Economic Devastation

[contagion]

so what fundamental principles do you find in crypto?

The following decentralization paradigms.

1. Decentralized consensus without requiring trust and reputation (which are both centralizing and which is why PoS is entirely uninteresting to me).

2. End-to-end principle (control is at the ends of the network and the intermediaries are dumb relays), e.g. that I don't need an intermediary dealer to do a trade. Btw, Cryptonote ring sigs obey the end-to-end principle and all other forms (CoinJoin, Zerocoin/cash) of on chain anonymity do not.

3. Open source.

Note CN coins currently have multiple problems such as ring sigs don't provide IP anonymity and Tor/I2P are not immune to Sybil attacks. The protection against Sybil attacks on the rings is by tx fee, which doesn't scale well when the attackers mine but the honest users don't.

All existing crypto-coins (and Inflatacoin wasn't a serious entrant, you can't just offer inflation and expect adoption, duh!) are going to going to be replaced by off chain fiat loans denominated in that coin's unit (Paypal and Coinbase taking over Bitcoin), because Gresham's Law says debased money drives non-debased money out-of-circulation. The fatal flaw in all coins is they don't have perpetual debasement. The holistic design of all existing crypto-currency is wrong on so many levels, but I am not going to detail every one of my ideas here and now. I have mentioned many of my ideas in my archives (under the various user names I had). For example, as U.T. I posted an idea to use merge-mining to achieve a programmable (mutable) block chain via decentralized competition.

[contagion]

Those in the medical field or who run or own a small business in the USA, please understand what is coming in 2016.

[contagion]

Is H7N9 the next pandemic? Can it advance the knowledge age and solve Economic Devastation?

https://bitcointalk.org/index.php?topic=365141.msg9894086#msg9894086

[CoinCube]

The reality is that the State exists because humans disagree and fight. This is why for example Proof-of-Work was such a major technological breakthrough, because it enabled centralized trust of decentralized untrusted parties. Ditto the end-to-end principle pushes the trust out to the ends of the network, so the untrusted intermediaries are just dumb relays. Please see my prior post where I mentioned that some decentralized (insufficiently damped) systems don't converge and instead oscillate. It is not enough to just say "magic wand decentralized!". We have to actually build decentralized technologies that solve real problems. Also decentralized systems may have tradeoffs. For example, an entirely anonymous, decentralized economy means human trafficking may become less traceable.
...

Socialism is needed to smooth the fitness curve. In a MadMax scenario (a world without socialism) the fitness curve steepens to the point that only those adept at violence (or in servitude to the violent) can survive.

This culling of the population would reduce adaption and progress in the long run as it forces relative uniformity on the population. The degrees of freedom in such a society declines.

This same principle on a lesser scale justifies limited social safety nets limited redistribution via taxation and some government assistance to the poor.

The problem is the progressive growth of socialism.  In combination with fractional reserve banking socialism becomes an inescapable vortex. The ability to debase the currency at will leads to unrestrained all consuming growth. Without a paradigm shift socialism will continue to grow unchecked until it starves and dies with tragic consequences for just about everyone.

What is needed is a negative feedback mechanism to check this growth. Perhaps a combination of sound money, elimination of fractional reserve, and outlawing government debt would be sufficient? In such a system the government would actually have to tax for every new program creating the potential for true opposition from those opposed to taxes.

Regardless such safeguards would never hold if the need for them was not glaringly obvious to the populace as a whole.  That condition won't exist until the current system collapses.

[contagion]

I believe the negative feedback mechanism is the decentralized technologies I mentioned. Decentralized leaders will compete for market share against inertia. Paradigm shifts are the negative feedback.

A free market. Socialism can never provide that. Never. See even my breakdown of directing voting in the Mad Max thread. Similarly I broke down your argument for centralized sound money.

If some leaders don't pull off an emergency paradigm shift pronto, we are headed towards that dysfunctional overshoot you describe.

That is why I am going quiet now. See my final post in the Mad Max thread.

Adios amigos.

[OROBTC]

...

@ CoinCube, anonymint and contagion

I should not have stayed away from this wonderful thread for so long, my compliments for the excellent back and forth.   Bravo!  + $55,000

 

Discussion of your ideas is critical for those of us who merely want to protect our freedoms and wealth (whatever we have...).  Your thoughts here, and on the other (linked) threads are on a very high level.

