large degree.

You could say that the Federal Reserve is a mixed thing:

- The local Federal Reserve branches are "private". And I use brackets because its not private in the common sense. The system has its unique government regulations, for example, the private banks that own the stocks can not sell them. So this "private" system does not operate under the market rules, and certain sentences have declared that they are not even private but a mix of private corporations and government entities, because of the unique regulations they have to obey. Also, bear in mind that the local Federal Reserve branches are not the ones that decide the Federal Reserve policy.

- The Board of Governors of the Federal Reserve (Bernanke and the rest) is a federal government agency. Wikipedia is not the best source, but hope its enough for this: http://en.wikipedia.org/wiki/Federal_Reserve_System#Board_of_Governors (or you can do your own research). The Board of Governors is the one that decides the Federal Reserve policy. The members of the Board of Governors are nominated by the president and ratified by congress. And yes, once they are nominated they are supposedly independent from political pressure. But its not true that the Fed is politically independent, f.e. Bernanke knows that to be re-elected again, he has to please the politicians.

So I think its very inaccurate to say that the Federal Reserve is a private institution. You could argue that its not a 100% government institution, that its a mixed thing between private and government, but still the government is the one holding control over the institution that sets the policy. If you want a more exact and legal approach, check this: http://mises.org/daily/4171

So I would say that the political system holds good power over the Federal Reserve. That is not to say that the corporate system does not benefit or controls the Federal Reserve. They do, but I think its mainly through the control they have over the political system.


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 26, 2010, 06:27:38 PM
creighto, yes we are discussing the exact tonality while we agree in the color. But for the sake of it:

No, it is not.  The Federal Reserve Bank is a privately founded bank with monopoly powers by virtue of a government charter.  This is comparable to the federal government hiring a private merc army for operations overseas a la Blackwater.  Government is the customer, and has sway, but does not make the executive decisions and was never designed to be able to influence those executive decisions to any large degree.

You could say that the Federal Reserve is a mixed thing:

Well, yes.  It's a public/private arrangement.

Quote


 The members of the Board of Governors are nominated by the president and ratified by congress.


Yes, but the president can only nominate from within the ranks of the sitting board.  It's as false as the choice of voting for or against your local representative.  By the time the public gets a say, their choices are effectively reduced to only two people, both of whom are already parts of the political machine.  This is not similar to a Supreme court nomination.

Quote

And yes, once they are nominated they are supposedly independent from political pressure. But its not true that the Fed is politically independent, f.e. Bernanke knows that to be re-elected again, he has to please the politicians.


Only to a point.  If he were to fail to get renominated by the next president, he would *still* be a member of the board until his original 14 year term was up.  He may risk his position by upsetting the politicians, but not his paycheck.  This gets back to my comment about the tail wagging the dog.  The Senate *does not* have the power to affect the personal finances of the members of the board by *any* legal process; but the reverse is not true.  The decisions of the board can dramaticly affect the personal finances of the members of the Senate in the same way that they affect the entire nation times the size of their fortunes.  Who do you think has more power? 

Quote

So I would say that the political system holds good power over the Federal Reserve.


I think that is a fiction.



Title: Re: Bitcoin as a GET System
Post by: hugolp on August 26, 2010, 07:57:47 PM
Yes, but the president can only nominate from within the ranks of the sitting board.  It's as false as the choice of voting for or against your local representative.  By the time the public gets a say, their choices are effectively reduced to only two people, both of whom are already parts of the political machine.  This is not similar to a Supreme court nomination.

The president can only nominate to Chairman someone who is already part of the Board of Governors, correct. But all the members of the Board of Governors are previously nominated by the president and ratified by Congress... I am not discussing how great or bad this works. All I am saying is that there is no private entity involved in the process. Whatever the rules are, is a government issue.

The Board of Governors of the Federal Reserve is a federal government agency, and is the one setting the policy.

