BitCoin

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Re: BitCoin

Postby drstrangelove » Sun May 15, 2022 9:58 pm

Also tether pegged briefly. I reckon that will be the next to go.

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Re: BitCoin

Postby Agent Orange Cooper » Sun May 15, 2022 10:36 pm

JackRiddler » Sun May 15, 2022 5:11 pm wrote:.

ON EDIT: As I post this, I see it's seven minutes before Musk starts a livestream that promises "Elon Musk about Changes His Mind on BITCOIN! Bitcoin & Ethereum set to EXPLODE in 2023! Crypto News!"


That is a fake account Jack. Use your faculties.
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Re: BitCoin

Postby JackRiddler » Mon May 16, 2022 6:03 am

Agent Orange Cooper wrote:
JackRiddler » Sun May 15, 2022 5:11 pm wrote:That is a fake account Jack. Use your faculties.


Oops. Happens. Allows you to ignore the substance, which may be painful.

JackRiddler » Sun May 15, 2022 4:11 pm wrote:.

Oh look, investors in a huge scam are complaining that bigger investors sooner or later exploit it for their own hyperprofit through "market manipulation." The latter phrase is synonymous with the unregulated globalized financial sector itself. There is no other kind of major action on these markets. The architects of crypto schemes know that well enough (other than a few who might be insane and believe the bullshit about how cryptos will be the new world currencies).

Of course it's the biggest makers engaging daily in schemes at incomprehensible volumes who have the mass to decide when to dump and pop the bubble and get the most out of it. And to lure in a couple of ambitious medium-size sharks, as the above post claims they did. Inside every con artist there's a sucker waiting to come out. I'm sure the SEC and Treasury are on it!

But what determined that the time for the inevitable shakeout was ripe, triggering this predictable "manipulation"? Presumably they saw the weaknesses of some of the specific ponzi-stamp securities sold as if they are currencies or assets and went in for the quick kill, again as described above. Sure.

Of course we all see the inflation panic -- speaking of manipulation, there's also the ideological kind in which phenomena of supply shock and ongoing deglobalization are blamed on the plebeians supposedly getting a percent or two more in gummint money than before. So we see rate-hike trajectories signaling recession and a general market bloodbath (or correction if you will), where crypto with its marvelous volatility can be a lucrative multiplier.

But you know it was also that hilarious Super Bowl coming-out party and, of course, the NFT thing. Garbage Ape derivatives and the like are really too far on the hubris. Wile E. Coyote doing a victory dance fifty feet out from the cliff edge at the same time that the crypto companies do a big roll-out urging the population that the time has come to shift their meagre savings into new perpetual money machines. They're running out of suckers and making it too obvious to conceal.


https://www.youtube.com/watch?v=svQ9_IjXaGk

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Re: BitCoin

Postby Agent Orange Cooper » Mon May 16, 2022 1:24 pm

Substance. Right.
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Re: BitCoin

Postby Elvis » Wed May 18, 2022 3:55 pm

ROBINSON:
One of the things you’ve said, if I recall, is that the cryptocurrency space is “speed-running 500 years of financial history.” By which I take you to mean that all of the financial disasters of centuries past are playing out in short order, and then they have to rediscover the solutions that were put in place for those things not to happen. So you start off thinking, “Oh, wouldn’t it be fantastic if there were no central authority?” and then all of a sudden you realize, “Actually, it really would be nice if we had a central authority to regulate fraud and such” and you rediscover the virtue of banks and government.



bookz.jpg



I recommend starting with Felix Martin.
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Re: BitCoin

Postby Elvis » Wed May 18, 2022 4:05 pm

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Re: BitCoin

Postby Agent Orange Cooper » Fri May 20, 2022 8:52 pm

Elvis » Wed May 18, 2022 3:55 pm wrote:
ROBINSON:
One of the things you’ve said, if I recall, is that the cryptocurrency space is “speed-running 500 years of financial history.” By which I take you to mean that all of the financial disasters of centuries past are playing out in short order, and then they have to rediscover the solutions that were put in place for those things not to happen. So you start off thinking, “Oh, wouldn’t it be fantastic if there were no central authority?” and then all of a sudden you realize, “Actually, it really would be nice if we had a central authority to regulate fraud and such” and you rediscover the virtue of banks and government.


