To put this in context, Varoufakis' idea plan of how to solve the greek crisis after closing the banks was as follows: His team would break into the central bank to steal the tax id archives and issue a new "parallel" currency of IoUs that might be on blockchain, but would be completely controlled by him. So obviously the idea of currency not controlled by a central authority is not one he would accept.
His plan was for Greek government debt to be restructured (so it can be paid at some point in the future), for many reforms to be implemented and to reject "bailouts" and strict austerity that would only increase debt and decrease ability of Greek government to service the debt.
The plan for "parallel" currency of IoUs was made so that Greece could continue functioning in case European Central Bank forced banks in Greece to be closed.
But his point that Bitcoin is also essentially controlled by a central authority, i.e. the Bitcoin community, has merit.
(Even if the control isn't formal, owning a large percentage of a finite "thing" still counts as control, if the "thing" is the unit of exchange for people's work, property, etc. A BTC economy would depend on what the large holders decide to do with their portion).
With Bitcoin, the community that controls the money supply is not at all democratic; it is the early adopters with large holdings that carry all the weight.
From the perspective of a non-early adopter, the Bitcoin world would be even worse then the central bank and government world. Banks can be regulated and governments can be thrown out. Bitcoin would create a tyranny of "hodlers" protected by intractable mathematics.
except that people can always vote with their wallet against bitcoin, while his currency was unfairly advantaged by becoming tender for paying tax.
I dont think currency should be democratic, it should be impersonal and outside the whims of any group of people. Gold is like that. Cryptocuyrrencies may reach that stage after they solve all their bugs and their source code becomes fossilized.
Gold is not like that. When my country, France, floated the idea to maybe sell our reserves now that it's useless to pay for things people may need, the pressure from Russia and other very large holders was so heavy we dropped it: not worth the amount of enemy we would have made crashing its price.
People who advocate for gold... wait for it ... have gold ! It's the same as bitcoin.
The best currency is worthless and fleeting and represent work effort today and must be quickly converted back to work. Invest in schools to pay for a productive future that can afford your retirement, instead of clutching your precious metal.
Voting with your wallet has worked in several isolated instances where there is a clear divide and an ability to coordinate large groups of people. Meanwhile it has failed in areas with obfuscation and unclear understanding of complex processes (most of the companies/organizations in the world). Technical understanding of Bitcoin and crypto in general is so limited it certainly falls into the latter category.
Nothing which responds to interactions with humans operates outside the whims of any group of people.
> I dont think currency should be democratic, it should be impersonal and outside the whims of any group of people. Gold is like that.
If gold (or some other precious metal) is such a fantastic currency for a modern economy to use, why are no modern economies pegging their currencies to gold? Why didn't Nixon keep the dollar convertible to gold?
> it should be impersonal and outside the whims of any group of people. Gold is like that.
Gold is not like that at all. In the days of gold backed currencies, owners of gold mines had tremendous power to manipulate the market at their own whims.
> With Bitcoin, the community that controls the money supply is not at all democratic; it is the early adopters with large holdings that carry all the weight.
The mechanism according to which Bitcoin upgrades has nothing to do with decisions of whales or democracy. Read about how soft/hard forks and UASF specifically works.
I wasn't referring to upgrades, I was referring to control of the existing, finite supply of Bitcoin.
In a Bitcoin-centered economy, a relatively small community of "whales" would have de-facto control of the supply, because the supply available for circulation would depend on what they decide to do with their holdings.
True. Although their control of money supply would be limited, and they would lose some part of that control every time they decide to "increase" the money supply.
But Bitcoin has inflation though. The supply doesn't become limited until the inflation curve runs out in years to come. The early adopters will find the same financial pressures as with fiat currency.
This is why bitcoin is not the answer. Bitcoin is v0.1. It kickstarted everything but isn’t shaped up to the the gold standard. For that we need a more distributed and chain using the fundamentally same consensus strategy. Chia looks way more poised to address this problem and become the foundation for a real economy.
Varufakis was only vocal about these things in the media. During the Euro meetings, he kept silent, talking general nonsense, eating by himself, taking selfies and filming in secret. He is a cartoon character, who the populist prime minister of the time kicked out of the government after almost risking a GrExit. Please stop taking him seriously. The GPT-3 is just as smart or smarter.
Long story short: Varoufakis dislikes the inflexibility of Bitcoin's supply. Varoufakis wants currencies with flexible supplies safely under the control of technocrats like him. This should come as no surprise. What is surprising is that anyone would think differently.
What Varoufakis doesn't get is that he has no control over the future direction of Bitcoin. It's in large part an escape hatch for those who are fed up with technocratic debasement of money. Neither Varoufakis nor anyone else will be able to prevent people from using Bitcoin. They'll try, but lose enormous credibility when they fail.
