You'd get more actual work out of Dilbert if he was only in 4 9-hour meetings from hell per week rather than 5. Page's plan is to reduce bullshit, not cut work, shirley. Do you think employees moving to a 4 day week would see their pay rise or fall, as a rule?
I have written about the phenomenon of bullshit work and bureaucracy at length.
Page: I totally believe we should be living in a time of abundance, like the Peter Diamandis book. If you really think about the things that you need to make yourself happy: housing, security, opportunity for your kids. I mean, anthropologists have identified these things. It’s not that hard for us to provide those things. The amount of resources we need to do that, the amount of work that actually needs to go into that is pretty small. I’m guessing less than 1 percent at the moment.So the idea that everyone needs to work frantically to meet people’s needs is just not true. I do think there’s a problem that we don’t recognize that. I think there’s also a social problem that a lot of people aren’t happy if they don’t have anything to do. So we need to give people things to do. You need to feel like you’re needed, wanted and have something productive to do. But I think the mix with that and the industries we actually need and so on are — there’s not a good correspondence. That’s why we’re busy destroying the environment and doing other things maybe we don’t need to be doing. So I’m pretty worried until we figure that out, we’re not going to have a good outcome. One thing, I was just talking to Richard Branson about this. They have a huge problem that they don’t have enough jobs in the U.K. So he’s been trying to get people to hire two part-time people instead of one full-time. So at least, the young people can have a half-time job rather than no job. And it’s a slightly greater cost for employers. I was thinking, the extension of that is you have global unemployment or widespread unemployment. You just reduce work time. Everyone I’ve asked — I’ve asked a lot of people about this. Maybe not you guys, but most people, if I ask them, “Would you like an extra week of vacation?” They raise their hands, 100 percent of the people. “Two weeks [of vacation], or a four-day work week?” Everyone will raise their hand. Most people like working, but they’d also like to have more time with their family or to do their own interests. So that would be one way to deal with the problem, is if you had a coordinated way to just reduce the work week. And then, if you had slightly less employment, you can adjust and people will still have jobs.
You said in one of your beyond scarcity articles: "debasing or adding debt to the system may only lead to lower living standards for all, rather than elevating all and closing the inequality gap in the process." What do you mean by this?
Well, what i was saying is that a lot of people THINK that the reason we should not take on more debt, is because this will lead to lower living standards, for more debt equals more consumers and more competition over a scarce amount of goods and resources.
This would have been a fair argument for most of history. BUT… my argument is that in times of abundance and output gaps, more debt helps to spread the abundance of goods, rather than have it be concentrated in areas of ridiculous wealth. Debasement or more debt, amount to the same thing. Greater distribution of today’s goods away from concentrated zones.
Now, that sort of policy in times of bare equilibrium or scarcity, was literally the equivalent of confiscating assets from people who had worked harder than most to accumulate them.
This is the story of communism.
But this is not the case now. Debasement/debt doesn’t diminish relative wealth or access to goods. At worst it limits the generations for which extreme wealth can be passed down over the years. Is it fair that rather than spend on existing goods today, some people are hoarding claims so that they can keep them for grandchildren of grandchildren not even born yet? No, I don’t think so. Those claims should be circulated today, and thus no longer put off to the future, but brought forward to today. If not, an excess of goods and capacity will just go to waste. We have the means to feed and provide for more people than ever before, we are choosing not to because it compromises the value of generational claims.
In the US we stigmatize non-workers, and select remaining workers for high or low reward. Education is a big part of the selection process. In a leisure society education would be for avocation rather than vocation.
Have you read Julius Norwich's "Christmas Crackers" series of commonplace books? (I haven't yet been able to find the most recent decadal compilation in the US, but I have the earlier ones.) Just wondering. e.g., (tried to add an Amazon UK link)
Hi! You say "The more leisure the more time to educate ourselves (...)" >> Aren't you afraid a big number of people simply lack the social/cultural capital to evolve and find meaning into such an increasingly ambitous&smart-people centered economy ? Do you take seriously the often evocated "lords & servants" outcome ? Thanks ! Keep up the good work
Yes, I agree with you. Curiosity of the world is something that’s impossible to enforce. Hopefully, though, if you stimulate enough minds the right way people will begin to ask the right questions. But there is always going to be a risk where people opt out and choose the banal superficial life. That’s not necessarily a bad thing. In abundance the world becomes meritocratic from an influence point of view, but it doesn’t deprive anyone I don’t think. You can choose to engage or disengage. What we don’t want is a Morlock/Eloi situation evolving.
If there's increasing abundance and the emergence of a leisure society, I wonder what this means for the current (western) education system that is as intensely and insanely focused on competition as never before. Kids already learn 3 languages in kindergarten these days. Is this a bubble before the collapse? Any thoughts on how education would change/needs to change for a world with increasing abundance?
I think that fits the paradigm very well. The more leisure the more time to educate ourselves, and the more education needed to excel at the remaining jobs which still satisfy a great purpose.
Hi there, I just read your post on contango and backwardation and the gold market. I found it interesting and illuminating to consider storage costs/reburying as crucial to the dynamics of the gold market. Still several parts I wasn't able to completely wrap my head around. Can you recommend any good "advanced-intro" ( book to these issues, i.e. financial markets, fiscal policy instruments, currency. Would be much obliged. Thanks, Sandy, Berlin
Hi there, thanks for your note.
I’m afraid there is no definitive book. That is partly the problem. A good basis in contango/backwardation are the JM Keynes on the topic. The goldwatcher is a good base, but doesn’t really go into commodity curve trading.
I have just taken on a beautiful house, 10 minute walk from Turnham Green tube.
I have attached some pictures, Please have a look. I have no other details and to be honest, the way the market is, it will be sold before I have them!
Excellent Condition Throughout South Facing Garden Period Property Three Double Bedrooms Two Bathrooms Double Reception Room Elegant Hallway Cellar Dining Room Fitted Kitchen 10 Minutes Walk to Turnham Green Tube Station
I can possibly get some one off viewings.
Please let me know if you would like to view. My direct line is xxxx
Or will this time be different because we know the government will continue to backstop?
Reading Richard Dawkins’ Selfish Gene. Absolutely fascinating.
This from the updated version had me absolutely gripped:
A computer is a real machine, hardware in a box. But at any particular time it is running a program that makes it look like another machine, a vitual machine. This has long been true of all computers, but modern ‘use-friendly’ computers bring home the point especially vividly. At the time of writing, the market leader in user-friendliness is widely agreed to be the Apple Macintosh. Its success is due to a wired-in suite of programs that make the real hardware machine - whose mechanisms are, as with any computer, forbiddingly complicated and not very compatible with human intuition - look like a different kind of machine: a virtual machine, specifically designed to mesh with the human brain and the human hand. The virtual machine known as the Macintosh User Interface is recognizably a machine. It has buttons to press, and slide controls like a hi-fi set. But it is a virtual machine. …..
I now turn to the other background idea that we need to import from computer science, the idea of serial and parallel processors. Today’s digital computers are mostly serial processors. They have one central calculating mill, a single electronic bottleneck through which all data have to pass when being manipulated. They can create an illusion of doing many things simultaneously because they are so fast. A serial computer is like a chess master playing twenty opponents but actually rotating around them. Unlike the chess master, the computer rotates so swiftly and quietly around its tasks that each human user has the illusion of enjoying the computer’s exclusive attention. Fundamentally, however, the computer is attending to its users serially. Recently, as part of the quest for ever dizzying speeds of performance, engineers have made genuinely parallel processing machines.
