Peter Schiff exposes himself as a fraud ?

[Erdogan]

I don't disagree much with this, except that you say that what I wrote is not really correct.

For bitcoin there is a disconnect, because there is no intrinsic value.

This is a pet peeve of mine. The term "intrinsic value" should not be used at all as it sets people to arguing all over again about stuff that's already been settled and explained to death a thousand times.

People use it in a colloquial sense, like Peter Schiff does, for market value. But if market value is meant, then market value should be used. But when people use "intrinsic value," then suddenly you get all these arguments that go off in every direction talking about why we value everything from warm breezes to pizzas to music to hammers. It's really annoying because it's completely unnecessary. The Austrian understanding that economic value is subjective does away with the necessity to delve into the metaphysical implications of every kind of "value" one can imagine and discuss.

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.

[dave3]

I don't think Peter Schiff is a bad guy.  Maybe someday he'll concede, and start to support bitcoin.

I think gold and silver are being heavily manipulated and pushed down, but eventually I think they'll also do really well.  Maybe not as well as bitcoin, but if a bitcoiner wants to cash out a bit and diversify, gold and silver are an obvious choice.

[Bitcoinpro]

I don't disagree much with this, except that you say that what I wrote is not really correct.

For bitcoin there is a disconnect, because there is no intrinsic value.

This is a pet peeve of mine. The term "intrinsic value" should not be used at all as it sets people to arguing all over again about stuff that's already been settled and explained to death a thousand times.

People use it in a colloquial sense, like Peter Schiff does, for market value. But if market value is meant, then market value should be used. But when people use "intrinsic value," then suddenly you get all these arguments that go off in every direction talking about why we value everything from warm breezes to pizzas to music to hammers. It's really annoying because it's completely unnecessary. The Austrian understanding that economic value is subjective does away with the necessity to delve into the metaphysical implications of every kind of "value" one can imagine and discuss.

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.

freedom has intrinsic value

[btbrae]

Disappointed as a long time Schiff listener/reader. He has his fingers in his ears and is la-la-la all the way on this one.

[hyunsookmom]

There is a split in the libertarian zerohedge crowd about Bitcoin but it doesn't make him a fraud if he's not that positive about Bitcoin. He's old school but that isn't all bad, I mean he knows in another thousand years Gold will still have value but no one here would bet their life that Bitcoin will still be around.


he has not been entirely negative about Bitcoin from what I have seen either? he's a legitimate challenger to bitcoin! the sensible should at least listen to him and have a balanced view.

[Bitcoinpro]

Disappointed as a long time Schiff listener/reader. He has his fingers in his ears and is la-la-la all the way on this one.

Well the US government doesn't have to worry about the dollar holdings like China does.

So they will just use Propagandists to help control the price.

China now backs the US dollar, they stupidly took the dead baby of America.

Sun Tzu would be turning over in his grave 

[Misesian]

Just because someone is wrong doesn't mean they are a fraud, Bitcoin is an incredibly new concept of course some people are going to be very skeptical of it, especially traders who have seen a many bubbles over their lifetimes

[Morphling4047]

    
Peter Schiff, here is a video to you:

http://www.youtube.com/watch?v=15_Y3_eRfOU

You can't just make those AFIRMATIONS, without even knowing how does bitcoin world works! Go home, you're drunk!

[Johnny Bitcoinseed]

I like Peter and watch his videos regularly.  

Here are some facts - fiat currencies come and go, they NEVER last "forever".  Generally a couple hundred years at most is enough to destroy a currency.  Read your history.

Will BitCoin last forever (as in a thousand years)?  Read your history.  The answer is No.  But it may (or may not)  last longer than our lifespans, nobody knows.

What about Gold?  Well, gold has been valuable for thousands of years and will likely remain valuable for many more centuries.  Gold your great great great great grandpa mined in California in 1849 is still sought after and valued today.  His gold did not "disappear" or become worthless.  Gold is timeless, immutable.

Ultra long term I'd stake my fortune that is to be passed down the generations on Gold.  Also Silver, lead, and the other commodities.  They will always be useful and sought after.  These commodities are a store of value beyond a doubt.  They cannot be created out of thin air or destroyed.  A chunk of metal is a chunk of metal even centuries from now.

Schiff knows this too and repeats that time and time again.

[teukon]

Gold isn't money simply because of it's properties.  It earned it's status by defeating rival commodities in free-market competition and gradually building a reputation.  It was able to defeat it's rivals due to it's properties.  One of those properties was its "intrinsic value" (originally people wanted gold for it's physical properties and thus bartered for it).  Gold could surely not have become the worlds most successful sound money without this property (silver would have kicked it's arse).

Bitcoin has different properties to gold but is establishing itself in the same way, through free-market competition.  However, at 5 years of age, it's just an experiment.  If it fails, it adds weight to the hypothesis that "intrinsic value" is necessary to "sound money".  If it succeeds (is widely held and used as money 50 years from now) it will have disproved the hypothesis.

Peter believes it will fail, that's all.  Peter doesn't really understand Bitcoin (evidenced by his repeated assertions that Bitcoin would be better with a gold backing) but, to be fair, very few do.

He sympathises with the community and argues his point fairly well (see the debate with Voorhees).  I, for one, welcome his respectful criticism and find it to be a refreshing contrast to the mindless pro-Bitcoin drivel ubiquitous here.

[teukon]

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.

[Bitcoinpro]

Gold isn't money simply because of it's properties.  It earned it's status by defeating rival commodities in free-market competition and gradually building a reputation.  It was able to defeat it's rivals due to it's properties.  One of those properties was its "intrinsic value" (originally people wanted gold for it's physical properties and thus bartered for it).  Gold could surely not have become the worlds most successful sound money without this property (silver would have kicked it's arse).

