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I came to this conclusion after spending a significant fraction of my too-short lifespan studying how money works. I am hardly an expert. But I (apparently) k
by hapless 13y ago
I came to this conclusion after spending a significant fraction of my too-short lifespan studying how money works.
I am hardly an expert. But I (apparently) know a lot more than the average Joe. Seeing the rash of "end the fed" madness on the internet makes me very sad.
- Eleutheria 13y agoOnly one simple question. Did you read Rothbard's "What has government done to our money?" If not, do so, and come back to tell us how your mind changed, for good or bad.
- mark_l_watson 13y agoThanks, I just bought that for the Kindle for a few dollars. Another book in a similar vein is "The Currency Wars" which I really enjoyed, and then shared with my family. TLDR: the financial system is rigged to make the rich richer; getting off a fiat currency would in general (and long term) help 99% people. BTW, it still blows my mind that so many friends think the US economy is so great right now, ignoring the $3 trillion in money created out of nothing in the last few years; sure stock and home prices were maneuvered higher.
- hapless 13y agoI have not, and I will not in the future. Just as one does not read alchemical texts for insight into modern chemistry, I have not spent very much of my life reading the Austrian school. There is certainly a great deal of historical interest for students of philosophy, but that isn't in line with my personal interests. Broadly speaking, the Austrian school has little relevance to the study of economics or finance.
- anonymoushn 13y agoA preference for some economic texts over others seems more like a preference for some alchemical texts over others than a preference for chemistry texts over alchemical texts.
- sixQuarks 13y agoThis is all I need to know. Now I am absolutely sure you don't know what you're talking about.
- notahacker 13y agoFrankly, Rothbard's book is not particularly likely to change the mind of anyone with a good grasp of economics or finance because it's basically an extended political pamphlet which doesn't actually address the arguments economists make against the gold standard. Economists, for example, believe that hoarding is detrimental to investment because [some more] individuals will be rationally inclined to hoard rather than invest in a noninflationary environment, resulting in fewer real goods and services being produced. Rothbard manages to write an entire chapter claiming that "hoarding never brings any loss to society" without any reference to investment, or the effects of expected zero inflation (or deflation) on propensity to invest. He even describes the beginning of a credit crunch "suppose, for whatever reason--perhaps growing apprehension--people's demand for cash balances increases" as a good thing which it would be a "positive social benefit to satisfy"! Let them eat coins! What happens to the people who want to make stuff to sell at a profit and face both increasing borrowing costs and decreasing prices isn't discussed...
- lukifer 13y agoThere is a practical example where the incentive to hoard has not stopped transactions: the technology industry. Since the dawn of computers and personal electronics, the purchasing power of the dollar for technology products increases drastically year-by-year, and yet transactions continue to occur. If a currency or commodity accumulates value, the seller's incentive to acquire it is mathematically equal to the buyer's incentive to hoard it. Eventually, they meet in the middle and find a mutually agreeable price, because people will always want goods and services.
- sixQuarks 13y agoObviously, just because you study something intently doesn't mean you understand it
- derwiki 13y agothis comment seemed unnecessarily mean :(
- antoinec 13y agoWhat the purpose of studying something then, if at the end you still don't understand it?
- coldtea 13y agoJust the fun of it? Learning other stuff in the process? Gaining a better idea of what the thing you study entails, even if you don't understand it fully yet?
- antoinec 13y agoI don't even know how to argue with that...can't do anything against bad faith I guess
- coldtea 13y agoHuh? Where's the bad faith? What I mean is, you can study something even if you know that you won't understand it at the end of your studies. There's even stuff that you can have a full career in and still not understand completely, like Quantum Mechanics. It's not a guarantee that by studying something you'll understand it, but learning more about it can be valuable in itself. For example I can study some X technique in a language, e.g Monads, and know when to apply it and what it does, and be quite productive with it, even if I don't yet understand it (or never get to understanding type theory).
- Sharlin 13y agoBut it certainly raises the priors. Corollarily, if you haven't studied something intently it is actually quite probable that you don't understand it.
- sparkie 13y agoAlso have a read of David Graeber's "Debt: The first 5000 years". This "central banking" was invented way before sanitation, and is older than the currency itself.
- rsync 13y agoBut that same book also has a very succinct and useful definition of money - remember the scenario wherein thieves are stealing from you and you need a token to show to the thieves to prove you've already been stolen from that day ? And then those tokens become valuable themselves ? I thought that explanation was quite interesting but was unsure of its value in describing the real world. BUT THEN, I remember the description in Zinns _Peoples History of the United States_ wherein he describes exactly that scenario: Columbus wanted gold out of Haiti. There was none. They told the natives to get it anyway, and gave them copper necklaces to indicate that they had fulfilled their gold tribute. "Indians found without a copper token had their hands cut off and bled to death." So ... to whatever degree this picture of money is accurate, and it appears that it is more accurate than I thought after simply reading "Debt", and to whatever degree central banking is a continuation of that process ... I would have to look askance at central banking, yes ? [1] http://www.thirdworldtraveler.com/Zinn/Columbus_PeoplesHx.html http://www.thirdworldtraveler.com/Zinn/Columbus_PeoplesHx.ht... (see paragraph that begins "But too many of the slaves died in captivity")
- kaybe 13y agoHm, those tokens appear in Terry Pratchett Diskworld books.. so there is a historical foundation to it. Interesting.
