Maybe you are correct in that it is a misuse of the term "based on", however much of the the money supply, as opposed to the money base is created via debt. As only a fraction of the the value of the loans are held in reserve, much of of the money supply exists purely by loans exceeding the reserve. In this sense, parts of the money supply is "based on debt".

I would call fiat currencies, in particular fiat currencies that expand the monetary base/supply far greater than the increase of goods and services created, for "wealth appropriation schemes"; which with a very simplistic explanation appropriates the "wealth" of workers who receive wages in a depreciating currency, whereas bankers and the financial class do not suffer due to earning interest on the expanded monetary base/supply and thus although their "wealth" in the shape of currency also depriciates, their "wealth" is also expanded.

Government will be a threat to Bitcoin - depending on Bitcoin's success rate. The financial elite who control governments will not sit idle and watch Bitcoin take over a large share of trade/"money" transfers.

As to "the war on drugs" - the war is working perfectly, more than 1% of USA's population is incarcerated, of which a vast majority are serving time for narcotics crime. The prison-industrial comnplex provides corporations with cheap labor and thereby also distorts the "free market".

As to 1984; the society today is far worse than Orwell could have imagined; are you aware of that every car tire sold in the must in accordance with law have a unique RFID (Radio Frequency Identification?

http://www.rfidjournal.com/article/view/1223

In the not so distant future, everything one purchases in stores will have RFID chips, and scanners (like those in place to hinder theft) will scan  the items that you have on you, in order to "profile" you and market such products that are of your interest. Some people will even think that it is a good idea. Of course bureaucracy poses problems in itself - but the U.S. has surveilled millions of Americans  and countless others via electronic and other means, Britain has millions of CCTV, Sweden has secretly been collecting the DNA of every child born in hospitals since 1978, despite parents been given the choice to opt in or out from such a scheme; only a couple of years ago the government enlightened its "subjects" of the practice - which is in place to target health issues, or so they claim.

The difficulty of government control is economic; the apartheid system in South Africa became too expensive, too many costs were incurred and only when South African business lost competitiveness on the global stage were any sanctions reasonably enforced. However, control is aided by technology, and technically speaking, the possibilities of surveillance are endless. Efficiency is one of the reasons why all kinds of standards are adopted globally. I am not paranoid, some years ago I used to read a lot about the "control grid" - from a legislative and technical point - not some flimsy worded articles circulating on the internet.

I understood way back in 2003 that gold price was going to skyrocket; however - no money to invest

Yes, the bitcoin.org is not at all professional. Wiki? Users can edit the pages? The "Disclaimer" page is empty, etc.

This is somwhat of the chicken and the egg problem - do people have a desire for a Bitcoin market, or does a Bitcoin market exist before people aquire a desire to use that market? However, I agree with the many posters who think that it is too early to market Bitcoin to a wider audience. Presumably a number of people who see the ad will view the webpage, but if that webpage cannot display the usability of Bitcoins, not many will take any further steps. To target "the masses" a marketplace must be in place. In my humble opinion, it is better at this stage to target early adopters of users and merchants, which of course the upcoming FB campaign does. Since word-to-mouth is the best form of marketing, people's positive experience from using Bitcoin would have a far greater impact, which would promote Bitcoins further.

As to the forum of the ad; call me stereotypical, but most people that buy products from infomercials are not consumers of the type that search for information about products, instead they prefer to sit in their couch and digest whatever the merchandise presenter says, why the impact of this ad is likely to be rather small. Has paypal ever had tv commercials? I have not seen any, although I do not watch that much TV. TV is probably not a good marketing forum at any stage of Bitcoin, in a cost/benefit sense. Of course, "the only bad exposure is no exposure" or something like that, so I do not see that the ad will have a negative impact; almost all viewers who may think that Bitcoin is a scam are very likely to forget about Bitcoin in a very short time span.

I am bloody annoyed with myself, my previous post in this thread is complete nonsense and makes no sense whatsoever.

Would it not be in the interest of subsequent miners to increase appreciation. Say early adopters have mined 1M in one year. Secondary adopters with twice as much computational power decide on an appreciation rate of 500%. So after year two there would be 5M (early adopters) + 10M (secondary adopters) + 1M, and the secondary adopters clearly have more Hashcoins/power etc.

With the "inalienable rights" scheme the "tyranny of the majority" (in above example, or otherwise) would render Hashcoins impossible to function as "their" blocks would be accepted by the "majority", whereas "the minority" may not want to continue on those terms - or am I missing something?

The idea of not having a deflationary currency which would not massively benefit early adopters is in my view better than the how Btc is set up. As you say, many people do not find Btc atractive at all due to this circumstance. But if the opposite is true, that if a constellation of very powerful computers wanted inflation and there is no possible way of stopping them from getting their will through - how is this scheme better as opposed to different from Btc. This is a genuine question - I have no programming skills whatsoever.

