Yawn, how predictable and predictably void of arguments. Here is a question for you though; back in the 50s and 60s, did we live in a communist state? Or did we have a reasonably well working capitalist one? If you agree on the latter, you might want to look up tax rates from back then and compare it with what we have now. And since Im sure you are allergic to big government, pay close attention: its not even the overall height of the taxes that matters, overall taxes were arguably lower back then, its the distribution.

BTW, if you had actually understood what I wrote, you would have noticed Im absolutely not advocating printing of money and giving it to the banks.  Printing of money is not a  solution by itself, though its defensible if used appropriately; but giving it to wallstreet accomplishes the exact opposite of what we need as its a transfer of wealth from the poor to the rich and is likely to cause even more excess capacity.  Im also not saying we need more government spending, you can argue that either way, what I am saying is we need to change how government collects its taxes and spends its money. That is far more important than how much it collects or how much it spends.

And then there is the (also predictable) communist stuff. Which is funny, because you have more in common with a communist than I have. Like most communist, libertarians  use moral arguments to defend an economic system thats demonstrably less efficient.

The communist will use the moral argument that all humans are equal and have equal rights to justify collectivism and then delude himself in to thinking its also a more efficient economic model. The libertarian will make the same mistake, just using the moral argument of individual freedom and property rights to justify any amount of economic inequality even if it results in inefficient distribution of capital or ultimately gets to the point where it turns in to financial slavery.

Im not an ideologue, i am not driven by the morality of wealth or poverty. If you want to argue morality of property rights versus poverty and starvation, then be my guest,  but realize two things:

1) I dont give a hoot either way. I have a degree in economics not moral philosophy so Im driven by pragmatism to strive towards a more efficient economy. If reaching that goal requires a large inequality and what a communist would consider gross economic injustice, then i have no problems with that. No more then i object to redistributing wealth and do what libertarians would consider theft if im convinced it would result in greater economic prosperity.

2) dont make the same mistake as communists by confusing your morality with economics.

I tried keeping it as simple as possible. But if you prefer,you could  sell the pots for 5 dollar and charge 5 dollar interest. Doesnt change anything does it?


Doh. Yeah if I only have 1 potential customer on the planet because we are only a planet of 2, its rather likely my company will go bust if that sole customer decides not to buy my goods. Good point. I was just proving how interest gets repaid without being created with the loan. Interest just results in a transfer of debt or ultimately goods, it doesnt create some death spiral towards infinite debt.. And contrary to my example,  that transfer wont justbe  to the bank as much as it will be to deposito and share holders. After all banks are competing private companies.


See 1. Makes no difference. But with no central bank, its hard to see were the bank would get its first credit money from on my imaginary planet.

No, the money is what I give you instantly, if Im lacking something of actual value you want to barter for the car. In my example you wanted a diamond ring for the car, that is what you will get at a later date, by trading my IOU (money) either with me or someone else for a diamond. Nobody actually wants money, we want what we can buy with the money, ie, collect the debt it represents. If the money doesnt represent a debt, its quite worthless.


We just agree on a value denominated in something abstract, that used to be gold and now we call it dollar or euro, thereby making debt fungible and the IOUs more versatile than a "good for a x carat diamond" or "good for 10 ounces of gold" note. But fundamentally its still the exact same thing and its definitely a IOU.


IOU
n
a written promise or reminder to pay a debt

In the above example, the debt is what i owe you for the car. The money you get serves as proof of what you are owed by the issuer of the IOU, be it me or a bank. The money itself has no value, other than the debt it represents.

To solve a problem you must first understand it. You are saying our society has too much debt. Debt as a person is usually a bad thing, but its completely different from collective debt of a society.  A society owes itself that debt, and that  is just as big a problem as me writing myself a check for 1 trillion dollar. Guess what, it isnt a problem, its just a number. Money is debt, and the opposite is usually also true. One person's debt is another person's wealth. Are you saying we have too much wealth?

So if its not collective debt, then what is the real problem? What most economists agree on, including everyone quoted in this thread, not too mention myself, is that (too) cheap credit has led to overinvestment resulting in production overcapacity. This capacity is created based on debt, and much of that debt may have to be defaulted on,  which is why was some say “we have too much (bad) debt";  what they really should say is we have industrial (/agricultural and other) over capacity, or if you prefer, not enough demand.  Unlike the trillion dollar check to myself, over capacity truly is a problem, because empty factories  cost money and resources and that goes to waste and will cause default and unemployment when they cant be used.

