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It's a potential storehouse of value (currently) that could transition into a currency (medium of exchange) if adopted as such.

Maybe I'm cynical but does a connection exist between sudden renewed interest in Kacynski and a discovery channel docudrama being released?

I use google docs and title the doc with a broad question or the search terms. I then answer the question or put in the research in the body of the doc. The search engine for the docs is then my own personal google.

The key is the trust that this special power that the Federal Reserve and Banks in general have to create the medium of exchange. If that power is used in such a way that all participants are not treated fairly, the system is ultimately unsustainable.

If I create my own medium of exchange (MoE) it's only valuable to someone else if that MoE can be used to purchase goods or services from anyone in the system. What would incentivize Amazon or my local baker to accept my currency?

> Like a universal, self-granted credit/debt system?

Not being sarcastic, but how does that work?

The main issue isn't solved by replacing fiat currency with a digital crypto currency. The problem that must be solved is how do you manage (the creation/destruction) of a medium of exchange in a manner that is equitable to ALL participants. The current system uses a combination of central banks, plain ole banks, and government bonds. I'd argue that their management hasn't met the goal of being equitable to ALL participants, however, I don't see how crypto currency improves on this.

The Double coincidence of Wants is solved by any Medium of Exchange (MoE). The bigger issue in my opinion is how to manage the creation of new MoE. The current system "solves" this by empowering a group (banks) to issue new MoE via loans. We have a significant body of history on the "efficacy" of this approach.

How does Crypto currency, Bancor or other, improve the management/new creation issues?

First clip of Honnold's climb: https://goo.gl/LZ1jcq

> Does anyone think the same kind of extreme care taken by the Fed is going to be replicated?

What are some examples of where "the extreme care" has resulted in long term positive outcomes?

The paradox is that a modern society needs a unit of exchange (money), however, the management (adding and subtracting) of that medium of exchange is extremely problematic.

For better or worse Bitcoin isn't at all similar to the current bank/central bank system we currently have and without the ability to increase the money supply to prevent bank runs never will be. But the federal reserve's evolving strategy is just an experiment. And their effectiveness remains to be seen.

> As far as I know, at least in the US, the central bank is not involved in bank runs.

The FDIC is involved if the bank fails, the central bank is involved to prevent the bank from failing. So the central bank is very much involved in the prevention of bank runs.

> That's the job of the FDIC, which doesn't print new money, it keeps a reserve from funds levied upon private banks.

That reserve is a small fraction +/- 1% of deposits.

> All of which could certainly exists in a Bitcoin world. An FDIC-like institution could exist in the Bitcoin world, however, the central bank powers as well as bank's power to increase the bitcoin supply at will could not. For better or worse, this would put us back in pre-fed banking world prior to 1913.

> The entire world banking system for hundreds of years was based on credit backed by gold

Just adding that the system above, rightly or wrongly was not sufficient for the expanding credit requirements of the world.

> so it definitely can work. Depends upon what your definition of work :)

> My only point was that this wouldn't equate to more btc in circulation, just more credit.

Exactly. And be subject to the problems with bank runs because of the inelastic nature of gold.

> Of course you can. People deposit BTC in your bank, and you then loan that out to others while telling the depositor that they can withdraw at any time.

First, without a change in bank legislation and/or rules, I'm not sure a bank could take bitcoins as a deposit. Second, even if they could, if a bank loaned out more bitcoins than it possessed it would be subject to the possibility of a run on depositor's bitcoins. Finally, unlike fiat currency, the central bank in order to end the run could not produce "temporary" new bitcoins to make depositors "whole". I use quotation marks because sometimes new fiat is not temporary and all depositors in the system are not necessarily made whole.

> In practical terms I don't see how this is necessarily a huge issue in the one case and not in the other.

In the case of fiat currency, the supply of money is based primarily on 1) Increases/Decreases in the loans provided by banks and to a lessor extent 2) a central banks balance sheet.

I don't believe it's possible to add to the supply of bitcoins simply by loaning them into existence vs. fiat currency. That is, there isn't a closed-loop system similar to the banking system that allows for this elasticity of bitcoin units.

I'm not advocating that this is a requirement or even desirable, it's just a limitation that I don't see often discussed.

