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No, I'm pointing out how this does in fact cause net value creation. Sure, when somebody mines Bitcoin, the dollar value of the Bitcoin is purely on paper. When

No, I'm pointing out how this does in fact cause net value creation. Sure, when somebody mines Bitcoin, the dollar value of the Bitcoin is purely on paper. When they send dollars to chip manufacturers to buy mining hardware, the movement of dollars from one bank account to another is also purely on paper. But when people respond to the movement of those dollars by building more advanced chip factories, that is indeed net value creation.

alexasmyths 9y ago
That is not 'value creation' - that is 'digging holes and filling them'. The 'innovation' created from 'more advanced tech' to do something entirely useless is not really 'value creation'. Now - if those 'advanced shovels' end up being used for other purposes, you might argue there is 'value creation' - but no - this is not right. Why? Because of the distortionary effects of the impetus of the innovation in the first place. If there is a 'real reason' to make 'better shovels' - then they will get created for that reason. But because they are being created for a non-reason - i.e. digging holes and filling them, well, it's a misallocation of resources. If the 'false impetus' did not exist, that investment would go elsewhere, and create value for society in more efficient ways. It's pointless to invest in things that have no value, because there might be indirect innovation elsewhere - just use the money for rational, value creating things - it's much more efficient.
- rwallace 9y ago
  > If the 'false impetus' did not exist, that investment would go elsewhere, and create value for society in more efficient ways. Actually no, it probably wouldn't. Most likely, the money would be hoarded and the people would be eking out an existence doing some miserable make-work. The unspoken assumption behind your position is that all resources are currently being used fully and optimally. Unfortunately, this is very far from true.

alexasmyths 9y ago

That is not 'value creation' - that is 'digging holes and filling them'. The 'innovation' created from 'more advanced tech' to do something entirely useless is not really 'value creation'. Now - if those 'advanced shovels' end up being used for other purposes, you might argue there is 'value creation' - but no - this is not right. Why? Because of the distortionary effects of the impetus of the innovation in the first place. If there is a 'real reason' to make 'better shovels' - then they will get created for that reason. But because they are being created for a non-reason - i.e. digging holes and filling them, well, it's a misallocation of resources. If the 'false impetus' did not exist, that investment would go elsewhere, and create value for society in more efficient ways. It's pointless to invest in things that have no value, because there might be indirect innovation elsewhere - just use the money for rational, value creating things - it's much more efficient.

rwallace 9y ago
> If the 'false impetus' did not exist, that investment would go elsewhere, and create value for society in more efficient ways. Actually no, it probably wouldn't. Most likely, the money would be hoarded and the people would be eking out an existence doing some miserable make-work. The unspoken assumption behind your position is that all resources are currently being used fully and optimally. Unfortunately, this is very far from true.