Economic Devastation

[CoinCube]

A couple of interesting links.

How Bitcoin could become its antithesis

First off let me say right away that I’m a newbie. I’ve known about Bitcoin for a few years, and have been watching from afar, but only recently decided to immerse myself in the technical details  — and equally important, the culture. I stayed away out of a suspicion that one of Bitcoin’s main claimed virtues (privacy) was oversold, and because I knew that it would hard for me to get into Bitcoin in a casual way.

What I’ve found so far is a an environment that’s far more complex and captivating then I’d imagined. It could help liberate the world from the chains of fait currency and the banking establishment, but it could also become a powerful tool for statist control. I’m sure this latter possibility is inconceivable to many within the space, but it would’t be the first time a vehicle of liberation spun around 180 degrees.

From what I can tell, the early adopters of Bitcoin skewed heavily libertarian, anarcho-capitalist, Rothbardian. As use of Bitcoin spreads to the general public, the culture surrounding it changes, becomes more mainstream. There’s a long history of online communities which, over time, became hostile to the original crowd and their laissez-faire ideals. Slashdot, Wired, Reddit. You can see the transition happening right now in the comments section at Zerohedge.

The reaction to the fall of MtGox shows that many Bitcoiners are now muggles (or matrix dwellers, if you prefer). These new users were raised on an intellectual diet of “market failure” and “much needed government regulation.” Their first instinct when things go wrong is to look for government to fix it. They’re comfortable with filing requirements, identity verification, withdrawal limits. They’re shocked to find out the BTC exchanges don’t have deposit insurance.

Here we get to an essential weakness of the protocol, at least so far as how it compares to the promised benefits. As a pseudonymous currency with a full public ledger of transactions, the privacy of everyone depends on the privacy of everyone else. Every single input and output from the real world to Bitcoin (every wire transfer you send to an exchange, every purchase of items shipped to your home), is a potential crack in the veil of privacy not just for you, but for everyone else.
 
I can see that developers are working on interesting technologies, like CoinJoin, which could be baked into the the protocol to enhance privacy. But right now, securing your privacy within Bitcoin requires additional, complicated steps (using tumblers, creating a new address for each transaction). The lessons from PGP email could not be more clear: if it’s a hassle, the vast majority of users won’t do it, which means that users of these privacy measures will be the ones who *really* need it. But because the defining feature of our new age is data interconnectivity, true privacy in can only come from increasing the amount of noise in the system, not decreasing the amount of signal. When the privacy of the network as a whole depends on individual users taking steps that make their lives more complicated, this privacy won’t survive.

Even if changes to the protocol make tracking harder by default, political changes could allow governments to view a nearly complete record of every BTC purchase and movement of funds. What’s going to happen if the IRS adds an addendum to the FBAR that requires you to list all of your public keys? What will happen when thousands of law-abiding citizens report their capital gains (and losses) from Bitcoin on their returns?

If your Bitcoin profits are turned into fiat and taxed to support the continued bailout of Wall Street, then nothing’s really changed. Bitcoin trading becomes one more acceptable way for people to make money that can be funneled back to the state and its favored groups.

Meanwhile, Bitcoin’s virtues compared to dealing with credit cards, in terms of lower transaction costs and reduced counter-party risk, could speed adoption among merchants, which in turn generates more data to connect buyers and sellers with public BTC addresses.  
Volatility, transaction malleability, exchanges gone bad… to me these seem like minor issues, taking the long view. They’re not why I’m still looking in from the outside, without a single satoshi to my name. These aren’t the reasons I decided to write this open letter to the Bitcoin developers and community at large.

I’m writing this because I’m worried that Bitcoin could become a far greater threat to fiscal independence than anything that’s come before. The history of the United States itself should serve as a warning. What began with a constitution to strictly restrain the government’s role, and a Bill of Rights as safeguard, is now a leviathan with effectively unlimited power. The massive economic surplus, fostered by the country’s laissez-faire roots, is now used to fund the largest welfare-warfare state the world has ever known.

Failure to Understand Bitcoin Could Cost Investors Billions

Failure to understand Bitcoin will indeed cost investors billions. 744,408 BTC stolen (nearly 7% of total mined coins to date) and some people seem to be cheering like this is a good thing because they don’t like (long despised) MtGox. This is far far from over.  Where did those stolen coins go? Well check your wallet because they were likely fed back to the markets. If you have been buying bitcoins on any exchange chances are you have some of the stolen loot yourself. These stolen coins can be traced back to their true owner in a direct chain of title thanks to the block chain. If you don’t think this matters you don’t understand the legal system and the principle of Nemo dat quod non habet

Under both American and English law the original owner of stolen property can demand ownership be returned to him if he can prove a chain of title (something the blockchain conveniently provides). The only recourse for an innocent buyer of stolen goods (and only in some jurisdictions) is to argue the exchange it was bought from had an implied warranty and he can try to sue the exchange after returning the coins to the true owner. MtGox is insolvent good luck there. BTC-e is run by anonymous folks think they will stick around in the face of massive lawsuits?

But cheer up there is still a chance most MtGox victims will get their coins back. The threat of massive unending lawsuits targeting innocent bitcoin buyers is an existential one for bitcoin. The 10-15 early adopters stand (by far) to lose the most if bitcoin goes down in flames. They might actually decide to buy out MtGox for the 744,408 bitcoins (an amount grossly exceeding the worth of the company) not because they are altruistic people, but because the chain of lawsuits that would follow if they don't act may hurt their holdings more than the loss of 744,408 bitcoins. It’s a lot of money, however, so its likely a difficult call for them. Regardless expect all future exchanges to require both rigorous identity checks prior to buying and selling as well as fine print stating that anyone who supplies coins to a market is ultimately responsible in the event those coins are determined to be “black” or stolen goods in the future.

Still think there is no need for truly anonymous cryptocurrency?

