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A lot of the monetary history stuff is wrong in the way that most economic texts are wrong. "Debt: The First 5000 Years" is a fantastic book from an anthropolog

A lot of the monetary history stuff is wrong in the way that most economic texts are wrong. "Debt: The First 5000 Years" is a fantastic book from an anthropologist's perspective that clears up the real origins of money. For just one example of how this presentation is misleading, gold has never really been selected by free markets as a currency. What happened repeatedly was imperial governments with big war machines minted gold and silver coins, paid soldiers and military contractors with them, and then required the coins back from the general population in payment of taxes. This fostered markets to service the war machine. In terms of true free market currencies what you usually found were tally sticks and cheques; debt based money with no gold backing. But these currencies had personal history to them and would only be honored within webs of social trust. The issuing name on the cheque and the chain of endorsements were considered when accepting payment.

kyledrake 14y ago
One of the unfortunate things I did not add to the slides were Gift Economics, and I apologize for that. This was indeed the first form of economic exchange, predating bartering for sure. The problem, of course, is that it only works when you have a small number of trustable people (I'll leave Dunbar's number out of this, pick your favorite). When you get into the realm of billions of people, it's a system that just doesn't work. And there's plenty of romanticism out there from people that would love to go back to such a system. But -that- to me is ideologically driven economics. I'm not saying that Bitcoin is morally superior, or that gold is better than paper money, I'm trying to relay the verdict that large numbers of decentralized people have arrived at. Which could be a worse system in many ways. But I'm not so sure, for the reasons you bring up. I do agree with you that governments capture these systems and control them. And the principal reason for this has been to wage war. War is so closely attached to control and devaluation of money, that you can almost predict monetary instability based on it, as these governments use it as a form of taxation. We've had quite a few currency devaluations in our own history, beginning with the colonies during the Revolutionary War (printing money to pay the soldiers, that they would take home and discover was essentially worthless). This is where Bitcoin becomes interesting: It becomes a form of gold that is so liquid, that it is arguable if a government could even take control of it. You certainly can't stop someone from going through customs at the airport with it (or are we going to require a scan of all computers before leaving the country now?). If Bitcoin prevents/disrupts governments from amassing war chests, I see that as a potentially very positive development. Time will tell, as with all things.
temphn 14y ago
For just one example of how this presentation is misleading, gold has never really been selected by free markets as a currency. "Never"? Quite the opposite. Gold was seized by Roosevelt with Executive Order 6102 to prevent people from using gold as a currency. Nixon pulled the dollar off the gold standard in 1971 as the US Treasury didn't have enough gold to finance the war in Vietnam, and he feared a run on the banks. On both those occasions, people wanted to get into gold, but the government prevented them from doing so. And today physical gold has been bought by millions of people as a hedge against the world financial crisis. On these occasions and more people would use gold as a currency if they weren't prevented by law (= men with guns) from doing so; this is the opposite of the claim that "gold has never really been selected by free markets". imperial governments with big war machines minted gold and silver coins, paid soldiers and military contractors with them, and then required the coins back from the general population in payment of taxes. This fostered markets to service the war machine. Speaking of counterfactual claims, the war machine is actually powered by printing money. The reason Nixon got the US off the gold standard was to print money to finance the Vietnam War. Every major war in the US (Civil War, WW1, WW2) has involved increases in US debt, inflation, and printing of money to facilitate the massive/rapid seizures of wealth that governments use to fight and win wars.
- betterunix 14y ago
  "Gold was seized by Roosevelt with Executive Order 6102 to prevent people from using gold as a currency" That is not accurate. People were hoarding gold at the time, which was harming the economy. Gold currency was taken out of circulation by the government and replaced by a currency less prone to hoarding. Hoarding stopped because people were given money that was not worth hoarding -- which is a good thing for the economy. "today physical gold has been bought by millions of people as a hedge against the world financial crisis" Which is not a currency, any more than a building, a field, or a gun is currency. "On these occasions and more people would use gold as a currency if they weren't prevented by law" Nobody in this century is prevented from using gold as a currency, just like nobody is prevented from using Bitcoin as a currency. The only difference is that gold is not legal tender. People tend to gravitate towards legal tender as a currency, probably because people live in a society governed by laws and need to legally repay their debts (taxes and others).
SilasX 14y ago
Yeah, fantastic book. Smashes lots of myths by conclusively demonstrating how "Apple Computers [sic] ... was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other's garage."
- scarmig 14y ago
  Somehow some libertarian blogger picked that quote up, and the number of times it's been cut and pasted now exceeds the length of Debt itself. David Graeber, on that quote: "The endlessly cited Apple quote was not supposed to be about Apple. Actually it was about a whole of series of other tiny start-ups created by people who’d dropped out of IBM, Apple, and similar behemoths. (Of them it’s perfectly true.) The passage got horribly garbled at some point into something incoherent, I still can’t completely figure out how, was patched back together by the copyeditor into something that made logical sense but was obviously factually wrong. I should have caught it at the proofreading stage but I didn’t. I did catch it when the book first came out, tried to get the publisher to take it out, and have been continually trying since July. All to no avail. I have absolutely no idea why a book can go through eight editions and it’s impossible to pull out a couple lines of obviously incorrect text but they just keep telling me, no, I have to wait until July. Allow me to reassure the reader: You have absolutely no idea how frustrating this is, especially as the stupid line has been held out, reproduced, sent around in every conceivable way to suggest that nothing else in the book is likely to be factually accurate To which all I can reply is: well, notice how this is the only quote in the book that happens with. That one sentence gets repeated a thousand times. No other one does. That’s because it’s the only sentence flagrantly wrong like that. In fact, I’ve communicated with, or read reviews by, scholars of Greece, Mesopotamia, and Islam, Medievalists, Africanists, historians of Buddhism, and a wide variety of economists, etc, etc, and none have noticed any glaring errors—in fact, the most frequent reaction is that it’s remarkable that someone who is not an area specialist actually more or less gets it right (remember, these are scholars often loathe to admit even their own colleagues in the field get it more or less right.) The book is pretty meticulously researched and has stood up to scholarly review. The problem is I haven’t been able to get the one idiotic garbled sentence out despite my utmost endeavors. But it will be. They promise. Soon."

