Okay, I read your link.  And if this guy is representative of the "Free Money theory of interest" then I'm calling that theory bunk.  I'm not even going to bother to break it down.  If you wish to try to defend that crap, feel free, but otherwise don't refer to this crank as the basis for any more of your ideas.  I'll just lose more respect for your mind than I just did.

Well, as I already said, I don't consider interest a flaw (if indeed a flaw) of gold because it's not a feature of gold at all, but a product of contracts.  Bitcoin is likewise.  Even Freicoin, for that matter.  All of these currencies are independent of the interest rates that individual users charge.  I can see now how you intend to suppress the general interest rate, but I don't agree that is an advantage worthy of a new fork.  You certainly cannot force the market interest rate to below 0%, otherwise the user base of freicoin will flee to any alternative, the relative value of Freicoin would crash, and your fork would fail.  So even a 4% demurrage is dangerously high.  I wouldn't invest in any cryptocurrency with more than 1% APR demurrage.  Probably 0.5% would be high enough for the other advantages of demurrage; i.e. rotting away the value of lost addresses as an example.


I'm aware of how ripple works.  It's a web-of-trust mutual credit system.  It's well done, for what it is.  But it's a credit network, not a currency.  It cannot work at all without a commonly established currency, whether that is US$, silver ounces or pounds of wheat berries.  Ripple doesn't have a metric, which is what currencies are at root.  Ripple only records, and consolodates, the trust that people will put in people that they know on behalf of other people that they know, and expresses that consolodated trust as credit available.

I'll try to read your link when I get a chance.

I see.  But if demurrage fees are unavoidable, then you are limiting how the system can encourage users to use the currency.  For example, this reduces the incentive to consolidate multiple transactions into a single transaction.  If the users have a grace peroid, say three months, that security is considered paid for by the transaction fees, then some will make an effort to avoind transactions growing older than three months so long as the cost of consolidating into a new transaction is cheaper than just taking the demurrage hit.  This encourages old transactions to update and also encourages miners into improving security buy participation.  If thedemurrage fee is a flat fee applied to each transaction in the blockchain, then users with many transactions are further encourages to freshen their holdings and reducing the blockchain load.  I really don't think that a ridgid percentage is really demurrage.  Demurrae is a cost of security in real currencies such as gold.  Literally the cost of renting a saftey deposit bos to hold the gold, which still costs the same no matter how much is eing kept.  Percentage fees aren't demurrage.
No, but not because of some theoretical 'basic interest' that you are trying to avoid.  Because of arbritrage.  I'm not likely to be lending in freicoin if I never bother to buy any, due to the losses that I can forsee.  Really, you can't see the problem with this plan?
That is a amaturish view on velocity. There is simply too many variables to make such a blanket statement.  I can't een say if this is true or false in general, but I'd guess that it's likely false.

There is an obvious third solution.

Educate yourself and/or your children to be able to compete in a rapidly advancing economy; or die off and make room on this planet for those who can.

It's called evolution, and it's one reason that ethnic Jews are the most intelligent race on average.  Because for hundreds of years, ethic Jews had neither a nation of their own, nor the basic right to own property in either Old Christiandom (Europe) or anywhere in the Middle East.  If you couldn't farm to feed your family, you and your children would have had to become the best businessmen around just to be able to feed your family as well.

Artifical support of those who cannot support themselves in the human race is counter evolutionary, and sooner or later nature is going to revert to the mean.  And it will be 'mean' in every sense.  When the USSR broke apart, leading directly into the collapse of the Russian economy, the life expecency of a Russian male was already much shorter than in the US and many "Western" democracies.  But it still dropped significantly in the next two years.

Building a road requires that the property be owned by whatever agency that intends to build it.  Eminent domain is only a legal process established by governments in order to short cut the difficulties of aquiring said property.  Again, many private roads and highways have been built in America in the past; even though most of them have been taken as public property, they were still built privately. 

There isn't much evidence either way, but I'd say that no one in either of these two photos actually work directly for CalTrans.  They are all almost certainly employees of private contractors.  And those machines are not likely to be either owned, nor leased, by CalTrans or any other goverment agency of the State of California.

So thank you for proving the point so well.

