Krugman On Bitcoin and the Gold Standard 601
twoallbeefpatties writes "Prominent Keynesian economist Paul Krugman has left a note on his blog at NYTimes about his view of Bitcoin, discussing its similarity to the gold standard and suggesting a drop in 'real gross Bitcoin product' as its users hoard the currency rather than spend it."
Keynesian? (Score:2, Insightful)
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Re:Keynesian? (Score:5, Insightful)
Qualifying Krugman as a "prominent Keynesian economist" is like calling Stephen Hawking a "prominent Einsteinian physicist".
I call shenanigans.
That analogy would make sense only if the theories of John Maynard Keynes [wikipedia.org] were as universally accepted as those of Einstein. Economics never has been and probably never will be as testable a science (if it's a science at all) as physics.
Re:Keynesian? (Score:5, Insightful)
But you can learn from historic reactions to varies pressure. For example Austerity has never gotten anyone out of a recession. Now, if people would look at that, look at it's history and act upon that, we wouldn't be having these issue in Washington.
So the testing part is looking at previous success a failure, and the prediction side would be using the previously success as a reaction to current economic situation and seeing the results.
You can't really do it in the lab, yet, but you can apply it.
History also shows Keynesian policies can fail (Score:2)
http://en.wikipedia.org/wiki/Monetarism [wikipedia.org]
Is Keynesian theory wrong, not quite, just incomplete. Not a universal solution. Its like physicists moving from Newton to Einstein. Its not that Newton was "wrong", he just had an incomple
Re:History also shows Keynesian policies can fail (Score:4, Informative)
Keynsian theory stated that the government should run deficits during cyclical depressions and surpluses during periods of growth that fully pay down the debt to "smooth out" the business cycle .
The second half prescription has never once been practiced because a government running a surplus is as unnatural as water flowing uphill.
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In this way, it is much like Communism: "It only doesn't work because no one does it right!" The fact is, expecting a government entity to impose limits on itself in order to make a plan work is tautologically identical to saying it doesn't work.
Re:History also shows Keynesian policies can fail (Score:4, Insightful)
And yet, there are governments in the world that do impose limits on themselves and make plans work. Something doesn't become logically impossible just because it's not within your experience.
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In this way, it is much like Communism: "It only doesn't work because no one does it right!" The fact is, expecting a government entity to impose limits on itself in order to make a plan work is tautologically identical to saying it doesn't work.
And that is why fiat currencies are so superior to the gold standard. With a fiat currency you always have the ability to pay back any debt, but at the same time there is also no need for it as you can always print the interest you need to pay.
Government debt in essence becomes little more than a subsidize on private savings. Of course, governments can still screw up in the short term, but unlike with a more primitive system like the gold standard you aren't screwed in the long term.
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Canada. Googling "canada budget surplus history" turns up several relevant hits, including blogs referencing the surpluses, news stories talking about it, and this page [fin.gc.ca] at the Government of Canada website. Surpluses became the norm after Chretien and his finance minister Paul Martin balanced the budget in the 1990's or so, and remained that way until the last Harper government, who went into deficit spending as a response to the recession. And just as an aside, after Chretien did his budget balancing act, m
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I'm pretty sure they were real, not through personal knowledge but because funny bookkeeping seems to come out to the public sooner or later, usually sooner. The last government fell in part because of funny bookkeeping. Of course, they got re-elected with a majority, so what can you do?
There has often been related funny business that has gotten exposed. A few of our surpluses actually came out of the funds set aside for Employment Insurance, when employment numbers did better than expected. The government
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Ironically, it's exactly in the short term, when liquidity trap conditions apply (like now, and unlike the 70's) that Keynesian policies work. In the long term, they lead to contraction. In stagflation conditions, ineffective. Krugman has been explaining, talking about, making predictions about, and refining his models of all of this stuff since 2008, and his predictions have been almost always right (he thought wages would drop, they didn't, that's the only thing he's missed as far as I can tell). No moder
Re:Keynesian? (Score:4, Interesting)
For example Austerity has never gotten anyone out of a recession.
