Topic: Economic Devastation - page 133. (Read 504813 times)

Backed to some extent is really not backed at all. Countries do not accept an independent audit of their gold reserves. So nobody can be really confident of the total gold reserves that a country has.

You also have the money supply exploding. If we look at what various QEs have done to the money supply, the ratio of gold reserves to total fiat in circulation would not appear comfortable at all.

Open source theory is rooted in evolutionary psychology, by Eric S. Raymond[2]
http://esr.ibiblio.org/?p=6586#comment-1364271

(note you won't find my comment below at the above link, because Eric S. Raymond censors my comments. Go figure    )


[2] Eric S. Raymond is the 150 - 170 IQ genius writer and progenitor of the term “open source” and promoted it as a non-communist, alternative to Richard Stallman’s and GNU’s antecedent “free software” movement. He is famous for writing the The Art of Unix Programming, the Cathedral and the Bazaar, and the Magic Cauldron, which enumerated many of the design and economic philosophies and principles that drive the internet, modern software, and open source. If you want to dig into understanding the coercion, communism problem with “free software” which ESR corrected with his promulgation of “open source”, listen to Eric’s advocacy in the following video about permissive open source licenses versus the GNU GPL viral licenses which compel certain actions on the licensee.

http://jobtipsforgeeks.com/2012/05/17/lessons-from-a-jug-talk-with-eric-esr-raymond/ (skip to 9:30 mins in video, or 11:15 for punch line)

The public knows how to read & use wikip, which tells the public:

Just because you rabid Bitcoiners pride yourselves in your willful ignorance, doesn't mean "the public" is equally clueless.

End of the world is coming!!!!

Idiot of course not 100% backed yet still backed at some ratio of leverage and from the public's perspective fully backed; it was a discussion of fractional reserves. Up until 1971, it was indeed "backed" by gold in the USA but when France began demanding the gold, Nixon ended the gold window. During the 1800s, the private banks were issuing fractional reserve promises to pay in gold. Even the dollar was backed by silver, and up until 1965, you could bring your silver certificate paper dollar to the bank and exchange it for a silver dollar coin.

Yeah welcome to the knowledge age dimwit.

Bro, fiat is not backed by gold.  By definition.
Welcome to the age of knowledge!

The OP is that knowledge can't be financed and the future capital is knowledge. People won't save in money, they will save (invest) in (their own) knowledge (e.g. their software projects, etc). Money will be a language for directing knowledge resources to where knowledge can develop the fastest in the maximum division-of-labor. Those who value knowledge will refuse to accept the debased language that was used to misallocate knowledge resources with debt, because they will find they can't invest knowledge resources with it, i.e. the audience of that form of money are the lazy people with less knowledge to bear.

Unlike fiat of yore backed by gold or promises of State order, the knowledge age has no use for open-ended promises that could be hidden in fractional reserves and instead wants immediately incremental conversion of the money language into knowledge production.

Thus fractional reserves will become impossible.  The fractional reserves will concentrate into the dumbest sector of the economy and that sector will fall away into an abyss. This is exactly what I expect to happen going forward in this coming global crisis.

And that is why anonymity is critical.

(missed this post earlier)

Even in the extreme case of a world with a completely fixed money supply (absolutely no inflation) loans could still be made without fractional reserve if the enterprise was productive enough. Someone with a good business idea could make a profit and pay back the loan. Obviously money in such a world could not be debt based fiat as it is today.

I agree there would be a very strong push by large actors to capture the system and revoke any prohibition on fractional reserve in such a world. Those same forces sunk the Chicago plan in the 1930s in favor shifting all the debt obligations onto government. As the masses are currently blind to the economic forces at work a prohibition of fractional reserve currently impossible.  


The masses will either learn or perish and be replaced by wiser masses. Hopefully that process will involve a lot more learning and education and a lot less perishing. I can think of little reason why our wiser and more educated descendants will tolerate fractional reserve.

Major social changes take time and generations to accomplish. From the time when the first modern state Iceland abolished slavery in 1117 to Saudi Arabia which abolished slavery in 1962 it took over 800 years to largely eliminate the practice. Hopefully eliminating fractional reserve won't take that long. In the short run we can only watch the current trajectory play itself and protect ourselves from the fallout. To this end OROBTC's advice above is excellent.