One such is the Edinburgh Supercomputer, which I was recently priviledged to visit. It consists of a parallel array of some hundreds of ‘transputers’, each one equivalent in power to a contemporary desk top computer. The supercomputer works by taking the problem it has been set, subdividing it into smaller tasks that can be tackled independently, and farming out the tasks to gangs of transputers. The transputers take the sub-problem away, solve it, hand in the answer and report for a new task. Meanwhile other gangs of transputers are reporting in with their solutions, so the whole supercomputer gets to the final answer orders of magnitude faster than a normal serial computer could. I said that an ordinary serial computer can create an illusion of being a parallel processor, by rotating its ‘attention’ sufficently fast around a number of tasks.
We could say that there is a virtual parallel processor sitting atop serial hardware. Dennett’s idea is that the human brain has done exactly the reverse. The hardware of the brain is fundamentally parallel, like the Edinburgh machine and it runs sofware designed to create an illusion of serial processing: a serially processing virtual machine riding on top of parallel architecture. The salient feature of the subjective experience of thinking, Dennett thinks, is the serial ‘one-thing-after-another’, ‘Joycean’ stream of consciousness.
He believes that most animals lack this serial experience, and use brains directly in their naive, parallel-processing mode. Doubtless the human brain, too, uses its parallel architecture directly for many of the routine tasks of keeping a complicated survival machine ticking over. But in addition, the human brain evolved a software virtual machine to simulate the illusion of a serial processor. The mind with its serial stream of consciousness, is a virtual machine, a ‘user-friendly’ way of experiencing the brain, just as ‘Macintosh User ‘Interface’ is a user-friendly way of esperiencing the physical computer inside its grey box. It is not obvious why we humans needed a serial virtual machine, when other species seem quite happy with their unadorned parallel machines…..
“Labor, similarly, should be renegotiated. Submitting oneself to labor discipline—supervision, control, even the self-control of the ambitious self-employed—does not make one a better person. In most really important ways, it probably makes one worse. To undergo it is a misfortune that at best is sometimes necessary. Yet it’s only when we reject the idea that such labor is virtuous in itself that we can start to ask what is virtuous about labor. To which the answer is obvious. Labor is virtuous if it helps others. A renegotiated definition of productivity should make it easier to reimagine the very nature of what work is, since, among other things, it will mean that technological development will be redirected less toward creating ever more consumer products and ever more disciplined labor, and more toward eliminating those forms of labor entirely.”
Corporate equity is a corporate currency. (Also why Weimar notgeld created a hyperinflation problem during times of scarcity, since this was effectively temporary corporate equity issued for immediate redemption against corporate stock/inventory).
RE: naming of the wordpress. Given the obscure reference to Thorstein Veblen in the name of this blog, maybe you could find another esoteric reference. William Stanley Jervons, for example, given how often you write about currency. In the introduction to Money and the Mechanism of Exchange (1876), he describes how his focus was on past and present systems of currency and how check & clearing systems have "perfected" the system. (the full text is available through Google Books)
That’s a nice idea. I was thinking of naming it Dizzynomics actually, much less sophisticated.
Currency doesn't give a right to vote. Vote is given based on citizenship or residence, so foreigners, convicts, and in some countries, blacks, women, and others viewed as less equal are denied voting rights period. If the idea here is offering risk-free deposits to the government, and no debt issuance by other financial intermediaries, it isn't going to work. Voters want yield plays and purported safety even if that is impossible.
It is still the equivalent of a national stock. We are all shareholders because currency is ultimately a national wealth allocation mechanism. Interest is the equivalent of a dividend in the event of growth.
Your votes are your democratic power brought to u by a collective agreement. Even in a command economy you have the chance to vote by means of rebellion or insurrection. A stockholders rebellion or the ousting of the board being the equivalent.
And even in an ordinary corporate not all shareholders have voting rights and there are different classes of stockholders as there are citizens in an economy.
You are missing the point about yields. Stocks don’t have yield they have dividend. No growth no dividend, and the same should apply to money.
Money already is national stock. It’s just we are holding it through intermediaries rather than directly. Banknotes — the only form of national currency citizens can hold (because we are not banks with reserves ) is already zero yielding. When we keep our money in a bank we are actually waiving our right to owning the national stock directly and instead are issued with parallel units that track that stock akin to etfs.
We receive interest because the parallel unit issuer pays us that interest to compensate for the fact that the fund is not fully collateralised.
None of this is explicit, but it is exactly that.
Germany has the second oldest population after Japan (people over 60 will soon be the majority of voters). Right now it's pushing austerity in the EU & wants to avoid inflation at all costs. Could these two be connected? The cost of austerity and lack of quantitative easing in the EU falls on the young, mostly through high unemployment. At the same time older generations benefit from the lack of inflation which protects their net worth. Would love to hear your thoughts on this.
I think that’s a very good assessment. And I agree it’s the older saving generations that benefit least (and thus are most afraid) of inflation.
Q1: I don't understand why money is stock in a country, since stock has distribution and voting rights, while money has neither. Q2: I don't understand why a government owned and operated bank (payment services, deposit taking, credit extension) is necessarily any more efficient or less corrupt than a private one.
We do have voting rights in the national corporate . It’s called a general election. Unless u live in a command economy, but chances are u don’t have a free floated currency then.
And a govt/central bank already issues cash. It has given up seigniorage (which is really interest free borrowing) by allowing banks to create parallel units on its behalf on the basis a free market is better at identifying lending opportunities. But these banks have failed and more importantly there are no risk free lending opportunities out there any more.
Hence it has every reason to start issuing digital (zero yielding) cash directly. This is simply the equivalent of offering an opportunity to hold cash that would otherwise be under your mattress in digital form.
This leaves banks free to focus on risky lending. As a depositor u have the choice. If u want safety and zero yield u sit in government digital cash, if u want interest u give to a bank — but u do so on equity terms. You receive the upside of a successful investment but are also exposed to downside of a bad one. This is the anat admati view of fully capitalised banks.
There are two ways the banking universe can pan out as far as I can see.
One is the Gorton way, where everything is eventually collateralised and anyone with credibility or collateral can issue collateral-type obligations that turn into collateral money.
In this world banks are as good as the collateral they hold, and they can flourish if they can persuade the markets to accept new types of collateral when old forms run out.
The other is the Admati view which is about going towards a Fisher style full reserve banking plan. Banks can take all the risk they want provided they can persuade “depositors” to fully fund them in these ventures and to bear all the risk.
I like Admati’s view but also see some benefits to Gorton’s — which basically represents a truly liberalised money market.
The problem with Admati’s view is that we are basically reducing banks to venture capitalists. That’s fine. But if depositors are going to bear all the risk, it makes sense their upside exposure should not be capped to a specific return.
A much better system would be something of a sukuk system where the investors returns are linked to his effective ownership of the asset and thus its cash flow.
In Admati’s world the government regains control over money supply however, but in a way that can still stimulate new investments.
With Gorton’s world the problem is the ongoing fragmentation and explosion of shadow banking.
Everyone effectively becomes some type of lender, funding some form of collateral at the end of a chain.
The problem here is a) how good is the collateral really and b) what stops the collateral being relent into unwise investments creating too much money velocity?
If the collateral transpires to be unsound what stops the whole thing from suddenly becoming massively deflationary as well?
This is free markets banking with no checks or balances.
In fact the whole thing reminds me of the film Inception. A bank within a bank within a bank and so on.
The layering is everywhere. After all even PayPal is a shadow bank to some degree — though really it’s more akin to a zero yielding money market fund.
