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>They're hoping more will buy in so they can dump at a higher price. We're seeing, right in this moment, why the ability to increase the supply of currency is

>They're hoping more will buy in so they can dump at a higher price. We're seeing, right in this moment, why the ability to increase the supply of currency is a necessity for a functioning economy, especially in times of crisis. Somehow the hodlers take the exact opposite lesson from what's happening.

api 7y ago
You're referring to what I call "pop Austrianism," and that's definitely an adjacent issue. Austrianism is a rationalistic theory of economics. By rationalistic in this context I mean it's not empirical. It's the sort of thing you get when smart people sit around and reason through something and come to a conclusion based on that alone without bothering to observe, experiment, or evaluate their ideas in practice. A wonderful classical example of this kind of rationalism is Aristotle reasoning that heavier objects fall faster than lighter objects. Of course they do! Heavier objects are subject to more force, therefore they fall faster. It's perfectly rational. BTW I'm not saying that other economic schools of thought have it all correct either. They clearly continue to make incorrect predictions all the time. I really don't think anyone understands economics very well. It's a subset of complex auto-adaptive systems, but with an added layer of adversarial behavior. In economics when a major economist, government, central bank, or business makes a prediction, the market acts so as to attempt to invalidate that prediction. Economic systems actively attempt to invalidate theories about them.
- felipeko 7y ago
  I may be way of my field here, but my understanding is that the whole point of the Austrian school is that human behavior is (purposeful, but) unpredictable. This is a testable claim, and you can bother to observe, experiment and test this claim. Austrians should accept they are wrong if you can empirically prove that humans behavior is predictable. But if this claim is correct, there's no reason for you to do empirical economic observations to prove or disprove economic laws. Any empirical conclusion will have no predictive power as a law, only as a trend. Not only that, but any logical consequence of human behavior being purposeful and unpredictable is as correct as the original claim. Is anything here that I am missing?
  - api 7y ago
    The thing that really doesn't seem to work in the Austrian model is the whole "hard money" superstition... the idea that money should be an immutable store of value. I really think it is a superstition of sorts, since I don't think the rationale or the underlying model work in the real world. Not only does this seem to fall down in a variety of ways in practice, but I have philosophical issues with it. The value in the economy is in capital, goods, and services. Money has no value. You can't eat it, drink it, live in it, or use it for anything. It's a medium of value exchange, not a value of its own. In fact one of the desirable characteristics of money is that it's useless for other purposes, otherwise those other purposes compete with its money use case. Cryptocurrency does check that box, but so far all popular cryptocurrencies are built on hard money assumptions. It would be theoretically possible to build a cryptocurrency that wasn't, but there are issues like how to make the inflation targeting algorithm not be trivially game-able by 'whales.' (Real world whales do in fact try to game central banks, so this is not fiction... of course central banks are AI-complete so they have a better chance of resisting this.) Most of the affinity for Austrianism is really rooted in a dislike for central banking and the assumed authoritarianism that goes with it, but I am not convinced that these issues are intrinsically inseparable. I don't see why libertarianism necessitates Austrian hard money finance or why hard money prohibits totalitarianism in any way. Since totalitarians have guns they can easily just confiscate and monopolize any hard currency. Cryptocurrency is no different, since rubber hose cryptography is highly effective.
    - felipeko 7y ago
      I don't see what is the point of your criticism. Either the epistemological grounds of Austrian economics is correct or it is not. It should not matter what austrians feel about central banking.
  - blobster 7y ago
    What Austrians fail to grasp is that human behavior is quite predictable at the population level, or for large groups in general. This is the entire basis of game theory, marketing, sociology, etc. Unsurprisingly, Austrians refuse to acknowledge that economics is subject to science and do not recognize entire fields such as statistics. It's true that the actions of single individuals cannot be fully predicted, but that's not necessary. Any level of insight is enough to form the basis of a scientific theory. In other words, mainstream economists do not claim that they can perfectly model human behavior, but they do (rightly) claim that they can make educated guesses which are correct more often than not.

api 7y ago

You're referring to what I call "pop Austrianism," and that's definitely an adjacent issue. Austrianism is a rationalistic theory of economics. By rationalistic in this context I mean it's not empirical. It's the sort of thing you get when smart people sit around and reason through something and come to a conclusion based on that alone without bothering to observe, experiment, or evaluate their ideas in practice. A wonderful classical example of this kind of rationalism is Aristotle reasoning that heavier objects fall faster than lighter objects. Of course they do! Heavier objects are subject to more force, therefore they fall faster. It's perfectly rational. BTW I'm not saying that other economic schools of thought have it all correct either. They clearly continue to make incorrect predictions all the time. I really don't think anyone understands economics very well. It's a subset of complex auto-adaptive systems, but with an added layer of adversarial behavior. In economics when a major economist, government, central bank, or business makes a prediction, the market acts so as to attempt to invalidate that prediction. Economic systems actively attempt to invalidate theories about them.

felipeko 7y ago
I may be way of my field here, but my understanding is that the whole point of the Austrian school is that human behavior is (purposeful, but) unpredictable. This is a testable claim, and you can bother to observe, experiment and test this claim. Austrians should accept they are wrong if you can empirically prove that humans behavior is predictable. But if this claim is correct, there's no reason for you to do empirical economic observations to prove or disprove economic laws. Any empirical conclusion will have no predictive power as a law, only as a trend. Not only that, but any logical consequence of human behavior being purposeful and unpredictable is as correct as the original claim. Is anything here that I am missing?
- api 7y ago
  The thing that really doesn't seem to work in the Austrian model is the whole "hard money" superstition... the idea that money should be an immutable store of value. I really think it is a superstition of sorts, since I don't think the rationale or the underlying model work in the real world. Not only does this seem to fall down in a variety of ways in practice, but I have philosophical issues with it. The value in the economy is in capital, goods, and services. Money has no value. You can't eat it, drink it, live in it, or use it for anything. It's a medium of value exchange, not a value of its own. In fact one of the desirable characteristics of money is that it's useless for other purposes, otherwise those other purposes compete with its money use case. Cryptocurrency does check that box, but so far all popular cryptocurrencies are built on hard money assumptions. It would be theoretically possible to build a cryptocurrency that wasn't, but there are issues like how to make the inflation targeting algorithm not be trivially game-able by 'whales.' (Real world whales do in fact try to game central banks, so this is not fiction... of course central banks are AI-complete so they have a better chance of resisting this.) Most of the affinity for Austrianism is really rooted in a dislike for central banking and the assumed authoritarianism that goes with it, but I am not convinced that these issues are intrinsically inseparable. I don't see why libertarianism necessitates Austrian hard money finance or why hard money prohibits totalitarianism in any way. Since totalitarians have guns they can easily just confiscate and monopolize any hard currency. Cryptocurrency is no different, since rubber hose cryptography is highly effective.
  - felipeko 7y ago
    I don't see what is the point of your criticism. Either the epistemological grounds of Austrian economics is correct or it is not. It should not matter what austrians feel about central banking.
- blobster 7y ago
  What Austrians fail to grasp is that human behavior is quite predictable at the population level, or for large groups in general. This is the entire basis of game theory, marketing, sociology, etc. Unsurprisingly, Austrians refuse to acknowledge that economics is subject to science and do not recognize entire fields such as statistics. It's true that the actions of single individuals cannot be fully predicted, but that's not necessary. Any level of insight is enough to form the basis of a scientific theory. In other words, mainstream economists do not claim that they can perfectly model human behavior, but they do (rightly) claim that they can make educated guesses which are correct more often than not.