An understanding of how to authenticate the blockchain and transactions is obviously essential, however, I haven't seen the same level of discussion on the affects of managing (or lack of managing) the crypto-currency's money supply. With bitcoin the total number is finite. With etherium, it appears that money supply management is being debated. IMHO this management of the money supply is a huge issue.

This is my second pass at the Fundamentals course and it's great the way they've updated it with the latest conventions (e.g. using es6 class syntax, webpack 2, React Router 4, and more).

Just saw it tonight and can't understand why all the critics panned it. By today's standards of what makes a good movie I thought it was great.

Agreed. Pharma is managing their expenses and profitability based upon the ability to charge much higher prices in the US. Take that away and suddenly everyone outside the US will have to pay more -or- Pharma will have to rethink their business model. The more this connection is obfuscated the easier it is to confuse decision makers.

It would seem the biggest impediment to the "fairness" and successful implementation of a free market is the ability of the participants to have access to perfect information.

No sarcasm intended here: Does it matter in terms of social utility whether these types of predictive models are making predictions of human decisions to buy or sell a stock versus predictions of AI based decisions to buy or sell a stock?

It seems like a major influence in the price of oil is the US Dollar, [1][2] rather than geopolitical issues.

[1] Price of Oil Chart: https://fred.stlouisfed.org/series/DCOILWTICO [2] Dolar Chart: https://fred.stlouisfed.org/series/DTWEXM

Here are some references to my main assertion that reserve requirements don't limit a bank's ability to loan, instead capital requirements are the limiting factor.

Another good source from digi_owl: http://www.bankofengland.co.uk/publications/Documents/quarte...

Also this: https://www.newyorkfed.org/medialibrary/media/research/epr/0...

and this: http://www.economonitor.com/lrwray/2013/08/15/banks-dont-len...

and finally this: http://www.forbes.com/sites/francescoppola/2014/01/21/banks-...

> That legal fractional reserve requirement acts like a powerful lever on how much money banks can create.

With respect that is not accurate. [1][2]

[1] http://www.cnbc.com/id/100880857 [2] http://www.cnbc.com/id/100497710

> Anyone creates "money" every time they lend. Banks do a lot of lending, so they're definitely involved. But even opening a bar tab creates "money" (more accurately, "credit").

I believe that's only partially true. If your definition of money is a piece of paper (e.g. a bar tab), than yes anyone can create money. However, if your definition of money is the U.S. dollar (e.g. paper or electronic versions) than there are only two entities that can create it: the federal reserve via open market operations and banks via lending.

My question to digi_owl was whether he was making a distinction of what limits credit creation from banks. The reserve requirement has very little to do with it.[1][2]

[1] http://www.cnbc.com/id/100880857 [2] http://www.cnbc.com/id/100497710

I appreciate the link to the video, I'll check it out.

> Fractional-reserve has crap all to do with it, but their lending do indeed introduce new money into circulation.

Do you mean that money creation has little to do with the reserve requirement?

For context, this is the ramp up of student loans: https://fred.stlouisfed.org/graph/?g=nQY and https://fred.stlouisfed.org/series/TOTALGOV.

If investing in Treasuries and Savings accounts are considered hoarding or "dead money" that's +/-$13T to $19T depending upon how you look at it for Treasuries [1] and $8.6T for savings [2].

[1] http://treasurydirect.gov/NP/debt/current [2] https://fred.stlouisfed.org/series/WSAVNS

> but stored cash/assets are dead weight

Curious, are US treasuries or interest in a savings account considered "dead weight" in your definition?

> They want your money to lend to other people at yet higher interest rates. If they don't have reserves they can't make loans and they go out of business, so they pay you a premium for your deposits.

As I understand it banks don't use deposits to back-up lending. There are folks in HN more knowledgeable then myself that may correct me, however, banks leverage Tier 1 capital to create loans. Deposits are the result of the loans and not vice versa. So banks aren't paying you interest because they need your deposits in order to lend.

[1] http://www.cnbc.com/id/100497710 [2] http://www.bankofengland.co.uk/publications/Documents/quarte...

Wow, I didn't imagine the possibility of creating a different exchange rate for cash versus deposits. Surely this could not be implemented by the US central bank without new legislation? Many thanks for the reference to the IMF publication...just the TOC makes the hair on my neck stand on end :)