If anyone can issue units which guarantee some sort of return linked to some underlying collateral which may or may not be in their possession due to rehypothecation, u realise how quickly the money supply can be obscured from central source. We have layers upon layers of parallel money and currencies which are somehow loosely linked in value to the underlying currency of the realm.
But eventually the dream ends and we have to revisit economic reality.
And that’s fine providing the parallel units have encouraged the government to dish out enough additional currency (via interest to lenders) to cover all the interest liabilities of the private money market.
In short sovereign money — the ultimate liability of the system, and the dream upon all other dreams are based on — has to keep expanding to account for all the private promises of return.
Given that money is endogenous that shouldn’t really be a problem — providing output doesn’t fail.
But if there is a concentrated funding gap somewhere along the chain and the government refuses to materialise the money that the private banking world had materialised on its behalf… We have a problem.
(The government is likely to decline this sort of bailout on the basis it believes a funding gap has manifested because there isn’t the output in the economy to support the legacy money creation of the private institution.)
Indeed, in some ways Lehman happened because the government refused to materialise the money that the private banking world had over lent and lost.
It chose instead to punish the foolish investors who had made bad decisions — on the basis that it couldn’t be guaranteed to support bad lending choices and the investments of the already wealthy. And also on the basis that it believed these investors had not funded real growth.
Of course it’s not clear at all that the growth/output was not there. After all, the failure to support those bad investments initiated a major deflationary reaction — it did not keep the system balanced.
The systemic shock that followed was in some ways associated with the capitalist system’s realisation that returns were only possible by means of continued central government/bank money creation.
This was shocking because of a) misjudged inflation fears and b) a great misunderstanding about our real level of available resources and output.
The greatest shock to the capital system actually being the idea that the govt could print money to compensate for poor decisions without it leading to inflationary shocks — precisely because capitalist scarcities had by and large been overcome.
That’s not to say completely uncontrolled money creation should be encouraged. Even in a technologically abundant world there is always a risk money begins to outstrip output.
It’s worth remembering that what caused all the problems in Weimar Germany wasn’t as much the over issuance of money by the state but the over issuance of private parallel currencies by corporates to employees (often as payment proxies). These expanded the money supply in an economy plagued by external debt and scarcity to such an extent that rampant inflation was the only inevitable outcome.
These are not conditions that are easily replicated.
However, initiatives like bitcoin are our surest way to try and replicate them.
The ultimate irony with bitcoin, after all, is that even though it purposefully strives to be deflationary it’s much more notgeld than money.
If and when Bitcoin becomes so valuable and currency-like that deflation really is a problem, the low barrier to entry into the market becomes an issue. There is after all nothing stopping competing currencies from coming into the market when bitcoin supply becomes lacking.
As more currencies compete you just get the Notgeld problem all over again.
In some ways it’s even worse than notgeld because at least the german notes were redeemable for the goods and services of the corporates issuing the units.
There is no such guarantee with virtual currencies based on nothing.
A state-issued digital currency on the other hand (or one redeemable against real resources) is another matter…
There’s a report in my inbox which talks about the risk of Japan having exported deflation.
I like this idea and I have often talked about the idea of China having exported deflation as well.
But really it’s all about stealing inflation from the last remaining zones where scarcity prevails and where competition over scarce resources can yield interest on capital.
Remember money is a wealth allocation tool. When it concentrates in too few hands it causes deflation — until the moment the rest if society goes, hang on we don’t need money like we used to (thanks to a collaborative less selfish economy).
Japan has effectively said enough is enough. We shall create the inflation by diluting the units by which we allocate wealth. And we will do this (and this is important) in conjunction with government spending so that the new units can be redistributed outside the hands that hold the wealth already.
The fact that this is yen dilutive has the pleasant consequence of devaluing the yen. No wonder yen stocks are going up the world is about to benefit again from Japanese engineering and creativity which is going to look cheap and competitive in comparison to domestic goods and services.
Of course in the game of currency thrones this is unlikely to last too long, for it hurts Japan’s nearest like for like competitor which is actually germany.
Japan’s gain is Germany’s loss.
The natural reaction is to engage in competing currency devaluation.
Unfortunately German paranoia will prevent that for far too long.
And with bunds unable to penetrate below zero (though I’m not sure how long for) Germany’s loss will also be the periphery’s gain.
No wonder the spread between Germany and periphery is contracting.
But this is more about Germany’s weakness than the periphery’s strength.
And by weakness I mean inability to dilute money so that the wealth can be shared.
Re digi-direct QE / welfare for all. A. Landlords would just raise rents. (i.e same problem as parking capital in Park Lane: current holders of property benefit). B. The capital is needed for Maslow L1 & 2 in developing countries, so it is immoral for developed country govt's to compete by issuing bonds. What am I missing?
I don’t really understand your question.
Digital qe would hurt savers and narrow gap between debtors and savers. Rentiers would continue to have same power they always had. But yields would necessarily be affected because house prices would probably rise too.
Not sure about your EM point. If you are referring to currency wars and dollar depreciation that’s just an incentive for equilibrium to be reached in other ways. In fact currency wars ensures the effects are global rather than domestic.
Consider such a computer is built. Now remember that moment when Scotty goes to the 1980s to save a whale and tries to programme a computer vocally and sighs at how primitive keyboard input is.
Then consider what happens to language to differentiate from user and programmer input?
For those not initiated in C++ Star Trek operating system version does what the programmers utter begin to resemble a mysterious esoteric language? A spell that magically makes things happen?
Perhaps instead of keyboard input they use a wand, like with a Wii.
Perhaps malevolent hackers know the spells that can cause harm and anguish, and disrupt systems?
Both malevolent and good come from the same esoteric Hogwarts school of programming.
Technology and magic.. what’s the difference?
A magic flying broomstick - some sort of drone.
A magic mirror - an iPad.
A crystal ball - access to surveillance cameras.
A book of magic spells - a programming manual.
And so on…
On the Game of Thrones like origins of property rights:
"In ancient North China a new kind of giant had developed long, long before Roland’s time a three-componentparts giant, i.e., the little man, with a club, mounted on a horse — who could and did overwhelm the big, onfoot, tribe-leading shepherd. This new composite giant, the horse-mounted bully, could divert to his sole advantage as much as he wanted of the life-support productivity of the on-foot peasantry.
(Pays = land; ped = foot = ped ant = pays antry = peasantry = combination of on the land and on foot = pa y of lands = pa of patriot = pa of pagans = patois = po-gan, pa-gan peasantry.)
The horse-mounted, clubwielding bully asserted — as do the twentieth-century racketeers — that he owned the land on which the shepherds were grazing their sheep or the farmers were growing their crops. There was no way in which the shepherd could realistically contradict the bully.
Each night, many of the shepherd’s sheep disappeared until the shepherd agreed to “accept” the horse-mounted bully’s “protection.” This was the origin of “property.”
The most powerful amongst the leaders of gangs of horsemen became the emperor. The emperor rewarded his henchmen with deeds to the land in proportion to the deeds at arms they performed for him. There is no historical record of religion founders who have been so bold as to assert that God had deeded land to anyone.
History shows that religious leaders have, however, frequently complied with their king’s instructions to plant a cross or other symbol of God’s approval of their king’s sword-accomplished vast landsseizure and ownership-claiming. Over thirty thousand years ago, these prehistoric horsemounted “landowners” began expanding their territory northwardly and westwardly beyond the Himalayas into Mongolia and then ever westward into Europe.”