So how do we solve it? On one hand, you have the teaparty and libertarians who say we should just unwind the debt, close the factories, default on the loans, become unemployed and suffer until it gets better.

Some of that may be unavoidable, but I think thats silly as a strategy. I think its even silly to say we have overcapacity once you realize we have a significant portion of our own population that owns virtually nothing and more than a billion people living in abject poverty. How can we have too much steel and cement production when millions in our country are homeless? Too much food production while millions die of starvation?  How can it be that our economy would be so inefficient that we would have to close house building companies and lay off construction workers and pay them for unemployment while at the same time,  so many people are homeless?

IMO the real cause of our current industrial overcapacity is not so much that we had cheap credit, its the increasing under capacity of too many people to pay for these goods and services. Its not like they dont want it. The word no one here wants to use: we have too much inequality. We have this within our own countries, were the rich can only consume so much and the poor cant afford enough to keep the factories humming, and we have this across borders, you can only export so much to a country which is bankrupt and who's citizens earn $50 per month on average.  So when you say "we have too much debt", my response is that a society cant have too much debt to itself, but our debt is far too concentrated.

We have already tried getting everyone deeper in to debt with virtually free credit, in an attempt to stimulate demand and keep our factories open-   and that is the real reason, not our fractional reserve  system, but that we didnt want to tackle the root problem and instead deliberately inflated the credit bubble, making the rich richer, and the poor poorer. Free credit will help for a bit, allowing the poor to buy stuff and thus to keep factories open , but of course doesnt solve the real issue as unlike societies, individuals (and nations, if its to other nations) can get and did get  too deep in to debt. And thats what we have too much of now: too many people carrying the debt which is owned by too few.

In that context, this is a chart worth looking at:



Note how major crisises (aside from the oil crises which made everyone suffer "equally") in the last century correspond pretty well with when inequality reached  its peak, and we had the golden years when it was at its lowest.  Its my conviction inequality isnt a result of financial crisis, its a root cause of it. And its completely logical that its so. How can car manufacturers flourish when most people can no longer afford  a new car? If you are in the business of selling cars, imagine how you would prefer to see wealth distributed among your customers. Would you prefer to sell one or two  $1M cars to Warren Buffet, or would you prefer his fortune was spread out over 50000 potential customer that could then all afford a new midrange car?

Once you understand that, then you can begin to think about policies to fix it. Rather than closing perfectly fine and competitive factories, rather than keeping educated, capable and willing workers at home unemployed, we should focus on ways to create demand to make use of the investments and assets we already have anyway. Not demand from free credit, but we have a massive potential for new demand from the poor if only we could make them a tiny bit less poor.  Now there is no easy fix, particularly not for inequality across borders, and  Im not suggesting we just hand money to the poor just because Im a bleeding heart Samaritan, but from a purely economic POV it makes complete sense to try and lift people out of poverty and in to the middle class so that our human capital, our workforce, our  production capacity, and the money invested in it can actually be used much more efficiently, rather than just defaulting on our debts, closing the factories, increase unemployment and cause a downward spiral until we hit some bottom.

In short: replacing fiat currency with some inflexible commodity currency isnt a solution and artificially low interest rates and a resulting credit bubble arent the root problem,  it was a flawed attempt to overcome the discrepancy between production capacity and demand, which is the root problem. The only real lasting solution is to reduce inequality and shift more of the tax burden from the poor to the rich so we can better leverage our already existing capacity to create wealth, rather than destroying it through bankruptcies and unemployment. I know raising taxes, even if its on the rich is a  hugely "popular"  thing to say here, but in the long run, Im convinced its even in the (collective) interest of the rich, and its definitely in the interest of society at large. If Warren Buffet asks to be taxed more heavily, Im sure he knows well enough why.

So you are saying I should really read Duncan's books  because he truly understands the issue, but I shouldnt read too far and at some point  completely disregard what he says or suggests as solution  (which is basically the same solution  just about any living nobel laureate in economy favors, including Krugman)  and instead we should apply some vague, radical solution proposed by an artschool dropout cartoonist who clearly does not understand the issue? 

really?

Dont get me wrong; our current system is not without its flaws. But its like democracy, its the worst possible solution except for everything else we have tried so far. And we've definitely tried using scarce commodities as currency. In case you missed it, the free market deemed it unsuitable and invented fractional reserve banking to make it more suitable for commerce.