> It's in large part an escape hatch for those who are fed up with technocratic debasement of money
Those fed up with technocratic debasement of money, and organized crime. I just read here [0] that Bulgaria is the second largest owner of Bitcoin, after Satoshi Nakamoto, due to "a crackdown on organized crime by the Bulgarian law enforcement in May 2017 resulted in the seizure of a stash of 213,519 Bitcoins".
Same article claims FBI is number 4 owner, after "they brought down Silk Road, the infamous dark web drug bazaar, and seized 144,000 Bitcoin owned by the site’s operator Ross Ulbricht, better known as, “Dread Pirate Roberts”, in 2013.
I do not know how correct this information is, though, so take it with a grain of salt. In any case, it makes one wonder how much more cryptocurrencies are owned by organized crime.
Are the long term goals of crypto-enthusiasts for crypto to completely replace fiat currency?
I can’t imagine a world without fiat currency, for the simple reason that governments operate in a deficit. A world without fiat currency would imply that all government workers are paid with crypto, all roads are funded with crypto, the military is funded with crypto, etc. And since this currency is limited and deflationary, this would imply that the only people who can fund these governments are the crypto whales. This sounds like a dystopian nightmare.
Further, it seems obvious to me that many of the decisions made by the Ethereum community are only intended to benefit wealth hoarders and early investors (PoS and the deflationary aspect). Their decisions don’t seem to have the larger global community in mind, at least in an authentic way. They seem to see it, simply, as a store of value.
It doesn't mean that governments are going to be funded by crypto whales, it just means that government spending will be kept on check and limited by the amount of money they can tax from people.
Politicians not being able to fund wars using a money printer is a good thing, not bad.
> it just means that government spending will be kept on check and limited by the amount of money they can tax from people
Governments can borrow money with or without fiat currency, so I don't know where you got the idea that a crypto-currency would stop governments from borrowing.
The difference is that without fiat currency, the government can't inflate it's currency to pay off the debts. At the very least it means that the population does not have the risk of their savings becoming worthless anymore, and it probably also disincentives the lender to give money for such purposes.
If anything, the inability to print money would make governments more dependent on borrowing, since the ability to print your own money eliminates the need for borrowing.
Different people have different preferences with regards to the level of government spending. In general, the actual level of spending will be some sort of average of society's preferences. You, as an individual, will have a hard time imposing your individual preferences about government spending on the rest of society, and "crypto" is not gonna help you achieve that goal in any way shape or form. That doesn't mean to say government spending is unconstrained. Of course, it's constrained, by the government's ability to tax and to borrow, but generally not by its ability to print money. If governments were to lose their ability to tax, we would end up with a bunch failed states, which is a considerably worse situation than having "bloated" governments. And their ability to borrow depends on their creditworthiness. To me nothing suggests that crypto-currencies can have any impact in any of this, to be honest.
I agree that it is unlikely that cryptocurrency replaces fiat currency entirely. What is more likely is a return to fiat money backed by an asset. A Bitcoin standard as opposed to the (relatively) recently abandoned gold standard.
Fiat currency as the world is experiencing it now is just as grand and uncharted of an experiment as Bitcoin.
I have read in a few places (example below) that Bitcoin hash power is highly concentrated. Given that Bitcoin is controlled by hash power it would be good to know who those people are.
Thanks. This is a helpful link. If the majority of good/honest nodes and the Bitcoin developers decide to implement a change, presumably this change will occur. My understanding is this happened recently with Taproot for example so one must infer that this is possible. Obviously such changes only impact new blocks but naturally this can still have an impact on the general ecosystem.
Here is a hypothetical situation for consideration (please shoot holes in it!).
The year is 2105, Bitcoin is the defacto world currency. Everyone is paid in Bitcoin and all transactions are performed in Bitcoin. Democratically elected world governments control the majority hashrate since they have decided that it is too risky to allow private individuals to control the network.
A major financial crisis emerges in which prices of goods relative to Bitcoin are on a severe downward trend. Individuals realize that if they simply delay purchases, their own purchasing power will increase - further reducing demand for goods and services thus further decreasing price. Since businesses cannot make a profit in this situation, workers need to be paid less continuing the deflationary cycle.
Democratically elected world governments decide that inflation is necessary in Bitcoin in order to avoid an exceedingly long painful and unnecessary economic depression. World governments work with Bitcoin developers to start rewarding miners with 20 Bitcoin per block mined thus devaluing the currency. 99.9999% of citizens of the world agree with this move. After the financial crisis is abated, world governments determine that a 2% inflation rate should be built into the Bitcoin in order to avoid such problems in the future and virtually everyone is happy with this.
Changing the miner subsidy amount would require a hard-fork, so the chain would split in two chains with a shared history, the original with only 21M coins and the new chain without the cap. And once that happens, it would be in everyone's financial interest to get rid of their inflationary coins and sell them for original Bitcoin.
So unless all the world governments decide to make it illegal to mine the old chain, it wouldn't work.
I don't believe that a hard fork necessarily results in a split of the chain. If all miners accept the hard fork then there is no split in the chain - new blocks require miners. My understanding is this has happened before.