Quote
Only to a point.  If he were to fail to get renominated by the next president, he would *still* be a member of the board until his original 14 year term was up.  He may risk his position by upsetting the politicians, but not his paycheck.  This gets back to my comment about the tail wagging the dog.  The Senate *does not* have the power to affect the personal finances of the members of the board by *any* legal process; but the reverse is not true.  The decisions of the board can dramaticly affect the personal finances of the members of the Senate in the same way that they affect the entire nation times the size of their fortunes.  Who do you think has more power?

Take it to the extreme. The government created the Fed. If the politicians are not happy on how the Fed operates they could decide to change the law. Check Ron Paul recent Audit the Fed bill that had great support among congressman until it was taken down. The Fed knows that all its power, the monopoly on money, comes from the government. So its in its own interest to keep politicians happy.

That said the bill Audit the Fed failed because there was evident pressure on Congress to not audit the Fed. And that pressure did not come from Bernanke, but from banking power.

Again, I honestly think that saying that the Fed is a private institution is highly inaccurate. About who controls who... I think we might have slightly different suppositions on how that works. I think we can agree that banking power controls both.


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 27, 2010, 07:35:51 PM
The president can only nominate to Chairman someone who is already part of the Board of Governors, correct. But all the members of the Board of Governors are previously nominated by the president and ratified by Congress... I am not discussing how great or bad this works. All I am saying is that there is no private entity involved in the process. Whatever the rules are, is a government issue.


Those previously nominated board members, that were ratified by the US Senate, must also be acceptable to the sitting board for practial reasons.  Again, it's impossible for any sitting president to pack the board during his two terms, so any attempt to nominate anyone that the board doesn't approve of would upset the sitting board.  If the Senate doesn't nix the nomination, then that person will be entirely ineffective their entire time.  So for practical purposes, all board members that are nominated come from a pool of acceptable employees of the Federal Reserve banking structure itself.  Which, in turn, recruits from a pool of applicants with a history of employment with the member banks.  So yes, there is and are private entities involved, and they hold most of the cards.  You are taking what is seen and drawing the conclusions that they desire that you come to, and failing to look at the unseen to understand the entire process.  The Federal Reserve system is intentionally designed to give the appearance of a government entity with a measure of independence, while for all practical purposes, they are a private business with monopoly powers.  As a wise man once said, if the common man understood how the montary system of the United States actually worked, there would be a revolution before tommorrow morning.

Quote
Take it to the extreme. The government created the Fed. If the politicians are not happy on how the Fed operates they could decide to change the law. Check Ron Paul recent Audit the Fed bill that had great support among congressman until it was taken down. The Fed knows that all its power, the monopoly on money, comes from the government. So its in its own interest to keep politicians happy.


Yes, the federal government could revoke the charter of the Federal Reserve; and yes, the Fed does have an incentive to keep those politicians happy.  But to assume that Congress is actually in control is to ignore the obvious.  The Fed has significant influences upon a large number of members of Congress, because it's very difficult to get anyone to understand anything that he benefits from not understanding.

Quote

That said the bill Audit the Fed failed because there was evident pressure on Congress to not audit the Fed. And that pressure did not come from Bernanke, but from banking power.


Bernanke is the front man for banking power.  That is the point that I was trying to make.

Quote

Again, I honestly think that saying that the Fed is a private institution is highly inaccurate. About who controls who... I think we might have slightly different suppositions on how that works. I think we can agree that banking power controls both.

To varying degrees, yes. 


Title: Re: Bitcoin as a GET System
Post by: hugolp on August 28, 2010, 05:37:26 PM
Those previously nominated board members, that were ratified by the US Senate, must also be acceptable to the sitting board for practial reasons.  Again, it's impossible for any sitting president to pack the board during his two terms, so any attempt to nominate anyone that the board doesn't approve of would upset the sitting board.  If the Senate doesn't nix the nomination, then that person will be entirely ineffective their entire time.  So for practical purposes, all board members that are nominated come from a pool of acceptable employees of the Federal Reserve banking structure itself.  Which, in turn, recruits from a pool of applicants with a history of employment with the member banks.  So yes, there is and are private entities involved, and they hold most of the cards.  You are taking what is seen and drawing the conclusions that they desire that you come to, and failing to look at the unseen to understand the entire process.  The Federal Reserve system is intentionally designed to give the appearance of a government entity with a measure of independence, while for all practical purposes, they are a private business with monopoly powers.  As a wise man once said, if the common man understood how the montary system of the United States actually worked, there would be a revolution before tommorrow morning.

