Bitcoin

[Visbek]

Just interjecting here.... I'm sure you're all shocked by that

This is a gigantic topic in itself, and I will not have room in my response to go very deep. This line of thought ends in the oversimplification of this typical statement. " Bitcoin uses more electricity than x country! ". But simply, I would argue that debt-based central banks have to have support systems that are quite extensive as well.

1) They are nowhere near as energy-intensive as Bitcoin. I've never seen anyone say that all the central banks combined use as much energy per hour as all of Poland.

2) The central banks are performing functions that are absolutely vital to the global financial system. Bitcoin isn't.

I do not necessarily believe that Bitcoin has to become primarily currency. Not at first.

You, uh... do know that was its original purpose, right?

Currencies also need to be stable. However, BTC can never be stable, because there is no one who can stabilize it. That's why speculators love it.

I think it can be an extremely successful store of value.

What a shock.

There are many people in the Bitcoin world who see this way.

There are many cryptocreeps who will say anything to protect their holdings.

And to your point that Bitcoin is technically incapable of becoming transactional for the entire world,.. I think this was the argument made immediately after Satoshi's first post on the mailing list when he introduced the white paper.

Considering that BTC is a failure as a currency, it seems the critics were correct, no?

But layered systems are being developed that are already working for transactional Bitcoin.

How many years have you been saying that? Two?

I think I have less faith in the debt-based central banking system and it being the best we can do than you. And taking the most central and basic control of money out of the hands of even well-meaning small groups of humans might just have an amazingly positive impact.

Oh, you think crypto will reduce the dependency on credit? That's so cute!

No, wait, that's just absurd. Credit and FRB is far too useful to go away.

I'd add that from what I'm seeing, US legislation passed this week basically allows conventional banks a lot more options to work with crypto. If you think large banks won't be able to dominate the sector, you're in for a rude awakening. Here comes the new boss, same as the old boss....

We should also note that, especially in the past 40 years, we've repeatedly seen those "well-meaning small groups" rescue the global economy from disaster via monetary policy. And now what, you want to take away one of the few tools governments are willing to use to manage recessions? While ignoring how Big Crypto keeps melting down, stealing customer assets, and getting caught laundering money? Seems odd.

Finally, I thank you for your thoughtful, even, intelligent posts. It's what I come to this site, craving, instead of the one-liners and name-calling that we do so much of here.

 

[Econ4every1]

Yes, Bitcoin is really 100% economic value. And it is absolutely abstract.

I would just ask that you define your terms, wat does "economic value" mean to you?

But... I think there are also problems. The Cantillon effect is one example.

Oof...That's a big can of worms , but I think the The Cantillon effect can be utilized smartly, but let's table this for now, though I will ask, do you think that BTC really solves this problem, or do we just trade one "problem" for another? Simply moving the The Cantillon effect from the public side to the private side (albeit an effect that would emerge differently, though no less significantly)?

But simply, I would argue that debt-based central banks have to have support systems that are quite extensive as well.

Sure, though I would argue that creating a BTC worth $100k come with real costs orders of magnitude larger than the cost of creating $100k in a computer and crediting your account. Further, those systems serve other purposes that mostly hinge on reliability and security, but both systems have that issue.

And perhaps they're more connected to military hardware than electricity, for example. (Another huge rabbit hole)

US dollars are connected to everything that can be bought with them.

The military aspect isn't in necessary in the costs per-se, but in the nations capacity to defend it's sovereign interests and maintaining global partnerships that facilitate trade.

But yes, deep rabbit hole.

I do not necessarily believe that Bitcoin has to become primarily currency. Not at first. I think it can be an extremely successful store of value.

Despite it's recent success, I do not believe that BTC is fundamentally sound. Of course it's results will speak louder than my objections to most people until I'm right. This reminds me of the housing market in the run up to '08. Claiming that the market for housing was unstable and almost certain to crash to a person who has been flipping houses for the 10 years prior could easily be dismissed based on the results to that point. IMO, it's the same, but BTC doesn't have any real, tangible, objective value to fall back on. It doesn't have a central authority that can intervein in the interests of the nation a a whole. Instead, the lower and middle classes would suffer, while those with assets and wealth will use the opportunity of deflating prices and increasing desperation as an opportunity to become even wealthier post-collapse. Something we already see because of the misunderstandings I've mentioned already.


