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Against The Gold Standard

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Michael Suede Posted: Tue, Jun 21 2011 1:24 PM

An article I authored on why I think the gold standard is not a vaible long term monetary system:

 

 

After reflecting upon the recent articles I have written where I have defended the new peer-to-peer currency called Bitcoin from attacks by gold standard advocates, I feel it is time stop taking a defensive role and make a few offensive jabs at the much vaunted gold standard.

In my articles I have spent a lot of time comparing the economics of how gold operates as a currency to how Bitcoin operates as a currency.  In the course of comparing the currencies, I was struck by a problem with the gold standard that was so obvious, yet so damning, I felt it deserved its own article.  I hope to hear a response from some well versed gold standard advocates on this issue.

The problem is not a new one, but it is a problem that I have never in all my years heard a satisfactory answer to.   The problem is quite simple, so here it is:

When gold is represented by something, what prevents arbitrary replication of that “thing”?

The law?  Who is the law?  Aren’t laws arbitrary creations by some governing body?  If that body has the authority to make arbitrary replication of money products illegal, then it stands to reason it also must have the power to make counterfeiting legal.

Throughout history, hasn’t that been the historic fault of the gold standard?  Hasn’t history been abundantly clear that as soon as paper receipts for gold are used as money, those paper receipts inevitably become monopolized by State actors, leading to their eventual arbitrary replication at the hands of the criminal class?

Don’t the bankers who issue the receipts have a massive incentive to cheat the system and issue more receipts than they actually have in gold reserves?  Doesn’t the State have a massive incentive to allow such legalized counterfeiting?  Has not history made it clear that those who have the power to issue money always and inevitably come to dominate the rest of society?

Baron Nathan Mayer Rothschild once said, 

“I care not what puppet is placed on the throne of England to rule the Empire, …The man that controls Britain’s money supply controls the British Empire. And I control the money supply.”

Rothschild wasn’t talking about minting gold coins for use in barter; he was talking about paper receipts.  The incentive to issue more paper than specie is more massive than any other kind of fraud imaginable.  If one had the ability to manufacture paper that people treat in the same way they treat a gold coin, the urge to inflate would be more powerful than even an angle could bear.

I’m reminded of a statement Milton Friedman once made concerning greed as he was addressing Phil Donahue on his talk show.  Friedman said, “You know I think you are taking a lot of things for granted, just tell me where in the world you will find these angles who are going to organize society for us? I don’t even trust you to do that.”

I would argue that there is NO solution to this problem.  Changing the structure of government, eliminating the State, enforcement of fraud laws, and other such measures ultimately can not prevent a private bank from engaging in this kind of fraud.  Indeed, history has shown us that bankers routinely buy the law and were instrumental in creating the modern State.

Rothbard wrote extensively on the mischief caused by private banks engaged in the counterfeiting of their own notes prior to the inception of the Fed.  The Fed is simply a coordinator and cartelizing agent that allows for the even inflation of the money supply and acts to prevent bank runs, but its existence is not necessary for banks to engage in the counterfeiting of their own notes.  It was through this process that the bankers came to acquire enough power to take control of government in the first place.  It was through the power of the printing press that the Fed came to be enshrined in law.

I seem to recall, deep within the recesses of my mind, Hoppe making similar arguments at one point in time.

Dr. Hans-Hermann Hoppe writes:

And they [the power elite] realized that their ultimate dream of unlimited counterfeiting power would come true, if only they succeeded in creating a US dominated world central bank issuing a world paper currency such as the bancor or the phoenix; and so they helped set up and finance a multitude of organizations such as the Council on Foreign Relations, the Trilateral Commission, the Bilderberg Group, etc., that promote this goal. As well, leading industrialists recognized the tremendous profits to be made from state-granted monopolies, from state-subsidies, and from exclusive cost-plus contracts in freeing or shielding them from competition, and so they, too, have allied themselves to and “infiltrated” the state.

There are “accidents” in history, and there are carefully planned actions that bring about consequences which are unintended and unanticipated. But history is not just a sequence of accidents and surprises. Most of it is designed and intended. Not by common folks, of course, but by the power elites in control of the state apparatus. If one wants to prevent history from running its present, foreseeable course to unprecedented economic disaster, then, it is indeed imperative to arouse public indignation by exposing, relentlessly, the evil motives and machinations of these power elites, not just of those working within the state apparatus, but in particular also of those staying outside, behind the scenes and pulling the strings.