I dont agree with the above, but it does not matter at the end. You are criticizing the government rules to elect the member of a federal government agency, The Board of Governors. There is nothing private in that. One can argue that the government regulations for that agency are more or less prone to corruption. But that does not make it private.

The secretaries of the Treasury have banking employees for the last decades as well. Yet nobody is saying that the Treasury is private. To a certain point, it makes sense that central bank employees and even that treasuries employees come from finance.

The Board of Governors, the agency setting monetary policy in the USA is a federal government agency, not a private agency. Another discussion would be if the government regulations regarding that agency are better or worse, or more or less prone to corruption. You wont find disagreement with me there. I find that most areas of government are geared towards corruption and corporate profit. Also, you have to think that the legal actions of a central bank are already extremely favorable to commercial banks. One of the legal functions of a central bank is to provide liquidity to member banks of the cartel. By "provide liquidity" they mean that the banks can borrow money at an interest that nobody in the market can get. This allows banks to over-extend credit a lot a lot a lot more than they could naturally (and earn the interests), because it protects them from failure. And protecting them from failure stops competition and creates the big banks (at the end its a government created cartel of banks). And this is all legal.


Title: Re: Bitcoin as a GET System
Post by: Red on August 28, 2010, 06:52:39 PM
The point of the Fed system is to separate banking from politics. It deliberately makes it hard to change policy. The congress could disband the fed but reality shows that the fed is succeeding at its assigned task. Congress however is much less effective at its tasks.

It's hard for the pot to call the kettle black, when the kettle is shiny copper.


Title: Re: Bitcoin as a GET System
Post by: hugolp on August 28, 2010, 07:00:29 PM
but reality shows that the fed is succeeding at its assigned task.

What reality?


Title: Re: Bitcoin as a GET System
Post by: Red on August 28, 2010, 07:28:01 PM
What reality?
http://upload.wikimedia.org/wikipedia/commons/8/8c/US_Historical_Inflation.svg

The part to the right of 1960, that excludes the 70's which sucked. But even when things sucked in the US, they sucked more in other countries at the time.

But ever since 1980, you see a consistent ability to keep inflation slightly positive, with no deflationary dips. 2010 might actually be deflationary dip, but it won't be one because of the fed.



The goals of the fed are:
maximum employment
stable prices
moderate long-term interest rates
promotion of sustainable economic growth


http://www.federalreserve.gov/pf/pdf/pf_2.pdf


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 28, 2010, 09:32:48 PM
The point of the Fed system is to separate banking from politics. It deliberately makes it hard to change policy. The congress could disband the fed but reality shows that the fed is succeeding at its assigned task.


Are you talking about the United States, or some dreamworld?  The Fed has consistantly failed at it's assigned tasks, which are fundamentally impossible.  The free market did a better job of tempering the business cycle than the Fed, and that was it's original purpose.  In reality, the Fed has managed to extend the length of the normal business cycle to the point that it allows malinvestments to accumulate for more than a decade.  The spike in real estate values that ended in 2007 is *entirely* the doing of the Fed, for nothing but central monetary planning could have kept the prime interest rates *too* low for so long.  As far as real estate values have fallen nationwide, we *still* are not back down to the long term trendline relative to average household incomes.  That is price inflation in a nutshell, and it was in the double digits in the fields of real estate, medical technology and higher education for at least a decade; the short lived post-Y2K recession notwithstanding.  I can never understand how rational people opposed to cenral planning and price fixing in all things can be blind to the fact that is exactly what the Fed does, because that is what their mission is!


