4 ms·

Crypto is essentially the modern equivalent of the pre-Federal Reserve era of US banking, commonly known as the "Free Banking" era or "Wildcat banking". Back t

Crypto is essentially the modern equivalent of the pre-Federal Reserve era of US banking, commonly known as the "Free Banking" era or "Wildcat banking". Back then, states chartered their own banks, there was little cooperation between banking outfits and banks could issue their own currency. Financial crime targeting consumers was everywhere and currency stability was a major problem, two major issues that crypto faces today. Historians largely attribute the failure of the Free Banking era as a catalyst of the creation of the Federal Reserve. We need to be able to at least have a nuanced conversation about how we've seen these patterns in history, it didn't go well then, and there's not a lot of evidence that these age-old problems have gone away with this new technology.

ramoz 5y ago
I feel like this argument isn’t stated enough. I’m not financially savvy and can’t determine if crypto is just re-inventing abstractions in which we’ll ultimately see the same societal patterns develop.
aww_dang 5y ago
Yet this era was also known as the "Gilded Age". Literally covered in gold. I'm not detecting nuance in this take. The Fed has created boom bust cycles and is hardly a bastion of price stability. The great depression and the continued interventions which prolonged it come to mind.
- thr0wawayf00 5y ago
  Boom and bust cycles are inherent to capitalist markets, you can't have capitalism without it. Blaming it all on the Fed isn't accurate. Markets boomed and busted long before the Fed existed. > hardly a bastion of price stability Relative to BTC, USD is much, much more stable. This is what I don't get about these kinds of arguments. What are you comparing the Fed to in this case?
  - aww_dang 5y ago
    I'd go even further than that. The mismanagement of markets by central planners set the stage for cryptocurrencies. We're living in an era of speculative mania. Savings accounts have a negative real interest rate. This currency must go somewhere. Centralized payment services are vulnerable to regulators, see eGold and Liberty Reserve. Note that BTC emerged shortly after these services were destroyed. Anti-terror legislation was used. Of course there are always price fluctuations, but attempting to fix prices (i.e. interest rates) results in greater imbalances. https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression#:~:text=The%20central%20bank's%20policy%20was,and%20bonds)%20and%20capital%20goods https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression....
    - thr0wawayf00 5y ago
      > Centralized payment services are vulnerable to regulators, see eGold and Liberty Reserve. Note that BTC emerged shortly after these services were destroyed. Anti-terror legislation was used. According to Wikipedia, Liberty Reserve was used to launder over $6B stolen from offshore banks. That sounds like a pretty legitimate reason to shut a service like that down to me. You argue that central banks are incompetent and need to be disrupted, yet you don't hold services like these to the same standard. Instead, you argue that they're victims of regulatory overreach and that we should create that allow this kind of activity to thrive. Where's the anti-money laundering mechanism in crypto? It doesn't exist. I truly do not believe that the full anonymity provided by crypto does anything but benefit those with the most resources in the system. As long as that remains true, how do we expect it result in a more fair system than what we already have?
      - aww_dang 5y ago
