Why I think the Galt Misses the Point on Decentralized rypto
Posted by CaptainKirk 1 year, 3 months ago to Economics
I am 100% okay with getting flamed and being called names and told that this is all a big scam.
It has ZERO value, etc. etc. etc.
But please hear me out. In fact, I don't completely disagree with you, I started where you stand!
We need some form of money. Which must be a store of value (unlike the dollar).
And I ASK you to ignore BOTH the current instability of BTC pricing, and the difficulties in using it. [for now].
What were used, in the past, for money? (Glass beads, shells, various coins, etc. etc. etc.)
And what happens over time (People shave the coins (hence the ridges), people counterfeit the paper,
the English even came to an island with a bunch of glass beads. Bankers use inflation, and debt is used
to enslave us).
I am VERY confident that everyone here is a solid believer that GOLD/SILVER would work just fine.
(Even better if it wasn't so dang heavy... But I've seen plastic bills with pressed gold foil inside)...
The point is. WE NEED a money and a CURRENCY (something we actually spend) that we can TRUST.
We cannot Trust: CBDCs, the Dollar, etc. etc. etc.
But MANY people here REFUSE to consider trusting BTC, because it's "software".
The reality is. It is an IMPOSSIBLE to counterfeit currency. It's #1 drawback is that you can lose access to it because of some failure to keep the password. The #2 is the ability to have someone strong-arm your password from you... And I agree...
But in all honesty. I think if the Gulch [Which digital currencies allow to be geographically disconnected], used crypto as part of their "going on strike" from the rigged system... They would realize it solves a few problems.
Far more than it creates.
Yes, it requires Electricity, Internet, and Devices to transact. (Just like Credit Cards do).
And MAYBE we need some level of Coinage. I agree this is a weakness.
But here are the Strengths:
1) It's impossible to counterfeit! EVEN by Governments and by COURTS.
2) Once it's EVERYWHERE, it makes more sense to use it, then to try to go around it. [Chicken/Egg, I know]
3) It's trust is the SIMPLE fact that if you had MILLIONS in it, and you felt the network was at risk. You, too, could setup a few miners, to help keep the network DECENTRALIZED.
FWIW, I am not sold on PoS (Proof of Stake). This is where you put up money and you RISK that money to authenticate transactions... In such a way that if you try to approve (back door) a fraudulent transaction, your are penalized by having the money you Staked taken from you. [Reality: Some players have enough $$$ that they can afford to lose that money in order to "break" the system].
In PoW (Proof of Work), you solve tough math problems, and the first ones done get the reward (more coins).
This is why it is called Mining. You don't get an outsized amount of coins. In fact the difficult and price can be tracked. Miners are EFFECTIVELY Converting Electricity to Coins via a dollar cost averaging function. And this is a TOTAL DEMOCRATIC Approach. You join other miners, and you mine. You make some money for mining. But there are literally TOO MANY Miners for someone to sneak in and start trying to get "Bogus" transactions to be validated. Every ONE of these miners has EVERY TRANSACTION on them. The SECURITY is that the system is spread out. And that a bunch of RANDOM miners will have to validate your transaction.
Even China could not corner the market on mining in such a way as to corrupt it.
Yes. It is ONLY WORTH what the market says it is. BUT it is also back-stopped by what it costs to MINE new BTCs. Because if you are mining it, and it costs you $35,000 to mine 1 BTC. You have ZERO incentive to sell that at a loss. Much less a huge loss.
And I guess that's the final piece. It will be REALLY hard to manipulate when it is fully adopted.
Full adoption means the price fluctuations are gone.
Gold, Silver, Stocks, Bonds. These are all heavily manipulated.
And the final feature. Imagine the government tries to claim they lost 100,000 BTC last year,
and have no idea where it went.
Um, lets trace those transactions... AND Along the way, lets make sure that taxes were paid/collected.
Lets see. You gave a ton to XYZ Corp, what did they deliver? Where's the contract? (Oh, they were overpaid by 10x and didn't notice... LOL).
TBH... That final piece is why we should FORCE our government to use BTC.
And it's what I HATE about ME USING BTC... I don't want my transactions traceable like that.
But I would still want a Credit Card I use for transactions. And then Settle monthly for BTC.
