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The presentation has plenty of historical data going back to Roman times, including links to sites with debased currency, so I'd humbly suggest that you enumera

by temphn 14y ago

The presentation has plenty of historical data going back to Roman times, including links to sites with debased currency, so I'd humbly suggest that you enumerate the "common errors" in the presentation. Moreover, experts in "monetary policy" have not exactly covered themselves with glory over the last few years (decades?). As for Freicoin, it might be silly, but it just puts the Bernanke-ist inflation into the protocol and makes its purpose explicit: namely to break up long-term holdings of wealth, force spending, and discourage saving. The part that isn't silly about it is that said destruction of long-term wealth is distributed rather than centralized, and the wealth redistribution essentially provides increased transaction fees and thereby a reason for more people to validate transactions. Bernanke-nomics or "monetary policy" constitutes the redistribution of wealth via inflation from the people to the banks. Hard to say that's crazier than Freicoin.

djur 14y ago
A handful of anecdotes about hyperinflation do not amount to "plenty of historical data". Inflation has the important role of decreasing the value of debt, which is something demurrage does not provide. Neither does a constant rate of 'inflation' via demurrage allow any kind of countercyclical policy. "[inflationary monetary policy] constitutes the redistribution of wealth via inflation from the people to the banks" Do you have any evidence for that claim?
cynicalkane 14y ago
Inflation redistributes wealth from the people to the banks? You understand that inflation reduces the value of bank debt, which is almost always nominal. And surely you must know that tight money has the objectively observed effect of rewarding capitalists and punishing earners (viz. the wealthy parts of the Eurozone, right now). What are you trying to say that I'm missing?
- 13b9f227ecf0 14y ago
  Inflation transfers wealth from savers and creditors to those with first access to newly created money. In our system it is the banks and the federal government that have first access to newly created money.
  - cynicalkane 14y ago
    Actually, anyone can buy Treasuries direct from the auction at no fee. (The government even has a website for it.) Furthermore, the Treasury market is extraordinary tight, so it barely matters who has access to the Fed. Finally, the recent effect of the Fed announcing expansionary programs has been to lower Treasuries values through implied inflation. (Check the charts if you don't believe me.) So I'm not sure how you can be correct to any significant degree.
    - 13b9f227ecf0 14y ago
      I don't see how access to the treasury market has bearing. The issue is seigniorage. In our system that mostly happens through fraction reserve banking, mostly independent of government debt.
- temphn 14y ago
  The bailouts represent money printed and deposited in the accounts of banks. Kind of a fusion of the worst of right and left ideology: devalue everyone else so that the richest get richer. The full magnitude of the money printing is actually much greater than the public has been led to believe, and came out quietly in late 2010. http://money.cnn.com/2010/12/01/news/economy/fed_reserve_data_release/index.htm http://money.cnn.com/2010/12/01/news/economy/fed_reserve_dat... The Federal Reserve made $9 trillion in overnight loans to major banks and Wall Street firms during the financial crisis, according to newly revealed data released Wednesday. ... The amount of cash being pumped out to the financial giants was not previously disclosed. All the loans were backed by collateral and all were paid back with a very low interest rate to the Fed -- an annual rate of between 0.5% to 3.5%. ... Sen. Bernie Sanders, the Vermont independent who had authored the provision of the financial reform law that required Wednesday's disclosure, called the data that was released incredible and jaw-dropping. "The $700 billion Wall Street bailout turned out to be pocket change compared to trillions and trillions of dollars in near zero interest loans and other financial arrangements that the Federal Reserve doled out to every major financial institution," Sanders said.
  - argonaut 14y ago
    Your arguments seriously ignore and misstate what the Federal Reserve actually does. 1. The Fed/govt does not simply deposit money "in the accounts of banks." Under TARP and quantitative easing, the Treasury purchased securities or shares from the banks. Under quantitative easing, the Fed purchased Treasury securities and mortgage-backed securities from the banks. Yes, the Fed printed the money to buy those securities, but it't not like they just printed the money and gave the banks free money. 2. Overnight loans are almost irrelevant to your point because they're overnight. They have to be paid back within 24 hours. The $9 trillion dollar figure sounds impressive but that's just the value of all the overnight loans added up. If you make $8.2 billion in loans every day for 3 years (with the 8.2 billion paid back the next day and then another 8.2 billion loaned out again), you get $9 trillion.
    - temphn 14y ago
      Yes, the Fed printed the money to buy those securities, but it's not like they just printed the money and gave the banks free money. That is exactly what they did, because otherwise those securities would not have had the same price on an open market. The Fed paid for worthless holdings and propped up banks by printing trillions, thereby devaluing everyone else's dollars. And they are still doing it, now printing $85B per month ($1T/year) to buy mortgage-backed securities and reinflate the housing bubble. Printing $100 to buy $1 of MBS toxic waste from the banks is direct depositing $99 into their pockets (and causing commensurate dilution of all other dollar holders). Overnight loans are almost irrelevant to your point because they're overnight. Without printing $9 trillion to "inject liquidity" the banks would have gone bust when the capital call came. It was this overnight loan that allowed the banks to socialize the losses while privatizing the gains.
