Topic: Peter Schiff on Bitcoin - page 19. (Read 38869 times)
Yes, it was buried in there.
In short, there can be heavy deflation before the onset of hyperinflation. This Schiff does not take into account.
This is, almost word for word, Mish's complaint with Schiff and other hyperinflationists today.
http://globaleconomicanalysis.blogspot.com/2011/05/hyperinflation-nonsense-in-multiple.html
http://globaleconomicanalysis.blogspot.com/2012/08/reader-questions-on-hyperinflation.html
Peter Schiff has written some good books, but what he is probably missing:
Debt money is unstable because the lender has to trust the loaner. If trust generally disappears, the money also disappears.
On the other hand, the central bank can regulate the wider money supply easily by changing the banks' reserve requirements.
As long as bonds are trusted, the government can loan money indefinitely, and also continually expand the loans forever. A government lives for ever.
Continualy increasing loans has the same effect as printing money. The effect of printing money is more resources to the government and their friends, including voting cattle.
The printing moves resources from the rest of the world to USA. As other money system tanks, and rising economies partially wants to use USD, the user base increases and also the value of the USD increases.
In sum, this can lead to price deflation in the area where dollar is used.
This might be countered, as it is always easy for a central bank to take down the value of its money unit.
In short, there can be heavy deflation before the onset of hyperinflation. This Schiff does not take into account.
It is a possibility. With heavy regulation from a single person who only reads the data, but never depend on fundamental principles, anything can happen. It is an extraordinarily extraordinar situation.
Debt money is unstable because the lender has to trust the loaner. If trust generally disappears, the money also disappears.
On the other hand, the central bank can regulate the wider money supply easily by changing the banks' reserve requirements.
As long as bonds are trusted, the government can loan money indefinitely, and also continually expand the loans forever. A government lives for ever.
Continualy increasing loans has the same effect as printing money. The effect of printing money is more resources to the government and their friends, including voting cattle.
The printing moves resources from the rest of the world to USA. As other money system tanks, and rising economies partially wants to use USD, the user base increases and also the value of the USD increases.
In sum, this can lead to price deflation in the area where dollar is used.
This might be countered, as it is always easy for a central bank to take down the value of its money unit.
In short, there can be heavy deflation before the onset of hyperinflation. This Schiff does not take into account.
It is a possibility. With heavy regulation from a single person who only reads the data, but never depend on fundamental principles, anything can happen. It is an extraordinarily extraordinar situation.
Consumer demand has been pretty constant, but that is a very tiny fraction of the demand. Almost the entire market is central banks.
Right, people are not selling their physical gold. All the selling is in the futures, derivative, and ETF markets etc. All of the "dumb" money is getting out of gold. More smart buyers are buying more physical (me.) 
Soon, smart countries will be buying more physical gold, i.e. China. Once the price gets low enough, it will slingshot back to the old highs and beyond. So the demand is still the same, if not higher, within the physical market. Gold is going to go up so fast when the s*it storm comes. Those who sold in the recent correction will probably stay out and not rebuy, that's how fast it's going to move. imho
China has been scooping up retail gold. A lot of it. The Chinese new generation very much like the bling factor, and nothing has the bling factor like gold.
Also Chinese government is encouraging it. They have removed the tax on gold panda coins this year.
http://numismaster.com/ta/numis/Article.jsp?ArticleId=26693
India did last year
http://online.wsj.com/article/SB10001424052702304363104577389443337247370.html
but raised it again this year.
China is one of the top miners, and exports almost none of it.
Im all for, buying up gold & precious metals. Solid investment. But I sure hope you all have a means to secure your armory. Whether it is a vault, hidden vault and/or weaponry. I am not a doomsday guy by any means but just a thought as I was reading through....
hidden and locked up. Not even in the same country some if it 
Im all for, buying up gold & precious metals. Solid investment. But I sure hope you all have a means to secure your armory. Whether it is a vault, hidden vault and/or weaponry. I am not a doomsday guy by any means but just a thought as I was reading through....