Title: Re: Bitcoin as a GET System
Post by: Red on August 28, 2010, 10:13:33 PM
In the us. Lived here for lots of years. It still doesn't suck where I live.

real estate, medical technology and higher education

Real estate spiked mostly in particular areas, CA, FL, AZ, NV. It wasn't the Feds doing. It was wall street's fuckup. It is very simple to understand and explain. The actual criminals were mortgage brokers who didn't vet loans. They basically gave out loans to anyone then sold them the same day to Fannie, Freddie, and real estate trusts. Bankers bought in to wall streets fuckup. It turns out letting them do that was a bad thing in retrospect. To big to fail served us just as well as it served the soviet union.

Yes there was a central policy fuckup, but it was that the government should be in the real-estate business without paying any attention. It wasn't the Feds fuckup though. Outside of the areas being gamed things remained stable.


Education is again a central planning fuckup and an organized scam. But it isn't the Feds fault either. Sallie allowed any crappy fake university take government backed student loans. This increased competition, but again it was competition against state supported universities. Who then just raised their prices to cover losses of aid flowing elsewhere. Again, state universities are always too big to fail. Now students are defaulting at much higher rates from fake universities. So we have the big O is nationalizing the whole program without fixing any of the problems.


Medical care spiked because insurance and government subsidies make an even more horrible combination than subsidies alone. But the industry made huge improvements in care and technology over thirty years. Americans however made impressive strides in how far we are willing to go to abuse our bodies over the same time period.

This time it's not a too big to fail problem, it's a "too stupid to die" problem. Again not the Feds fuckup. If anyone fucked up, it's American restaurants for providing huge food value at minimal cost.


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 28, 2010, 11:24:56 PM
In the us. Lived here for lots of years. It still doesn't suck where I live.


Who says that it has to suck?

Quote

Real estate spiked mostly in particular areas, CA, FL, AZ, NV. It wasn't the Feds doing. It was wall street's fuckup. It is very simple to understand and explain. The actual criminals were mortgage brokers who didn't vet loans. They basically gave out loans to anyone then sold them the same day to Fannie, Freddie, and real estate trusts. Bankers bought in to wall streets fuckup. It turns out letting them do that was a bad thing in retrospect. To big to fail served us just as well as it served the soviet union.


You have your causes and effects mixed up.  The Fed forced rates below the market value during the post-Y2K recession in order to 'stimulate' the economy, and kept those rates artificially too low for too long.  Unnaturally low interest rates encourage indebtedness and risk taking.  Yes, fradulent criminal elements took advantage, but that is what always happens.  The root cause is always the manipulation of the markets, and that is solely the Fed's doing.  There is always someone in a position of power that stands to gain from market manipulations, otherwise those events wouldn't happen to start with.

Quote

Yes there was a central policy fuckup, but it was that the government should be in the real-estate business without paying any attention. It wasn't the Feds fuckup though. Outside of the areas being gamed things remained stable.


You're a bright man, Red.  (At least I assume that you are a man.)  But you have fallen victim to the image.  The fact that some industries are doing okay is in spite of the manipulation, not because of it.  And that may yet change, as different industries tend to be affected in differnet ways.  There is no area outside of the 'game'.

Quote

Education is again a central planning fuckup and an organized scam. But it isn't the Feds fault either. Sallie allowed any crappy fake university take government backed student loans. This increased competition, but again it was competition against state supported universities. Who then just raised their prices to cover losses of aid flowing elsewhere. Again, state universities are always too big to fail. Now students are defaulting at much higher rates from fake universities. So we have the big O is nationalizing the whole program without fixing any of the problems.


Again, you are mixing up your causes and effects.  Yes, higher education costs rose as a direct result of the easy money available from student loan programs.  Yet, that money is only backed by Sallie, not loaned by it.  Student loans are funds loaned from private institutions, mostly those same banks, whose own borrowing costs were held artificially low by the Fed for too long.  Follow the money, and it always leads back to Fed manipulation of the availability of credit, usually via the prime interest rate.