It's not a trivial detail.  The post that I was responding to questioned how public infrastructure, and particularly public roads, could exist in a libertarian government model.  A model that doesn't support the concept of taxpayer funded infrastructure, and the question "what about the roads?" is the one that every detractor always comes up with thinking that they can paint libs into an ideological corner.  I was just pointing out that the libertarian model abhores public funding of infrastructure, but that doesn't neccessarily lead to the conclusion that such infrastructure wouldn't exist.  Many privately highways have existed in the US in the past, and a few still exist in this modern world.  The question of funding isn't trivial either, but if it can be solved; and there is no reason to believe that it cannot under a libertarian form of governance, then the rest really is trivial because the vast majority of publicly funded infrastructure isn't publicly constructed at present.  That was my entire point, and it still is.  No matter how someone might wish to attack my perspectives, it's still true that most public projects are privately implemented.

It's more like this..

Me:  "Customers don't run grocery stores, they only pay for them."
Youe: "Uhhh, sure they do, the customer is always in charge!"

The government is the customer.  The private contractor is the grocery store, and the privately employed skilled laborer is the cashier.


Uh, yes.  Of course.  The funding is just funding.  The actual people who do the work really are the most important factor.


No, I'm not.  You're big with burning straw, but not particularly good at it.  Again, the government is the customer in this deal, operating as the representative of the taxpayers (hopefully).  It's like the customer decided that a road needed to be built, and hired ACME Engineering to design it, present it's project for approval, and then build it once funding was present.

Actually, it's not like that at all.  It's exactly that.
I what throwback city do you live in?  I haven't seen an actual public works vehicle in over a decade, and even that was just a passenger van moving laborers with sidewalk brooms.


It was another comparison.

I disagree already.


I consider a perishable trade currency a bug, not a feature; and ripple is a p2p credit system, it's only as abundant as users are credit worthy.


I don't understand your explaination here.  And I don't agree that 'basic interest' is not trivial, or even always a postive number.


But how?  I mean how is that actually enforced?  Is it taken as a fee once the funds are spent, or is there some other mechanism?  Can a miner chose to ignore it, like a miner can presently choose to favor a transaction dispite a higher fee offered by another, or is there some mechanism that requires the miner to enforce demurrage for all transactions?


Does this mean that miners cannot waive the demurrage fee?  A universal demurrage fee isn't useful for encouraging desired behaviors either.  In order for the desired effects to occur, there has to be an alternative to paying full costs.

I question this assertion.  At least, I question that it's effects on the market interest rate is not negligble.


I question this as well, velocity is effected by so many variables that I don't think you can claim that velocity is stablized in any great degree via demurrage.  Certainly not with a 10% APR demurrage that is inflexible and unavoidable.


How is this?  Do you just delete the transactions if they reach zero?  How?

But that is a contradiction.  In order for there to be investing and spending in relation to a currency, it must also be fairly good as a storage of value.  At least as good as the Euro or US $.  Otherwise, your spenders are never going to spend in Freicoin, because they never have an incentive to earn it.  Credit works in our debt laden economy because the credit is based upon the US $, which is still a decent store of value compared to a demurrage rate of 10% APR.

If you are referring to the concept of a private police force patroling a public or private network of roads as being unwieldy, I would agree.  I was pointing out that it's possible within the current social order without changes that would be dramatic to the casual observer.  I'm not suggesting it as a solution, only an example of how a lib society could actually solve the problem of "enforcement of the traffic laws" in a post-government civil society.  We can't even know how it would actually happen, and I don't even personally support the absolute 'anarchist' ideal anyway.  I think that governments exist because they serve a particular niche (justice, collective defense) very efficiently.  The problem that I have with governments is that they have a perverse incentive to expand the mission into ever more facets of private life.

You contradict yourself immediately...


Based upon the research, work and recommendations of private planning firms.  Governments don't have planning firms, btw.


Most people would consider that project management, would they not?


Some government agency finances and manages the maintaince contracts of completed roads.  Only very large cities such as Chicago and NYC do this kind of skilled labor without contracting out the work to private contractors, and even they do it sometimes.  It's literally impossible for smaller cities and independent towns to do it without contracting, because they can't maintain the expertise.  And states don't do it because of the distances involved and political issues with county governments that make such a thing a logistical nightmare.