Yes, but as long as some miners stay on the old chain, it will live. Hard fork also requires the users to switch to that new client, otherwise they won't be able to accept the new blocks from the forked chain.
Basically exchanges and whales determine the outcome of a hard fork. In a "hyperbitcoinized" world there wouldn't really be exchanges and it's not clear who the whales would be, but that scenario is so unlikely that I don't think about it.
Nope, the 2X upgrade was derailed by an exchange that decided to list both sides (IIRC it was going to be BTC1 and BTC2) and they were motivated by a (possibly rigged) futures market.
How exactly was it derailed? Creators of 2X stopped the fork because it was clear that majority of users were against it and that miners would be forced to mine it at their expense.
I suppose that leads back to my original question. What are the names of the people that control Bitcoin? Should we wait until this group does something that is not in the best interest of Bitcoin holders to find out?
It is a problem IMO that Bitcoin has no documented governance process so it's basically "if it prosper, none dare call it treason". As for who the CEOs and whales are, you can Google them.
They could rewrite the protocol at-will if a cabal of miners holds a clear majority of the hash power.
If that cabal would require hundreds of groups with no common cause on every continent, then no problem. If it's just a handful of individuals who could make that call, that's a potential problem.
And we just don't know which end of that spectrum the current hash rate distribution actually looks like.
Admittedly, there's no reason a private investor would want to tank their holdings like that I can think of. But, if significant hash rate is being held by state actors as some have suggested, economic warfare comes into the picture.
No, that's literally not how it works. Read the article I linked.
Even if the cabal of miners decided to make a change in the protocol and print themselves bunch of free coins, those mined blocks would get rejected by the full nodes, which compose the Bitcoin network and validate all the transactions.
- US farm bubble and crisis (1914–1918, crash 1919–1920) prices rapidly escalated during WWI and crash after war's end
.
- Roaring Twenties stock-market bubble (US) (1921–1929)
- Florida speculative building bubble (US)(1922–1926)
Were these actually related to the gold standard as such? Or were they just bubbles that occurred during that time. For instance the railway bubble seems to have nothing at all to do with being on the gold standard.
The gold standard meant that QE style answers were not possible. It didn't cause the bubble or the crash, but it meant that there were stronger constraints on what the government could do in response.
The Great Depression? Many countries had to abandon the Gold Standard to get out of it. In my country we also had a real estate bubble in the late 19th century.
Wait, isn't it obvious that cryptocurrencies like bitcoin are:
fully unchecked capitalism
Socialism is (at least in theory) about regulating the market in a way which puts social aspects in the foreground to maximize benefits for the society as a whole even if it's at the cost a a few.
This requires regulation.
Cryptocurrencies like bitcoin are all about avoiding regulation.
Also in cryptocurrencies in the end the wealthy have all the power, because they can use the wealth to dominate the mining and with this can control which changes are accepted by a blog-chain and which are not (this is a bit more obvious for PoS chains, but applies to PoW chains too).
Socialism is also about every natural person in society (theoretically) having the same power, which is in direct conflict with how modern crypto currencies work.
So IMHO crypto currencies are an aspect of hyper capitalism pretending to be something else.
> So IMHO crypto currencies are an aspect of hyper capitalism pretending to be something else.
Yes, exactly! The "problem" cryptocurrency solves is people with wealth having too many restrictions on that wealth.
I think blockchain technology is super interesting, and insofar as cryptocurrencies are an implementation of that technology they're interesting, but I'm very much not in agreement that they're solving any real problem that needs solving, and in fact the concept of cryptocurrency as money actually exacerbates an already bad situation. If one is worried about a small number of economic elite having undue influence over society, crypto is part of the problem, not the solution.
If controlling money means controlling speech, and so keeping money free from regulation is a strike against censorship, then I'd suggest the problem isn't over-regulation of money, but rather that somehow money == speech. Cryptocurrency seems to make that worse, focusing on protecting the freedom of wealth but doing nothing to break the unhealthy premising of freedom on wealth.
You can't have freedom of speech without freedom of wealth. The more Money is controlled by the government, the more it will be able to censor opposition and incentivize loyalism.
But you can't have freedom of speech with unchecked capitalism either as extreme wealth individuals/companies then can easily manipulate/undermine it.
This is especially true for countries without a constitutional right for free speech or such which made the mistake to only protect free speech from the government but not extremely powerful non-government entities.
Furthermore putting checks on capitalism doesn't mean the government is not directly controlling the money (I mean it's not the same as e.g. communist style planed economy).
To make thinks worse as long as a government still has any power they still can undermine freedom of speech even in mostly unchecked capitalism as they can subtle motivate the extremely money-rich entities such a system will produce to use there money to undermine free speech. Now some would bring here the argument that the markets self regulation will fix that, but I think it should be obvious this doesn't really work for many various reasons (like e.g. DRM, or just the simple fact that everything is extremely complex where it's close to impossible for a consumer to e.g. reliable not buy a direct or indirect nestle owned, to just name some examples.).
