Peter Schiff on Bitcoin

[AnonyMint]

Actually, this (misconception) points out very clearly why Bitcoin/Gold are on the same side opposite modern day fiat.

Modern day fiat monetary systems are almost all 'debt based'.  The currency is actually created by someone going into debt and extinguished by someone going out of debt through one means or another.  The paradox is that if there were not debt, there would be no money.  This explains, among other things, why pretty much everyone and every corporate and government is in debt.

Money has always been debt based. The state mafia indebted the people from the very beginning with a tax (debt ex nihilo).
To pay this debt you had to produce more than a stateless, selfsufficient community, and that enforces the nationalized people (society) to borrow more and more.
The state mafia itself is also indebted from the very beginning. The henchmen get a promise by the state mafia to be paid with the money they have to collect.
Debt is always the base of the money, wheter it is backed by metal, grain or any other property, which is the case today. Private debt is backed by private property.

And that will never change. But there is a very important distinction.

When the base money (that the debt or fractional receipts are based on) can't be created by a power center, then the debt write-downs (defaults and bank runs) are more frequent and self-liquidating. This is what we had in the 1800s. When the free market is allowed to run, the downturns only last about 2 years, e.g. the 1919 depression that no one remembers. Whereas when government tries to stop the write-down, then it drags on for decades, e.g. 1929 to 1946. And 2007 - 2024.

With a central bank that can create base money out-of-thin-air (or authorize banks to do it by lowering reserve ratios), they can just prevent write-downs for decades until we reach for example now 550% total debt-to-GDP in the UK we are facing now. Then the implosions are horrific as what is coming to the world after 2016. Find the link to that debt data for all countries in the following post I wrote:

http://blog.mpettis.com/2013/10/hidden-debt-must-still-be-repayed/#comment-3179

So decentralized crypto-currencies have the potential to bring us back to a more sane system as what we had in the 1800s. But realize society doesn't like the frequent mini-depressions and recessions of the 1800s. Humans want everything safe and guaranteed without volatility and risk.

This is a falsehood.  

Ignore this guy. I read his posts upthread and he is suffering the goldbug delusion. I don't have time to correct all his wrong thinking.

[MoonShadow]

This is a falsehood.  

Ignore this guy. I read his posts upthread and he is suffering the goldbug delusion. I don't have time to correct all his wrong thinking.

Dude, you don't even know who you're talking about.  I'm no goldbug, for one.  It's a falsehood that is easily provable.  Money predates nation-states, it's only the advent of nation-states that has permitted debt based money.  Credit is something a bit different.  Gold & Silver (not a gold standard paper currency) are two monies that have no counterparty risk, there are others also.  When you pay with gold, real gold coins and not warehouse receipts, the debt is immediately settled.  Without counterparty risk, debt based currencies cannot exist.  With regard to modern fiat currencies, the counterparty is the government that issues the currency.  I.E., "The full faith and credit of the United States..." (or, in the case of Britian, the Crown)

[AnonyMint]

This is a falsehood.  

Ignore this guy. I read his posts upthread and he is suffering the goldbug delusion. I don't have time to correct all his wrong thinking.

All goldbugs, please educate yourself and here and here also.

I was once a goldbug, sigh.  

That doesn't mean I don't use gold and silver as an asset when they are undervalued.

[AnonyMint]

This is a falsehood.  

Ignore this guy. I read his posts upthread and he is suffering the goldbug delusion. I don't have time to correct all his wrong thinking.

All goldbugs, please educate yourself and here and here also.

I was once a goldbug, sigh.  

Here is a very relevant point against the selfishness of goldbugs and the coin supply design of Bitcoin:

https://bitcointalk.org/index.php?topic=323988.msg3582346#msg3582346

98% of humanity won't have any bitcoins when it enters a bubble and this is a problem, since these are already the laggards, and by buying at the bubble, they make their situation worse, not better. Any thoughts?