Quote

Medical care spiked because insurance and government subsidies make an even more horrible combination than subsidies alone. But the industry made huge improvements in care and technology over thirty years. Americans however made impressive strides in how far we are willing to go to abuse our bodies over the same time period.

This time it's not a too big to fail problem, it's a "too stupid to die" problem. Again not the Feds fuckup. If anyone fucked up, it's American restaurants for providing huge food value at minimal cost.


American medical advancments have been huge over the last several decades, but the costs associated with them still have to be paid by someone.  Who paid the money, and where did they get it?  Much of the cost increases in medical care occurred on the "you need to do this or you will die" end of the spectrum.  Some of that was borne by insurance companies, which in turn passed those costs onto the pool of covered via higher premiums.  Some of it, however, was borne directly by households.  The doctor says that grandpa is likely to die without a new kidney, and Jr is a match, but the cost of the operation is still more than the value of everything that grandpa owns.  So how does the family get the money?  They aren't going to let grandpa die if they can work it out, so Jr's sister and her family get a home equity loan on the inflated value of their home, and suddenly the money is now available to save grandpa.  Of course, that equity value was an illusion created by Fed manipulation over the previous several years, and the money loaned to Jr's sister was also money borrowed from the Fed at an unnaturally low interest rate by her bank.

Now grandpa is broke, and so is Jr's sister.  And Jr is screwed if he has a similar medical need when he hits 60.  But at least the medical professionals got paid.

See how this works?


Title: Re: Bitcoin as a GET System
Post by: mizerydearia on August 29, 2010, 03:41:28 AM
<offtopic value="slightly">I would rather die without any nonfree medical treatment than to pay for my health. I appreciate Japan's health industry.</offtopic>


Title: Re: Bitcoin as a GET System
Post by: hugolp on August 29, 2010, 04:25:18 AM
The part to the right of 1960, that excludes the 70's which sucked. But even when things sucked in the US, they sucked more in other countries at the time.

But ever since 1980, you see a consistent ability to keep inflation slightly positive, with no deflationary dips. 2010 might actually be deflationary dip, but it won't be one because of the fed.

So? Price inflation is a bad thing, it creates bubbles and deindustrializes a country (its one of the main reasons the jobs are going to China). Price deflation is one of the signs of a sane and healthy economy.

Quote
The goals of the fed are:
maximum employment
stable prices
moderate long-term interest rates
promotion of sustainable economic growth


http://www.federalreserve.gov/pf/pdf/pf_2.pdf

The real goals of the Fed are not those, but even if they were the Fed is a complete failure:

There has not been stable prices, on the contrary, since the Fed was founded the dollar has lost 95+ % of its value. Housing became totally unaffordable, the difference between the rich and the poor has widen (again, it happens always when inflationary policies are pursued), etc...

There is not maximum unemployment and crisis have become deeper and longer, so people go without a job for longer period of times.

Moderating long-term interest rates is something the Fed has done, but its actually a bad thing to do, because if a form of price control and messes up the economy.

And the promotion of sustainable economic growth is laughable seeing how it has turned an industrialized country into a deindustralized and completely debt dependent country.

Quote
Real estate spiked mostly in particular areas, CA, FL, AZ, NV. It wasn't the Feds doing. It was wall street's fuckup. It is very simple to understand and explain. The actual criminals were mortgage brokers who didn't vet loans. They basically gave out loans to anyone then sold them the same day to Fannie, Freddie, and real estate trusts. Bankers bought in to wall streets fuckup. It turns out letting them do that was a bad thing in retrospect. To big to fail served us just as well as it served the soviet union.

Where did the money to do all this came from? What would have happened if the Fed did not supplied cheap interest rates to Wall Street and the rest of the banks? Why do you look at the symptoms but dont look at the root?