Wow! That is incredibly untrue. Shrinking government spending (while deregulating private activity) caused a boom in China. It has also made Germany the only stable economy in Western Europe in the recent years. Austerity itself is a loaded word. It's not that the government has to just cut the money it spends. It has to also get out of the way. For example, cutting government expenses by shifting them to the private sector, is not going to solve anything. It will only increase regulatory costs. But cutting government expenses by cutting government involvement has been beneficial in most economies in which government had previously was TOO involved in economic activity.
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That only works if there is demand in the private sector for jobs which occurs in a growing economy. During a recession, cutting public jobs will just increase unemployment which lowers economic activity.
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You attribute complicated situations to a single cause; it's a very simple-minded argument, and misses a host of other reasons that have caused Germany to be very stable and China to undergo their boom.
Germany: A big reason for the economic stability is Germany is due to their very high level of public spending, focused on effect
Re:Keynesian? (Score:5, Informative)
The over extension of debt can be corrected by devaluing the the currency. You pump more money into the economy during the process, which creates jobs and stimulates economic activity. It will make your exports more attractive to other nations and while decreasing the demand of imports, which improves the trade balance.
This works and is how the US got out of the great depression with help from the New Deal and WW2.
Re:Keynesian? (Score:4, Insightful)
I like how you write devalue the currency like it's nothing. You do understand that by devaluing the currency you destroy the life savings of the elderly and people on fixed income. You basically rob all of the people that lived within their means and saved their whole life to bail out those that borrowed to the hilt and lived like there is no tomorrow.
And we never recovered from the great depression until after WWII and we cut government spending WAY down and fired millions of soldiers. WWII only got us out of the depression if you think the way to get rid of unemployment is to ship millions of unemployed people overseas. Look how people actually lived during WWII. It was terrible with rationing and cost controls on all sorts of products.
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You pump more money into the economy during the process, which creates jobs
No it doesn't.
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So take the few remaining dollars from the poor and middle class and hand it to the rich to trickle back down? Liberals always claim to be for the poor but they don't realize that keynesian economics does the most damage to the poor and benefits the rich. And NO that is not what got us out of the great depression. It certainly prolonged it though.
You are describing supply side economics which is a conservative idea.
Stimulus can be in the form of creating public works projects that create jobs for the poor. If the rich are sitting idle on their money, you can tax it and spend it on the poor who will spend the money on goods and services, which will create more jobs as businesses need to hire to keep up with demand.
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http://en.wikipedia.org/wiki/John_Maynard_Keynes#During_the_Great_Depression
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"Massive tax cuts" have nothing to do with any definition of "Austerity".
Re:Keynesian? (Score:4, Insightful)
Because all the other major industrial powers had been crushed in the war, giving US-based industries an unparalleled opportunity for expansion and near complete control of global markets.
Also, social spending soared after World War II. There was less wealth going to war, and more to infrastructure improvements and individual consumption. That's the opposite of austerity.
Re:Keynesian? (Score:4, Interesting)
I personally think people pick their favorite "school" based on their pre-existing views and agendas, and not on any actual merits of their philosophies.
Also, the way you put it sort of hurts the Austrians, at least in my eyes. Theory is useless without observations. Where observations are somewhat useful with the judicious use of statistics and large data sets.
Personally I think both of them are completely useless. Both of them, applied, have caused a decent amount of harm. Neither of them, applied, have seemed to do the slightest bit of good. And generally people who vocally subscribe, and show brand loyalty, to any of them are as idiotic as people who declare themselves as following one of the the two established political agendas. Its just as arbitrary. Reading debates about which of the various schools of economics is gospel leads to the conclusion that economics has more in common with religion than with science. There is no way to conclusively falsify any claim, and thus the argument never, ever, can have an actual objective conclusion.