*  *  *

On a lower and more immediate level I offer up some thoughts too.  All assets have problems of one sort or another.  Diversification is the one key to having the best shot of preserving (and growing) what each of us has.

-- Gold is excellent as the proven wealth preserver throught the ages.
-- Bitcoin (and similar) has some advantages for preservation and (some) anonymity, also portability is an important feature!
-- "TEOTWAWKI" hard assets (farmland, guns & ammo, a water well, etc.) for those who can and can deal with them
-- Quietly held assets OUTSIDE the USA
-- Useful skill sets (I note many here have impressive skills)
-- Certain small businesses may offer up more stability than others.
-- Physical, mental and spiritual preparation all are important.  Stay healthy physically, mentally and spiritually!
-- I would suggest staying out of debt where possible, although in a hyperinflation debt is less dangerous (but who knows what will happen...).
-- Staying in touch with events, and staying nimble, will likely be good skills too...

Having the above and doing what you can are all good.

*  *  *

Although maybe not useful to many here, I value the conversations re the role of God and interpretations of Him.  I have found most useful to me Emmet Fox and in particular his study of the core part of Matthew in his book The Sermon on the Mount.  Highly recommended!  Fox does not subscribe to the scary & fearmongering views of Christ and our Father.  The same book offers up the only real study of The Lord's Prayer, a remarkable 20 pages or so, I had *NEVER* read anything like that before...

I am over-generalizing and over-summarizing in this remark, but Fox makes a very convincing case that Jesus is speaking in a kind-of code, a technical language that really it is the state of consciousness (via prayer -- MUCH more powerful than most believe) and the work put in (quality and quantity of prayer -- letting yourself be in the Presence of God) that leads to everlasting life in His House.

The book is revolutionary yet easy to read.  It helped save me from alcoholism.  Fox showed me that God is with you always, all you have to do his open your door to Him.

[CoinCube]

Fractional reserve banking is not without its advantages. If high reserves on deposits were made mandatory, banks would need to charge a huge spread on their loans to ensure that the return on capital is acceptable.

Untrue nothing prevents banks from making a conservative living via time deposits.

That is false when you consider all the externalities. It is only true isolated in vitro (in theory), not in vivo (in reality).

Not only do you not consider the opportunity cost of being eaten by larger fish when not being the one who captures the power vacuum of the Realpolitik (by creating fractional reserves, etc.), but you also don't consider the fact that when all money is loaned, then the money supply must increase at the aggregate level of interest in the economy, else the debt can't be paid. So mathematically those are two reasons that fractional reserves must exist and will always exist.
...
I had already explained my only hope on a solution to this dilemma, which is based on the concept that the masses will always be wrong and must be sacrificed by creating new frontiers for those who sit higher on the bell curve of evolutionary IQ. The banksters think they sit higher on the evolutionary IQ, but I think they would perish in a terminal spiral Dark Age without the knowledge creators who create the technological frontiers that renew humanity.

(missed this post earlier)

Even in the extreme case of a world with a completely fixed money supply (absolutely no inflation) loans could still be made without fractional reserve if the enterprise was productive enough. Someone with a good business idea could make a profit and pay back the loan. Obviously money in such a world could not be debt based fiat as it is today.

I agree there would be a very strong push by large actors to capture the system and revoke any prohibition on fractional reserve in such a world. Those same forces sunk the Chicago plan in the 1930s in favor shifting all the debt obligations onto government. As the masses are currently blind to the economic forces at work a prohibition of fractional reserve currently impossible.  

Thus the people are blind to the mechanism which is enslaving them and reducing their prosperity. Thus, since they will not change the mechanism, centralization of governance will grow stronger from the current financial crisis, and will diminish only when the involved organisms perish.

The masses will either learn or perish and be replaced by wiser masses. Hopefully that process will involve a lot more learning and education and a lot less perishing. I can think of little reason why our wiser and more educated descendants will tolerate fractional reserve.

Major social changes take time and generations to accomplish. From the time when the first modern state Iceland abolished slavery in 1117 to Saudi Arabia which abolished slavery in 1962 it took over 800 years to largely eliminate the practice. Hopefully eliminating fractional reserve won't take that long. In the short run we can only watch the current trajectory play itself and protect ourselves from the fallout. To this end OROBTC's advice above is excellent.

