The process of bitcoin mining involves having a machine to do virtual work.
A Bitcoin miner does real work. Real resources are consumed in the process. So do World of Warcraft gold miners. The point is that "work" hold little value to majority of people. Who freaking cares if some computer can solve a math problem faster than another computer. |
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This theory is bunk. I'd like to see just one historical example where this has happened.
On the contrary. Central Banks (FED) sell gold when it is cheap, and buy gold when it is expensive, which makes them make "losses" which don't matter as they print the money. As such, they amplify the prices in the markets, to go against the speculators/investors gains (except for those in the knowing). Gold exchange funds buying gold: 1997 0 1998 0 1999 0 2000 0 2001 0 2002 3 2003 39 2004 133 2005 208 2006 260 2007 253 2008 321 <- buying at low prices 2009 617 <- buying at low prices 2010 367.7 <- buying less at somewhat higher prices 2011 154.0 <- even more 2012 279.1 <- again somewhat more 2013 -880 <- selling 2014Q12 -42.5 <- selling at even higher prices FED: 1997 $330.98 326 selling at low prices 1998 $294.24 363 selling at low prices 1999 $278.88 477 2000 $279.11 479 2001 $271.04 520 2002 $309.73 547 2003 $363.38 620 2004 $409.72 47 2005 $444.74 663 2006 $603.46 365 2007 $695.39 484 selling at low prices 2008 $871.96 235 speculators try to buy, so let's sell less too to counter them 2009 $972.35 34 2010 $1224.53 -77 higher prices, so let's buy instead of selling. 2011 $1571.52 -455 even higher prices, so let's buy even more. 2012 $1668.98 -544.1 peak buying 2013 $1411.23 -409.3 speculators start selling, so we shouldn't buy: lowering buying. 2014Q12 $1294.64 -242.1 counter the speculators trying to sell by buying less. FED does identical movement as speculators and hence counter-acts them, increasing prices when they try to buy, and lowering prices when they try to sell. Gold in metric tons. Why is this considered buying up the entire economy? |
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If the state auctions public property (like airwaves) to private enterprise then the money goes to the public coffers. That money gets spent on public works which is to benefit all constituents of the state.
Gaawd why is it you don't know this? If you don't like it vote for different representative or move out. It's that simple
Thanks, I don't even know that I collectively own some airwaves  I pay tax to government, like an expensive insurance, and then what they do with that money is their business, but just don't say that their properties are owned partially by me, I don't even get a dividend on those returns (if there is any) The root of the problem is you don't understand what a state is. So you don't understand public vs private. And you don't know what a govt is designed to do. Who do you think capitalised the iinternet infrastructure and where that capital came from? |
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I'm the long run USD is based on work. Its backed by bonds which are debt to be paid by future earnings of the tax base.
The only way the issuer (US govt) can make good is if the USA has an adequate GDP when the bonds are due. That's real work!
However, work in itself doesn't define whether something is fiat or not. You have to look for intrinsic value.
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John Law's Real Bills Doctrine says that banks can create fiat money backed by his assets
Originally, if a bank have one ounce of gold, then they are able to issue fiat money of corresponding value. The fiat money have the same purchase power as one ounce of gold, since they can redeem the gold at bank anytime
However, John Law went one step further, saying that if the bank have one acre of land, then they can issue fiat money of corresponding value, since they are backed by the value of that land
Adam Smith pointed out, this increased money supply will cause large inflation and will not help economy. However, his view is too academical, since the money creator will not be so foolish to use their new money to buy goods for daily consumption to trigger inflation, they will use those money to buy assets
Consider such a scenario:
The bank would start with a small amount of asset, say one acre land. They issue the money worth of one acre land, then bank can use those money to buy one more acre land. After they get the new land, they could issue money worth one acre land again, and use those money to buy another acre land...