I'll continue with the rest a little later.....

Cheers

 

[cAPSLOCK]

True.

You can still use beanie babies as a toy.

I’ve spent quite a bit of time trying to understand crypto too. I get the arguments for it- I really do. But my conclusions are a bit different than yours.

But when someone tells me they have their life savings in it…. I automatically am very suspect of their judgement- because, as another poster eloquently pointed out, diversification is the only thing that makes long term sense in investing.

I understand the idea about diversification. and the risk of putting "all your eggs in one basket".

And I'm not going to explain to you the reasons behind the choice I have made, which I am satisfied with. I am okay with the risk I'm taking.

And I am also fine with you determining that in your eyes my judgment is suspect.

Also, I wouldn't touch 99.9% of "crypto" with a 10-foot pole.

 

[cAPSLOCK]

I would just ask that you define your terms, wat does "economic value" mean to you?

Poorly chosen words. I am camping and trying to do this on my phone. What I mean is monetary premium, or I think what you're calling extrinsic value.

Simply moving the The Cantillon effect from the public side to the private side (albeit an effect that would emerge differently, though no less significantly)?

Agree. Bitcoin's version of the Cantillon effect moved the advantage to the early adopters. But after that, distribution will flow to everyone who uses it naturally and without controls.

Sure, though I would argue that creating a BTC worth $100k come with real costs orders of magnitude larger than the cost of creating $100k in a computer and crediting your account.

I believe the ease of creating $100,000 on the computer and crediting the account is at the root of some of our problems. ( Way more nuance here I can't type though.)

As to the expense of the creation, once it is created it can be used forever. This means the cost of a Bitcoin asymptotically approaches zero over time. And at this point, the energy use shifts to supporting the network rather than the creation of Bitcoin. A lot of nuance here too.

The military aspect isn't in necessary in the costs per-se, but in the nations capacity to defend it's sovereign interests and maintaining global partnerships that facilitate trade.

It is an oversimplification but I see us issuing debt to send $$ to a foreign country under the stipulation that they buy our weapons from our military industrial complex while the hands of the elite are greased all along the way to be a worse use of "energy" than what Bitcoin does. ( I am aware that there are a lot of suppositions and political opinions in that little statement.)

Despite it's recent success, I do not believe that BTC is fundamentally sound.

I hate to have to delete the rest of that paragraph. There's so much good in there. But yes, this is something we definitely disagree on. And I admit fully I could end up wrong about that.

This reminds me of the housing market in the run up to '08. Claiming that the market for housing was unstable and almost certain to crash to a person who has been flipping houses for the 10 years prior could easily be dismissed based on the results to that point. IMO, it's the same, but B

This is a good argument. And Bitcoin has been a series of bull runs and bursting bubbles from the very beginning. And I am worried about the Bitcoin Treasury companies that are being managed poorly and even things like the ETFs because the next bubble pop is going to touch a lot more people than any of the last ones.

I'll continue with the rest a little later.....

I look forward to it.

 

[cAPSLOCK]

Just interjecting here.... I'm sure you're all shocked by that


1) They are nowhere near as energy-intensive as Bitcoin. I've never seen anyone say that all the central banks combined use as much energy per hour as all of Poland.

2) The central banks are performing functions that are absolutely vital to the global financial system. Bitcoin isn't.


You, uh... do know that was its original purpose, right?

Currencies also need to be stable. However, BTC can never be stable, because there is no one who can stabilize it. That's why speculators love it.


What a shock.


There are many cryptocreeps who will say anything to protect their holdings.


Considering that BTC is a failure as a currency, it seems the critics were correct, no?


How many years have you been saying that? Two?


Oh, you think crypto will reduce the dependency on credit? That's so cute!

No, wait, that's just absurd. Credit and FRB is far too useful to go away.

I'd add that from what I'm seeing, US legislation passed this week basically allows conventional banks a lot more options to work with crypto. If you think large banks won't be able to dominate the sector, you're in for a rude awakening. Here comes the new boss, same as the old boss....

We should also note that, especially in the past 40 years, we've repeatedly seen those "well-meaning small groups" rescue the global economy from disaster via monetary policy. And now what, you want to take away one of the few tools governments are willing to use to manage recessions? While ignoring how Big Crypto keeps melting down, stealing customer assets, and getting caught laundering money? Seems odd.