The ONLY thing that would be public is I paid XXX Visa.
I think that's fine. But it still has a choke point. And that's the CC company.
BTC cannot be reversed. You spend it, it is gone. Escrow type services will be huge again.
Anyways. I throw these thoughts at this group.
Here are my questions:
1) If it were WELL ESTABLISHED and STABLE in it's value [changes would reflect the OTHER currencies inflation] and it proved to be a storehouse WOULD you use it then? (Why/Why Not)
2) If it guaranteed we could see where the government money was going, would you want the GOVT to be forced to use it?
3) What is a realistic Alternative? (That can't be counterfeited, and could you leave the country if all of your wealth was converted to that? Safely?)
Thanks in advance. I think this discussion is worth having.
And I have my concerns. But they are not with the safety/security of the asset.
It has ZERO value, etc. etc. etc.
But please hear me out. In fact, I don't completely disagree with you, I started where you stand!
We need some form of money. Which must be a store of value (unlike the dollar).
And I ASK you to ignore BOTH the current instability of BTC pricing, and the difficulties in using it. [for now].
What were used, in the past, for money? (Glass beads, shells, various coins, etc. etc. etc.)
And what happens over time (People shave the coins (hence the ridges), people counterfeit the paper,
the English even came to an island with a bunch of glass beads. Bankers use inflation, and debt is used
to enslave us).
I am VERY confident that everyone here is a solid believer that GOLD/SILVER would work just fine.
(Even better if it wasn't so dang heavy... But I've seen plastic bills with pressed gold foil inside)...
The point is. WE NEED a money and a CURRENCY (something we actually spend) that we can TRUST.
We cannot Trust: CBDCs, the Dollar, etc. etc. etc.
But MANY people here REFUSE to consider trusting BTC, because it's "software".
The reality is. It is an IMPOSSIBLE to counterfeit currency. It's #1 drawback is that you can lose access to it because of some failure to keep the password. The #2 is the ability to have someone strong-arm your password from you... And I agree...
But in all honesty. I think if the Gulch [Which digital currencies allow to be geographically disconnected], used crypto as part of their "going on strike" from the rigged system... They would realize it solves a few problems.
Far more than it creates.
Yes, it requires Electricity, Internet, and Devices to transact. (Just like Credit Cards do).
And MAYBE we need some level of Coinage. I agree this is a weakness.
But here are the Strengths:
1) It's impossible to counterfeit! EVEN by Governments and by COURTS.
2) Once it's EVERYWHERE, it makes more sense to use it, then to try to go around it. [Chicken/Egg, I know]
3) It's trust is the SIMPLE fact that if you had MILLIONS in it, and you felt the network was at risk. You, too, could setup a few miners, to help keep the network DECENTRALIZED.
FWIW, I am not sold on PoS (Proof of Stake). This is where you put up money and you RISK that money to authenticate transactions... In such a way that if you try to approve (back door) a fraudulent transaction, your are penalized by having the money you Staked taken from you. [Reality: Some players have enough $$$ that they can afford to lose that money in order to "break" the system].
In PoW (Proof of Work), you solve tough math problems, and the first ones done get the reward (more coins).
This is why it is called Mining. You don't get an outsized amount of coins. In fact the difficult and price can be tracked. Miners are EFFECTIVELY Converting Electricity to Coins via a dollar cost averaging function. And this is a TOTAL DEMOCRATIC Approach. You join other miners, and you mine. You make some money for mining. But there are literally TOO MANY Miners for someone to sneak in and start trying to get "Bogus" transactions to be validated. Every ONE of these miners has EVERY TRANSACTION on them. The SECURITY is that the system is spread out. And that a bunch of RANDOM miners will have to validate your transaction.
Even China could not corner the market on mining in such a way as to corrupt it.
Yes. It is ONLY WORTH what the market says it is. BUT it is also back-stopped by what it costs to MINE new BTCs. Because if you are mining it, and it costs you $35,000 to mine 1 BTC. You have ZERO incentive to sell that at a loss. Much less a huge loss.
And I guess that's the final piece. It will be REALLY hard to manipulate when it is fully adopted.
Full adoption means the price fluctuations are gone.
Gold, Silver, Stocks, Bonds. These are all heavily manipulated.
