Astrohacker

Since grades are so subjective, I've always thought of them as being basically meaningless. So I'm happy seeing grade inflation because it's gradually making grades obsolete.

Every industry in the US is highly regulated. The worsening economy has correlated with more regulations and bigger government. I don't think this is a coincidence. It is the decrease in capitalism due to an expansion of government that is creating our present problems. Capitalism is not the problem. Government is.

Deregulation is not the problem. The financial industry is highly, highly regulated. The Federal Reserve, a corrupt union of government and big banks, controls the money supply, which is always used to bail out big banks. To suggest that "deregulation" is the problem is to ignore the corrupt regulations at the very heart of the financial system--and indeed the entire free market in the US, and even the world--in the form of Federal Reserve Notes.

Good insight. I would just add that the concentration of wealth has a lot to do with fractional reserve banking and the Federal Reserve. Since these are highly regulated institutions, it's not as simple as saying the concentration of wealth created the central planning. The central planning also created the concentration of wealth.

I'd hate to accept $10,000 via paypal and only get $5,000 out of it. At least with bitcoin there is a chance it will go up in value rather than down.

What? Just sell the bitcoins and pay for things in dollars.

If you accept bitcoin, then there is no third party that can freeze your account.

I read most of the article, and I think it is as flawed as his title. Of course, we aren't broken. If anything is broken, it is the system. If there is a problem between us and the system that we have created, then it is the system that we should change, not us.

Interesting. Thanks for the info. We obviously need better information about this though - anecdotes only go so far.

Software patents are a problem. But perhaps software engineers are biased about this particular regulation because this is the field they work in. Seems to me similar arguments can be made about all other patents, and all other IP laws, and even all other regulations period. They do more harm than good.

Exactly. Don't give someone 24/7 access to your bitcoins unless you are gaining enough from the situation to offset the enormous risk that your trust will be violated.

Stealing doesn't create capital. It moves it. Your points 3 and 4 also indicate you don't seem to understand the difference between creating capital and moving it.

As for buying and selling stuff for a profit, you may not be producing stuff with your own hands, but you are enabling more production to occur.

It's odd to me that he thinks Wall Street was ever in the business of "creating capital for business". The only thing that can create capital is producing more than you consume and saving the difference. Now I have nothing against trading, speculating, or whatever else most people on Wall Street do. However, I think fractional reserve banking, which creates new money, is an extremely destructive practice equivalent to counterfeiting. Presumably it's fractional reserve banking that he thinks "creates capital". I recently gave a highly upvoted description of why fractional reserve banks are a scam here: http://news.ycombinator.com/item?id=2844528

It's a myth that banks create capital by employing fractional reserves. All they do is take purchasing power from some people, give it to themselves, and then charge a toll (interest) to the people they loan it to. It's unethical and it should be illegal. Unfortunately this isn't going to change until people stop believing the myth that printing new money is the same as creating capital.

Agreed. It is basically all government regulations that are the problem. Very few regulations exist for ethical reasons; most are there to entrench powers or are just mistakes. The way forward may be to create anonymous or pseudonymous companies, operating over the internet, and paid for in bitcoin, that cannot be stopped (at least not easily) because the real-world identities of the owners are not known. Thus, government would simply be made obsolete.

I agree with your "incompetent bureaucracy" analysis, except I would point out that the government is the biggest and most burdensome of all. It would be interesting to chart the number of regulations companies have to follow or risk being dismantled as a function of time. My bet would be since 1900, the number of regulations has increased constantly and dramatically. Every new regulation is a new barrier companies have to cross before being able to exist, and thus they greatly limit innovation.

Note that the government is largely responsible for our education catastrophe. The government should be removed from education, like all other areas of human life. Allow people to have choices in a free market, and the revolutionary innovations would eventually rise to the surface. But for right now, the revolutionary innovations are muffled before they even have a chance.

I'm not so sure I agree with your moral/ethical analysis. People, if anything, are more moral today than 100 years ago. However I'm not really sure how to measure this and I'm open to the possibility that morals actually have declined.

FWIW, I totally disagree. There is still low-hanging fruit, and there always will be, because the new technology brings fruit that was high down so it's low. The problem is actually the law, because it is so difficult to start a company without doing something illegal. This is the #1 factor stopping innovation.

