Why Bitcoin is ultimately doomed to fail (not today or tomorrow)

[anth0ny]

Central bank emitted money can be considered in this context as base money (as it is)...

So then it is money that is created through fractional reserve banking. Central bank emitted money is created when the Federal Reserve lends through the discount window, right?

It is called "money printing", lol

It's also called "creating money out of thin air".

Following this logic, all fiat currencies can be said to be created "out of thin air"

Correct. And as I've said before, as far as the metaphor goes, Bitcoin can also be said to be created "out of thin air".

Wrong. Bit coin is not created out of thin air.

Of course it isn't. It can be said to be created "out of thin air" though.

[anth0ny]

Fiat currency is created in exactly oposite direction: First you create money and then you do the labor - slavery (this makes sense of course in the bigger relation picture like this: Banks (FED) -> Money user).
So by doing labor you are paying debt that FED (Banks) created for you. Here is how Fiat cureency works:
1. Print money and make them more available to others (value declines)
2. Energy used to produce money is less than the value of the new paper (value declines)

I don't think that's an accurate description of money creation in the United States. Among other things, note that the Federal Reserve doesn't actually print dollar bills.

[deisik]

In any case, you haven't answered my question. What's a bank run in 100% reserve banking? There's no such thing.

People running to banks to get their money back (possibly out of the fear of losing the money, though there are other reasons as well). Nevertheless, if we exclude demand deposits out of consideration (i.e. taking into account only term deposits), will this also effectively put an end to FRB?

[anth0ny]

In any case, you haven't answered my question. What's a bank run in 100% reserve banking? There's no such thing.

People running to banks to get their money back (possibly out of the fear of losing the money, though there are other reasons as well).

I don't think that alone qualifies as a bank run. But if you want to call it that, then whatever. Yes, in 100% reserve banking, people will sometimes make withdrawals. Sometimes they'll even run to the bank to do so. (Although, with Bitcoin, there's really no reason to run to the bank to make a withdrawal - you can do so over the Internet.)

Nevertheless, if we exclude demand deposits out of consideration (i.e. taking into account only term deposits), will this also effectively put an end to FRB?

I'm not sure what you're asking. If there are no demand deposits, I'm not sure whatever is left can be called fractional reserve banking. It'd certainly be much different from what is today known as fractional reserve banking.

Ultimately what I see is more of a lendingclub.com type deal if you want to lend bitcoin and earn interest. You lend money to the financial institution (e.g. Lending Club) who puts it into a pool which it uses to lend money to individuals. The financial institution takes a cut of the profits earned by the pool and distributes the rest to the investors. There's also the prosper.com version which is more direct, but I don't think most people will want that. In either version there's no demanding your money before it has been paid back.

[deisik]

Nevertheless, if we exclude demand deposits out of consideration (i.e. taking into account only term deposits), will this also effectively put an end to FRB?

I'm not sure what you're asking. If there are no demand deposits, I'm not sure whatever is left can be called fractional reserve banking. It'd certainly be much different from what is today known as fractional reserve banking

I'm sure that you are unsure (but it seems to be primarily your problem, lol)

I see no difference between what we have now and the system where would be no demand deposits, in respect to fractional reserve banking. Before you ask why so, answer first why it should be otherwise (to me, FRB would work even better in this case, as it would with no reserve requirements at all)...

[deisik]

In any case, you haven't answered my question. What's a bank run in 100% reserve banking? There's no such thing.

People running to banks to get their money back (possibly out of the fear of losing the money, though there are other reasons as well).

I don't think that alone qualifies as a bank run. But if you want to call it that, then whatever. Yes, in 100% reserve banking, people will sometimes make withdrawals. Sometimes they'll even run to the bank to do so. (Although, with Bitcoin, there's really no reason to run to the bank to make a withdrawal - you can do so over the Internet.)

You don't even need to run to the bank itself to withdraw your fiat deposits, either. In most cases, you can do so over the Internet as well (and then cash through an ATM), lol

[anth0ny]

Nevertheless, if we exclude demand deposits out of consideration (i.e. taking into account only term deposits), will this also effectively put an end to FRB?