The only potential solution I see is an altcoin which distributes coins continuously to CPU-only miners (while not diluting capitalists too rapidly since the coin is appreciating orders-of-magnitude faster than the small coin rewards). This will also raise the transaction rate (velocity of money), because the bottom 97% have a wealth distribution based on using money as cash, not as a store-of-value:

http://physics.umd.edu/~yakovenk/papers/PhysicaA-299-213-2001.pdf

The above is referring to Bitcoin's Dystopian Future.

[AnonyMint]

This is a falsehood.  

Ignore this guy. I read his posts upthread and he is suffering the goldbug delusion. I don't have time to correct all his wrong thinking.

Dude, you don't even know who you're talking about.  I'm no goldbug, for one.  It's a falsehood that is easily provable.  Money predates nation-states, it's only the advent of nation-states that has permitted debt based money.  Credit is something a bit different.  Gold & Silver (not a gold standard paper currency) are two monies that have no counterparty risk, there are others also.  When you pay with gold, real gold coins and not warehouse receipts, the debt is immediately settled.  Without counterparty risk, debt based currencies cannot exist.  With regard to modern fiat currencies, the counterparty is the government that issues the currency.  I.E., "The full faith and credit of the United States..." (or, in the case of Britian, the Crown)

Credit has existed since the time of Mesopotamia. Martin Armstrong has images of clay tablet credit contracts on his blog to prove it.

[MoonShadow]

This is a falsehood.  

Ignore this guy. I read his posts upthread and he is suffering the goldbug delusion. I don't have time to correct all his wrong thinking.

Dude, you don't even know who you're talking about.  I'm no goldbug, for one.  It's a falsehood that is easily provable.  Money predates nation-states, it's only the advent of nation-states that has permitted debt based money.  Credit is something a bit different.  Gold & Silver (not a gold standard paper currency) are two monies that have no counterparty risk, there are others also.  When you pay with gold, real gold coins and not warehouse receipts, the debt is immediately settled.  Without counterparty risk, debt based currencies cannot exist.  With regard to modern fiat currencies, the counterparty is the government that issues the currency.  I.E., "The full faith and credit of the United States..." (or, in the case of Britian, the Crown)

Credit has existed since the time of Mesopotamia. Martin Armstrong has images of clay tablet credit contracts on his blog to prove it.

Credit, yes.  Debt based currencies, no.  The difference is not trivial.

[AnonyMint]

This is a falsehood.  

Ignore this guy. I read his posts upthread and he is suffering the goldbug delusion. I don't have time to correct all his wrong thinking.

Dude, you don't even know who you're talking about.  I'm no goldbug, for one.  It's a falsehood that is easily provable.  Money predates nation-states, it's only the advent of nation-states that has permitted debt based money.  Credit is something a bit different.  Gold & Silver (not a gold standard paper currency) are two monies that have no counterparty risk, there are others also.  When you pay with gold, real gold coins and not warehouse receipts, the debt is immediately settled.  Without counterparty risk, debt based currencies cannot exist.  With regard to modern fiat currencies, the counterparty is the government that issues the currency.  I.E., "The full faith and credit of the United States..." (or, in the case of Britian, the Crown)

Credit has existed since the time of Mesopotamia. Martin Armstrong has images of clay tablet credit contracts on his blog to prove it.

Credit, yes.  Debt based currencies, no.  The difference is not trivial.

In those cases, either the base money was a fractional receipt or it was a fractional purity.

Never has there been a non-fractional, hard assets currency. Never. Not even in the Byzantine Empire as some think.

Because humans require debt.

Try outlawing debt, you will enter another 600 year Dark Age and feudalism

[MoonShadow]

Credit has existed since the time of Mesopotamia. Martin Armstrong has images of clay tablet credit contracts on his blog to prove it.

Credit, yes.  Debt based currencies, no.  The difference is not trivial.

Either the base money was a fractional receipt or it was a fractional purity.

Never has there been a non-fractional, hard assets currency. Never. Not even in the Byzantine Empire as some think.

Yes, there has been.  Regression theory requires it, and takes it as a given.  Evidence of same isn't even a requirement.  Or are you contesting the regression theory?

Because humans require debt.