[contagion]

The OP is that knowledge can't be financed and the future capital is knowledge. People won't save in money, they will save (invest) in (their own) knowledge (e.g. their software projects, etc). Money will be a language for directing knowledge resources to where knowledge can develop the fastest in the maximum division-of-labor. Those who value knowledge will refuse to accept the debased language that was used to misallocate knowledge resources with debt, because they will find they can't invest knowledge resources with it, i.e. the audience of that form of money are the lazy people with less knowledge to bear.

Unlike fiat of yore backed by gold or promises of State order, the knowledge age has no use for open-ended promises that could be hidden in fractional reserves and instead wants immediately incremental conversion of the money language into knowledge production.

Thus fractional reserves will become impossible.  The fractional reserves will concentrate into the dumbest sector of the economy and that sector will fall away into an abyss. This is exactly what I expect to happen going forward in this coming global crisis.

And that is why anonymity is critical.

[NotLambchop]

...
Unlike fiat of yore backed by gold or promises of State order, the knowledge age ...

Bro, fiat is not backed by gold.  By definition.
Welcome to the age of knowledge!

[contagion]

...
Unlike fiat of yore backed by gold or promises of State order, the knowledge age ...

Bro, fiat is not backed by gold.  By definition.
Welcome to the age of knowledge!

Idiot of course not 100% backed yet still backed at some ratio of leverage and from the public's perspective fully backed; it was a discussion of fractional reserves. Up until 1971, it was indeed "backed" by gold in the USA but when France began demanding the gold, Nixon ended the gold window. During the 1800s, the private banks were issuing fractional reserve promises to pay in gold. Even the dollar was backed by silver, and up until 1965, you could bring your silver certificate paper dollar to the bank and exchange it for a silver dollar coin.

Yeah welcome to the knowledge age dimwit.

[youngmike]

End of the world is coming!!!!

[NotLambchop]

...
Unlike fiat of yore backed by gold or promises of State order, the knowledge age ...

Bro, fiat is not backed by gold.  By definition.
Welcome to the age of knowledge!

Idiot of course not 100% backed yet still backed at some ratio of leverage and from the public's perspective fully backed;...

The public knows how to read & use wikip, which tells the public:

Fiat money is currency which derives its value from government regulation or law. It differs from commodity money, which is based on a good, often a precious metal such as gold or silver, which has uses other than as a medium of exchange. The term derives from the Latin fiat ("let it be done", "it shall be").

Just because you rabid Bitcoiners pride yourselves in your willful ignorance, doesn't mean "the public" is equally clueless.

[contagion]

Open source theory is rooted in evolutionary psychology, by Eric S. Raymond[2]
http://esr.ibiblio.org/?p=6586#comment-1364271

(note you won't find my comment below at the above link, because Eric S. Raymond censors my comments. Go figure    )

Money is a language for exchanging value. In open source we are saving in acquired (personal and collective) knowledge and reputation, thus a language of value exchange.

When software or knowledge has become the most valuable product in the economy[1], this exchange can in theory significantly fulfill individual’s needs and desires. However, it is probably not the most efficient currency.

Knowledge and projects aren’t fungible. The maximum division-of-labor insures that some needs can’t be fulfilled by trading knowledge in kind.

Yet we don’t trust fungible monetary representations of value because they are inherently social institutions which are debased with debt and fractional reserves in a devolution into the antithesis of knowledge due to the Iron Law of Resource Statism.

Proof-of-work solved the Byzantine Generals Problem so in theory inverted the location of power in a monetary system moving it from the collective center to the individuals at the ends of the network, leaving only dumb protocol agents in the center — the end-to-end principle.

The individuals unleashed from that horrific Iron Law, are now free to vote with their value to walk away from initiatives (e.g. Paypal or Coinbase loaning in Bitcoin fractional reserves offchain) that debase the knowledge value in a decentralized cryptocurrency.

I assert that monetization of open source with decentralized cryptocurrency is imminent. The maximum division-of-labor is a more efficient and powerful force than open source’s gift culture which for example is subject to Dunbar number limit in some cases — it scales.

One generative prediction is that open source will become more modular and granular because project module developers remunerated in a knowledge backed currency are able to maximize their division-of-labor without the collectivization variance risk tradeoff of the gift culture when open source developers choose between applying their effort to larger projects that have the most inertia and smaller projects that have the most potential gain in (knowledge and reputation) value.