Re:Keynesian? (Score:4, Insightful)
You do understand that on the planet Earth, if you actually do this, you will indeed come out from the hole by continually digging?
No, no you will not. What will happen is that eventually you will dig deep enough to reach molten rock and you will die from the heat.
Keynes like Newton (Score:2)
Qualifying Krugman as a "prominent Keynesian economist" is like calling Stephen Hawking a "prominent Einsteinian physicist".
I call shenanigans.
That analogy would make sense only if the theories of John Maynard Keynes [wikipedia.org] were as universally accepted as those of Einstein. Economics never has been and probably never will be as testable a science (if it's a science at all) as physics.
Actually Keynesian theory would be more akin to Newton's. Sometimes useful, but it can fail under some circumstances. As Newton's followers went on to refine things with Einstein's theories, some of Keynes' followers went on to refine things and came up with Monetarism.
http://en.wikipedia.org/wiki/Monetarism [wikipedia.org]
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Qualifying Krugman as a "prominent Keynesian economist" is like calling Stephen Hawking a "prominent Einsteinian physicist". I call shenanigans.
A better analogy would be "like calling John Edward a 'prominent television psychic.'"
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Ok, but if Krugman is a television psychic, his Friedman equivalents are television evangelists. At least the psychic knows what he's saying is bullshit, and he doesn't try to fleece the masses listening to him.
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Yeah, seriously? Ron Paul = Austrian School devotee. Paul Krugman is pretty close to the opposite there.
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Why would you think that? He's been against the Bush tax cuts, pro regulation of the mortgage industry and financial markets, anti Wall Street bailouts, pro massive recession/job package expenditure, pro health care reform, pro tariffs on Chinese imports until they stop messing with their currency, and believe social democracy is the direction the US should be heading. There will always be exceptions, but you will not be able to find 1/10th the examples of supporting big business over social programs.
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No, these are the same types of policies that FDR through Johnson (and even Nixon in many cases) followed to various extents and resulted in the greatest growth of the middle class in any country in the history of the world.
You would prefer to return to pre-1930 or post 2000 policies that completely screw the middle class? Awesome.
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Terrible summary, decent blog post (Score:5, Insightful)
By "discussing its similarity to the gold standard" the summary means "he points out one way Bitcoin is flawed." Specifically, that people hoard it instead of spending it (creating an unstable monetary system). Fewer transactions actually means less value, since the whole point of a monetary system that lacks intrinsic value (gold at least had that) is that it gets spent. Since the amount of Bitcoins is limited, and as time goes on the early adopters get "richer" (since less is being mined), they have an incentive not to spend. But the system will only succeed if they do spend and create a thriving system.
This is a massive gaping flaw in Bitcoin that I haven't seen pointed out yet. It means that Bitcoin will nearly always be a deflationary system. It also requires people to keep investing computing time, while their return on investment only gets less and less over time, and early adopters have no reason to spend, creating fewer transactions to be verified. And this can't be fixed: the limit to the number of Bitcoins is builtin to the system and cannot be changed.
So to everyone going "not another Bitcoin story!": read it. It actually points out a way that Bitcoin is (possibly) flawed (unlike so many of the stories on /.) And from a real economist, too.
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a monetary system that lacks intrinsic value (gold at least had that)
What's the intrinsic value of gold? It has value as a material to make jewelry out of, and that seems to be a lasting thing looking at history, but to my mind it's just a matter of personal preference (I would probably prefer silver jewelry to gold, myself) and therefore a false "value." All it would take would be one famous celebrity soccer mom to come along and claim gold causes autism and the value of gold would drop.
I always wonder why all the gold bugs aren't talking about instating an oil standard. Oi
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Gold has an intrinsic value as a material for various technological uses, outside of its use for human adornment (which is really just an extension of its scarcity, just like its use as a currency).