And the final feature. Imagine the government tries to claim they lost 100,000 BTC last year,
and have no idea where it went.
Um, lets trace those transactions... AND Along the way, lets make sure that taxes were paid/collected.
Lets see. You gave a ton to XYZ Corp, what did they deliver? Where's the contract? (Oh, they were overpaid by 10x and didn't notice... LOL).
TBH... That final piece is why we should FORCE our government to use BTC.
And it's what I HATE about ME USING BTC... I don't want my transactions traceable like that.
But I would still want a Credit Card I use for transactions. And then Settle monthly for BTC.
The ONLY thing that would be public is I paid XXX Visa.
I think that's fine. But it still has a choke point. And that's the CC company.
BTC cannot be reversed. You spend it, it is gone. Escrow type services will be huge again.
Anyways. I throw these thoughts at this group.
Here are my questions:
1) If it were WELL ESTABLISHED and STABLE in it's value [changes would reflect the OTHER currencies inflation] and it proved to be a storehouse WOULD you use it then? (Why/Why Not)
2) If it guaranteed we could see where the government money was going, would you want the GOVT to be forced to use it?
3) What is a realistic Alternative? (That can't be counterfeited, and could you leave the country if all of your wealth was converted to that? Safely?)
Thanks in advance. I think this discussion is worth having.
And I have my concerns. But they are not with the safety/security of the asset.
What exactly will stop me from growing my own food?
What exactly will stop me from distilling water?
What exactly is going to make the land under my feet disappear?
Answer: predatory humans stealing my food and water, kicking me out from all the livable places or charging me exorbitant taxes for it, bombing the shit out of everything with nuclear weapons and contaminating all continents, etc.
Yes, if human predation reaches a critical point, you better believe there will be DARK AGES.
By the way, I would include having too many children in the human predation category. All these idiots multiplying like rabbits only make it worse for everybody else. The only way they can sustain this shit is if they get the STATE to support their bad behavior by having the state steal shit from sane people and giving it to the fuckers. Speaking of which, I believe they are discussing doing something like that currently in the US Congress.
I guess you can say that land is 'produced' by discovering it and establishing claim on it. However, it is not something that is terribly valuable in itself. It would be valuable if there was a farm on it and the farm was producing income. Even infertile land can be made into fertile one (with some effort). There is plenty of land everywhere. A plot of land is cheap, especially in unpopulated areas. Look at the difference in price of an empty plot of land and one with a house on it. The difference is like 50x. So, the price you are paying is for human labor to build the house there, get the building materials there, make the building materials, etc. Now, some areas have very high housing prices, but that is caused by inexplicably high demand, which can actually be explained by factors such as proximity to high value producing capital (factories, jobs, etc). So, the source of high cost still goes back to human time/productivity. All cost is human time, or so I conclude.
Fresh water isn't terribly valuable either. There is plenty of it everywhere. Still, with a cheap enough energy source, you can easily make fresh water.
Food might be an issue closer to the poles, but if you look closer to the equator, food is DIRT CHEAP. You literally walk up to a tree, open your mouth, wait a little bit and some fruit falls from it directly into your mouth.
I (a complete newbie) tried growing food myself. I didn't even spend that much time on it. The stuff literally grew by itself. I also do water distillation regularly. Distilled water (not just fresh water) is basically free.
So, give me a break. This Martenson guy is a bit off. These things he says are wealth aren't actually terribly valuable. I agree they are somewhat valuable, but I wouldn't put them at the top of the most valuable things. These shoulders you are standing on aren't very solid.
What is valuable is something that people want/need that is also hard/time consuming to get. Usually, it isn't food or land or fresh water. If that was the case, we would all be dead floating through the darkness of space.
Money is just a proxy for human time, so, no shit money is valuable.
A house (not the land it is on) might be hard to get. It takes a lot of human time to build it. A car is also not terribly easy to get. It is quite a time consuming process to make, even with all the automation. Building a profitable company is nightmarish hard. It takes an extreme amount of time to get valuable metals (gold). That is why these things cost a lot compared to food and such. It just takes way too much human time.
I guess you may have a point to some extent, these days you might say that is done by people doom spending and defaulting on their debt. But then the lender has to pay up, or so I understand. However, if they drag it out indefinitely maybe that is kind of like money printing via psychology. I'll give you that one, but only on a technicality.