Consumer demand has been pretty constant, but that is a very tiny fraction of the demand. Almost the entire market is central banks.
Right, people are not selling their physical gold. All the selling is in the futures, derivative, and ETF markets etc. All of the "dumb" money is getting out of gold. More smart buyers are buying more physical (me.) Soon, smart countries will be buying more physical gold, i.e. China. Once the price gets low enough, it will slingshot back to the old highs and beyond. So the demand is still the same, if not higher, within the physical market. Gold is going to go up so fast when the s*it storm comes. Those who sold in the recent correction will probably stay out and not rebuy, that's how fast it's going to move. imho
New links added to initial post. An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.
Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.
Don't be ridiculous. Saying gold demand is always the same or higher is like saying the demand for bitcoin is always the same or higher while the price was going down from $30 to $2. Almost the entire market cap of gold and bitcoin is speculative and monetary value.
Also, the price of gold is capped because there is $150t worth of it that is recoverable on the ocean floor using technology that is not cost effective at current price levels.
I would highly recommend quitting listening to the Schiff if you are getting these ideas from him.
So I am to understand that you think the demand for gold was constant while it was losing value for the 2 decades prior to the turn of the century, and that the demand was also still constant during the price increase of this last decade?
Consumer demand has been pretty constant, but that is a very tiny fraction of the demand. Almost the entire market is central banks.
New links added to initial post. An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.
Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.
Don't be ridiculous. Saying gold demand is always the same or higher is like saying the demand for bitcoin is always the same or higher while the price was going down from $30 to $2. Almost the entire market cap of gold and bitcoin is speculative and monetary value.
Also, the price of gold is capped because there is $150t worth of it that is recoverable on the ocean floor using technology that is not cost effective at current price levels.
I would highly recommend quitting listening to the Schiff if you are getting these ideas from him.
So I am to understand that you think the demand for gold was constant while it was losing value for the 2 decades prior to the turn of the century, and that the demand was also still constant during the price increase of this last decade?
New links added to initial post. An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.
Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.
Don't be ridiculous. Saying gold demand is always the same or higher is like saying the demand for bitcoin is always the same or higher while the price was going down from $30 to $2. Almost the entire market cap of gold and bitcoin is speculative and monetary value.
Also, the price of gold is capped because there is $150t worth of it that is recoverable on the ocean floor using technology that is not cost effective at current price levels.
I would highly recommend quitting listening to the Schiff if you are getting these ideas from him.
New links added to initial post. An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.
Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.
Don't be ridiculous. Saying gold demand is always the same or higher is like saying the demand for bitcoin is always the same or higher while the price was going down from $30 to $2. Almost the entire market cap of gold and bitcoin is speculative and monetary value.
Also, the price of gold is capped because there is $150t worth of it that is recoverable on the ocean floor using technology that is not cost effective at current price levels.
I would highly recommend quitting listening to the Schiff if you are getting these ideas from him.
New links added to initial post. An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.
Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.
New links added to initial post. An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.
Thanks for the updates. Schiff is big on precious metals, speaking of which the price has been manipulated sharply lower as of late.
New links added to initial post. An article by Andrew Schiff and the "bitcoin" word reared its little head on Tues.
I know it's not Peter Schiff, but Erik Voorhees was on the Gold Money podcasts last Wed.
http://www.goldmoney.com/podcast/erik-voorhees-financial-independence-through-gold-and-bitcoin.html
http://www.goldmoney.com/podcast/erik-voorhees-financial-independence-through-gold-and-bitcoin.html
"Intrinsic value" is a misnomer, intentionally designed to mislead people. The only legitimate use of the term is in futures/options trading as there is a "present value".
Case in point, answer these three questions:
1) What is the intrinsic value of water?
2) What is the intrinsic value of water if you are lost in a desert?
3) What is the intrinsic value of water if you are drowning?
Case in point, answer these three questions:
1) What is the intrinsic value of water?
2) What is the intrinsic value of water if you are lost in a desert?
3) What is the intrinsic value of water if you are drowning?
Σ(N * (% of time N applies))
If everything had the same value to everyone else at all times there would be no trade.