[1713573687]

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[AnonyMint]

Dark Enlightenment

I must break my promise not to post in this thread again, because Eric S Raymond has demonstrated his awesome writing skills and high IQ ability to discern the generative essence of the salient features of a phenomenon.

There is a poll and thread for Dark Enlightenment.

First I quote myself:

https://bitcointalk.org/index.php?topic=455141.msg5023887#msg5023887

In defence of the Libertarians here, most seem to have quite moderate views in advocating "small" governments and seeing their ideology as a "guiding principle" rather than a hard set of rules.

I am not a wishy-washy, fence-straddling Libertarian who accomplishes nothing. I am an anarchist, who makes it happen by releasing software that enables individual freedom.

Specifically I am some what near to being a polymath (although I am a poor writer and communicator), e.g. I probably connect to all clusters on the Dark Enlightenment map (if following image doesn't display, then click that link to see it at top of page). Note for example I've exchanged communications on his blog with James A. Donald (who was the first person to communicate publicly with Satoshi!).

Bitcoin is doomed to a future of top-down control and thus can't compete with the top-down global money solutions

That's BS. Central control implies a cohesive group of vested interests -- much more dangerous to legacy financial systems than a disorganised collective of FOSS enthusiasts.

You have not technically refuted the Threats section of the OP which drive Bitcoin to a centralized control. If Bitcoin can be taken over by vested interests, then we are back in the same predicament, just a different set of slave masters.

Decentralized means the vested interests can't take control, only contribute in a decentralized competition. Centralized means it gets swept into the power vacuum of democracy.

Re: the $150T bubble collapsing?
Not gonna happen unless levels of mutual distrust in society reach a crisis point.

Eventually you run out of other people's money and productive lifespans. Then comes the outcome that has repeated throughout recorded human history, as linked in the OP.

That most people believe it is impossible for history to repeat, is why we are nearly doomed to an Apocalyptic or Mad Max outcome outcome. The people expect the government and the collective system can take care of them, but in fact it turns on itself like a cancer and eats itself because the money has to come from some where to continue to pay for all the entitled expectations of the people.

Look up the causes of hyperinflation. There doesn't even need to be an increase in the money supply -- hyperinflation is fundamentally a runaway collapse in the amount of trust the average person has in the underlying system.

We are headed into massive deflation, and perhaps you fundamentally don't understand that hyperinflation only occurs in peripheral economics, not in the core of the global economy.

http://armstrongeconomics.com/2013/01/28/here-we-go-again-hypreinflation/
http://armstrongeconomics.com/2014/01/14/hyperinflation-is-it-even-possible/
http://armstrongeconomics.com/2013/11/20/hyperinflation-all-just-hype/
http://armstrongeconomics.com/2014/01/14/hyperinflation-impossibility-in-private-sector/
http://armstrongeconomics.com/2013/08/11/defining-hyperinflation-the-coming-new-currency/
http://armstrongeconomics.com/2012/07/04/hyperinflation/
http://armstrongeconomics.com/2013/02/24/the-untold-truth-about-the-german-hyperinflation/
http://armstrongeconomics.com/2013/06/24/12703/
http://armstrongeconomics.com/2013/12/29/law-of-unintended-consequences/
http://armstrongeconomics.com/the-taxman-cometh/
http://armstrongeconomics.com/2013/10/30/world-trade-turning-negative-same-as-protectionism/
http://armstrongeconomics.com/2013/11/14/the-coming-deflation/
http://armstrongeconomics.com/2013/11/09/deflation-the-great-equalizer-now-greece-was-there-a-different-tested-response-in-history-yes/

My point in the Errata section of the OP about centralized control over debasement isn't that hyperinflation results. I never wrote the word hyperinflation. Rather my point is those who have captured the government gain the fruits of that debasement, or it is wasted by the poor fitness of top-down allocation of resources.

And I quote ESR:

http://esr.ibiblio.org/?p=5238

Premises of the Dark Enlightenment
Posted on 2014-02-19 by esr   

The Dark Enlightenment is, as I have previously noted, a large and messy phenomenon. It appears to me in part to be a granfalloon invented by Nick Land and certain others to make their own piece of it (the neoreactionaries) look larger and more influential than it actually is. The most detailed critiques of the DE so far (notably Scott Alexander’s Reactionary Philosophy in an Enormous, Planet-Sized Nutshell and Anti-Reactionary FAQ nod in the direction of other cliques on the map I reproduced but focus pretty strongly on the neoreactionaries.

Nevertheless, after we peel away clear outliers like the Techno-Commercial Futurists and the Christian Traditionalists, there remains a “core” Dark Enlightenment which shares a discernibly common set of complaints and concerns. In this post I’m going to enumerate these rather than dive deep into any of them. Development of and commentary on individual premises will be deferred to later blog posts.

(I will note the possibility that I may in summarizing the DE premises be inadvertently doing what Scott Alexander marvelously labels “steelmanning” – that is, reverse-strawmanning by representing them as more logical and coherent than they actually are. Readers should be cautious and check primary sources if in doubt.)

Complaint the first: We are all being lied to – massively, constantly, systematically – by an establishment that many DE writers call “the Cathedral”. Its power is maintained by inculcation in the masses of what a Marxist (but nobody in the DE, ever, except ironically) would call “false consciousness”. The Cathedral’s lies go far deeper than what most people think of as normal tactical political falsehoods or even conspiracy theories, down to the level of some of the core premises of post-Enlightenment civilization and widely cherished beliefs about the sustainability of racial equality, sexual equality, and democracy.

An interesting feature of the DE is how remarkably little conspiracy theorizing there is in it. Instead, DE thinkers tend to describe the Cathedral as what I have elsewhere called a “prospiracy”. The Cathedral is bound together not by a hierarchy of internal control and explicit membership; rather, it runs on a shared set of ideological premises not all of which are held or even completely understood by the people who act as part of it.

To a first approximation, the ideology of the Cathedral can be described as “leftist” (many DE writers use the term “Progressive”, not meaning it as a compliment). However, the DE analysis of Cathedral ideology is actually much more complex and less reductive than these terms might imply (a point on which I expect to expand in later posts).