...

@ CoinCube, anonymint and contagion

I should not have stayed away from this wonderful thread for so long, my compliments for the excellent back and forth.   Bravo!  + $55,000

 

Discussion of your ideas is critical for those of us who merely want to protect our freedoms and wealth (whatever we have...).  Your thoughts here, and on the other (linked) threads are on a very high level.

*  *  *

On a lower and more immediate level I offer up some thoughts too.  All assets have problems of one sort or another.  Diversification is the one key to having the best shot of preserving (and growing) what each of us has.

-- Gold is excellent as the proven wealth preserver throught the ages.
-- Bitcoin (and similar) has some advantages for preservation and (some) anonymity, also portability is an important feature!
-- "TEOTWAWKI" hard assets (farmland, guns & ammo, a water well, etc.) for those who can and can deal with them
-- Quietly held assets OUTSIDE the USA
-- Useful skill sets (I note many here have impressive skills)
-- Certain small businesses may offer up more stability than others.
-- Physical, mental and spiritual preparation all are important.  Stay healthy physically, mentally and spiritually!
-- I would suggest staying out of debt where possible, although in a hyperinflation debt is less dangerous (but who knows what will happen...).
-- Staying in touch with events, and staying nimble, will likely be good skills too...

Having the above and doing what you can are all good.

*  *  *

Although maybe not useful to many here, I value the conversations re the role of God and interpretations of Him.  I have found most useful to me Emmet Fox and in particular his study of the core part of Matthew in his book The Sermon on the Mount.  Highly recommended!  Fox does not subscribe to the scary & fearmongering views of Christ and our Father.  The same book offers up the only real study of The Lord's Prayer, a remarkable 20 pages or so, I had *NEVER* read anything like that before...

I am over-generalizing and over-summarizing in this remark, but Fox makes a very convincing case that Jesus is speaking in a kind-of code, a technical language that really it is the state of consciousness (via prayer -- MUCH more powerful than most believe) and the work put in (quality and quantity of prayer -- letting yourself be in the Presence of God) that leads to everlasting life in His House.

The book is revolutionary yet easy to read.  It helped save me from alcoholism.  Fox showed me that God is with you always, all you have to do his open your door to Him.

I believe the negative feedback mechanism is the decentralized technologies I mentioned. Decentralized leaders will compete for market share against inertia. Paradigm shifts are the negative feedback.

A free market. Socialism can never provide that. Never. See even my breakdown of directing voting in the Mad Max thread. Similarly I broke down your argument for centralized sound money.

If some leaders don't pull off an emergency paradigm shift pronto, we are headed towards that dysfunctional overshoot you describe.

That is why I am going quiet now. See my final post in the Mad Max thread.

Adios amigos.

Socialism is needed to smooth the fitness curve. In a MadMax scenario (a world without socialism) the fitness curve steepens to the point that only those adept at violence (or in servitude to the violent) can survive.

This culling of the population would reduce adaption and progress in the long run as it forces relative uniformity on the population. The degrees of freedom in such a society declines.

This same principle on a lesser scale justifies limited social safety nets limited redistribution via taxation and some government assistance to the poor.

The problem is the progressive growth of socialism.  In combination with fractional reserve banking socialism becomes an inescapable vortex. The ability to debase the currency at will leads to unrestrained all consuming growth. Without a paradigm shift socialism will continue to grow unchecked until it starves and dies with tragic consequences for just about everyone.

What is needed is a negative feedback mechanism to check this growth. Perhaps a combination of sound money, elimination of fractional reserve, and outlawing government debt would be sufficient? In such a system the government would actually have to tax for every new program creating the potential for true opposition from those opposed to taxes.

Regardless such safeguards would never hold if the need for them was not glaringly obvious to the populace as a whole.  That condition won't exist until the current system collapses.

Is H7N9 the next pandemic? Can it advance the knowledge age and solve Economic Devastation?

https://bitcointalksearch.org/topic/m.9894086

Those in the medical field or who run or own a small business in the USA, please understand what is coming in 2016.