How does any of this refute the notion of things having intrinsic value when it seems to indicate the opposite?
Please compute the example above and give us the solution.
The explain why it so.
There is no something "intrinsic value" and using fuzzy words cause just fuzzy thinking.
Substitute "intrinsic value" with "direct use value".
Direct use value is the value of gold (for example) when it started to be used as a mean of indirect exchange (like many others).
There is nothing "intrinsic" in "direct use value", because the subjective value change with the quantity available and its direct uses.
Certainly true. Nothing has value without someone valuing it, so there is no "intrinsic" value, it is semantic slight of hand.
It is elementary to philosophy of perception.
Though when we climb out of the ivory tower and enter the town, there are things that have value without a law giving it value enforced by a state, and there are things that do not. The things that do, we have adopted the convention of calling that value, intrinsic.
So sure, it is not strictly true, in that water has no value unless there is something to value it, but it also does not rely on a legal tender law to get that value, or being useful for paying a tax to a government.
One of the core requirements of bitcoin was that it not have a value as something other than "money". This way it does not compete with a market for its use as money. It is designed to have no intrinsic value or backing, other than what we the people choose to back it with.
I back it with gold and silver, others with their time, everyone that uses it for trade backs it with something.
I will leave the computation and explanation to the reader as an exercise.
Stuff has had the value people give it, over time, each in their own situation.
"Intrinsic value" is a misnomer, intentionally designed to mislead people. The only legitimate use of the term is in futures/options trading as there is a "present value".
Case in point, answer these three questions:
1) What is the intrinsic value of water?
2) What is the intrinsic value of water if you are lost in a desert?
3) What is the intrinsic value of water if you are drowning?
Case in point, answer these three questions:
1) What is the intrinsic value of water?
2) What is the intrinsic value of water if you are lost in a desert?
3) What is the intrinsic value of water if you are drowning?
Σ(N * (% of time N applies))
If everything had the same value to everyone else at all times there would be no trade.
How does any of this refute the notion of things having intrinsic value when it seems to indicate the opposite?
Please compute the example above and give us the solution.
The explain why it so.
There is no something "intrinsic value" and using fuzzy words cause just fuzzy thinking.
Substitute "intrinsic value" with "direct use value".
Direct use value is the value of gold (for example) when it started to be used as a mean of indirect exchange (like many others).
There is nothing "intrinsic" in "direct use value", because the subjective value change with the quantity available and its direct uses.
"Intrinsic value" is a misnomer, intentionally designed to mislead people. The only legitimate use of the term is in futures/options trading as there is a "present value".
Case in point, answer these three questions:
1) What is the intrinsic value of water?
2) What is the intrinsic value of water if you are lost in a desert?
3) What is the intrinsic value of water if you are drowning?
Case in point, answer these three questions:
1) What is the intrinsic value of water?
2) What is the intrinsic value of water if you are lost in a desert?
3) What is the intrinsic value of water if you are drowning?
Σ(N * (% of time N applies))
If everything had the same value to everyone else at all times there would be no trade.
How does any of this refute the notion of things having intrinsic value when it seems to indicate the opposite?
btw, saving bitcoins does not make anybody hungry. The effect of saving bitcoin is that it drives the value up, prompting others to spend or buy capital goods.
"Intrinsic value" is a misnomer, intentionally designed to mislead people. The only legitimate use of the term is in futures/options trading as there is a "present value".
Case in point, answer these three questions:
1) What is the intrinsic value of water?
2) What is the intrinsic value of water if you are lost in a desert?
3) What is the intrinsic value of water if you are drowning?
One's answer will always be different for all three cases, indicating there is no such thing as "objective value". In the case of #2, the average person may be willing to lose a limb to avoid dying of thirst. In the case of #3, the average person may be willing to lose a limb to see enough water removed that they could obtain another breath.
Value is always "subjective", no matter what adjectives are added to it. To argue there is some inherent property of an entity that provides an objective value to it, is to purposely mislead people.
