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The future of Bitcoin is new types of businesses that have never exited before, not replicas of existing models.
Otherwise, what's the point of all these exotic transaction types?
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I must admit this is sad that the Internet is not decentralized enough to prevent such moves. TLD .com is managed by Verisign which is based in US, therefore it would be prudent to move GLBSE onto a different TLD, with a registrar and the TLD registry based in some liberal place. It would be prudent for all Bitcoin services which do not require a physical nexus or an interface with the legacy banking system to operate anonymously on Tor like Silk Road does to insulate them from future changes in the law and/or extra-legal regulatory harassment. |
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That purchasing power has to come from somewhere. And it does. It comes from everyone else holding that currency.
No, it comes from there being lots people who have something they want to sell. This sounds like a case of, "It is difficult to get a man to understand something, when his salary depends upon his not understanding it." |
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I knew on a subconscious and later conscious level that my savings were being eaten up. Like running to stay in the same place. That's because inflation is a tax on you to enrich the apparatchik and their cronies and to bribe the dependent classes. |
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Long story short, Im inheriting $5000, with this I am looking to turn a profit, should I invest it in bitcoin miners, or should I invest it in GICs and government bonds, or perhaps play with it in the stock market? Note: I am getting a bit ballsier with money, knowing how worthless it actually is.
Also, Im 24 years old, and I have to start thinking about my financial security for my future.
None of the above. Learn useful skills and start a business. There are a lot of things you can do that much money, from learning to weld to starting a small aquaponic farm. The best assurance of long term financial security is being willing to get your hands dirty and do some actual work. |
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I don't think so. I think you can argue that regardless of whether you believe that market failures exist the voluntary adoption of a fixed supply currency is not a market failure. I can't argue that because I don't know what a "market failure" is until the term has been adequately defined. |
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I can remember a time when you could fill up an entire standard-sized grocery cart with real food for $100.
You can still fill up a shopping cart for $100, but now you're getting processed food-like substitute instead.
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But my point is that the question of whether a market failure exists is a completely separate question from whether state coercion is an effective (or legitimate) response. Are we assuming a priori that "market failure" is a valid concept? |
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The question is what currency will optimize the balance between present consumption versus savings / investment. I think it's a deflationary one for the reasons I've argued. The most optimum currency can only be determined by examining what people choose when they are free to decide. What we can observe is that people act in ways to preserve the purchasing power of their deferred consumption. Based on their risk profile they choose to store their savings in ways that maximise future purchasing power. Currency devaluation can only be imposed on a population by force, because individuals are constantly trying to flee from it. That tells you all you need to know about inflationary vs deflationary currency. Anything that must be imposed by force is only optimum for those holding the guns and suboptimal for everyone else. |
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One thing we can see as non-economists is that economic takeoff associated with the industrialization never happened in any country that didn't have the financial structure in place to fuel it through loans. Growth in most countries takes off after liberalizing their financial sector. This is pretty basic.
Saying you don't need loans to succeed may be true for individual examples of companies but ignores the fact your overall growth rate will be very low if few people can find loans. You see recognition of this in all those schemes to foster growth in third world countries through micro-loans. Have you accounted for other factors which typically correspond to a liberalized financial sector, like increased recognition of property rights and fewer restrictions on entrepreneurship in general, which could potentially affect the correlation/causation relationship? Here's a thought: it's impossible to save money without lending it. Imagine that you take a $100 bill and stick it in your safe for a year. It's true that when you do so, you're not lending that money to a specific person, but you are lending the purchasing power of that money to the overall economy. That's exactly right. All currency can be modeled as a series of informal loans, which means every transaction involving any type of currency requires a lender and a borrower. Factory workers loan their labor to their employed and don't truly get paid for it until they consume products and services with their paycheck. Their production happens before the corresponding consumption which makes them lenders. The factory itself consumes the productivity of its employees first before producting a valuable product and getting paid by its customers. In this case the factory is the first in a series of borrowers that correspond to the workers' loan of productivity. The debt flows through the economy via the transfer of currency and is extinguished when the workers finally spend their paychecks (or is defaulted on in the case of inflation). Note this form of informal, decentralized debt has only a superficial resemblence to "long-term interest bearing instruments". |
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You've got a lot to say but none of it is logic or evidence. All you have to fall back on is angry insults and appeals to the credibility of a profession whose actual achievements, especially in the last four years, don't live up to its pretensions.
If you've something worth saying you can back it up with more than, "the people who I agree with also agree with me therefore we're right".
If you don't have anything worth saying you'll just fall back to more insults.
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The proof? Every economist who has ever lived! Austrian, Keynesian, or otherwise. You do NOT have any clue of what you're talking about.
That was cool. You managed to combine an appeal to authority fallacy with an ad hominem fallacy in the same (non) rebuttal. LOL because lines of credit are anywhere near the same thing.
Stop trying to machinate bullshit to fit your view. It's wrong.
"Doing so on credit is a gamble and you're gambling with other people's money."
Whose money?
"That risk belonged properly to the shareholders"
Oh the shareholders? You mean, the people who invested in the business? As in, lending money to produce growth and ergo more money? And he says he's the majority shareholder, which is money he got one of two ways 1) a prior business that had profitable return on investment or 2) family wealth. If we only allow situation 2) we're at feudalism.