Look, I've tried to say this before, and this is the last time. I'm going to try to say it very clearly, though.

This is a little personal, but I am an exceedingly neurodivergent individual, and I'm overly sensitive to tone.

But even if that wasn't the case, I wouldn't be coming here to be mocked.

 

[Sooner or Later]

I sold off my IBIT profits.

Proceeds to finish purchase of a BMW 240i.

 

[Napoleon]

Crypto is probably the biggest and most successful economic scam in history. There is absolutely nothing behind it but hopes, dreams, and predation.

 

[Threegoofs]

I understand the idea about diversification. and the risk of putting "all your eggs in one basket".

And I'm not going to explain to you the reasons behind the choice I have made, which I am satisfied with. I am okay with the risk I'm taking.

Whatever floats your boat. I've seen lots of disasters with people investing who were absolutely sure that their one thing would land and make them rich.

My wife is in the financial advisor business and sees (and punishes) lots of shady stuff with advisors putting money into risky and inappropriate investments, and I can tell you that anyone who has a significant portion of money in bitcoin would be a gigantic red flag in any and all situations.

And I am also fine with you determining that in your eyes my judgment is suspect.

Good. Because your judgement is not just suspect if you are telling us the truth - your judgement is horrible. But you might get lucky, so there's that.

Also, I wouldn't touch 99.9% of "crypto" with a 10-foot pole.

Thats one saving grace...

 

[cAPSLOCK]

Whatever floats your boat. I've seen lots of disasters with people investing who were absolutely sure that their one thing would land and make them rich.

I have seen this too. And for what it's worth, I would never suggest to anybody to put an enormous amount of their wealth into Bitcoin. In fact, I would say people's allocation should be fairly small percent of their total net worth, probably single digit. Though I don't even make that suggestion.

So hopefully that's clear.

My wife is in the financial advisor business and sees (and punishes) lots of shady stuff with advisors putting money into risky and inappropriate investments, and I can tell you that anyone who has a significant portion of money in bitcoin would be a gigantic red flag in any and all situations.

This paragraph bothers me. What would it be a red flag to? And what sort of punishment would I be dealt? I am not sure I would want your wife advising me on my finances, but perhaps I'm misunderstanding what she does?

Good. Because your judgement is not just suspect if you are telling us the truth - your judgement is horrible. But you might get lucky, so there's that.

I don't think you know enough details about my positions to really judge that thoroughly. I did use the phrase "life savings". That was hyperbolic. I tried to explain that a ways back. I have many other assets. But I do keep an extremely large percentage of my liquid assets in Bitcoin. More than I would suggest to others. But again... I don't make those kinds of suggestions.

 

[Threegoofs]

I have seen this too. And for what it's worth, I would never suggest to anybody to put an enormous amount of their wealth into Bitcoin. In fact, I would say people's allocation should be fairly small percent of their total net worth, probably single digit. Though I don't even make that suggestion.

Yep

So hopefully that's clear.

This paragraph bothers me. What would it be a red flag to? And what sort of punishment would I be dealt? I am not sure I would want your wife advising me on my finances, but perhaps I'm misunderstanding what she does?

Punishes the advisors (fires them off their platform), who are supposed to have a fiduciary duty to their clients. She doesn’t advise- part of her role is to adjudicate fraud and mishandling of client money. Those massively long disclosure sheets when you open financial accounts are serious to people who hold licenses.

I don't think you know enough details about my positions to really judge that thoroughly. I did use the phrase "life savings". That was hyperbolic. I tried to explain that a ways back. I have many other assets. But I do keep an extremely large percentage of my liquid assets in Bitcoin. More than I would suggest to others. But again... I don't make those kinds of suggestions.

Like I said. Bad idea, almost always.

 

[cAPSLOCK]

Punishes the advisors (fires them off their platform), who are supposed to have a fiduciary duty to their clients. She doesn’t advise- part of her role is to adjudicate fraud and mishandling of client money. Those massively long disclosure sheets when you open financial accounts are serious to people who hold licenses.

That makes sense. And it's kind of what I started to think after I read what you wrote a couple more times.

It's easy to have a little hair trigger reactivity when people start talking about punishments and red flags because so many people say Bitcoin is "only good for criminals and money launderers" and I am neither of those and Bitcoin is very good for me.