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 29, 2010, 04:54:51 AM
<offtopic value="slightly">I would rather die without any nonfree medical treatment than to pay for my health. I appreciate Japan's health industry.</offtopic>

If you would rather die than pay for your own health care, then you will die, for it is not free.  Someone else must be taxed to fund your care, just as you will be taxed to fund the health care of others. There is no such thing as a free lunch, nor free health care. 


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 29, 2010, 05:06:23 AM
Price deflation is one of the signs of a sane and healthy economy.


Amen.  Red, you should also consider the flip side of price deflation, for there are always winners and losers in the ebb and flow of a free market.  During price deflation the losers are banks and businesses, for neither can sell their wares for as much as they once could.  But who, then, are the winners?  The consumers who can, temporarily, buy more groceries or a better car or a newer home for less money than they could have before.  This is when the prudent saver is rewarded for foregoing the high life during the boom.  Said another way, the Fed's basic mission, to avoid deflationary cycles, known in our modern economic speech as a "recession", is to, openly and without pause, benefit finance and business at the expense of everyone else; forever.  They haven't been very successful at that, but it is not for a lack of trying. 


Title: Re: Bitcoin as a GET System
Post by: FreeMoney on August 29, 2010, 06:56:40 AM
Price deflation is one of the signs of a sane and healthy economy.


Amen.  Red, you should also consider the flip side of price deflation, for there are always winners and losers in the ebb and flow of a free market.  During price deflation the losers are banks and businesses, for neither can sell their wares for as much as they once could.  But who, then, are the winners?  The consumers who can, temporarily, buy more groceries or a better car or a newer home for less money than they could have before.  This is when the prudent saver is rewarded for foregoing the high life during the boom.  Said another way, the Fed's basic mission, to avoid deflationary cycles, known in our modern economic speech as a "recession", is to, openly and without pause, benefit finance and business at the expense of everyone else; forever.  They haven't been very successful at that, but it is not for a lack of trying. 

Absolutely.

We should be having major price deflation. Instead printing is neutralizing it. There is not a vacuum large enough to bring it all back in. The next boom is the crack up boom, imo.


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 29, 2010, 09:52:23 PM
Price deflation is one of the signs of a sane and healthy economy.


Amen.  Red, you should also consider the flip side of price deflation, for there are always winners and losers in the ebb and flow of a free market.  During price deflation the losers are banks and businesses, for neither can sell their wares for as much as they once could.  But who, then, are the winners?  The consumers who can, temporarily, buy more groceries or a better car or a newer home for less money than they could have before.  This is when the prudent saver is rewarded for foregoing the high life during the boom.  Said another way, the Fed's basic mission, to avoid deflationary cycles, known in our modern economic speech as a "recession", is to, openly and without pause, benefit finance and business at the expense of everyone else; forever.  They haven't been very successful at that, but it is not for a lack of trying. 

Absolutely.

We should be having major price deflation. Instead printing is neutralizing it. There is not a vacuum large enough to bring it all back in. The next boom is the crack up boom, imo.


Except for the pesky little fact that the Fed isn't neutralizing the deflation.  The deflation is here and now, reflected in the falling real estate values, the drop in state sales tax revenues, the rapid contraction of credit outstanding (due to both mass bankruptcies and a sea change in the public towards austerity) and vast unemployment and under-employment.  It's not that the Fed is incapable of creating enough new FRN's to come close to what you seem to believe that they already have done, it's that they fear hyperinflation in a couple of years as a direct result.  The things that they already have done, although they would be vastly inflationary under other circumstances, have done very little towards replacing the contraction in credit extended by the Fed's member banks.  2009 was the first year in two decades that American's were net savers, and that was by a measly 1%.

It is in the best interest of the political powers, in the near term, to compel the Fed to participate in stimulus.  But to do more than the appearance of complying risks the hyperinflationary death of the currency.  Since this would spell the end of the game, the Fed, and the private banking interests that they represent, are simply not willing.  I see no conditions that could change that in the foreseeable future.   