- williamcotton 13y agoImagine that, successful artists being well grounded in the lessons of the past...
- MaysonL 13y agoGiven that he wrote this in that book: "The greater the need to improvise the more democratic the cooperation [within companies] tends to become. Inventors have always understood this, start-up capitalists frequently figure it out, and computer engineers have recently rediscovered the principle … Apple Computers is a famous example: it 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 garages." I wouldn't trust any part of anything in the book.
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- brudgers 13y agoWhile one might argue that the comment about Fox appears intended as ad hominem, the link to Wikipedia is clearly an argument from authority.
- bduerst 13y agoThe link to wikipedia was referential, not the basis for an argument. Unless of course, you're challenging that informal fallacies even exist.
- whatevsbro 13y ago>> Central banking is possibly the greatest human invention since sanitation. The U.S. central banking system ranks among the finest of its kind. > I came to this conclusion after spending a significant fraction of my too-short lifespan studying how money works. Alright, I'll bite. Please educate me by answering these questions: 1) How are central banks "ranked"? What makes one better than another? 2) What is the benefit of a central bank? 3) What makes fiat currency valuable? 4) Why is governments' ability to print limitless amounts of fiat currency not a problem with regard to its value? 5) .. and if it is, why are we all using fiat currency anyway? I guess that's enough for now. Having spent years studying how money works, you should be able to breeze through these questions with satisfactory answers, right?
- altcognito 13y ago#4 Why is governments' ability to print limitless amounts of fiat currency not a problem with regard to its value? Having the ability and using it are two completely different things. "Competent economic management" (which establishes trust in a currency) is the answer to #2, #3. #1 - They are ranked by their primary objective which is slow stable growth. #5 - because that is what has worked best.
- hapless 13y agoI do indeed have answers. I doubt they will satisfy you. 1. Central banks are ranked on two measures: a.) How independent are they? Are they easily swayed by politicians? b.) How well do they meet their mandates? The U.S. Fed is universally well-regarded in terms of its independence. It does less well on its "dual mandate." 2. Central banking systems make cash and checking possible. Without central banking, your bank-denominated money (whether "checking" or cash) is valued only to the extent that a third party trusts your bank. Your twenty dollar bill printed in Philadelphia becomes valueless in New York, 100 miles away. Fixing this problem makes business transactions, particularly lending, easier and more efficient. 3. Broadly, fiat currency is valuable because other people deem it to be so. Specifically, even if no other person on earth wants it, the IRS and the courts will accept it. Being able to pay my taxes and satisfy court judgments against me in fiat currency places a floor on its value. (It is interesting to observe fiat systems where you de facto can't pay your taxes in the fiat currency: north korea, cuba, zimbabwe, etc) 4. Ability is not action. It is a problem when and if they do happen to do so. (returning to the ranking question, the central bank that printed limitless amounts of currency would be very poorly ranked, since they would fail to meet inflation mandates) Secondly, we want the money supply to rise and fall with the economy. It is very important that the printing of money is not limited artificially, or else we encounter liquidity crises, bank runs, etc. The ancient demons of inflation and deflation. 5. Because the prior standard for currency, precious metal, was dangerously uncontrollable. The very word "dollar" comes from a place in Germany where silver was unexpectedly found, causing an economic crisis across Europe as cheap silver flooded the market.
- tolmasky 13y agoFrom my experience people who defend central banking usually are actually only defending US central banking, or Western superpower central banking. That's fine, but its at least a little troubling that good banking seems to correlate to some degree with having a strong military presence around the world. In other words, I think the arguments against why Bitcoin is needed in the US are interesting and all, but ultimately miss the point (in my opinion). As someone who came from a country where the central banks were anything but amazing, and there is essentially a 5/10 year cycle that inevitably leads to hyperinflation, I can attest that these problems are in fact very real -- not scary stories told by crazy libertarians -- even if they don't happen to take place in the richest nations on earth. As such, Bitcoin provides a very interesting new hope to solving these problems in these areas, as opposed to yet another unfair loan from the IMF or exploitative foreign investments. It's kind of like laughing at how silly filtering water bottles are because we have great water sanitation in America, while ignoring that this is a real issue in Africa.
- thisiswrong 13y ago> Even if they don't happen to take place in the richest nations on earth. Germany 1930s - hyperinflation; Argentina 1990s - hyperinflation; USA 2010s - quantitative easing. These can also be real problems even for the richest nations. As you correctly mention - Iraq [1] & Libya [2] were essentially currency invasions and NOT oil invasions. Millions of innocent lives lost to keep the USD propped up. Wars that would make no sense under BTC. [1] http://content.time.com/time/magazine/article/0,9171,998512,00.html http://content.time.com/time/magazine/article/0,9171,998512,... [2] http://www.thenewamerican.com/economy/markets/item/4630-gadhafi-s-gold-money-plan-would-have-devastated-dollar http://www.thenewamerican.com/economy/markets/item/4630-gadh...
- hapless 13y agoIt is true that QE has tremendously increased the money supply. Inflation remains around 1%. Inflation and money supply do not have a simple or linear relationship. The oil thing is nonsense. All oil sales are enumerated in USD for historical reasons only. Dictators who face embargo by the U.S. would rather sell oil for other currencies in order to evade the embargoes. Iran is trying to sell oil on their own private oil bourse right now. It is an operating concern, today, in 2014. They are perfectly free to sell oil for other currencies, but they are not finding a lot of buyers.