I think you are starting to get it.
The correct definition of inflation is an increase of money supply.
Now, I know that the definition of inflation currently being used by the masses goes something like "general increase in prices". However, that is not a correct definition. This definition has been promoted by the statists to confuse people. That is one of the psychological tricks statists use. They alter inconvenient words so that everyone is mixed up and confused about the true source of their problems (the state). Back before the statists screwed up the meaning of this word, "inflation" did not mean "an increase in prices".
Even the statists admit this:
https://www.clevelandfed.org/publicat...
The reason why statists fucked up the word is because they want to redirect the blame for increasing prices away from themselves onto the producers of goods and services. "Your prices went up? Ah, that's too bad, damn those greedy capitalists!"
You see, when money supply goes up but the supply of goods and services stays the same, you start to have shortages as producers are unaware of what is happening and don't produce more stuff to meet demand and don't raise the prices to prevent the shortages. Next cycle, producers think it is a boom (because they see a spike in demand) and they ramp up production. However, they are unable to do so because all of them are doing this at the same time and there are labor shortages. So, they raise their prices so they can hire more people for higher cost. However, that is not enough because labor wants even more money now that their costs went up (because everybody raised their prices). So, for a while the system goes into a bit of a wage-price spiral, at least until an equilibrium is reached.
So, increase of money supply (or alternatively an increase in monetary base) causes an increase in prices across the whole system. That is inflation.
Prices also increase and decrease for other reasons that are not related to inflation, such as an increase/decrease in productivity, temporary events that cause demand to shift across the economy, etc.
Inflation and deflation are mutually exclusive. A money supply / monetary base cannot go up and down at the same time. These two CANNOT coexist at the same time by definition. Now, some parts of the economy separated by distance and lag may experience inflation while others may experience deflation due to money all the sudden leaving one area while going elsewhere, however, each part of the economy experiences either inflation or deflation, not both. In your hypothetical silver example, price of silver would increase while prices of other assets decrease, however, overall the average price level (and money supply/monetary base) will remain the same. That would not be considered inflation by the original definition.
Inflation and deflation can coexist.
Taking Housing Prices.
No huge inflation in Montana.
I don't like that you created your own definition of hyperinflation.
Inflation is seen as the increase in PRICES.
So, lets take all the savings there is in the USA Today.
And have the government declare that ALL stored assets EXCEPT SILVER will be taxed 20% annually.
What do you think happens to the price of silver?
Without increasing the money supply?
It will INFLATE.
Now, the question is did the value of the underlying dollar decrease. YES, because holding it now comes with a punitive tax.
Regardless, everyone starts selling their excess assets in order to position into Silver.
But Silver has a FINITE Supply.
It's price responds.
Inflation is BETTER described as TOO Much money chasing a small set of assets.
If the assets being chased are unlimited.
There will never be inflation (in that asset).
I get that you don't think "Psychology" matters.
But look deep into the stock market.
It's all FOMO. It's all Psychology.
I am not making that up.
This is the result of reading many books on this and other topics.
I've been to a LOT of auctions.
The entire process is to disable the thinking part of your brain (the incessant repeating of numbers, etc). So that you are responding with your lizard brain.
I will argue that you can have UNLIMITED INFLATION (like we've had)...
And you will NOT SEE HYPER INFLATION.
UNTIL FEAR Kicks in.
Fear that your life savings is about to be made worthless.
Otherwise, why would you empty your bank account and start buying assets?
I think the COUNTER ARGUMENT is easier to make. WITHOUT "Emotion", hyperinflation never starts.
he makes some claims in there, and a few I don't completely accept.
But ONE stands out.
There are MANY forms of wealth in society.
There is PRIMARY Wealth. Which is fertile land, fresh water, available food.
There is SECONDARY Wealth, which includes tools, and community, etc. etc.
And Tertiary Wealth which is "currency".
Because without others to trade with, The third type of wealth isn't wealth. (he does a better job, I am paraphrasing).
Then there are contracts which are CLAIMS on future Currency or Goods, etc.
He uses this to describe money as a CLIAM on future goods (ie, what you can trade them for).
You might want to read some of his writings as you are dealing with similar issues.
