Re: Bye bye bitcoin (Split: Morality of Bitcoin vs. Fiat Discussion)

[DeathAndTaxes]

Sure they do! Holding a Dollar note does NOT give me a claim to any of that however

you can say that for bitcoin too.

Of course but
a) nobody profits from the inflation in Bitcoin
b) the inflation is outside the control of any party which could game it to their advantage
c) nobody is forced to used Bitcoin.  If someone doesn't see a value proposistion they can simply choose not to participate

None of those are true with national fiat currencies.

[derpinheimer]

Bitcoin will fade away eventually. It will take awhile but its inevitable.

Correct, but only with something to replace it. And then its goes to <$10 adjusted for inflation.

[murraypaul]

You are not forced to accept fiat currency for goods and services you provide, only for settlement of debts.
And you are not forced to use fiat currency to buy goods and services from others.

I wouldn't be so sure. Liberty dollar's history shows that US government doesn't like competition.

In May 2009, von NotHaus and others were charged with federal crimes in connection with the Liberty Dollar and, on July 31, 2009, von NotHaus announced that he had closed the Liberty Dollar operation, pending resolution of the criminal charges. On March 18, 2011, von NotHaus was pronounced guilty of "making, possessing, and selling his own currency".

http://en.wikipedia.org/wiki/Liberty_Dollar

I'm sure this has come up before, and the conclusion was that you cannot create your own coins.
You can create your own notes, as long as there is no intent/risk of confusion with 'real' money.

[westkybitcoins]

If Bob approaches Alice and *forces* her to accept his IOUs in exchange for her goods and services, and to use them in her dealings with others

You are not forced to accept fiat currency for goods and services you provide, only for settlement of debts.
And you are not forced to use fiat currency to buy goods and services from others.

What do governments pay their soldiers, contractors and employees in? What do they pay tax returns, SS and other non-employee obligations in?

When purchase orders for tanks and ammunition (or staples and printer ink) are issued, what will be spent?

(The reference to her 'dealings with others' is a reference to the 'settlement of debts' portion.)

But it also resulted in the loss of quite a significant portion of your wealth through inflation over just the last few decades.

Actually, like very many people, inflation has increased my overall worth, as I had more mortgage debt that savings, and that debt was also inflated away.

Hmm.

"like very many people"

Considering that inflation is a shell game, transferring wealth rather than inherently creating or destroying it, do you think that the majority benefits from inflation? Do you even feel that a large minority benefits?

If not, again presuming your inflationary gains via mortgage debt were enough to more than offset your inflation losses elsewhere, aren't you kind of admitting that you're simply one of the lucky ones who benefited? After all, it's not as if its possible for everyone to benefit from inflation if they all just take the same actions you did.

[murraypaul]

If Bob approaches Alice and *forces* her to accept his IOUs in exchange for her goods and services, and to use them in her dealings with others

You are not forced to accept fiat currency for goods and services you provide, only for settlement of debts.
And you are not forced to use fiat currency to buy goods and services from others.

What do governments pay their soldiers, contractors and employees in? What do they pay tax returns, SS and other non-employee obligations in?

When purchase orders for tanks and ammunition (or staples and printer ink) are issued, what will be spent?

None of which has anything to do with whether you are forced to accept fiat for your goods and services. You aren't. You just don't get to sell tanks to the government, because you can't force them to pay in a currency you want.
If you are selling something I want, and only accept Bitcoin as payment, my options are either to pay in Bitcoin or not buy, I cannot force you to accept payment in fiat.

[murraypaul]

Considering that inflation is a shell game, transferring wealth rather than inherently creating or destroying it, do you think that the majority benefits from inflation? Do you even feel that a large minority benefits?

I think there are a small proportion of people whose savings vastly exceed their debts, and massively more people whose debts exceed their savings, or who are roughly neutral.