Only skimmed over the document and I have to partially agree with casascius, you are doing your idea a great disservice by presenting it the way you do. Its presumptuous and intellectually dishonest.

That said, Ive always thought that bitcoin as a payment system is as brilliant as its infantile as a currency, basically eradicating thousands of years of monetary evolution and returning to the idea of shells or feathers. Its like satoshi gave that part no more than 5 minutes of thought and basically came up with the most simplistic of solutions to test the rest of his ideas.

So I really wish someone would combine the very useful features of bitcoin (pseudonymous, irreversible, electronic,  almost free transactions, decentral, p2p) with a currency thats more appropriate for the 21st century. Ripple might be a step in that direction, and so might this idea. If you could use the bitcoin network and concept to send euro's or dollars, then you really have something that could see mass adoption.

Money is a tradable representation of debt. You have a car, I want to have it. We could barter if I had something you wanted, say a diamond, but as it happens, I dont. So I write you a IOU to give you something in return for the car at a later date. That IOU is money, and it represents nothing else then the debt created when you gave me your car. It seizes to exist the moment I repay my debt. For instance when some time later I give you a diamond  for the car. You hand me back the IOU and I shred it. Paying for something with money is just an exchange of debt.

Now you may not know or trust me or my credit worthiness, so in practice we will use a bank we both trust to issue the IOU. I apply for a loan, bank creates the IOU (money) based on my pledge to repay it, I trade that IOU for your car. Then later you trade that IOU back to me  for the diamond, I give it to the bank to repay my loan and the IOU no longer exists. Its exactly the same principle.

So if Richard Duncan is your hero, why did you link to an interview (that you called debate) with Keene to supposedly prove Krugman wrong? Dont you realize Duncan also ridiculed Keene's theory in the very clip you linked earlier. This is your link:
http://www.youtube.com/watch?v=iquemUNNYY8
Fast forward to 23:15
So who should we believe then?

BTW, I tend to agree with most of what I heard of Duncan so far. But are you really sure you do to? I havent read his book, but in the interview you linked he proposed to get out of the current mess by massive government spending in energy and infrastructure. Is that what you believe too? because its pretty much what krugman is advocating for as well.
And where  exactly is he agreeing with your youtube cartoon or suggesting we should move away from fractional reserve banking?

Okay.. To prove my point, lets assume there are only two people on the planet, the banker and me. And only 1 gold dollar exists as reserve money at the bank.
I loan 1 dollar from the bank and owe 10 dollar interest on top.
So I owe the bank the 1 gold dollar that exists and another 10  interest money that doesnt exist. Impossible? Hardly
I buy clay from the banker for the 1 dollar.
With the clay I make a dozen pots.
I sell half of those pots  to the bank for 10 dollar. The bank doesnt have 10 dollar either, so buys it on credit.
The bank only has 1 dollar, so the bank does a 1 dollar payment to me for its debt to me for the pots.
I return the 1 dollar to the bank to repay my loan.
Bank does another 1 dollar payment to me for the pots, I return the 1 dollar for my interest debt.
Rince repeat 10x until neither the bank nor I have any debt.

In the end the bank has its dollar back, we both paid our debts, I have some spare clay and we both have some clay pots.
No on defaulted.

So ? money=debt and trade obviously results in debt changing hands. What on earth is wrong with that? If i buy your car with fiat money, it also means you get someone else's debt. Is that somehow bad? I could also give you nothing and owe you, so you would have my debt. Its the same thing.

Obviously this isnt a problem, but our youtube cartoon believer was misled in to thinking that with each loan additional debt (interest) was created that could never be paid back and therefore fiat money is like a pyramid scheme that has to collapse some time. Its nonsense. The only reason all debt cant be paid back is because we would no longer have either trade or money, but that doesnt mean the books arent in balance, because they are.

No its not meaningless, its precisely what money is; a tradeable representation of debt, aka IOU. Money without debt is what has no meaning, and in our system, it cant even exist. Money doesnt represent anything other than someone else's debt.

Assume i take out a loan to start a business. The interest on the loan represents a portion of the profits I expect to make from the loan. The interest money isnt created when i take the loan, but neither is it destroyed when I pay back the loan. Instead it will just be transferred from my customers to me and then back to the bank, its shareholders or deposito holders where it will remain even after my debt money is destroyed. The net result is no new debt whatsoever, just a transfer of existing money/debt from my customers to the people who bankrolled my enterprise.