I will note, by the way, the known backgrounds of several key DE thinkers creates grounds to suspect that my own critical use of “Cathedral” in connection with software engineering had some influence on the DE terminology. I do not particularly claim this as an accomplishment, but there it is.

Complaint the second: “All men are created equal” is a pernicious lie. Human beings are created unequal, both as individuals and as breeding populations. Innate individual and group differences matter a lot. Denying this is one of the Cathedral’s largest and most damaging lies. The bad policies that proceed from it are corrosive of civilization and the cause of vast and needless misery.

Another way the DE puts this complaint is that nobody on the conventional political spectrum takes Darwinism seriously enough. Left-liberals self-identify as the friends of evolution out of a desire to be “on the side of science”, but if they really understood the implications of evolutionary biology and psychology they would be more horrified by them than Christian fundamentalists are.

The emphasis on this complaint is probably the single feature which most distinguishes the DE from other kinds of conservatism and anti-left-wing reaction. I’ll be writing about it at more length because I think it is the most interesting and challenging part of the DE critique.

While I don’t intend to do that here and now, I cannot exit this summary without acknowledging that many people will read this complaint as a brief for racism. In fact the DE itself contains two relatively distinguishable cliques that have processed this complaint in different ways: the Ethno-Nationalists and the Human Bio-Diversity people – in DE jargon, eth-nats and HBD for short.

If you come to the DE looking for straight-up old-fashioned racism, the Ethno-Nationalists will supply your requirement as hot and hateful as you like. The HBD people, on the other hand, are interested in value-neutral Damned Facts. They trade not in invective but in the nuts and bolts of psychometry and behavioral genetics. A signature consequence of the difference is that European-descended white people don’t necessarily come off “best” in the comparisons they make.

Complaint the Third: Democracy is a failure. It has produced a race to the bottom in which politicians grow ever more venal, narrow interest groups ever more grasping, the function of government increasingly degenerates into subsidizing parasites at the expense of producers, and in general politics exhibits all the symptoms of what I have elsewhere called an accelerating Olsonian collapse (after Mancur Olson’s analysis in The Logic Of Collective Action).

If this sounds like a libertarian critique, it in many ways is. One of my commenters noted, astutely, that the DE bears the imprint of Hans-Hermann Hoppe’s libertarian polemic Democracy: The God That Failed. Some of the leading DE thinkers describe themselves as ex-libertarians, but their thinking has often taken some very dark and strange anti-libertarian turns since. (I’ll have more to say about this in discussing Mencius Moldbug, who is worth a post all to himself).

Note to commenters: Please do not dive into attacking or defending these premises; that will be appropriate when I discuss them individually. Appropriate discussion for this post is whether I have missed major premises or gotten these wrong in any significant way.

I expect future posts in this series to include both a closer focus on individual premises ansd on individual cliques within the Dark Enlightenment.

Finally I quote James A. Donald (who is on the DE map above and was the first person to communicate publicly with Satoshi the creator of Bitcoin):

http://esr.ibiblio.org/?p=5238&cpage=1#comment-424855

I hope you’ll write about what Dark Enlightenment folks think would work better than what we’ve got, if they’re been at all specific about it.

We have not been specific about it, because we think that almost anything would likely work better than what we have.

The public service is largely independent of the politicians. They cannot be fired, they cannot have their budget cut.

For example the SEC protected and favored the Ponzi schemer Madoff, in a fashion that smells massively of corruption. The Senate summoned them for questioning. They refused to answer questions, and refused to invoke the fifth amendment, placing them clearly and unambiguously in contempt of the senate, and their silence in the face of questioning was an implicit admission of guilt.

Nonetheless, the senate lacked the balls to charge them with contempt.

So the practical effect is that government lacks any central control, so government funds are a commons, government regulatory power is a commons, which guarantees that the commons will be exhausted, unlimited spending, unlimited regulation. That is why they cannot pass a meaningful budget, why laws grow to thousands of pages.

Anarchy, monarchy, and despotism are all solutions to this intolerable problem of the commons.

This is anarcho tyranny: Everything is illegal, except crime which legal. The anarchy is that there is no center, no central authority, the tyranny is that the government buts into everything.

Anarchy without tyranny is a solution, tyranny without anarchy is a solution.

[joethejudge77]

This is the most interesting and well-written thread that I've ever read in this forum. I think I need more time to get everything.

[AnonyMint]

Adding to my prior post, I was enjoying the comments and I see that ESR still remembers me well. I didn't know I was the only person he restricted to one post per day. I guess I am the only person he banned from his blog under my real name and two pseudonyms.

http://esr.ibiblio.org/?p=5238&cpage=1#comment-425069

>I think high quantity combined with low quality is an issue.

That’s a point, and I did once before restrict a wack-job to one post a day. I will bear this in mind if JAD erupts again.

I'm amused.

[CoinCube]

The diagram of the Dark Enlightenment above is incomplete.
It is missing Contentionism. I corrected this omission.
 

[CoinCube]

I will be away for some time (work obligations) I wanted to share one last interesting link before I go.

The Dark Enlightenment

The (Bright) enlightenment of the Renaissance was to raise society from the dark anarchy of decentralized warlordism a.k.a. feudalism into the collective light of art, culture, finance, governance, central banking, usury and top-down order.

Now the (Dark) enlightenment pushes us from the order into the decentralized disorder (where in Shannon entropy disorder means maximizing the number of least probable possibilities i.e. maximizing degrees-of-freedom and diversity).

This is the pendulum of Contentionism that CoinCube and I have been theorizing about.

I've stumbled onto an analogy in my recent work on improving Zerocoin. It appears that all public key cryptography hinges on two dual forms, those based on number-theory (e.g. factoring of logarithms or elliptical curves) where the whole is collected into a monolith, or on random oracles where the whole is equipartitioned into its constituent parts (e.g. Lamport signatures). The former is an inductive and latter is a coinductive function (although to make them practical they are not unbounded oracles).

