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Author Topic: What do you guys make of this comment? (from Chicago Fed)  (Read 711 times)
jag2k2
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November 07, 2013, 02:53:13 AM
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http://www.chicagofed.org/digital_assets/publications/chicago_fed_letter/2013/cfldecember2013_317.pdf

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The state has also concerned itself with money because one main function of money is to free a debtor from his or her obligations, tying money to an essential state function, the administration of justice


I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. - Thomas Jefferson
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November 07, 2013, 03:01:35 AM
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It is a stretch.  Debts can be discharged in court but that doesn't mean they have to be fiat, the same fiat created by the state.
Bankruptcy existed under gold backed currencies, and other forms of debt forgiveness existing under commodity money systems.

There is no legal precedent for why a debt denominated in BTC couldn't be discharged in Bankruptcy court.

So the idea that because the state may discharge debts it must also create the money seems weak.
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November 07, 2013, 03:37:17 AM
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D&T is right, their logic on that fact doesn't follow. But they could easily and more accurately say that courts need an official form of payment for damages and reparations to be made in when there is no more direct form of compensation. For example if someone breaks into your house and destroys a unique painting from a hundred years ago, a court can't order that the defendant give him back another like painting because one doesn't exist. The court has to have some kind of default means of payment, be it dollars or gold or Bitcoin.

Do not waste your time debating whether Bitcoin can work. It does work.

"Early adopters will profit" is not a sufficient condition to classify something as a pyramid or Ponzi scheme. If it was, Apple and Microsoft stock are Ponzi schemes.

There is no such thing as "market manipulation." There is only buying and selling.
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November 07, 2013, 05:41:59 PM
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D&T is right, their logic on that fact doesn't follow. But they could easily and more accurately say that courts need an official form of payment for damages and reparations to be made in when there is no more direct form of compensation. For example if someone breaks into your house and destroys a unique painting from a hundred years ago, a court can't order that the defendant give him back another like painting because one doesn't exist. The court has to have some kind of default means of payment, be it dollars or gold or Bitcoin.

Bankruptcy lawyer here, co-signing both of the above posts.  This actually happens every day already.  Other than debt instruments, compensation for a legal claim isn't inherently priced in dollars.  If you breach a contract to supply widgets, a nonbankruptcy court will (absent very unusual circumstances warranting specific performance) award damages in dollars simply because that's what we use to estimate and compensate loss.  Same thing with tort claims.  In bankruptcy court, specific performance is almost never available.

If someone breaches a contract denominated in BTC and subsequently files BK, the best practice would likely be to file a proof of claim in dollars at the then-prevailing exchange rate.  That's what folks do presently if the contract is denominated in some other currency.  Bankruptcy courts are rough-justice  kinds of places, typically.  If the debt would have been dischargeable had it been denominated in USD, it will in all likelihood still be dischargeable denominated in BTC.
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