The ability to acquire enormous power through the fraud of counterfeiting is plainly evident.  Thus, the importance of ensuring that such fraud can not take place is paramount in selecting a currency system.  Bankers are very good at playing the role of benevolent benefactors.  Today, over half of our society calls out to the banker gods begging for more table scraps and handouts.  Bankers make society love them for their printing presses. It is impossible to get rid of counterfeiting if bankers can use the power of the printing press to make the public believe they are the beneficiaries of the fraud.  They only need to convince half of the population that they are benefiting from the fraud, then turn that half against the other to ensure their fraud continues unhindered.

Former Chairman of the Federal Reserve, Alan Greenspan once said,

“Well, first of all, the Federal Reserve is an independent agency, and that means, basically, that there is no other agency of government which can overrule actions that we take. So long as that is in place and there is no evidence that the administration or the Congress or anybody else is requesting that we do things other than what we think is the appropriate thing, then what the relationships are don’t, frankly, matter.”

Low interest rates, cheap loans, cheap credit, social welfare programs, public-private contracts that insulate corporations from competitive forces, etc.. etc.. etc.. – all act to fool the public into believing that their great benefactors are only looking out for their best interests.  And all of those things arise from the power of the printing press.   From this we can say that the urge to inflate is not limited to the bankers who control the printing presses, but also expands out to the public who ostensibly control “the law.”

I would argue that as long as the possibility exists that gold receipts can be counterfeited, they will be counterfeited.  And as long as those receipts are counterfeited, a State will exist to ensure that things remain that way.  It is a simple matter to bribe judges, law makers, enforcement agents, and even the public itself when one has a printing press.

The market has proven wholly inadequate at preventing the fraud of counterfeit bank notes, it can only react after the fact to punish the fraudsters.  But as we have seen, it is often too late.  Once the bankers have bought off the politicians and the public with their fraudulently acquired dollars they will be protected by the State.  The market has been trying to punish the fraud of counterfeit bank notes for the past 40 years and yet the State has held it at bay.

Thus we are back to my original question.  What system is to prevent the arbitrary replication of receipts for gold under a gold standard?  Unless we give up digital transactions and outlaw the use of paper receipts as a society, there is nothing that can prevent it.

If it hasn’t become clear by now, I hope you can see why Bitcoins (or another similar currency like it) are superior to a gold standard.  They simply can’t be inflated.  It can’t happen.  And further, since there is no bank issuing the notes, there is no one group of people who can use the power of the press to influence the public or political class with the bribery of free money.

This core problem must be addressed by gold standard advocates if they want to argue that gold is superior to encrypted digital currencies like Bitcoin.   Since gold can not be shoved down a transmission wire, unless the gold standard advocates want argue that all transactions must be made with physical specie, they have no possible way of getting around this one fatal flaw with the gold standard.

I never in a million years thought I would be saying these words, but the gold standard really is a relic of a by-gone era.  In today’s society where barter takes place across global markets using digital transactions, a gold standard currency that does not use the exact same mechanisms of Bitcoin to ensure replication of the digital representation of gold is impossible, is ultimately doom to fail in the exact same manner it has already failed today.

Of course, the nature of Bitcoin is such that it is impossible to tie gold specie to a Bitcoin because Bitcoins can not be created in accordance with the minting of new gold.  But the nature of Bitcoin also begs the question as to why we even need to have such a currency tied to a commodity at all.

We don’t – and we shouldn’t.

It is a waste of resources to have men digging for gold, just to have it sit in a bank vault, when those same men could be making something useful for humanity instead.  Gold was only useful as a currency because it could not be arbitrarily inflated and met the requirements of scarcity, divisibility, fungibility, and recognizably better than any other physical commodity.   Today, in our new digital world, such monetary requirements are better suited to the digital realm, where the waste of resources on the production of money is not necessary.

I would like to end this article with some thoughts on money by Hoppe.