We are headed into the coinductive age where the advances are to destructively peel off freedom from the monolithic whole, instead of constructively structure the chaos in collected forms.

In the small, in Dark enlightenment (phase of the cyclical contentionism model) we have a plurality of inductive structures constructively growing within the context of the proliferation of structures destructively peeled away from the monolith increasing the economies-of-scale in the small (i.e. networking effects). Whereas in the dual of Bright enlightenment, in the small we are destructively peeling away small inductive structures and binding them together constructively to produce higher economies-of-scale in the large (i.e. fixed capital allocation).

P.S. And this post was to get you to realize I was really serious when I said this topic is for the highly intellectual. Please don't be offended by Damned truth.

The fundamental goal is maximizing degrees-of-freedom.
 

Degrees-of-freedom is the number of potential orthogonal (independent) configurations, i.e. the ability to obtain a configuration without impacting the ability to obtain another configuration. In short, degrees-of-freedom are the configurations that don't have dependencies on each other.
...
This universal trend towards maximum independent possibilities (i.e. degrees-of-freedom, independent individuals, and maximum free market) is why Coase's theorem holds that any cost barrier (i.e. resisting force or inefficiency) that obstructs the optimum fitness will eventually fail. This is why decentralized small phenomena grow faster, because they have less dependencies and can adapt faster with less energy. Whereas, large phenomena reduce the number of independent configurations and thus require exponentially more power to grow, and eventually stagnate, rot, collapse, die, and disappear.

As shown earlier in the economic devastation thread unrestrained socialism by its very nature limits degrees-of-freedom. Society is trapped in a cycle of ever increasing economic inefficiency which is the equivalent of a loss of degrees-of-freedom. Our collective lack of understanding of the fundamental cause will result in attempted "fixes" that will worsen the underlying problem.
 
Similarly, anarchism by its very nature limits degrees-of-freedom. Unrestrained anarchism will quickly exceed the error threshold at which point knowledge is destroyed rather then created. Unrestrained anarchism increases short term fitness at the cost of long term optimization/adaptation. In a fitness landscape anarchism steepens the curve driving the population to the nearest local optima. Individuals not at the local optima are destroyed their uniqueness obliterated. This destruction impacts the ability of the system to obtain another configuration and thus limits degrees of freedom.  

For example, there would be gaps (i.e. errors in fitness) between a bicycle chain and a curved shape it is wrapped around, because the chain can only freely bend (i.e. without permanent bending) at the hinges where the links are joined. Each hinge is a degree-of-freedom, and the reciprocal of the distance between hinges is the degrees-of-freedom per unit length. Employing instead a solid, but flexible metal bar, the metal would remain fit to the curve only with a sustained force. The resisting force is a reduced degrees-of-freedom and an error in fitness. Permanent bending to eliminate the resisting force, reduces the degrees-of-freedom for future straightening some of the bend for wrapping to larger curves or straight shapes.

Using this analogy unrestrained socialism is using a solid but flexible metal bar forced to the curve using sustained force supplied via expropriation. Unrestrained anarchism is eliminating the resisting force via permanent bending reducing the degrees-of-freedom for future straightening of the bend. Contentionism is the balance of the two forces. Contentionism is our bicycle chain with hinges.

The optimum should maximize the search done through anarchism subject to constraint via socialism to limit the loss of information already gained.

The role of socialism is to act as a dynamic constraint and smooth the fitness curve. Critically, socialism must be prevented at all cost from warping the fitness curve and creating false local optima. Socialism can only function via expropriation of resources from the fit. If socialism is permitted to create false optima it will progressively pool individuals into this falsehood. The optima can thus only be sustained by ever increasing expropriation on the fit leading to the eventual collapse of the system and the total loss of the dynamic constraint. This way lies the jungle.  

Socialism has been allowed to grow to the point where it has created multiple false optima. These are set to require ever increasing expropriation from the fit. The end result is Economic Devastation. To solve this requires a solution to the power vacuum. I am hopeful that truly anonymous cryptocurrency can help perform this function. The power vacuum starts to break down once government loses the ability to debase the currency. Even a truly distributed non anonymous cryptocurrency that cannot be debased would be a significant improvement over our current system. It would give us an opportunity to retire fiat debt and force governments to tax for their spending rather then simply debasing the currency. My hope is that cryptocurrency will eventually force socialism to live on a fixed income (taxation of the physical economy). Socialism would then lack the resources to create systemic false optima. The danger of collapse would ease and stability of the dynamic constraint would be achieved.

[AnonyMint]

Cross-posting this...

Soooooooooo, I read today that the world's debt amount to $100 trillion.
Wikipedia says that in 2012, the GDP was ~72 trillion. Let's suppose that it's $80 trillion now.

Debt to GDP = 125%

Incorrect. Total debt is $157 trillion in developed countries plus $66 trillion in emerging markets, because is 313% of GDP and the GDP is $72 trillion:

http://www.gfmag.com/tools/global-database/economic-data/11855-total-debt-to-gdp.html#axzz2iu5C4Y4Z

http://blogs.wsj.com/economics/2013/05/11/number-of-the-week-total-world-debt-load-at-313-of-gdp/

Chinese corporate debt is the highest in the world as a percentage of GDP:

https://bitcointalk.org/index.php?topic=365141.msg4337574#msg4337574

Don't forget to add on $1000 trillion of sovereign bond derivatives, and $1000 trillion of unfunded social liabilities.

http://www.indexq.org/economy/gdp.php

About the imminent conflagrapocalpyse...

What does that have to do with whether the technology exists to improve nuclear?

I hope you realize energy is regulated and taxed such that it is controlled by cartels. Getting rid of that doesn't imply a Dark Age, rather it frees us to realize innovations which were suppressed because they are paradigm shifts which compete with the cartels.