So I apologize for my knee jerk.

Like I said. Bad idea, almost always.

I agree with you, believe it or not.

 

[devildavid]

I don't see how this can be the case. If I sell you my car, you and I will determine the price. I have a price range at which I'm willing to sell it. You have a price at which you're willing to buy it. And if we can meet in the middle, then we're signing the title.

No one needs gold unless you happen to make electronic devices that use it. And yet, after thousands of years gold is a 24-hour day worldwide market in which human beings are constantly setting the price.

And as to things that we need to stay alive, having reliable places to store wealth over time is pretty basic. My stomach is full today, but I might be very hungry tomorrow. So having a bank account is very useful.

Your car’s value is arbitrary. Gold’s value is arbitrary. All markets assign arbitrary values to things. Having things with arbitrary value doesn’t guarantee you will eat tomorrow if the market setting that arbitrary value collapses tomorrow.

 

[cAPSLOCK]

Your car’s value is arbitrary. Gold’s value is arbitrary. All markets assign arbitrary values to things. Having things with arbitrary value doesn’t guarantee you will eat tomorrow if the market setting that arbitrary value collapses tomorrow.

So what asset does not have an arbitrary value?

I would agree, if you were to suggest, the US dollar has a relatively stable value over the short term.

But this comes at the cost of a constantly reducing amount of purchasing power.

The stability of the dollar makes it a monetary asset that's easier to trade in. And as I said, I agree this is a plus. But how do you not end up with an asset that's just a constant black hole for your savings?

Aside from the very newly rich, there is no wealthy person on planet Earth who saves in fiat currency. They only keep enough fiat currency to operate whatever they need to operate. Where do they put the money that they want the value of their time and effort to retain its purchasing power?

 

[JohnfrmClevelan]

So what asset does not have an arbitrary value?

I would agree, if you were to suggest, the US dollar has a relatively stable value over the short term.

But this comes at the cost of a constantly reducing amount of purchasing power.

The stability of the dollar makes it a monetary asset that's easier to trade in. And as I said, I agree this is a plus. But how do you not end up with an asset that's just a constant black hole for your savings?

Aside from the very newly rich, there is no wealthy person on planet Earth who saves in fiat currency. They only keep enough fiat currency to operate whatever they need to operate. Where do they put the money that they want the value of their time and effort to retain its purchasing power?

When you say that the dollar loses purchasing power, that's because the price of goods is rising - relative to whatever currency you are using, of course. That includes Bitcoin. A $40K car that goes up to $42K is getting more expensive relative to Bitcoin, too.

The problem is that Bitcoin is measured in the local currency. Unless Bitcoin becomes the dominant currency, it will always have this problem. And if it does become the dominant currency, it will come with all of the same problems that any currency has; if there is a fixed amount (I think that's the plan), then you will have deflation. Prices relative to the currency will go down, and that comes with a whole host of problems that generally work against the current plan, where businesses produce more to make more money.

In an inflationary environment, businesses produce more to make more money, and people prefer to spend now or invest in production rather than hold onto money.
In a deflationary environment, people will just hold onto money, because the value should increase relative to goods. Business will suffer. And without businesses making things, what good is your money?

 

[aociswundumho]

The problem is that Bitcoin is measured in the local currency.

So is gold. It's been measured in local currency for centuries. That doesn't mean it can't be a store of value or a medium of exchange.

if there is a fixed amount (I think that's the plan), then you will have deflation.

True, but deflation isn't automatically bad.

In a deflationary environment, people will just hold onto money,

Nonsense. People will still eat, drive, travel, invest, etc. Deflation doesn’t erase human needs.

 

[JohnfrmClevelan]

So is gold. It's been measured in local currency for centuries. That doesn't mean it can't be a store of value or a medium of exchange.

I never said that it couldn't. But it's also not a cure for inflation. Same as Bitcoin.

True, but deflation isn't automatically bad.

Deflation is automatically bad. It works against commerce.

Nonsense. People will still eat, drive, travel, invest, etc. Deflation doesn’t erase human needs.

No, but it certainly disincentivizes nonessential consumption, and the commerce that comes with it.

 

[cAPSLOCK]

Nonsense. People will still eat, drive, travel, invest, etc. Deflation doesn’t erase human needs.