You are an economic dunce. Don't argue with me - take it up with Denninger on his Monday BlogTalk show. Maybe you can trade stories about your vast experience in building businesses from the ground up and explain where he's wrong with evidence instead of name-calling. I'm very interested to hear how you explain the correlation between the increased credit emissions since 2008 and the flatlining employment rate of the population. BTW, what's the "we allow" business? Surely you don't think you or anyone else is entitled to make those kinds of decisions for other people? |
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Oh enough with the bullshit. You are wrong. You either have no concept whatsoever of how the economy works, or you are just purposely turning on the blinders so that you can find some rationalization for bitcoin's economy. "LOL THERE'S NO NEED FOR LENDING LOL LET'S KEEP SOCIETY AS IMMOBILE AS POSSIBLE!" What you want is feudalism. AIN'T GONNA HAPPEN. The economy would grind to a total halt without lending. Lending is beneficial to both parties; people have money that is idle and want to increase it, other people have ideas to create or expand the economy and need money. You. Are. Wrong. Totally. Absolutely. Wrong. I assume you have proof for all that and we don't just have to take your word for it. On the other hand there are successful businessmen, with records of running profitable companies, who emphatically disagree with you: http://market-ticker.org/akcs-www?singlepost=2830302 |
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But we can't assume whatever rates we want. It seems so simple to throw out figures like "this business earns 5%" or whatever, but the reality is not so simple in nominal terms.
If deflation acts faster than the interest rate, businesses are prone to go bankrupt, and you are prone to make more money by hoarding. Real growth in the economy as a whole when businesses borrow money makes businesses prone to go bankrupt. In real terms, loans get harder and harder to pay back.
Front-heavy loans don't do businesses any favors. They need time to go through the stages of production. The amount of super-credit-worthy people/businesses is not infinite, and it will be very difficult for banks to find people that are low-risk in a deflationary economy. Risk-adjusted means you just aren't going to find any decent positive returns, regardless of what numbers you plug in that don't fit in reality. You might be looking at 0.1% instead of 0.5%. Is 0.1% worth the risk of your non-FDIC backed bank going bankrupt? Is 0.5% even? 140 years to double your nominal investment?
God forbid the deflation rate go above the "expected" 3% or whatever making it even harder for businesses to pay back their loans and making it more likely that you lose all your money rather than just some of the real value of your money in the case of higher-than-expected inflation.
Businesses don't inherently need loans to function. A profitable business can fund expansion via its profits and avoid getting into this trap in the first place. Right now businesses take loans for a lot of reasons, not the least of which is that government and fed policies heavily subsidize lending and have turned the entire financial system into a giant ponzi scheme. The problems you are describing would be real if a businesses in a Bitcoin-based economy behaved like they do in a dollar economy. It's false to assume that the way things work now is the way things will always work after a paragidm shift. |
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you do assess who or what you value more and decide in its favor. otherwise you will always fail to get a satisfying answer to this dilemma. for example, you can just reduce the number of children. at which point does the life of the woman get more important? or replace the children with cute bunnies and kittens: would you kill the woman for a single bunny? or not even for all the bunnies and kittens in the world?
there is just no fundamental answer to this kind of question inside absolute ethics that, in all possible cases, accords with everybodies sense of "just" or "the right thing do to".
forget the notion of "the right thing" and do what you consider best. if you can't stop yourself, bath in self-pity or self-righteousness according to the rules of your chosen ethic afterwards. but please do it silently. You've identified a problem with utilitarianism, not with ethics itself. |
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"Store of value" is a misnomer unless you're talking about canned food or something similarly directly consumable.
Not even gold is a store of value. You can't hardly do anything at all with gold directly - it's only useful if somebody is willing to accept it as trade for the products and services you actually use.
When you defer consumption by accumulating currency it behaves as if you are storing value but this is only possible when there is extensive trade happening using that currency.
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The only thing that truly and permanently props up the price of BTC are true BTC transactions where someone buys something and the vendor who sold it to them holds the BTC instead of selling it on the exchange because there's enough that he can spend thge BTC on that it would actually be inconvenient to turn it into USD Bitcoin is just as useful for trade at $1 as it is at $100 - the exchange rate doesn't matter anyone except for speculators, and catering to speculators does nothing to secure the future of Bitcoin as a viable currency. What matters in the long term is the market demand for products and services that can be purchased with Bitcoins. Anyone who wants Bitcoin to succeed should focus on creating those products and services rather than playing pump and dump games with the exchange rate, because speculation is a zero-sum game at best that does nothing to help the Bitcoin economy. |
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It's self-evident that reality is both subjective and objective simultaneously. There is no explanation necessary, it's completely obvious (as in "duh"). You're clearly done a lot of studying and thinking about this topic and have a lot of knowledge to share with the rest of us. Can you begin by explaining what you mean by "subjective" and "objective"? I've been defining objective as anything which is true relative to a standard which is independent of any particular perception and subjective as the opposite of objective (i.e. an opinion). Using theses definitions your statement is not at all self-evident but perhaps this is because I lack your wisdom. or because you mean something else by "subjective" and "objective". Would you please enlighten us? |
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What if I can buy aluminum for 20 BTC and turn it into a bicycle worth 30 BTC, but my overhead is 9.5 BTC? I'd be only make 0.5 BTC/bicycle. Then I'd only have a 2.5% net profit margin, which would be fine in an economy neither inflating or deflating, but a bad investment in an economy deflating at a rate of 3%. Why is this a bad investment? If the currency is gaining purchasing power over time this means the cost of aluminium is going down, the cost of labor (overhead) is going down and the price you can charge is also going down. You won't be able to charge as much for it next year but your costs will be lower and you'll still make the same amount of profit. |
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