The problem is that the same tools which helps with "censorship resistance" also prevent certain forms of well intended "moderation"* similar "government seizure" isn't necessary theft at all as it might e.g. "seizure" of stolen money (e.g. through hacking) or "seizure" of money earned through serve crimes (murder, human traffican, etc.).
*like e.g. removing videos of a rape used to blackmail a innocent person.
I don't believe that you can magically/blindely solve problems of society with technical solutions.
Tools are amoral. A 90 pound woman using a tool built of metal to defend herself from home incursion and possible rape implies no morals to the metal tool. Tools can be a defensive equalizer, and should be readily available.
Tools are also widely used for some (potentially different) use case.
As such tools are often not amoral at all.
A assault riffle is designed to kill people and potentially many of them (self defense per gun doesn't require killing). As such it's not a amoral tool. Even through you might end up using it in a "good" way, or as "hobby" it's design makes it fundamentally a "weapon for killing, not self defense".
Through this is kinda getting off-topic.
Because whatever moral you want to attach to tools is irrelevant for aboves discussion.
Crypto currencies are a tool for unchecked Kaptialism, which has nothing to do with moral nor does it mean others can't use it for other purposes.
When did private money / store of value become 'unchecked Kapitalism'? Is gold also unchecked Kapitalism?
Seems we both can agree USA-funded murderer Lon Horiuchi did an evil thing when he pulled the trigger and killed an unarmed mother using an assault rifle.
Tools have use cases and use cases are not amoral. You can argue that in some cases otherwise immoral actions can be justified (such as your example), but this doesn't justify said actions moral outside that case.
Assuming that a tool is amoral just because it, theoreatically, could be used to act in a morally justified way is just cherry-picking situations in order to have them fit your worldview.
The Decentralization Movement, in the Web3 sense (three Internet prongs: consensus, messaging, information persistence), is (or ought to be) ultimately a vehicle for fostering subsidiarity[+], working opposite to the efforts of socialism to subordinate the individual to the state, and opposite to the extremes of laissez-faire capitalism.
You're right that the best that a cryptocurrency distribution could hope for is to mimic fiat ownership.
But Bitcoin distribution is so heavily tilted toward the initial years that it's much more uneven than fiat. And other cryptocurrencies are worse yet, especially those with huge premines (which include all coins lacking PoW), concentrating all the wealth on its creators.
varufakis should reade graeber's Debt. the most glaring problem of bitcoin (and the whole crypto world) is that it has this naive "scarcity view" of currency whereas it is an in-your-face reality that a most important role of currency is to boostrap a credit system.
cryptobros have an obsession with inflation and rates side of government regulation and they seem to be completely oblivious to the credit system side of regulation - the two-tier private/central bank etc. maybe because they actually have no clue how the current system works)
so besides the inflation/deflation challenge I have yet to see any proposal how one could have stable decentralized unregulated credit markets and would be quite interested if people have serious relevant references.
Varoufakis is a pretty sensible economist and understands perfectly what money's role in society is. If you read his book on confronting the EU he shows how eg Greece abandoning the Euro and moving to the Drachma wouldn't work out... It shows his understanding of macroeconomics.
I am pretty sure he understands credit money but he needs to show his work :-)
The point of my comment is that cryptobros are largely financially illiterate and when an economist undertakes the thankless task to discuss the possibility of a "cryptoeconomy" its important to make a list of all the missing parts
Let's compare it with the baseline alternative, the fiat currency called the US dollar - Call it $1USD, no vote.
With USD, the long-run target inflation rate as stated by the Federal Reserve is 2% per year. Seems small, some would argue - a small price to pay to avoid the dreaded risk of deflation. (Side note: why is deflation expected and approved of in computers and electronics but not healthcare or higher education?)
What if I told you that the average worker who works for wages for 40 years, will lose 40% of the value of their lifetime earnings if inflation was 'only' 2% per year? What if I told you that the current inflation rate according to official sources is over twice the target inflation rate and all signs indicate it will remain elevated for years to come?
What if I told you that the real problem with fiat currency is all the trust required? What if I told you that as a worker you now have an alternative to store a portion of your wages in a currency that is engineered using properties of digital scarcity, incredible security, and ingenious game theory to preserve, store, and even grow the purchasing power of your savings at a long-term rate of return that greatly exceed the rate of inflation or the performance of even the riskiest stocks.
Why is it bad for workers to have another option for storing their savings, an option that doesn't leak value due to manipulation by centralized actors? No one is forced to use Bitcoin. Bitcoin is a choice. IMO Bitcoin is the better choice. YMMV.
> Side note: why is deflation expected and approved of in computers and electronics but not healthcare or higher education?
