Comment by gridlockd | Hacker News Reader

Comment by gridlockd | Hacker News Reader

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> That's not what "empirical evidence" means. Empirical evidence is something we observe in the world. If we set a definition "all murder is illegal" and then we conclude "legal murders do not exist", do we have "empirical evidence" that legal murders can not exist? Of course not.

Hmm, you're right...

> We can conclude the claim is true by definition.

...which means we don't even need any empirical evidence to say that banks are different and unique from non-bank entities!

> I never asked for empirical evidence for non-banks' inability to create money out of thin air. Werner claimed to have empirical evidence for this.

No, he doesn't. He claims that he has empirical evidence for banks creating money out of thin air, nothing more.

> If Werner had instead said "due to accounting conventions, we declare banks' IOUs to be money and non banks' IOUs to not be money", I wouldn't have any problem with that.

Doesn't that go without saying, considering that non-bank IOUs, such as poker website deposits, aren't considered part of the money supply under pretty much any definition?

> ...which means we don't even need any empirical evidence to say that banks are different and unique from non-bank entities!

That's correct, and I said so in the article. I said that (although there is no empirical evidence) the underlying claim is true on a technicality.

>> Werner claimed to have empirical evidence for this.

> No, he doesn't. He claims that he has empirical evidence for banks creating money out of thin air, nothing more.

Here is a direct quote from Werner's paper: "We now know, based on empirical evidence, why banks are different, indeed unique … and different from both non-bank financial institutions and corporations: it is because they can individually create money out of nothing."

When Werner claims to have empirical evidence that banks possess a unique ability to create money out of nothing, he is technically making 4 claims:

1. Banks possess said ability

2. Non-banks do not possess said ability

3. Empirical evidence shown for claim 1

4. Empirical evidence shown for claim 2

Claim 4 ("empirical evidence shown for claim 2") is patently false.

Again, this is an uncharitable misreading of one sentence of the paper.

This is a more reasonable reading:

Banks are different because they create money out of thin air. That has been generally accepted so far, but where is the empirical evidence for banks creating money out of thin air? It's in the paper. That's the contribution of the paper, to show empirically how new money is created.

We don't need evidence (empirical or otherwise) for non-banks not creating money, because that would be proving a negative.

If you want to attack the strong interpretation of the claim, you would have to show how non-banks do create money, which you didn't, because as we already agreed, deposits at non-bank institutions are not considered money.

I implore you to apply the principle of charity (steelmanning) instead of wasting your time on semantic disputes.

Hmmh, I can see how you might take a more charitable interpretation of that claim, and maybe this does fall in the category of semantic disputes.

> we already agreed, deposits at non-bank institutions are not considered money.

...due to a technicality / accounting conventions. Yes, I conceeded that already in the original revision of the article. Nonetheless, I made a pretty good case why the IOUs created by Full Tilt Poker could be considered money, even though they were created by a non bank institution. Yes, the IOUs created by banks are "more like money", but in my view, the difference is not that large.

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