I'm not sure what you're asking. If there are no demand deposits, I'm not sure whatever is left can be called fractional reserve banking. It'd certainly be much different from what is today known as fractional reserve banking

I'm sure that you are unsure (but it seems to be primarily your problem, lol)

Who is the "we"? What does it mean to exclude demand deposits "out of consideration"? Taking into account only term deposits for the purposes of what? What does it have to do with the elimination of FRB?

By "if we exclude demand deposits out of consideration (i.e. taking into account only term deposits)", do you mean "if we put an end to demand deposits"?

I see no difference between what we have now and the system where would be no demand deposits, in respect to fractional reserve banking. Before you ask why so, answer first why it should be otherwise (to me, FRB would work even better in this case, as it would with no reserve requirements at all)...

Without demand deposits you wouldn't have checking accounts. You see how that's different from what we have now, right?

[anth0ny]

In any case, you haven't answered my question. What's a bank run in 100% reserve banking? There's no such thing.

People running to banks to get their money back (possibly out of the fear of losing the money, though there are other reasons as well).

I don't think that alone qualifies as a bank run. But if you want to call it that, then whatever. Yes, in 100% reserve banking, people will sometimes make withdrawals. Sometimes they'll even run to the bank to do so. (Although, with Bitcoin, there's really no reason to run to the bank to make a withdrawal - you can do so over the Internet.)

You don't even need to run to the bank itself to withdraw your fiat deposits, either. In most cases, you can do so over the Internet as well (and then cash through an ATM), lol

Is that a joke or something?

To get cash, you have to go to a bank, or at least to an ATM. You can't download cash over the Internet.

[deisik]

I see no difference between what we have now and the system where would be no demand deposits, in respect to fractional reserve banking. Before you ask why so, answer first why it should be otherwise (to me, FRB would work even better in this case, as it would with no reserve requirements at all)...

Without demand deposits you wouldn't have checking accounts. You see how that's different from what we have now, right?

I don't see how it would be different with respect to fractional reserve banking. Do you get me?

[anth0ny]

I see no difference between what we have now and the system where would be no demand deposits, in respect to fractional reserve banking. Before you ask why so, answer first why it should be otherwise (to me, FRB would work even better in this case, as it would with no reserve requirements at all)...

Without demand deposits you wouldn't have checking accounts. You see how that's different from what we have now, right?

I don't see how it would be different with respect to fractional reserve banking. Do you get me?

No.

[deisik]

You don't even need to run to the bank itself to withdraw your fiat deposits, either. In most cases, you can do so over the Internet as well (and then cash through an ATM), lol

Is that a joke or something?

To get cash, you have to go to a bank, or at least to an ATM. You can't download cash over the Internet.

Yes, but every bank which I recently trusted my money to allowed to transfer funds to another account in another bank without a personal visit to the bank (i.e. remotely over the Internet or by the phone call). So, as you can see, there is no need to literally run to the bank...

[deisik]

I see no difference between what we have now and the system where would be no demand deposits, in respect to fractional reserve banking. Before you ask why so, answer first why it should be otherwise (to me, FRB would work even better in this case, as it would with no reserve requirements at all)...

Without demand deposits you wouldn't have checking accounts. You see how that's different from what we have now, right?

I don't see how it would be different with respect to fractional reserve banking. Do you get me?

No.

Okay then

[anth0ny]

You don't even need to run to the bank itself to withdraw your fiat deposits, either. In most cases, you can do so over the Internet as well (and then cash through an ATM), lol

Is that a joke or something?

To get cash, you have to go to a bank, or at least to an ATM. You can't download cash over the Internet.

Yes, but every bank which I recently trusted my money to allowed to transfer funds to another account in another bank without a personal visit to the bank. So, as you can see, there is no need to literally run to the bank...

Then why are there bank runs?

The whole point is that there are times when people don't trust their banks, and there are also times when people need cash. So sometimes there is a need to literally run to the bank.

With Bitcoin, the actual base currency can be transferred over the Internet.

[deisik]

You don't even need to run to the bank itself to withdraw your fiat deposits, either. In most cases, you can do so over the Internet as well (and then cash through an ATM), lol

Is that a joke or something?

To get cash, you have to go to a bank, or at least to an ATM. You can't download cash over the Internet.

Yes, but every bank which I recently trusted my money to allowed to transfer funds to another account in another bank without a personal visit to the bank. So, as you can see, there is no need to literally run to the bank...

Then why are there bank runs?

