Whenever they dig up some lost city wiped out in a flash, they do not gold and silver coins in everyone's pockets, nor buckets of precious metals buried here and there, they find tallies.
Bitcoin is not a money, it is not even a currency, it is a tally. Here Hugo Salinas Price makes an excellent summary:
Read Price's whole article. Mish quotes the above in an article his post on bitcoin where he interviews a merchant building a biz on bitcoin transactions.
How can this be if bitcoin is neither money nor currency? For most of history, most business transactions required neither money nor currency. Most business is on creit among the players, very local and trust based. Everyone kept tallies, and to fool around is to go out of business for lack of trust and cooperation.
With banking, and then lending at usury, and then lending fractional reserve at usury, and then lending only the unbacked fraction of the reserve at usury, "credit" could be lent apparently cheaper ay usury than otherwise, at least for those who pursued foolish risk. The result is the boom and bust cycles. the bonus to the rise of the state was all this lending took record keeping, and states could use the records to tax transactions.
Another aspect to worsen the economies was selling debt on secondary markets. Once no one in his right mind would buy debt, and it was not legally permissible anyway for you to sell a loan made to me to a third party. I have no idea who the third party is, I contracted with no third party, so why would I be obliged to pay that third party anything? What was once local and immediate consideration of each other's creditworthiness among each other kept busts at check, but once fractional reserve and selling debt on secondary markets occurred, the boom where the damage is done occurs, and then the bust where schmucks are assigned the debt follows.
The fisherman sells his fish for $5 on credit to a trader who sells is for $7 on credit to the fishmonger who sells it for $10 on credit to the restauranteur who sells it for $20. The customer who extinguishes the fish funds the settling of his bill for $30 with silver. All those back on up the line who extended credit (at no interest) get paid back eventually. As you can see of all the economy, most is on credit.
But is was safe and legitimate because it was local ad limited to those who would suffer if there was a default. None of this "I take the profits, taxpayers take the loss" we have in capitalism.
We need to return to free markets to regain our economy and security.
AS for bitcoins, they are just a tally outside the tax system, like we once had.
Feel free to forward this by email to three of your friends.
Bitcoin is not a money, it is not even a currency, it is a tally. Here Hugo Salinas Price makes an excellent summary:
The Bitcoin is an example of the tremendous hold that the idea of the omnipotence of technology to solve human problems has upon humanity. However, technology cannot create matter; it cannot create commodity-money, as it cannot create petroleum. Technology may give various forms to matter, but it cannot create matter or substance, and money must be the substance that is most accepted in commerce. All the Ph.D.s and Nobels in Economics are playing games to keep the world entertained. The less their pronouncements make sense, the wiser they think we will consider them.
You tell me: What is the future that awaits a humanity so confused that it can no longer distinguish between an abstract concept and what is real and material? Very confused people are participating in speculations in imitation currencies – dollars, pounds, euros, yen, yuans, Bitcoins - in the hopes of obtaining some profit or benefit, because unable to think for themselves, they can do nothing but speculate – and ruin themselves.
Read Price's whole article. Mish quotes the above in an article his post on bitcoin where he interviews a merchant building a biz on bitcoin transactions.
How can this be if bitcoin is neither money nor currency? For most of history, most business transactions required neither money nor currency. Most business is on creit among the players, very local and trust based. Everyone kept tallies, and to fool around is to go out of business for lack of trust and cooperation.
With banking, and then lending at usury, and then lending fractional reserve at usury, and then lending only the unbacked fraction of the reserve at usury, "credit" could be lent apparently cheaper ay usury than otherwise, at least for those who pursued foolish risk. The result is the boom and bust cycles. the bonus to the rise of the state was all this lending took record keeping, and states could use the records to tax transactions.
Another aspect to worsen the economies was selling debt on secondary markets. Once no one in his right mind would buy debt, and it was not legally permissible anyway for you to sell a loan made to me to a third party. I have no idea who the third party is, I contracted with no third party, so why would I be obliged to pay that third party anything? What was once local and immediate consideration of each other's creditworthiness among each other kept busts at check, but once fractional reserve and selling debt on secondary markets occurred, the boom where the damage is done occurs, and then the bust where schmucks are assigned the debt follows.
The fisherman sells his fish for $5 on credit to a trader who sells is for $7 on credit to the fishmonger who sells it for $10 on credit to the restauranteur who sells it for $20. The customer who extinguishes the fish funds the settling of his bill for $30 with silver. All those back on up the line who extended credit (at no interest) get paid back eventually. As you can see of all the economy, most is on credit.
But is was safe and legitimate because it was local ad limited to those who would suffer if there was a default. None of this "I take the profits, taxpayers take the loss" we have in capitalism.
We need to return to free markets to regain our economy and security.
AS for bitcoins, they are just a tally outside the tax system, like we once had.
Feel free to forward this by email to three of your friends.
4 comments:
Good money according to Aristotle has to be durable, portable, divisible and have an intrinsic value. I think Bitcoin is questionable in terms of 'intrinsic value' but not more than our bills and coins.
I do see the value of a system based on gold but that is never going to happen as long as governments have an interest in printing money to wage wars.
One observation I've made however is that the entire management of gold is pretty absurd. Human resources en masse are engaged in the hard labour to dig out the gold from the deep earth, only for people then to put the gold in other deep valves that are specially built for the purpose of guarding the gold and equipped with comprehensive safety features. Doing this is going to make human life better, how exactly?
/Jacob
The management of gold may be absurd to you, but not to those who own it and direct its management. Those who own it know it to be a medium of final liquidation of debt. If your counterparties do not believe you are good for credit, they demand gold. The Allied countries who sold war materiel to Nazi Germany obliged the Nazis to appear in Switzerland during the war to transfer gold from Nazi accounts to Allied business accounts. It's just business. But in doing so, both the nazis and the Allied businesses recognized Germany was as good as defeated.
I think it is absurd in terms of value to people. If I was stranded on an island with nowhere to go I wouldn't care for a piece of metal. I'm not saying gold doesn't have value but value to who? Bartering with goats like the romans did has more value since you can eat it.
I recognize that I fully don't know how gold as an investment works but I'm not ready to buy into some peoples argument about intrinsic value either.
It seems there is a longstanding hype around it. We've always been in fear of the world coming to an end and we need something to barter with if worse comes to worst. Since gold has always existed (in our history, religions and so on) we believe it to be somehow special. But consider the changes that have come about in the last one hundred years; Maybe in the next one hundred years we will find gold on some distant planet, or maybe it will be possible to produce gold.
In the book that I'm currently reading I learnt that it apparently already has been done. Soviet scientists found a way to make gold out of lead because lead has almost the same number of protons that gold does.
/Jacob
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