Gold can’t be that knowledge backed currency because it can’t be exchanged digitally and anonymously. It is impossible to make a digital proxy backed by physical gold that obeys the end-to-end principle because proof-of-work is based on decentralized consensus without trust. How could you not trust anyone to hold the gold backing, yet still insure the backing exists.

[1]	Iron was a precious metal 342 B.C.. Commodity prices inexorably trend downwards. https://bitcointalk.org/index.php?topic=495527.msg6065144#msg6065144 https://bitcointalk.org/index.php?topic=495527.msg6082580#msg6082580 http://unheresy.com/Information%20Is%20Alive.html#2nd_Law_of_Thermo

[2] Eric S. Raymond is the 150 - 170 IQ genius writer and progenitor of the term “open source” and promoted it as a non-communist, alternative to Richard Stallman’s and GNU’s antecedent “free software” movement. He is famous for writing the The Art of Unix Programming, the Cathedral and the Bazaar, and the Magic Cauldron, which enumerated many of the design and economic philosophies and principles that drive the internet, modern software, and open source. If you want to dig into understanding the coercion, communism problem with “free software” which ESR corrected with his promulgation of “open source”, listen to Eric’s advocacy in the following video about permissive open source licenses versus the GNU GPL viral licenses which compel certain actions on the licensee.

http://jobtipsforgeeks.com/2012/05/17/lessons-from-a-jug-talk-with-eric-esr-raymond/ (skip to 9:30 mins in video, or 11:15 for punch line)

[panju1]

...
Unlike fiat of yore backed by gold or promises of State order, the knowledge age ...

Bro, fiat is not backed by gold.  By definition.
Welcome to the age of knowledge!

Idiot of course not 100% backed yet still backed at some ratio of leverage and from the public's perspective fully backed; it was a discussion of fractional reserves. Up until 1971, it was indeed "backed" by gold in the USA but when France began demanding the gold, Nixon ended the gold window. During the 1800s, the private banks were issuing fractional reserve promises to pay in gold. Even the dollar was backed by silver, and up until 1965, you could bring your silver certificate paper dollar to the bank and exchange it for a silver dollar coin.

Yeah welcome to the knowledge age dimwit.

Backed to some extent is really not backed at all. Countries do not accept an independent audit of their gold reserves. So nobody can be really confident of the total gold reserves that a country has.

You also have the money supply exploding. If we look at what various QEs have done to the money supply, the ratio of gold reserves to total fiat in circulation would not appear comfortable at all.

[bigtimespaghetti]

...
Unlike fiat of yore backed by gold or promises of State order, the knowledge age ...

Bro, fiat is not backed by gold.  By definition.
Welcome to the age of knowledge!

Idiot of course not 100% backed yet still backed at some ratio of leverage and from the public's perspective fully backed; it was a discussion of fractional reserves. Up until 1971, it was indeed "backed" by gold in the USA but when France began demanding the gold, Nixon ended the gold window. During the 1800s, the private banks were issuing fractional reserve promises to pay in gold. Even the dollar was backed by silver, and up until 1965, you could bring your silver certificate paper dollar to the bank and exchange it for a silver dollar coin.

Yeah welcome to the knowledge age dimwit.

Backed to some extent is really not backed at all. Countries do not accept an independent audit of their gold reserves. So nobody can be really confident of the total gold reserves that a country has.

You also have the money supply exploding. If we look at what various QEs have done to the money supply, the ratio of gold reserves to total fiat in circulation would not appear comfortable at all.

Money supply on balance sheets. Get worried when this actually starts to be lent out, then we will see inflation- otherwise only expect grinding marginal inflation such as has been seen lately, barring of course black swans or exogenous events. Many people might be shocked to know that the Euro actually has the most 'paper' currency (including coins) actually in physical circulation but you do not hear goldbug gurus going on about this. Does that in fact make the dollar better to hold?

If you are interested in the complex relationship between gold, currency and oil. Check out a youtuber called Belangp very interesting take.

[CoinCube]

The problem is the progressive growth of socialism...
What is needed is a negative feedback mechanism to check this growth. Perhaps a combination of sound money, elimination of fractional reserve, and outlawing government debt would be sufficient? In such a system the government would actually have to tax for every new program creating the potential for true opposition from those opposed to taxes.

