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It is quite incorrect to say that "Historically, money arose from, and in conjunction with, this power." (the power of taxation by states). He gives no evidence
by qengho 13y ago
It is quite incorrect to say that "Historically, money arose from, and in conjunction with, this power." (the power of taxation by states). He gives no evidence for this claim except to reference a "controversial" book - perhaps controversial because of its wildly inaccurate thesis?
Unless the contention is that humans traded solely by barter before states came along to tax them, mediums of exchange (money) obviously predate the statist invention of fiat money. In fact fiat money is a relatively recent phenomenon, as money was historically backed by precious metals long before states invented unbacked fiat money and central (statist) banking.
Which doesn't in any way invalidate his argument that Bitcoin is a bubble. It's totally irrelevant to the Bitcoin issue. It's just wrong by itself.
Another thing that's just plain wrong is the attempt to refute the efficient markets hypothesis (EMH). The only reason Bitcoin actually does have a value above 0 at the moment is precisely because statist meddling in the market has created a huge demand for an alternative to fiat money - such a huge demand in fact that people are willing to try almost anything, including Bitcoin, or even riskier methods with a high failure rate (such as J. Orlin Grabbe's early anonymous banking system DMT, or unaudited gold-backed e-currencies that may actually be backed by nothing at all, among many other examples).
If we had uncrippled free-market gold-backed electronic currencies (such as e-gold was before it was attacked and destroyed by the feds) there would be zero demand for bitcoin as the existing currencies would have all the benefits of Bitcoin, while also being backed by a commodity with a base value (not 'intrinsic value').
So, it _might_ be a refutation of EMH if Bitcoin were to be successful long-term in an actual free market. As nowhere on this planet do we find anything even remotely resembling an actual free market, his argument against EMH is as much of a straw man as all the other examples that pinkos trot out as examples of "market failure" while pretending that there is a free market somewhere, which there isn't. All such examples are really examples of statist intervention failure, not market failure, as the market we are talking about is highly crippled and not remotely free.
- gph1 13y agoThis is just fetishism. All currencies are fiat currencies, and all currencies are creatures of the state. If a currency is set at a fixed exchange rate to a precious metal, it's because a "statist fiat" made it so.
- qengho 13y agoNot at all. Gold by itself is a currency / medium of exchange. It doesn't need any "statist fiat" to make it so. The fact that states (or other entities) might issue redeemable paper certificates or receipts (or dollar bills) as a convenient stand-in for gold deposited with them is entirely irrelevant. Gold is already money before that and without that.
- mpyne 13y agoGold is only "money" inasmuch as it is accepted as currency, to pay debts, etc. If cowrie shells were as acceptable then they'd be just as legitimate money as gold. Or for a better example, cigarettes as currency in prison.
- qengho 13y agoSure, but this has nothing to do with the point that gold is not money by statist fiat. Gold's real scarcity and base value are what make it suitable for use as money and therefore universally accepted as money for thousands of years. Cowrie shells might also make an acceptable non-fiat currency if cowrie shells were really scarce (they're not, because one can presumably breed cowries and generate them at will - something that was perhaps not so practical at the time when they actually were used as currency) or had a significant base value (again, they don't though they once did, but purely for ornamental uses). Similarly cigarettes are a currency in prison without any fiat being involved because they're scarce in that context and they have a base value (based on their use for smoking). Bitcoin has neither real scarcity nor any basis for a lasting base value. It has illusory scarcity, and a transient base value based on the fact that in the current historical context, it enjoys network effects and near zero competition for certain use cases (illegal transactions where fiat currencies are unsuitable). There's nothing sacred about gold either. If efficient nuclear transmutation of lead into gold were possible, gold would no longer be suitable as a currency. We'd have to switch to Latinum.