[westkybitcoins]

If Bob approaches Alice and *forces* her to accept his IOUs in exchange for her goods and services, and to use them in her dealings with others

You are not forced to accept fiat currency for goods and services you provide, only for settlement of debts.
And you are not forced to use fiat currency to buy goods and services from others.

What do governments pay their soldiers, contractors and employees in? What do they pay tax returns, SS and other non-employee obligations in?

When purchase orders for tanks and ammunition (or staples and printer ink) are issued, what will be spent?

None of which has anything to do with whether you are forced to accept fiat for your goods and services. You aren't. You just don't get to sell tanks to the government, because you can't force them to pay in a currency you want.
If you are selling something I want, and only accept Bitcoin as payment, my options are either to pay in Bitcoin or not buy, I cannot force you to accept payment in fiat.

Let me see if I'm getting this.

My assertion is that fiat currencies are inherently bad. A scam. Theft.

The supporting argument I'm making is that due to government laws and actions, including legal tender laws, taxes and government spending, individuals are forced to use and accept their fiat, and hence society is coerced into using it, which is how the scam is enabled. I provided the examples of paychecks, obligations and the purchasing of tanks and staples.

And your response is that no one is literally forced to accept fiat for goods and services because no one ever has to sell the government anything.

Is that the entirety of it?

Considering that inflation is a shell game, transferring wealth rather than inherently creating or destroying it, do you think that the majority benefits from inflation? Do you even feel that a large minority benefits?

I think there are a small proportion of people whose savings vastly exceed their debts, and massively more people whose debts exceed their savings, or who are roughly neutral.

So... that's a "yes"?

[notme]

Considering that inflation is a shell game, transferring wealth rather than inherently creating or destroying it, do you think that the majority benefits from inflation? Do you even feel that a large minority benefits?

I think there are a small proportion of people whose savings vastly exceed their debts, and massively more people whose debts exceed their savings, or who are roughly neutral.

And yet, you don't see how a system that encourages debt over savings could be problematic?

[murraypaul]

My assertion is that fiat currencies are inherently bad. A scam. Theft.
[...]
And your response is that no one is literally forced to accept fiat for goods and services because no one ever has to sell the government anything.

Is that the entirety of it?

I'm not arguing your general point, but your specific one.
You said:

If Bob approaches Alice and *forces* her to accept his IOUs in exchange for her goods and services

You are not forced to accept fiat for your goods and services.

[Spendulus]

Printing money is theft and therefore fiat money is inherently immoral.

This cannot be repeated enough. It's the biggest scam on Earth and it's hidden in plain sight!

Repetition does not make a false statement true.
Following your logic, if I buy a TV set and the producer makes just one more unit, you consider that act "theft".

The underlying issue (which molecular and wachtwoord probably should've noted explicitly, since you apparently missed it) is that citizens are forced, through threat of prison (ie, violence), to use currency that gets debased. If that were not the case, there wouldn't be anything immoral about it, and it would be analogous to a company, whose stock you own, issuing more shares.

But we're forced to use these currencies through the requirement that we pay taxes in them (and other legal tender laws), so when we get diluted, we lose value/property. This is immoral because we're forced to use such currencies without explicit consent or choice, and the entities forcing us to do so intend to deprive us of the value of that asset through dilution. ....

No, actually we are not forced to use USD.   For some things, yes.  Many countries ask for their taxes to be paid in their currency, but freely allow other moneys to circulate.  Banks in Austrailia handle many currencies.  Banks in US handle only USD, true.  But that does NOT force us to use USD.

The glass here is either half empty or half full, depending on how you look at it...

[westkybitcoins]

My assertion is that fiat currencies are inherently bad. A scam. Theft.
[...]
And your response is that no one is literally forced to accept fiat for goods and services because no one ever has to sell the government anything.

Is that the entirety of it?

I'm not arguing your general point, but your specific one.
You said:

If Bob approaches Alice and *forces* her to accept his IOUs in exchange for her goods and services

You are not forced to accept fiat for your goods and services.

Yes, I understand that you're arguing the specific point.

