[hnews_account_1]

I have a deep understanding of all of the latter. I work in capital markets daily. I do not know anyone serious with my level of experience in the actual markets who thinks bitcoin is the answer.

There are several issues with tradFi. Pointing that out is like saying the sun will rise tomorrow. In some cases, people are working on a fix. In other cases, the inefficiency and criminal activity is not ceasing because the scale is too small for overburdened regulators to care about.

Not one of these uses bitcoin as a fix. Whoever is building it has almost never been in finance. They think tech bros can easily understand finance cos numbers! Except finance is extremely advanced. It’s like trying to join a full ML team after running a single random forest regression or something. The consequence of such hubris is sentences like this:

> Bitcoin is the solution to the fundamentally broken debt-driven economy.

The debt driven economy is by design. It’s not a fucking flaw like the hard money idiots listening to Peter Schiff daily want to believe. Sometimes it goes to excess and we get 2008. Doesn’t mean the older idea was better. There is no wealth distribution in a hard money paradigm that makes sense.

For simple terms since you’re obviously not in the field, ask yourself where is money created? If you say central banks, go back to Econ 101 and study better this time.

[tomputer]

> Except finance is extremely advanced.

Exactly. This is a problem. It can be so advanced that almost nobody understands it.

Now take a look at how advanced Bitcoin is:

  Total circulation will be 21,000,000 coins. It'll be distributed
  to network nodes when they make blocks, with the amount cut in half
  every 4 years.
  
  first 4 years: 10,500,000 coins
  next 4 years: 5,250,000 coins
  next 4 years: 2,625,000 coins
  next 4 years: 1,312,500 coins
  etc...
  
  When that runs out, the system can support transaction fees if
  needed. It's based on open market competition, and there will
  probably always be nodes willing to process transactions for free.

  Satoshi Nakamoto

[hnews_account_1]

Your idea is KISS works for finance and the rest of humanity are idiots. As you sit down and type from a device created very much by the financial engineering “complications” of the modern market (and in turn being used to create further pockets of complexity).

[ephbit]

> As you sit down and type from a device created very much by the financial engineering “complications” of the modern market ...

That's a ridiculous claim.

As if the development of complex technical devices wouldn't have happened without complex financial markets and inscrutable financial business models.

Complexity in finance .. up to a certain degree it may well serve the purposes of society .. beyond some level though, excessive complexity mostly serves few big players who can manage and understand the complexity and gain an advantage over other actors with less resources (that'd be most of the rest of society).

[hnews_account_1]

I like your confidence. I happen to agree with the second part while I don’t want to explain the first part. See my other comments for nuance.

[ephbit]

> There is no wealth distribution in a hard money paradigm that makes sense.

Care to explain how one can come to this claim based on first principles?

Maybe I'm misinterpreting this sentence of yours. I read it as: a hard money paradigm will inevitably lead to a very undesirable wealth distribuation (Gini coefficient --> 1) and there's no way to fix/prevent this other than moving from hard money to soft money.

I'd refute this claim. There are completely obvious ways to prevent Gini --> 1. Effective redistribution from wealthy to poor. The only hurdle to that is political systems, voters, governments or monarchs deciding to and then enacting it. Absolutely possible.

[ephbit]

My point here is: concerns with undesirable wealth distribution (in a hard money system) make IMO no sound argument against hard money. Because there's ways to redistribute wealth through the state.

Besides that, if the current wealth distribution (under non hard money) isn't all but a calamity, then what is it?

Also most states are currently doing effective redistribution of wealth so it's clearly something that can be done. One issue though in most states is that the redistribution is getting outpaced by countering effects, so it's insufficient.

[hnews_account_1]

Good luck forcing redistribution using central authorities. The very reason for the existence of modern loans is to bypass their stupidity. You do not comprehend the literal scale of the problem. You have to replace every fucking bank employee with a govt employee (in simple terms). If you think a central body is bloated now…

[ephbit]

> You do not comprehend the literal scale of the problem.

Phew, OK, if you write so.

> You have to replace every fucking bank employee with a govt employee ..

No, all it needs is a reasonable tax system without loopholes and where taxes are well balanced and of course reasonable services provided by the state funded by these taxes.

[hnews_account_1]

Ok so I’m going to start making up theories by assuming the second law of thermodynamics is false and we can have infinite free energy.

[ephbit]

Do I get this right?

You have a rather pessimistic view of the world that leads you to believe that while such tax systems might be possible they allegedly haven't ever been observed in the real world. So you go on to infer that what hasn't been observed is not possible.

I think it's a stretch to draw a parallel here to the unyielding character of physical laws.

I assume the world has seen reasonable tax systems in the past but since politics/science/tech/societies/culture is constantly evolving this "state" was not stable. That it wasn't, doesn't prove it's not possible. Future societies with more knowledge on the whole subject (of creating beneficial equilibria in society) might find ways to keep desirable states over long periods of time.

[hnews_account_1]

I’m not pessimistic. In fact, I definitely think something will disrupt the status quo and it is very corrupt. That’s not the point. I just don’t think your solutions are workable. If you’d told me about btc 10 years ago, I would’ve thought it was a radical attempt at a solution. Now I don’t think it’ll work with the benefit of hindsight. I just think anything in the future that disrupts tradFi will have equally crazy origins.

