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"Economists have written on the mechanics of a Bitcoin-like currency, in essence, a fixed-supply alternative anonymous fiat "currency"." You need to go back to

"Economists have written on the mechanics of a Bitcoin-like currency, in essence, a fixed-supply alternative anonymous fiat "currency"." You need to go back to papers written by F.A Hayek criticizing Keynes in the 30s to get any serious academic discussion of the benefits of a fixed money supply. His critique of Keynes' idea of the "Paradox of Savings" is good, also the later paper he wrote: "The Denationalization of Money", which explores privately issued competing currencies is pretty interesting.

cynicalkane 14y ago
Hayek later changed his mind on monetary policy, denounced some of his old views, and endorsed inflation targeting, so that's not a very good example.
- DennisP 14y ago
  He published Denationalization of Money when he was 77 years old.
- narrator 14y ago
  Funny thing about Hayek. If you read "Monetary Theory and the Trade Cycle" (http://mises.org/daily/3121 http://mises.org/daily/3121) he describes the dynamics of the boom/bust cycle and how they are a direct result of fractional reserve banking but then says: "If it were possible, as has been repeatedly asserted in recent English literature,[114] to keep the total amount of bank deposits entirely stable, that would constitute the only means of getting rid of cyclical fluctuations. This seems to us purely utopian. It would necessitate the complete abolition of all bank money — i.e., notes and checks — and the reduction of the banks to the role of brokers, trading in savings. But even if we assume the fundamental possibility of this state of things, it remains very questionable whether many would wish to put it into effect if they were clear about its consequences. The stability of the economic system would be obtained at the price of curbing economic progress. The rate of interest would be constantly above the level maintained under the existing system (for, generally speaking, even in times of depression some extension of credit takes place).[115] The utilization of new inventions and the "realization of new combinations" would be made more difficult, and thus there would disappear a psychological incentive towards progress, whose importance cannot be judged on purely economic grounds. It is no exaggeration to say that not only would it be impossible to put such a scheme into practice in the present state of economic enlightenment of the public, but even its theoretical justification would be doubtful." He's basically apologizing for finding all these flaws in the monetary system and central banking. He was convinced, at least at this point in his life that he could reason with the financial system to resolve these issues through better understanding. That's the interesting thing about Hayek. He was not opposed to the structure of the financial system out of ideological conviction but just that he had enormous insight into the dynamics of the system and stated his understanding without editing or simply repeating the conventional wisdom.
JumpCrisscross 14y ago
F.A. Hayek versus J.M. Keynes is an Einstein versus Quantum Mechanics moment for economics. There is a tremendous amount of richness that is lost from just reading them without any context. Neither "won" - both theories saw their halcyon days and both have been incorporated into the modern dialectic. Note that a lot of Bitcoin enthusiasts plough through Keynes to the value of debt. This, on the other hand, was answered by the Battle of Waterloo, where the City of London financed British army beat the initially superior French.
- fnordfnordfnord 14y ago
  Are you saying that the good thing about fiat currency is that the gov't can use it to finance a war? Because that's one of my main complaints about fiat currency.
  - deleted 14y ago
    [deleted]
  - illuminate 14y ago
    Whatever you pay your taxes in will be used to finance a war.
    - fnordfnordfnord 14y ago
      For your statement to be true, I would have expected a big rise in my taxes over the last decade, and perhaps a corresponding contraction of other gov't spending. I've seen neither, nor do I think the gov't was hoarding a big war-chest of funds for such an occasion. The main point of my comment was to point out that when it's possible for the gov't to finance war(s) with deficit spending as opposed to war-bonds, people freely ignore it, as you've demonstrated.

cynicalkane 14y ago

Hayek later changed his mind on monetary policy, denounced some of his old views, and endorsed inflation targeting, so that's not a very good example.

DennisP 14y ago
He published Denationalization of Money when he was 77 years old.
narrator 14y ago
Funny thing about Hayek. If you read "Monetary Theory and the Trade Cycle" (http://mises.org/daily/3121 http://mises.org/daily/3121) he describes the dynamics of the boom/bust cycle and how they are a direct result of fractional reserve banking but then says: "If it were possible, as has been repeatedly asserted in recent English literature,[114] to keep the total amount of bank deposits entirely stable, that would constitute the only means of getting rid of cyclical fluctuations. This seems to us purely utopian. It would necessitate the complete abolition of all bank money — i.e., notes and checks — and the reduction of the banks to the role of brokers, trading in savings. But even if we assume the fundamental possibility of this state of things, it remains very questionable whether many would wish to put it into effect if they were clear about its consequences. The stability of the economic system would be obtained at the price of curbing economic progress. The rate of interest would be constantly above the level maintained under the existing system (for, generally speaking, even in times of depression some extension of credit takes place).[115] The utilization of new inventions and the "realization of new combinations" would be made more difficult, and thus there would disappear a psychological incentive towards progress, whose importance cannot be judged on purely economic grounds. It is no exaggeration to say that not only would it be impossible to put such a scheme into practice in the present state of economic enlightenment of the public, but even its theoretical justification would be doubtful." He's basically apologizing for finding all these flaws in the monetary system and central banking. He was convinced, at least at this point in his life that he could reason with the financial system to resolve these issues through better understanding. That's the interesting thing about Hayek. He was not opposed to the structure of the financial system out of ideological conviction but just that he had enormous insight into the dynamics of the system and stated his understanding without editing or simply repeating the conventional wisdom.

JumpCrisscross 14y ago

F.A. Hayek versus J.M. Keynes is an Einstein versus Quantum Mechanics moment for economics. There is a tremendous amount of richness that is lost from just reading them without any context. Neither "won" - both theories saw their halcyon days and both have been incorporated into the modern dialectic. Note that a lot of Bitcoin enthusiasts plough through Keynes to the value of debt. This, on the other hand, was answered by the Battle of Waterloo, where the City of London financed British army beat the initially superior French.

fnordfnordfnord 14y ago
Are you saying that the good thing about fiat currency is that the gov't can use it to finance a war? Because that's one of my main complaints about fiat currency.
- deleted 14y ago
  [deleted]
- illuminate 14y ago
  Whatever you pay your taxes in will be used to finance a war.
  - fnordfnordfnord 14y ago
    For your statement to be true, I would have expected a big rise in my taxes over the last decade, and perhaps a corresponding contraction of other gov't spending. I've seen neither, nor do I think the gov't was hoarding a big war-chest of funds for such an occasion. The main point of my comment was to point out that when it's possible for the gov't to finance war(s) with deficit spending as opposed to war-bonds, people freely ignore it, as you've demonstrated.