Prove it.

Try outlawing debt, you will enter another 600 year Dark Age and feudalism

Maybe, but irrelevent.  Commerce often requires debt, even if momentary in nature.  That does not imply that commecre requires a debt based currency.  Think about what it is that you are really advocating here.  If you owe fiat to anyone, you owe a debt; but when you pay for it in fiat, you're paying for it by transfering debt to another party.  You are never actually settling the debt.  Yes, modern fiat currencies work this way, and they will continue to work so long as the public continues to trust that the issuing government will continue to exist & continue to honor it's own debts.  (which is one reason that an outright & open default on foregn debts is never acceptable to an idebted nation)  This does not conclude that all mediums of exchange are, themselves, a debt of another party.  Physical gold rounds, silver bullion, trade barter in canned goods and bullets, etc. is not the exchange of a debt unless you're the creditor.  All that is required for you to see the difference between a two party consumer debt and that of a debt based currency system is to reason it out a bit.

[AnonyMint]

Debt and debasement (in various forms of regimes ranging from debt-issued fiat as we have now to fractional reserves of gold in the 1800s to fractional purity of coins in Rome) have always been required and will always be required, because otherwise dumbass wanna-be elite capitalists (e.g. gold fever "goldbugs" greed) go create a ButtCon that puts 98% of the coins (of the world's wealth if ButtCon becomes ubiquitous which thus it won't) in 2% of the hands.

And the 2% doesn't spend, they invest to gain more coins.

So the 98% has no choice but to accept debt to survive.

Then the base money is debased to accommodate the required money supply expansion to accommodate the interest on the debt.

Note due to the Quantity Theory of Money, M x V = P x Q ≈ GDP, increases in monetary velocity substitute for money supply increases until the downturn and drop in velocity by -50% as we have since 2007.

Debt is required because there is a tension between the incentives of capitalists and the masses. Neither is wrong, this tension exists as the way nature works. The masses gain their limited wealth via using the currency for spending. The capitalists gain their outsized wealth by saving and investing. See the research paper I linked upthread.

This is why you must have debt and regular debasement to keep this ying and yang tension in balance. Nature is composed of relativity waves, not linear nor constant nor absolute frame of reference. You need to understand the nature of the universe, what it is fundamentally composed of.

http://unheresy.com/The%20Universe.html (my blog)

The key improvement we can hope for is to prevent a power center from manipulating the base money supply curve. And thus have more frequent write-downs of debt, to avoid those horrific implosions like the one coming for us after 2016.

The decentralized nature of Bitcoin is excellent. The chosen coin supply curve is idiotic and cruel, because it stops expanding and thus is static with a small percent of the world accumulating all wealth. It will not work out well, if we have only Bitcoin. Thus there is no way Bitcoin will be the only one. There are several scenarios that are possible:

1. Altcoins emerge and rectify the problem
2. Bitcoin reaches the dystopian outcome alone, thus society goes to war against Bitcoin.
3. Bitcoin never captures any where near all the world's wealth.

And some of the permutations of partial outcomes of the above.

[MoonShadow]

Debt and debasement (in various forms of regimes ranging from debt-issued fiat as we have now to fractional reserves of gold in the 1800s to fractional purity of coins in Rome) have always been required and will always be required, because otherwise dumbass wanna-be elite capitalists (e.g. gold fever "goldbugs" greed) go create a ButtCon that puts 98% of the coins (of the world's wealth if ButtCon becomes ubiquitous which thus it won't) in 2% of the hands.

And the 2% doesn't spend, they invest to gain more coins.

So the 98% has no choice but to accept debt to survive.

Then the base money is debased to accommodate the required money supply expansion to accommodate the interest on the debt.

Note due to the Quantity Theory of Money, M x V = P x Q ≈ GDP, increases in monetary velocity substitute for money supply increases until the downturn and drop in velocity by -50% as we have since 2007.

Debt is required because there is a tension between the incentives of capitalists and the masses. Neither is wrong, this tension exists as the way nature works. See the research paper I linked upthread.