That's... not deflation? It's literally building wealth. Cheaper computers means more people can afford them/ people can afford more of them. This is a good thing! Cheaper healthcare (or higher ed) would also be a good thing. But for it to be a good thing, you would have to make it objectively easier for more people to access the same-or-better-quality healthcare or higher ed! If by "deflation" here you simply mean "there's the same overall quality and quantity of higher ed, but older people (who had time to hoard money) can access it a lot easier, to the detriment of young people"... that would clearly be a bad thing.
Money is not like that, though. There's no economic advantage to be gained from people hoarding money - they're supposed to be a medium of exchange. If money increases value, you're not spending or investing them, which means less economic activity, hence less wealth for everyone. Money is just a vehicle, never an end-goal.
Tl;dr: wealth is, largely speaking, "more and better stuff for everyone!". More and better computers, electronics, higher ed, healthcare. And money, too, I guess? Except that "more money" is typically associated with "inflation" - which shows you that money doesn't really count, it's just a vehicle.
Isn't inflation/deflation about purchasing power? I.e. how much housing you can buy for a month's salary (for example), how much computing power, how much food you can buy? If you hoard money you can buy more computing power down the line. Isn't that "deflationary"? While if you hoard money and buy food down the line you'd get less of it. So food would be "inflationary".
> Isn't inflation/deflation about purchasing power?
No, that is the exact opposite of inflation/deflation.
Inflation/deflation are about nominal prices of goods and services.
If you want to talk about the price of a good in terms of a real quantity, then that is not measured by inflation or deflation and you need to specify what your measuring stick is, whether ounces of gold, or gallons of gasoline, or a median hourly wage in a specific labor market. There is one special term, called "real" prices, where the measuring stick is a weighted consumption basket, but that too is not going to represent purchasing power, which suggests deflating by either household income, or wages, or wealth.
> What if I were to tell you that the average worker who works for wages for 40 years will lose 40%
I'd point out that this was true only of workers who stored all their earnings over those 40 years in cash, and approximately 0% of workers do this. The actual average worker spends a portion of their income pretty quickly on goods and sticks savings into some combination of pension, savings accounts and a house.
> Why is it bad for workers to have another option for storing their savings?
Because "workers" aren't the people with vast reserves of wealth, they're the people who are paid by people with vast reserves of wealth. Make the vast reserves of wealth a zero or negative sum game, and they'll store that wealth in deflationary currency instead of businesses that generate less revenue each year, and the workers will find that their ability to get paid goes down every year.
The workers, unlike capitlists, earn a fixed salary. Inflation makes this salary have increasingly less buying power. This way workers are forced to negotiate a raise every year just to keep up with inflation and don't become poorer.
So, to be able to save, workers are forced to buy real estate that they don't need, making it less affordable for people who actually need to buy a house or get exposed to stock market risks.
All these problems caused by absence of hard money.
"Workers are forced to buy real estate that they don't need"
No, the average worker definitely isn't forced to buy more houses than they live in :D
I mean, it's always been obvious that the "lack of Gold Standard is the real reason workers are poor" is an astroturf movement by the ultra rich who have successfully lobbied for tax breaks for the rich and elimination of worker protections to blame something else [which removing would further benefit them] for the logical consequences of their actions, but the complete failure to understand what an average worker actually does with money is particularly amusing in this subthread. Strong people who don't work for a living cosplaying people who do energy here...
Since falling wage levels literally are deflation it's a bit hard to argue with a straight face that what the workers really need to be better off is a good old dose of deflationary currency.
> "lack of Gold Standard is the real reason workers are poor"
I would argue that it is less about the lack of a gold standard and more about the lack of a hard money standard that cannot be debased by centralized powers such as governments and central bankers.
Bitcoin is an excellent substitute for gold as hard money since it also cannot be debased (i.e. inflated) by central actors. Debasement (money printing) steals the value of the purchasing power of the worker and gives it to those closest to those in power via the Cantillon effect.
Bitcoin is also much more easily verifiable than gold. There is no such thing as counterfeit Bitcoin. Either you receive valid Bitcoin on an address that you access through a wallet that supports the Bitcoin protocol or you don’t. No need to worry about an assay to ensure that your gold isn’t actually Tungsten.
Do you disagree that real estate is used as a hedge against inflation, which artificially increases the prices?
And you can call "lack of Gold Standard is the real reason workers are poor" an astroturf, but it's something that actually makes sense to me when I look at the arguments.
I'm a worker. I can buy a bigger house than I need as an investment. Or I can buy the size I need, and take the money that I would have invested in the bigger house and put it in the stock market instead. Sure, some people do buy bigger houses as investment. They sure aren't "forced" to, though - not even for investment reasons.
And, the fact that an argument makes sense to you is a really poor response to an argument telling you why your position is wrong. (Of course, calling it an astroturf isn't much of an argument against it, either...)
Lack of a gold standard means inflation can happen. Is inflation why workers are poor? It's part of the reason, and it works this way: Inflation happens, then later workers' wages go up. The price increases come first. That makes workers poorer to some degree.
