Topic: Blockchain = Powerful Tool for Keynesian Monetary Policy - page 8. (Read 11460 times)

Ah, the usual libertarian approach. Seek Truth by ignoring facts.

I made the premises of the argument explicit well before you posted this. https://bitcointalksearch.org/topic/m.1341445.

You chose to ignore these premises. Which you are free to do. But of course it is obviously false to claim that the premises are tacit.

It is worth pointing out that the investment is chump change and that the investment would be highly profitable. Say bitcoin replaces all card payments in the Euro area. That is about 54.8 billion Euros in 2008. Suppose that the average fee on bitcoin payments is 0.1%. Suppose that hardware depreciate at a 20% rate [slow for computer hardware], that labor costs are negligible [labor costs make monopoly easier], and that the interest rate is 5%. Assuming a competitive market, we have

capital rental costs=flow of bitcoin payments
(0.20+0.05)K=0.001*54.8 billion
K=$212 million.

It is chump change for a large corporation like VISA (let alone the central bank). More importantly, monopoly control easily repays itself. Suppose the monopoly raises the fee to 3% (same as credit cards) and that the volume of payments declines by five-fold to 10 billion as people flee instantaneously to gold or other types of rocks or whatever you might think of as 'sound money'. VISA/ the central bank will earn $300 million from the 3% fee. That is a nice 142% return on capital.

Now let's think about the volume of payments decreasing five-fold in one year. Is that plausible? Of course not. You cannot bootstrap a new currency in one year. If you could, you guys would not still be using USD. Thus the monopolist's profits during its first year of operation will be far greater than a measly 142% annual rate of return.

You may say we will have many competing PoW currencies. If so, the payment flow from each of these media decreases accordingly. The central bank's total expenses for controlling many small competing cryptocurrencies are identical to the central bank's expenses for controlling one large cryptocurrency. Only the total flow of fees matters.

Why don't you propose a fix for the problem? Or explain why I am wrong? Why does burying your head in the sand seem like a good idea?

He's totally in the "educational" sector.  Can't you tell?  He's a propagandist who seeds FUD.

Look at his rhetoric, at his signature (that overtly hints at violence against a certain set of people), at his profile image and the caption.  This man is either an agent provocateur or he is severely mentally disturbed.

I suggest ignoring him.  I will do so right after this post.

False argument alert.  Of course cunticula leaves his premises tacit, to make his false argument harder to refute.


Statists insulting?  YOU DON'T SAY!

All arguments to prove authoritarian central control always start by assuming authoritarian central control.

Bitcoin is succeeding quite well as an example for the Free Money Movement,  the current authoritarian delusions of what 'money' should be is beginning its implosion. I'm not sure I want to watch your increasingly nasty, shrill disgusting pleas for state-violence and thuggery to defend the failed monopolistic monetary ideologies as it all progresses.

In the end, the superior technology will win the battle of ideologies as people choose "what just works".

I do not see any potential superstar crypto-currency programmers or mathematicians amongst the central banking keynesians ... so unless they can recruit the mind-share of a team of technologists needed they are dead as an implementable ideology ... and the market will probably reject it on basic economic principles even if you got one of your fantasy blockchain Inflatacoins off the ground.

Maybe you should go and learn C++, a bit of number theory, crypto, etc and try competing in the marketplace with a real product instead of spouting your failed ideologies?

Then again, teachers teach because they can't do, isn't that how it goes Mr. Economist?

I'm sorry, what? You're a teacher? Got I hope you're not a university professor, or at least not from any place other than a diploma mill. Your "teaching" style would make you fit only for teaching theology classes, and if you are a professor, I feel sorry for your students.

In stages. Metallic coin --> privately issued metallic-backed paper --> central bank issued metallic-backed paper --> central bank issued pseudo-backed paper --> pure fiat. And that series was of course assisted by government coercion. Our task is much harder. We are trying to bootstrap a new currency that can overcome both the network effects advantage enjoyed by the current system AND the government coercion that's attempting to prop that system up. And for a long time those two hurdles in combination seemed insurmountable. But Bitcoin might just be the revolutionary technology powerful enough for the job. Time will tell.

If you don't believe it will work, then why are you here? If it's to provide us all with the motivation to help the success along, then you're doing a fine job. It can't be much fun seeking out forums whose fundamental tenets you disagree with, disapprove of, or think to be invalid, and then proceeding to try and undermine it? Are you a sadist? Is someone paying you to do this? If the answer to both questions is no, then I'd recommend taking a big step back to take a look at what is motivating you. Because you're definitely rather unbalanced, to say the least.

I am here to tell you that you are an idiot. I'm in the educational sector. It is my calling.

You are kind of missing the period when paper currencies replaced very well bootstrapped metallic ones. How did that happen?

Of course we are still using euros & dollars, because up to now, no other currency could overcome the bootstrapping problem of network effects, to be useful. Bitcoin is changing that. Thats why we are all here, on the bitcoin forum.

Why are you on a bitcoin forum? Just to pester and annoy people, it seems.

True. Prices don't actually change as a result of the policy. You would be implementing a policy that is equivalent to increasing prices though. It is called demurrage. Theoretical effects on consumer behavior are (more or less) identical.

http://en.wikipedia.org/wiki/Demurrage_(currency)

Note that Keynes says it won't work in the wikipedia article. True enough. An efficient technology for removing dollars from your wallet directly didn't exist then. Thank you blockchain.

My point: Bitcoin cannot succeed as a free-money movement. Full stop. If you think otherwise, you are deluding yourself.

If they haven't crushed you yet, it is because you are too insignificant to merit their attention.

I see. So if I understand the argument correctly:

1) If the central bank inflates the currency, then people will not use it.
2) If the people do not use the central bank's currency, then the central bank cannot affect people's behavior.

Is that right? So let's apply that to USD or Euros. Do you still continue to use USD/Euros/other national currencies for over 90% of your purchases in value terms? If yes, then I guess the central bank is not inflating the currency (otherwise premise 1 is wrong). I'd be interested to hear you confirm that. If no, then please tell me what you do. I'd be even more interested to hear about that.

If this reasoning applies to you, why wouldn't it apply to others in a similar predicament?
If no, then what do you use?

You aren't increasing the money supply at all. You are just transferring existing money from consumers to bankers.

That would be like paying a huge premium to acquire a controlling share of a company and then deliberately rendering that company worthless through mismanagement. And then repeating that process. That doesn't sound like a great business model.

Hence Bitcoin.

Sorry cunicula, but your seem to have turned up to a free-money-movement talking shop trying to talk about how effective it would be to try and turn it into a system that's just like the one the one we want rid of. People will vote with their feet if that came to pass, just like they are now with turning to Bitcoin.

And the authoritarians will control that currency as well. And the peons will know that. So they will rationally accept control.