An Electronic Currency That Could Save The Economy - And It's Not Bitcoin

[marcus_of_augustus]

... yeah, best to just tell the prof. dude to post it in the Alt-coin forum and see how it flies in the free market (no pre-mining scams either please prof.)

[zachcope]

One more thing, why do all the banksters steal our wealth, time, industry and pensions at the same time as telling us it's the 'free market'. Free market my arse.
I change my mind about this crappy coin idea - I think USD should be changed to 'shit-crap-US-e-coin-schmoin' with no exchange restrictions on bitcoin.

Western govts should accept taxes in their local 'inflation-demurage-shit-coin' .

See what the frikkin 'free market' decides it likes best then.

 


'Think happy thoughts' - 'BTCBTCBTCBTCBTC'  

[proudhon]

To the original poster:

You're surprised?

Bernanke likes Bitcoin, not because he likes Bitcoin, but because he and everyone else in the Govt is planning to make their own.

That's why they never say they endorsed Bitcoin.   They only said that "the technology" is something that could be extremely beneficial.

As everyone in the Bitcoin community has already proven, any tom dick, or harry can make a new cryptocurrency.

I warned all of you about this a long time ago, because all you're doing is showing the Govt that they can easily make their own.

But hey, everyone wants to get rich, so now there's nearly 100 alt coins.  Woo hoo!  :/

Anyways ... old news ... Govt doesn't love Bitcoin.   They plan to make their own.

Trillions of dollars could be saved if the Govt switched to a cryptocurrency, and they're fully aware of that.

Trillions upon trillions.

From my reading of all of these statements about governments and financial institutions moving to "virtual currencies" it really seems like they don't really understand the technology.  They're all focused on speed.  The real innovation that underpins bitcoin (a decentralized consensus network) isn't needed to make the current system work faster, and that's what most of the government and traditional banking types think is the big innovation bitcoin brings to the table, just speed.  It isn't, and any computer scientists knows that.

The existing financial system can be made faster by changing some of the rules about how ACH works, for example, and by upgrading computers in a data center.  Whoopdee do!  That hasn't been done yet because it'll be kind of a headache.  But, doing it doesn't rely on any of the technical innovation behind bitcoin.  In short, they've completely overlooked what exactly is innovative about bitcoin.  And that property of the protocol is what makes it potentially so disruptive because it can be used for more things than just a means of exchanging value as in a currency.

Just look at this article in the LA Times.  He thinks the real fancy technical innovation has to do with speed and how they're created.  Not that the whole system is a network of computers distributed globally coming to consensus about what transactions are verified and when, and is doing so without any one giving telling them what to "believe" - and their consensus can be trusted and verified by everyone using the system.  Nope.  It's faster than ACH and checks and the money supply is limited.  He does not understand the system.

[crumbs]

One more thing, why do all the banksters steal our wealth, time, industry and pensions at the same time as telling us it's the 'free market'. ...

Beacause they can?
The ignorance level here is over 9000

[Impaler]

One more thing, why do all the banksters steal our wealth, time, industry and pensions at the same time as telling us it's the 'free market'. ...

Beacause they can?
The ignorance level here is over 9000

And the reason they can is because of INTEREST, money has a liquidity value which accrues unearned to the one holding it.  People can then monetize that value by loaning money at interest, the rate of interest will reflect the market valuation of the liquidity value, that is how banks make money.

Demurrage sterilizes the liquidity value of money, the liquidity is now being paid for by the person holding money, they have no surplus unearned value to sell.  People will still loan money but it will be at 0%, the loan maker will lose liquidity but stop paying demurrage, the loan recipient will acquire liquidity and begin paying demurrage.

[crumbs]

One more thing, why do all the banksters steal our wealth, time, industry and pensions at the same time as telling us it's the 'free market'. ...

Beacause they can?
The ignorance level here is over 9000

And the reason they can is because of INTEREST, money has a liquidity value which accrues unearned to the one holding it.  People can then monetize that value by loaning money at interest, the rate of interest will reflect the market valuation of the liquidity value, that is how banks make money.

Demurrage sterilizes the liquidity value of money, the liquidity is now being paid for by the person holding money, they have no surplus unearned value to sell.  People will still loan money but it will be at 0%, the loan maker will lose liquidity but stop paying demurrage, the loan recipient will acquire liquidity and begin paying demurrage.

I'm with you on this (the interest part), what i don't understand is how demurrage would be different from simply inflating the money supply (like it is done with fiat).  I am also having trouble coming up with plausible scenarios where people would voluntarily adopt such a currency.
The egalitarian part of me likes it -- it would be great for the poor & discourage hoarding, but so is inflation-done-right.

[zachcope]

One more thing, why do all the banksters steal our wealth, time, industry and pensions at the same time as telling us it's the 'free market'. ...