This is not an argument.  Whatever you think, or feel, is correct is not an argument.  It's bullshit.  This sounds like the distorted (and wrong) economic education that marxists try to tell me about whenever I'm forced by circumstances to interact with them.

BTW, you really have misunderstood the meaning behind the Quantity Theory.  Changes in velocity do not support your position that debasement is an economic requirement, it contradicts it.  The very notable fact that velocity of money is able to change in response to the demand for money implies that hard currencies are more flexible in practice than is often touted by academtic economists.  You metioned that you live in England, perhaps you do or have attended Cambridge?  Or, perhaps, like to echo the bullshit of someone who has for strangers on the Internet?

[AnonyMint]

Debt and debasement (in various forms of regimes ranging from debt-issued fiat as we have now to fractional reserves of gold in the 1800s to fractional purity of coins in Rome) have always been required and will always be required, because otherwise dumbass wanna-be elite capitalists (e.g. gold fever "goldbugs" greed) go create a ButtCon that puts 98% of the coins (of the world's wealth if ButtCon becomes ubiquitous which thus it won't) in 2% of the hands.

And the 2% doesn't spend, they invest to gain more coins.

So the 98% has no choice but to accept debt to survive.

Then the base money is debased to accommodate the required money supply expansion to accommodate the interest on the debt.

Note due to the Quantity Theory of Money, M x V = P x Q ≈ GDP, increases in monetary velocity substitute for money supply increases until the downturn and drop in velocity by -50% as we have since 2007.

Debt is required because there is a tension between the incentives of capitalists and the masses. Neither is wrong, this tension exists as the way nature works. See the research paper I linked upthread.

This is not an argument.  Whatever you think, or feel, is correct is not an argument.  It's bullshit.  This sounds like the distorted (and wrong) economic education that marxists try to tell me about whenever I'm forced by circumstances to interact with them.

Your inability to comprehend is not a rebuttal.

BTW, you really have misunderstood the meaning behind the Quantity Theory.  Changes in velocity do not support your position that debasement is an economic requirement, it contradicts it.

That demonstrates you did not comprehend what I wrote. I wrote that velocity can increase as a substitute for debasement. But remember velocity eventually has to decline when the economy does. So it does not absolve the necessity of debasement.

You metioned that you live in England, perhaps you do or have attended Cambridge?  Or, perhaps, like to echo the bullshit of someone who has for strangers on the Internet?

I never wrote I live in England and I don't. I live in a backwater, third world country. You apparently have low comprehension skills. I did write the UK has a total debt-to-GDP ratio of 550%. And many other countries have near that level too.

Dude I used to be a goldbug and believed that shit. At one time I owned 18,000oz of silver. I even minted 15,000 rounds of 1oz silver coins from 1000oz bars. Don't you want to learn from what I figured out over the years?

[MoonShadow]

Debt and debasement (in various forms of regimes ranging from debt-issued fiat as we have now to fractional reserves of gold in the 1800s to fractional purity of coins in Rome) have always been required and will always be required, because otherwise dumbass wanna-be elite capitalists (e.g. gold fever "goldbugs" greed) go create a ButtCon that puts 98% of the coins (of the world's wealth if ButtCon becomes ubiquitous which thus it won't) in 2% of the hands.

And the 2% doesn't spend, they invest to gain more coins.

So the 98% has no choice but to accept debt to survive.

Then the base money is debased to accommodate the required money supply expansion to accommodate the interest on the debt.

Note due to the Quantity Theory of Money, M x V = P x Q ≈ GDP, increases in monetary velocity substitute for money supply increases until the downturn and drop in velocity by -50% as we have since 2007.

Debt is required because there is a tension between the incentives of capitalists and the masses. Neither is wrong, this tension exists as the way nature works. See the research paper I linked upthread.

This is not an argument.  Whatever you think, or feel, is correct is not an argument.  It's bullshit.  This sounds like the distorted (and wrong) economic education that marxists try to tell me about whenever I'm forced by circumstances to interact with them.

Your inability to comprehend is not a rebuttal.