bcoates 14y ago
> I'd humbly suggest that you enumerate the "common errors" in the presentation. That money exists to serve as an improved barter good, rather than barter being a degenerate form of trade that exists mostly in the rare cases when credit is impractical. That quantity fixation or durability are particularly important properties of money. That gold is particularly important, versus anything else that is pretty and value-dense. That the only forms of money are commodity-backed and pure fiat. That the USD switched from the first camp to the other in 1971. Describing the USD without reference to the Federal Reserve at all. The assumption that the debasement of coins over a 300 year period had any harmful effects other than making the coins less pretty 1700 years later. That +200% wage and price inflation over 130 years is any kind of serious problem. That hyperinflation and regular inflation are the same thing except in degree. That Bitcoin limiting supply controls inflation. That the problems with deflation are somehow non-obvious or not happening observably in Bitcoin right now. That flat-rate Demurrage fixes Bitcoin inflation.
- temphn 14y ago
  Great. I hope you will agree most of these are differences of opinion ("particularly important", "serious problem") rather than empirical fact. Moreover, I hope you will agree that people with similar conventional beliefs on inflation & economics are in power, and the world economy is not doing very well. FWIW, here's a first cut at separating statements of opinion & fact to drill down to potential empirical differences. That money exists to serve as an improved barter good, rather than barter being a degenerate form of trade that exists mostly in the rare cases when credit is impractical. Not sure about your disagreement here - are you saying that credit is more fundamental than barter? Money as an improved replacement for barter is hardly controversial. Credit is a third layer on top of money, which only comes into play when there are actual goods to be traded. That quantity fixation or durability are particularly important properties of money. If you care about money as a long-term store of value, these are important characteristics. Paper notes from most countries that existed in the 1800s don't hold their value today. Gold coins do. That gold is particularly important, versus anything else that is pretty and value-dense. Gold is important because it can't be mined as easily as paper is printed, and because it's an element and thereby difficult to truly counterfeit without an atom smasher. As such it limits the spending power of governments. It's also important for the same reason any network effect is important, namely other people use it (and have used it since historical times). That the only forms of money are commodity-backed and pure fiat. This is possibly a factual disagreement. But either a paper note is exchangeable for a fixed quantity of a commodity like gold or it isn't. I suppose you can have some limits on redemption on a daily basis, but otherwise it seems like a reasonable boolean distinction. Please do elaborate on what you have in mind. That the USD switched from the first camp to the other in 1971. This also seems to be a factual claim. The US under Nixon did indeed abandon the gold standard fully in 1971, removing the $35 dollars per ounce peg (http://www.theatlanticwire.com/politics/2011/08/nixon-gold-standard-gamble-interrupting-bonanza/41278 http://www.theatlanticwire.com/politics/2011/08/nixon-gold-s...). Most people both pro- and con- would refer to this as "going off the gold standard". Describing the USD without reference to the Federal Reserve at all. I think that's implicit. Not sure this is a "common error". The assumption that the debasement of coins over a 300 year period had any harmful effects other than making the coins less pretty 1700 years later. This is not an assumption but is explicitly argued. The underlying thesis is that governments that debase their currency by printing money eventually find their ability to compel obedience waning, as their official scrip is rendered useless. That +200% wage and price inflation over 130 years is any kind of serious problem. Given that this period coincides with the decline and ultimate fall of the Roman Empire, I wouldn't call this a "common error" either. That hyperinflation and regular inflation are the same thing except in degree. This claim is not made in the slides. But both of them do have the property in common that one's currency becomes less valuable. "Normal" inflation has devalued the US dollar 23.45X since 1913 (roughly $1 in 1913 buys $23.45 today; see usinflationcalculator.com). If that happened in one year we'd call it extremely strong inflation, if not hyperinflation. That Bitcoin limiting supply controls inflation. Please give a counterargument here. How can you inflate a currency if the supply is fundamentally limited? That the problems with deflation are somehow non-obvious or not happening observably in Bitcoin right now. What are the problems? A rise in market cap to $1B over four years from nothing and adoption by millions in the face of government opposition looks like a smashing success. Fluctuations aren't unilateral seizures; everyone in Bitcoin has chosen to be in Bitcoin. That flat-rate Demurrage fixes Bitcoin inflation. I suppose you mean "fixed Bitcoin deflation"? Freicoin may not "fix" deflation but it's a currency which has regular inflation built into it. Because Kyle supports deflation he certainly did not claim that Freicoin is a "fix", but rather a technical embodiment of an alternate philosophy. In short, I think most of the points you raise are not "common errors" but rather (at best) disagreements of opinion. Would appreciate any elaboration on the points of seeming factual disagreement.