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Oil's value is gone once it is used. Gold can be recycled and reused. It has lots of industrial uses too, not just making pretty things. And regardless of whether YOU prefer silver or gold jewelry, the fact is you are pretty much guaranteed you can find someone to trade you something you want for your gold. I agree with you that it's "intrinsic vale" is not really as much as what most people think it is. But unlike money the government can't just print more, so the limited supply is an important featur
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I don't know about you, but I don't even keep thousands of dollars of paper money. I keep thousands of dollars of imaginary money -- even more compact and durable than gold -- and every so often I go to a machine that gives me a few paper vouchers that are good for trading imaginary money. If the machine gave me gold instead of paper, I guess I'd have to deal with the gold, but that sounds like a pain in the ass. Gold is kind of heavy. But gold, paper, all the same to me -- the imaginary money is what matte
Re:Terrible summary, decent blog post (Score:4, Informative)
No, the real issue is that under the "gold standard", the money supply is related to gold finds - which are random events. It's not like the supply of gold is actually fixed. So someone could find a huge gold vein tomorrow, and crash the world economy. Just like printing money, but done by individuals!
Also, there is simply the unavoidable result of a fixed currency:
Country X says "my dollars are worth exactly 1 Y", for any option of Y. You take your money, and short lots of X dollars. Then you counterfeit X's currency (or wait for someone else to counterfeit it). Now your "short" position is worth more than you paid for it. Country X's only hope is to deflate their currency voluntarily each year, to account for counterfeiting.
This happened to the US several times, and that is why we are now off the gold standard. It's amazing how few people bother to figure that out before advocating the gold standard!
Re:Terrible summary, decent blog post (Score:4, Informative)
"Intrinsic value" is an economic term, and as such, it's by definition vague ;)
It's a combination of scarcity, permanence (you can't destroy it - but feel free to delete your bitcoins), physical qualities (and yes, being nice for jewelry is a quality), and it has tended to hold its value over a LONG time (which is the weakest of those arguments IMO, but that's economics for you...)
Oil doesn't have a very well defined intrinsic value, because it is easily produced (the *current* scarcity is artificial based on production quotas), it has no permanence (its usefulness is based on consuming it), and its physical qualities/usefulness are not inherently valuable (there are alternatives, and if we don't start using them we're screwed).
Basically, the WHOLE POINT of a good monetary "standard" is that it is supposed to be STABLE and allow growth. Gold is not really the most stable standard because of all the speculation and inability of governments to control that - which is why we abandoned the gold standard. Its scarcity basically rewards saving and punishes debt (ie. tends to be deflationary), which means it's horrible for risk (think: the entire US tech industry). And it's not great for economic growth because the money supply is limited by mining gold.
Given all that, oil would be HUGELY worse for that stability....
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Chicks dig it...but of course, Slashdot readers might not understand that.
No, no... Slashdot readers then proceed to ask, "what's the intrinsic value of chicks?".
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It's not the fact that it can be divided (Score:3)
Let me recast Paul Krugman argument by using this 1930’s example:
The Monetary Supply is fixed
BitCoin: By design – 21 million is the max.
1930: Currency is tied to gold, and no major gold strikes in the 1920s
The demand for money increases.
BitCoin: More people get interested
1930: The economy grows in 1920s high productivity, population growth, move away from agrarian society, etc.
Supply and Demand
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Dividing a bitcoin into a billion billion parts doesn't change the fact that it's deflationary. It doesn't matter how many parts you can make out of it, each part will still be worth more tomorrow, so there's still pressure to hold it rather than spending it.
The main problem: Greed (Score:4, Insightful)
While bitcoin is quite interesting from a cryptography point of view, it totally fails to address human nature.
In particular, GREED.
2 years ago it was trivially easy to mine 100s of bitcoins. Hell, you could by 1000 for less than a happy meal. Now people sit on those coins, hoping that bitcoin will become a mainstream currency, in which case the value of a bitcoin would need to rise by many orders of magnitudes. If it reached a capitalization compareable to the USD, that bigmac would become equivalent of $25M.