Bitcoin is money (or can be used as such) because it is like gold and other precious metals. They are all scarce, which gives them *some* value, even if it's not always a stable one. Even fiat money has scarcity, regardless of inflation, it is not infinite, even if some might be trying to make it infinite even today.
There's an old saying that goes: "Money is a matter of functions four: a medium, a measure, a standard, a store."
Gold and other precious metals have problems with the second of these: measure (AKA unit of account).
A good unit of account has to be divisible, fungible, and countable.
Precious metals meet the fungible and countable requirements, but have struggled over the years with meeting divisibility. After all, suppose you were to do work that is the equivalent of 5.1 grams of gold. The individual you did the work for reaches into their pocket and gives you 6 grams and asks for .9 of a gram in change. How do you provide it?
Bitcoin solves the divisibility problem of scare goods, while still meeting all the other requirements of money.
So if you wanted to say there was any sort of "objective value" of Bitcoin, it would be the following: Bitcoin is a medium, a measure (divisible, fungible, & countable), a standard, and a store.
From there you can argue whether or not it fits these attributes better than fiat money, but it almost certainly meets these attributes at least as well as precious metals.
Case in point, answer these three questions:
1) What is the intrinsic value of water?
2) What is the intrinsic value of water if you are lost in a desert?
3) What is the intrinsic value of water if you are drowning?
One's answer will always be different for all three cases, indicating there is no such thing as "objective value". In the case of #2, the average person may be willing to lose a limb to avoid dying of thirst. In the case of #3, the average person may be willing to lose a limb to see enough water removed that they could obtain another breath.
Value is always "subjective", no matter what adjectives are added to it. To argue there is some inherent property of an entity that provides an objective value to it, is to purposely mislead people.
Bitcoin is money (or can be used as such) because it is like gold and other precious metals. They are all scarce, which gives them *some* value, even if it's not always a stable one. Even fiat money has scarcity, regardless of inflation, it is not infinite, even if some might be trying to make it infinite even today.
There's an old saying that goes: "Money is a matter of functions four: a medium, a measure, a standard, a store."
Gold and other precious metals have problems with the second of these: measure (AKA unit of account).
A good unit of account has to be divisible, fungible, and countable.
Precious metals meet the fungible and countable requirements, but have struggled over the years with meeting divisibility. After all, suppose you were to do work that is the equivalent of 5.1 grams of gold. The individual you did the work for reaches into their pocket and gives you 6 grams and asks for .9 of a gram in change. How do you provide it?
Bitcoin solves the divisibility problem of scare goods, while still meeting all the other requirements of money.
So if you wanted to say there was any sort of "objective value" of Bitcoin, it would be the following: Bitcoin is a medium, a measure (divisible, fungible, & countable), a standard, and a store.
From there you can argue whether or not it fits these attributes better than fiat money, but it almost certainly meets these attributes at least as well as precious metals.
I agree with most of what you say here, except your description of "intrinsic" as "objective". Intrinsic value, when used in the money domain, means the value that is not echange value. It is not objective by any means, it is defined by supply and demand as everything else.
Imagine that gold is unsellable as a used item, like an opened bag of potato chips. What is the value? You could make things out of it, use it in electronics and so on. A piece of jewelry is nice, but the wearer (and everybody else) is also conscient of its exhange value, so lets take that out. I would say that it is worth far less than the current gold price, driving its use up and the mining down. This is the intrinsic value (intrinsic used in the money domain).
Money is the stuff that is used for indirect exhange. Gold, silver, fiat, bitcoin. The quality of a sort of money is decided by its traits like fungibility, scarcity, divisibility and some others. In fact, the best money has no intrinsic value. Gold having intrinsic value means that its use as money displaces its use in electronics. Imagine food being money - saving would make somebody hungry. Anything can aquire some moneyness, or exchange value, especially in times of hyperinflation or when use of the best money is restricted.
If you don't like the word "intrinsic", which, outside of the money domain, means inherent, fundamental or genuine, use either "direct use-value" or "value apart from its exchange value"
Present value is the value calculated using some future value and some interest rate.
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