Title: Re: Bitcoin as a GET System
Post by: hugolp on August 30, 2010, 03:03:25 AM
Except for the pesky little fact that the Fed isn't neutralizing the deflation. The deflation is here and now, reflected in the falling real estate values, the drop in state sales tax revenues

In macroeconomics, price deflation is defined as a decrease in the general price level, meaning the CPI. There has been a stock crash and a housing crash, but there has been no significant price deflation. It really is a stupid issue, since its only a definition. I dont really care about the definition as long as everybody knows what its happening in reality, but using standard definitions makes everything easier.

There should have been price deflation but the government has stopped it.

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, the rapid contraction of credit outstanding (due to both mass bankruptcies and a sea change in the public towards austerity) and vast unemployment and under-employment.  It's not that the Fed is incapable of creating enough new FRN's to come close to what you seem to believe that they already have done, it's that they fear hyperinflation in a couple of years as a direct result.  The things that they already have done, although they would be vastly inflationary under other circumstances, have done very little towards replacing the contraction in credit extended by the Fed's member banks.  2009 was the first year in two decades that American's were net savers, and that was by a measly 1%.

This is something very few people understands for what I've seen. The government could print more and create more price inflation, but they fear the consequences this could have in 1 or 2 years, because it could even create hyper-inflation as you said. But for some reason, people has a big problem understanding this.

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It is in the best interest of the political powers, in the near term, to compel the Fed to participate in stimulus.  But to do more than the appearance of complying risks the hyperinflationary death of the currency.  Since this would spell the end of the game, the Fed, and the private banking interests that they represent, are simply not willing.  I see no conditions that could change that in the foreseeable future.


Title: Re: Bitcoin as a GET System
Post by: MoonShadow on August 30, 2010, 04:01:54 AM
Except for the pesky little fact that the Fed isn't neutralizing the deflation. The deflation is here and now, reflected in the falling real estate values, the drop in state sales tax revenues

In macroeconomics, price deflation is defined as a decrease in the general price level, meaning the CPI. There has been a stock crash and a housing crash, but there has been no significant price deflation. It really is a stupid issue, since its only a definition. I dont really care about the definition as long as everybody knows what its happening in reality, but using standard definitions makes everything easier.

There should have been price deflation but the government has stopped it.


The official CPI is a government metric, and should be suspect.  It does not include energy or equities, and only considers real estate indirectly via 'owners equivalent rent' which (presumedly by design) tends to dampen the effects of inflation or deflation upon the real estate sector.  There are better metrics to base your opinions upon.

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, the rapid contraction of credit outstanding (due to both mass bankruptcies and a sea change in the public towards austerity) and vast unemployment and under-employment.  It's not that the Fed is incapable of creating enough new FRN's to come close to what you seem to believe that they already have done, it's that they fear hyperinflation in a couple of years as a direct result.  The things that they already have done, although they would be vastly inflationary under other circumstances, have done very little towards replacing the contraction in credit extended by the Fed's member banks.  2009 was the first year in two decades that American's were net savers, and that was by a measly 1%.

This is something very few people understands for what I've seen. The government could print more and create more price inflation, but they fear the consequences this could have in 1 or 2 years, because it could even create hyper-inflation as you said. But for some reason, people has a big problem understanding this.


Indeed.  I find that it's incredibly difficult to get people to consider the motivations of the creation of the Fed, beyond the official story.  The idea that the Panic of '07 was so terrible, but it only lasted for a year.  And during the depression of 1920, the Fed did nothing at all, and the economy recovers in 18 months.  So what was different in 1929?  The classic story that the Fed waited too long to provide stimulus is historicly dishonest.  The reality is that the Fed was stimulating for several years leading up to the crash, mostly by keeping the interest rate too low, encouraging risk-taking.  As the cracks started to show in the economy, the Fed started to tighten up, triggering the crash themselves.  We would be better off without monetary management, but like anything else, it's very difficult to get a professional to admit to any client that his services are counterprodutive; or even unneccesary.


