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What you call inefficiency others call profit. The more times money moves around the more money others stand to gain. The economy as a whole does well when mov

What you call inefficiency others call profit. The more times money moves around the more money others stand to gain. The economy as a whole does well when moving between parties at a consistent rate. Eliminating the inefficient transaction doesn't just hurt profit. It hurts the very core of how our economic models currently work. That being said Bitcoin is currently no threat to that system. It's hard to imagine it ever being honestly.

guylhem 14y ago
I'm not sure I understand your point. It seems inconsistent with walrasian pure and perfect competition, where profits tend to zero and the optimal outcomes are achieved. Eliminating the inefficiencies, ie profit in pure and perfect competition, is the way the system works - non null profits attract new businesses. That's basic economics, with very special edge cases (ex - natural monopolices) I'm not sure exactly why or how economy as a whole would do better with more inefficiencies at each point, and money moving more as you suggest. Are you referring to the equation of the velocity of money (MV=PQ) ? It says nothing about how desirable the outcome is (ex: broken window fallacy)
- parasubvert 14y ago
  Pure and perfect competition has never existed in the real world, however - it's a theoretical modeling tool to remove complexities when describing interactions. The real world has to deal with asymmetric information and product differentiation. In other words, price is not the only signal driving supply and demand. It also has to deal with the dynamic disequilibrium that is caused by entrepreneurship and innovation, which "creatively destroys" previous markets in favor of new ones. It is this process that is the source of all profit and economic growth, at least according to Schumpeter.
- pjzedalis 14y ago
  Banks don't really want to be more efficient and charge less fees. Banks are essential to any system (capitalism) that requires a currency. Nobody would want to be a bank if they could not charge fees. No bank would offer loans or any kind of securities without some backing and protections. Since Bitcoin is finite, semi-anonymous and not backed by a central bank or government banks will never have those protections. So instruments that are essential to our economy like car loans, mortgages, etc. will not be possible. Does anybody really want that?

guylhem 14y ago

I'm not sure I understand your point. It seems inconsistent with walrasian pure and perfect competition, where profits tend to zero and the optimal outcomes are achieved. Eliminating the inefficiencies, ie profit in pure and perfect competition, is the way the system works - non null profits attract new businesses. That's basic economics, with very special edge cases (ex - natural monopolices) I'm not sure exactly why or how economy as a whole would do better with more inefficiencies at each point, and money moving more as you suggest. Are you referring to the equation of the velocity of money (MV=PQ) ? It says nothing about how desirable the outcome is (ex: broken window fallacy)

parasubvert 14y ago
Pure and perfect competition has never existed in the real world, however - it's a theoretical modeling tool to remove complexities when describing interactions. The real world has to deal with asymmetric information and product differentiation. In other words, price is not the only signal driving supply and demand. It also has to deal with the dynamic disequilibrium that is caused by entrepreneurship and innovation, which "creatively destroys" previous markets in favor of new ones. It is this process that is the source of all profit and economic growth, at least according to Schumpeter.
pjzedalis 14y ago
Banks don't really want to be more efficient and charge less fees. Banks are essential to any system (capitalism) that requires a currency. Nobody would want to be a bank if they could not charge fees. No bank would offer loans or any kind of securities without some backing and protections. Since Bitcoin is finite, semi-anonymous and not backed by a central bank or government banks will never have those protections. So instruments that are essential to our economy like car loans, mortgages, etc. will not be possible. Does anybody really want that?