A lot of people wouldn't like Coca-cola scammers. They'd want the real Coca-cola. And these people would be willing to pay a small premium for it. So stores would have an incentive to sell the real thing. A lot of stores would probably refuse the sell the scam Coca-cola.

But a lot of other people wouldn't care, and they'd happily drink the scam Coca-cola which tastes just like the real thing, but is made by somebody else, and is cheaper.

B) Remove all intellectual property laws period. Not just patents for software, but all patents, and copyrights, and trademarks.

You might think at first this would lead to chaos. I don't think it would. I think it would make the world radically better. I can show this would work if you're curious.

I would like to do the same. Do you have any suggestions about which TLD to use and which registrar to use?

Government will not solve this problem. Companies should operate anonymously on the internet, and just ignore patents and copyrights. Then they can't be stopped and IP laws will become obsolete.

No. Suppose the $80 are immediately paid back. The bank just moves the $80 from the loanee's checking account into the bank's own checking account. Total amount of money is now $180. $80 have been created, and is now owned by the bank.

It may not be news to you, but younger people may only be learning this now. We need to keep talking about it if they are going to learn about it.

I'm not a troll. Read my blog, my past posts here, posts on reddit, posts on the Bitcoin Forum, and my Tweets. I mean what I say.

> Are you a techie? Do you understand the web? Who would you want writing legislation to govern the web? Lawyers who are clueless about the web and think that the internet is a series of tubes, or people that are VERY web savvy - like Tim Berners-Lee, et. al? The same thing applies to finance, banking and everything else. Makes no sense to have people writing legislation or creating systems that don't understand what they are doing.

The tech equivalent of the Fed would be if the techies designed an internet where 1) all information goes through some central servers that they control, 2) they sell that information and profit, 3) everyone is legally required to use their internet and not a competing internet for sending information over long distances. This would be a corrupt, Fed-like version of the internet where some particular group of people have all the power and use it for their own benefit. This analogy isn't perfect, but it captures the basic point, that the Fed was designed in a corrupt way. It doesn't matter that the corrupt people were experts or not. If anything, being experts and using expert-jargon just allowed them to mislead everyone about the true purpose of their design - socialism for the rich.

For more of this type of information on the Fed, read "End the Fed" by Ron Paul and "The Case Against the Fed" by Murray Rothbard.

> If that's the case, why has inflation been so low in the US in the last two years, when the Fed undertook the largest expansion of it's balance sheet in modern history? i.e. it has printed more money recently, than at any other time in it's mandate - but inflation AND inflation expectations are still low.

The Fed publishes misleading inflation numbers. Anyone who spends a lot of their income on things like food and energy recognizes that prices are rising pretty quickly. For me one price that stands out is that a cup of coffee used to cost less than $2 a few years ago, but now costs something like $2.30. It stands out because paying $2 and receiving a nickle as change is a lot more convenient than paying $3 and receiving $0.70 as change.

However, I agree that inflation is not as high as I would expect given just how much money the Fed has printed. I'm not exactly sure where the new money has gone, but it is probably just sitting around in some bank accounts somewhere, not circulating in the economy, and that's why we haven't felt it more than we have. I suppose it is probably being used by banks to patch up their balance sheets after the crisis and that's why it is just sitting there. My bet would be that in the coming years, that money will get used, and that's when we will really start to feel the inflation. When coffee reaches $5 per cup, we will know QE1 and QE2, etc., have trickled down.

> However, that being said, you make it sound as if those banks are lending/giving that money to rich Saudi princes who squander it. They are not. They are lending it to entrepreneurs that have built a business to X point that want to expand.

Banks create 80% of the money and declare themselves owner of it, which they then loan out. There is nothing wrong with loaning money. But there is something very wrong with creating new money and then loaning it out, which is what banks do. They are money trolls... hijacking 80% of the money and charging a toll for using it.

> I apologize if this reply comes across as very terse and perhaps facetious, but I am SICK and TIRED of people bashing the current fiat system when there is no other viable alternative in sight.

Bitcoin is a viable alternative. (I'm aware of all the limitations of bitcoin, like the maximum rate of transactions. But the fundamentals are sound. The problems that exist can and will be fixed in time. Bitcoin will scale to be a global currency.)

> The fiat system is one where the global economic systems evolved into it - not because bankers wanted to get rich, but because policymakers realized that by being able to print more currency on-demand, it would soften economic pullbacks.