FWIW, I disagree that Fossil Fuels come from Fossils and NOTE BURRIED Trees/Plants, etc.
When we burn trees, we get carbon, we make charcoal. And I just learned that the TYPE of carbon we release into the air is plant based...
So, outside of that ONE point.
I think he is spot on.
I think we have seen the best years of humanity in the last 70.
And we are at a turning point.
We will LIKELY enter YET ANOTHER Dark Ages.
And hopefully come out better later.
The other option is we stumble past the Dark Age, and actually do real good.
But I think that's smaller than the odds of guessing a BTC private key!
Wealth creation is done by people using their intelligence and time. When you pay someone, the cost is exactly human hours. It is a "you scratch my back, I scratch yours" type of thing. Money is back scratching I-owe-yous.
There is a saying: time is money. It is absolutely correct.
Energy is not a replacement for either money or time. You can use energy to power time-saving machines, but that doesn't mean what you think it means.
I tried that but a lot of the shoulders were crooked.
Hyperinflation is when money supply doubles every x number of days, right? So, let's say everyone decided to all the sudden spend all their savings. The savings would NOT exceed the start money supply amount. If they all went out to spend all their savings, things they would buy would run out and would increase in price, however, after a while they would run out of money and stop buying, which will cause the prices to go back down. So, the savings would just move to someone else (to the producer of whatever they were buying). So, there is no way to trigger doubling of money supply by spending savings. Even if you tried to, you would just be able to keep it up for at most 1 cycle (x number of days). However, for hyperinflation you need at least a few cycles. There physically need to be multiple doublings of amount of money in people's bank accounts. So, unless they are spending on their credit cards and there is no credit limit, you can't really have a hyperinflation just from people losing trust and spending their money.
Of course, this view is rather simplistic and money velocity would be important as well. However, I think it still demonstrates that psychology isn't going to cause it.
Of course, when you realize THEY HELD the physical and gave us paper slips. Printed TONS of extra paper slips to steal "real assets"...
Then defaulted on turning the paper slips back in for the real thing.
kinda hard to get that gold and silver in the middle of civil unrest
I was considering seriously taking it up as a personal project, ironing out all the details and writing the wallet software for it, however, I decided against it. The parasites (the state) are probably going to squash it and the sheeple will continue using a backdoored CBDC. So, it would be a waste of my time.
Tax revenues go down but their costs also go down, so, that's not entirely a bad thing.
"If incomes go down because nobody needs to work, then tax revenues REALLY go down."
I don't see the "nobody needs work" happening. You could've said this 100 years ago. They actually did say back in the day, that in the future you would have to work 1 day per week because of increasing productivity. Yet, that didn't happen. One thing that did happen is the standard of living increased. People's greed is unquenchable, they will continue to work as much as possible so they can spend as much as possible. Additionally, what also happened is the parasite state added on a bunch more taxes and increased spending, so, I would imagine they will find ways to extract all that increased productivity. Depressingly, everyone will still live paycheck to paycheck.
"I don't see TPTB allowing this."
No, I think they are also very greedy. Their thing is going to be adding more and more taxes and keeping everyone in the hamster wheel.
These fuckers are looking for ANY excuse whatsoever to predate on society.
Nah, I think they are just trying to find an excuse to tax people and skim a share of revenue. These people are parasites. God forbid they think of the future.
If farming productivity goes down to per-industrial levels, I think everyone would need to suddenly become subsistence farmers. I don't know if I would call that a stop, just a huge decrease in wealth.
There is a case to be made that there wouldn't be enough farmland on earth to allow for subsistence farming with such a huge population (due to fertilizer increasing productivity of farms). So, maybe a large part of the population would die of hunger. But after that there would still be trade and money.
GDP is a measure of wealth per person. Ya, energy is used for increasing productivity. The more boosting of productivity, the more energy is going to be used. More productivity = more wealth.
Energy IS NOT a substitute for human time. These are completely different things. Energy can be used to increase productivity (save time). However, you still need to press buttons on the machines to direct energy into doing something useful.
Once the AI and robotics are at the right level, you can have them do the energy plucking. So, it will be a self-sustaining process. They can be set up to produce the electricity/fuel needed to run themselves. They are not going to ask for payment. The only reason why you need to pay for energy right now is because another entity (that has agency and has a social contract with you) is trading it with you for something else that it wants from you. Once you can produce your own energy using your own robotic AI swarms, you don't need to pay anybody for it.