by temphn 14y ago

djur 14y ago

A handful of anecdotes about hyperinflation do not amount to "plenty of historical data". Inflation has the important role of decreasing the value of debt, which is something demurrage does not provide. Neither does a constant rate of 'inflation' via demurrage allow any kind of countercyclical policy. "[inflationary monetary policy] constitutes the redistribution of wealth via inflation from the people to the banks" Do you have any evidence for that claim?

cynicalkane 14y ago

Inflation redistributes wealth from the people to the banks? You understand that inflation reduces the value of bank debt, which is almost always nominal. And surely you must know that tight money has the objectively observed effect of rewarding capitalists and punishing earners (viz. the wealthy parts of the Eurozone, right now). What are you trying to say that I'm missing?

13b9f227ecf0 14y ago
Inflation transfers wealth from savers and creditors to those with first access to newly created money. In our system it is the banks and the federal government that have first access to newly created money.
- cynicalkane 14y ago
  Actually, anyone can buy Treasuries direct from the auction at no fee. (The government even has a website for it.) Furthermore, the Treasury market is extraordinary tight, so it barely matters who has access to the Fed. Finally, the recent effect of the Fed announcing expansionary programs has been to lower Treasuries values through implied inflation. (Check the charts if you don't believe me.) So I'm not sure how you can be correct to any significant degree.
  - 13b9f227ecf0 14y ago
    I don't see how access to the treasury market has bearing. The issue is seigniorage. In our system that mostly happens through fraction reserve banking, mostly independent of government debt.
temphn 14y ago
The bailouts represent money printed and deposited in the accounts of banks. Kind of a fusion of the worst of right and left ideology: devalue everyone else so that the richest get richer. The full magnitude of the money printing is actually much greater than the public has been led to believe, and came out quietly in late 2010. http://money.cnn.com/2010/12/01/news/economy/fed_reserve_data_release/index.htm http://money.cnn.com/2010/12/01/news/economy/fed_reserve_dat... The Federal Reserve made $9 trillion in overnight loans to major banks and Wall Street firms during the financial crisis, according to newly revealed data released Wednesday. ... The amount of cash being pumped out to the financial giants was not previously disclosed. All the loans were backed by collateral and all were paid back with a very low interest rate to the Fed -- an annual rate of between 0.5% to 3.5%. ... Sen. Bernie Sanders, the Vermont independent who had authored the provision of the financial reform law that required Wednesday's disclosure, called the data that was released incredible and jaw-dropping. "The $700 billion Wall Street bailout turned out to be pocket change compared to trillions and trillions of dollars in near zero interest loans and other financial arrangements that the Federal Reserve doled out to every major financial institution," Sanders said.
- argonaut 14y ago
  Your arguments seriously ignore and misstate what the Federal Reserve actually does. 1. The Fed/govt does not simply deposit money "in the accounts of banks." Under TARP and quantitative easing, the Treasury purchased securities or shares from the banks. Under quantitative easing, the Fed purchased Treasury securities and mortgage-backed securities from the banks. Yes, the Fed printed the money to buy those securities, but it't not like they just printed the money and gave the banks free money. 2. Overnight loans are almost irrelevant to your point because they're overnight. They have to be paid back within 24 hours. The $9 trillion dollar figure sounds impressive but that's just the value of all the overnight loans added up. If you make $8.2 billion in loans every day for 3 years (with the 8.2 billion paid back the next day and then another 8.2 billion loaned out again), you get $9 trillion.
  - temphn 14y ago
    Yes, the Fed printed the money to buy those securities, but it's not like they just printed the money and gave the banks free money. That is exactly what they did, because otherwise those securities would not have had the same price on an open market. The Fed paid for worthless holdings and propped up banks by printing trillions, thereby devaluing everyone else's dollars. And they are still doing it, now printing $85B per month ($1T/year) to buy mortgage-backed securities and reinflate the housing bubble. Printing $100 to buy $1 of MBS toxic waste from the banks is direct depositing $99 into their pockets (and causing commensurate dilution of all other dollar holders). Overnight loans are almost irrelevant to your point because they're overnight. Without printing $9 trillion to "inject liquidity" the banks would have gone bust when the capital call came. It was this overnight loan that allowed the banks to socialize the losses while privatizing the gains.

