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BoingBoing Update on Bitcoin Alternatives

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Renegade:
It all seems insane to me.  But I'm probably misunderstanding some essential economic concepts.
-mouser (July 25, 2011, 01:40 PM)
--- End quote ---

Yes. The markets will take care of themselves. If we try to interfere, then we're evil socialists, and should be shot.

Nope. I don't think you're missing anything important.

To further add to the insanity...

http://en.wikipedia.org/wiki/Fractional-reserve_banking

Particularly, check the table:

http://en.wikipedia.org/wiki/Fractional-reserve_banking#Example_of_deposit_multiplication

I utterly fail to understand how anyone that understands that system can be oblivious to its inherent insanity. It's printing money from nothing. With nothing to back it up. It's just NOT stable. Recalling enough debt would cascade disastrously. It's very similar to a pyramid scheme.

"Belief" isn't a foundation. Heck, there are still wackos that believe the earth is flat! That doesn't make it true. It doesn't even make the belief useful.

If software were written like the banking system, nothing would even run.

johnk:
Before the world became a frighteningly complex place, money was simple. It's a commodity, like anything else. The conceit, the deal, if you like, is that we all accept that money can be exchanged for any other commodity.

So if the world only contained three bananas, three fish and three coins, and we all accepted these were of equal value, then you have a starting point. But if you make three more coins, then you need two coins to buy a fish. Because you can create infinite amounts of money, but other resources are limited. Then derivatives came along...

For a slightly more sensible, more complex, but excellent "Economics 101", which predicted and describes what's happened to the world economy in the last few years (and is very depressing if you buy the author's ideas in full) read this:

http://www.hedgefundletters.com/wp-content/uploads/2011/03/a-template-for-understanding.pdf

And there's an interesting piece on the guy who wrote that article in the New Yorker this month:

http://goo.gl/h14hA

mouser:
Paul Krugman (highly regarded economist and writer at the NY Times) has a short piece today on bitcoin:

What we want from a monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. And that’s not at all what is happening in Bitcoin... So to the extent that the experiment tells us anything about monetary regimes, it reinforces the case against anything like a new gold standard – because it shows just how vulnerable such a standard would be to money-hoarding, deflation, and depression.
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http://krugman.blogs.nytimes.com/2011/09/07/golden-cyberfetters/

JavaJones:
What we want from a monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. And that’s not at all what is happening in Bitcoin...
--- End quote ---

Ah, so it mirrors the real economy in that way then? :D

- Oshyan

J-Mac:
Now here is an example of a big confidence game sham... errr..... world economy in action... Zimbabwe in 2008 - 2009!

http://www.cato.org/zimbabwe

A quote from that article at the CATO Institute web site:
New Hyperinflation Index (HHIZ) Puts Zimbabwe Inflation at 89.7 Sextillion Percent
--- End quote ---

And even a handy chart:

[attachimg=#1][/attachimg]

And here is a pic of the largest denomination currency note in the world! (Well, actually a few of them; I use them for a magic effect where I instantly change these to $2 bills!   :)  ):

[attachthumb=#2][/attachthumb]

Now that is a sham!

Jim

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