Topic: 2013-04-12 krugman.blogs.nytimes.com - Adam Smith Hates Bitcoin - page 3. (Read 3610 times)

Proudhorn says:


This is sadly misinformed. The resources consumed by poorly managed govt. paper currency (which they all inevitably are since humans are fallible) also encompasses all the waste associated with the gross mis-allocation of capital and resources that come about from centrally-planned financing ... it is not just mere few bits of coloured paper expended but the complete screw up of the economic system that needs to be accounted for ... count that up and get back to us.

Edit: Patiently waiting for krugman's follow up post titled "Adam Smith Hates Federal Reserve Banking"

And because I said so because I'm Paul Krugman and fuck you.

Proponents of bitcoin actually go out and investigate their ideas.

He's right, you know, because the only resource consumed by government currency is paper.

I saw an estimate last year somewhere on this board that the Bitcoin network took as much energy in a day to operate as the Bank of America tower in NYC does. If anyone recalls the post, link it please.

I wish someone could make a study on how much energy and/or money is spent with the bitcoin network as opposed to the current monetary system.

Adam Smith Hates Bitcoin

There have been many good pieces written on the dubious economics of Bitcoin; I especially liked this one by Neil Irwin. One thing I haven’t seen emphasized, however, is the extent to which the whole concept of having to “mine” Bitcoins by expending real resources amounts to a drastic retrogression — a retrogression that Adam Smith would have scorned.

Smith actually wrote eloquently about the fundamental foolishness of relying on gold and silver currency, which — as he pointed out — serve only a symbolic function, yet absorbed real resources in their production, and why it would be smart to replace them with paper currency:

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The gold and silver money which circulates in any country, and by means of which, the produce of its land and labour is annually circulated and distributed to the proper consumers, is, in the same manner as the ready money of the dealer, all dead stock. It is a very valuable part of the capital of the country, which produces nothing to the country. The judicious operations of banking, by substituting paper in the room of a great part of this gold and silver, enable the country to convert a great part of this dead stock into active and productive stock; into stock which produces something to the country. The gold and silver money which circulates in any country may very properly be compared to a highway, which, while it circulates and carries to market all the grass and corn of the country, produces itself not a single pile of either. The judicious operations of banking, by providing, if I may be allowed so violent a metaphor, a sort of waggon-way through the air, enable the country to convert, as it were, a great part of its highways into good pastures, and corn fields, and thereby to increase, very considerably, the annual produce of its land and labour.

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And now here we are in a world of high information technology — and people think it’s smart, nay cutting-edge, to create a sort of virtual currency whose creation requires wasting real resources in a way Adam Smith considered foolish and outmoded in 1776.