And again, for clarification, I point out that you're trying to say that government does NOT force acceptance of their fiat for goods and services, and the reason you give for this isn't because the government doesn't use their fiat for all their interactions, but essentially that no given individual must of necessity interact with them. That when they acquire their goods and services, they don't overtly hold guns to people's heads as they hand over the check.

Alice wasn't just representative of an individual. She was also representative of any given society as a whole. And every society MUST interact with its government.

Please think about this very carefully:

What do you think would happen if the government requested bids for an interstate highway and every contractor refused to accept their money, demanding gold instead? What do you really think would happen if every gun manufacturer in the country suddenly refused to sell arms to the military, or to policemen? Do you *honestly* believe they'd just throw up their hands, shrug and say "oh well," and voluntarily expire as a "sovereign" entity? The very thought is ludicrous, and I'm sure you could dig up a historical example or two of exactly what happens when a government is denied in such a manner.

So your phrase "you are not forced to accept fiat for your goods and services" doesn't apply to society--it applies to me personally. Currently. Thanks. That changes everything.*

Is that all you were wanting to point out there?


*Yeah, that was snippier than it needed to be. Sorry.

[theonewhowaskazu]

This argument is hilarious. The pro-fiat guy is great. 

2% debt growth for every 1% GDP growth, yeah that's totally progress! Hahaha. Praise Ford for fiat.


Average lifespan of a fiat currency: 30 years

Current lifespan of USD (in its truly unbacked, unconvertible, wholly fiat form) 42 years

Now that's one outlier that's gonna get fucked.

Out of curiosity, where did you get the average lifespan number. Is there some kind of database of all historical fiat currency & its gold exchange rate somewhere, or something?

[Hawker]

Considering that inflation is a shell game, transferring wealth rather than inherently creating or destroying it, do you think that the majority benefits from inflation? Do you even feel that a large minority benefits?

I think there are a small proportion of people whose savings vastly exceed their debts, and massively more people whose debts exceed their savings, or who are roughly neutral.

And yet, you don't see how a system that encourages debt over savings could be problematic?

If one person has savings in the bank, someone else has debt in the same amount.  Sometimes, people have no way to repay their debts because the economy sucks.  When that happens, inflation reduces the principal so the saver can at least get some money back.  It also forces the saver to spend their cash which boosts the overall economy.

If my understanding is right, then inflation is good for everyone under certain circumstances.

[murraypaul]

Standard economic theory, which you may or may not agree with, says that a small, relatively constant, amount of inflation is the best answer for the economy. Large amounts of inflation, or fluctuating inflation, is bad, as it deflation.

[Hawker]

Standard economic theory, which you may or may not agree with, says that a small, relatively constant, amount of inflation is the best answer for the economy. Large amounts of inflation, or fluctuating inflation, is bad, as it deflation.

The interesting question is how much?  In the 70s inflation was much higher than the 80s but growth was much much higher.  Today we have massive amounts of currency sloshing about and very low inflation.  I wonder how high inflation would need to go before that money was considered better invested in industry than sitting in government bond accounts.

[murraypaul]

Standard economic theory, which you may or may not agree with, says that a small, relatively constant, amount of inflation is the best answer for the economy. Large amounts of inflation, or fluctuating inflation, is bad, as it deflation.

The interesting question is how much?  In the 70s inflation was much higher than the 80s but growth was much much higher.  Today we have massive amounts of currency sloshing about and very low inflation.  I wonder how high inflation would need to go before that money was considered better invested in industry than sitting in government bond accounts.

It is certainly an oddity. Eventually all the QE must lead to inflation, surely?
But at the moment banks are simply sitting on the extra money to build capital reserves, and are not lending it out, so most of it isn't really entering the economy.
I fear there is going to be a nasty rebound at some point.

[b!z]

Bitcoin will fade away eventually. It will take awhile but its inevitable.

I actually agree with this. There are many areas for improvement in Bitcoin, and it is likely that a better method of transferring money will be developed in the future.