[kloch]

> For simple terms since you’re obviously not in the field, ask yourself where is money created? If you say central banks, go back to Econ 101 and study better this time.

The Fed itself directly created 8T USD since 2009 (QE). Some of it in the past two years even went straight to consumer's pockets via the Treasury in the form of stimmies and forgivable PPP loans (helicopter money/MMT).

https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

That's a non-trivial amount, 41% of total M2 and 61% of the increase in M2 since 2009:

https://fred.stlouisfed.org/series/M2SL

Where did the rest of the increase in M2 come from? Fractional reserve lending by banks -- at interest rates artificially suppressed by Fed policies specifically to encourage lending/money creation.

Before the Fed was created in 1913, USD was created by fractional reserve lending by banks at market determined interest rates and the marginal increase in monetary gold and silver from mining output (typically 1-2%/yr).

This historic monetary system was dynamically unstable as mining output was uncorrelated with natural business cycles and unbackstopped banks were subject to runs during downturns. The Fed was created to solve these problems, specifically the panic of 1907.

Over time it's mission evolved from being a lender of last resort to actively targeting employment and consumer prices. Since the 1987 crash however, this official mandate was effectively replaced with one targeting asset prices - primarily stocks and houses (wealth effect targeting).

Normal business cycles were now increasingly distorted by the fed Fed responding to (or not wanting to hurt) asset prices for fear it would psychologically affect consumer and business spending and eventually employment.

This lead to a new instability: bigger booms created or exaggerated by easy Fed money, followed by bigger busts during the tightening phase.

Each boom/bust cycle led to more micromanagement by the Fed and thus more instability. Since 2008 (QE), and especially after 2020 (helicopter money) they have gone completely off the rails as seen by the M2 chart above and soaring consumer prices. "Inflation is always and everywhere a monetary phenomenon - Milton Friedman"

[hnews_account_1]

Also just to be clear, almost every measure of banking and economic crisis has reduced after the advent of central banking in most countries. 2008 still happens and we should hold everyone accountable etc but if you think living pre 1971 was some dream time with everyone eating a full meal and heavy technological innovation, you’re misguided. It’s not to say the lack of innovation was a monetary issue but removing those obstacles sure as fuck didn’t hurt.

[hnews_account_1]

That fact that you conflate the QE and fiscal stimulus is reason enough not the read the rest of this diatribe.

Basically you did answer where the M2 increase is coming from but you have no idea what is the difference between M2 and real money. If you’re following the idiots on finance twitter tweeting daily about velocity of money charts, stop, pick up a modern macro textbook and read in detail.

[olalonde]

Just for your interest, you just called a few recipients of the Nobel Prize in Economics idiots.

[hnews_account_1]

Thanks. I’d call them that again. But just for my curiosity, please, who is the econ Nobel winner shilling crypto?

[olalonde]

That's a loaded question, don't you think? What I meant was that there are several respected economics scholars who have endorsed "hard money" and/or competition among currencies. Regarding "shilling", Milton Friedman didn't quite do that but he largely predicted a system like Bitcoin: https://www.youtube.com/watch?v=leqjwiQidlk

[mikestaub]

Bitcoin is not ever going to replace the fiat economy, it simply solves the wealth preservation problem by acting as gold v2.0. This is a huge deal as most empires in history have risen and fallen via currency manipulation, hurting millions of people in the process. The life preservers have finally arrived, just in time.

[ephbit]

> The debt driven economy is by design.

People should ask "whose design?" then. Who's the beneficiary of this design?

What do you think is more likely to be true?

A. The wealthy/influencial/powerful/elites use their (disproportionate) power to influence the design of fundamentals of society - such as the monetary system - in a way that benefits/stabilizes their position at the top.

B. The wealthy/influencial/powerful/elites just let the design of fundamentals of society - such as the monetary system - be in whatever way it's shaped by society or political processes.

[immigrantheart]

There are economists with deep understanding of finance and economy that disagree with you.

[throwawash]

Where can I read their points of view? Can you provide some links by any chance?

[jkepler]

Read Rothbart's Mystery of Banking, https://mises.org/library/mystery-banking. Or Mises' Human Action.

[ephbit]

Safedean Ammous isn't 100 % studied economist. But according to his CV he studied at London School of Economics, also gave economics lectures and was/is assistant professor of economics at Lebanese American University (Beirut). [1]

I'd recommend listening to his interview with Lex Fridman. [2]

[1] https://capitalism.columbia.edu/files/ccs/person/cv/2015/amm...

[2] https://lexfridman.com/saifedean-ammous/

[hnews_account_1]

Do not read idiots like Ammous. I don’t like to restrict people’s reading choices but this is equivalent to reading Deepak Chopra for economics. Between that and someone like Lee Smolin who is also extremely anti establishment, only one of them is an incredibly deep thinker.

People’s appearance on Lex Fridman shouldn’t be used as an indicator of anything. He interviews very widely and he does it well. But he isn’t very selective about guests.