But workers are still pretty poor during periods of low inflation. Why? Because they aren't paid enough. And why is that? Lack of unions, lack of individual bargaining power, greedy owners, lack of ability to produce enough value to be worth more. (I think that all of the above are true at least to some degree.) Which of those does the gold standard fix? Does it create unions? Does it give individual employees more bargaining power with their employers? Does it make owners less greedy? Does it give workers the skills to do more valuable things? No, no, no, and no.
So the gold standard won't really fix worker poverty.
Sure, I'm not "forced" to buy real estate, but I think it's fair to say that I'm forced to invest and buy speculative assets, otherwise my savings will slowly melt away.
And of course I also don't think that once gold standard is established, there will be absolutely no poverty.
To the extent capitalist speculation on housing as an inflation hedge drives up the prices of assets workers store much of their wealth in, it benefits them a lot more than "not bothering to invest in anything at all, least of all job creation" being the rich's hedge against deflation
If it "makes sense to you" that the lack of Gold Standard is the real reason workers are poor, it probably helps to consider that workers were much poorer for the vast majority of human history with a Gold Standard...
>If it "makes sense to you" that the lack of Gold Standard is the real reason workers are poor, it probably helps to consider that workers were much poorer for the vast majority of human history with a Gold Standard...
That doesn't tell much. Anyone was much poorer for the vast majority of human history.
It doesn't, for the most part. In most of the graphs its pretty obvious the rich getting richer bit happened in the 1980s, not the 1970s. It's also obvious their share of wealth was particularly large in the 1920s, when there was a very pure gold standard. (And of course back when most people were so much poorer there wasnt even enough food to go around, the rich still had palaces, servants and mountains of gold to fund wars to engage in the most profitable economic activity of capturing other people's gold)
But obviously the people who advocated the tax cuts for the rich in the 1980s are highly, highly motivated to pretend it was leaving Gold Standard several years earlier that did it. Not least because going back to a gold standard would allow them to make that gap even bigger - the 1% could HODL the 30% their wealth in risk free, liquid, appreciating coins instead of having to take actual risks and create actual jobs. But the deflation that preserves their wealth as they withdraw from funding productive activity is - quite literally - everyone else's wages and sales revenues going down.
Sure, but the original discussion wasn't concerning the rare exception to the rule the gold standard hurts the poor (a brief period between 1958 and 1971 in the US which started with half the world's gold supply, and so growth and inflation took occurred as normal).
The original discussion was concerning the insane fantasy that the US economy would be better off backed by a deflationary cryptocurrency than the US dollar.
Under a fiat system those workers were forced to put their hard earned life savings into the stock market or real estate in order to escape the ravages of inflation. Despite all the talk about the time value of money in finance, under a fiat regime it is impossible to save your earnings for the future in a bank account or Certificate of Deposit such that you come out ahead after inflation over time.
The fact that there is no option to save an enjoy positive inflation-adjusted returns without taking on market risk is an indication of what a scam the current system of fractional reserve banking and artificially manipulated interest rates is.
> Because "workers" aren't the people with vast reserves of wealth, they're the people who are paid by people with vast reserves of wealth.
Really? Workers have less wealth than rich people so it’s okay to steal their wages via inflation? /s
> Really? Workers have less wealth than rich people so it's OK to steal their wages via inflation.
No, workers have less wealth than rich people (no wealth, in the case of a sizeable fraction of the population)so it's not OK for rich people to steal their wages by getting "positive inflation adjusted returns without taking on market risk". I mean, where do you think "risk adjusted returns without taking on market risk" come from? They come from other people doing more work for the same cash payment.
An FDIC insured bank account is already limited to a specific amount in order to prevent the 'rich' from free-riding.
It still isn't clear to me why you would try to justify a system that doesn't allow an average wage earner or pensioner the mere possibility of earning a positive inflation adjusted (not risk-adjusted) return on savings?
Why are risk-free inflation-adjusted savings options for the working class a negative thing? That's all Bitcoin really is, on a long-term basis for most people.
> What if I told you that the average worker who works for wages for 40 years, will lose 40% of the value of their lifetime earnings if inflation was 'only' 2% per year?
how did you come up with this number? rational people don't just accumulate a big pile of cash over forty years. to the extent they have a surplus that doesn't immediately go towards expenses, they purchase assets.
by the way, I don't think it's "bad" that crypto exists as an option. having options is great! but I do think you'd be a fool to park an amount of money that matters to you in crypto.
That is because rational people know that the scam that is the fractional reserve banking system with it’s artificially low interest rates, is the direct reason why workers have no option to save their money in the bank while coming out ahead of inflation. If there were no inflation and banks had to pay you a meaningful rate to save with them, then there would be a viable option for those who do not wish to risk their life savings in the stock or real estate markets.