After a while they have bought so much land and now the price of the land has increased, they can issue more money based on higher worth of their lands. They could keep doing this until they bought up most of the land in the country
And since the land price is not showing up in inflation statistics, they can keep buying like this for many years
To make it more aggressive, now they purchase not only land, but also debt, which is in fact future products and services. And purchasing debt is even better than purchasing land, since a high level of debt will put a downward pressure on consumption, so inflation will not be a problem no matter how much land they purchase
What does this mean?
If the money creation is based on the backing of assets, then money creator can acquire almost all assets if he just scale up his operation, without doing any meaningful work or giving anything valuable in return
On the contrary, gold or bitcoin is totally different, you can not issue money based on backing of anything, you must put real valuable resource to get it, this created an equal ground for value creation
Indeed. That's the trick of ANY form of fiat money. Seigniorage. It goes somewhere. It is even the case with bitcoin. It isn't the case any more with gold (except for a few gold mines). Seigniorage is the fundamental problem of any issuing of money, other than a genuine asset which has a large "usage" value: the one issuing it, gets buying power in return for nothing. That is then taken on the back of those acquiring the new money. The one who can issue money, can of course buy up the whole economy in the end. Whether this is by "backed" money, or "thin air" money doesn't really matter. The only advantage of "backed" money is that there will always be some finite supply of it, if the backing asset is a collectible, such as land or gold. The one issuing money can use his seigniorage to make assets rise and fall and go against speculation and investment at will. If the central bank buys up gold with newly printed money, it increases the gold price and makes in fact the seigniorage go partly to those already holding gold. Later, they can dump that gold (they don't mind losing money as they can print it). If the central bank buys X or Y asset, they make rich those holding those X or Y assets before. In this way, central banking (and some phone calls) is the perfect way to make "the friends of the state" hugely rich on the back of the people producing value. Central banking is the ultimate state theft of value and production. The only "fair" forms of seigniorage are: - the seigniorage that has been historically diluted (gold has had its seigniorage already millennia ago) - the seigniorage that is in one or other way equally distributed (everybody can print his own amount of money) - the seigniorage that is randomly distributed (like in bitcoin with very high volatility, long inflation period, and so on). This theory is bunk. I'd like to see just one historical example where this has happened. |
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Problem is when they issue more money, the general common people's wealth get diluted. So in effect, indirectly we are working to pay off the land purchase but the difference here is that we don't own any share of the land.
Poor logic. It dilutes anything denominated in USD including banks assets. What is this land crap you are talking about. If land belongs to the state then it belongs to the people of that state collectively. As in PUBLIC. Stop being a whiny selfish prick and think somehow you are owed anything. Or your share of taxes contribute more than the next guy What is this "land belongs to people of that state collectively" you are talking about, is it a communist country? As I know, some western state governments are selling their property little by little to those bankers, due to that they can not afford to repay the loan I'm only talking about public land. It belongs to the state. The state is an entity that is comprised of the people belonging to that state. The govt is elected by the people. It's not communism. If you think it's communism then you need to review junior high school civics class. If the state auctions public property (like airwaves) to private enterprise then the money goes to the public coffers. That money gets spent on public works which is to benefit all constituents of the state. Gaawd why is it you don't know this? If you don't like it vote for different representative or move out. It's that simple |
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Let's see what the Internet says about it:
Fiat money is currency which derives its value from government regulation or law.
Completely wrong. Governments can regulate commodities and tell you how much they are worth, but it doesn't make it a fiat currency. Currency that a government has declared to be legal tender, but is not backed by a physical commodity.
Legal tender, meaning that you can pay a government debit with it. A generally accepted definition of fiat currency, in that it is not backed by a commodity. money (as paper currency) not convertible into coin or specie of equivalent value
That makes no sense. Misquote? Paper money or coins of little or no intrinsic value in themselves and not convertible into gold or silver, but made legal tender by fiat (order) of the government.
Sounds close. To be fair, from my quick search, there's one site (Merriam Webster) that mentions nothing about the government; but others do. So, you can't just say “That's not the definition of fiat” when most people disagree with you.