I wasn't trying to rebut a non-argument.  You may continue to live your life believing that anyone who disagrees with your bullshit doesn't comprehend.  You have my permission.  However, you are far from the smartst person in this room.  I'm one of the nicer lot here, and eventually you're going to hit one of the not-nice and have your virtual arse handed to you in public.  I don't have the time or inclination, and suspect that you'd just bail if I should try, but I will enjoy that day.

BTW, you really have misunderstood the meaning behind the Quantity Theory.  Changes in velocity do not support your position that debasement is an economic requirement, it contradicts it.

That demonstrates you did not comprehend what I wrote. I wrote that velocity can increase as a substitute for debasement. But remember velocity eventually has to decline when the economy does. So it does not absolve the necessity of debasement.

By your own logic, it doesn't need to resolve anything.  Like all thinkgs, demand for money comes in waves, and recedes the same way.  We call it the business cycle.  Debasement is not required, although it is often beneficial for certain parties.

You metioned that you live in England, perhaps you do or have attended Cambridge?  Or, perhaps, like to echo the bullshit of someone who has for strangers on the Internet?

I never mentioned I lived in England. You have low comprehension skills. I did write the UK has a total debt-to-GDP ratio of 550%. And many other countries have near that level too.

And I quote...

"With a central bank that can create base money out-of-thin-air (or authorize banks to do it by lowering reserve ratios), they can just prevent write-downs for decades until we reach for example now 550% total debt-to-GDP in the UK we are facing now"

Considering that I live in teh US, I'm not "facing" anything that happens in the UK.  By including yourself (by way of the "we" above) in that group, you betray that either you identify with Britons, or you have a poor understanding of English grammer rules with regard to context.  I don't believe that I'm the one with poor comprehension skills, but at least one of us has poor communication skills.  I'm dyslexic, so that's my excuse.

[AnonyMint]

BTW, you really have misunderstood the meaning behind the Quantity Theory.  Changes in velocity do not support your position that debasement is an economic requirement, it contradicts it.

That demonstrates you did not comprehend what I wrote. I wrote that velocity can increase as a substitute for debasement. But remember velocity eventually has to decline when the economy does. So it does not absolve the necessity of debasement.

By your own logic, it doesn't need to resolve anything.  Like all thinkgs, demand for money comes in waves, and recedes the same way.  We call it the business cycle.  Debasement is not required, although it is often beneficial for certain parties.

You apparently did not read the links I provided. I told you I don't have time to repeat all the past discussion I had already at those links.

Those links PROVE why debt requires debasement. Essentially it is because if 97% use debt, then the money supply (or temporarily the velocity but then it must decline eventually which then requires the central bank to step in and debase) has to increase by the prevalent rate of interest. That is mathematically unarguable. The lenders are protected against default by the central banks, which was my point after all, of what we can actually improve upon.

Indeed removing the ability to print the base money out-of-thin air, could attempt to force all defaults on lenders. But if you go for that with strict 0% debasement, you will find that society hates you and will spite you because the debt will never expand enough and defaults will be so frequent as to keep the economy in a Dark Age. There has to be some acceptance and forgiveness and flexibility, otherwise with a static money supply the most successful capitalists just can accumulate larger and larger percentage of the money supply until they own it all. And this will just drive the capitalists to buy off the government to force a fiat. You've got to have your base money at least somewhat close to the trendline debasement rate need for the waves to revolve around, otherwise you end up with war.

In proof-of-work, without debasement, you end up with a transactions withholding attack and cartelization of the mining, thus you lose the decentralization and back at fiat again.

Hard money people see the world as flat and absolute. They are not realistic.

You metioned that you live in England, perhaps you do or have attended Cambridge?  Or, perhaps, like to echo the bullshit of someone who has for strangers on the Internet?

I never mentioned I lived in England. You have low comprehension skills. I did write the UK has a total debt-to-GDP ratio of 550%. And many other countries have near that level too.

And I quote...