kyledrake 14y ago

One of the unfortunate things I did not add to the slides were Gift Economics, and I apologize for that. This was indeed the first form of economic exchange, predating bartering for sure. The problem, of course, is that it only works when you have a small number of trustable people (I'll leave Dunbar's number out of this, pick your favorite). When you get into the realm of billions of people, it's a system that just doesn't work. And there's plenty of romanticism out there from people that would love to go back to such a system. But -that- to me is ideologically driven economics. I'm not saying that Bitcoin is morally superior, or that gold is better than paper money, I'm trying to relay the verdict that large numbers of decentralized people have arrived at. Which could be a worse system in many ways. But I'm not so sure, for the reasons you bring up. I do agree with you that governments capture these systems and control them. And the principal reason for this has been to wage war. War is so closely attached to control and devaluation of money, that you can almost predict monetary instability based on it, as these governments use it as a form of taxation. We've had quite a few currency devaluations in our own history, beginning with the colonies during the Revolutionary War (printing money to pay the soldiers, that they would take home and discover was essentially worthless). This is where Bitcoin becomes interesting: It becomes a form of gold that is so liquid, that it is arguable if a government could even take control of it. You certainly can't stop someone from going through customs at the airport with it (or are we going to require a scan of all computers before leaving the country now?). If Bitcoin prevents/disrupts governments from amassing war chests, I see that as a potentially very positive development. Time will tell, as with all things.