Here is the rub: If you classify currency as EITHER fiat OR a commodity or commodity-backed currency (USD before Nixon), then I think bitcoin is a fiat, with the "government" being the consensus of miners regulating the issuance of bitcoin. You just can't go back to the miner and ask for some electricity and hardware in exchange for the bitcoin they mined that you currently hold. The term "government" in relation to fiat currency is vague. US dollars are issued by a private bank AKA the Federal Reserve that is not really controlled by the US government. Euros are not issued by one government, but rather a cartel of governments. I agree with you. I find it especially annoying that these bitcoiners just learned the word "fiat" and they keep using it all the time. Nobody goes around calling modern money fiat unless they're a conspiratard. We just call it "money" The word fiat is just Latin for "let it be done", "it shall be" aka created from thin air. Which is Bitcoin. Created from thin air. Big difference is USD derive the price from Treasury bonds (future debt of USA). Bitcoin price derived from millennial speculators |
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So the proposal is something like creating a new crypto which the amount is based on relative amount of fiat money, right? Hmm. Why do we need that? Wouldn't that defeat the purpose and concept of crypto of going against inflation. So if Fiat is printing more money, in effect the value of that crypto is going down as well. It's like building something new on something which is already flawed.
The proposal makes no sense syntactically QTM says that prices have a proportional relationship to money supply. You use the formula to estimate the price based on velocity and supply. Has nothing to do with how a currency is designed. It has to do with informing monetary policy. |
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Problem is when they issue more money, the general common people's wealth get diluted. So in effect, indirectly we are working to pay off the land purchase but the difference here is that we don't own any share of the land.
Poor logic. It dilutes anything denominated in USD including banks assets. What is this land crap you are talking about. If land belongs to the state then it belongs to the people of that state collectively. As in PUBLIC. Stop being a whiny selfish prick and think somehow you are owed anything. Or your share of taxes contribute more than the next guy |
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Its a big joke how wealth is so unfairly distributed in this so called world. But what can we do? i think we can do exactly nothing.
You can endorse politicians who support progressive tax |
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Is it possible to create a crypto based on the equation of the quantity theory of money MV = PQ?
This statement makes no sense. Its like saying let's make a spaceship based on theory of relativity |
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In the free market, negative interest rate is impossible...but, what you normally think of as interest on a loan, is the general interest rate, plus risk, and something for the work of the bank. For lending to the bank (deposit), you get zero interest rate, zero risk cost (because the bank is safe by their definition) minus the cost of administration (it is always the bank who gets the cost covered, never you).
So what we can have in the free market, when interest and risk is zero, is the cost of administration, payable by you.
The negative rate that ECB is talking about, is the bank's deposits in the central bank, and that is not the free market, because the ECB by regulation decides what the banks have to deposit... at least to some degree.
No read the article again. He cites some cases of corporate bonds a negative interest rate |
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Thats not buying land or real estate. They're called securities. As in Mortgage Backed Securities. LOL |
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It only works if the value of the land rises. If the value falls then the bank will fail if there is a run.
Also, it will cause inflation even if the money is used to buy assets.
In modern fiat money system, the fiat money holder do not have the right to redeem the land, so banks will keep buying land using this trick and the available land will get less and less, thus the price will rise forever. The land price only drops if there is no new money inflow, but just look at what FED did, they printed 5x more money to buy those lands to support the price of them, actually the best time for them to buy the land is during an economy crisis And it will not cause inflation if they purchase equal amount of national debt at the same time. A high ratio of debt will cause austerity, which reduce the consumption on daily goods, counter the inflation tendency of money printing It's amazing that on one hand, they keep buying properties using printed money, on the other hand they keep buying debts using printed money and charge interest. The inflation effect of property purchase is negated by the deflation effect of more debt for the whole nation, how genius   Please cite source where the FED is buying land. I call mythbusters in this claim |
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Bitcoin is made by Chinese computer farms.