Nope. It very much is because bankers wanted to get rich. The Federal Reserve was designed by bankers. Other central banks are designed by bankers. Governments go along with it because they get to benefit from the inflation just like the bankers.

> At the end of the Fiscal year, if the Fed has profited from it's monetary activities during the year, it writes a fat ass check to Uncle Sam. Sometimes in the $50B range.

The Fed does not produce wealth. Any profits they give to the government, thus saving taxpayers a little money, are more than offset by the loss in purchasing power the taxpayers suffer through inflation.

There's no reason to create new money[1]. As I argued in my post, all inflation can do is change the distribution of the purchasing power of the money... not create new wealth. But the market already handles the distribution or purchasing power just fine through normal market forces. Good businesses get more purchasing power and grow. Bad businesses lose purchasing power until they collapse. The only reason to inflate the money supply is to scam everyone because you get all the new money.

As for replacing the dollar, bitcoin is the only reasonable alternative that presently exists. Fiat currencies almost certainly will never work, because the temptation to inflate them is too great. Gold can't work because you can't send it over the internet. But bitcoins both can't be inflated and can be sent over the internet. No government will decide to switch from dollars/Euros/whatever to bitcoins. Rather, it will be the market that chooses them if they are appropriate.

[1] If you actually halted inflation of the dollar, then as technology continues to increase the supply of everything, eventually the dollar would be so valuable that a cup of coffee would cost less than a penny. You would need to make new monetary units worth less than a penny so that cheap things like coffee can be purchased with them. You would do this by taking your pennies to a bank and getting, say, 100 penny pennies with each penny, and then a cup of coffee could cost 78 penny pennies.

Here's how banks counterfeit money. You deposit $100. The bank loans out $80 of your money to someone else. They put that money back in the bank. The bank now has $100 - all your money. But your checking account says $100, and the loanee's checking account says $80, for a total of $180. The bank has now effectively created--that is, counterfeited--$80 in new money. They gave this new money to themselves, and then loaned it out. Since their reserves are still over 20% (or whatever the present reserve requirement is), they keep doing this until 80% of the money is money they have counterfeited and loaned out.

And the Fed does give money to banks. They gave loans at 0% interest to Goldman Sachs who then buys government debt with it and earns interest >0%. That is the same as giving them the new money. And that is only one way, but there are others. Another way is by buying government debt from banks using freshly printed money at prices that are necessarily above what the market value would be if there wasn't an institution like the Fed that can print new money any time it wants to buy stuff.

You also need to end the Federal Reserve and make fractional reserve banking illegal so no one can create new money and give it to themselves. Allow the market to handle the distribution of purchasing power. Not the government banking cartel.

It makes perfect sense that most people in the top 0.1% are associated with the financial and banking industries if you know how banks work. Banks, and the Federal Reserve, create new money. They give this money to themselves, and then loan it out. This is as bad as, and effectively equivalent to, counterfeiting. Creating new money, i.e. counterfeiting, i.e. inflation, does not create new wealth. It merely changes the distribution of the purchasing power of the money away from most people who have the money and to the people who get the new money. This is where the wealth of the top 0.1% comes from. Freshly printed money. It is a terrible system. The people with the highest wealth are not contributing in proportion to their wealth. Rather, they are stealing their wealth from the bottom 99.9% by stealing their purchasing power by printing new money.

If you would like to read a thorough argument about how fractional reserve banks and the Federal Reserve are scams, read "The Mystery of Banking" by Murray Rothbard. Google it and you will see it is available for free at mises.org.

For some reason this subject is very polarized and I get downvoted whenever I explain this. Don't downvote me just because you are uncomfortable with what I'm saying. Note that I am not ignorant. I have learned about economics. It just so happens that when trying to understand the issues myself, I have arrived conclusions that are not mainstream. But they are the correct conclusions in so far as I presently understand.

There are some threads on the Bitcoin Forum about it:

https://bitcointalk.org/index.php?topic=32900.0

https://bitcointalk.org/index.php?topic=32984.0

On the same weekend, the third largest bitcoin exchange site, Bitomat, lost their wallet.dat and thus lost 17,000 of their customers' BTC in the process:

https://bitcointalk.org/index.php?topic=33457.0

Sad times for bitcoin.

I verified it by typing in the command. The ASCII Bernanke is truly hilarious.