The irony of his statement is that the same 500 years of financial history the shitcoiners are re-enacting... eventually just leads back to the invention of Bitcoin. :lol:
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Re: BitCoin

Postby Elvis » Sat May 21, 2022 6:49 pm

Agent Orange Cooper wrote:The irony of his statement is that the same 500 years of financial history the shitcoiners are re-enacting... eventually just leads back to the invention of Bitcoin. :lol:


How?
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Re: BitCoin

Postby Elvis » Sat Jul 16, 2022 5:36 pm

Podcast: https://moneyontheleft.org/2022/07/16/b ... -salvador/

Bitcoin in El Salvador

Posted on July 16, 2022
by Money on the Left

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Ricardo Valencia joins co-hosts Andrés Bernal and Scott Ferguson to discuss recent protests against Bitcoin in El Salvador. Adopted as legal tender by the authoritarian President Nayib Bukele in September 2021, Bitcoin has become an emblem in El Salvador for U.S. corporate imperialism, public mismanagement, and anti-democratic rule. Whereas mainstream accounts of cryptocurrency tend to flatten stories in Latin America to matters of success and failure, Ricardo draws upon rich critical approaches in Cultural Studies developed by the likes of Stuart Hall and Paul Gilroy to situate current events in El Salvador within histories of global governance, political conflict, and cultural identity. During the conversation, Ricardo weighs the fraught legacy of left politics in and beyond El Salvador. He analyses the conspicuous convergence of “tech-bro” boosterism coming from the U.S. with right-wing regimes in vulnerable countries across the Global South. He considers tensions between imperial domination and quotidian safety that attend El Salvador’s dollarization in 2001, including the large role that remittances play in the everyday lives of the Salvadoran people. Finally, Ricardo contemplates the future promise of left politics in El Salvador. This promise, he explains, hinges upon feminist, queer and environmental movements, which are now demanding democratic and just uses of public money.

Dr. Ricardo Valencia is an assistant professor of public relations in the Department of Communications at California State University, Fullerton. Between 2010 and 2014, Dr. Valencia was the head of the communication section at the Embassy of El Salvador to the United States. He has also worked as a reporter covering international and domestic politics for Salvadoran and global media outlets such as La Prensa Gráfica, German Press Agency (DPA), and El Faro. Follow Ricardo on Twitter @ricardovalp.

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure
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Re: BitCoin

Postby Belligerent Savant » Sun Jul 17, 2022 12:31 am

.

From the same Substack I just quoted Re: El Salvador's handling of covid (in the primary covid thread), here's a recent piece by the author Re: Bitcoin. He delves into cryptocurrencies/Bitcoin in some detail at his Substack (among other topics covered).

The Mature Future of Bitcoin Economics

The Bitcoin Wars Part XIII

Mathew Crawford
Jul 15

Find other Bitcoin Wars articles here.

Now that I've expanded my Bitcoin education chat group, I plan to write more about Bitcoin. Tuesday's Rounding the Earth Roundtable will also feature a Bitcoin/cryptocurrency discussion for the first time.

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For the purpose of this article, let us dispense with the challenges that Bitcoin faces in ascending to become the world's reserve currency, meaning that the Bitcoin network would become the world banking system. Here, we evaluate the future in which we no longer price Bitcoin in terms of dollars or other fiat currencies, which may not even exist. Bitcoin would simply be the unit of account. However, we might still make a basic monetary comparison and suggest that the value of a single Bitcoin might be around $10 million in today's dollars. Let us not quibble about the total monetary supply or how it might be sucked up into Bitcoin during hyperbitcoinization, topics which I hope to discuss in future articles, but essentially this valuation would imply something like a monetary supply of $170 trillion globally (assuming that roughly 4 million or so Bitcoin are simply lost at that time due to loss of passwords).

Again, let's quibble later about these starting assumptions. I plan to discuss them more thoroughly in other articles.

Does the Monetary Unit of Account Accrue in Value?

Yes.

This answer probably feels weird to many people who tend to think of fundamental units that seem based in almost mystical invariance. I will do my best to explain this simply.

If you are entirely or generally unfamiliar with the notion of the unit of account, this set of pages at thebusinessprofessor.com seems to be fairly thorough at first glance.

In economics, money behaves as part of the system, and gets warped along with economic changes. But just as space-time warps around gravitational objects, we can and do generally observe variation in units. The medium in which a unit functions is important in understanding the type and scale of those changes, and the medium of economics is quite dynamic.

Along the way to Bitcoin's ascension to the world monetary throne, the greatest annualized returns (increases in Bitcoin's value) would have happened (have already happened) throughout the process. But once on the throne, Bitcoin will continue to accrue value based on the supply-and-demand forces for monetary capital (with respect to all other objects and investments). One year a Bitcoin might buy 400 acres in some geographical location, and then 406 acres the next.

What might influence that equilibrium most?

This is the question. The strongest influence will come from the technological growth factor of the global economy.