This is an absolute wall of truth. And the ultimate ruler of this equation is death. Why would I save my money forever when I will not live forever?

A deflationary currency, or store of value, will slow down one's preference to spend. That is for sure.

But why is that bad?

Do we need to buy more plastic garbage, more ramen, more shit?

We have taken on the label of "consumers" so easily. Consumers. Does it not bother anyone but me anymore?

Houses, educations, health care, and the necessities of life? And then our desires? Sure. Of course we're going to buy those things. Why else are we here? ( Honestly, that's a little rhetorical too. There's a lot of fantastic reasons we are here that have nothing to do with money, or spending, or consuming or saving).

Maybe you want a boat, or a bigger house. Maybe you want to eat better. Okay.

Maybe even the occasional pack of ramen.

We have been artificially trained to spend... Spend... SPEND! Where does this lead? ask the Venezuelans they know.. Or the Nigerians. Or so many, many, many others.

And it's really easy for us sitting here in the land of the reserve currency of the world to assume that everybody has it like we do.. And yet they don't.

17 countries in the world use the US dollar as legal tender. If you remove the United States, that's 16.

Remember when we gave stimulus checks to every American during COVID?

Never mind the fact that was packaged in as a tiny little portion of trillions of dollars of other spending for which we created more USD out of thin air...

But those, $1,300? $1,500? Something? Those checks? They eased the burden for all the US Americans... helped them through a difficult time. (Lol).

But mathematically, provably, absolutely, truthfully, we were stealing value from those other 16 countries. No one who lived in those countries received those "stimulus checks". And yet they had to absorb the same monetary inflation that the US Americans did.

Their prices rose just the same as ours did (relatively). For the little bit of money we spent sending checks to Americans to bribe them into creating all the other trillions of dollars we spent ripping off the rest of the world. It's not the only thing we've done with the US dollar, but it is certainly one of the things we've done with the US dollar... is rip off the rest of the world.

We can get lost in the details of what Bitcoin may be or may not be, how volatile it is, whether it's good for a currency. ( It has been proven to be good for the last 15 years of the store of value.)

But the people in those countries that are being ripped off by our country over and over again? They're figuring it out.

Its just MATH.

The United States may have an advantage in holding the world's reserve currency, but it doesn't have any monopoly on math or logic. And I would say those two things are more powerful in the end.

Americans have been blessed with a lot of advantages.

Luckily, Bitcoin does not judge. If you can see where we're headed and put a little money in Bitcoin, well, you'll be like the Africans and South Americans and other people who have been ripped off by this country and the U.S. currency for decades and benefit from a store of value that isn't being devalued year after year after year.

This is not financial advice, but it's true.

( I expect this little diatribe will put me into the crazy cuckoo camp for most of you... and I'm okay with that. Have at it. But I was already there anyway, right?)

 

[JohnfrmClevelan]

This is an absolute wall of truth. And the ultimate ruler of this equation is death. Why would I save my money forever when I will not live forever?

A deflationary currency, or store of value, will slow down one's preference to spend. That is for sure.

But why is that bad?

Do we need to buy more plastic garbage, more ramen, more shit?

How much of our economy produces the essentials, and how much produces nonessentials? For a quick estimate, how much of your budget goes to entertainment? TV, movies, books, restaurants, etc. - it's a pretty big chunk, and that chunk employs a lot of people. If we pared our economy down to just the essentials, we would need to change the way we distribute that production, because a ton of us would be unemployed.

But those, $1,300? $1,500? Something? Those checks? They eased the burden for all the US Americans... helped them through a difficult time. (Lol).

But mathematically, provably, absolutely, truthfully, we were stealing value from those other 16 countries. No one who lived in those countries received those "stimulus checks". And yet they had to absorb the same monetary inflation that the US Americans did.

Other countries just did stimulus differently. Other governments took over most or all of company payroll when they shut certain businesses down.

If commerce slows down, our collective income goes down as well. Less income, less spending, less production, less income, etc. Recessions spiral until the government steps in to boost demand.

 

[cAPSLOCK]

How much of our economy produces the essentials, and how much produces nonessentials? For a quick estimate, how much of your budget goes to entertainment? TV, movies, books, restaurants, etc. - it's a pretty big chunk, and that chunk employs a lot of people. If we pared our economy down to just the essentials, we would need to change the way we distribute that production, because a ton of us would be unemployed.