The universe is full of energy. Matter is energy. You are literally sitting on a form of energy right now. Matter has an ungodly amount of energy in it. The only difficulty is the lack of technology to convert that matter to energy. Theoretically, if you could conjure up neutrons and direct them at a piece of matter, you can start up the process of converting it into energy. This is all very impractical right now, but eventually with some R&D investment I can totally see Back to the Future type Mr. Fusion devices running on banana peels and beer. If you had a small black hole, you could feed matter directly into it and it would emit a huge amount of Hawking radiation which you can capture and use. All you have to do is arrange matter in certain specific (as of yet unknown) shapes and combinations to allow all this energy conversion to take place.
What I'm trying to get at is the energy cost is limited by humans needing to do the extraction. That takes human time. Which is what the price is for, human time.
This whole energy is money idea is utter nonsense.
Consider monkeys. They groom each other. Now, let's imagine they invent money. They may start using it as payment for grooming. But they have no energy or technology. They just have their time. As you can see, no electricity or fuel is needed to exchange services for money. You might argue they use chemical energy in their muscles. However, that doesn't matter because that energy would have been spent anyway on something else less profitable and they would receive no money for it. Imagine a monkey grooming a rock. He spent energy on it, why didn't he receive grooming points for it? Because it is an exchange of services that is important, not the expenditure of energy.
BROKE is a lack of money.
I know people who are poor because they are down to their last $7 Million, and they are dreadfully afraid they will outlive that money. (Dead serious here).
I don't think anyone is smart enough to figure out ALL of the stuff you are talking about without standing on a lot of shoulders.
I always start by reading others, then learning their language. Energy being a master resource comes from Dr. Chris Martenson. So does the plat against GDP, and the comment on Complex Systems.
I believe these are "base facts" you accept, or attack. I Could not defeat them as facts.
I go to others to get the definition of money.
To get the definition of inflation, and Hyperinflation.
That inflation "trips" hyperinflation is strange to me. We are always living in inflation (these days).
Typically a TRIPPING event is why people ask "How does a currency devalue? Slowly... Then VERY QUICKLY!"
If we cannot agree that it takes the MASSES to 'believe/see' the inflation is catastrophic to trigger Hyperinflation... Then we are at an en passe.
The very definition of trigger or trips... Says it
is something that sticks out.
And it is okay to disagree. I've learned to express my ideas better, and you have been exposed to different ideas.
As have I.
I wish you luck on your journey...
Zimbabwe is the one with 10 MILLION DOLLAR bills.
The problem is that HYPER inflation is unreasonable levels. So once it trips, it over compensates (and that's all emotion).
But the main point is loss of faith.
Things fail to the point that people actually switch from the currency to direct barter. Until the currency is replaced by a new currency (all new bills are issued)
My goal in life is to figure out how stuff works exactly, and not by learning from a textbook but the hard way. Based on my experience with this, a lot of theories people have in their heads are bunk. I prefer to derive everything myself from scratch. It is the only way to be sure that it is true.
I hope I am not mistaken in my understanding. I have tried to see it from your point of view but it disagrees with what I know to be true. The mechanism, as I see it happening in the real world, is not triggered by realizations or psychology. In my view, inflation (and hyperinflation) is triggered by printing and spending new money in the market. Everything that comes after (shortages, price increases, realizations, savings spending) is a consequence, not a trigger.
Who cares if you don't realize you are poor. You are still physically poor and no amount of psychology is going to change that.
The speed at which money printing happens doesn't matter too much. The consequences are just stretched out over a longer period of time. I observe incredibly bad consequences of all the USD printing on the US economy. What has transpired is a terrible thing.
Define 'reasonably'.
I am not a history major, so, I can't really recite exact excerpts from history for you.
One example that can be looked at is:
https://en.wikipedia.org/wiki/Hyperin...
It seems to have ended 'reasonably' in that case.
Supposedly, Javier Milei is working on stopping it 'reasonably' in Argentina.
Hyperinflation stops eventually. It is not sustainable. Either the money printing stops being exponential or the currency is rejected by its users.
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