In a free society, the market would produce money, as all other goods and services. There would be no such thing as money in a world that was perfectly certain and predictable. But in a world with unpredictable contingencies people come to value goods also on account of their marketability or salability, i.e., as media of exchange. And since a more easily and widely salable good is preferable to a less easily and widely salable good as a medium of exchange, there is an inevitable tendency in the market for a single commodity to finally emerge that differs from all others in being the most easily and widely salable commodity of all. This commodity is called money. As the most easily salable good of all it provides its owner with the best humanly possible protection against uncertainty in that it can be employed for the instant satisfaction of the widest range of possible needs. Economic theory has nothing to say as to what commodity will acquire the status of money. Historically, it happened to be gold. But if the physical make-up of our world would have been different or is to become different from what it is now, some other commodity would have become or might become money. The market will decide. In any case, there is no need for government to get involved in any of this. The market has provided and will provide some money-commodity, and the production of that commodity, whatever it is, is subject to the same forces of supply and demand as the production of everything else.

Bitcoins are the first true digital commodity.

Bitcoins are free market money.

 

Related articles:

How To Use Bitcoin – The Most Important Creation In The History Of Man

Libertarian Goldbugs Hating On Bitcoin – Free Market Money

The Economics Of Bitcoin – Why Mainstream Economists Lie About Deflation

The Economics Of Bitcoin – How Bitcoins Act As Money

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I think the standard answer is that there will be a run on the bank and it will go out of business.

I'm surprised you researches into AE haven't shown you this answer. It's what the defenders of fractional reserve banking say will keep the banks honest.

Which is exactly what happened in 1971. The US govt was printing way more paper than it had gold, the French called their bluff and said, "OK, give us gold for all the paper dollars we have".

Sadly, the world just took it when Nixon said , "Nope . We legally bound ourselves to give you gold, but you ain't getting any."

With a private bank, however, people will stop patronizing the bank.

BTW, what have you to say about Bitcoin going from $17 to one penny yesterday?

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  • BTW, what have you to say about Bitcoin going from $17 to one penny yesterday

Holy crap, I wish I had time to watch those trades and scoop that up.  All those wild fluctuations allow you to make an absolute killing.  Going from $0.01 to even $5 is a return of 500,000 %, hahaha.  Dump a few hundred in there and then retire.

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The trades are being rolled back.

To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process.
Rabbi Lapin: "Let's make bricks!"
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The trades are being rolled back.

Can you explain what that means, please? And what the effects of that will be?

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http://www.youtube.com/watch?v=6epCVUppjJM&feature=player_profilepage

Watch this.  The Fed governor sets up straw men over and over.  He demands that if we moved to a gold standard the price would HAV to be fixed.  This is an economic straw man.

 

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You are really ignorant of free banking theory, as you don't even seem to be aware of the argument that competition would make FRB almost impossible in a free market. You should read something like "The Mystery of free banking" by Rothbard. It is elementary.

Also, your argument is false, there can be inflation of bitcoins in the same way you argue that there can be inflation of gold. In the bitcoin forums a lot of people think that mtgox has engaged in inflation by trading more bitcoins than it actually has, which will probably cause the first "bitcoins bank run" as soon as their site is up again, after this week's huge fiasco.

But regardless of the fact that mtgox has or hans't inflated, it is theoretically possible that a trade can trade bitcoin it doesn't have, which make your point invalid.

And since you think that this is a serious flaw of the gold standard, that it makes the GS virtually impossible, I expect that you now say the same about bitcoins.

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Are you saying that prior to the Fed, the banks did not compete with each other on the soundness of their currecy?

Are you also suggesting that this competition prevented the creation of the Fed and that we are actually still on a gold standard today because the law was not actually corrupted by banking interests who acquired their money through fraud?

Again people, you are missing the point.

If money can be printed, it will be printed.

Not only because the bankers want it, but because large portions of the public want it.

The market does not prevent banks from inflating their notes - period.  The market punishes those who do, but only to the extent that they are caught.  The market rewards those who do it and get away with it.

 

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I made a slight edit to the OP to drive my point home:

 

The market has proven wholly inadequate at preventing the fraud of counterfeit bank notes, it can only react after the fact to punish the fraudsters.  But as we have seen, it is often too late.  Once the bankers have bought off the politicians and the public with their fraudulently acquired dollars they will be protected by the State.  The market has been trying to punish the fraud of counterfeit bank notes for the past 40 years and yet the State has held it at bay.