AnonyMint, I realize you are a very intelligent man and I enjoy reading your posts because they address many glaring problems others might realize but either subconciously or deliberately ignore to protect their investments or agendas.
My question to you though is because I have read your prediction about the burst of a $ 150 trillion debt bubble multiple times in your posts how you think such an event will unfold.

To whom is the world in debt exactly and how does this creditor force the government(s) to act as his debt collector(s)? From my understanding of your scenario it will lead to a widespread pauperization of the world respectively the majority of the people. Do you predict a simultaneous increase in the creditor's wealth or is this a scenario where basically everybody gets poorer?

As I explained in an upthread post (which I am too rushed to go find the link to at the moment), the ledger of who owes whom is less important consideration than the fact that it represents $150 trillion of human capital that was misdirected in its activities since mid-1980s and especially since 1994 or so when the debt-based economy accelerated (1994 is when Clinton had the equations for official statistics changed so they can unleash the surge).



(note we have inflation of fractional reserve digits which is why official stats lie about inflation to hide its relevance, but simultaneously we have a deflation of M0 which official stats also lie about by including bank deposits held Federal Reserve (which should be monetary base MB not M0), thus MB is hockey stick but the Fed doesn't show us the true M0. The Fed is trying to hide from us the deflation that is really there. We can get a proxy for what is happening with M0 by looking velocity of MB which falling like rock! Go to this link then change the "a/b" to "b/a", click the "Redraw Graph" button, so that you get GDP / MB, then you will see velocity is falling off a cliff since 2008.)

So this is why technological employment is going to be so severe and massive overcapacity in manufacturing, fixed capital infrastructure, and conspicuous consumption, because all during the 1970s, 80s, 90s, and 2000s, while a few of us hackers were becoming 100000X more productive with our new found toy (the personal computer), the bulk of the population was able to stay in the old industrial economy thanks to increasing debt.

So what you are going to see when the $150 trillion debt bomb explodes 2016ish is that anyone who is not very technically relevant in the new Knowledge Economy will find themselves unemployable. The governments will try to appease this majority by taxation and confiscating everything, because they fundamentally don't understand the cause of the problem.

With both scenarios (further concentration of wealth/obliteration of wealth) I see several problems that make this scenario seem unlikely.

Those ledger IOUs are worthless to both lender and borrower. The capital now is all in the brains of hackers such as myself. We take over now. Checkmate. While we were busy sleeping under our desks for the past 3 decades, the rest of you were out enjoying yourself. Now the payback comes. Oxford U. admits 47% of the existing jobs will be replaced with robots over next 19 years (was 20 last year when study was published).

1) The widespread confiscation of wealth would inevitably weaken or even nearly eradicate consumerism which is one of the strongest motors to our society and one of the most effective measures for the elite to concentrate wealth at the same time by concentrating the production to satisfy consumerism.  What would the elite gain by basically wiping out most people's spending capacity?

The government isn't run rationally. The vested interests want to suck as much blood out of a turnip as they can. They have no foresight on outcomes, especially they don't even understand.

However, I am one of those who do believe the Bilderbergs understand they must first collapse the economy in order to create the chaos from which they can get their one world government. They want to weaken local and national structures so they can get the economy-of-scale of control to compete with the technology which is rewarding bottom-up hackers.

It is really a defensive move for them and they while getting their world outcome are actually in retreat and losing the way ultimately.

This would in either case harm the creditor by either obliterating his own wealth or at least a lot of possibilities to spend his own wealth.
2) Do all relevant governments work on this collectively? From my current observations of international politics it seems as this is not the case most of the time. Why would it be the case in this event and wouldn't it create opportunities for backstabbing and breaking of the agreement to confiscate all wealth?

The nation-state is being destroyed by this. The national institutions will be completely discredited and untrusted within a decade.

Out of the ashes the Phoenix will rise. The world will see massive new productivity once the youth take political control away from the boomers and we move to a high tech Knowledge Age where there are no more severe national barriers. You will be able to freely travel and invest in all countries, we will be headed towards a Jetsons level of lifestyle...

3) What boundaries are set for the governments in this scenario? Are concepts like democratic elections or consistency with the constitution still applicable in this case? If not what changes and what keeps governments from doing now what you predict for 2016?

The constitutions aren't followed any more any way.

Government is reactionary. The owners of the government (the vested interests) only do what they need to maintain their position of privilege. They are preparing (e.g. the 2714 tank-like vehicles and 10 billion rounds of hollow point bullets for the Homelove Security dept in the USA, the 9/11 pretext to track everything we do, etc..) but just like in Ukraine and other places where there have been unrest, they will only act as necessary.

The peripheral economies blow up first. We see already Ukraine, Greece, Spain, Thailand, India, Indonesia, Egypt, even China has -18% drop in exports just this month over last year.

Then core of Europe 2015ish or so.

Then the USA will be last to fall 2016ish.

We are getting very close now. We might see a dead-cat bounce in 2017, and the severe SHTF hard down phase maybe 2018.

I hope you can answer some of these potential problems/questions as the theory seems pretty far-fetched in my opinion. I would rather fear a global nuclear war at the moment.

Looking forward to hearing from you.    

Well yeah that is why I've been screaming this in the Mad Max thread in the Politics forum. Check it out for more details. See also the Economic Devastation thread in the Economics forum.

There is no chance I am wrong. Zero. The only variability is in the timing. By 2020, I assure you we are in a shithole outcome.

[AnonyMint]

Cross-posting this...

https://bitcointalk.org/index.php?topic=455141.msg5654081#msg5654081

You fail to understand that you can't just wipe the debt ledger clean, then everything continues as if there wasn't debt.

Not only is there the problem of leverage meaning some people expect more than can ever be produced to pay them, i.e. a unit of money is a claim on production.

There is also the problem that the population has become lulled into technological irrelevance by the debt which sustained their desire to remain technologically ignorant.

F8ck the coming apocalypse is worse than I previously estimated...