(IK - also why gun rights are so embedded in the US constitution. A desired cold war effect on a micro level. If we all have guns and a chance to protect from the oppressive authority we are all freer than those peasants who can’t. Except that nothing changes because property becomes determined by who has the biggest gun and who has the means to form a cartel.)
"My two completed lifetimes and my third of a third lifetime have found the great majority of "savvy," well-todo individuals I have met convinced that there exists an inherent inadequacy of life-support on planet Earth, and therefore that their own successful survival as well as that of those whom they cherish depends upon their cleverly learning more and more about how to be legally selfish and thereby to accomplish personal economic advantage by anticipatorily depriving others in directly undetectable ways.
These ways are legally and socially accepted practices of deceiving and cheating the public — e.g., by altering the scoring system and the official “game rules” of the accrued monetary equities of other humans through zoning laws, “etc.” x 1010 ways. Price manipulation is most often defended as being governed by supply-and-demand variables, i.e., by what the traffic will bear” and not by time-energy costing, which science finds to be exclusively operative throughout all the constant energy-transformings and interchangings of Universe.
This legal deprivation of other humans to one’s own personal advantage is most simply accomplished through increasing rents or prices of a cup of coffee or a secondrate cigar (both of which have escalated during my lifetime from five cents to fifty cents). The powerful social precedent for price-advancing has been initiated by nonperishable mine and oil-well owners and those other prime industrial producers, the physical cost of whose products, measured in ergs of energy per hour and pounds of coal or petroleum per pound of manufactured goods, has steadily decreased.”
What I wasn’t able to articulate properly tonight regarding what was really important about the day’s Eurozone/EU deveopments…
1) I’m not really an expert on British politics but it seems to me David Cameron’s Merkel visit is a bit of a distraction. The two have come together because of mutual political interest. Merkel has an election and must look strong. If she can keep David Cameron sweet she wins easy brownie points, but I don’t think it’s really her priority. Nor do I think compromises would be made. Cameron gets a chance to seek amendments. Don’t imagine there’s much more to it than political theatre.
2) Cyprus is better off leaving the euro and issuing its own currency. If a bunch of wayward criminals can attract $2bn to back a currency based on nothing but a black economy, then the potential for Cyprus is clear. And not because of its ties to Russia.
If any country can leave the Eurozone without shock it’s Cyprus. It has a viable economy that can underpin it and a budget that was never really a problem until now.
Its problems are tied entirely to external liabilities, which now threaten the collapse of GDP and future budget balance. Default taboo, however, isn’t what it used to be. This isn’t 2011. Chances are that a default now, and the issuance of a new currency, would improve the chances of a recovery that makes the rest of its debt liability sustainable.
I’m with Paul Krugman.
Cyprus has the chance to be the experimental zone for a new economy without so much of a dependence on commercial banks. Cooperative finance can also stabilise the system and Cyprus has plenty of that. We also have capital controls already in place, which would ease the transition greatly.
Almost every social and political taboo has already been broken. Eurozone exit, if well signalled, would not have to be a shock. And it wouldnt need to cause a terrible precedent for the rest of Europe either. Cyprus is not Spain.
It’s also one of the newest entrants to the zone, and has much less invested in defending the system.
Culturally it’s a much more cohesive society anyway and even has the memory of much greater strife and pain imprinted in its collective consciousness compared to anything like this. Point is, worse things have happened in Cyprus. They know what pain is, and are likely to come together and make a new currency work.
An independent cy-euro has worth. It would be volatile, but its value could not go to zero. The sun, the beaches, the infrastructure wouldn’t disappear because of default. A cheap currency is even desirable if the country is to redevelop its tourist industry.
As for external liabilities and more specifically import cost exposure. If there was ever a time these could bartered, it’s now. There’s even the chance to stabilise a cyprus currency by collateralising it with redeemability against natural gas.
Gold also better used as collateral to back a new currency than sold into a descending price market.
It’s about wealth allocation, and selling goods to cyprus still very much makes sense because the small island economy has something it can offer in exchange.
Cyprus’ financial services industry meanwhile could reinvent itself it as a support system for a new collaborative banking and digital payment system.
Most importantly a new Cy-euro should be issued as digital cash directly by the central bank. Cy-coins would effectively be backed by the collective wealth of the island (both people and resources). The allocations could be decided on in a way that echoes current allocations on the domestic side. Foreign capital invested in Cyprus could have the choice of cy-euro compensation, or nothing.
We’re talking essentially about the issuance of stock in Cyprus Inc. Think of it like the makings of an acquisition currency in conventional corporate M&A, where stock is used to purchase the stock of another company.
With cyprus you’d effectively bring to market an IPO in Cyprus Inc. A highly risky but fundamentally viable national corporate. Once the stock would set a stable price they could use it to buy back their underperforming euro-denominated debt.
Think of it like the central bank doing a euro recall. You as a citizen would hand the euros you have to the cbank and in return you would receive an equal value of cyprus units. Potentially collateralised in natural gas on top of that.
The euros would also be used as quasi reserves/collateral/fund/equity to back the newly issued shares — probably by being invested in its own euro-debt. The parallel units however would not be pegged. This would not be a cyprus euro ETF.
Most likely the new units would trade at a discount, but as the economy stabilised there would be a chance for that gap to be closed as more people demanded cy-coins to transact with cyprus.
These are very rough thoughts, but it seems to me that hyperinflation has to be inevitable.
The real euros which represent the cyprus economy in the system, would not be extinguished you see. In some ways it’s the collateral that’s backing the euro which would be diminished, diluting the value of the euro relative to other currencies.
How the new parallel currency performs relative to the euro is unclear. Defence of the new units’ value would be difficult but not impossible.
Think of it like an ETF which has 1000 units in issuance (each worth 1 euro) and which is collateralised with 15 stocks collectively worth 1000 euros.
If one of those stocks (worth 10 euros) leaves the basket, but no units are absorbed and destroyed to compensate for the value of that stock, the unit price gets diluted. It’s worth (reatively) 0.990 on an international basis.
The unit is actually the euro. And cyprus still ends up with euro reserves, made up of its own private and sovereign debt.
Capital controls would help immensely as well.
The hurdles are mostly legal.
Also, let’s not forget the British military bases.
Alternatively Cyprus calls in euros in exchange for cy-euro and in spirit of cooperation hands them back to ecb for destruction. This would probably be seen as more cooperative. But it would mean no buy back of bonds.
The other interestin aspec is that the path Satoshi has taken is an anarchistic organisational model, a free for all, but then you get uncoordinated development and product extensions and the crap ones damage the brand. The experiment is in a leaderless organisational model, true libertarianism. It will be interesting to see if it can work and end up producing a product the mass market will use compared to a "Bitcoin Co" where the CEO can control things (ie herd the cats).
Personally i think true libertarianism is conflicted because you can’t leaderless authority and the respect for property rights, without the formation of cartels.
"A them and us society. It may work for stocks but not for a currency." My point is that bitcoin is both a stock in some IP and a currency. The early adopter profits aspect is no diffeent to a tech stock and without that potential for profit vs risk we would have no entreprenuership. The question is whether this alternative way of founders profiting from IP is clasing with it trying to be a currency.
That is true, it is a bit like a tech stock. But it’s also like a platform which people are using to build Bitcoin apps from. I like that analogy a lot. But it’s still not a currency.
"IPOs are great because they allow the public to participate in wealth. To have a stake along zuckerberg if they want to take risk" - bitcoin allowed this also because it was open, the public could have mined coins early and participated in the wealth. It is actually far more democratic because the timing and size of IPOs is at the insiders behest. With Bitcoin there was/is no restriction.