 

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That's pretty much why we don't want the fucking politicians having anything to do with banking or the government to be involved with the economy.  Because they are like spoiled teenagers who would go the crack whore road any day.  We want Economics and Politics, well, no we don't, but for argument's sake; not Political Economy.

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Yeah, but you can't keep them out.

It is impossible to keep the politicians out of the money if the money can be inflated and controlled.

If the money can be inflated, it will be inflated.

Only a currency that literally can't be inflated or controlled will be able to keep the politicians out of it.

As soon as you start using paper to represent gold, you throw away all the constraints that make gold a good money.

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As I said you're not even aware of the argument that competition can effectively curb FRB. If you are, could you please provide an example of a period of time where there was de facto free banking without any kind of central authority whatsoever and FRB flourished?

About your point that bitcoins cant' be inflated (at least in the same way you claim that gold can be inflated) it's false and you will show it again.

There is this company called "X trade", where you can buy and sell bitcoins. They have 1000 actual bitcoins. They decided to create out of thin air 500 bitcoins and sell them.

Now bitcoins have been inflated. They can offer all kinds of benefits so a lot of people keep a large sum of their bitcoins there (right now, due to bitcoins' uselessness a large amount of bitcoins are in the hands of traders, because they're only good for speculation, so that's where people keep their BTCs), and also try to engage as much as possible with commerce only with people who have accounts at this trade, which means that actual transfer of bitcoins doesn't even occur, as the trade can move the BTCS only on their databases, not on the P2P network itself.

So here's you bitcoins being inflated in the same way that gold can be inflated (by your definition of inflation).

Since you thought this is such a fundamental flaw with the gold standard, I expect that you're going to sell all your bitcoins right now before it's too late. Unless they are stuck at mtgox and you don't even have control over them anymore.

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As I said you're not even aware of the argument that competition can effectively curb FRB. If you are, could you please provide an example of a period of time where there was de facto free banking without any kind of central authority whatsoever and FRB flourished?

Did you bother to read the OP before posting?

Did the private banks inflate the supply of their notes before the creation of the Fed? (yes)

Did the courts prevent the banks from doing so? (no)

Did the market prevent inflation of notes prior to the establishment of the Fed? (no)

Did the market constrain our government from inflating the money supply while we were on a pesudo-gold standard? (no)

What makes you think that government wouldn't simply create a new Fed in the future if this current one was abolished?

What would prevent that from happening - please do tell.

The only way to stop this Fed or any other is to have a money that simply can't be controlled.

As soon as you represent gold with "things" - those "things" can be arbitrarily inflated.  The market will not prevent that from occuring under a gold standard.

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Let's make a long story short: Do you deny that the scenario that I described above, where a trade (or even a bitcoin bank, if such thing ever come into existence) could create bitcoins out of thin air and trade them is possible?

A monosyllabic response will be enough, thanks.

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yes

bitcoins can not be created out of thin air.

Ever.

The reason for this should be obvious.  People don't need a receipt for bitcoins to transact with, they use the actual coins themselves. 

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Bogart replied on Tue, Jun 21 2011 9:47 PM

Sure the Government Run Gold Standard, although superior to the current Fiat Money System is a system run by government force and therefore not optimal.  The best money system would be like any other best system which is to not have a top down government imposed system and let the market place sort out the best through profit and loss.  Of course the disadvantage to this system is that govenrment is the big loser as it can not longer steal money through inflation.  But the advantage is that fickle consumers will determine the best forms of money on an ever changing basis. 

So the Bit Coin or Gold Coin or orange, cigarette, barrel of petrol, diamond, opal, GigaBit Coin, etc, who knows and who really needs to care, would be the best as determined by consumers.

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Since you insist on denying it, I'd like you to explain what is technically impeding a trade like mtgox, for example, of selling bitcoins they don't have.



Michael Suede:


The reason for this should be obvious. People don't need a receipt for bitcoins to transact with, they use the actual coins themselves.



Oh, that kind of addresses the first question. So tell me something: Why is mtgox, which is by far the biggest BTC trade, able to rollback all transactions that took place during the crash that happened a couple of days ago?

No need to reply, I will tell you why: because the transactions happen in the trade's internal database and only when the trade deems appropriated the transactions actually happen is the BTC network.