The Right and Wrong Definitions of Technology
The Monetary Wars, Part II

Mathew Crawford
Mar 23, 2021

Before we jump into the topic of technology, let us consider the level importance of the topic. You may already understand the immense power of technology in many levels, but we cannot overstate the importance of a good definition. A bad definition is like tunnel vision or blurry eyesight. It can leave us half-blind to the ways in which technology shapes the world.


The relationship may not be perfect. Nobel Prize winner and MIT Economist Robert Solow estimated that 90% of economic growth came from technological innovation in the U.S., which was by far the world's leader in research during that era. The global factor may be closer to 95%, perhaps.

Thus, the growth of the value of a Bitcoin should basically mirror the totality of human progress. It's hard to know what that is as a percentage given the way inflation (including shadow inflation) of the dollar supply sucked a great deal of those gains into centralized wealth pools whose jobs became protecting those centralized wealth pools. The fact that GDP growth is a flawed proxy for utility growth makes the problem worse. Economists have debated the percentage growth rates since the dawn of…the times since economics have been debated. What will the actual growth rate look like?

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I'm personally less concerned about what the true number for the economic growth rate might be than that essentially all the people of the world have access to the gains because I think that artificially extreme and systemic inequality is something like an anti-technology. But for the moment, I'm going to pick a number like 2% for the sake of discussion. Sure, GDP growth appeared to be more like 4-5% for much of the twentieth century, but the measurement may include various forms of warping, including what might be incorrect interpretations of inflationary effects of the monetary supply. We should also assume that there are times when growth "plays catchup" back to an exponential growth curve. One example that always comes to mind for me is the "Chilean Miracle", though on a global level, the conclusion of the world wars might be the most significant warping of twentieth century economics.

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In an era of zero (or near-zero and predictable) monetary supply, we should expect to see price deflation for ordinary goods and services. If one year a can of kidney beans costs 10 satoshis, then it might cost only 9 satoshis five years later if and when technologies of automation make cans of beans easier to produce. It might also be the case that the quality of the beans improves and that we pay 10 satoshis for superior beans for which we would otherwise have paid a little bit more. This kind of price deflation does sometimes happen during our current era, but most often inflation of the monetary supply inflation eats away the technological gains as the value of our dollars shrinks that we would otherwise see in improved grocery bills.

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A Note About Bitcoin Mining Economics

One implication of the accrual in value of a single Bitcoin is that, assuming miner fees remain invariant in terms of Bitcoin awarded in the mining lottery, that the growth in capital accrued by miners also grows in proportion with the growth in value of the capital. I will talk further about this in a future article where I will refute the notion that block reward halvening threatens the Bitcoin security model.

https://roundingtheearth.substack.com/p ... -economics


This is worthy of sharing here as well (or in other monetary threads). An excerpt; it's a lengthy piece:

https://cryptohayes.medium.com/energy-c ... f9e53a50cd
...

During the unfolding of this new global financial crisis, if you are serious about what the future holds monetarily for the various global factions, reading Zoltan Pozsar’s missives is non-negotiable. He is a money markets and rates strategist for Credit Suisse and pairs an excellent understanding of the intricate plumbing of global money markets with a clear and concise writing style. I don’t know if he coined the terms “Inside Money” and “Outside Money,” but I rather like how simple yet informative these descriptions of money and collateral are.

Inside Money are monetary instruments that exist as liabilities on another player’s balance sheet. A government bond is a liability of the sovereign, but an asset in the banking system that trades like cash depending on the credit quality of the issuer.

Outside Money are instruments that are not liabilities on another player’s balance sheet. Gold and Bitcoin are perfect examples.

The current PetroDollar / EuroDollar monetary system ended last week with the confiscation of the Russian Central Bank’s fiat currency reserves by the US and EU, and the removal of certain Russian banks from the SWIFT network. In a generation hence, when hopefully this sad episode of human history concludes, historians will point to 26 February 2022 as the date on which this system ended, and a new, currently unknown-to-us system sprouted.

I obviously have predictions on how this will play out, and that is the subject of this essay. Your moralistic opinions of the rightness or wrongness of different flags’ actions during this war should not distract you from the colossal implications to your personal finances.
...
...

Diminishing Demand

The West put themselves into quite a pickle.

Energy will cost more, food will cost more, and increased military spending will further crowd out the civvy economy. Citizens will protest the high and rising cost of living to their elected representatives. Politicians will resort to their easy button, villinaising producers, implementing energy subsidies for consumers, and in the worst case, using price controls. The summation of these popular quick fixes for inflation will be increased government spending. Someone must lend to the government at a rate it can afford …

Previously, when surplus countries believed in the sanctity of their reserves, America could count on foreigners (read: capital account surplus countries) to fund these deficits through debt purchases. America both issues the reserve currency and runs the largest current account deficit, therefore it’s the only flag that matters in this analysis.