Beacause they can?
The ignorance level here is over 9000

I didn't actually want your opinion.

[Impaler]

From my reading of all of these statements about governments and financial institutions moving to "virtual currencies" it really seems like they don't really understand the technology.  They're all focused on speed.  The real innovation that underpins bitcoin (a decentralized consensus network) isn't needed to make the current system work faster, and that's what most of the government and traditional banking types think is the big innovation bitcoin brings to the table, just speed.  It isn't, and any computer scientists knows that.

The existing financial system can be made faster by changing some of the rules about how ACH works, for example, and by upgrading computers in a data center.  Whoopdee do!  That hasn't been done yet because it'll be kind of a headache.  But, doing it doesn't rely on any of the technical innovation behind bitcoin.  In short, they've completely overlooked what exactly is innovative about bitcoin.  And that property of the protocol is what makes it potentially so disruptive because it can be used for more things than just a means of exchanging value as in a currency.

Just look at this article in the LA Times.  He thinks the real fancy technical innovation has to do with speed and how they're created.  Not that the whole system is a network of computers distributed globally coming to consensus about what transactions are verified and when, and is doing so without any one giving telling them what to "believe" - and their consensus can be trusted and verified by everyone using the system.  Nope.  It's faster than ACH and checks and the money supply is limited.  He does not understand the system.

Their are two halves to 'BTC' the basic block-chain cryptographic 'tech' part and the layer of 'currency' built on top.  When people like Ben Bernanke see value in the tech ONLY it's because they the so called 'currency' layer is an unsustainable scheme with no value in their eyes.  They just aren't interested in popping anyone's fantasy because one, you folks would all dismiss them out of hand if they degenerate BTC as has been done to every intellectual that has done so, and two the currency is really just a spec on their radar, if it becomes a bubble big enough to threaten the economy then they might care.

[Impaler]

One more thing, why do all the banksters steal our wealth, time, industry and pensions at the same time as telling us it's the 'free market'. ...

Beacause they can?
The ignorance level here is over 9000

And the reason they can is because of INTEREST, money has a liquidity value which accrues unearned to the one holding it.  People can then monetize that value by loaning money at interest, the rate of interest will reflect the market valuation of the liquidity value, that is how banks make money.

Demurrage sterilizes the liquidity value of money, the liquidity is now being paid for by the person holding money, they have no surplus unearned value to sell.  People will still loan money but it will be at 0%, the loan maker will lose liquidity but stop paying demurrage, the loan recipient will acquire liquidity and begin paying demurrage.

I'm with you on this (the interest part), what i don't understand is how demurrage would be different from simply inflating the money supply (like it is done with fiat).  I am also having trouble coming up with plausible scenarios where people would voluntarily adopt such a currency.
The egalitarian part of me likes it -- it would be great for the poor & discourage hoarding, but so is inflation-done-right.

Did you read my reply in another thread concerning Price information and how inflation/deflation over time destroys this information flow?  That is a major part of the equation for demurrage over inflation (and the one I bring out first as Austrians generally except the importance of price information), but their are other points as well but they are a bit more complex.

In the classic 'quantity theory of money' the equation MV = PQ (Money Supply x Velocity = Price Level x Quantity of Goods) is going to hold true IN THE LONG RUN.  But in the short run a central banks increase in M may not go directly into an increase in P, it may (as it is now) result in dropping V as the money becomes 'stuck in the Banks'.  Because their isn't any inflation YET, no one is interested in loaning or investing and thus the money never gets out to cause the inflation desired.  You see normal Banks actually create most money by credit expansion they stand between the Central Bank and the actual inflation rate in the economy.  

Central Banks have a high degree of control on Interest rates by controlling the bond markets and thouse rates go right out into the economy to encourage or discourage borrowing and investment, but they have only INDIRECT control of inflation rates.  Right now the FED has a 2% inflation target but inflation is failing short of that, in contrast the FED just PICKS the interest rate and sets it practically at Will (smaller or indebted nations may not have that degree of control mind you but the FED dose).  

So because inflation/deflation in actual prices in the economy is so indirect, being after all a dynamic arising from the gradual bidding up of prices as consumers have more money in their pockets to spend with the effects of a central bank have a lot of lag.  The economy may need higher prices and higher velocity right now but money supply expansion could take months or years to reach the economy and it would continue to have an effect long after the need is gone.

A Demurrage rate though has the EFFECT of Inflation but moves at the SPEED of Interest rates allowing it to be far more responsive then even the best managed Inflation targeting.  Now in FRC we don't have the ability to adjust the rate of Demurrage (no technical solution and no willingness on our part to take the responsibility to set it), but a nations central bank WOULD use a dynamic rate, really it would just be an extension of their interest rates so this would allow them to be a better central bank.