"With a central bank that can create base money out-of-thin-air (or authorize banks to do it by lowering reserve ratios), they can just prevent write-downs for decades until we reach for example now 550% total debt-to-GDP in the UK we are facing now"

Considering that I live in teh US, I'm not "facing" anything that happens in the UK.

And again you did not read the link I provided which (contains a link which) shows all the countries in the world have a similar level of debt. Thus we are all facing the same outcome. I mentioned that. I guess you also didn't read the "for example" above.

Sorry I don't have time to reorganize a whitepaper every time I get into a debate with another hard money fanatic.

[MoonShadow]

BTW, you really have misunderstood the meaning behind the Quantity Theory.  Changes in velocity do not support your position that debasement is an economic requirement, it contradicts it.

That demonstrates you did not comprehend what I wrote. I wrote that velocity can increase as a substitute for debasement. But remember velocity eventually has to decline when the economy does. So it does not absolve the necessity of debasement.

By your own logic, it doesn't need to resolve anything.  Like all thinkgs, demand for money comes in waves, and recedes the same way.  We call it the business cycle.  Debasement is not required, although it is often beneficial for certain parties.

You apparently did not read the links I provided. I told you I don't have time to repeat all the past discussion I had already at those links.

I care not at all about your past bullshit.

Those links PROVE why debt requires debasement.

Bullshit.  You can't prove anything.  If you had any education in the dismal field, you would know this much.

Essentially it is because if 97% use debt, then the money supply (or the velocity) has to increase by the prevalent rate of interest. That is mathematically unarguable. The lenders are protected against default by the central banks, which was my point after all, of what we can actually improve upon.

I agree that the above highlighted part is mathmaticly correct.  However, your unstated premise is that the average inflation rate is the only variable force on the demand for money.  This is not supportable, and is easily disproven.  For example, bankruptcy is a countervailing force.  Anohter unstated premise youseem to have is that, because this effect is evident under the current fiat currency systems (i.e. central bankng, farctional reserve) that it must always have been this way or cannot be any other way under a different monetary system.  While it's possible that that second statement is still true, it's still unsupportable.  Just because it's true in every case that you (or I) could be aware of does not condlucde that it must be true under any system.

You would have already failed my class.

You metioned that you live in England, perhaps you do or have attended Cambridge?  Or, perhaps, like to echo the bullshit of someone who has for strangers on the Internet?

I never mentioned I lived in England. You have low comprehension skills. I did write the UK has a total debt-to-GDP ratio of 550%. And many other countries have near that level too.

And I quote...

"With a central bank that can create base money out-of-thin-air (or authorize banks to do it by lowering reserve ratios), they can just prevent write-downs for decades until we reach for example now 550% total debt-to-GDP in the UK we are facing now"

Considering that I live in teh US, I'm not "facing" anything that happens in the UK.

And again you did not read the link I provided which (contains a link which) shows all the countries in the world have a similar level of debt. Thus we are all facing the same outcome.

Again, no we are not.  It's actually impossible for all nations to face the same outcome even if allnations have similar issues (which they don't).  Once the first major nation defaults, the situation on the international stage has changed, and the next must fail in another manner.  The cascade probably makes it worse for the late nations, so the best time to default is early.  Iceland has proven this already, as they don't really have any lingering effects of telling Euopean banks to poiund sand.

I notice, also, that you really never did say why you identify with Britons in particular.  From whom do you draw your economic education & understanding?

Sorry I don't have time to reorganize a whitepaper every time I get into a debate with another hard money fanatic.

Again, I'm not a hard money fanatic.  I would assume that a fanatic would actually own some, at least a little.  I don't own any.  However, I do understand the difference between a debt owed betweeen contracting parties and a debt based currency.

[AnonyMint]

Realize that the money supply is always accumulating to the capitalists.

Thus our big opportunity with crypto-currencies was to get the wealth distributed back out to the people with a decentralized control over the coin supply. But not in a socialist method of distribution of course, as that would be counter-productive.

Bitcoin fucked up both aspects of the design.

1. It puts roughly 98% of the coins in 2% of the hands.

2. It ends debasement, so the mining and thus the control over the coin supply ends up in a cartel.

[MoonShadow]

Realize that the money supply is always accumulating to the capitalists.