And there are people around with a much much larger fraction of possible bitcoins than there were ever for any real currency. And the deflationary nature of it will mean that the value of those horders (and thus their economical power) WILL have to grow in case of a success of bitcoin.
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Bitcoin (Score:2)
is the digital implementation of the 1800 con with the same name.
i looked into it (Score:2)
Fundementally flawed (Score:3, Interesting)
Bitcoin is the equivalent of a nations currency that has been printed by individuals by permission.
This fact alone is its undoing.
Your GPU's do not constitute value. Nobody will accept the fact that you are a bitcoin millionaire simply because you let a few unused computers run for a few months.
Comment removed (Score:3)
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Have you actually made any money yet? When I looked into it I wasn't too thrilled at how easy it was for people to scam you out of bitcoins by contesting Paypal payments etc
Re:Bitcoin (Score:4, Insightful)
Re:Bitcoin (Score:5, Informative)
how easy it was for people to scam you out of bitcoins by contesting Paypal payments
1. Scammer buys bitcoins on ebay.
2. Seller sends the bitcoins
3. Scammer pretends he never received them, and reports this as a fraudulent transaction to Paypal
4. Paypal asks the seller for evidence that he has sent the goods (i.e. a tracking number)
5. Sellers explains what bitcoins is, digital revolution, bring back the gold standard, Ron Paul 2012 et cetera
6. Instead of a tracking number, Paypal gets a bunch gibberish, so it rules in the scammer's favor
7. Rinse and repeat
This applies to pretty much all virtual goods on eBay, so it's not really a bitcoin problem as much as it is a Paypal problem.
This whole digression is moot in the end because there are dozens of bitcoin exchanges out there now, so there's no need to rely on Paypal. Admittedly it was a problem in the early days before exchanges were established, so that's no longer the case.
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You'd think the retard selling the bitcoins would just use a block explorer to point to the number of the block containing the transaction and show that as proof that the coins were sent and credited to the buyer's address instead of going through all that bullshit you listed in step 5.
If PayPal wants some kind of "tracking number" for the bitcoins, the block number containing the to/from addresses is as good as you're gonna get.
Re:Bitcoin (Score:4, Insightful)
Re:Bitcoin (Score:5, Informative)
But more importantly you are trolling because each 6990 consumes at least 300 watts during mining, which means you need 7.2kw for your whole setup. This far exceeds what a single outlet can provide.
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Nope, not quite right (except the part about higher voltages needing less thick wires.). How thick a wire must be to handle a given load depends mainly on amperage. Since this is a heat dissipation issue, where you put the wire also matters: in a wall means less heat dissipation than outdoor use which means a thicker gauge. Voltage means nothing. The only thing that voltage matters for is insulation. The higher the voltage, the better able electricity is at jumping gaps in the circuit, and so you need thick
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Re:Bitcoin (Score:4, Informative)
A hilarious comment from the source shows how pathetic your trolling attempt is:
Not to mention that the door hinges on the side away from the plug, so you have to unplug the door to open it.
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Getting paid for being actively harmful (using electricity) is precisely why Bitcoin will never amount to anything.
Ah, so you're a thieve too.
I wouldn't take it of
Re:Bitcoin (Score:5, Insightful)
. I don't have electricity costs as I take it from the hallway
There ain't no free lunch. Either you're still paying for that electricity indirectly, or someone else is bearing that cost. If the latter - which seems to be more likely - then it's about as moral as tapping that electricity and reselling it directly, then pocketing the profit.
Just because something is provided to you "for free" (really, at the expense of your community) doesn't mean that you should feel free to abuse it for your own sake.
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Yep, he should be growing weed.
so the only way to make bank is to not pay for pow (Score:3)
so the only way to make bank is to not pay for power?
Re:STOP (Score:4, Insightful)
I'm pretty sure taco wasn't editing the New York Times.
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You are making the New York Times into something important and noteworthy and it is not.
No wonder Taco left.
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It's his blog, he can post what he wants.