No there should be opportunity for entry all the time. You can’t shut off the opportunity, that is how wealth concentrates. You can always invest in a stock. The price is either offers value or doesn’t. You don’t have to participate in the IPO.
Re bitcoin the controlled supply and early adopters holding the majority, how is this different from an entreprenuer holding a majority of stock in their business? Satoshi could have kept his bitcoin IP in a company and held most of the stock. Instead he opens the bitcoin IP but holds most of the bitcoins. Yes he profits from its success, but how is that different to Zuckerberg?
That’s the entire point. It isn’t. It’s a system designed to create bitcoin billionaires. A them and us society. It may work for stocks but not for a currency. The problem with tech companies today is precisely that. Competition and risk is huge at the beginning. Lots of volatility. But if u succeed, u end up concentrating wealth wherever the big computer is.
Especially because most of these companies employ very few people.
See my beyond GDP post on alphaville from this week.
That’s why we need an antitrust system.
Bitcoin is like a stock. But that’s always been my point about the money of any country. All money is ultimately the stock of the country. See the history of tally sticks. Pounds are shares in UK plc. just when wealth over concentrates beyond the rate of shared mutual growth the central bank can dilute the shares. It’s not debasement if the ratio between money to services and goods is the same.
Bitcoin is like a pump and dump scheme designed to reward early entrants. But it’s like a stock which will only ever have x amount of shares outstanding.
The reason companies dilute their shares is because a) the velocity (and thus the liquidity and price discovery) suffers if shares are denominated in too large a value. B) because they want as many people to be invested as possible to ensure continued growth. And that’s the point with a currency too. As market cap goes up it should be spread between more people.
Bitcoin is not a just system. It’s like saying there will only ever be five shares in Facebook. Like having all companies held in private hands. IPOs are great because they allow the public to participate in wealth. To have a stake along zuckerberg if they want to take risk. Facebook shares could go to near zero as well you know.
I try not to get angry but the sheer scale of propaganda, denial and outright twisting of the truth across my Twitter stream the last few days has been astounding.
The core Bitcoin support brigade appear to be Right-wing Libertarian leaning. That’s fair enough. I understand the motives for the core right to create a stateless currency backed by the black economy.
As they say… the best capitalists are street criminals. It really is survival of the fittest. Stringer Bell land. That’s why the oligarchs succeeded in Russia. Rising from the black economy to deploy their superior and ruthless non-regulated capitalist instincts on a fresh market where competition and efficient markets were compromised because of a lack of capitalist education for the majority of the communist era.
That’s why everyone needs a god damn gun in ‘The Wire’. You never know when you are going to get done.
Is this really how we want to live?
The sad, sad thing is that there are a lot of confused people out there, somehow confusing Austrian economics and Libertarianism with fairness and equality.
They demand to arrest the banksters?! But who exactly in their anarchic right-wing world has the authority to do that?
There is no authority. Except a private mercenary to defend the property rights of the richest. It’s law according to the man with the biggest gun. It’s a life of fear.
I try not to be political. But what does annoy me is when people are being misguided by means of pure propaganda.
There is a propaganda war out there trying to capture hearts and minds to support the Austrian economic system by misrepresenting it as pro equality, when economically it does nothing but contract wealth and further the gap.
And these propaganda outfits are often shamelessly invested or involved in the philosophy they are pushing.
I am not attacking capitalism. The sort that’s regulated by the correct authority is much needed. We could not have progressed as a civilisation without the capitalist incentive-system to overcome scarcity. Capitalism has achieved many great things.
But this is something entirely different.
I believe politics should be adaptable. There are times when more socialistic policies make sense (abundance cycle) and times when more capitalistic policies make sense (scarcity cycle). No one system serves the interests of the majority all of the time.
But an authority is needed.
That said Authority may one day be replaced by a cybernetic system. But Bitcoin doesn’t represent functional cybernetics — at least not the sort that works properly with feedback loops. Instead it’s very politically biased coded system, designed to undermine a cybernetic system’s ability to reach the perfect equilibrium for all through complexity. It is like a cancer that steals all the nutrients from the rest of the body to serve only itself.
Austrian economics is all about ensuring a small wealth pool is preserved for as long as possible and passed around in volatile fashion from one successful capitalist to the other.
It has nothing to do with trying to encourage useful productive instinct.
Totally deregulated markets lead to monopolies and cartels. That’s why we have antitrust authorities. Again, the clue is in the real criminal markets where cartels flourish.
If you have to blame the bankers, which I totally understand the motives for (even though I think sweeping generalisations tend to be unfair, and that not all bankers are bad) it’s important to recognise the role played by Austrian economics in that system. Also the fact that this theology if applied would only result in more pariah behaviour, not less. More inequality.
Moderation and adaptability make much more sense to me, especially if the alternative is an absolute belief systems.
We are all on a learning curve. And it’s clear that the first step to understanding banking and finance tends to lead to Austrian (primitive) assumptions.
I should disclose my initial reaction to the crisis also exactly that. To believe that the Libertarian message of let them fail, let’s start afresh was the only fair solution. This seemed sensible to me at the time.
I now realise this mentality only encourages volatility, pain, suffering and despair. Every time the slate is wiped clean, the whole process repeats from a clean slate.
There is never any change. Just more volatility. Because a small bundle of wealth is being fought over all the time.
This is just like the philosophy that concocted Bitcoins and their controlled supply. The wealth never advances. Every efficiency leads on a path to monopoly and the total obliteration of competitors, until there is only one authority, the monopoly. A.k.a The Empire. Darth Vader.
This is the conflicting message in the network. Somehow so many people think that debasement is bad, when it is the only way to spread a growing real wealth pile in economically constructive way that benefits all.
Debasement is like a stock dilution that allows more people take part in the wealth. Contolled currency supply in the face of growth and efficiency only concentrates more wealth in fewer hands on a relative basis. A have and have not society.
We must stop thinking in monetary terms, we must look at the real wealth that surrounds us. The overall growth in the standard of living of the world. We are richer now than ever before, it’s just that the wealth has been poorly allocated.
Money, at the end of the day, is just an allocation system.
Remember, inflations only happen in countries where there is a physical lack of goods and services relative to demands and needs, or alternatively because external obligations were issued in foreign currencies.
The shelves in western stores are not empty however.
The wealth is there, it just needs better distribution. Government issued emoney may be a good way to do that.
Resources which are still scarce should, meanwhile, be allocated (with a redeemability option) in an exogenous sense, because these are the efficiencies we still need to encourage.
Keynes’ idea for that was always the Bancor. Effectively today’s SDR.
"who really wants to mask themselves in a cash transaction" - its called privacy and there is nothing wrong with it. I think you are being a bit naive thinking that Govt or its employees are totally honest and wouldn't abuse the information about every transaction you have done. You think sociopaths don't work in Govt?
I agree that the right to be anonymous is a desirable feature. I say so right from the top. But people’s paranoia about the government varies and most of the time people have no choice but to have government know their financial affairs. It’s called the tax system. It depends if I view taxes as a social duty or expropriation.
If I don’t declare earnings I am already in breach.
The only point of non anonymity would be between u and the government. And actually doesn’t have to be because u can mask your VPN.
If the government became oppressive and started persecuting then political solutions of a different sort would need to be found.
But an oppressive govt would probably be spying u already via a camera in your computer and drones and more. So money transaction knowledge hardly the ultimate problem.
Big data also compromising privacy. But that is a different debate, especially when so many people are giving up information voluntarily.