Given that fact, they can create BTC out of thin air and trade them, and as long as there isn't a "bank run" they are safe and can inflate the BTC economy.

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bbnet replied on Tue, Jun 21 2011 11:06 PM

Anyone wanna buy some BitCoin Certificates?

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John James replied on Tue, Jun 21 2011 11:27 PM

Smiling Dave:

The trades are being rolled back.

Can you explain what that means, please? And what the effects of that will be?

I want an answer to this too.  This seems to go against at least a couple of the points about bitcoin that proponants keep harping about.  If someone (or some group) can just "rollback trades" at a whim, how in the world is this a secure currency as they claim?  And how do they get the real-world dollars back?  Yes, I want to know what "rolling back trades" means exactly.

 

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John James:

Smiling Dave:

The trades are being rolled back.

Can you explain what that means, please? And what the effects of that will be?

I want an answer to this too.  This seems to go against at least a couple of the points about bitcoin that proponants keep harping about.  If someone (or some group) can just "rollback trades" at a whim, how in the world is this a secure currency as they claim?  And how do they get the real-world dollars back?  Yes, I want to know what "rolling back trades" means exactly.

 

The transactions made in a specific trade will be rolled back.

Let's say I own a bitcoin trade, you want to sell 100 BTCs. You create an account at my trade, transfer to me the ownership of your BTCs and I give you a certificate of deposit, which is an entry on my trade's database that I owe you 100 BTCs.

I then sell your 100 BTCs to someone, but at first all the steps of the transaction take place at my trade's database, only when I deem appropriated I actually effectuate the transactions in the actual BTC network, so while I haven't effectuated the transaction in the BTC network I can roll them back at will.

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Oh, that kind of addresses the first question. So tell me something: Why is mtgox, which is by far the biggest BTC trade, able to rollback all transactions that took place during the crash that happened a couple of days ago?

No need to reply, I will tell you why: because the transactions happen in the trade's internal database and only when the trade deems appropriated the transactions actually happen is the BTC network.

Given that fact, they can create BTC out of thin air and trade them, and as long as there isn't a "bank run" they are safe and can inflate the BTC economy.

No - You are completely wrong about them being able to create coins out of thin air.

They are able to pool coins and distribute them automatically between accounts on their site, which allows them to bypass the need for network validation of inter-account transfers.  This does not result in the creation of any new coins.  Not a single new coin is created in this process.

Mt. Gox could engage in outright theft and take money from the pool of coins - but this does not result in NEW coins being created.  It simply results in less coins in the pool than are allocated to accounts on the site.  This is does not result in any new coin generation, it is pure outright theft if they were to take from the pool.

Consider that no matter what Mt. Gox does, the number of bitcoins in circulation never changes, and since users are directly transacting with the Bitcoins themselves (not receipts for bitcoins), the theft would come unwound rather quickly.  Mt. Gox could not fractionally lend bitcoins in a classic sense either, since it would be akin to a bank lending out specie on loans.  They would destroy themselves rather quickly if they attempted to do this.

 

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John James replied on Wed, Jun 22 2011 12:36 AM

Frederique Bastiao:

The transactions made in a specific trade will be rolled back.

Let's say I own a bitcoin trade, you want to sell 100 BTCs. You create an account at my trade, transfer to me the ownership of your BTCs and I give you a certificate of deposit, which is an entry on my trade's database that I owe you 100 BTCs.

I then sell your 100 BTCs to someone, but at first all the steps of the transaction take place at my trade's database, only when I deem appropriated I actually effectuate the transactions in the actual BTC network, so while I haven't effectuated the transaction in the BTC network I can roll them back at will.

That's a start.  Is there somewhere I can get more details as to how this will work?

 

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More q's about this rollback.

1. All those trades that will be rolled back, will that happen only with the consent of both parties? Or will someone decide that "to protect the value of the bitcoin" a legally binding trade will be declared void against the will of one of the parties?

2. Are all my trades in bitcoin going to be possibly supervised by someone to make sure he likes them, and if not he will roll them back? Why is this case different from any others?

3. How far back are we talking about? If I sold at $17 [on that black day that bitcoin fell from $17 to a penny], then it went to $16.99, will my $17 trade be rolled back? Why or why not? How is that trade different from one made say a year ago when I sold for some amount and then it dropped back a penny? If those trades will not be rolled back, because it's only a penny, who will determine the cutoff line? On what basis will he determine that cutoff point?