EDIT:  A single paving machine can cost over $100K, and unlike a fire truck which sits still most of it's service life, a paving machine needs to be in nearly constant use in order for the costs of road maintaince to remain low.  This also means that the machine itself needs constant professional maintaince as well.  And this is just one type of specialized equipment required in road maintaince.  Can a city own one of these?  Sure, but it's not cost effective for a city to do so, because a single city's public works department is unlikey to be able to keep the machine in service.  At least not as well as a contracting company that owns twenty of them, employs 15 operators full time, and two mechanics.  The kinds of specialized equipment that cities tend to own fall into the catagory of 'physical insurance', such as salt trucks in cities that freeze and fire pumper boats in cities near trade waterways.  Many cities have enough trouble just keeping their police helicopters in flight ready condition.

That sometimes is the vast majority of the time.  I would say almost all of the time, but I have no doubt that there are a few exceptions.


And utility companies are private corporations, not mere extensions of government.  And like all companies, they have the right to sub-contract those maintaince duties to other, more specialized, contractors.  And they do, everywhere in America.

This is a field that I have worked within in the past, from several different perspectives.  I know how things actually get done.  You should try to consider your practical understanding of a topic before posting about issues for which you know not.

These are not trivial questions, but they are questions with real world solutions besides government.  In fact, I'd be willing to wager that the roads that you drive on were no built by government, are not maintained by a government, and could also be policed by a private contractor even though they are not presently, and you would likely never notice the differences.

Governments don't build roads in America.  They never have.  They fund roads and maintaince via taxation, but there are other ways to fund roads if need be.  The roads are built and maintained by construction contractors, and governments (at most) function as management.  In fact, none of your vital public infrastructure is provided for you by any direct actions of a government official, beyond the funding aspect.  Even in areas that the water or electic companys are publicly owned monopolies, the work of maintaince and expansion of the infrastructure network is done by employees of private industry.  Hell, even the police and military were somewhat private enterprises in the United States once upon a time.  The term 'constable' (where we get the term "cop" from, i.e. "constable on patrol") is an English word that literally refers to a privately hired policeman.  To this day, the county that I live in, and technically every county in the state, has two publicly elected positions for constables, who are not paid by any government agency for the office.  They are private security companies with state honored police powers.  One guy gets elected to the office, and hires off-duty cops to patrol banks and ride along with bounty hunters and serve private civil court summons, etc.  It's likely similar in your own city.  The enforcement of the traffic codes could likewise be performed by private companies.  For example, what if the funds from a traffic ticket went into the coffers of the constable's office after being proven in an independent traffic court?  Enforcement would be both better, and more just, then is presently so.

Why is that crazy?  That's exactly what commonly happened before the New Deal.  It was the role of the Church to guilt the rich into funding the missions that supported the poor.  It still happens, just not to the same degree.  The government has mostly muscled the charities out of the charity business.  And not just religious groups, either.  Before the New Deal, fraternal societies were enormously important social organizations; providing benefits to their local memberships that were hard to come by for middle class families by any other means until the 1950's.  Such as group health and life insurance coverage.  The American model of unionism is directly based off of the fraternal orders, and is the primary reason that unions don't function the same way in most other countries.  Those fraternal orders were, for the most part, forced to stop providing member benefits by the increasing regulations imposed by governments.  Many of those orders only existed for the purpose of collective social benefits, and thus simply faded out of existance.  Of course, many were racist by their nature, refusing to accept members who didn't look like them or pray like them; but every race and social group had their own order, so that didn't limit options much.

You guys worry too much, all of you.  A large number of core GNU/Linux developers worked at IBM.  That favored IBM, but it also favored Linux.  They didn't hide their affiliations, nor did they declare them to every Linux user.  This doesn't qualify as a conflict of interests.

I looked up Freicoin, and I'm not impressed.  How did you impliment demurrage into the codebase that manages the blockchain?  By what method do you actually impose the demurrage fees upon the addresses with a positive balance without also introducing security issues into the blockchain?  10% per year is way too high, 1% is probably too high.  And is that percentage applied to the individual balances, or only to the total monetary base?  If the former, how?  If the latter, what are the details of applying demurrage to transactions buried deep into the blockchain?  A demurrage system that is rigid is not likely to achieve the social goals, if the users can take no other actions for reducing their loss other than leave the currency in favor of another method of storage of value.  In this respect, a rigid demurrage fee system isn't much better than a rigid/predictable inflation target.