temphn 14y ago

For just one example of how this presentation is misleading, gold has never really been selected by free markets as a currency. "Never"? Quite the opposite. Gold was seized by Roosevelt with Executive Order 6102 to prevent people from using gold as a currency. Nixon pulled the dollar off the gold standard in 1971 as the US Treasury didn't have enough gold to finance the war in Vietnam, and he feared a run on the banks. On both those occasions, people wanted to get into gold, but the government prevented them from doing so. And today physical gold has been bought by millions of people as a hedge against the world financial crisis. On these occasions and more people would use gold as a currency if they weren't prevented by law (= men with guns) from doing so; this is the opposite of the claim that "gold has never really been selected by free markets". imperial governments with big war machines minted gold and silver coins, paid soldiers and military contractors with them, and then required the coins back from the general population in payment of taxes. This fostered markets to service the war machine. Speaking of counterfactual claims, the war machine is actually powered by printing money. The reason Nixon got the US off the gold standard was to print money to finance the Vietnam War. Every major war in the US (Civil War, WW1, WW2) has involved increases in US debt, inflation, and printing of money to facilitate the massive/rapid seizures of wealth that governments use to fight and win wars.

betterunix 14y ago
"Gold was seized by Roosevelt with Executive Order 6102 to prevent people from using gold as a currency" That is not accurate. People were hoarding gold at the time, which was harming the economy. Gold currency was taken out of circulation by the government and replaced by a currency less prone to hoarding. Hoarding stopped because people were given money that was not worth hoarding -- which is a good thing for the economy. "today physical gold has been bought by millions of people as a hedge against the world financial crisis" Which is not a currency, any more than a building, a field, or a gun is currency. "On these occasions and more people would use gold as a currency if they weren't prevented by law" Nobody in this century is prevented from using gold as a currency, just like nobody is prevented from using Bitcoin as a currency. The only difference is that gold is not legal tender. People tend to gravitate towards legal tender as a currency, probably because people live in a society governed by laws and need to legally repay their debts (taxes and others).

SilasX 14y ago

Yeah, fantastic book. Smashes lots of myths by conclusively demonstrating how "Apple Computers [sic] ... was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other's garage."

scarmig 14y ago
Somehow some libertarian blogger picked that quote up, and the number of times it's been cut and pasted now exceeds the length of Debt itself. David Graeber, on that quote: "The endlessly cited Apple quote was not supposed to be about Apple. Actually it was about a whole of series of other tiny start-ups created by people who’d dropped out of IBM, Apple, and similar behemoths. (Of them it’s perfectly true.) The passage got horribly garbled at some point into something incoherent, I still can’t completely figure out how, was patched back together by the copyeditor into something that made logical sense but was obviously factually wrong. I should have caught it at the proofreading stage but I didn’t. I did catch it when the book first came out, tried to get the publisher to take it out, and have been continually trying since July. All to no avail. I have absolutely no idea why a book can go through eight editions and it’s impossible to pull out a couple lines of obviously incorrect text but they just keep telling me, no, I have to wait until July. Allow me to reassure the reader: You have absolutely no idea how frustrating this is, especially as the stupid line has been held out, reproduced, sent around in every conceivable way to suggest that nothing else in the book is likely to be factually accurate To which all I can reply is: well, notice how this is the only quote in the book that happens with. That one sentence gets repeated a thousand times. No other one does. That’s because it’s the only sentence flagrantly wrong like that. In fact, I’ve communicated with, or read reviews by, scholars of Greece, Mesopotamia, and Islam, Medievalists, Africanists, historians of Buddhism, and a wide variety of economists, etc, etc, and none have noticed any glaring errors—in fact, the most frequent reaction is that it’s remarkable that someone who is not an area specialist actually more or less gets it right (remember, these are scholars often loathe to admit even their own colleagues in the field get it more or less right.) The book is pretty meticulously researched and has stood up to scholarly review. The problem is I haven’t been able to get the one idiotic garbled sentence out despite my utmost endeavors. But it will be. They promise. Soon."