Peter Schiff exposes himself as a fraud ?

[westkybitcoins]

That's not really correct. Austrians hold that economic value is subjective. The regression theorem is simply an inference about the emergence of money from barter. It's saying that a medium of exchange must have been valued for itself by the market prior to being adopted for use as a money. From the point of view of monetary theorists, it was necessary to break the perceived infinite regression of saying that something always had value as a medium of exchange. Obviously you have to close the loop somewhere, so this is just a logical inference which keeps you out of the circular logic of saying that something always had medium-of-exchange value when discussing the emergence of money.

Peter unfortunately does use the term "intrinsic value," but he's not an academic. What he means is market value apart from its use as a medium of exchange. What people in the hard money crowd find it hard to grasp is that human beings can quite easily ascribe value to something that was initially valueless (no market price) like the tokens produced by the Bitcoin software on Day 1 of its launch. No bickering about monetary theory can contradict what we actually observe in the marketplace. We see clearly that people started valuing Bitcoin for itself due to its perceived utility or novelty or whatever. It's irrelevant what the reason to value it was in the minds of the participants. The relevant point is that they then form the market for Bitcoin, and it's off to the races. Bitcoin is being used as a medium of exchange now, and so it obviously had to have had a value to people (if not a price) before it started being traded for pizzas and such. That's the point of the theorem. It's expressing the idea that this is a logical necessity. But the regression theorem should not be used as a predictor. It just says that if something becomes a medium of exchange then it was valued for itself immediately prior to that. People tried to use it as a predictor when it came to Bitcoin and got confused.

So one persistent error is in thinking that if something did not always have a market price (like the original BTC tokens), then it was never really valued for itself in the marketplace, and therefore can't become a money (due to the regression theorem). This is obviously a misunderstanding of the theorem, but it's hard to catch when you've focused on the virtues of hard money for so long. We never think of gold and silver as being valueless at one time because most pat explanations of the emergence of money start with precious metals being valued commodities already. But originally they did not have prices at all - just like Bitcoin. They were newly discovered curiosities at one point too. So this failure to go back to the beginning of the story of precious metals led to confusion when people analyzed Bitcoin as being merely valueless tokens with "no intrinsic value." Add to that the fact that Bitcoin was engineered on a computer and you get an understandable resistance in people who have been immersed in classical monetary theory.

Wow. Well said, particularly the highlighted portion.

[BlueNote]

Great post! You just put 500 pages of discussion about "intrinsic value" to rest...

...BlueNote, can I ask you where you come from - is it the academic world, have you privately studied this and/or have you been investing for some time (and if yes into what if you don't mind me asking)?

Thank you. I'm not an academic, but I have followed the Austrian school generally through articles and lectures put out by the Mises Institute and such. As a long-time libertarian I have always been interested in money and alternative currencies. Bitcoin has provided an exciting challenge to those who think intently about economics and money, so I've had to wrestle with every pro and con argument that's out there relating to cryptocurrency.

[proton]

It is a bad idea to take Peter Schiff seriously. Not only on bitcoins, but also on money and economics. 

He cried wolf so often that even when the wolf was to come, nobody would believe him.  According to him, we were supposed to see 5 major crisis in the last 4 years plus major hyperinflation.  He is just a media personality, serving as a Cassandra counterpoint to market’s eternal optimists.  All are opportunists.

Let’s focus on those who know what they are talking about when it comes to money and digital world.

[BlueNote]

I don't want to go into the question of what intrinsic value is. Read up on it, if you want to continue this discussion.

The Austrian school holds that all economic value is subjective. Since economic value is subjective, i.e., in the mind of the subject, all we need to know to do objective economic analysis is that someone values something. The way human beings express that they value something is that they seek to acquire it, either through some type of original appropriation or through exchange. So properly observing human action is what gives us an objective view of what people subjectively value.  That's all we need.

Note that this approach to economic value is merely methodologically subjective. It is not an attempt to philosophically deny objective value, rather it is simply seeking to explain human action as it pertains to the field of economics.

Economics is a narrow discipline while exploring the notion of value in general is a wider philosophical endeavor. Not understanding this is what leads people into endlessly arguing the semantics of every conceivable notion of value. We do not need to go there. The use of the term "intrinsic value" leads us away from the narrow field of economics because it strongly implies a philosophical worldview where objects are constitutionally endowed with value in themselves apart from the human subject who values them. While this may be appropriate in another context, it doesn't help us within the discipline of economics.