Money is a language for exchanging value. In open source we are saving in acquired (personal and collective) knowledge and reputation, thus a language of value exchange.
Proof-of-work solved the Byzantine Generals Problem so in theory inverted the location of power in a monetary system moving it from the collective center to the individuals at the ends of the network, leaving only dumb protocol agents in the center — the end-to-end principle.

The individuals unleashed from that horrific Iron Law, are now free to vote with their value to walk away from initiatives (e.g. Paypal or Coinbase loaning in Bitcoin fractional reserves offchain) that debase the knowledge value in a decentralized cryptocurrency.

This is why I am so interested in cryptocurrency. In theory cryptocurrency has the potential to restore sound money. It also makes fractional reserve more difficult and obvious.

US history provides a living example that the forces that drive socialism are not easily checked. In the 1830s we had sound money (gold), no government debt, no taxes (except tariffs on foreign imports), and after no central bank. Compared to the government of today it was a libertarian dream. Yet despite these advantages and despite a constitution specifically written to limit government we morphed into what we are today.

Through the favor of an overruling and indulgent Providence our country is blessed with a general prosperity and our citizens exempted from the pressure of taxation, which other less favored portions of the human family are obliged to bear.... How gratifying the effect of presenting to the world the sublime spectacle of a Republic of more than 12,000,000 happy people, in the fifty-fourth year of her existence, after having passed through two protracted wars — one for the acquisition and the other for the maintenance of liberty — free from debt and all her immense resources unfettered!

There will always be forces that seek to debase sound money, initiate fractional reserve, and encourage government debt. These actions are all highly profitable to individuals and special interests while their cost is distributed over society as a whole.  This is the Iron Law as mentioned above and essentially a tragedy of the commons scenario with the commons being sustainable government.         

[STT]

Many people might be shocked to know that the Euro actually has the most 'paper' currency (including coins) actually in physical circulation

Ive read that before a few times as criminal gangs with large amounts of money like the Euro for its high denominations and liquidity.   I think dollar is still most favoured globally as its used as the actual main currency unofficially many places.    China is another place Ive heard of very large amounts of cash being hoarded like this related to corruption, enough cash to fill a warehouse so perhaps they lack the appreciation and high value euro has come to have

[contagion]

Is Anonymity undesirable for society or unrealistic?

Contracts shouldn't be designed to require the courts for restitution. This drives collectivism as you duly noted.

There will always be a need for dispute resolution and mediation in contracts. It is impossible to fully remove this need. Although it is certainly possible to mitigates the state’s role via private judges/arbitrators the best that can be achieved here is minimization.

In the part of my prior post which you did not quote, I explained that certain contracts can be indisputable because they are algorithmically settled. With the Knowledge Age, I expect these type of indisputable contracts to become a preponderance of the GDP[1]. My hypothesis is the Knowledge Age changes the fundamental basis of society.

For example, I expect the monetization of open source to foster granularity of project modules. So this means instead of contributing to for example Firefox or Linux source code, an open source developer could instead contribute to a module of source code with a much more general but limited scope of functionality (e.g. a HTML rendering engine or an image format rendering engine, i.e. the latter is a sub-module of the former module). These modules would then be funded by a license fee paid by the users of the software. The key here is micropayments, because each module would self-register itself on installation and request a micropayment from the user. The user would be shown  an aggregation dialog box of all the micropayments for the all the modules in the software they want to install and use, and click to approve the payments. A huge advantage is then we can upgrade specific modules of a software, so we can customize software to our liking. For example, Mozilla assholes would no longer have the power to do what I warned them would be egregiously unpopular with website developers. You thus see from that Mozilla fiasco that even in open source, the IRON LAW of Political Economics applies. The way open source funding works now is that the key developers of large projects are funded by large corporations. Thus only the core developers receive remuneration. And the synergies and network-effects are highly muted as compared to the new paradigm I describe above.

[1]	Iron was a precious metal 342 B.C.. Commodity prices inexorably trend downwards. https://bitcointalk.org/index.php?topic=495527.msg6065144#msg6065144 https://bitcointalk.org/index.php?topic=495527.msg6082580#msg6082580 http://unheresy.com/Information%20Is%20Alive.html#2nd_Law_of_Thermo

 

Pedophilia, rape, murder, assassination have been going on since Mesopotamia. Communications were always anonymous in the past. You want a 666 control system to try to stop what has always existed and you will get instead your nirvana of megadeath.