Soooooooooo, I read today that the world's debt amount to $100 trillion.
Wikipedia says that in 2012, the GDP was ~72 trillion. Let's suppose that it's $80 trillion now.

Debt to GDP = 125%

Incorrect. Total debt is $157 trillion in developed countries plus $66 trillion in emerging markets, because is 313% of GDP and the GDP is $72 trillion:

http://www.gfmag.com/tools/global-database/economic-data/11855-total-debt-to-gdp.html#axzz2iu5C4Y4Z

http://blogs.wsj.com/economics/2013/05/11/number-of-the-week-total-world-debt-load-at-313-of-gdp/

Chinese corporate debt is the highest in the world as a percentage of GDP:

https://bitcointalk.org/index.php?topic=365141.msg4337574#msg4337574

Don't forget to add on $1000 trillion of sovereign bond derivatives, and $1000 trillion of unfunded social liabilities.

http://www.indexq.org/economy/gdp.php

While that is likely a fairly accurate statistic, it's still very misleading...

...The hotel proprietor takes the 100 dollar bill and runs to pay his debt to the butcher. The Butcher takes the 100 dollar bill and runs to pay his debt to the pig raiser. The pig raiser takes the 100 dollar bill and runs to pay his debt to the supplier of his feed and fuel. The supplier of feed and fuel takes the 100 dollar bill and runs to pay his debt to the town’s prostitute that, in these hard times, gave her “services” on credit. The hooker runs to the hotel, and pays off her debt with the 100 dollar bill to the hotel proprietor to pay for the rooms that she rented when she brought her clients there...

...No one earned anything. However, the whole town is now without debt, and looks to the future with a lot of optimism.

Most of these derivitives are just like the debt that this small town had, interlinking trade debt that largely self cancels...

And this exemplifies you are a mainstream (Keynesian Krugman-esque) economist and they are incorrect.

You fail to understand that you can't just wipe the debt ledger clean, then everything continues as if there wasn't debt.

Not only is there the problem of leverage meaning some people expect more than can ever be produced to pay them, i.e. a unit of money is a claim on production.

There is also the problem that the population has become lulled into technological irrelevance by the debt which sustained their desire to remain technologically ignorant.

What you fail to understand is that along the way of creating $227 trillion of global debt, the people were incentivized to attain skills and life experience that makes them entirely unemployable in the robotics and computer automation age.

I already explained this twice upthread, but you seem to have selective comprehension, i.e. you ignore (and fail to refute) my logical points when they challenge your basis.

https://bitcointalk.org/index.php?topic=455141.msg5637503#msg5637503

About the imminent conflagrapocalpyse...

As I explained in an upthread post (which I am too rushed to go find the link to at the moment), the ledger of who owes whom is less important consideration than the fact that it represents $150227 trillion of human capital that was misdirected in its activities since mid-1980s and especially since 1994 or so...

So this is why technological employment is going to be so severe and massive overcapacity in manufacturing, fixed capital infrastructure, and conspicuous consumption, because all during the 1970s, 80s, 90s, and 2000s, while a few of us hackers were becoming 100000X more productive with our new found toy (the personal computer), the bulk of the population was able to stay in the old industrial economy thanks to increasing debt.

So what you are going to see when the $150227 trillion debt bomb explodes 2016ish is that anyone who is not very technically relevant in the new Knowledge Economy will find themselves unemployable. The governments will try to appease this majority by taxation and confiscating everything, because they fundamentally don't understand the cause of the problem.

With both scenarios (further concentration of wealth/obliteration of wealth) I see several problems that make this scenario seem unlikely.

Those ledger IOUs are worthless to both lender and borrower. The capital now is all in the brains of hackers such as myself. We take over now. Checkmate. While we were busy sleeping under our desks for the past 3 decades, the rest of you were out enjoying yourself. Now the payback comes. Oxford U. admits 47% of the existing jobs will be replaced with robots over next 19 years (was 20 last year when study was published)...

...I've been screaming this in the Mad Max thread in the Politics forum. Check it out for more details. See also the Economic Devastation thread in the Economics forum.

https://bitcointalk.org/index.php?topic=455141.msg5097815#msg5097815

But first, we go to a strong dollar and massive global deflation. The USA and the NSA will thus be in the driver's seat of the default of $150227 trillion in debt. They will not give up this power (thus they will not hyperinflate away their power). They plan to charge to all of us. This is massive deflation.

No major nation in the world has ever hyperinflated away their power. They always self-destruct by attacking their own citizens. Study Rome. Study Germany, etc....

You don't sniff this yet, but Armstrong and I do. Later when you do finally capitulate and realize, that is when the others have also figured it out and it will be mad rush into the dollar and away from all other economies. Then we move into the peak for the USA Sept. 2015, then the USA goes over the cliff and total chaos will ensue. It will be much worse than 2008 and the central banks will be powerless this time. In fact, the Fed has been warning the banks they will not be bailed out again. This is why all the G7 have official bail-in plans (seen on their government websites) to take the money from the depositors instead.

You also don't understand that $150227 trillion global debt means every one has been doing the wrong activities and everything is uneconomic.

You don't understand that debt is not just a ledger item, it also reflects real waste of human years, wrong skills acquired, wrong decisions made, etc.. These real problems are not corrected just by changing a line on the financial ledger.

This frustration is why riots and global unrest (and the war cycle) is increasing all over the world right now. There is no way to avoid the global deflation contagion.

[AnonyMint]

Dark Ages...

https://bitcointalk.org/index.php?topic=455141.msg5672089#msg5672089

P.S. John Williams (proprietor of ShadowStats.com) thinks we will have hyperinflation. He is entirely mistaken. We will have severe deflation.

You are both entirely mistaken. As soon as we have severe inflation or deflation, the game will be over and dark age begins. Japan and all other 400%-Debt/GDP economies are trying to maintain zero percent inflation until they can't.