What the B story really shows us is that there is demand for a better digital transaction and payment system, but also some desire for digital anonymous cash.
On the first point, this is easily solved if the central bank opts to issue emoney directly to digital wallets.
The cbank would effectively become paypal. If you wanted velocity and speed of transaction you would hold your cash in digital official ecash. Zero interest just like with banknotes.
This would leave banks purely to the lending side of the business, and your incentive to keep your money in the bank would be to get a sound interest returned to you.
In a low interest environment there would be little incentive to keep your money in a bank rather than a secure digital BoE wallet.
Banks would lose deposits. Which is fine because there was an alternative store of value in the form of a BoE wallet.
Banks would have to raise money from the markets for lending in a more equity focused way, attracting cash holders if and when the terms were attractive enough. But while putting money in the bank could reward you with interest (as opposed to your digital wallet) you would bear all the risk in the event of an imprudent loan.
In short official emoney could give cashholders the option to keep their cash more like reserves at the BoE than as a loan to a bank. There would be no redemption risk.
How would such an ewallet work? Probably by some system of authentication.
You transform your bank emoney into official money by receiving a uniquely coded file. When you transact the payment system has the recipient effectively authenticate the code as BoE code.
Double spending is eliminated by the authentication process, which somehow stamps the code as used. If the authentication shows up non BoE code or a code that has already been presented for authentication it rejects the emoney as a counterfeit.
This could be relatively anonymous, and if they had to, people could mask themselves during the authentication process .
Supply could also be controlled according to BoE policy.
Question is who really wants to mask themselves in a cash transaction?
Which goes back to the point i made the other day. It is not surprising that a crypto currency was spawned by the black market.
Being a criminal, tax dodger or drug dealer is becoming hard in the cyber digital age, where everything needs an identity or personal account.
You can’t pay with cash like you used to. And big ticket items are particularly hard to acquire.
What’s the point of a life of crime, if you don’t have any purchasing power?
That’s the appeal of an anonymous digital currency to some people. Others are just speculating, and for them Bitcoin is not a currency but an asset class.
A stateless currency like that can always have appeal. But guess what, if it’s tied to too much crime, it can be made illegal.
1) Air miles.
2) Tesco club card points.
5) deposits in RBS
6) Paypal float
7) The physical banknote cash in your wallet?
Answer: everything but 7). This is called M0.
Which of the others are perfectly fungible with M0?
5) and 6)
That means as far as the world is concerned 5) and 6) are just AS good as M0 (legal tender).
That is… until there is a bank crisis. At this point some forms of bank money become less valuable than others.
Why does a bank crisis make the value of RBS issued parallel currency suddenly less valuable? Because a bank crisis implies the bank has somewhere along the line messed up the allocation.
And because deposits are effectively bank capital to some degree, misallocation erodes capital at the particular bank eroding the value of deposits.
Another way of looking at it, those parallel units which were issued by the bank suddenly become worthless because it turns out the bank in question overissued parallel units beyond its ability to balance its books.
So like me issuing way to many promises to buy someone a coffee than I am really capable of satisfying if they are all redeemed at the same time.
Of course there is nothing stopping me issuing as many coffee promises as I want. I can issue a thousand coffee promises knowing I only have ability to satisfy 5 a day. And I can do that no problem providing everyone doesn’t try to redeem at the same time. If I get a request for 10, either it becomes known that my coffee obligations are not worth anything, and the value falls quickly… Or I can beg someone else in mkt to lend me five more coffees temporarily, or failing that I can go to the central bank of coffees and beg to temporarily borrow the coffees I wasn’t expecting redemption for.
The fact that I have recourse to a) other lenders and b) the ultimate keeper of the coffee in the form of the central bank, means my parallel units will still be fungible with the system for as long as these guys can help me out.
If the central bank says no, we won’t help you anymore because u keep coming to us, and clearly this is not a temporary mismatch but a hole in my capital… Then my coffee obligations go to zero. And I fold because I cannot honour my obligations.
The same applies to 1) and 2) BUT there is no recourse to a central bank. British Airways and Tesco issue points, which they promise to honour. If everyone redeems at the same time, and they can’t honour, they have two choices… Suspend programme and risk credibility knock back or borrow what is necessary from someone else.
The fact that most people consider these points a “gift” rather than an entitlement means reputational risk of not redeeming much smaller. Also an airline will create innovative solutions such as T&Cs to ensure u can only redeem for Sunday or very early morning flights, or only to certain locations.
If a bank did this, “you can only draw your money between the times of x and x” you would be annoyed. Though the phenomenon of “time deposits” and “lock ups” is an attempt to stagger redeemability much in that way.
Paypal is slightly different because its parallel currency units are theoretically 100% collateralised, which means the company should always be able to meet redemptions. No recourse to central bank is needed.
Problem here is that your Paypal units are actually in a parallel unit that receives no interest, while PayPal receives interest from banks on your behalf. In sustained period of low interest rates this model does not work for Paypal which will likely be more and more eager to get into credit issuance side of the business, which immediately begins to threaten the 100% collateralised status of the company.
More to the point it’s a needless expense for the government, which loses seigniorage revenue to PayPal.
Bitcoin is not redeemable and never pretends to be. This in some ways is ironically its saving grace. It can never suffer from a bank run in the traditional sense. But it has no supply flexibility, meaning it will always be volatile and supply and demand imbalances have to clear through the price mechanism.
But the key problem with Bitcoin is how it allocates wealth.
If you divert bank emoney or cbank cash into Bitcoin from UK legal tender you are effectively opting to become a monetary nomad.
This stateless existence can come across as very appealing. No taxes. Anonymity. Nothing just Bitcoin “gains” versus other currencies which are associated with an authority.
The problem with stateless currencies is that anyone can issue them, and anyone can compete.
Even if the Bitcoin model succeeds eventually the price will reach a choke point. This will be related to how those in the Bitcoin economy interact with the real economy.
For example merchants.
Even if merchants take more and more Bitcoin for payment, their ultimate liability is to the government payable in legal tender. This presents a two-way flow problem. A certain proportion of coins will have to be liquidated to meet tax obligations. Also suppliers who dont take bitcoin will need payment in legal tender.
Even if all of UK operates only in Bitcoin on a practical basis, taxes will still be required to be paid in sterling.
And here is the beauty of our current system. If sterling becomes too undervalued vs Bitcoin economy, the bitcoin merchants will begin to suffer from an overvalued currency.
And if you are a Bitcoin merchant you will prefer to source supplies from a non Bitcoin merchant, meaning constant FX pressure.
Alternatively the UK could absorb sterling from the market in return for high yielding bonds, and destroy sterling cash. This would balance the relative supply to bitcoin. But wouldnt be ideal because it would be hugely deflationary.
GLORY has developed a technique to shield the contents of conversations from third parties. GLORY’s Speech Privacy Protection Technology, otherwise known as GVIPS (GLORY Voice Intelligent Protection System), was created through collaborative research with a professor from the Japan Advanced Institute of Science and Technology. Until now, speech security typically required sound masking apparatuses such as soundproof walls, systems to generate noises similar to those of ventilation systems, or any of the many other sound masking systems available. Problems with accuracy and the high expense of installation were significant disincentives against actually installing these systems. GLORY’s solution is a speech privacy protection technology capable of analyzing voices in real time. Based on vocal analysis, the technology prevents conversations from being overheard by generating a special masking sound as a conversation takes place. The system requires no major equipment and has the additional advantage of being noiseless when the people themselves are silent.
