3 ms·

Normally, a big problem in crypto-currency blog posts is that an ill-informed author blathers on about supposed technical features of blockchains. But this art

Normally, a big problem in crypto-currency blog posts is that an ill-informed author blathers on about supposed technical features of blockchains. But this article is remarkable in that it doesn't mention any feature or property of bitcoin at all! You could replace the word 'bitcoin' in the page with any other currency, monetary system or whatever means of accounting that you like (using shells for currency, perhaps?), and nothing would change. The article is amazingly content-free, and its arguments & propositions could be re-applied to whatever you like/dislike!

sudosysgen 6y ago
It isn't an ill-informed author, Yanis Varoufakis is a very respected and competent economist. Of course! You could replace Bitcoin with any other fixed supply currency. This is literally the point of the article! He is arguing that Bitcoin cannot work for the common man, because it has all the issues of fixed-supply currencies that lead to fiat currency. Transitioning to Bitcoin would be akin to restoring the Bretton Woods system, and would be disastrous for everyone. He is indeed addressing a feature and property of Bitcoin. That feature is fixed supply. That is what matters to an economist, because it has huge impacts. Varoufakis, in this essay, doesn't talk about the tech, because not only has he already done so, but because it is irrelevant to the analysis that he, as an economist, makes about the consequences of a switch to Bitcoin.
- joosters 6y ago
  A 'fixed supply' is not key to his points. Point 1 is, more specifically, that you would not be able to get agreement to adjust properties of the currency (remember, bitcoin is only 'fixed' in that there's a number in the code: with enough support, all the numbers can be changed). But he goes on to say that the problem is that the rich & powerful won't have incentives to adjust the money supply, something that could be argued about any money that already exists right now. Point 2 is just: there will be inequality, the rich stay rich, the poor stay poor. Yes, true, unless you do some huge form of wealth redistribution, you won't change this. But note that this again is not related to the new currency. Jeff Bezos will still remain rich no matter what features your new currency has, because he already is rich. So, I don't see how these points are related to bitcoin or in fact any currency.
- chrisco255 6y ago
  Why would restoring Bretton Woods be disastrous? The late 40s through the late 60s were among the biggest economic boom years in world history and perhaps the greatest expansion of wealth and quality of living in human history.
  - sudosysgen 6y ago
    The late 40s through the late 60s were amazing economic booms because of a small event called World War 2. It was removed because it gave very little flexibility in monetary policy, and gravely prevented deficit spending. This led to failure to control the business cycle, as well as inflation in general, which would have been disastrous. If we restored Bretton Woods, 2008 would have been a complete disaster, and the current recession would be orders of magnitude worse and would last much longer. As for why control over inflation and deficit spending is helpful in recession, read Krugman, or Keynes if you like the classics.
    - chrisco255 6y ago
      That's not strictly true. The suburbs were rolled out, interstate highway travel became widespread, commercial air travel took off, computing was just beginning, television started to proliferate, retail expanded, air conditioning became widespread...there were numerous technological expansions and improvements in quality of life. Sound money ensured that money was invested in things that actually produced productivity improvements. We coasted on the residual returns of investments from earlier eras, but productive investment, I would argue, has declined since those earlier decades. ROIs on loaned money have declined in the zero interest rate era.
  - kerkeslager 6y ago
    The 40s through the late 60s were also the era of the Holocaust, the Indonesian Genocide, and the Serbian Genocide. Did Bretton Woods cause those too? Or can we agree that maybe a lot of things that happened during the 40s through 60s weren't caused by Bretton Woods?
    - 6y ago
ascorbic 6y ago
It doesn't talk about technical features because it's about the macroeconomic features (unsurprisingly, as Varoufakis is an economist). He criticises it because it removes the ability of central banks to sharply increase the money supply during a crisis. Whether or not you agree with his argument, it is quite specific in that respect.
- joosters 6y ago
  Moreover, this free-rider problem is made far, far worse by the fact that Bitcoin ownership is very unequally distributed, thus giving the Bitcoin-rich powerful incentives to restrain the growth of the money supply (since such restrictions would boost their private rents at the expense of the public interest). Take out the word 'bitcoin' from this, and all the points still stand. The super-rich tend to be the ones with power, and they are never motivated to change this. (Which is kind of a truism really, because if the super-rich & powerful were willing to be generous, they wouldn't be super-rich in the first place...)
  - wmf 6y ago
    The super-rich tend to be the ones with power, and they are never motivated to change this. And yet those social democratic countries exist.