Yeah this sure is more real than govt bonds. Let's see who I'd trust more the ENTIRE tax base of the USA or some crappy Chinese business. Him difficult choice
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So much negativity.
ů hum.. i think a long long long stagnant period... it would was... did you remeber Japan??? on 1990 the nikkey225 was near 40000... in the last years, japan index touch 8000 more times!!!! It is ridiculous to claim that japan suffered as a result of deflation. During the period of their supposed suffering, their economy has grown to become one of the strongest in the world, second only to the U.S., and only recently third behind China. Deflation hurts the wealthiest people more than everybody else. The bankers and their lapdog economists claim that deflation must be avoided at all costs only in order to preserve their wealth at the expense of everyone else. As someone who's been traveling to Japan for the last 15 years. I can safely say you are full of shit. The Japanese don't 'suffer' but they are definitely not livin large. They are just as stressed out about economy as anyone else. My colleagues are all on a real tight budget paycheck to paycheck. They have cheap mortgages but thats about all. |
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Much delusional I sense in this thread.
Only this thread? Practically the entire forum and most of bitcoin land is delusional |
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I see Keynesian economics in the same light as the psychology establishment sees Freudian Psychology today. Its an outdated way of thinking about how things are. Maybe Freud was right back in the 1880, but he's not right anymore. Keyes may have been right in the 1920s, but he isn't right anymore. Infinite expansion may have seemed like the inevitable outcome of mankind back in 1929, but it doesn't any more. Everyone is saying the world's population is on track to stop expanding in the next 100 years. Current generation are more about saving the environment and reducing man's footprint rather than "owning it all". Even after hyperbitcoinization, whatever economical model people adopt (Satoshian economics?) will eventually be replaced with something else within 100 years or so. One constant truth about mankind is that each generation thinks differently than the generations before them. Ok now i'm just blabbin', peace out.
Satoshian economics? Bwahaha. You know Satohsi is just influence by Rothbard, who nobody in economic takes seriously |
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Keynes is the troll of economic theorists used by universities and interested parties to add theoretical justification for their parasitism.
Keynes was probably terrible at saving money. Marx was for a fact. I think Keynes appeals to people who are suseptible for lazy quick fixes in general. We live in a different world now as well and so I think something as simple as "save money for future consumption and investment" is a principle we all need to adhere to a lot more now. Society might grind along at a slower pace, but it will probably have to since things are growing in complexity globally.
Managing a global economy is a much larger pipe dream than managing farmers in Siberia was during the Soviet regime. So much more impossible. Governments and citizens alike will have to become more coherent going forward if anything is going to get done.
Wrong. Keynes is not the prevalent "school" in academia. Its probably neo classical Keynes did public service and was an astute investor. His theories comes from market experience and public service experience. IOW "real life experience" not academic theories. He only started to get popular again recently after the 2008 crash. His main thing is using fiscal policy and focus on unemployment numbers The govt has no reason to "save money" when they can just "print money". You are totally confusing household economics and macro and blaming everything on Keynes. Since 80's there have been no Keynesian influence on policy. It was more Friedman Since 2008 Keynesians and central bankers have been salivating at being able to bring on more assets. We're in a pretty bad mess. I also recommend reading the Archonology series at runesoup.com. A little bit unrelated to the strictly economic discussion here, but the series talks about how City of London banking interests, IMF, etc. are able to rake in quite a lot more ownership over North America under the Bretton Woods system. Heavy reading so it might not be for everyone. I almost want to say that the Keynesian argument is usually pushed by globalists (and hence at universities more so, but unknowingly, by extension), but the picture is pretty complex if you zoom out far enough. Who are these Keynesians and Central Bankers are you referring to? Bernanke is more of a Friedmanite. Certainly not the ECB or the IMF. They were recommending austerity. You must be talking about Krugman. But He's just professor who has an op ed piece. He has no influence over any policy. And he's not mainstream he's on the left. That runesoup site. WTF? It's a conspiracy theory site. |
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You should find a chart with dollars index on it to see the correlation
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