If one of us setup such a scheme we would be labelled criminal, for setting up a pyramid style scam, and rightly so!
Mathematically any ecenomic system that relies on ever increasing growth to survive is destined to fail, because we live in a finite world.
The growth of the fruits of all labours is infinite, it cannot ever be properly represented by anything else that is finite. (without infinitely further subdividing that) for all practical purposes the BTC subdivided at $10 and again at $100 and maybe will again at $1000
The world may seem finite, but we and our knowledge of it, our productivities, ingenuity and capabilities are not. We have all already clearly seen that our hatefully evil, repulsive, soullessly bestial powers to desolate and destroy surpass any naturally disastrous power ever encountered during the recorded existence of our world. Our loving, creatively attractive powers shall surely far exceed those sadly most valueless, pointless and foolishly passed war-communist milestones. Neither is their any law nor impenetrable barrier that restricts us from exploiting other celestial bodies with greater "finiteness" beyond that of our own.
This is 18th century Malthusian physiocratic claptrap. Back then the farmers would have also scoffed at the "silly notion" that an arsenal of "petards" could destroy the world. They dwelt in a monopolized-gold debt-enslaved prison of ever-diminishing returns.
In the old book of Genesis' economics lesson of Joseph, the 7yr famine and a foolish gold-commodity Labour Exchange "currency" results in the people selling themselves into slavery to Pharaoh as soon as their gold (for grain) runs out. The same thing happened all over again to moron Wilson's enviously, greedily and lustfully expanding USA in 1913. They sold themselves through their (treasury) ownership of their National Medium of Labour-Exchanging Currency to the Rothschild/Morgan tory-Trotskyite boardroom-socialist Gold Pharaoh's "Fed, central bankstering syndicate", effectively reversing the outcome of the Civil War (all debt-slaves now).
You simply cannot use another finite, limited (and likely monopolized already) commodity-resource (gold, silver or DaVinci paintings) to represent an infinite and limitless and ever growing commodity (the value of all human efforts and labors). What this foolishly-pegged to another commodity-value dual-use conundrum in a nation's people's Labor Exchange Currency inevitably causes is assured monetary slavery! Sooner or later by means foul or fair one economic "winner (or boardroom-socialist group of them) will inevitably come close to owning all of the available gold or silver or DaVincis etc and all of the means to produce any much more of it! Thereafter everyone in the economy must go to the "winners cap in hand to borrow either some token of "their gold" or a fiat token that they mint which is backed by some fraction of their wealths just to use a pay toilet!
Well regulated "inflation' is just a symptom of "growth". As productive national economic populations grow so must (and should) the quantities of their national economic labour exchanging currencies.
Finite Rarities are Mediums of Savings
Renewable, Produceable and Less-Finite commodities are Mediums of Investment
A nation's people's Labor Exchange Currency is it's unique-economic Medium of Labor Exchange.
Since the "globe" does not produce nor exchange with any other planet, there is no such thing as a "global economy". The "world" is just a marketplace. A transnational-corporate cult of boardroom socialist Pharaohs in the Cayman Islands is not "another globe". But, the trans-nation of Bitcoin may well be the first globally "All-Human Currency" ever devised.
The economic value of a nation's people's Labor Exchange Currency can only be what it alone is, a fractional representation token-derivative of the values of their EXPORTS into the global marketplace.
The moral to the Genesis and the Wealth of Nations economic lessons is simple. As citizens of a nation we are "enslaved" through the instrument of our nation's Labor Exchange Currency tokens to the well-regulated export trading policies of our governments who's solemn duty it is to accountably and responsibly manage the value of those tokens of it's citizens wealth. When a government abdicates it's responsibility and duty to defend its trade balances effectively through such corruptions as "free trade" it has abdicated the economic defence of it's citizenry and it's right to be their national government.
A finite resource-commodity foolishly adopted as a Medium of Labour Exchange "currency" by a national economy is a recipe for enslavement. The "finiteness" of Bitcoins has nothing to do with stopping "inflation", nor should it be confused with the Austrian Fascist (Tory Trotskyite) notion of gold enslaved economies. All the "shortage" of BTC does is fund a transaction recording network that happens to also mine new coins as a profitably commingled pastime. So far absolutely nothing "regulates" the inflation or deflation of the value of the money supply of the derivative market speculated BTC Derivative Tokens.
But, in honest fact, the "bitcoin derivative" itself is a so-called "pyramid scheme" as are all market traded stocks and commodity-derivatives. New fiat Federal Reserve Note "dollars" are also a once-gold-derivative, "derivatives" albeit that only an ennobled group of old boardroom socialist Gold-Pharaoh monopolists are still "trading" them to their political serfs for federal-socialist "bonds", that we all end up owing them tax-derivatives for.