On a side note I've speculated on a means to created decentralized demurrage rates in Freicoin, the general outline I have is that their would be some kind of internal bond-market / prediction market operating inside the block-chain that all clients can participate in, the result is then used to modify the demurrage rate.  Something similar might control Money Supply as well but it's all VERY complicated and just a bare theory right now.

[crumbs]

One more thing, why do all the banksters steal our wealth, time, industry and pensions at the same time as telling us it's the 'free market'. ...

Beacause they can?
The ignorance level here is over 9000

And the reason they can is because of INTEREST, money has a liquidity value which accrues unearned to the one holding it.  People can then monetize that value by loaning money at interest, the rate of interest will reflect the market valuation of the liquidity value, that is how banks make money.

Demurrage sterilizes the liquidity value of money, the liquidity is now being paid for by the person holding money, they have no surplus unearned value to sell.  People will still loan money but it will be at 0%, the loan maker will lose liquidity but stop paying demurrage, the loan recipient will acquire liquidity and begin paying demurrage.

I'm with you on this (the interest part), what i don't understand is how demurrage would be different from simply inflating the money supply (like it is done with fiat).  I am also having trouble coming up with plausible scenarios where people would voluntarily adopt such a currency.
The egalitarian part of me likes it -- it would be great for the poor & discourage hoarding, but so is inflation-done-right.

Did you read my reply in another thread concerning Price information and how inflation/deflation over time destroys this information flow?  That is a major part of the equation for demurrage over inflation (and the one I bring out first as Austrians generally except the importance of price information), but their are other points as well but they are a bit more complex.

In the classic 'quantity theory of money' the equation MV = PQ (Money Supply x Velocity = Price Level x Quantity of Goods) is going to hold true IN THE LONG RUN.  But in the short run a central banks increase in M may not go directly into an increase in P, it may (as it is now) result in dropping V as the money becomes 'stuck in the Banks'.  Because their isn't any inflation YET, no one is interested in loaning or investing and thus the money never gets out to cause the inflation desired.  You see normal Banks actually create most money by credit expansion they stand between the Central Bank and the actual inflation rate in the economy.  

Central Banks have a high degree of control on Interest rates by controlling the bond markets and thouse rates go right out into the economy to encourage or discourage borrowing and investment, but they have only INDIRECT control of inflation rates.  Right now the FED has a 2% inflation target but inflation is failing short of that, in contrast the FED just PICKS the interest rate and sets it practically at Will (smaller or indebted nations may not have that degree of control mind you but the FED dose).  

So because inflation/deflation in actual prices in the economy is so indirect, being after all a dynamic arising from the gradual bidding up of prices as consumers have more money in their pockets to spend with the effects of a central bank have a lot of lag.  The economy may need higher prices and higher velocity right now but money supply expansion could take months or years to reach the economy and it would continue to have an effect long after the need is gone.

A Demurrage rate though has the EFFECT of Inflation but moves at the SPEED of Interest rates allowing it to be far more responsive then even the best managed Inflation targeting.  Now in FRC we don't have the ability to adjust the rate of Demurrage (no technical solution and no willingness on our part to take the responsibility to set it), but a nations central bank WOULD use a dynamic rate, really it would just be an extension of their interest rates so this would allow them to be a better central bank.

On a side note I've speculated on a means to created decentralized demurrage rates in Freicoin, the general outline I have is that their would be some kind of internal bond-market / prediction market operating inside the block-chain that all clients can participate in, the result is then used to modify the demurrage rate.  Something similar might control Money Supply as well but it's all VERY complicated and just a bare theory right now.

This is pretty neat, especially the last part (variable demurrage rates).  I'm having a hard time picturing how it would be possible to implement algorithmically, but it doesn't seem outright impossible.  If made to work, it would be pretty elegant.  Is there a thread (i won't post -- just read) or a white paper you can point me to?  I'll re-read your post later, maybe i'm reading too much into the "self-correcting demurrage," but it's an interesting way of seeing money as a self-contained governor of economy. 

[Impaler]

This thread on our forums is where I did most of the brainstorming, ultimately I wasn't satisfied with any concrete design, but I think the general concept is sound.  Part of the problem is untangling of liquidity premium and inflation expectations.  This means that two inter-related markets are likely required.  Also their are risks that users could game any markets to get results that don't reflect the real values involved but I think having people put 'skin in the game' will help prevent that, skin being the coins involved. 