        >a pretty legitimate reason to shut a service like that down to me Meanwhile physical cash is preferred for criminal acts. Would you similarly blame the issuer of cash for these crimes? What about footwear? Most criminals wear shoes or boots. Running shoes can be used to evade capture. Should we hold Nike accountable? >does anything but benefit those with the most resources in the system. As long as that remains true, how do we expect it result in a more fair system than what we already have? If fairness is the virtue we are seeking, then how does the plunge protection team protect fairness? If fairness is the virtue we are seeking, then how do Cantillon effects factor into your argument? If fairness is the virtue we are seeking, then how does a central bank formed by the blue-blood oligarchy advance this cause? If fairness is the virtue we are seeking, then why does the central bank protect financial markets at the cost of all participants in the market? (Pseudo?) Anonymity is what protects individuals from regulatory overreach and confiscations of wealth. True to the form described by regulatory capture, the IRS disproportionately attacks the income of small business owners vs. the super rich, who can afford to keep a small army of tax accountants, lawyers and lobbyists on retainer. Meanwhile the tax code grows ever more byzantine by the year. https://en.wikipedia.org/wiki/Richard_Cantillon#:~:text=Furthermore%2C%20he%20posited%20that%20the%20original%20recipients%20of%20new%20money%20enjoy%20higher%20standards%20of%20living%20at%20the%20expense%20of%20later%20recipients.%5B63%5D%20The%20concept%20of%20relative%20inflation%2C%20or%20a%20disproportionate%20rise%20in%20prices%20among%20different%20goods%20in%20an%20economy%2C%20is%20now%20known%20as%20the%20Cantillon%20Effect https://en.wikipedia.org/wiki/Richard_Cantillon#:~:text=Furt.... https://www.mdtaxattorney.com/resources/irs-targeting-small-businesses-audits/#:~:text=Experts%20Suggest%20the%20IRS%20Is,%24400%2C000)%20get%20audited%20most%20frequently https://www.mdtaxattorney.com/resources/irs-targeting-small-.... https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets https://en.wikipedia.org/wiki/Working_Group_on_Financial_Mar... https://en.wikipedia.org/wiki/Laffer_curve#:~:text=In%20economics%2C%20the%20Laffer%20curve,of%20the%20government's%20tax%20revenue https://en.wikipedia.org/wiki/Laffer_curve#:~:text=In%20econ.... https://www.marketplace.org/2015/10/20/how-secret-meeting-jekyll-island-led-fed/#:~:text=he%20organized%20a,Federal%20Reserve%20Act https://www.marketplace.org/2015/10/20/how-secret-meeting-je....
- oblio 5y ago
  > Yet this era was also known as the "Gilded Age". Literally covered in gold. Let's be real here. https://en.wikipedia.org/wiki/Gilded_Age https://en.wikipedia.org/wiki/Gilded_Age > which satirized an era of serious social problems masked by a thin gold gilding. https://en.wikipedia.org/wiki/The_Gilded_Age:_A_Tale_of_Today https://en.wikipedia.org/wiki/The_Gilded_Age:_A_Tale_of_Toda... "The book is remarkable for two reasons—it is the only novel Twain wrote with a collaborator, and its title very quickly became synonymous with graft, materialism, and corruption in public life." It only took me 2 seconds to find out that the term was ironic.
  - aww_dang 5y ago
    It was an era of unprecedented wealth creation and upward mobility. There were also robber barons, who preyed upon government largess. The irony here is that the Fed was created at the behest of one of the greatest robber barons of them all, John Pierpont Morgan. To this day the institution still protects the interests of Wall Street at the expense of holders of USD. Corruption is still with us. If we are to be real as you say, we should also acknowledge that history is largely written by the victors. Not mentioned are the other two central banks the US fought to extricate itself from. It shouldn't be surprising at all that a two second glimpse of into the subject results in a superficial reading of history. I think the above poster mentioned something about nuance. If the Federal Reserve Notes issued by the central bank were sufficient to meet our monetary needs, there would be no interest in cryptocurrencies. Clearly, "Something is rotten in Denmark", or NW DC more accurately.
    - oblio 5y ago
      1. There are a lot of central banks in the world, not everything in the world revolves around the US. > If the Federal Reserve Notes issued by the central bank were sufficient to meet our monetary needs, there would be no interest in cryptocurrencies. 2. The cynical interpretation would that a large part of that ton of monetary needs that need meeting are criminal activities.
tmaly 5y ago
I think the one feature of Bitcoin that makes it interesting is its inherent scarcity. It mirrors gold in this sense, but it is a lot more flexible in that you do not have to deal with physical material.