Anonymous internet communication doesn't make it more difficult to hunt down individuals as compared to the way it was done before the internet. There was always anonymous money and transactions in the past. Whereas, if we give the State the power to make all transactions trackable in the imminent switch over to digital currency, we will surely all die in megadeath 666.

Two separate issues here. 1) It there a social cost to adding unbreakable anonymity in monetary transactions 2) Is the cost worth the benefits.

It is true that such crimes are ancient ones. However, it is also true that the creation of a marketplace where such activities can be financed in absolute anonymity will lead to an increase in said activity.

Firstly, I philosophically do not agree that which is natural is a cost for society. I believe the antithesis is the truth, which is that statism attempts to enforce unnatural outcomes[2], which is huge cost on society because nature always wins in the end.

But more saliently, as usual is appears you don't view the issue holistically and only look at one of the vectors that the new paradigm changes. For example, parents have a responsibility to protect their children from paedophilia and the Knowledge Age will economically empower individuals so they can have more influence over their kids, i.e. not be dependent on sending their kids to public schools where they lose some of their individuality and morals. The current statism is destroying the family unit which destroys children and makes them more vulnerable to paedophilia. Statist funded feminism[2] is causing more rape than anonymity could ever hope to. Murder rates are 26 times higher amongst blacks who have lower IQs and knowledge age skills — fact is that Knowledge Age workers do not murder. Increase in the risk of collectively funded assassination would be a great incentive to be anonymous and to not be a public figure, thus another restraint on corrupt governance and overpaid actors and sports stars which are a moral turpentine on society ("let them eat cake" or "feed them bread and circus" to keep their minds preoccupied).

Note I believe IRON LAW of Political Economics can't coexist with the Knowledge Age, because remember my thesis is that knowledge isn't fungible and can't be financed, thus it really can't be centralized and controlled and thus the government must eradicate the Knowledge Age if the government is to survive. In short, there is war ahead and only one side can survive. If the government wins, humanity loses.

[2]

http://armstrongeconomics.com/2013/10/13/defeating-the-business-cycle-a-goal-for-thousands-of-years/ http://armstrongeconomics.com/2013/10/01/what-socialism-destroyed-govt-shutdown/ http://armstrongeconomics.com/2014/04/11/socialism-at-its-best-how-to-destroy-the-wealth-of-a-nation/ https://bitcointalk.org/index.php?topic=365141.msg9910747#msg9910747 (Western civilization destroyed by trying to enforce gender equality) http://esr.ibiblio.org/?p=4934 (The true meaning of moral panics) http://www.usnews.com/news/blogs/washington-whispers/2011/03/04/5-ways-feminism-has-ruined-america http://esr.ibiblio.org/?p=3567 (What ‘privilege’ means to me) https://bitcointalk.org/index.php?topic=495527.msg5916097#msg5916097 (Banning both breathing and death)

 

Ask yourself this question. If everyone in the world was suddenly gifted with your current understanding of fiat, cryptocurrency, socialism and its dangers would you want anonymity in a world currency? The answer in my opinion is no.

I entirely disagree. I would still want anonymity because it provides the correct incentives for the game theory of society, as I enumerated above. Never should the game theory be based around personalities, but rather based on actual deeds which has nothing to do with identity. I view this very mathematically. Thanks for calling me out to explain my philosophy so it is available in the public record.

In such a admittedly very unrealistic scenario there would be no need for anonymity as the populace would vote to dismantle the foundations of fiat based socialism. There would be no justification for facilitating the aberrant social behavior that unbreakable anonymity helps hide.

Now obviously that is a completely unrealistic scenario. However, I believe it demonstrates why the long term solution to this problem is education and where that fails natural selection. Anonymity is a useful means to protect individuals until society progresses to the point where it can be safely set aside.

Not only unrealistic, but uniformed about the real game theory of society. Also society can't vote anonymity out of existence. Nothing can stop anonymity unless it is technologically possible for a central authority to squelch it. See below...

Internet anonymity is nothing like burying gold coins. It doesn't have to be cumbersome nor cost more (but there is a lot of programming work that needs to be done to make it so). It doesn't have to decline the velocity of money and can in fact increase the velocity which has been collapsing, by providing an outlet for the private sector to grow and interrupt without the oppression of the State.

Perhaps but this has yet to be proven. Certainly nothing that exists today meets this criteria. The state is likely to come down hard on an anonymous cryptocurrency if it starts to gain traction. That alone will increase the cost of using it.