Think of money as an accounting system. What is an asset on my balance sheet, could be a liability on someone else's, or an asset of a company thats owns my company. Does the asset exist 1, 2 or 3 times? Is it the same? Its a meaningless discussion. Money is fungible, and its just accounting of debt.

Gold is just as divisible, thats not the issue. The issue is creating credit money, expanding the monetary supply when there is an increased demand for credit. Thats something you can do with fiat, and which is impossible with either bitcoin or gold. Dividing the currency is no alternative, because you still need the full amount of money that represents the full value of the trade.  A bitcoin based economy would be permanently stuck in a credit crunch. Just think who would lend you bitcoins over 20 years to buy a house or build a factory, when everyone expects bitcoins to keep increasing in value? It just cant work.

Im not sucking anything and Im not even aware Krugman ever commented on these cartoons, did he? You brought him up, I didnt.
Perhaps unlike you,  I like to think for myself rather than being spoon fed disinformation by anyone.
But since you brought up Krugman, Im just pointing out he has at least a tiny bit more credibility then your hillbilly cartoonist. Maybe next time you can point me to a simpsons clip to prove your point.

BTW, ROFL to that link. You call it a debate, but Krugman isnt even on it. And that guy that was on there, had already received a thorough trashing by some other guy who's clip you linked earlier. Seems like you cant make up your mind who to believe, i guess anyone is  credible as long as he rants against NCE. Even though no two of your hero's seem to agree on much amongst themselves. Why dont you try understanding the issues and make up your own mind?

Im guessing unverified paypal address, and transfer it immediately to somewhere else to pay for moneypak or something? Im not entirely sure how paypal would handle a chargeback in that case. Either way, if he doesnt go first, I wouldnt touch it. If he is serious, he can just sell his coins for paypal here:
https://fastcash4bitcoins.com/

I cant say I see any logic there. The number of miners is irrelevant, its their aggregate hashrate. Its only aggregate hashrate that determines difficulty. GPU miners quitting will be like a drop on a hot plate, it wont really change a thing


Problem is that this isnt a skill game, unless you can find out how many asics will be delivered and installed in the next 6 months and when you will receive yours if you order today. No one knows the answer to either question. However, consider there at least 2 known asic miners entering the market now but that not selling their gear, Goliath and ASICminer.  ASICs are expensive to develop, but cost almost nothing to produce, so you should expect at the very least those two companies  to ramp up their production (and therefore increase difficulty) for as long as its profitable for them. If its no longer profitable for them with ~$5 chips, just imagine how unprofitable it will be for you when paying >$100 per chip from BFL.

If you want to gamble, buy some more bitcoins. Probably a far safer bet.

Difficulty is about to explode. No ones knows for sure how many asics have been ordered/are being assembled, but 500TH over the next 6 months seems like a low estimate to me. BFL alone should be in that ballpark, and they are only one of 3 or 4 players. That means  difficulty will likely be >20x higher than today by the time you get your mini rig.  And thats only when you start mining, its not like it will stop there, as you wont be the only one ordering and getting hardware late. In case you hadnt noticed, people have been ordering from BFL since august last year, and none have shipped today. So dont expect an order today to ship next week, or month.

In all likelyhood, if you order today, it will never repay itself (when both purchase and revenue are expressed in bitcoin), but if you feel like gambling, dont let me stop you.

Wrong. People shut down $150 GPUs that cost $15 per month in electricity.
Who is going to shut down a $30.000 minirig that costs $100 to run?
No one. So dont expect hash rate to scale down with BTC price until the main cost of asics is electricity again and network hashrate is measured in petahash.

So you mean the pro is the one that keeps throwing good money after bad? If the investment proves unprofitable for either miner, buying more isnt going to solve it. Growth rate is meaningless.  If you try to grow your hashrate along with the network, so will your profits or losses, no different than the "amateur". Hashrate is fungible, costs and profits scale linearly. Well, actually, only costs scale linearly, as profits scale  less than linearly if you are talking large enough numbers.

If you are referring to BFL's upgrade program, dont count on that ever existing for ASICs, and even if it does, it will be like now where you have to double down your investment to get the discount.  The only reason BFL and its competitors offered upgrades is because otherwise no sane person would have kept buying FPGAs after they announced the ASICs. Regardless, betting your business on someone offering you a freebee that they never promised is rather silly.