So why do you think I wouldn't spend money on things that I want instead of just the essentials? I feel like your view is very binary. Like there's only those two. There's no range. There's no part in the middle.

I am typing this to you laying in a camper that I bought within the amount of time that I have been a Bitcoiner in a campground where I don't need to be.

Eating all kinds of food that I don't need to eat. Drinking kombucha, they don't need to buy. Wearing a pair of shorts that I bought at the same place that I bought the kombucha on impulse because they were on a clearance rack and I did need them either.

I already live in the deflationary Bitcoin world because I don't want to spend my savings but at the same time I'm human and I'm decaying and I wanted the kombucha and some shorts and burgers and charcoal and a new hose and a sprayer and I need diesel for my truck...

I could go on. In fact, that's one of my flaws, really.

Other countries just did stimulus differently. Other governments took over most or all of company payroll when they shut certain businesses down.

That doesn't change the fact that they are dominating everything in the currency that we were inflating to the benefit of our citizens (a pittance) and our government and everyone is connected to that. (The rest)

If commerce slows down, our collective income goes down as well. Less income, less spending, less production, less income, etc. Recessions spiral until the government steps in to boost demand.

Well, and this is certainly the most interesting bit of all of this in my opinion.

I don't think that continually increasing the need to spend and consume and run the treadmill is good.

I think there is somewhere between some frugal, scrooge like holding forever ( The deflationary fear). and spending because tomorrow everything will be more expensive ( The proven inflationary reality... see Argentina.) that makes sense. And I don't think the US dollar has found the best place because I think it benefits the rich and those closest to the "printer".

That may be the point on which we disagree.

 

[JohnfrmClevelan]

So why do you think I wouldn't spend money on things that I want instead of just the essentials? I feel like your view is very binary. Like there's only those two. There's no range. There's no part in the middle.

Don't make the mistake of applying your micro situation to the macro economy. Lowering interest rates might not induce you to buy a car, but they will almost certainly induce an increase in car buying, macro-wise.

Relatively small changes in certain numbers can have a large effect on the economy. Moving from a slightly inflationary condition to a slightly deflationary condition would be a huge shift. Instead of losing 2-3% per year on your dollar savings, you would be earning 2-3% per year. That would make a lot of people sit on their money, and that hurts business.

We already struggle to attain 2-3% growth. Without an expectation of growth, businesses won't invest, and the spiral starts. The business calculus in a deflationary environment would be so different, I wouldn't know how to predict what would happen.

I think there is somewhere between some frugal, scrooge like holding forever ( The deflationary fear). and spending because tomorrow everything will be more expensive ( The proven inflationary reality... see Argentina.) that makes sense. And I don't think the US dollar has found the best place because I think it benefits the rich and those closest to the "printer".

High inflation in places like Argentina is a complicated thing, but it isn't caused by people consuming too much.

 

[devildavid]

So what asset does not have an arbitrary value?

I would agree, if you were to suggest, the US dollar has a relatively stable value over the short term.

But this comes at the cost of a constantly reducing amount of purchasing power.

The stability of the dollar makes it a monetary asset that's easier to trade in. And as I said, I agree this is a plus. But how do you not end up with an asset that's just a constant black hole for your savings?

Aside from the very newly rich, there is no wealthy person on planet Earth who saves in fiat currency. They only keep enough fiat currency to operate whatever they need to operate. Where do they put the money that they want the value of their time and effort to retain its purchasing power?

At least you finally agree with that fact that markets assign arbitrary values to things. You were trying to argue that bitcoin had a real value due to some sort of work being done to create it. It doesn’t.

Fiat currency is more than just an investment, even if some use it that way. It is a currency used to record transactions in those places that accept it. Bitcoin is not a currency of any kind at all. It’s an investment which market value amount is measured in fiat currency. It is not a replacement currency.

 

[aociswundumho]

At least you finally agree with that fact that markets assign arbitrary values to things.

Prices are not "arbitrary", they're the the result of voluntary exchange between buyers and sellers. That's not arbitrary, it's based on preferences, scarcity, and opportunity costs.

 

[cAPSLOCK]

At least you finally agree with that fact that markets assign arbitrary values to things.