This is the big open question. Even I am not sure how this will play out, but I will say do not entirely underestimate the power of the Knowledge Age. It is possible we can render the government's power quite impotent. For example, if the government wants to pay footsy with internet kill switches and packet filtering, we can switch to P2P mesh networks of WiFi routers and stenography. Also if the Knowledge Age is more profitable for people than the collapsing socialism which becomes draconian, then the majority of people walk away from the government (withdraw their support for its authority) and walk to anonymity and the Knowledge Age. It could be like the fall of the Berlin Wall, one day the government realizes they've lost and it falls peacefully in tidal wave action.

That is my grand hope.

[panju1]

...
Unlike fiat of yore backed by gold or promises of State order, the knowledge age ...

Bro, fiat is not backed by gold.  By definition.
Welcome to the age of knowledge!

Idiot of course not 100% backed yet still backed at some ratio of leverage and from the public's perspective fully backed; it was a discussion of fractional reserves. Up until 1971, it was indeed "backed" by gold in the USA but when France began demanding the gold, Nixon ended the gold window. During the 1800s, the private banks were issuing fractional reserve promises to pay in gold. Even the dollar was backed by silver, and up until 1965, you could bring your silver certificate paper dollar to the bank and exchange it for a silver dollar coin.

Yeah welcome to the knowledge age dimwit.

Backed to some extent is really not backed at all. Countries do not accept an independent audit of their gold reserves. So nobody can be really confident of the total gold reserves that a country has.

You also have the money supply exploding. If we look at what various QEs have done to the money supply, the ratio of gold reserves to total fiat in circulation would not appear comfortable at all.

Money supply on balance sheets. Get worried when this actually starts to be lent out, then we will see inflation- otherwise only expect grinding marginal inflation such as has been seen lately, barring of course black swans or exogenous events. Many people might be shocked to know that the Euro actually has the most 'paper' currency (including coins) actually in physical circulation but you do not hear goldbug gurus going on about this. Does that in fact make the dollar better to hold?

If you are interested in the complex relationship between gold, currency and oil. Check out a youtuber called Belangp very interesting take.

The increased money supply will have to show up somewhere. Right now, the US has not seen increased inflation because the increased money supply has gone to emerging markets. This has resulted in asset bubbles in these markets. Once these markets crash, the money will return to domestic markets causing inflation.

[deluxeCITY]

...
Unlike fiat of yore backed by gold or promises of State order, the knowledge age ...

Bro, fiat is not backed by gold.  By definition.
Welcome to the age of knowledge!

Idiot of course not 100% backed yet still backed at some ratio of leverage and from the public's perspective fully backed; it was a discussion of fractional reserves. Up until 1971, it was indeed "backed" by gold in the USA but when France began demanding the gold, Nixon ended the gold window. During the 1800s, the private banks were issuing fractional reserve promises to pay in gold. Even the dollar was backed by silver, and up until 1965, you could bring your silver certificate paper dollar to the bank and exchange it for a silver dollar coin.

Yeah welcome to the knowledge age dimwit.

Backed to some extent is really not backed at all. Countries do not accept an independent audit of their gold reserves. So nobody can be really confident of the total gold reserves that a country has.

You also have the money supply exploding. If we look at what various QEs have done to the money supply, the ratio of gold reserves to total fiat in circulation would not appear comfortable at all.

Money supply on balance sheets. Get worried when this actually starts to be lent out, then we will see inflation- otherwise only expect grinding marginal inflation such as has been seen lately, barring of course black swans or exogenous events. Many people might be shocked to know that the Euro actually has the most 'paper' currency (including coins) actually in physical circulation but you do not hear goldbug gurus going on about this. Does that in fact make the dollar better to hold?

If you are interested in the complex relationship between gold, currency and oil. Check out a youtuber called Belangp very interesting take.

The increased money supply will have to show up somewhere. Right now, the US has not seen increased inflation because the increased money supply has gone to emerging markets. This has resulted in asset bubbles in these markets. Once these markets crash, the money will return to domestic markets causing inflation.

A lot of the excess liquidity has flowed towards emerging markets as people are generally taking on more risks and emerging markets represent greater risk. However even more of the excess money that the fed has 'created' has stayed on deposit at the federal reserve by the banks as there has not been sufficient demand for high enough quality loans