Thus our big opportunity with crypto-currencies was to get the wealth distributed back out to the people with a decentralized control over the coin supply. But not in a socialist method of distribution of course, as that would be counter-productive.

More neo-marxist, monetarist bullshit.  Just because you can imagine it, does not make it so.  It's actually impossible for the money supply to always accumulate to any group.  Eventually the distribution must drop below a functional level for a medium of exchange, at which point a free market chooses something else less scarce to be the new medium of exchange.  This crap has Cambridge written all over it, it's somewhat suprising that the UK is still a first world nation. 

Bitcoin fucked up both aspects of the design.

1. It puts 98% of the coins in 2% of the hands.

Citations?  Fail.

2. It ends debasement, so the mining and thus the control over the coin supply ends up in a cartel.

Show your work, child.  How do you arrive at this conclusion?  Make sure that you explain how such a cartel could maintain loyalty among it's ranks when mining services are distributable with relatively low cost of market entry.

[AnonyMint]

I care not at all about your past bullshit.

If you won't read cited references, we can't have a meaningful discussion. I am not going to repeat everything for you. You are not worth it to me.

Those links PROVE why debt requires debasement.

Bullshit.  You can't prove anything.

Sigh. You have not refuted.

Essentially it is because if 97% use debt, then the money supply (or the velocity) has to increase by the prevalent rate of interest. That is mathematically unarguable. The lenders are protected against default by the central banks, which was my point after all, of what we can actually improve upon.

I agree that the above highlighted part is mathmaticly correct.  However, your unstated premise is that the average inflation rate is the only variable force on the demand for money.

That is not my premise and not even a possible unstated mathematical relationship to my premise.

Feel free to attempt to write down an equation. I will be waiting.

For example, bankruptcy is a countervailing force.

Do you always fail to read? I wrote that central banks prevent defaults, which is the main improvement we can make with a decentralized currency.

Anohter unstated premise youseem to have is that, because this effect is evident under the current fiat currency systems (i.e. central bankng, farctional reserve) that it must always have been this way or cannot be any other way under a different monetary system.  While it's possible that that second statement is still true, it's still unsupportable.  Just because it's true in every case that you (or I) could be aware of does not condlucde that it must be true under any system.

I attempted to distill the information content of that and ended up with the empty set.

You would have already failed my class.

hahaha. I wouldn't waste my time if you were the "teacher".

You metioned that you live in England, perhaps you do or have attended Cambridge?  Or, perhaps, like to echo the bullshit of someone who has for strangers on the Internet?

I never mentioned I lived in England. You have low comprehension skills. I did write the UK has a total debt-to-GDP ratio of 550%. And many other countries have near that level too.

And I quote...

"With a central bank that can create base money out-of-thin-air (or authorize banks to do it by lowering reserve ratios), they can just prevent write-downs for decades until we reach for example now 550% total debt-to-GDP in the UK we are facing now"

Considering that I live in teh US, I'm not "facing" anything that happens in the UK.

And again you did not read the link I provided which (contains a link which) shows all the countries in the world have a similar level of debt. Thus we are all facing the same outcome.

Again, no we are not.  It's actually impossible for all nations to face the same outcome even if allnations have similar issues (which they don't).  Once the first major nation defaults, the situation on the international stage has changed, and the next must fail in another manner.  The cascade probably makes it worse for the late nations, so the best time to default is early.  Iceland has proven this already, as they don't really have any lingering effects of telling Euopean banks to poiund sand.

It is always best to default sooner (but not every week! see point below), as you stop the further misallocation of capital.

All nations are in the same boat in terms of contagion effects, because global trade will implode and all nations are reliant on it. The USA is the least reliant, and has even become energy independent recently.

But the USA is facing the worst regime in terms of tracking down all wealth with the NSA and confiscating anything that tries to move abroad, e.g. with the FATCA. Europeans currently are not taxed when they are abroad nor on capital gains whereas the Americans are (I am a US citizen too), thus if that remains, they can go take advantage of all the opportunities the coming global implosion will create, but Americans will be locked inside.