Tell me why is it, in a functioning economy, that the only option for wage earners to stay ahead of inflation is by risking their savings on volatile stocks or real estate?
Why is it not possible to save conservatively in a bank while staying ahead of inflation? In my opinion it is by design because it is easier for governments to steal wealth by inflation than it is by taxation.
Inflationary monetary policy is a scam designed to steal generational wealth. Bitcoin fixes this.
USD is managed by the federal government, which despite all its flaws, is still a democracy.
> What if I told you that the average worker who works for wages for 40 years, will lose 40% of the value of their lifetime earnings if inflation was 'only' 2% per year?
You'd be lying. The average worker spends the majority of their earnings immediately meaning that inflation doesn't cut into them, and puts most of the rest towards assets that track inflation (houses) or exceed inflation (stock market / retirement accounts).
Exactly who do I vote for to end the inflationary, easy money, Zero interest rate policy of the Federal Reserve. You may have been taught in school that the United States is a democracy but I am afraid that does not apply to the Federal Reserve which is an unelected unaccountable quasi-goverment entity at best.
> You'd be lying.
Nope, not lying - just calling out the truth that the government systematically steals the purchasing power of the common man by means of inflation, officially at the rate of 2% per year, but I believe the rate is actually much higher.
Currently the official rate is 6.4%, so over 3x the target rate. I’m curious how anyone could see this situation and not be concerned for the future. See 1971 Cost of Living for example https://imgur.com/3YApK5i
I don't think traditional economic models think of 2% inflation in terms of "40% of the value being lost over a career." It's more this is where, from experience, we have an socially positive balance between economic rictus (a deflationary economy tends to discourage discretionary spending) and undermining real-world projects (high or volatile inflation makes long term project financing difficult or expensive)
> I don't think traditional economic models think of 2% inflation in terms of "40% of the value being lost over a career."
Well maybe they should? I mean it is a real measurable cumulative effect of 2% inflation compounded over 40 years. It may not be convenient to mention this negative impact of a cheap money inflationary policy, but it is important for us to understand the reality of the situation.
Those who claim that ‘deflation bad’ have only marketing materials from the FED or thought experiments by traditional economists to rely on. Bitcoin is giving us a real-world experiment that allows us to understand what time-preference means in a deflationary currency.
Will it really be the catastrophe that the central bankers tell us or will life go on? Or will offering the public a new option - a money designed to preserve and even grow purchasing power over time?
What if it allows wage earners a new option to consume now or save and consume later, while enjoying the benefits of compounding and the time value of money, one that isn’t manipulated by central bankers to ensure that there isn’t a bank in the world that will pay interest on a savings account sufficient to keep place with inflation?
What if this new option provided a disruptive new option that shifted us from a mass consumer economy - destined to destroy the planet - into a saver economy, where consumption is deferred until it is required.
Instead of shopping till we drop, we as society could save for a more affluent future, build epic projects that span generations instead of always thinking so short term.
The canonical example of hard money failing is the Great Depression. You had a demand shock, and deflation contributed to that. If you had money, you had less motivation to spend it.
Once you gain the power to debase the currency on demand, it lights a fire under people's behinds-- I've got to turn those dollars into goods and services now!
There are definitely real-world examples of currency with an explicit expiration date or that required maintenance fees (i.e. Alberta's Prosperity Certificates) to boost the circulation rate.
I suspect the problem is that we're stuck with the current economic machine on a high level. We don't have facilities to keep the population fed and housed without the side effects of a lot of consumer spending churn.
If you had a partially planned economy to deliver those basics, then you could switch to a harder currency, because an economic slowdown wouldn't head to avoidable mass starvation or homelessness.
Hard money didn't cause the Great Depression any more than Bitcoin caused the Great Financial Crisis. There were multiple causes for the great depression but sound money was not one of them.
> If you had a partially planned economy to deliver those basics, then you could switch to a harder currency, because an economic slowdown wouldn't head to avoidable mass starvation or homelessness.
This is pure speculation. Luckily we will see the experiment play out with Bitcoin over the next few years. I hardly believe it will lead to mass starvation or homelessness, though the Fiat standard we are currently on already has led to both.
In most cases mining and PoS-schemes can’t really be meaningfully called “governance”. The miners hold very limited decisionmaking power, in the case of Bitcoin they can’t do much more than censor transactions (and even that is hardly practical).
Miners/Pools could go on strike. PoS schemes will require you to pool as well, meaning there will be centrally controlled staking pools. These pools will yield great power too.
No formal governance does not mean no governance. It just means obscured governance with more hidden power structures.
If people haven't read it, I highly recommend reading The Tyranny of Structurelessness, even if the political context of its writing is uninteresting to you, because the lessons are deep:
And if course, there's value in the critiques of it too. Libertarians can learn a lot from anarchists attempts at building social structures that don't have rulers.