sudosysgen 6y ago

It isn't an ill-informed author, Yanis Varoufakis is a very respected and competent economist. Of course! You could replace Bitcoin with any other fixed supply currency. This is literally the point of the article! He is arguing that Bitcoin cannot work for the common man, because it has all the issues of fixed-supply currencies that lead to fiat currency. Transitioning to Bitcoin would be akin to restoring the Bretton Woods system, and would be disastrous for everyone. He is indeed addressing a feature and property of Bitcoin. That feature is fixed supply. That is what matters to an economist, because it has huge impacts. Varoufakis, in this essay, doesn't talk about the tech, because not only has he already done so, but because it is irrelevant to the analysis that he, as an economist, makes about the consequences of a switch to Bitcoin.

joosters 6y ago
A 'fixed supply' is not key to his points. Point 1 is, more specifically, that you would not be able to get agreement to adjust properties of the currency (remember, bitcoin is only 'fixed' in that there's a number in the code: with enough support, all the numbers can be changed). But he goes on to say that the problem is that the rich & powerful won't have incentives to adjust the money supply, something that could be argued about any money that already exists right now. Point 2 is just: there will be inequality, the rich stay rich, the poor stay poor. Yes, true, unless you do some huge form of wealth redistribution, you won't change this. But note that this again is not related to the new currency. Jeff Bezos will still remain rich no matter what features your new currency has, because he already is rich. So, I don't see how these points are related to bitcoin or in fact any currency.
chrisco255 6y ago
Why would restoring Bretton Woods be disastrous? The late 40s through the late 60s were among the biggest economic boom years in world history and perhaps the greatest expansion of wealth and quality of living in human history.
- sudosysgen 6y ago
  The late 40s through the late 60s were amazing economic booms because of a small event called World War 2. It was removed because it gave very little flexibility in monetary policy, and gravely prevented deficit spending. This led to failure to control the business cycle, as well as inflation in general, which would have been disastrous. If we restored Bretton Woods, 2008 would have been a complete disaster, and the current recession would be orders of magnitude worse and would last much longer. As for why control over inflation and deficit spending is helpful in recession, read Krugman, or Keynes if you like the classics.
  - chrisco255 6y ago
    That's not strictly true. The suburbs were rolled out, interstate highway travel became widespread, commercial air travel took off, computing was just beginning, television started to proliferate, retail expanded, air conditioning became widespread...there were numerous technological expansions and improvements in quality of life. Sound money ensured that money was invested in things that actually produced productivity improvements. We coasted on the residual returns of investments from earlier eras, but productive investment, I would argue, has declined since those earlier decades. ROIs on loaned money have declined in the zero interest rate era.
- kerkeslager 6y ago
  The 40s through the late 60s were also the era of the Holocaust, the Indonesian Genocide, and the Serbian Genocide. Did Bretton Woods cause those too? Or can we agree that maybe a lot of things that happened during the 40s through 60s weren't caused by Bretton Woods?
  - 6y ago

ascorbic 6y ago

It doesn't talk about technical features because it's about the macroeconomic features (unsurprisingly, as Varoufakis is an economist). He criticises it because it removes the ability of central banks to sharply increase the money supply during a crisis. Whether or not you agree with his argument, it is quite specific in that respect.

joosters 6y ago
Moreover, this free-rider problem is made far, far worse by the fact that Bitcoin ownership is very unequally distributed, thus giving the Bitcoin-rich powerful incentives to restrain the growth of the money supply (since such restrictions would boost their private rents at the expense of the public interest). Take out the word 'bitcoin' from this, and all the points still stand. The super-rich tend to be the ones with power, and they are never motivated to change this. (Which is kind of a truism really, because if the super-rich & powerful were willing to be generous, they wouldn't be super-rich in the first place...)
- wmf 6y ago
  The super-rich tend to be the ones with power, and they are never motivated to change this. And yet those social democratic countries exist.