Dark Age is severe deflation, but the difference is that almost nothing has value any more. Food becomes the unit of currency and becomes much more expensive, e.g. rice was money in Japan for about 600 years during its Dark Age. This means the maximization of the division-of-labor collapses back to barter money, which means productivity and new knowledge production collapses.

Agreed there exists now the threat of falling into a Dark Age. And that is why I am working so hard on a technological solution. I know you don't believe it is possible to avoid a Dark Age. You might be correct, but you also might not be. I told you upthread that my strategy is to make it so the hackers can avoid confiscation and control over their activities, so that we can create 1000X more productivity in the Knowledge Age space. I hope this can offset the collapse of 47% into technological unemployment along with a $223 trillion global debt morass with a $2000 trillion derivatives and unfunded future social liabilities.

Wait to see the outcome.

P.S. And I thought I was the pessimist in this forum, you are more pessimistic than me.

[verdun2003]

Sounds like there are some zerohedgers here..

[CoinCube]

Premises of the Dark Enlightenment
Posted on 2014-02-19 by esr   

Complaint the Third: Democracy is a failure. It has produced a race to the bottom in which politicians grow ever more venal, narrow interest groups ever more grasping, the function of government increasingly degenerates into subsidizing parasites at the expense of producers, and in general politics exhibits all the symptoms of what I have elsewhere called an accelerating Olsonian collapse (after Mancur Olson’s analysis in The Logic Of Collective Action).

Of all the the premises of the Dark Enlightenment this is the most most critical for this is the mechanism (described as the power vacuum up-thread) which allows collectivism to grow to the the point where it threatens systemic collapse.

The historical predecessor for our current system of government was Athenian democracy. Their system lasted for 178 years.

Plato (427 or 428 BC - 348 or 347 BC) lived during the Athenian democracy. Plato in his most well known work the Republic points out all of the problems and pitfalls regarding living in a democracy, including its injustice and the oppression of the individual under the weight of a democracy that dictates at the whim of the majority of citizen votes.

The most chilling praise of democracy that I have ever read is that of James Anthony Froude.  

Democracies are the blossoming of the aloe, the sudden squandering of the vital force which has accumulated in the long years when it was contented to be healthy and did not aspire after a vain display. The aloe is glorious for a single season. It progresses as it never progressed before. It admires its own excellence, looks back with pity on its earlier and humbler condition, which it attributes only to the unjust restraints in which it was held. It conceives that it has discovered the true secret of being 'beautiful for ever,' and in the midst of the discovery it dies.
...
A centralized democracy may be as tyrannical as an absolute monarch; and if the vigour of the nation is to continue unimpaired, each individual, each family, each district, must preserve as far as possible its independence, its self-completeness, its powers and its privilege to manage its own affairs and think its own thoughts.

The founding fathers were well aware of the potential dangers.

At its birth, the United States was not a democratic nation—far from it. The very word "democracy" had pejorative overtones, summoning up images of disorder, government by the unfit, even mob rule. In practice, moreover, relatively few of the nation's inhabitants were able to participate in elections.

Specifically the founding fathers built a government with multiple safeguards against democracy. They built a government which

1) Lacked the ability to directly tax the population (no authority to tax income).
2) Had only one of its two legislative branches directly elected (The senate was appointed by state legislatures).
3) Did not have a fiat currency (gold and silver was money).
4) Did not have a central bank (no FED).
5) Did not allow direct election of the president (president was to be selected by the electoral collage).
6) Only gave the right to vote to landowners (called freeholders).
7) Gave most power to the states.

Gradually over time each of these safeguards has fallen. When Benjamin Franklin was asked what form of government the constitution of 1787 had created, he replied: "A republic, if you can keep it."
He reply has traditionally been read as a warning against monarchy, but it could just as easily be read as a warning against democracy. The Dark Enlightenment argues that we are failing to "keep it".

It argues that the republic is decaying into democracy and that democracy is a failure.

[LostDutchman]

The Republic was mysteriously transmogrified into a Democracy by the admisistration of FDR.

My $.02.

[skilo]

I think we need the venus project, But that would require a radical change in the way we think and live, I'm not sure many people are up for it, Some of us really wouldn't have a problem with a system in which no one "Owns" anything and there is no money, But some have no desire at all to be equal, They want to be above everyone else or they are not happy unless someone or some thing is under their control.

Maybe if we could create such a system where the needs of mankind are met firstly then there would be no need for a class based society.

Food, Clothing, Housing, Access to technology, With those needs met and guranteed to each person there would be no need to kill someone for something or start a war etc.

All monetary based systems require infinite growth to survive, Infinite growth is not possible on a finite planet with finite resources, Something will have to give sooner or later.

Pysicist Michio Kaku describes this as the transition from a type 0 to type 1 civilization.

As he puts it: "This is the most important transition because it's not clear if we are going to make it."

https://www.youtube.com/watch?v=6GooNhOIMY0

https://www.youtube.com/watch?v=7NPC47qMJVg

[CoinCube]

I think we need the venus project

Lets take a closer look at this Venus Project.

The term resource-based economy is used by the Venus Project to describe a hypothetical economic system in which goods, services, and information are free. Fresco argues that the earth is abundant with resources and that our current practice of distributing resources through a price system method is irrelevant and counterproductive to our survival.

Lets just call this what it is a modern day repackaging of communism.

From each according to his abilities, to each according to his needs.

According to Marx such an arrangement is made possible by the abundance of goods and services that a developed communist society will produce. The idea is that with full development of socialism there will be enough to satisfy everyone's needs.

Marx described the conditions under which such a creed could be applied. Mainly a society where  technology and social organization had substantially eliminated the need for physical labor.
Marx argued his belief that, in such a mythical society, each person would be motivated to work for the good of society despite the absence of a social mechanism compelling them to work.    

Just remember the true natural state of such a system as was so elegantly laid out for us by George Orwell.

“The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.”

“This work was strictly voluntary, but any animal who absented himself from it would have his rations reduced by half.”