That many people, including Peter Schiff, will use this term at times to refer to market or exchange value should be viewed merely as the use of a colloquialism. It simply fails as a technical term to describe economic value because people routinely misunderstand and misapply it when it's taken that way, and so go far afield of the narrow purpose of economic inquiry. You only need to search this forum for "intrinsic value" to see how useless and distracting the term can be. Language is supposed to help us clarify thought. So if a term produces more heat than light in a given context, then it's not working for us and we should abandon it.

[Dr Bloggood]

Bitcoin has provided an exciting challenge to those who think intently about economics and money, so I've had to wrestle with every pro and con argument that's out there relating to cryptocurrency.

Me too, I'm sure this is true for a lot of the smarter minds on this forum. Btw, the phrases westkybitcoins highlighted in your post above are exactly the key phrases for me as well. That's the whole point.

So what are your conclusions - how far can BTC go and what are the biggest dangers to it? How likely is it that it will still exist in 4 years from now?

Erdogan, those questions go to you as well - I'm really interested in your opinions!

[Erdogan]

I don't want to go into the question of what intrinsic value is. Read up on it, if you want to continue this discussion.

The Austrian school holds that all economic value is subjective. Since economic value is subjective, i.e., in the mind of the subject, all we need to know to do objective economic analysis is that someone values something. The way human beings express that they value something is that they seek to acquire it, either through some type of original appropriation or through exchange. So properly observing human action is what gives us an objective view of what people subjectively value.  That's all we need.

Note that this approach to economic value is merely methodologically subjective. It is not an attempt to philosophically deny objective value, rather it is simply seeking to explain human action as it pertains to the field of economics.

Economics is a narrow discipline while exploring the notion of value in general is a wider philosophical endeavor. Not understanding this is what leads people into endlessly arguing the semantics of every conceivable notion of value. We do not need to go there. The use of the term "intrinsic value" leads us away from the narrow field of economics because it strongly implies a philosophical worldview where objects are constitutionally endowed with value in themselves apart from the human subject who values them. While this may be appropriate in another context, it doesn't help us within the discipline of economics.

That many people, including Peter Schiff, will use this term at times to refer to market or exchange value should be viewed merely as the use of a colloquialism. It simply fails as a technical term to describe economic value because people routinely misunderstand and misapply it when it's taken that way, and so go far afield of the narrow purpose of economic inquiry. You only need to search this forum for "intrinsic value" to see how useless and distracting the term can be. Language is supposed to help us clarify thought. So if a term produces more heat than light in a given context, then it's not working for us and we should abandon it.

You can abandon it, but in that case it does not make sense to discuss the regression theorem, and what is the difference of money to other things.

[BlueNote]

I don't want to go into the question of what intrinsic value is. Read up on it, if you want to continue this discussion.

The Austrian school holds that all economic value is subjective. Since economic value is subjective, i.e., in the mind of the subject, all we need to know to do objective economic analysis is that someone values something. The way human beings express that they value something is that they seek to acquire it, either through some type of original appropriation or through exchange. So properly observing human action is what gives us an objective view of what people subjectively value.  That's all we need.

Note that this approach to economic value is merely methodologically subjective. It is not an attempt to philosophically deny objective value, rather it is simply seeking to explain human action as it pertains to the field of economics.

Economics is a narrow discipline while exploring the notion of value in general is a wider philosophical endeavor. Not understanding this is what leads people into endlessly arguing the semantics of every conceivable notion of value. We do not need to go there. The use of the term "intrinsic value" leads us away from the narrow field of economics because it strongly implies a philosophical worldview where objects are constitutionally endowed with value in themselves apart from the human subject who values them. While this may be appropriate in another context, it doesn't help us within the discipline of economics.

That many people, including Peter Schiff, will use this term at times to refer to market or exchange value should be viewed merely as the use of a colloquialism. It simply fails as a technical term to describe economic value because people routinely misunderstand and misapply it when it's taken that way, and so go far afield of the narrow purpose of economic inquiry. You only need to search this forum for "intrinsic value" to see how useless and distracting the term can be. Language is supposed to help us clarify thought. So if a term produces more heat than light in a given context, then it's not working for us and we should abandon it.

You can abandon it, but in that case it does not make sense to discuss the regression theorem, and what is the difference of money to other things.

That doesn't make any sense at all. You don't have to use "intrinsic value" to explain money or the regression theorem.

[Johnny Bitcoinseed]

I am 100% certain that sometime in the future Bitcoin will be worth Zero.
I am 100% certain that gold and silver will always be worth something.

That said, for the foreseeable future, Bitcoin is very valuable indeed.