Some times he posts about science fiction. [nytimes.com]
Some times he posts about indie bands he's into. [nytimes.com]
It wouldn't surprise me if he were reading this thread.
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Just as soon as Nobel Peace Prize winner Barack Obama stops all the wars. Hint--if you're left of center, you tend to win prizes from left of center organizations.
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Hint--if you're left of center, you tend to win prizes from left of center organizations.
That doesn't explain why Obama got his Nobel Prize.
Re:STOP (Score:5, Informative)
The peace prize is a real Nobel, it's one of the original group set up by Alfred Nobel. The economics one isn't, it's a separate award that uses a very similar name, set up by the bank that handles the Nobel grant because they wanted to give their field some legitimacy off of the name.
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nedlohs has it right.
Economics is not a real Nobel -- as you point out.
Further, it's as related to reality as the Peace Prize -- that is, it is not.
He doesn't say the Nobel Prize for Peace is not a real Nobel, he just said it's not related to reality. It's not, just look at the past recipients of the Nobel Peace Prize. There's no way a sane person could correlate those winners to the concept of progressing peace.
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You're just stupid and uneducated. You're also probably a college student.
I am NOT Paul Krugman!
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RTFA again. Nowhere does Krugman say bitcoins are a "lottery ticket" whose value might soar - their value has soared. His point is that this is problematic - massive deflation leads to hoarding, rather than spending, a currency.
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All sitting on currency does is drive down prices, which sets up an equilibrium that makes people spend (ie "look how cheap that is! I'm going to use some of my savings to buy that and let it improve my life"). The currency itself is worthless. All it is is a placeholder, telling society how much you have contributed. What is
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You have a very bad understanding of the purpose of currency.
Currency does not exist solely as a store of wealth, that is only one purpose, and not even the most important one.
The most important purpose of currency is in providing liquidity to allow for greater freedom in making economic transactions.
Re:Hoarding's the point. (Score:4, Interesting)
The issue is that there are two realities of the purpose of currency.
On one hand there is the natural way that most people use it and understand it; as a means for transactions and a store of value.
On the other hand there is the way that certain economic schools want to use it, some for personal gain, some for misguided theories.
The trouble comes when the first group understand what the second group intend, because the first group actually do want a store of value and they are going to get it even if that means hoarding limited real-world resources instead of pieces of organic fibre. Which ends up with the pieces of fibre being worth their actual resource value as the faith in them is lost.
The idea that deflation itself leads to hoarding is flawed. Many economic sectors suffer constant deflation; computing and electronics are a good example. When people know that prices will fall, people invest in products as they are needed instead of before they are needed. That is not a disaster, that is a basis for a stable real economy.
Having people buy things before they are needed (to 'stimulate' and create non-existent jobs) means they are constantly undermining future demand. As soon as a dip comes it's magnified as purchases are not actually needed, they have already been made to get rid of unstable currency, so there is already a large overcapacity and a store of products that will easily let the consuming side forego purchases for a long time.
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Inflation is about a currency's value, not its quantity. At least according to TFA, bitcoin has been undergoing deflation, which makes sense given that there's an upper limit to how many bitcoins there will ever be, and producing new ones gets exponentially harder as time goes on.
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If you think the odds of Bitcoin taking over the world (or even replacing PayPal for ecommerce) are one-in-a-million, owning one whole bitcoin is a lottery with a 1000:1 payoff. If you think it's a one-in-a-billion event, it's a coin flip. If you think it's a one-in-a-trillion event, buy a Big Mac instead.
Let's put it this way: I think the odds of me growing a new orrafice that poops out mutliple currencies AND a pair of wings are greater.
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In the one-in-a-billion chance that 20 years from now the entire world's economy is being transacted in bitcoins, you'll be a multibillionaire.
I know that "billionaire" part is just a figure of speech, but let's find out how large the bitcoin jackpot really is, for curiosity's sake.