Logic is logic.  Logic involves proofs, but that doesn't make it math.  Praxeology involves logic and reason and math, but it's still a social science.  The core concept of praxeology, and thus all included disiplines, is the study of human actions.  Thus, there is no way to separate the social aspect of the science without significant flaws.


I can see how you might consider Bitcoin to be similar to fiat currencies, lacking any obvious non-monetary use value; but how could you rationally consider it fiat?  The very term requires the imposition of a government agency, since it literally means "by decree".


I'm sorry to tell you this, but this is wrong.  The business cycle's root cause is malinvestment.  The social aspect is that, during the boom, investors are as upbeat as everyone else and are more likely to investing borderline projects.  Artificially low interest rates, manipulated by central banks, make this pattern of malinvestment worse but are not themselves the cause.  The root cause of the boom is a form of collective sentiment, what Keynes called "animal spirits".  Keynes was not wrong about the role of the mood of the collective in the business cycle, he was wrong in his belief that it could be forced via monetary policy.  The malinvestment of the boom cycle is what then makes the correction inevitable, but there is always a trigger event that draws the attention of the collective towards the developing cracks in the system.  Once the first true crack is identified to the collective, it starts looking for more, and it finds them; and then the mood changes.  And this continues until the correction resolves the cracks, and the recovery begins.  After a time of no cracks, the sentiment slowly turns to a 'feeling' that there are no more cracks to worry about, and the boom starts again.  In the past, both a gold standard and the more local regionality of the credit & productive markets tended to limit the scope of the boom, and thus the severity of the bust.  The boom from 1992 to 2001 was the longest national (worldwide?) boom period in the history of the US, thus we can expect the most severe correction in the history of the US.  But only once those with the power to manipulate monetary and fiscal policies finally resign to allow the correction to occur, or simply fail to continue to prevent it.


Neither gold nor Bitcoin have interest by their design (or nature).  Interest exists only because two parties are willing to engage in contract.  Do you believe that there is some mechanism inherent to either Freicoin or Ripple that prohibits interest?  Ripple is a web-of-trust credit system, and not a currency at all, so there is certainly not any means to prevent interest contracts from forming in whatever currencies that Ripple users ultimately settle upon using.  I admit I'm not terriblely familiar with Freicoin, care to enlighten me?


You would have lost that bet in whole.  People invest in stupid things because of interest, or more precisely in the pursuit of improbable interest.  And I am aware that demurrage is not equal to inflation.  Inflation is rot, udderly unavoidable while value is stored in the currency.  Demurrage is a security or storage fee, which can usually be reduced under certain situations, which players will then tend to favor.  I've started an older thread on this subject, stating my concerns about the lack of an artificail equivialnt to demurrage in Bitcoin, but the thread died because there doesn't seem to be any way to do that in the blockchain security model without also breaking the cash-like features of Bitcoin.  It also might not matter, as I'm concerned but not actually convienced that demurrage is neccessary for a cryptocurrency.

Knowing nothing about the projects that you are referring to, the fact that no one is interested in investing in these projects suggests that their application is limited.  Nations shouldn't really be investing, anyway.  The US "invested" into the Apollo program in order to be the first to put a man on the Moon, but the goal there was a display of technical superiority, not profit or sustainability.  One of the greatest projects for public investment in the US would be a right-of-way, pipeline and pumping station on the Mississippi River to force water up, through or over the Rocky Mountains in order to supply freshwater to populations beyond such as Los Vegas.  Or simply a pipeline from San Diego to siphon seawater to refill the Death Valley Basin, which was an inland saltwater sea (like the Dead Sea) up until about 800 years ago that provided rainwater (via the natural water cycle) to the entire area up until the last of the water dried up and left the salt flats.  Those would be investments worth of a national effort, but they are never going to happen due to interstate political issues and environmental issues.  A power plant is something that the private capital markets handle best. 

I suppose that our disagreement is more of a matter of degree.  I don't contest that deflation can be a destructive force.  I do think that a monetary system that tends towards deflation (gold standard, Bitcoin) and is naturally moderated is preferable to one that tends towards inflation (fractional reserve fiat) and is actively moderated.  The reason that it's preferable is because the consequences of the business cycle are more muted in a deflationary monetary model.  Thus, deflation is not "good" so much as it's better than the alternative, generally speaking.