[Johnny Bitcoinseed]

Will BitCoin last forever (as in a thousand years)?  Read your history.  The answer is No.

1) It's "Bitcoin", not "BitCoin".
2) Forever != 1000 years.
3) The answer is unknown.

LOL

1) who cares
2) it is forever as compared to your lifetime
3) I stand by bitcoin not being worth anything 1000 years from now, as something better will come along.  Technology changes rapidly to be sure.

[BlueNote]

Bitcoin has provided an exciting challenge to those who think intently about economics and money, so I've had to wrestle with every pro and con argument that's out there relating to cryptocurrency.

Me too, I'm sure this is true for a lot of the smarter minds on this forum. Btw, the phrases westkybitcoins highlighted in your post above are exactly the key phrases for me as well. That's the whole point.

So what are your conclusions - how far can BTC go and what are the biggest dangers to it? How likely is it that it will still exist in 4 years from now?

How far can it go? We can only guess. The demand for this kind of currency is potentially huge and the supply of the standard Bitcoin unit is relatively small, so barring any insurmountable interventions by colluding governments or unforeseen bugs in the system, it seems to be on pace to take significant market share from fiat currencies and therefore rise in price indefinitely until it reaches the saturation point. The argument that its utility is the same regardless of the price and that this will keep the price down doesn't take into account the liquidity (in BTC) needed to provide that utility to a large number of people across the world on demand. As long as most holders are not selling, new buyers will have to outbid each other for the newly-created units coming from mining in order to gain that utility. Adoption and use of the currency must keep pace with the price increases in order to sustain them long term. It has to be used in commerce in an ever-increasing way, otherwise the price will be driven by mere speculation (which is not a demand for utility but profit).

I think it will be here in 4 years. It's very hard to kill.

What are the dangers? The shutting down of exchanges and/or merchant services is probably the main danger from governments. They are able to act swiftly and decisively on any part of the ecosystem exposed to them. So exchanges, merchant services, and other Bitcoin related businesses are at risk directly if they are out in the open and the government decides it wants to crack heads, but as long as this is not a worldwide coordinated effort, it will be limited in effect. Bitcoin should be highly resilient to bureaucratic attack due to is design.

[Bismarckbkk]

http://www.europac.net

I watched a discussion with peter schiff where he said investing in BTC now is more dangerous then 3 years ago. He said someone investing 50$ 3 years ago had much less risk then someone investing 10 000$ now. After that it was clear he was just attention whoring for media attention. Also possible he is afraid BTC will hurt his mutual funds performance.

He likes to claim to have predicted the 2008 crash yet his customers lost alot of money back then because he didnt actually believe any of what he said. Hes just fishing for customers thats all.

[Dr Bloggood]

Thanks for your little essay there!

Adoption and use of the currency must keep pace with the price increases in order to sustain them long term. It has to be used in commerce in an ever-increasing way, otherwise the price will be driven by mere speculation (which is not a demand for utility but profit).

In times of huge inflation and bail-ins, couldn't the function of preserving your wealth be enough? Especially once this crisis accelerates, as I expect it will. I think when the shit hits the fan, BTC will get a huge boost, even without many merchants accepting it (of course that would help additionally).

[BittBurger]

He is just a fraud, scammer, idiot whateva its not that complicated.

Peter Schiff is none of those things. He's one of the few commentators who actually understands economics and could explain the banking crisis when it happened. In fact, he predicted it.

Really?  He's so intelligent, yet he can't come up with a single convincing argument to defend his position?  Have you ever heard him speak (verbally / audibly) about why Bitcoin is going to fail?  Its like listening to someone with a speech impediment.  He can't even finish a sentence without "huffing" and cutting himself off halfway through, becuase he's got absolutely nothing solid to grasp onto.  He just has an inflammatory tone, and acts extremely irritated.   No substance to anything he says.   That's why I am convinced he's doesn't even believe what he says.  He's shitting on BTC because he fears it will put him out of business.  Plain and simple.  Therefore he's playing a very unconvincing "acting" role, which bleeds through in every word he speaks. 

-BB-

[_Miracle]

Peter Schiff spent years being ridiculed for calling the R.E. bubble while it was booming. He is not a fraud , he's just not a fan
and has stated that he doesn't fully understand bitcoin. Any economist or financial advisor worth 2bits will understand the assets/instruments that they are evaluating/advising on and it's going to take some time to get a group of those well blended professionals established. Until then it would do many economists/advisors well to understand crypto currencies and all of us enthusiasts well to listen [especially] to the naysayers with open minds.