Your argument about today's price instability and your proposal of a fixed difficulty certainly hold some weight; however, for maximum stability I would propse a scheme under which the number of coins is fixed in accordance with computational power increasing and making it easier to create blocks.

I entirely agree with this, and which is why I suggest that the actual price of Btc will in relation to the size of the market.

The only way that Bitcoin can become an established method of payment is by people and merchants adopting Bitcoin. If Bitcoin does manage to establish itself as a method of payment, the eventual price of Bitcoin is likely to be something along the line of: size of the economy divided by amount of Btc available to facilitate the trade + the markets combined growth potential forecast + the cost of mining.

i.e. On a yearly basis services and goods of a value of $12M are traded through Btc. At that point of time, maybe 8M Btc exist, and maybe 500.000 Btc users exist. However, around 5M Btc are likely to be held by early adapters who do not use the Btc to trade goods and services with. So 3M Btc must facilitate trade. In this scenario, each Bitcoin must be transferred 4 times per year, however, Btc are likely to be transferred more than 4 times per year. However, suppose each Btc is only transferred 4 times per year. A reasonable price for Btc would perhaps be between $5-10. Based solely on the trade volume versus trade circulating Btc, price would be $3. If each Btc was tranferred more times, the price of Btc would be lower. However, if the Btc economy had grown in 1 year to become a $12M economy with 500.000 Btc users/owners, potential for further growth would obviously exist, which could account for $2-7 of Btc price. If some early adopters were to cash out and their Btc were bought by traders rather than "hoarders", the price of Btc would fall in a rough proportion to the amount "released" into the economy. Speculation in Btc would reflect all the inherent price dependents, and speculators would keep track of the amount of Btc released into the economy, so although the average trader would not possess relevant market information, the price of Btc would more or less equal the value of Btc due to competitive speculation.

However, if the Btc economy were to have a value of $120 m per year and only 8M or maybe 8.5M Btc are in existence, of which perhaps 6M Btc facilitate trade (if the economy was that large and stable, I suspect many early adopters would in due course of time cash out on a fair amount of their holdings, which would not sink the price and which could be invested more profitable,) the price of Btc, without taking speculation into account, would be less than $20, depending on the amount of trasfers of each Btc per year.

All of above numbers are just hapzard guesses, however, the above calculation could be used to forecast the price of Btc in the future, and also determine whether today's price reflects reality or not; or so I believe.

Disclaimer: I withdrew my USD from Mtgox without having made any trades, and am not looking to put any money into the market before an actual marketplace exists, or is at least far more developed than today.

EDIT: I FORGOT TO ACCOUNT FOR THE COST OF MINING IN THE CALCULATION

Agreed, Bitcoin does not even store wealth, although this claim has been made on this forum. Bitcoin has lost ca: $1.5 since Mtgox opened; anyone looking to preserve wealth would be wise to stay away from Bitcoin at this stage. Also, the value of Bitcoin was, according to what I have heard, stable for a long period of time, before appreciating during the spring. The only way that an apreciation could have occurred that is not due to speculation would be if the marketplace/usability of Bitcoin had grown substantially.

"Quote from: cypherdoc on June 29, 2011, 05:13:29 am

"Quote from: BubbleBoy on June 29, 2011, 11:28:27 pm

Up until recently most of the money printed by the federal reserve went indirectly to the government. Recent bailouts made it about 50-50. In 2011 the fed is accumulating govt. debt like there's no tomorrow.
[/quote]

 Bankers are evil alright, but it's still your lawfully elected representatives that take the cake.
deception, deception."

[/quote]


Since a few years the Treasury has found it increasingly difficult to sell bonds on the market, and the Federal Reserve is the primary purchaser. In February this year the Fed became the single largest holder of Treasury Bonds. However, the "lawfully elected representatives" are puppets on a string, obeying their monetary masters, while in no doubt also benefitting economically themselves.

http://www.ft.com/intl/cms/s/0/120372fc-2e48-11e0-8733-00144feabdc0.html#axzz1QkoEpeW4

I probably expressed myself somwhat carelessly. The Tea Party movement indeed enjoys widespread support, however, the politicians who are elected are no different from other politicians, i.e. they accept campaign contributions from the highest bidders and pay scant regard to the views of their supporters, apart from lip-service and rhetoric. Libertarian and/or republican values can never equal the aims of the corporations who provide campaign contributions.