"Comrades!" he cried. "You do not imagine, I hope, that we pigs are doing this in a spirit of selfishness and privilege? Many of us actually dislike milk and apples. I dislike them myself. Our sole object in taking these things is to preserve our health. Milk and apples (this has been proved by Science, comrades) contain substances absolutely necessary to the well-being of a pig. We pigs are brainworkers. The whole management and organization of this farm depend on us. Day and night we are watching over your welfare. It is for YOUR sake that we drink that milk and eat those apples."

“All animals are equal, but some animals are more equal than others.”

[skilo]

Lets just call this what it is a modern day repackaging of communism.

Communism is a monetary based system, The venus project advocates a system where money simply no longer exists.

I don't see how the venus project relates to communism, In the venus project there is no "To each according to his ability and needs" It's more like "Are you a human being? then you should have a home,food, and access to technology and transportation"

There are no "jobs" in the venus project, There are no business or corporations, It advocates replacing the role of man as a cog in the machine with robots and computers to do the drudgery.

[aminorex]

Lets just call this what it is a modern day repackaging of communism.

Communism is a monetary based system, The venus project advocates a system where money simply no longer exists.

I don't see how the venus project relates to communism, In the venus project there is no "To each according to his ability and needs" It's more like "Are you a human being? then you should have a home,food, and access to technology and transportation"

There are no "jobs" in the venus project, There are no business or corporations, It advocates replacing the role of man as a cog in the machine with robots and computers to do the drudgery.

Oh, great.

My $.02.

It didn't actually communicate anything.  More like a clipping from a thinly worn farthing perhaps.  Or a vague shininess left on a rough surface after you dragged a cupronickel clad coin across the surface.  Or maybe just the smell of thinking about it.

[aminorex]

Regarding technological surplus requiring new operating paradigms, I'm pretty sure that for the indefinite future people will use their social leverage to increase their power, and that social leverage will be primarily monetary or military for as far out as I can usefully plan.  That said, if a critical mass of talent were to focus efforts on creating a sustainable autonomic technical system incorporating productive capacity to support the full human life-cycle, it would probably be doable in a decade or two.  It's very analogous to a moon shot with 1960s tech, but more achievable, less of a stretch.  I imagine any such community of interest would have to be quite wealthy, and open-ended, with a strong coherent vision to which people would attach/detach over time.  Hard to see it happening without a personality cult of leadership, but a strongly coherent thesis could attract highly rationalistic people, just as e.g. the strongly coherent King leadership attracted highly moralistic people during the civil rights movement.  Once the system works, it should provide essentially unlimited surplus as it would have to be self-replicating in order to be sustainable against shock, so expanding it to all willing persons would be feasible.  The cultic aspects are likely to repel many, however, at least in a first generation.

Creating plenty would of course make the system an enemy of those who gain their power by enforcing scarcity.  There would be blood.

[CoinCube]

Communism is a monetary based system, The venus project advocates a system where money simply no longer exists.

Money is simply a medium of exchange. Eliminate money and all you have done is limit the ability to trade goods and services.
In a hypothetical society without currency power lies with those who control the means of production. A society without currency lacks the ability to effectively trade as barter is highly inefficient. Individuals in such a world would be completely dependent on the producers in this case robots. So who gets to own or control the robots?

If the answer is we all do equally or the government does and the people control the government the system is communism. See the Definition of Communism.

Regarding technological surplus requiring new operating paradigms, I'm pretty sure that for the indefinite future people will use their social leverage to increase their power, and that social leverage will be primarily monetary or military for as far out as I can usefully plan.  That said, if a critical mass of talent were to focus efforts on creating a sustainable autonomic technical system incorporating productive capacity to support the full human life-cycle, it would probably be doable in a decade or two.  

This could work as a form of base human income funded by taxation on a prosperous overall competitive economy. However, the key operative word is sustainable meaning resources have to be rationed in such a system. This circles us back to the question of how do we achieve said rationing?

What I like about the Dark Enlightenment (which I had actually never heard of prior to a month ago) is that it has given me a ton of outside the box thinking to look through. Each of those little dots on the map above is a blog of some sort. I am sure some of it will be garbage but there will also be gems. I have started with the political philosophy of Menicus Moldbug since he is described as the founder of the neoreactionaries (the purple section of the map). His Gentle Introduction to Unqualified Reservations is essentially a detailed walk-through of Complaint the Third: Democracy is a failure. It's a very long but fascinating read.

[BitOnyx]

Information price is according to how easy it is to access. Internet might make it priceless but at same time it is good thing.

[AnonyMint]

http://blog.mpettis.com/2014/03/will-emerging-markets-come-back/#comment-21244

Even the IMF has admitted that global debt is at a 200 year high. Central bank was invented a the end of the Middle Ages, but it wasn't ubiquitous until the 20th century. In addition to the $223 trillion debt which is 313% of global GDP, there is something on the order of $quadrillion of derivatives and another $quadrillion of actuarial promises to society which are unfunded. Central banking being the omnipresent lender of last resort is the cause of humongous monstrosity, because it prevented liquidation of TBTF throughout the 20th century.

For example the emerging markets are heavily laden with corporate dollar bond debt because due to ZIRP the fixed income investments (e.g. pensions) were forced to seek higher returns abroad. Thus emerging markets are mathematically betting short the dollar. Thus as capital flees the peripheral (i.e. non-reserve currency) markets (to include Europe and Japan by next year), there will be massive strength in the value of the reserve currency (the dollar) in 2015 and concomitant doubling in the NYSE index. This would put a spiraling (the toilet bowl) pressure on emerging markets, because they will be repaying debt with weakening local currencies. This will spiral until they exhaust dollar reserves and default on external debt, because once you take away the bubble veneer, none of them have positive current accounts. Argentina is approaching default the earliest probably in 2016.

Central banking is an abject failure.

But there is currently no better solution on tap. The fundamental issue and potential solution is much deeper than I can insert into a blog comment.

See also:

https://bitcointalk.org/index.php?topic=518453.msg5775371#msg5775371