Title: Re: Bitcoin as a GET System
Post by: hugolp on August 30, 2010, 07:20:30 AM
The official CPI is a government metric, and should be suspect.  It does not include energy or equities, and only considers real estate indirectly via 'owners equivalent rent' which (presumedly by design) tends to dampen the effects of inflation or deflation upon the real estate sector.  There are better metrics to base your opinions upon.

I agree that any government metric should be doubted, in fact I am a big critic of the CPI. But the point is that macroeconomics uses the terms price inflation and price deflation to refer to the prices of the CPI, and using it in another way just adds confusion. There is no doubt that house prices are down (and they still have some way to go), there has been an stock crash (and another might be coming, probably smaller though), and day to day consumer goods prices (CPI goods) have remained flat. Semantical discussions are a bit pointless in my opinion and I prefer to use the definition the majority of economist use.

And yes, the gov CPI is a big scam, but because the CPI is always reported lower than it is in reality! not higher. This happens thanks to the hedonic method and other inventions. Check shadowstats.com : http://www.shadowstats.com/alternate_data/inflation-charts You can see that even during this crisis prices have been rising quite fast, which matches better the real life impressions. This CPI manipulations allows the government to pay less in its obligations like pensions, because they are updated by the CPI. Also, the real GDP number is corrected by the deflactor that comes from the CPI. If the CPI is lower than it should the real GDP number is bigger... By just changing a method the economy is "growing" faster! Isnt government statistics great?

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Indeed.  I find that it's incredibly difficult to get people to consider the motivations of the creation of the Fed, beyond the official story.  The idea that the Panic of '07 was so terrible, but it only lasted for a year.  And during the depression of 1920, the Fed did nothing at all, and the economy recovers in 18 months.  So what was different in 1929?  The classic story that the Fed waited too long to provide stimulus is historicly dishonest.  The reality is that the Fed was stimulating for several years leading up to the crash, mostly by keeping the interest rate too low, encouraging risk-taking.  As the cracks started to show in the economy, the Fed started to tighten up, triggering the crash themselves.  We would be better off without monetary management, but like anything else, it's very difficult to get a professional to admit to any client that his services are counterprodutive; or even unneccesary.

And the panic of 1907 was only possible because of the banking laws approved by Lincoln at the end of the civil war, that centralized the credit around the New York banks (one of the main reasons Wall Street grew so big).

The most funny thing about all this is the legend that Herbert Hoover was a free market proponent and did nothing when the crash of 1929 happened. Hoover was the Secretary of Commerce when the 1920 crash happened (and btw, the 1920 crash happened because of the bubble created by the Fed to finance IWW) Hoover urged the president to intervene the economy and raise gov spending. But the president dismissed Hoover and listened to his Secretary of Treasury, Menlow, who recommended lowering taxes and lowering gov spending. The crisis was over quick. Hoover tried to intervene and created some government programs from his position as Secretary of Commerce, specially subsidizing farming businesses, but he had not enough power and did not had a significant impact in the economy.

Fast forward to the 1929 crash, and now Hoover is the president, and Menlow is still the Secretary of Commerce. Menlow again recommends the president a non interventionist approach to the crisis, but Hoover is a staunch interventionist, and not only dismisses his advice, but also teams with the Subsecretary of the Treasury to implement the measures that Menlow was refusing, in effect putting Menlow out of power. Hoover even said that he was going to put the USA government to work like never had been seen before. And he did.

But Hoover's rhetoric used the market language while FDR rhetoric used the labor language, and because of that some historians portrayed Hoover as a non interventionist free market supporter, when in reality it was the opposite. In fact, FDR accused Hoover repeatedly during the campaign of being an interventionist and that it would prolong the crisis (for some reason he changed his mind once he got in power). Even one of the subsecreatries of Treasury of FDR said that Hoover reforms where a big help and that the FDR just renamed and continued most of his programs.

It is so ridiculous to portrait Hoover as a non-interventionist...