I do understand the difference between a debt owed betweeen contracting parties and a debt based currency.

I was not referring to the political differences in monetary systems. Loaning the base fiat from the Fed to the Treasury, and the creation of money as debt by the banks due to fractional reserves is basically a political issue of how the power center is structured.

I was talking about the fractional nature of ALL money systems, whether which form they take (in various forms of regimes ranging from debt-issued fiat as we have now to fractional reserves of gold in the 1800s to fractional purity of coins in Rome).

I am getting more fundamental to the root of the nature of money, which is that it has to be compatible with debt regardless of which political form it takes.

If we set the debasement of money at 0%, then it means the capitalists can accumulate the total money supply faster. There has to be a   balance between the 2% and 98%.

And the benefit we can get with a decentralized currency is that the control over the debasement can't be centralized and manipulated. But if we set the debasement to 0%, then the mining isn't funded (tx fees don't work due to transaction withholding attack), thus the decentralized benefit is lost.

You are thinking it doesn't matter if the money is debased, because the credit contracts can fall where they may in terms of success or bankruptcy. But you forget that people demand insurance. And then they demand the government to backstop the insurance.

A 0% debasement means the money velocity has to be exponential in order to keep up with the issuance of debt and thus demand for money, thus the debt expansions and collapses are too frequent, perhaps on the order of a couple of years or months or even weeks.

So then the public will of course demand to debase that money by demanding the government backstop and stop those too frequent corrections.

So for 3 reasons above, the debasement needs to be higher.

Since the 1800s, the data is that the debasment has averaged 5%. And the incomes have risen 5%. The 98% did not lose from debasment.

They lose from the power centers taking control of the government.

So the debasement rate has to be designed with the 3 factors I mentioned above in mind.

See sir, I am just thinking at a much higher and deeper level than you are.  

[AnonyMint]

It's actually impossible for the money supply to always accumulate to any group.  Eventually the distribution must drop below a functional level for a medium of exchange, at which point a free market chooses something else less scarce to be the new medium of exchange.

Indeed that is my point. If you don't design Bitcoin to be distributive in supply and thus a medium-of-exchange, it will fail.

Bitcoin fucked up both aspects of the design.

1. It puts 98% of the coins in 2% of the hands.

Citations?  Fail.

2. It ends debasement, so the mining and thus the control over the coin supply ends up in a cartel.

Show your work, child.  How do you arrive at this conclusion?  Make sure that you explain how such a cartel could maintain loyalty among it's ranks when mining services are distributable with relatively low cost of market entry.

I have cited both and explained them both ad nauseum in the past few days. Just click my name and read the past few pages of my posts.

I don't have any time nor desire to repeat it ALL again for you. If you are not interested to know the truth, then go on your blissful ignorance way.

This ends here.

[MoonShadow]

It's actually impossible for the money supply to always accumulate to any group.  Eventually the distribution must drop below a functional level for a medium of exchange, at which point a free market chooses something else less scarce to be the new medium of exchange.

Indeed that is my point. If you don't design Bitcoin to be distributive in supply and thus a medium-of-exchange, it will fail.

I take it that you really don't know how bitcoin actually works, do you?

This ends here.

I'm surprised this lasted this long.

[AnonyMint]

It's actually impossible for the money supply to always accumulate to any group.  Eventually the distribution must drop below a functional level for a medium of exchange, at which point a free market chooses something else less scarce to be the new medium of exchange.

Indeed that is my point. If you don't design Bitcoin to be distributive in supply and thus a medium-of-exchange, it will fail.

I take it that you really don't know how bitcoin actually works, do you?

Haha. You don't know who I am. Very funny. That is like telling the President he has never run the country. Wait I will get an embarrassing link for you.

I will grant you this. Money is not always a debt, but that is just semantic weasel words, because it is always compatible with debt. Hard money that presumes that money and debt are orthogonal (as you claim) has never been a reality. I've presented the logic upthread. You have not refuted it.