No, I never agreed with that. I asked what doesn't have an arbitrary value? in relation to your examples and implicitly in your frame of thought.

I still contend that values are set by markets ultimately. I don't even understand what you mean by arbitrary in this context. Values can change. And two of the same thing can be sold between two different people in two different places for two different prices. But that's variance, not arbitrariy-ness. But let's zoom out just a little. Gas prices in an area of a city will tend to coalesce around a certain average. Because if one station is selling it much higher than its neighbor, then they won't have many customers. That's a good example of a market setting the value via unplanned (hopefully) coordination.

You were trying to argue that bitcoin had a real value due to some sort of work being done to create it. It doesn’t.

I never made this argument either, I don't think. I have said that I believe some people think that a floor value comes from the energy put in. And I have said there is a correlation between how much it costs to produce a bitcoin and how much it's worth to the members of its market. But it's not immediate nor is it tracking 100% at any time. But I do not pretend that it's some direct correlation. It's a relationship.

Fiat currency is more than just an investment, even if some use it that way. It is a currency used to record transactions in those places that accept it.

I am not sure I ever called Fiat currency an investment either, and I mostly agree with you here. The US dollar, for example, is very special. It is the legal tender of the United States.

And more than that, but also because of that, it is the worldwide unit of account. The United States has done an extraordinary job in achieving the advantage that much of the world prices their goods in the US dollar.

Bitcoin is not a currency of any kind at all.

This is patently false. I can buy things with it. I can go down the road right now and have lunch at Steak and Shake and pay for it with my phone strictly in Bitcoin. Now, it is not the official currency of the United States. That's for sure. Nor is it a world reserve currency. Nor is it used very much as a currency at the moment.

Particularly in the United States, it doesn't make sense to use Bitcoin as a currency.

It’s an investment which market value amount is measured in fiat currency. It is not a replacement currency.

I have never claimed that Bitcoin is currently a "replacement currency" ( Also noting you used a significant adjective here that you didn't use a couple sentences up.)

I have also made the point several times that it is currently being used mostly as a store of value or, as you say, an investment.

I don't tend to think in black and white. And many of the arguments being made seem to me to be sort of polarized arguments. Bitcoin is a currency or Bitcoin isn't a currency for example.

In most places, it's definitely not much of a currency. Kooky Bitcoiners use it to transact and do things, but there are other pockets of the world and also some places online that are definitely using it as a currency.

 

[Econ4every1]

But why is that bad?

Simple, if the currency is increasing in value by 4% per year, rather than devaluing by 2.5%, that's a 6.5% difference.

In order to attract investment relative to today the expectation on rate of return would be at least 7.5% higher than today (I added 1%, because that last percent is added for risk).

People would still invest, but the expected rate of return would have to be higher or there is no incentive to lend.

A great segue to your next question....

Do we need to buy more plastic garbage, more ramen, more shit?

Pet rocks, hand and foot anti-perspirant, koozies.....These seemingly useless items are the emergent result of a highly successful economy.

40% of the labor force in 1900 was employed in agriculture in 1900, in 2000 it was 1.9%. In 1900 it took 1 man about 8hrs with the technology of the day to harvest 1 acre (and that's on the low end), today, 1 man and a combine can do it in minutes.
So where do the other 38.1% of people go? Well, obviously over 100 years a sizeable portion of the workforce did things other than farming. But, this plays out over and over and over again thought the 20th century.

What to design a building in the 1940s??



All of these people are replaced with 2 people and software:



Imagine the army of people that it took to keep track of the accounting for the worlds largest companies....

Here is a room full of accountants in the 1930's keeping the books for some large company:




Replaced by a few people and a laptop running a spreadsheet.

Think of all the typists that lost work due to the copier.

The point is, technology keeps displacing people from their jobs and they have to find new ways to make a living.

When you disparage "cheap plastic crap and ramen", what you aren't thinking about, is how at some point in the 20th century, this country, though technology and labor could for the first time in human history, care of all it's NEEDS.

