Economists think they know it all

[linzello]

I'm fed up of reading articles like this...
http://pandodaily.com/2013/04/10/great-now-engineers-think-that-they-are-economists-too-2/

...where some haughty financial expert is poo-pooing the idea of bitcoins because they're not a real currency (and they were unlucky enough to miss the wave).  What the author of this article and so many others fail to realise is that bitcoins serve another important service other than facilitating trade.  The main point of bitcoins, in my opinion, is a place to store your money where governments and other people who may try to take your money, can't easily get to it.  It can't be taxed, it can't be easily devalued and it's pretty hard to steal (unlike a car or other physical asset).  For these reasons, it serves a purpose and thus will keep it's value. As for being doomed for defalation(rtfa), that can only be a good thing for investors wanting to put their money in a safe place.  And yes of course it will be worthless if people loose faith in it, but that could be said of gold or virtually anything else.  The difference is gold has been around a lot longer and people trust it.  However, I see bitcoins as being better - as I've already described, they have advantages that other investments do not, so ultimately I see them replacing gold.

[zRISC]

I prefer to trust first a gipsy-seer, then any astrologist's zodiacal metaphysical energetics explanation, than any economist forecast on buy/sell.

[reich]

I completly agree i also get pissed off reading articles like this

[Explodicle]

(I'm an engineer)

The author's job evidently revolves around appeals to authority, yet all of his power is ironically granted by laymen who vote for keynesian politicians. But now we have the power to call bullshit, to shout "the emperor has no clothes!" and opt out of his banking cartel scam. He'd have us listen to his horror stories about how deflation harms borrowing, which is why he must force us to borrow at gunpoint despite the recent dot-com and housing bubbles this excessive borrowing caused.

So I kinda find it offensive that he would say I think I'm an economist. No, I still think I'm an engineer - the quality of MY work is demonstrated by the willingness of my customers to buy it. I'm accountable for actual results. Now that he has to convince more than just the elites who profit off his bullshit, he will be held similarly accountable.

When WE fuck up and design a shitty machine, PLEASE, come and design a better one for us. We won't stall you for decades just to protect the theories we've built careers around.

[aymar_est]

Writer of the article refers to deflationary effect but years to come there. And i lol'ed on that:

No, we are safer with a currency that is managed by a government that can manipulate that currency.

[QuinnHarris]

The very problem of deflation he speaks to is only a problem if the deflation isn't predictable.  If a currency deflates at a few percent per year as I would expect bitcoin would if it had wide spread use, the interest rates charged would be adjusted accordingly just as they are with persistent inflation.

The deflationary spirals is largely the symptom of excessive debt creation and the deflation is caused by that debt not being paid (default) which basically reduces the money supply in a fractional reserve system.  When the federal reserve prints money to buy mortgage backed securities to prevent this deflation it does address the symptom, but it doesn't change the fact those debt instruments never properly reflected the underlying economic reality.  This causes a distortion in markets where the asset prices (morgage backed securities, US treasuring etc) appears to reflect greater future production than will actually be available.  Let alone the huge moral hazard caused by telling well colluded banks that if they make bad investments they won't have to suffer the losses.

We will see a lot more stuff like this.  But in the end real world results are what matter.  I hope if we push forward developing BitCoin and successive and related technologies in time the empirical reality will overwhelm this Keynesian non sense.  Keynesianism is better understood as an excuse for government spending and monetary manipulation for those that pay the salaries of those economists than a useful model to understand economic reality.