From Asimov’s Foundation:
He said, “The Commission will,of course, have a spy beam on our conversation. This is against the law, but they will use one nevertheless.” Gaal ground his teeth. “However,” and Avakim seated himself deliberately, “the recorder I have on the table, — which isa perfectly ordinary recorder to all appearances and performs it duties well — has the additional property ofcompletely blanketing the spy beam. This is something they will not find out at once.”
My error. I should have used past tense. You are on record for having previously had hopes.
Never about Bitcoin. I think there are important innovations taking place with mobile money which will improve the velocity of money greatly.
Currently many corporates are taking advantage of that innovation (PayPal, M-pesa etc), and this is actually creating a clandestine transaction charge/or diverting seigniorage revenue from the government. The official sector should react, because it is being outpaced by technical innovation simply because there is no emoney in official form.
The only emoney that is fungible with national money is bank money, but the banks have less of an interest in adding to that emoney supply (at the moment). And bank emoney doesn’t travel as quickly as it should.
The process for transacting that bank emoney across platforms is not fungible, and impacts the velocity of money. Hence the room for organisations like Paypal, which act as yet another intermediary.
But all of the corporate innovations are basically a way of diverting existing emoney to the hands of a non-bank corporate, which then receives interest instead of you. (This isn’t such a problem nowadays because interest is low anyway. But it still creates a liability for the banks)
I favour a regulated or official emoney system, or at best a collateralised universal allocation system based on SDR concept rather than a world allocated by Bitcoin.
That is to say, I think emoney should be directly issued by the cbank, since digital cash is another manifestation of banknote cash.
Think of it this way. If there was an internet marketplace but the concept of ebanking had never been invented, everytime you wanted to pay for something you would have to go to the bank, withdraw banknote cash, send it in an envelope to the merchant. Who would then deposit in his account.
That period during which your account at has been debited and before the merchant’s account has been credited, is the time that official money really manifests.
But what we have going on now is rather than the bank being forced to meet its liabilties at the cbank the moment you withdraw cash (it has to give you the banknotes requested, therefore it must have in its possession the banknotes in the first place) it just issues its own emoney (which is totally fungible) and waits for that money to redeposited in another account somewhere in the system. It kinda presumes there is no net difference to its liability to the central bank.
And that’s fine. But it does mean that third parties are the ones redepositing that money before the merchant gets to do it. Which adds an additional layer of complexity to the system.
You could bypass that entire process if you had the cbank behaving in the role of PayPal. Like a little digital wallet, very much like bitcoin, which once is credit behaves like normal bank money. You don’t get interest but neither does anyone else. This is real MO.
Alternative parallel currencies can work alongside that system as well, but would suffer from non fungibility.
Bitcoin is an attempt to create M0 but without anyone backing or defending the system. IT is like a stateless currency. As a result it has volatility embedded into its structure. Vendors who accept bitcoin have no predictable way to manage supply and inventories. Costs and payments would be mismatched.
Quite separately, if you are talking about global reserve system, which allocates capital between nations — which then allocate internally according to their own economics — then something focused on the remaining scarcities would make sense.
But I have no definitive system in mind. I think it does make sense to somehow revise the allocation though.
Especially something that goes against your core belief system (i.e. precious metals are great, so and so is an idiot, inflation wil be rampant, the government sucks, Elvis is alive, technology is irrelevant)
a) think, man that’s stupid, I won’t read stuff in that publication/by that author again.
b) consider the points, and think… ok this isn’t what I believe but let me consider it from the other point of view for a second. Then conclude a) or wow, maybe they have a small point, and adjust your belief system slightly.
c) shout and curse at the TV/internet, but generally keep your emotions private because you can always resort to a). After all you’re right, they’re wrong, the facts will make themselves known soon enough.
d) speak to like-minded people to confirm that a) is really as stupid as you think. Possibly express and reconfirm your position with other like-minded people. Discuss the issue on Twitter or a public platform in the spirit of mutual support for your belief system. I.e. recoil to your home turf for psychic therapy after episode of psychic harm.
e) seek council from different areas, and other more objective contacts?
f) put out a well argued response to why you believe the view is wrong and engage with the author, respectfully.
g) Resort to name-calling, cursing, unsubstantiated claims, slander on your own platform which is viewed by people of the same belief system as you.
h) decide to write to the author respectfully to explain why they may have the wrong view. Agree to disagree in worst case scenario. You respect that in a democracy not everyone will think the same way, and has the right to.
i) decide to spam the author with badly written communications of the “you’re an idiot” variety.
I ask, because I am truly interested in understanding how people’s processes work. BTW I think everything apart from i) (and to some degree g) as well) is a perfectly rational and understandable response.
But I really don’t understand what i) is supposed to achieve other than inflict psychic harm on people. It’s malevolent, irrational and abusive. And how does that encourage anyone to take your view seriously?
I think I know why the volume of i) has risen, I think it’s because I was recently taken out of context and unfairly represented in a show hosted by a rather eccentric american. I think he called me a bankster, which I find deeply ironic since more recently people have been accusing me of being an idealistic communist.
Nevertheless, I don’t blame him. He has a right to express himself I guess. But it’s a shame some people think that justifies spamming my inbox with totally meaningless and non-constructive correspondence.
Hello - I think you might find _The Gifts of Athena_ a nice historical counterpart to some of the topics you've been writing about recently - (google "A Fine Theorem"+"The Gifts of Athena" for a good summary - this box doesn't like links...) I really enjoy reading what you write, here and on FT Alphaville (I'm not in finance, but I like to know what's happening in the world) - so thanks. (also, is the Accelerando mentioned in your recent post the book by Charles Stross?) ~ RP
Thanks for getting in touch. Yeah, these boxes are a bit annoying. But I don’t have the time to moderate comments properly and this way i get to monitor and reply :) I believe that is the Accelerando referred to. It was a suggestion from someone. All the best,
Seriously. Anyone peddling the idea that bitcoin is a nobler system than the current one needs to get their head examined.
Just look at the supporting infrastructure. It’s clear it’s designed to replicate the current system almost identically. It panders to exactly the same speculative, pariah and profit incentives as the much derided current banking system.
There are the platforms — which can’t even be arbitraged because of variable access. There are the OTC price charts and pricing venues, who knows accurate they really are. There are the synthetic product structurers (aka miners). There are the sales people pushing investments on people who know no better. There is the supporting propaganda system — aided by the supply side’s superior ability to keep the opposing viewpoint supressed on the internet. There are bitcoin banks. There are bitcoin futures. There’s even DoS attacks as an evolved form of HFT.
And worse than the current system there isn’t even collateral there to be misvalued.
How did all this get set up in just three years?
And who benefits in the end?
Undoubtedly the answer is a handful of early investors. The bitcoin millionaires, who no doubt take their profits and run, investing them immediately in other more worthwhile assets.
Someone intent on forging a fairer world would never have created such a system.
No, this is much more lively the product of an extremely sophisticated and strategically planned initiative of bitter capitalist interests. Ones that hope the Bitcoin system will be able to perpetuate the old order into the digital age. A desperate attempt to protect against the collapse of capital and a move towards a fairer sharing economy.
This is nothing less than an attempt to forge Capitalism 2.0.
In fact it takes the sharing and collaborative infrastructure which has a real chance at changing the world for a better place and corrupts it from the inside.
It is nefarious. It is the existing system re-animated in digital form.
In 1997 some dude who is now in charge of US currency and thus probably knows a bit about it, argued in an academic journal — so like an old fashioned blog — that money in its purest form was probably just a memory. Like in a computer.