The whole point is that there are times when people don't trust their banks, and there are also times when people need cash. So sometimes there is a need to literally run to the bank.

With Bitcoin, the actual base currency can be transferred over the Internet.

As you said it yourself, it is a metaphor, lol

[anth0ny]

You don't even need to run to the bank itself to withdraw your fiat deposits, either. In most cases, you can do so over the Internet as well (and then cash through an ATM), lol

Is that a joke or something?

To get cash, you have to go to a bank, or at least to an ATM. You can't download cash over the Internet.

Yes, but every bank which I recently trusted my money to allowed to transfer funds to another account in another bank without a personal visit to the bank. So, as you can see, there is no need to literally run to the bank...

Then why are there bank runs?

The whole point is that there are times when people don't trust their banks, and there are also times when people need cash. So sometimes there is a need to literally run to the bank.

With Bitcoin, the actual base currency can be transferred over the Internet.

As you said it yourself, it is a metaphor, lol

Have I?



Looks to me like people are literally going to the bank. Maybe they drive nowadays rather than run, but that'd make it an anachronism, not a metaphor.

By the way, there are pretty low limits as to how much you can withdraw in one day from an ATM.

[deisik]

Nevertheless, if we exclude demand deposits out of consideration (i.e. taking into account only term deposits), will this also effectively put an end to FRB?

I'm not sure what you're asking. If there are no demand deposits, I'm not sure whatever is left can be called fractional reserve banking. It'd certainly be much different from what is today known as fractional reserve banking

I'm sure that you are unsure (but it seems to be primarily your problem, lol)

Who is the "we"? What does it mean to exclude demand deposits "out of consideration"? Taking into account only term deposits for the purposes of what? What does it have to do with the elimination of FRB?

1) "We" means I in an academic parlance (don't take too personal, I didn't mean you, lol). 2) "exclude out of consideration" means leave out of consideration (if you are unfamiliar with the phrase, it is your problem really). 3) For the purpose of seeing that FRB would be just fine under these conditions. 4) It doesn't have anything to do with FRB (let alone its elimination, lol), that was my point exactly (see 3)...

[deisik]

You don't even need to run to the bank itself to withdraw your fiat deposits, either. In most cases, you can do so over the Internet as well (and then cash through an ATM), lol

Is that a joke or something?

To get cash, you have to go to a bank, or at least to an ATM. You can't download cash over the Internet.

Yes, but every bank which I recently trusted my money to allowed to transfer funds to another account in another bank without a personal visit to the bank. So, as you can see, there is no need to literally run to the bank...

Then why are there bank runs?

The whole point is that there are times when people don't trust their banks, and there are also times when people need cash. So sometimes there is a need to literally run to the bank.

With Bitcoin, the actual base currency can be transferred over the Internet.

As you said it yourself, it is a metaphor, lol

Have I?

Looks to me like people are literally going to the bank. Maybe they drive nowadays rather than run, but that'd make it an anachronism, not a metaphor.

By the way, there are pretty low limits as to how much you can withdraw in one day from an ATM.

What is Northern Rock and what are all those people doing there (it seems they are doing nothing, lol)?

[anth0ny]

What is Northern Rock and what are all those people doing there (it seems they are doing nothing, lol)?

Seriously? (You keep adding "lol" so I guess you're not being serious. But I don't understand the joke.)

[deisik]

What is Northern Rock and what are all those people doing there (it seems they are doing nothing, lol)?

Seriously? (You keep adding "lol" so I guess you're not being serious. But I don't understand the joke.)

What seriously? Don't know about you (and Northern Rock, for that matter), but in these quarters if a bank has problems, you'd better wait till an insurance agency comes and takes over (otherwise, you may actually lose your money). Though it may take some time (less than a month usually)...

And it was a question, not a joke (lol)...

[anth0ny]

What is Northern Rock and what are all those people doing there (it seems they are doing nothing, lol)?

Seriously? (You keep adding "lol" so I guess you're not being serious. But I don't understand the joke.)

What seriously? Don't know about you and Northern Rock, but in these quarters if a bank has problems, you'd better wait till an insurance agency comes and takes over (otherwise, you may actually lose your money)...

I can't tell if you're serious or joking. Partly because you keep adding "lol", which generally is an indication that you're joking, and partly because you claim to be knowledgeable of what a bank run is but you apparently don't know about the most famous bank run of the last century.