Suppose miraculously bitcoin manage to completely replace both the USD and the Euro tomorrow. There are currently:
980 billion USD in circulation [federalreserve.gov]
863 billion Euros in circulation (~1.2 trillion USD) [ecb.int]
7.2 million bitcoins in circulation [bitcoincharts.com]
Thus each bitcoin would be worth approximately 300k USD. Hardly makes you a millionaire, let alone a billionaire.
Disclaimer: I
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that's the problem. The entire fiscal policy of USA destroys the value of savings by inflation
Thats not a bug, its a feature. You don't seem to understand what the purpose of money is. It is not an investment.
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I never said money is investment. You seem to misunderstand me completely.
Money is savings, it's not an investment. Real money is gold, it's not an investment. It is NOT an investment. Investment is a business. Business that makes money. Be it your own business or somebody else's business that you invest in.
Money is store of value, medium of exchange and unit of account. USD doesn't work as a store of value, here is the proof:
sugar [indexmundi.com] Dec 2003: 20.40 cents/pound, Apr 2011: 36.97 cents/pound, price up b
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I can buy things in USD not in rice, so I disagree. Money can lose or gain value and still be a store of value. Gold is a commodity. It is not money anymore than uranium is money.
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Business don't make money, they collect money. There is a huge difference.
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I don't think you understand what a "store of value" is. You can put dollars into a bank, take them out again, and spend them just as you could before.
Also keep in mind that the current inflation rate is 3.6%, not 1200%. By your definition, there wouldn't be any "stores of value" left in the world.
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the government doesn't lie about the inflation rate. It is caculated by a multitude of different organizations, both private and public.
Uh-huh. And if you calculate it the same way it was calculated thirty years ago [shadowstats.com], before the government changed the formula for some mysterious reason, you'll see that the real rate is actually much higher than the official number.
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Money is store of value, medium of exchange and unit of account. USD doesn't work as a store of value, here is the proof [long list of commodity price increases, snip]
The "store of value" function isn't boolean. Without some incentive to spend or invest, the money fails. In particular, it fails as a medium of exchange since there is no incentive to spend or invest. Now note, I used the abstract "incentive" without referring to inflation. Inflation is simply the most convenient incentive we've found to
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Since we have adopted leaves as legal tender, we have all become immensely rich, but due to high leaf availability we have run across a slight inflation problem meaning it will take three deciduous forests to buy one ship's peanut. Therefore, we are about to embark on a leaf revaluation project... ...and burn down the forest.
(--HHGTTG)
That's precisely what central banks *do* (Score:2)
However, they try to do so with a bit more subtlety than Adams' imagined Golgafrinchan macroeconomists.
And immensely more subtlety than our friend the OP, whom is utterly delusional. Encouraging currency hoarding rates roughly up there with Caucescu's "export everything" policy as the silliest economic policy idea of all time.
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Slow down there, we figure you were stupid after the second paragraph you didn't need to keep pounding it home.
Moving money form the wealthy and into circulation is good for the economy.
And we should pay more for Gas. Seriously. It's a dwindling resource. A critical resource, I might add.
"- RELATIVE TO WHAT, YOU DUMBO? "
The fact that you don't understand what he is talking about means you should research, not fall to as homs.
There is some real issues t discuss about what he says, but you clearly don't under
Re:Krugman is not an economist. (Score:4, Insightful)
What we want from a monetary system isn't to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. And that's not at all what is happening in Bitcoin.
- that's the problem. The entire fiscal policy of USA destroys the value of savings by inflation and this is what destroys the economy. [slashdot.org]
Spending money is literally what drives the economy. Saving money in a bank does make it available for other people to borrow so that they may spend it. The "redistribution of wealth" is the benefit here, though, not the saving itself.
Bear in mind that dollar prices have been relatively stable over the past few years â" yes, some deflation in 2008-2009,
- RELATIVE TO WHAT, YOU DUMBO? Relative to other flawed currencies? :) Well, not to Swiss Franc. Not to Canadian dollar. Not to NZ dollar. Not to Australian Dollar.