ramoz 5y ago

I feel like this argument isn’t stated enough. I’m not financially savvy and can’t determine if crypto is just re-inventing abstractions in which we’ll ultimately see the same societal patterns develop.

aww_dang 5y ago

Yet this era was also known as the "Gilded Age". Literally covered in gold. I'm not detecting nuance in this take. The Fed has created boom bust cycles and is hardly a bastion of price stability. The great depression and the continued interventions which prolonged it come to mind.

thr0wawayf00 5y ago
Boom and bust cycles are inherent to capitalist markets, you can't have capitalism without it. Blaming it all on the Fed isn't accurate. Markets boomed and busted long before the Fed existed. > hardly a bastion of price stability Relative to BTC, USD is much, much more stable. This is what I don't get about these kinds of arguments. What are you comparing the Fed to in this case?
- aww_dang 5y ago
  I'd go even further than that. The mismanagement of markets by central planners set the stage for cryptocurrencies. We're living in an era of speculative mania. Savings accounts have a negative real interest rate. This currency must go somewhere. Centralized payment services are vulnerable to regulators, see eGold and Liberty Reserve. Note that BTC emerged shortly after these services were destroyed. Anti-terror legislation was used. Of course there are always price fluctuations, but attempting to fix prices (i.e. interest rates) results in greater imbalances. https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression#:~:text=The%20central%20bank's%20policy%20was,and%20bonds)%20and%20capital%20goods https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression....
  - thr0wawayf00 5y ago
    > Centralized payment services are vulnerable to regulators, see eGold and Liberty Reserve. Note that BTC emerged shortly after these services were destroyed. Anti-terror legislation was used. According to Wikipedia, Liberty Reserve was used to launder over $6B stolen from offshore banks. That sounds like a pretty legitimate reason to shut a service like that down to me. You argue that central banks are incompetent and need to be disrupted, yet you don't hold services like these to the same standard. Instead, you argue that they're victims of regulatory overreach and that we should create that allow this kind of activity to thrive. Where's the anti-money laundering mechanism in crypto? It doesn't exist. I truly do not believe that the full anonymity provided by crypto does anything but benefit those with the most resources in the system. As long as that remains true, how do we expect it result in a more fair system than what we already have?
    - aww_dang 5y ago
      >a pretty legitimate reason to shut a service like that down to me Meanwhile physical cash is preferred for criminal acts. Would you similarly blame the issuer of cash for these crimes? What about footwear? Most criminals wear shoes or boots. Running shoes can be used to evade capture. Should we hold Nike accountable? >does anything but benefit those with the most resources in the system. As long as that remains true, how do we expect it result in a more fair system than what we already have? If fairness is the virtue we are seeking, then how does the plunge protection team protect fairness? If fairness is the virtue we are seeking, then how do Cantillon effects factor into your argument? If fairness is the virtue we are seeking, then how does a central bank formed by the blue-blood oligarchy advance this cause? If fairness is the virtue we are seeking, then why does the central bank protect financial markets at the cost of all participants in the market? (Pseudo?) Anonymity is what protects individuals from regulatory overreach and confiscations of wealth. True to the form described by regulatory capture, the IRS disproportionately attacks the income of small business owners vs. the super rich, who can afford to keep a small army of tax accountants, lawyers and lobbyists on retainer. Meanwhile the tax code grows ever more byzantine by the year. https://en.wikipedia.org/wiki/Richard_Cantillon#:~:text=Furthermore%2C%20he%20posited%20that%20the%20original%20recipients%20of%20new%20money%20enjoy%20higher%20standards%20of%20living%20at%20the%20expense%20of%20later%20recipients.%5B63%5D%20The%20concept%20of%20relative%20inflation%2C%20or%20a%20disproportionate%20rise%20in%20prices%20among%20different%20goods%20in%20an%20economy%2C%20is%20now%20known%20as%20the%20Cantillon%20Effect https://en.wikipedia.org/wiki/Richard_Cantillon#:~:text=Furt.... https://www.mdtaxattorney.com/resources/irs-targeting-small-businesses-audits/#:~:text=Experts%20Suggest%20the%20IRS%20Is,%24400%2C000)%20get%20audited%20most%20frequently https://www.mdtaxattorney.com/resources/irs-targeting-small-.... https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets https://en.wikipedia.org/wiki/Working_Group_on_Financial_Mar... https://en.wikipedia.org/wiki/Laffer_curve#:~:text=In%20economics%2C%20the%20Laffer%20curve,of%20the%20government's%20tax%20revenue https://en.wikipedia.org/wiki/Laffer_curve#:~:text=In%20econ.... https://www.marketplace.org/2015/10/20/how-secret-meeting-jekyll-island-led-fed/#:~:text=he%20organized%20a,Federal%20Reserve%20Act https://www.marketplace.org/2015/10/20/how-secret-meeting-je....
oblio 5y ago
> Yet this era was also known as the "Gilded Age". Literally covered in gold. Let's be real here. https://en.wikipedia.org/wiki/Gilded_Age https://en.wikipedia.org/wiki/Gilded_Age > which satirized an era of serious social problems masked by a thin gold gilding. https://en.wikipedia.org/wiki/The_Gilded_Age:_A_Tale_of_Today https://en.wikipedia.org/wiki/The_Gilded_Age:_A_Tale_of_Toda... "The book is remarkable for two reasons—it is the only novel Twain wrote with a collaborator, and its title very quickly became synonymous with graft, materialism, and corruption in public life." It only took me 2 seconds to find out that the term was ironic.
- aww_dang 5y ago
  It was an era of unprecedented wealth creation and upward mobility. There were also robber barons, who preyed upon government largess. The irony here is that the Fed was created at the behest of one of the greatest robber barons of them all, John Pierpont Morgan. To this day the institution still protects the interests of Wall Street at the expense of holders of USD. Corruption is still with us. If we are to be real as you say, we should also acknowledge that history is largely written by the victors. Not mentioned are the other two central banks the US fought to extricate itself from. It shouldn't be surprising at all that a two second glimpse of into the subject results in a superficial reading of history. I think the above poster mentioned something about nuance. If the Federal Reserve Notes issued by the central bank were sufficient to meet our monetary needs, there would be no interest in cryptocurrencies. Clearly, "Something is rotten in Denmark", or NW DC more accurately.
  - oblio 5y ago
    1. There are a lot of central banks in the world, not everything in the world revolves around the US. > If the Federal Reserve Notes issued by the central bank were sufficient to meet our monetary needs, there would be no interest in cryptocurrencies. 2. The cynical interpretation would that a large part of that ton of monetary needs that need meeting are criminal activities.

tmaly 5y ago

I think the one feature of Bitcoin that makes it interesting is its inherent scarcity. It mirrors gold in this sense, but it is a lot more flexible in that you do not have to deal with physical material.