I believe that he is referring more broadly to forms of governance in DAOs (though I believe they're all on turing complete chains). For example, OpenZeppelin provides some quickstart governance contracts[1] that are all coin-based voting systems. There are some simple ways around this, like to make voting power proportional to the square root of token ownership but obviously one address != one human voter.
Vitalik wrote about some alternatives[2] on his blog, such as proof of humanity, proof or participation or staking based solutions primarily but most significant projects are still using coin-voting.
>In other words, I shall argue that Bitcoin is not fit for purpose under capitalism, or as a vehicle toward transcending capitalism, but something like Bitcoin will characterise monetary systems in a future world free of private banks and share markets.
Wow the open letter he is responding to is a socialist who believes bitcoin is a good idea for socialism?
Bitcoin is literally the antithesis to socialism. It seems clear to me in this article that Yanis knows this. Greece didn't get control over the euro. They couldn't print lots of money to generate significant inflation to hide their debt. Socialist governments basically dont function without heavy inflation making their people poor.
Something that has never happened in history is a fiscally conservative balanced budget socialist government with fully controlled inflation.
In a way bitcoin is a socialist's dream since it allows tracking of all transactions and tracing of all assets so taxation and surveillance can be nearly perfect.
I agree with that. My point was simply that if bitcoin were successful it could provide an untraceable haven that the government would have a difficult time in taxing.
Socialism (noun): a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.
> The main enabler of socialism in a non willing populace is the government forcibly extracting taxes from people who would otherwise not donate freely to that cause
Maybe my understanding of socialism is incorrect then. When I think of socialism the face of Bernie Sanders comes up. That equates to me of government subsidized everything. As anyone knows the government does not have anything it does not take from her citizens by force (taxes or printing money). Capitalism on the other hand, to me, puts the responsibility of life in the hands of the citizens directly. While not perfect by a long shot it was working well here. I think what has changed over the years is liberals slowly chipping away at capitalism and the two don’t mix well.
Yes, it is incorrect. Taxes has very little to do with socialism. You can have socialism without taxes and most non socialist system rely on taxes to some extent.
Because freedom is not absolute it does not mean I'd want to give whatever freedom I have away
Under socialism you do not get do pick jobs at will. And you better show everyone how happy you are at the job assigned to you.
"You don't have to live in your country, you are free to go."
Many have died for this freedom alone. And you don't have to go to North Korea to know this. Right in the heart of (now) western Europe people were shot dead for running away through the Berlin wall.
How come people risk death to run away from the utopia? They must be counter-revolutionaries better murder whatever family they left behind
> Under socialism you do not get do pick jobs at will. And you better show everyone how happy you are at the job assigned to you.
Socialism might mean you have more choice of work, because there is greater social mobility and access to education. Perhaps also you might work for a "cooperative" firm, where every employee is a part owner and gets to vote on issues and a take on the profits.
Yeah because those are dictatorships which have no meaningful socialism. I measure it in terms of worker power, not how authoritarian the state is or what it calls itself.
Hang on a minute, while what you are saying is true, the article is not trying to convince you that socialism is good. It's trying to convince you that bitcoin does not solve socialist goals. i.e. Bitcoin is still a capitalist tool even if it often uses narratives like "it breaks up central banks".
I agree with your perspective on socialism, and that yes, the is messy. It's just not the point here. It's simply what the other camp thinks of bitcoin. (assuming the writing is truthful and all that jazz)
> Anything that is not socialist is called ultra right.
Could it be that you have misunderstood this? He was talking specifically about ultra-right / far-right like "National Front"/"National Rally" in France and Vox in Spain. That economic crises benefit parties like that (And you can see that parties like that are/were on the rise in popularity after 2008 crisis in Europe).
I could equally well claim that capitalism is evil and destroying lives (and the planet). But such a view would be just as one-sided as yours. The Nordic model, especially Finland, gives a good example of how socialist ideas can work. Socialism is about collective ownership, not authoritarian regimes.
Just to clarify, socialism is about government ownership. Communism is about ownership of the people. As I see it no society has ever reached communism. Those that have gone full socialist have failed. There seems to be a fair amount of success in halfway there "socialist-capitalist" (essential services socialist, regulated capitalism for the rest) countries like Finland.
I'm Venezuelan. All I can say is: I know, and that's why I dedicated ten years of my life to help Bitcoin succeed, mostly in the form of Bitcoin Cash these days. I oppose socialism and understand how Bitcoin can help prevent elitists from gaining control over the economy.
Look around, everything is a vehicle for speculation, from houses to baseball cards to oil.
Of any network that exists over the internet, Bitcoin is the least elitist. Participation is permissionless; anyone can spin up a wallet, and it requires no identification. Transactions are borderless, code is open source. No one can prevent you from sending/receiving at a protocol level.
> Bitcoin is totally elitist and mostly a vehicle for speculation.
I agree, but the parent poster does have a point. There are places where the economic situation has deteriorated to the point that using Bitcoin can solve some problems. Some things are worse than Bitcoin, but it's a rare phenomenon.