The following decentralization paradigms.

1. Decentralized consensus without requiring trust and reputation (which are both centralizing and which is why PoS is entirely uninteresting to me).

2. End-to-end principle (control is at the ends of the network and the intermediaries are dumb relays), e.g. that I don't need an intermediary dealer to do a trade. Btw, Cryptonote ring sigs obey the end-to-end principle and all other forms (CoinJoin, Zerocoin/cash) of on chain anonymity do not.

3. Open source.

Note CN coins currently have multiple problems such as ring sigs don't provide IP anonymity and Tor/I2P are not immune to Sybil attacks. The protection against Sybil attacks on the rings is by tx fee, which doesn't scale well when the attackers mine but the honest users don't.

All existing crypto-coins (and Inflatacoin wasn't a serious entrant, you can't just offer inflation and expect adoption, duh!) are going to going to be replaced by off chain fiat loans denominated in that coin's unit (Paypal and Coinbase taking over Bitcoin), because Gresham's Law says debased money drives non-debased money out-of-circulation. The fatal flaw in all coins is they don't have perpetual debasement. The holistic design of all existing crypto-currency is wrong on so many levels, but I am not going to detail every one of my ideas here and now. I have mentioned many of my ideas in my archives (under the various user names I had). For example, as U.T. I posted an idea to use merge-mining to achieve a programmable (mutable) block chain via decentralized competition.

" China is acquiring gold not in an attempt to eventually back the yuan with gold but as a simple hedge against their multi trillion dollar US debt holdings"

Doing so would enable real capitalism in the middle of communist china.  It does seem unlikely without a revolution in china for that to happen.   The big thing now is how closely China and Washington agree on centralising power and choosing favourites for distribution of control they wield over their subjects.  It doesnt work in either case, there are some big bears on Chinas debt also

so what fundamental principles do you find in crypto?

Gold-bugs I am sorry (I used to be one), you will need to learn that tangible assets are archaic.

Here are two links to bring yourself up to speed:

https://bitcointalksearch.org/topic/m.9883335

https://bitcointalksearch.org/topic/m.9883761

Thank you CoinCube and anonymint for your answers.

@anonymint, I don't know what your future endeavors are but I assure you accessibility makes a significant impact. I repeat this because imo technically minded people do seem to underestimate this rather often.

contagion i agree with you on the fact that we shouldnt go trigger-happy on gold. top players will never let goldbugs get too much wealth. even if gold becomes hugely expensive the msm can scare public off it and then governments can push for gold posession reforms easier. selling prescious metals can become illegal too. same applies to btc i assume.
though most of us here, the little people, cant possibly be made to understand the economical system which is now totally disfunctional and impossible to predict. as paul craig roberts said yesterday that there is no 'economy' any longer as it dont follow any logic - rigged. so we are being subjected to something that is under total control of the very few - trying to understand their con game is nearly impossible at the moment. the spent time can be allocated on making some effort for preparation for the upcoming impact. i believe that best chance of getting by is for likeminded people to create communities and try to live off the land as far as possible from large cities. i still believe these metal or crypto possesions need to be held, not as speculative vehicle but only as store of wealth. it can be used as a head start once situation normalises. during the slaughter time its better to just be prepared and defend your family or sovereighnty of your and your ancestor's land.

I hope Jim Rickards fares better (with his understanding of gold) versus Armstrong than formerly highly respected gold-bug Jim Sinclair.

CoinCube, your summary makes me blush, thanks also for your essays, and I don't think I can know if I am worthy or not of that recognition until we see how the future plays out. I am enamoured when readers understand and spread the concepts, yet the contention is I prefer to remain in obscurity.  I suggest in future consider incorporating the following explanation of why collectivization doesn't optimize, to your summary. I will go add a link to your summary and mention Contentionism with the caveat that all decentralized systems are composed of actors which are doing top-down management of the aspects they control, top-down is more expedient which a form of optimization, and bottom up systems don't necessarily converge without some top-down incentives. The implication is there is an ongoing contention between the two forms (top-down and bottom-up) of systemic structure.

P.S. readers 'bottom-up' is synonymous with 'decentralized'.