That "fiat" Private Federal Reserve proprietary boardroom-socialist "dollar" in your pocket that we all use as our "Medium of Labor Exchange Currency" represents three things:
- TO THE GLOBAL MARKETPLACE; It is a national economic derivative token representing a fraction of the "currency" of the wealth of that nation's people's exports, both labours and products, as it, and they, are valued by global demands for it, and them. (a questionable It-Owes-Us note of theirs)
- TO YOU; It is a widely accepted derivative "It-Owes-You" token that represents the derived-value of what the previous holder of it got off of you for it. (a somewhat durable It-Owes-You note of yours)
- - AND EITHER:
- TO IT'S PRIVATE OWNER/ISSUER; It is the fractionally derived-token for part of a larger common debt owed to them, that your Tory-Trotskyite enslaved socialist-government is bond-indentured to them or to their bond clients for. (a fiat "Our-Slaves-Owe-Us" note of theirs)
- TO A CONSTITUTIONALLY RESPONSIBLE GOVERNMENT; It would (only theoretically, since almost none exist anymore) be a public treasury owned, issued and/or rented-out and profited from (greenback) derivative token representing a well-regulated fraction of the "current" wealth of that nation's people's exports, as it (and they) are valued by external demands for it (and them) from other economies in the Global Marketplace. (a well-regulated yet still fiat We-Owe-Us note of ours)
A Bitcoin is currently all of the first element, but only part of the second, and it is only hoped to be a part of the third..
Through the mechanisms of trading speculation on exchanges a Bitcoin is STILL a "fiat" currency since it can clearly still be inflated/devalued or deflated/overvalued and by the activity of trading exchanges, without any regard whatsoever to it's finite rarity. Trading it just like some common commodity/stock derivative and thus unhinging it's value irrationally just totally negates the rather silly "finiteness" anti-inflation argument.
see
https://bitcointalk.org/index.php?topic=175708.msg1832923#msg1832923 Re: stable bitcoin pricing...The "Bubbles with Bitcoins" nightmare
The Economic Nation of Bitcoin's Labour-Exchange Currency has already suffered at least three major inflationary devaluations, over alarmingly short periods of time! I cannot think of a nation's economic-export Medium of Labour-Exchange "currency" that has ever been so radically scary, unstable and undependable in randomly "fiat" minute to minute valuations.
Were the value of Bitcoins to GROW ONLY in value, (deflate) generally always progressively in small increments and seldom or never to inflate in any more but negligible manner than their promise as a cooperatively owned global profit-sharing common, public Medium of Labor Exchange Currency be realized (item 4), and savers would earn "interest-dividends" on their wallet savings in their own wallets, but this is risky or nearly impossible to guarantee under current market manipulative valuation conditions. In the matter of Reserve Banking nobody really banks Bitcoins but Exchanges. Some might even possibly be able to mount a small reserve-lending scheme. I tried out my wallet but kept worrying about a hard drive failure and a backup/ Time Machine restore nightmare, and simply couldn't see a way to have access to the same wallet on both of my computers (desk/lap/droid etc) unless i left them online at an exchange "bank".
A Bitcoin (unlike a nation’s people’s Medium of Labor Exchange “Exports-Currency”, has no “central authority” nor physical valuation (backing) such as even the “world marketplace’s good faith in the exports of Doofistan” (nor gold) to back it. When a customer shows up at a (say Canadian) Bitcoin Exchange with Doofistan Bitcoins in his wallet all his wallet contains is a pile of the “stock-derivatives” of the value that somebody else received for the assets he paid for them (a pile of derivatives).
This flaw raises an “MF Global” sort of an issue. The Canadian “MF Global Exchange” can’t phone up the Global (nor Doofistan) Bitcoin Reserve and ask them to send over some Loonies to compensate them for buying this guys Bitcoins, with Canadian Loot, can they?
So where does this Canadian Money come from? The exchange just has to wait until there are enough customers to buy them (at current valuation) to show the seller his money. The real problem comes from many traders trading-up into a balloon, and in what (or how well) the exchange chooses to segregate it's assets..
Say a trader trades dutifully and productively out-of and into a series of big run-ups and valleys in wildly fluctuating Wild-West Bitcoin speculation prices.
So say they came in last week with $1000, paid fees and consolidated gains in Bitcoin/Cash positions at various fluctuation points doubling their investment value to $2000. All of that value was paid for (locally) by somebody else. Now nearly half of that new value was probably eaten up in fees and maybe one lousy-timed trade ($400), so now they cash-out, after the crash, for $1600.
Where is that $600 going to come from? If the “exchange” kept most or all of their “floats” in cash, no problems, but if the exchange was also putting it (or putting it all) into Bitcoins (to lend them out)… different story!