Bitcoin has different properties to gold but is establishing itself in the same way, through free-market competition.  However, at 5 years of age, it's just an experiment.  If it fails, it adds weight to the hypothesis that "intrinsic value" is necessary to "sound money".  If it succeeds (is widely held and used as money 50 years from now) it will have disproved the hypothesis.

Peter believes it will fail, that's all.  Peter doesn't really understand Bitcoin (evidenced by his repeated assertions that Bitcoin would be better with a gold backing) but, to be fair, very few do.

He sympathises with the community and argues his point fairly well (see the debate with Voorhees).  I, for one, welcome his respectful criticism and find it to be a refreshing contrast to the mindless pro-Bitcoin drivel ubiquitous here.

If you only apply the intrisinct value test gold dosn't have anything compared to the kind of intrinsic trust bitcoin has.

[bitrider]

I do respect the differing opinions about gold vs cryptos. And think it worth exploring. Of course cryptos and bitcoin are experiments - just in the first phases of testing.  But just thinking it through, makes me want to challenge this whole idea that "gold will be valuable for a 1000 years". I don't really believe that anymore.

I agree gold has won the best money contest to date. But there are new guns in town. New guns that have characteristics and potential future characteristics, that seem to improve on gold in many ways.

Gold's "industrial" and "jewelry" utility value is probably several orders of magnitude lower than its "store of value" utility value (which its price is based on now). Thus when better money comes along, and is trusted and used, then gold will be worth much less than it is today in real terms. Simply not as useful.

Gold will always be pretty, and useful in many ways, but I suspect that as cryptos and other superior forms of money emerge (over some decades of course) gold will lose its special shine. And thus not necessarily a good long-term (decades+) store of value.

We have not seen this before. And we are doing the experiment. So we (or our children) will see how it plays out.

[cdog]

Can we stop throwing around the term "intrinsic value" and please have this not devolve into a semantics discussion because I did 4 years as a philosophy major and that shit was like a tour of Nam I dont want flashbacks.

I like gold and silver because Im so bearish on fiat. But they cant compare to Bitcoin. Bitcoin is so much more useful to me, personally.

Bullion is simply an insurance policy against shit really hitting the fan. Its not an investment itself, per se. Its just a hedge.

[Dr Bloggood]

[...]
My question is why would a highly publicised economist like schiff with a great reputation keep saying these things ,I would love him to explain how is it even possible to honestly with a straight face say these silly statements .
[...]

He does not understand bitcoin completely yet. Like many libertarians, he is locked up in the intrinsic value controversy. Austrian economics requires the money stuff to have intrinsic value. It was Mises who expressed it with his regression theorem. Bitcoin has no intrinsic value. Gold glitters.

We think either it doesn't matter, or that there is a miniscule intrinsic value, enough to satisfy the requirement.

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.

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

I have said it in a different way, but probably essentially wanting to express the same thing: BTC has "intrinsic value" because of X,Y and Z (X,Y and Z being, for example cheap transactions, independence from governments and being easy to transport). Just like gold has brought intrinsic value before it was used as currency/store of value for the first time because of U,V and W.

Erdogan and 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)?

[Dr Bloggood]

For bitcoin there is a disconnect, because there is no intrinsic value.

I have to disagree for reasons mentioned many times - good intrinsic value, no disconnect.

It's a good discussion though!

[Dr Bloggood]

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.

+1

Schiff is awesome and has some huge balls too. He just doesn't get BTC.

[bitrider]

That sounds fair.

[Erdogan]

[...]
My question is why would a highly publicised economist like schiff with a great reputation keep saying these things ,I would love him to explain how is it even possible to honestly with a straight face say these silly statements .
[...]

He does not understand bitcoin completely yet. Like many libertarians, he is locked up in the intrinsic value controversy. Austrian economics requires the money stuff to have intrinsic value. It was Mises who expressed it with his regression theorem. Bitcoin has no intrinsic value. Gold glitters.

We think either it doesn't matter, or that there is a miniscule intrinsic value, enough to satisfy the requirement.

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.

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

I have said it in a different way, but probably essentially wanting to express the same thing: BTC has "intrinsic value" because of X,Y and Z (X,Y and Z being, for example cheap transactions, independence from governments and being easy to transport). Just like gold has brought intrinsic value before it was used as currency/store of value for the first time because of U,V and W.

I do not agree with this. Intrinsic value is well defined in economics. All economic things, basically, have that kind of value. Money, because it is used in indirect exchange, get additional value, called exchange value. Can something exist that has only exchange value, as contrast to something that has intrinsic value and gradually gets exchange value in addition? The post by BlueNote above bring in many other topics and expands the discussion to just about everything.

Erdogan and 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)?

I am an economist of education from a long time ago, but the real interest and self-education came a few years ago, when I found austrian economics. I have not read all the books necessary to be a real economist. I don't need or want to hammer people with famous names, but what I write is certainly mostly from the masters. I have the confidence to declare Mises' regression theorem ... just wrong. It is interesting, but not necessary for bitcoin now. That does not make Mises any smaller.

[Dr Bloggood]

I do not agree with this. Intrinsic value is well defined in economics. All economic things, basically, have that kind of value. Money, because it is used in indirect exchange, get additional value, called exchange value. Can something exist that has only exchange value, as contrast to something that has intrinsic value and gradually gets exchange value in addition?

It might be usable as currency/money with just exchange value, but I think that descussion is not even needed for BTc (although of course it makes BTC even more interesting).

Oh, and the most decorated heads in the economical academic world are the most stupid ones. Those professors really can just draw pretty charts on a blackboard, that's all. Janet Yellen's husband got a nobel prize, that should tell you a lot, ha ha...