Now the nation could focus on solving other "problems" (wants). The incredible diversity of products and endeavors (like going to the moon) you see today are people trying to find a niche in the economy to make a living or exploring ideas and places that could never be done. We would likely agree on the "cheap crap" that can be purchased, but what you cannot do is dismiss those things as worthless in an economic sense. I mean, you can ask why a woman needs 50 pairs of shoes (sorry ladies!), and the answer is, because you live in an economy that is sooooooo successful, it can solve the smallest problems (I need coneflower blue pumps with this dress!). Problems so insignificant that people come here from the third world and are dumbfounded at all the products we have that satisfy almost any want and desire you can think of.

The point is, economies run on sales. People have jobs to earn money to use money to provide first for their needs and if there's money left over they indulge in wants. All of that success results in future generations having to find new areas to work in. The next 5-10 years is going to see an acceleration of this phenomenon with AI now in the mix. The best economies, like the best companies, are going to be the nations that actively invest in their people to continue to adapt to a changing world.

Austrian Econ says that prices are a signal to the market., and that when government interferes, it distorts that signal.

Starvation, ignorance, widespread illness, growing depression, decreased lifespans, decreasing opportunities for the lower and middle class. These things are signals.

Imagine your house in the winter is at 85 degrees and the repair man tells you there's nothing wrong, at this temperature the furnace is operating at peak efficiency and shouldn't be changed despite the fact you are terribly uncomfortable.

Who does the heater serve if not the people that use it? What is the purpose of an economy, to work efficiently when measured against itself, or should it serve the people that participate in it?

Indifference to suffering is not amoral when you live in an economy with the capacity to reduce suffering and increase well-being exists, being indifferent to suffering with the excuse that the person suffering put themselves in their position, that's immoral. This is the failure of Austrian econ, it is the failure of Ayn Rand's Objectivist ideas because these social and phycological states are every bit as important to a functional economy as any "price signal" and the idea that markets are self-correcting is pointless if the market increasingly serves a small and smaller portion of society. It's a recipe for disaster.

 

[Econ4every1]

We have taken on the label of "consumers" so easily. Consumers. Does it not bother anyone but me anymore?

Again, an emergent property of a successful economy.

It's like building a better and better engine and getting to a point where you disparage the speed and power it produces.

Perhaps money should go to "better" things, but that's not an economic problem, that is a social problem.

We have been artificially trained to spend... Spend... SPEND! Where does this lead? ask the Venezuelans they know.. Or the Nigerians. Or so many, many, many others.

It's not artificial, it's emergent. No one trains people to spend. The market you have so much faith in now uses it's power to understand human phycology. The same phycological elements that addict people to pulling the handle on a slot machine are use to keep people engaged with social media, so those companies can sell advertising.

But that's just the market doing what the market does? No?

17 countries in the world use the US dollar as legal tender.

That's a little misleading.

8 sovereign nations and a handful of territories use the US dollar. The total yearly GDP of all of those nations combines is less than 1/2 of US GDP in a single day. ($30 billion per year combined, vs US GDP of $82 billion per day).

Remember when we gave stimulus checks to every American during COVID?

Yes, that ensured that people didn't default on rent payments, car payment, credit card payment, mortgage payments to say nothing of the money that was used to keep the heat on, or pay for medicine and ALLLLLLLL the people that kept their jobs because that money was spent.

But mathematically, provably, absolutely, truthfully, we were stealing value from those other 16 countries.

First, please don't call it stealing. Stealing is accomplished though subterfuge with malice. First, this is a feature of government for all of our lives, there's no subterfuge. Everyone knows it works like this, it's no secret, like the trash truck that takes your garbage, you knew it was going to be taken, you wouldn't call it theft.

Second, inflation is not simply the result of more money. Most of the inflation during COVID was companies responding to inflation expectations. That is, companies raised prices because they knew the market was expecting it. Thus the majority increases in prices can be attributed to greedflation. Some can be attributed to a loss of supply and some to money added to the economy.

But the people in those countries that are being ripped off by our country over and over again?

No, they suffered a loss of supply.

Here, let's use a simple example. 10 people 10 apples and $10, that's $1 per apple.

Now, there's a drought and there's only 5 apples, resulting in increased competition for apples and the price is now $2 per apple. That's 100% inflation and we didn't add a single dollar.

Americans have been blessed with a lot of advantages.

So many advantages, that some people have been convinced to solve a problem with a tool that will make things worse.

Luckily, Bitcoin does not judge.

Yes, this idea of Bitcoin as "just a tool" indifferent the the machinations of policy makers.

Immorality posing as amorality.