4. What if someone correctly shorted the bitcoin market that day? Is anyone going to compensate him for the losses he incurs by this rollback? Or is it too bad for him, because he's a wicked speculator who deserves what he gets?

5. Mtgox is still closed while they try and sort this mess out. Reminds one of the bank holidays FDR imposed.

6. The very mention of a rollback shows once again that the guys in charge may know a lot about computer codes, but next to nothing about economics. Think about it. In 1929, and at all points when the stock market crashed and politicians were wringing their hands, why didn't they just declare a rollback? Do you think it's because they lacked the technical means?

7. I doubt this rollback will ever happen.

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TANSTAAFL replied on Wed, Jun 22 2011 7:54 AM

"Since gold can not be shoved down a transmission wire, unless the gold standard advocates want argue that all transactions must be made with physical specie, they have no possible way of getting around this one fatal flaw with the gold standard."

 

One question...

Ever heard of a check?

Seems to me the check solved your problem of needing to transfer physical gold for every transaction.

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bitcoins can not be created out of thin air.

Ever.

What were the existing bitcoins made out of? Pizza dough?

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MaikU replied on Wed, Jun 22 2011 8:45 AM

Smiling Dave:

bitcoins can not be created out of thin air.

Ever.

What were the existing bitcoins made out of? Pizza dough?

 

 

Bitcoins always existed, can't you understand? It's that simple.

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Smiling Dave:

bitcoins can not be created out of thin air.

Ever.

What were the existing bitcoins made out of? Pizza dough?

While I did chuckle at this, I think it's pretty easy to see what he meant by that was that bitcoins could not be created at will and without any real world resources and work.

 

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Conza88 replied on Wed, Jun 22 2011 11:05 PM

Michael Suede:
The problem is not a new one, but it is a problem that I have never in all my years heard a satisfactory answer to. The problem is quite simple, so here it is: When gold is represented by something, what prevents arbitrary replication of that “thing”? The law?  Who is the law?
What is to stop money substitites being artibitrarily replicated? Nothing but the fear that people will come to redeem them all at once. It is fraud, but laws don't stop anything; laws can merely allow one to perhaps get restitution. Regardless, the current "law" is just arbitrary legislation passed by self interested politicans. A free market in law is the solution, better alternative.

Michael Suede:
I would argue that there is NO solution to this problem.  Changing the structure of government, eliminating the State, enforcement of fraud laws, and other such measures ultimately can not prevent a private bank from engaging in this kind of fraud.  Indeed, history has shown us that bankers routinely buy the law and were instrumental in creating the modern State.

Rothbard wrote extensively on the mischief caused by private banks engaged in the counterfeiting of their own notes prior to the inception of the Fed.  The Fed is simply a coordinator and cartelizing agent that allows for the even inflation of the money supply and acts to prevent bank runs, but its existence is not necessary for banks to engage in the counterfeiting of their own notes.  It was through this process that the bankers came to acquire enough power to take control of government in the first place.  It was through the power of the printing press that the Fed came to be enshrined in law.

Yes, it was fractional reserve banking prior to the FED which allowed them to get leverage. Not an argument against full reserve banking / free market in money.

Michael Suede:
The ability to acquire enormous power through the fraud of counterfeiting is plainly evident.  Thus, the importance of ensuring that such fraud can not take place is paramount in selecting a currency system.  Bankers are very good at playing the role of benevolent benefactors.
One wonders how this would happen in the absence of a centralized power.

Michael Suede:
I would argue that as long as the possibility exists that gold receipts can be counterfeited, they will be counterfeited.  And as long as those receipts are counterfeited, a State will exist to ensure that things remain that way.
As long as there's a possibility of murder, murders will happen. So what.

Michael Suede:
It is a simple matter to bribe judges, law makers, enforcement agents, and even the public itself when one has a printing press.
Again, not in a stateless society. Try again. Do you not understand the checks and balances of an actual free market in money & law? Certainly doesn't look like it.