Relative to the purchasing power of the dollar a few years ago. A Big Mac, or a loaf of bread, or a new car costs about as many USD today as it did a few years ago. The dollar is stable. A Big Mac costs a wildly different number of BitCoins today than it did a month ago. The BitCoin is unstable.
then some inflation as commodity prices rebounded, but overall consumer prices are only slightly higher than they were three years ago. What that means is that if you measure prices in Bitcoins, they have plunged; the Bitcoin economy has in effect experienced massive deflation.
- GOOD. Good for those who hold Bitcoins. Bad for those who hold dollars.
Good for those who hold Bitcoins without spending them. Bad for those who spent them. Pretty soon, people will realize that it makes more sense to hold onto Bitcoins than spend them, so no one will spend Bitcoins - they'll hoard them, and spend, say, Dollars instead. This weakens the Bitcoin economy, because no one is spending Bitcoins.
And because of that, there has been an incentive to hoard the virtual currency rather than spending it. The actual value of transactions in Bitcoins has fallen rather than rising. In effect, real gross Bitcoin product has fallen sharply.
- This Keynesian wants you to be poor, do you understand that?
He wants you to pay 3.50USD for your gas, and BTW, he doesn't think it's high enough. They have a target to make it much higher. But he doesn't want you to pay 10 cents for that gallon.
Absolutely. He wants you to have to pay $15 per gallon in 50 years. He also wants minimum wage to be $45 in 50 years. He wants inflation - the purchasing power of $1 to decrease - and for people to have more dollars. This is good for the economy, because it means that spending money is more sensible than hoarding it. This means that people have to keep on working to get more money, and more economic product is produced.
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implying that Krugman advocates war or tragedy either illustrates profound stupidity or an intentional misinterpretation of the concepts he was trying to illustrate. Maybe you've been mislabeled a troll simply because your posts are unbelievably naive?
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Before the Fed, the US economy would fluctuate between booms and panics.
Whereas now it fluctuates between booms and decade-long depressions and economic collapse.
Oh, and they've decreased the dollar's value by 99% in the meantime too.
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Really? Nothing to do with reality? His predictions have been far better than most. http://tinyurl.com/3bqefxx [tinyurl.com] In particular, the WSJ was saying years ago that rampant inflation was just around the corner. When again?
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> rampant inflation was just around the corner
The technical definition of inflation is an increase in the money supply. And as it turns out, that was indeed just around the corner.
Rising prices are really just a symptom (money supply goes up, money value goes down, you need more money to buy stuff).
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Krugmans predictions have sucked:
Krugman said the borrow and spend and print and spend stimulus packages would help the US economy. They did not.
He said that inflating the bubble over the past decade would be good. It was not.
The people who predicted the housing bubble burst, the tech bubble burst, and just about every recession and depression since 1913 are the Austrians like FA Hayek, Ludwig von Mises, Murry Rothbard, and Ron Paul, all of whom are (or were until their deaths) firm bel
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Can we please stop re-naming economists you don't agree with "neo-Marxists" (or the more popular "socialist"). The question of deficit vs. excess spending is orthogonal to the effect the spending itself has on the economy. The point is where to apply the force-- at the bottom or the top. Reaganomics advocated extreme deficit spending while cutting the top earners' taxes in the theory that they'd create jobs. It didn't work, and he was forced to raise taxes again for several years in a row. (When they s
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Can we please stop re-naming economists you don't agree with "neo-Marxists" (or the more popular "socialist")
Ok. But can, please, please, still call everyone who is "Keynesian" by the proper name "neo-Marxist"? Or at least just plain "Marxist?" They do believe in the labor-driven theory of production. That's the basis of the Marxist view, so can we call them by the proper name? Even though I disagree with them? Or do we have to invent some name that would be less honest in order to make sure they are not laughed out of the room?
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No they don't. Stop making things up.
Well, Islam, Judaism, and Muslims are all Abrahamic faiths. So should be able to call all Muslims Jews, since they share the same basis?