We were talking about the creation of money, including "through deficit spending". I just pointed that deficit only determines creation of money if there is monetization.

I admit that a system where the Banks would live with a non-FR system would be viable. The banks wouldn't be allowed to lend more than what they have and if demand for money was higher than savings on their accounts, they would have to borrow from the central bank giving as collateral the money on their accounts. So the creation of money would rest on a public entity as well as the profits of that creation (so, we would pay less taxes). If the interest rates of the Central Bank were low, the banks rates could be acceptable.

But this system seems to be too tight, therefore a system of a high Fractional Reserve might be better, since still limits the ability of the banks to create money and limits the risks of a low FR.

Besides having effects on the banking multiplier that can increase the M3 (these issues, as we all know, are controversial and divide schools of economic thought), running a public deficit only resolves the problem if the deficit is monetized (supported on the liquid creation of money by the central bank that is transferred without debt to the State) and that was one of the solutions that I quoted, as one solution that usually creates inflation. If the States goes to the financial market to borrow money to pay for the new deficit, the debt just keeps growing.

Actually, the serious problems certain States are having, like Japan and Europe, are derived from a slow decrease of their active populations and expected negative grow of their general populations. That is going to bankrupt social systems and to provoke liquid creation of money/inflation or sovereign defaults.

Even China and India have the grow of their populations under control. India is having about two babies per women, China is having much less than that. China is going to have serious problems because of a decrease of their active population and huge numbers of old people.

Population is going to keep growing because of increase of life expectancy and because of Africa, that is still growing fast, but the population is going to decrease in Europe and other developed countries. Projections are pointing for about 9 or 9.5 thousand millions around 2050 and then a decrease that might be fast.

Fiat systems as systems based on authority/trust are not necessarily based on debt. I agree the debt system has its merits as a way to let the economy decide the expansion of the M3, but has also his risks and soon or later ends with a monetization of a public deficit with liquid (non based on debt) creation of money. Japan probably won't escape the need to create money to pay out its public debt (about 240% of GDP, even if its liquid debt is much lower). And Japan won't be the only one. So a mix system of debt and liquid creation seems to be necessary.

But I don't believe either on a system based on a golden standard or a finite currency like bitcoin, even if a mix system might be viable. A fiat system is necessary to allow for public economic policies and these policies are very important. Without the expansion of the monetary policy by Bernanke the USA would be as Europe is now, with about 11% of unemployment.

Real grow comes from investment that usually depends on cheap credit, new technologies, comparative advantages, new primary ressources, etc..

Of course, there are limits to grow and, in end, economies have to pass under periods of recession or/and inflation to return to a sustainable level of debt.

Since all fiat money is created out of debt (the central bank creates money by lending to banks or, in certain countries, directly to the State), interest creates new debt that can only be paid by borrowing more, supposedly supported in future income grow (think about corporations).

It's because of this that no modern economy is prepared for a long economic stagnation. Interest debt can only be paid by someone getting more loans and that can only be supported by economic grow or inflation (nominal grow). Any long stagnation creates a financial crisis, solved by inflation or defaults.

As explained by the op, the "we are going to play invisible, please just forget we exist" line of the chinese exchanges won't be able to make the chinese authorities change their policy. They went too far to smash a still small insect (bitcoin) to just forget the all issue and let bitcoin exchanges keep business as usual only with a more discrete stand.

However, the authorities don't seem to have much more means to strangulate the exchanges beside banning them and arresting their owners, something they probably won't do, because that would be a drastic change of policy with uncertain results on the present chinese owners of bitcoins.

I guess we'll see a slow death of the main exchanges. Even if they go off shore, with the limitations to send CNY abroad, they won't be the same again. They already have competition from BTC-e.

Never mind that the collapse of any hard currency is far from imminent, even the euro (the best candidate) is still alive and kicking, having made recently new yearly highs to the USD. It might end bad, but you can rest assure it won't collapse without a hard fight that will take a few years more.

As usual, the 5000 target is posted without any grounds, as an act of faith. It seems people think this is like a church, you just have to believe.

I'm also critic of the FR, but from a formal point of view it doesn't destroy the link between credit and debit. One man debit is another man/entity credit.

The bank lends the money someone deposited to another person by crediting the account of this second person, that might use the money to pay a debt to a third person that decides to keep the money on the bank, allowing it to lend again a big part of it. But the link between debit and credit isn't affected.

The problem is on their guaranty, the "real" money. If one of the debtors of the bank defaults that is going to have a bigger impact because of the FR.

The USA has been exporting their main commodity (the US dollar) for decades, living out of the expansion of the international commerce. Since the dollar is the main international currency, they can print out USDs with no risk of inflation as long as international trade increases.

But forget about wars. The idea that the USA went to war with Iraq because Saddam was saying he wouldn't accept USDs for its oil is a internet joke. The same can be said about the USA going to war with Russia or China because of their threats to dump the USD.

By definition, everything with value and scarce is precious. Therefore, bitcoin is precious.
The problem is comparing ounces of gold with 1 bitcoin. Why not 1kg or 1 gram of gold with 1 or 100 bitcoins. It's arbitrary.

You shouldn't take seriously what some holders write. For some of them, everything has to be good news to bitcoin. Or, at least, some think that if they write that is good, other people will believe and won't sell their bitcoins. As if anything we write here could have a serious impact on the price... ilusions...
The only thing good from the more or less banning of bitcoin in China is the end of incertitude. On the rest, if the chinese sell off part of their bitcoins this will be very bad.

This is supposed to be about arguments, not ad hominem attacks

Yes, the modern differentiation between property and management can have serious risks. An exaggerated attention to the short-term (profits this year) and a disregard for the long-term interests of the corporation. So, risks with good short-term profits are welcome.
A system of laissez-faire on the banking system was precisely what left us where we are.

The british central bank will never let the pound go under or the UK to go bankrupt.

The members of the euro zone are more or less screw on the long run, because they don't control the european central bank and probably they will never will (especially the small ones), but the UK? The british central bank will print the UK out of debt if that is necessary, as the FED will do. Yes, that will provoke inflation, but nothing like 8 or 10% inflation to erode debt.

Conclusion: if the goal is to have a safe haven, the pound is safer until things start to be out of control (and everybody will be able to see it coming months before); if the goal is to earn money, a wise investment in bitcoin (picking the right time to go in and go out) is a better choice.

Nothing like posting some links to give credibility to your assessment.
Anyway, even if I'm bearish on the short and median term, I'm positive in the long term. Rome and Pavia were not built on one day. To have already some major retailers accepting bitcoin is a success.
By the way, one of the basic rules of trading is: avoid to buy anything that didn't go the way you were expecting just to lower its price in your portfolio. You already bought at the wrong price a few times, so probably you are going to repeat the same mistake. Don't fight the trend by doing trades against it. At least, wait for serious signals of reversal of this bearish trend.

In the end, avoiding taxes is risky and demands one of two another risky things:
1) to hold bitcoins and risk going thru the cyclical drastic bear markets;
2) or exchange to fiat and risk to trust an exchange to keep your money, since withdrawing to a bank might mean troubles with fiscal authorities.

Ending it completely might be too demanding, but limiting it? 10% seems to be the rule around the world. That is playing with a serious risk.
And allows a drastic banking multiplier on the creation of money.