Michael Suede:
If it hasn’t become clear by now, I hope you can see why Bitcoins (or another similar currency like it) are superior to a gold standard.  They simply can’t be inflated.  It can’t happen.  And further, since there is no bank issuing the notes, there is no one group of people who can use the power of the press to influence the public or political class with the bribery of free money.
Lmao! You haven't made one friggin valid point against a gold standard (free market in money). You've ranted against the things gold standard supporters also dislike. You've attacked a gold exchange standard. Strawman fallacy.

But also - your whole post is in essence vibes off the Nirvana fallacy as well. "We can't have the bad, ergo we can't have it all!" Well we can never prevent the bad. That's called life! Seriously--we can never fully prevent kids from taking a fall and breaking something. So no one should have kids. yes

Michael Suede:
This core problem must be addressed by gold standard advocates if they want to argue that gold is superior to encrypted digital currencies like Bitcoin.   Since gold can not be shoved down a transmission wire, unless the gold standard advocates want argue that all transactions must be made with physical specie, they have no possible way of getting around this one fatal flaw with the gold standard.
http://www.goldmoney.com & http://www.e-gold.com .... you were saying?

Michael Suede:
It is a waste of resources to have men digging for gold, just to have it sit in a bank vault, when those same men could be making something useful for humanity instead.  Gold was only useful as a currency because it could not be arbitrarily inflated and met the requirements of scarcity, divisibility, fungibility, and recognizably better than any other physical commodity.   Today, in our new digital world, such monetary requirements are better suited to the digital realm, where the waste of resources on the production of money is not necessary.
Hilarious. laugh Waste of resources? Presumes objective value. And it still violates the regression theorem, for digital bits don't actually exist as some real thing in tangibility. To be sure, they can be written as a magnetic pattern on a platter, or stored as electrical impules. But what were they before? How did they come to acquire the use as money or commodity?

Or were they just stated as "this is money" one day after not existing in that combination of bits ever before, which would be no different from Rothbard's "Rothbards". Which is EXACTLY what you say next after quoting Hoppe on money, which is even more mind-blowing considering the level of selective reading involved.

I am going to de-bold your emphasis, and bold what you fail to acknowledge / understand.

Michael Suede:
I would like to end this article with some thoughts on money by Hoppe.

In a free society, the market would produce money, as all other goods and services. There would be no such thing as money in a world that was perfectly certain and predictable. But in a world with unpredictable contingencies people come to value goods also on account of their marketability or salability, i.e., as media of exchange. And since a more easily and widely salable good is preferable to a less easily and widely salable good as a medium of exchange, there is an inevitable tendency in the market for a single commodity to finally emerge that differs from all others in being the most easily and widely salable commodity of all. This commodity is called money. As the most easily salable good of all it provides its owner with the best humanly possible protection against uncertainty in that it can be employed for the instant satisfaction of the widest range of possible needs. Economic theory has nothing to say as to what commodity will acquire the status of money. Historically, it happened to be gold. But if the physical make-up of our world would have been different or is to become different from what it is now, some other commodity would have become or might become money. The market will decide. In any case, there is no need for government to get involved in any of this. The market has provided and will provide some money-commodity, and the production of that commodity, whatever it is, is subject to the same forces of supply and demand as the production of everything else.

Bitcoins are the first true digital commodity.

Bitcoins are free market money.

Hahah. Bitcoin is not a commodity in the proper sense of the word ie. economic good, at least you seem to acknowledge that by prefacing it as a digital commodity. Does that make it money? No - since a commodity in the Hoppean sense above has to be valued previously for something else. Whereas bitcoins were just fiat'd as money from the get-go. His quote doesn't support your case, it invalidates it.

Bitcoins:
- Commodity? No.
- The most easily and widely salable good? No. Let me know when people start trading in gold en masse for bitcoins.
- With the best humanly possible protection against uncertainty? Haha! Speaks for itself really given what it is based on - 'faith' and nothing else (besides legal tender laws & the state - which gives it the appearance of 'validitity' & 'legitimacy'. Bitcoin is merely a reaction to the existence of the state. It is not a valid free-market money. And I'd be interested to hear the 'positives' / 'arguments for' bitcoin - that would still exist, if there was a voluntary society (free market in money & the law) etc.

*Props to Knight_of_Bawaa for discussion & helping elduciate some answers.

Ron Paul is for self-government when compared to the Constitution. He's an anarcho-capitalist. Proof.
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