bcoates 14y ago

> I'd humbly suggest that you enumerate the "common errors" in the presentation. That money exists to serve as an improved barter good, rather than barter being a degenerate form of trade that exists mostly in the rare cases when credit is impractical. That quantity fixation or durability are particularly important properties of money. That gold is particularly important, versus anything else that is pretty and value-dense. That the only forms of money are commodity-backed and pure fiat. That the USD switched from the first camp to the other in 1971. Describing the USD without reference to the Federal Reserve at all. The assumption that the debasement of coins over a 300 year period had any harmful effects other than making the coins less pretty 1700 years later. That +200% wage and price inflation over 130 years is any kind of serious problem. That hyperinflation and regular inflation are the same thing except in degree. That Bitcoin limiting supply controls inflation. That the problems with deflation are somehow non-obvious or not happening observably in Bitcoin right now. That flat-rate Demurrage fixes Bitcoin inflation.

temphn 14y ago
Great. I hope you will agree most of these are differences of opinion ("particularly important", "serious problem") rather than empirical fact. Moreover, I hope you will agree that people with similar conventional beliefs on inflation & economics are in power, and the world economy is not doing very well. FWIW, here's a first cut at separating statements of opinion & fact to drill down to potential empirical differences. That money exists to serve as an improved barter good, rather than barter being a degenerate form of trade that exists mostly in the rare cases when credit is impractical. Not sure about your disagreement here - are you saying that credit is more fundamental than barter? Money as an improved replacement for barter is hardly controversial. Credit is a third layer on top of money, which only comes into play when there are actual goods to be traded. That quantity fixation or durability are particularly important properties of money. If you care about money as a long-term store of value, these are important characteristics. Paper notes from most countries that existed in the 1800s don't hold their value today. Gold coins do. That gold is particularly important, versus anything else that is pretty and value-dense. Gold is important because it can't be mined as easily as paper is printed, and because it's an element and thereby difficult to truly counterfeit without an atom smasher. As such it limits the spending power of governments. It's also important for the same reason any network effect is important, namely other people use it (and have used it since historical times). That the only forms of money are commodity-backed and pure fiat. This is possibly a factual disagreement. But either a paper note is exchangeable for a fixed quantity of a commodity like gold or it isn't. I suppose you can have some limits on redemption on a daily basis, but otherwise it seems like a reasonable boolean distinction. Please do elaborate on what you have in mind. That the USD switched from the first camp to the other in 1971. This also seems to be a factual claim. The US under Nixon did indeed abandon the gold standard fully in 1971, removing the $35 dollars per ounce peg (http://www.theatlanticwire.com/politics/2011/08/nixon-gold-standard-gamble-interrupting-bonanza/41278 http://www.theatlanticwire.com/politics/2011/08/nixon-gold-s...). Most people both pro- and con- would refer to this as "going off the gold standard". Describing the USD without reference to the Federal Reserve at all. I think that's implicit. Not sure this is a "common error". The assumption that the debasement of coins over a 300 year period had any harmful effects other than making the coins less pretty 1700 years later. This is not an assumption but is explicitly argued. The underlying thesis is that governments that debase their currency by printing money eventually find their ability to compel obedience waning, as their official scrip is rendered useless. That +200% wage and price inflation over 130 years is any kind of serious problem. Given that this period coincides with the decline and ultimate fall of the Roman Empire, I wouldn't call this a "common error" either. That hyperinflation and regular inflation are the same thing except in degree. This claim is not made in the slides. But both of them do have the property in common that one's currency becomes less valuable. "Normal" inflation has devalued the US dollar 23.45X since 1913 (roughly $1 in 1913 buys $23.45 today; see usinflationcalculator.com). If that happened in one year we'd call it extremely strong inflation, if not hyperinflation. That Bitcoin limiting supply controls inflation. Please give a counterargument here. How can you inflate a currency if the supply is fundamentally limited? That the problems with deflation are somehow non-obvious or not happening observably in Bitcoin right now. What are the problems? A rise in market cap to $1B over four years from nothing and adoption by millions in the face of government opposition looks like a smashing success. Fluctuations aren't unilateral seizures; everyone in Bitcoin has chosen to be in Bitcoin. That flat-rate Demurrage fixes Bitcoin inflation. I suppose you mean "fixed Bitcoin deflation"? Freicoin may not "fix" deflation but it's a currency which has regular inflation built into it. Because Kyle supports deflation he certainly did not claim that Freicoin is a "fix", but rather a technical embodiment of an alternate philosophy. In short, I think most of the points you raise are not "common errors" but rather (at best) disagreements of opinion. Would appreciate any elaboration on the points of seeming factual disagreement.