[ephbit]

A comparison of Safedean Ammous to Deepak Chopra isn't useful IMO. Chopra does likely have views on economics but it's not the focus of his work. Ammous' work is about economics.

Thus it appears you're merely trying to discredit one person by comparing them to another person whose views (on a totally different topic) are ridiculed/controversial (for potentially legitimate reasons).

As to Lee Smolin .. he appears rather off-topic to me in this discussion. I like his view on "There is only one universe." though [1]. Makes him stand out from the many many people who handle the meaning of words with insufficient rigor and then come up with useless conclusions.

> People’s appearance on Lex Fridman shouldn’t be used as an indicator of anything.

I was just linking to this interview because it's reasonably well done and Ammous' views come over, not because it was done by Fridman.

> But he isn’t very selective about guests.

Which is IMO a good thing.

[1] https://en.wikipedia.org/wiki/Lee_Smolin#Views

[hnews_account_1]

I wasn’t clear. I should’ve said it is equivalent to reading Deepak Chopra about quantum mechanics or string theory vs reading Lee Smolin. Not economics.

Additionally, imagine why and how someone with an Econ degree who wasn’t very well known became incredibly famous. Enough for Taleb to write a foreword for him (although I suspect that was motivated by their ethnic common origins and less so by the rigor in the book). This is a common grift. Several professors in extremely high end Ivy League universities tried the same tactic. Including that one fucktard from MIT who claimed he’d done simulations for a million years and Terra (or some other coin, I really can’t keep all the scams straight in my head) couldn’t fail no matter what. Same motivation. New shiny thing? Let’s use it to try and increase our social capital. Less erudite crowd? The better.

[throwawash]

hmm, no government in the world supports his thesis I guess. From what I understand of his position: deflational currency is the best type of currency. Any inflation is bad etc. The reason governments create inflation is to keep population poor and control them I guess?

Putting aside the weird trash-talking of status quo economists, in order to evaluate the correctness of his position, I would have to do way too much homework.

His prediction of human behavior under a deflational currency though does raise some flags. He says people will buy stuff regardless. If know I can use the same money to buy two cars next year instead of buying a car this year, I will not buy a car this year. He seems to say I will.

[ephbit]

> The reason governments create inflation is to keep population poor and control them I guess?

When I listened to the interview I didn't hear him say that.

My view on this: governments simply cannot help increasing debt to spend more on whatever purpose they deem right at a certain time. It's simply the easiest way (least opposition from voters) for them to enact their programmes. The only other option (cutting other spending to increase spending on what's current high priority) doesn't get them reelected.

> Putting aside the weird trash-talking of status quo economists ...

Yeah, I admit he does too much of that, not optimal. But that doesn't mean the message is wrong.

> He says people will buy stuff regardless.

You won't? If your car breaks down, you won't let it get fixed right now but next month because it's cheaper? If you're hungry today you'll wait till next week to buy food because it costs 0,005 % less? You'll wait 10 years to fly to Fiji because it'll be cheaper? Oh wow, you must be a special person then.

> If know I can use the same money to buy two cars next year instead of buying a car this year, I will not buy a car this year.

You sure? You just watch everybody drive around? Besides: same money, next year worth 2x is dramatically exaggerated. What are typical gains of efficiency through technological advances? Maybe 5 % per year? I say you're putting up a strawman here. With 5 % deflation you'll have 2x the buying power in ~ 14 years .. you're going to wait this long?

> He seems to say I will.

Nope, as I understood what he says, he just says it somewhat shifts time preference.

[throwawash]

>If your car breaks down, you won't let it get fixed right now but next month because it's cheaper?

Which car? The one I don't have because I'm saving to buy two next year? You're changing the example I gave into something else entirely. If you're saying that drastically reducing or eliminating the purchase of everything that is not absolutely essential to have won't be bad for the economy, or if it is, it won't be bad for society in the long term -- then say that.

>> If know I can use the same money to buy two cars next year instead of buying a car this year, I will not buy a car this year.

>You sure?

Yes. (I lived someplace where there was a ridiculous price markup for electronic goods. I needed a new phone and laptop but I refused to buy them because of the ridiculous prices. Then the currency crashed a year later and I immediately bought them by exchanging US dollars before they could markup the prices or pause sales. I ended up getting them for less than the US price incidentally. Otherwise I would have waited until the old ones were preventing me from doing essential tasks. This is same for cars.)

"People consume because there's a limitless desire to consume" he says. And when Fridman calls him on it, he says yes well people economize due to constraints no matter what.

>same money, next year worth 2x is dramatically exaggerated.

Well yes that’s the point. aren’t we talking about a bitcoin economy in the end after all? If a transition from fiat to bitcoin standard starts happening, this is the path its going to take until the price stabilizes, no? People doubled their money in half a year in 2021 after all.

EDIT: his odd comment that he is migrating from anarchism towards supporting benign dictatorships doesn't exact endear him either.

[NoticeMeSenpai]

Who? And disagree about what exactly?

[Rerarom]

What do you think of the endogenous money theory that is being promoted from time to time?

[hnews_account_1]

I obviously think it’s a better alternative than hard money. But it has several drawbacks, same as many other things in capitalism.