As it turns out, money is a funny abstract thing — a bit like beauty or love. It means lots of different things to different people.
To him it meant memory.
Even so, this sounded really weird to many people, because in 1997 the internet was really rubbish. There was no way to download music, file share or even send pictures or much else across the internet, let alone imagine a digital form of money made-up only of computer memory. Even internet banking was new back then.
It’s almost like this dude had a time machine, and went to the future and came across Bitcoin.
Bitcoin, of course, is a totally awesome digital currency that shoves it to the Man. You’ve probably never heard of it because you don’t use the internet and don’t know how to code. In fact, only cool people and nerds really knew about it until last week.
But then this thing happened in Cyprus, which made lots of other people want to shove it to the Man too. Now everyone knows about Bitcoin and it’s like the most valuable thing IN THE WORLD.
Lots of people say it’s even better than real money, because real money is being all f***ed up by banks and government.
But the beauty of Bitcoin is that it can never be messed with. Not EVER!
It’s valuable precisely because there can never be enough of it to go around.
So a bit like only ever allowing 11 million people to download Game of Thrones at any one time, even though the whole world clearly wants to see it.
That means if you want to get a Bitcoin file you’ve only got two options. You can either create one from scratch (like uploading a dvd and waiting hours and hours for it to digitise, so it’s almost hardly worth the bother unless you can sell it on for a really good price as a file) or buy it from somebody else who no longer needs it.
Except a Bitcoin file doesn’t even have a GoT episode in it. It’s just got static.
But Bitcoin definitely exists. It’s like any other illegally downloaded file made up of digital information and stored on memory drives. That’s why you can’t shut it down, because it would be like trying to shutdown Bit Torrent. You’d have to shut down every illegally-active computer in the world!
The fact that nobody really knows who invented it also makes it pretty cool. The guy is largely believed to be a cyber ninja.
A bunch of people who like guns and stuff particularly adore the fact that thanks ro Bitcoin anyone with a computer will now be able to turn illegally downloaded Game of Thrones episodes into money. In the old days, apparently, this could only be done by digging up bits of metal out of the ground instead. Thanks to Bitcoin, however, anyone with enough CPU power can theoretically become a billionaire (or a king) overnight. The guys with guns even insist this sort of digital mining is everybody’s democratic right.
Of course, you can’t have everyone being a millionaire at the same time, because then there wouldn’t be enough people left to do the crappy jobs that provide millionaires with all the stuff they like to buy or use. To get around that problem the Cyber Ninja programmed the system to ensure that only 21-million billionaires could ever be created. After all, there are 7 billion people in the world. If everyone was a millionaire, it just wouldn’t be special anymore.
While it’s a shame that leaves a lot of poor people without the ability to ever watch an episode GoT.. the guys with the guns say it’s their hard luck for having been TOO STUPID to download it while they could.
But some people, who really don’t get it, say that’s exactly why Bitcoin is a scam. Because at the end of the day you don’t even get an GoT episode, just a bit of static.
They also say that the whole thing was probably started by criminals who were getting fed up of not being able to buy stuff on the internet like normal people - or for that matter in any shop that doesn’t take more than 50 pounds in cash without calling the police.
In fact, they say it’s all a bit like a case of King Geoffrey’s new clothes — meaning there’s a sizeable chance that Tyrion will eventually expose Geoffrey for the crap King he really is. Failing that Geoffrey will just expose himself by doing something stupid that upsets almost everybody. And when everyone can’t pretend he’s a good king anymore they will probably revolt. And unfortunately some people may get injured or even die.
This is hard to understand at the moment because Bitcoin, like Geoffrey, is considered so very awesome in the counter cool culture.
But really, it’s no different to when we all realised Dubstep was actually a bit crap, and we couldn’t really justify it taking any part of our 16 GB memory space on our iPhone. Except we didn’t even leave it on backup. We just totally deleted it because it really was such utter rubbish.
This can never happen to the dollar, however, because there’s always Obama out there ready to insist that Dubstep is really good. Even if nobody believes him, he can still ensure you will never want to delete a Dubstep track off your computer by insisting only Dubstep files can be used to settle your Inland Revenue bill, and that if you try to settle in Bitcoin you’ll just go to prison like Bernie Madoff.
Even if the value of Dubstep falls, because he’s the president, he can rig all the x-factor contests and get Simon Cowell to talk it up. In the worst case scenario he can even eliminate all other music, until Dubstep is the only music left in the world.
Though, it’s true, that would certainly not be considered cool.
Also, if it became really hard to persuade people that Dubstep was worth listening to, he could even make it the national anthem and order everyone to play in classrooms and sporting events throughout the land. That way somebody somewhere would still definitely need it stored somewhere on their hardrives.
Try as he might, however, an anonymous cyber ninja could never defend Bitcoin in that way. At best he could only keep preaching that BitCult isn’t empty static, but the real and genuine path to eternal happiness and riches.
Of course, he’d also have to convince people that to join the kingdom of BitCult a donation of $195 is required as is the sign up of at least 10 new members in the next four to five weeks.
The world is a business, Mr. Beale; it has been since man crawled out of the slime. Our children will live, Mr. Beale, to see that perfect world in which there’s no war or famine, oppression or brutality - one vast and ecumenical holding company, for whom all men will work to serve a common profit, in which all men will hold a share of stock - all necessities provided, all anxieties tranquilized, all boredom amused. And I have chosen you, Mr. Beale, to preach this evangel.
Howard Beale:Why me?
Arthur Jensen: Because you’re on television, dummy. Sixty million people watch you every night of the week, Monday through Friday.
No one man knows everything.
Collectively, however, we know everything there is to be known.
I’m going to argue that civilisation ascends when the collective knowledge base learns something new.
This is why social networking is so important and more of a social utility than anything else?
Twitter is like listening in on a global conversation.
These Conversations were previously being had behind closed doors. They are now being flung open to the world.
Consequently (through social media and the net) we are learning on a collective basis like never before.
In a sense we are going from a system of isolated computers crunching independent datasets, with intelligence only boosted by purposeful acquisition of new data, to a system of networked computers drawing on the datasets of millions.
This has the chance to help us process the existing collective data more quickly, without doubling up, in a way that advances civilisation more quickly than ever before.
This is peer 2 peer knowledge sharing. You don’t need to know everything individually because u know someone in the crowd has the knowledge and u can tap it on demand.
Intelligence can consequently become more focused. Memory use can become more efficient and hardware can be freed for entirely new ideas.
Of course it is all kind of Borg. That is the problem. There is also an incidental dumbing down effect for those who over depend on the network and never bother to become a knowledge provider to the system themselves.
But perhaps this is what archetypal collective unconsciousness is all about? We’ve always been networked in some way but never knew it?
Deep thoughts for a Saturday.
I’m thinking there’s a science fiction novel/film in the idea that humanity has already, in a previous civilisation —long forgotten about by historians —- been networked.
That ancient mysterious stones are like wifi antennas still emitting an ancient primitive Internet signal.
Some of humanity may still have the ancient Google active in their heads and not know it. The ancient nanotechnology is passed down in hereditary form, hence why some people claim to have psychic abilities running in their families.
Most of us now have operating systems that can’t connect.
Or perhaps we all have compatible OS but not the right programming language or enough of the nano hardware?
But those still running the ancient software see visions and pictures whenever they are near the ancient wifi source or when they conduct procedures that enhance the signal.
The ghosts and spirits they see are just echoes of personal movies and data from the deep deep past.
Perhaps they can network with the share of today’s humanity which are still plugged in.