Yes, I agree that the industrial revolution created more wealth, however at least in England, farmers were intentionally displaced. An agricultural revolution occurred during the 18th century. Instead of crop-rotation which had been the norm, enclosure of fields which reduced the amount of land was applied, in order to increase yield. Capitalists petitioned the Parlaiment who made laws. "The first enclosure act was passed in 1710 but was not enforced until the 1750s. In the ten years between 1750 and 1760, more than 150 acts were passed and between 1800 and 1810, Parliament passed more than 900 acts of enclosure." (http://www.historyguide.org/intellect/lecture17a.html) So many peasants were forced from the land to the cities to work in factories. Without this the industrial revolution would not have played out the way that it did. This information is not disseminated in school classes. I am not arguing that the industrial revolution was not beneficial to society, which it most certainly was. What I am arguing is that society became much more unequal as a consequence of the industrial revolution.

However, you are correct about the income disparity, of course the disparity can increase while both sets of people are better off. We certainly disagree on the need or unnecessarity of welfare. With needs I mean funds to feed oneself and one's family, to educate one's children, to afford health treatment when one and one's family is ill. In many countries these absolute needs are not fulfilled. If a more equal distribution of assets existed, there would be no need for welfare. As to stealing; the far greater share of stealing has been perpetrated on the working class by the capitalist class ever since the invention of capitalism.

I know that we are about to enter into a discussion on Obama's health care legislation, so I wish to point out a few viewpoints before you present your arguments. I am aware of the fact that Ron Paul used to be a practicing doctor, and that he used to treat patients for free if they could not afford to pay, rather than ask for funds from his state (I believe it was the state, maybe county?) Paul is of the view that government interference in all spheres of life is pervasive and to give government control over health care is to extend the obtrusiveness of govenment to the detriment of freedom and liberty. Having read parts of the health care bill, and also reading extensively (at least for a non-US citizen) informed peoples' views of the health care bill, I entirely agree with Paul. The bill was literally written by the insurance industry. However, in Europe and Sweden, free health care is the norm. Although as of lately, many people do take out private insurances, due to reduced government services. Rich or poor, if one suffers from health problems, one is in nead of treatment. The have's should not deny the have not's basic needs, at least not in a somewhat equitable society.

In Sweden, different authorities are barred in law from accessing data from other authorities, which ensures privacy. At least this used to be the case; during the beginning of the 21st century these separations are being removed, one by one. Of course it is for our benefits, is what they claim - which is entirely false; it is of course the same process takning place all over the world. A police state. If I were to draw a quick timeline from capitalism it would be:

Capitalism - democracy (partially) - welfare state (partly to promote the concepts of democracy) - aristocracy (although always in existence, much more prevailing) - socialist capitalism for the rich - police state.

I appologise for gearing off-topic, it is not my intention to divert from any arguments on the original topic. I am most willing to continue a debate on the original topic.

The Tea Party movement is not grassroots but astroturf.

That was very interesting reading, coming from Greenspan as it were. However, Greenspan does seem to have a bias against the welfare state. More government debt is contracted during war than during any peace times, and government debt due to war is as old as the art of warfare. Also, when people lived scattered on vast areas of land, and farmed the land, each family was subservent. However, after the industrial revolution, people lived in towns and workers did not receive enough income to pay for all their needs. With every increase of income disparity the need for welfare increases. Very few people choose actively to live off welfare, but instead require welfare in order to subsist, or at least with some degree of comfort.

The following is largely what I posted in a different thread:

The value of gold is relative to the scarcity/abundancy of it and difficulty/ease of mining it. The whole conception of gold being a "hard asset" is flawed, although the flawed conception is not apparent either in theory or practice today. From the 16th century and onwards, gold primarily facilitated trade. Adam Smith showed that mercantile nations, which hoarded gold instead of freely circulating gold for trade pruposes, restricted trade. The object of political economy thus became to increase exports and restrict foreign goods for home consumption, which increased the gold reserves.

Regarding issuing paper money to facilitate trade, Smith and David Ricardo and others argued that, a paper currency which falls below the value of gold and silver does not sink the value of those metals; they exchange for an equal amount of goods as when paper money was of equal value.

i.e.:

1 oz gold = 1000 USD; 1 oz gold = 100 hours labour; 10 USD = 1 hours labour
1 oz gold = 1200 USD; 1 oz gold = 100 hours labour; 12 USD = 1 hours labour

However, with the decoupling of gold from USD, gold is no longer a facilitator of trade, but instead becomes a goods that falls or rises in value in comparison with USD. If the gold standard was returned macroeconomic stability would be enhanced (well, at least if the US closed its borders).

The traditional explanation of inflation is when the amount of money put into circulation exceeds the amount of new goods/services in circulation. With a gold standard, inflation is restricted, or almost not possible. The problem with cycles, depression and prosperity, stems largely from hoarding/releasing gold, issuing/contracting USD (through many means), which is hopelessly obfuscated in neo-liberal economics.