Although praxeology attempts to use reason and logic, it's still a social science.  There are no such things as 'undeniable truths' in any social science.  And the greatest folly of most self-described economists, both in history and modern, is the failure to recognize that economics is a social science.  Otherwise, mathmatical models really could be developed that consistantly predict economic events.  People have been trying to do this for decades in some form or another, but none are particularly good.  The best predictive model ever devised is the predictive market, such as Intrade, that leverages the collective wisdom of society itself in an organized fashion.  Even the best prophet among us isn't as good as all of us.


Again, I'm not making such a claim.  I'm been arguing that it's better than the alternative.


Again, I have to say that you are correct, but not completely so.  Economics is a complex topic, and any such simplification of causes such as you present are bound to leave out or gloss over non-trivial contributing factors.  But it doesn't matter what the root causes are, if one accepts that any market is 'unstable' and always seeking it's equalibrium.  Once you accept that, then it becomes obvious that the business cycle, as the agragate view of that unstablility, is inevitable.  If the cycle is inevitable, then the best overall solution is to use a monetary system that is self-regulating and generally less likely to reach extremes.  The only monetary systems that fit that description are commodity standards and Bitcoin.


In what way do you consider them flawed?

This is dead on correct.  By hindsight, we now know that the most important change in society that led to the equal rights of women was not the Women's Sufferage movement.  It was the invention of the automatic washing machine.

Those who are wealthy enough to afford a maid to clean their homes pay them because they favor their free time over their money.  The maid cleans the home because they favor the money over the free time.  It's a difference in wants and values.  The wealthy don't value money as much as the poor, because they have more than enough to satisfy their primal needs.  Thus they are willing to pay the poor woman to be their maid.  So who benefits most from the advancements in consumer technology?  The middle class and the poor.  Because of the inventions of washing machines, vacuums and automatic dishwashers; both middle class housewives and those nearly destitute maids of the rich are better off then their predecessors a few generations ago.  If a man is wealthy enough, he didn't have to labor to meet his own needs even back in Roman times, since he just had to hire more servants (or by more slaves).  The modern maid, however, directly benefits from the effectiveness of labor saving devices designed for the American middle class homemaker.  Because of a washing machine, the maid does not need to commit so much time or personal effort into the washing of clothes.  Because of the Roomba, she might be able to vacuum personally in one room while the robot vacuums in the next room; so that the maid only need to check the robot's work and finish up the details.  To sum it up, machines don't actually displace workers unless you are looking at a particular subset of work.  Before the machines, the maid did the work while her employer (or a manager) surveyed the results.  Now the maid has taken over much of the tasks of the manager, while the machines do much of the labor.  Thus she is more productive overall, and can earn more money (by doing the same work that would have required many more maids two generations ago, perhaps by freelancing and cleaning a different client's home each day of the week rather than laboring all day every day for one rich guy) while her employer benefits from lower labor costs as well.  This doesn't actually remove jobs, because although there is less need for professional maids, the rich man still has other unmet desires.  For example, since he doesn't have to pay two maids because one is enough, now he also hires a gardener (or a landscaping company, same principle) so that he doesn't have to worry about the yard work either.  Or a poolman.  Or he buys a home theater, which employs not just engineers to design the thing, but also those factory workers; who now rather than standing on an assembly line driving two screws into the product 1000 times each workday monitors three or four screw driving robots.  Now he is an 'operator', or a 'tech'.  So the employee makes more money, performing a less (physically) demanding task; while the consumer gets an improved product at a more affordable cost.

Literally everyone in society benefits from the improvements in productivity that automation provides, from the wealthiest industrialist down to the unemployed drunkard whose beer costs half as much because the brewing process is now controlled by a computer rather than a trained brewmaster.

You assume that the 'something' is a naturally occurring force in a market situation, but you can't offer any evidence to support that.  You can't, because it's not true, and it's provablely not true.  The 'something' that is driving disparity presently isn't a naturally free market mechanism, but the long predicted side effects of intervention into the free market.  It's just taken this long to accumulate to the current crisis.  I can actually support this premise, but I don't have the time and you wouldn't likely accept it anyway, so take the above however you wish.