I do not believe it is possible to get any kind of 'normal' exchange between national currency and crypto-currency to work inside the block-chain, people have speculated endlessly about that but the problem is you can't compel the delivery of the real assets by recording something in the block-chain, possession is 9/10th and all.  For the same reason all the 'smart property' ideas are DOA in my opinion, thus I've limited my designs for these markets and auto-adjustment system to only taking purchases/wagers etc in the chain coins and other chain enforced tokens, in a sense it would be completely self-contained.

http://freicoin.freeforums.org/decentralized-auto-adjusting-demurrage-t51.html

[cunicula]

http://www.scribd.com/doc/186071279/Hop-System-for-Store-of-USD-Value
You guys might look at the slides linked above which describe a design with variable interest rates.

[RenegadeMind]

This economy does not deserve to be saved.

It's a centrally-planned murder machine designed to enrich Manhattan and DC while bribing the Baby Boomers with the auctioned-off livelihoods of their grandchildren.

Bang on the money on both counts.

The sooner the USD collapses, the better. It's a decayed, rotting corpse that should have been buried long ago. Let it go and let's move on with rebuilding from the ashes of the fire the banksters lit.

I don't know why banksters and Keynsians feel that economic activity and consumption are the main goals.

Oh, that's an easy one... It's the only way they know how to rob and steal from you.


As for the currency in the article... Idiotic idea. It has zero benefit for the people using it. "Oh, but... the greater good..." To which the appropriate response is "f**k off". The greater good is never served by sacrificing people.

In other news, I'm selling suicide machines for 10 BTC each (special today of 1 BTC - just mention the special code "MASOCHIST1"). Send payment to the address below then PM me. Hey... if people are silly enough to buy into proposals like the e-dollar, I could get rich off of my suicide machines! Though I do wonder how many e-dollar users will also be my customers...

[PenAndPaper]

As everyone in the Bitcoin community has already proven, any tom dick, or harry can make a new cryptocurrency.

I warned all of you about this a long time ago, because all you're doing is showing the Govt that they can easily make their own.

But hey, everyone wants to get rich, so now there's nearly 100 alt coins.  Woo hoo!  :/

Anyways ... old news ... Govt doesn't love Bitcoin.   They plan to make their own.

Trillions of dollars could be saved if the Govt switched to a cryptocurrency, and they're fully aware of that.

It doesn't matter if one government likes bitcoin or not. It is the market that will decide in the end. Don't underestimate the free market.
Also when you say that a government has any reason at all to introduce their own crypto coin it looks like you don't understand what a crypto coin is.

[Impaler]

http://www.scribd.com/doc/186071279/Hop-System-for-Store-of-USD-Value
You guys might look at the slides linked above which describe a design with variable interest rates.

Thx for the link, this guy solution looks untenable for the reasons I described above, but he is at least on the same continent as I am in the goal he is aiming for.

[cunicula]

http://www.scribd.com/doc/186071279/Hop-System-for-Store-of-USD-Value
You guys might look at the slides linked above which describe a design with variable interest rates.

Thx for the link, this guy solution looks untenable for the reasons I described above, but he is at least on the same continent as I am in the goal he is aiming for.

Well you might click on the link before arriving at a judgement.
If you had, then you would have written "your solution" instead of "this guy solution."

Or not, up to you.

[niothor]

As everyone in the Bitcoin community has already proven, any tom dick, or harry can make a new cryptocurrency.

I warned all of you about this a long time ago, because all you're doing is showing the Govt that they can easily make their own.

But hey, everyone wants to get rich, so now there's nearly 100 alt coins.  Woo hoo!  :/

Anyways ... old news ... Govt doesn't love Bitcoin.   They plan to make their own.

Trillions of dollars could be saved if the Govt switched to a cryptocurrency, and they're fully aware of that.

It doesn't matter if one government likes bitcoin or not. It is the market that will decide in the end. Don't underestimate the free market.
Also when you say that a government has any reason at all to introduce their own crypto coin it looks like you don't understand what a crypto coin is.

The moment the gov creates an alt coin and it advertise you can pay your taxes and it pays it's own men with that new crypto..
bitcoin users vs govcoin users 0-1 mil.
 

[thatbluedude]

what scares me are the logical consequences this would bring since nobody would use this crap voluntarily.
- make cash illeagal/severly restrict use*
- controll and limit exchangeability into other currencys
- limit purchase of precious metals

*or do something like printing a date on it and/or selling tax stickers

[PenAndPaper]

The moment the gov creates an alt coin and it advertise you can pay your taxes and it pays it's own men with that new crypto..
bitcoin users vs govcoin users 0-1 mil.
 

You can do that already with fiat and visa and paypal. You don't need an altcoin.

[niothor]

The moment the gov creates an alt coin and it advertise you can pay your taxes and it pays it's own men with that new crypto..
bitcoin users vs govcoin users 0-1 mil.
 

You can do that already with fiat and visa and paypal. You don't need an altcoin.

You know what this thread it's all about ?