[Hawker]

Standard economic theory, which you may or may not agree with, says that a small, relatively constant, amount of inflation is the best answer for the economy. Large amounts of inflation, or fluctuating inflation, is bad, as it deflation.

The interesting question is how much?  In the 70s inflation was much higher than the 80s but growth was much much higher.  Today we have massive amounts of currency sloshing about and very low inflation.  I wonder how high inflation would need to go before that money was considered better invested in industry than sitting in government bond accounts.

It is certainly an oddity. Eventually all the QE must lead to inflation, surely?
But at the moment banks are simply sitting on the extra money to build capital reserves, and are not lending it out, so most of it isn't really entering the economy.
I fear there is going to be a nasty rebound at some point.

How would QE lead to inflation when there are so many factories to pick up demand?  Japan has had close to zero interest rates and humungous debts for over 20 years now and their inflation rate is very low.  My assumption is that prices are held down by the enormous supply of industrial production from China.  Here in the UK, there is huge spare capacity in factories.  you could print a billion pounds and prices of industrial goods would probably not rise.

Hmm in fact, they may well already have printed a billion    Its probably why house prices are rising - there are no enough houses to go around and the market is held back by crazy planning/zoning laws.

[Valerian77]

Some points:

1. Bitcoin is currently in deflation not inflation (the little BTC inflation is defined by the protocol with 25 bucks for each block)

2. Printing fiat money is theft for sure because the inherent inflation (printing money is inflation) takes the buying value from all existing money of the same fiat sort

3. The statement 'little inflation drives the economy' is not the full truth. It implies that people are scared of loosing their money and put it back into the economy circulation. The bad side is that it also implies interest which feeds people who already own enough fiat money. And the real negative point with that again is that it creates a steady money flow from the poor debted people to the rich wealthy ones. More worse - if the state is debted (the current case) then the whole economy is threatened just by the inflation mechanics. -- One may argue that the Bitcoin deflation has a similar problem because the early adopters profit from the deflation value increase. That is true. But it is not a similar problem because the deflation slows down and may stop some day. Then nobody makes profits just from owning the Bitcoin anymore.

4. One very big problem is the equity covering quote for banks. In Germany it is 7%. That means if a bank has 7000Euro in its safe the bank is allowed to credit 100.000,- Euro to debitors. Inherently the money multiplies many times over a credit chain with multiple banks. This creates a big imbalance between real money and credited money with the well known risks - Lehman Brother was a typical szenario. With Bitcoin this is not possible - you cannot create virtual money - you own the Bitcoin or not - finish.

[murraypaul]

How would QE lead to inflation when there are so many factories to pick up demand?  Japan has had close to zero interest rates and humungous debts for over 20 years now and their inflation rate is very low.  My assumption is that prices are held down by the enormous supply of industrial production from China.  Here in the UK, there is huge spare capacity in factories.  you could print a billion pounds and prices of industrial goods would probably not rise.

Hmm in fact, they may well already have printed a billion    Its probably why house prices are rising - there are no enough houses to go around and the market is held back by crazy planning/zoning laws.

Housing is a good example of how increased money supply will lead to inflation, here house price inflation.
If banks and building societies start to loan more money, require lower deposits, lend to riskier customers, and so on, then more people will be able to afford to buy any given price range of house, therefore there will be more competition, therefore sellers will raise their prices and/or not accept the same level of discount.
Generally, as the amount of lending increases, and the cost of borrowing decreases, people will borrow more, and so buy more goods that they couldn't afford otherwise. They will replace their car now, rather than waiting another year, or two, for example.
Having mothballed production facilities, there will be a lag time before supply can catch up with demand, and in the meantime, prices will rise.
But at the moment banks aren't really lending more, but instead sitting on the money, plus people's uncertainty about the economy makes them more reluctant to take risks, so we aren't seeing those effects.
When the economy picks up, and banks lend again, it is hard to see how that won't translate to a jump in inflation.