But now surplus countries will save in terms of gold and storable commodities. And even those who consider themselves allies of the West are not immune to confiscation if they do not directly control the fiat monetary transfer network in which they accumulate reserves.

With foreign buyers on strike, governments must allow rates to rise to a level that entices domestic demand for bonds. But higher rates crowd out capital for private businesses. That leads to a recession, because all available capital flows to high yielding government risk-free bonds.

That’s no bueno.

Therefore, the central bank will be called upon once more to explicitly or implicitly finance the government through bond purchases funded by “money printer go brrr.” The interest expense of the government is kept in check on a nominal basis, private enterprise does not face higher nominal borrowing costs, and economic activity measured by GDP can continue to grow on a nominal basis.

The number one job of a politician is to get re-elected. People vote with their wallets. Government debt interest rates will rise in order to pay for increased outlays, but that will cause a recession. Most politicians will not be able to keep their seat if that happens. This is especially true because their opponent will tell the people they have the solution, more government spending but paid for with central bank money printing. Currently they call this “Modern Monetary Theory,” although it used to be called money printing. Same sauce, different packaging.

As I laid out in “Annihilation,” even if central banks raise rates slightly on a nominal basis, in real terms interest rates are still deeply negative. They will remain this way for a very, very, very long time because the structural setup of Western economies points directly to a long period of high and persistent inflation.

...

[more at link]

Author: Arthur Hayes
Co-Founder of 100x. Trading and crypto enthusiast. Focused on helping spread financial literacy and educate investors.

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Re: BitCoin

Postby Elvis » Mon Jul 18, 2022 12:10 am

Lots to comment on here, which I'll do bit by bit (as it were). Mostly the issues are misunderstandings common to the "maximalist" bitcoin community about how the present system works.

Belligerent Savant » Sat Jul 16, 2022 9:31 pm wrote:From the same Substack I just quoted Re: El Salvador's handling of covid (in the primary covid thread), here's a recent piece by the author Re: Bitcoin. He delves into cryptocurrencies/Bitcoin in some detail at his Substack (among other topics covered).


Bitcoin network would become the world banking system.

The world banking system works by extending credit. Would "bitcoin banking" do the same?


Here, we evaluate the future in which we no longer price Bitcoin in terms of dollars or other fiat currencies, which may not even exist. Bitcoin would simply be the unit of account.

This is a huge conundrum, where something (bitcoin) priced in an existing unit of account (the dollar) becomes the new unit of account: There's no information to set a price level except relative to the prior unit of account. Also, through what mechanism would bitcoin "simply" become the global unit of account? The writer at least partly recognizes the pricing problem:

we might still make a basic monetary comparison and suggest that the value of a single Bitcoin might be around $10 million in today's dollars.

By whose fiat is this arbitrary valuation made?

And as we see below, the expectation is that the valuation would be subject to continual revision as the economy grew (or shrank?).

Does the Monetary Unit of Account Accrue in Value?

Yes.

"Accrue" is a very strange word to use here with regard to a money of account. Again, unit of account is confused with something priced in it. If "change of value" is the meaning here, it's no different than "crying up" or "crying down" a currency's value—as town criers did in England whenever the King decided to change the value of his coins. This is true for all commodity-based moneys: they are ultimately fiat currencies with ever-adjusted values. My question remains: who makes these adjustment decisions?

Continually and arbitrarily changing the value of a unit of account defeats its purpose, rendering accounting meaningless. A unit of account counts. If you continually adjust the 'size' of the unit, rather than the quantity of units, bookkeeping becomes impossible.

If you are entirely or generally unfamiliar with the notion of the unit of account, this set of pages at thebusinessprofessor.com seems to be fairly thorough at first glance.

I looked, and there's no actual article on unit of account. "At first glance," thebusinessprofessor's site is full of articles explaining discredited orthodox notions, like the Taylor Rule, associated with the imaginary & vile "natural rate of unemployment"; the "neutrality of money" (it's never neutral); and worst, the page on "crowding out."


Now it gets really confusing...
Along the way to Bitcoin's ascension to the world monetary throne, the greatest annualized returns (increases in Bitcoin's value) would have happened (have already happened) throughout the process.

Annualized returns? What?

"ascension to the world monetary throne"—interesting choice of metaphor. :wink:


Thus, the growth of the value of a Bitcoin should basically mirror the totality of human progress.

This doesn't describe a unit of account, which is not counted by things it is designed to count. Where is meaning in prices (expressed in the unit of account) found?

centralized wealth pools whose jobs became protecting those centralized wealth pools

And bitcoin prevents or changes centralized wealth pools how?
This is the only reference to power relationships, a factor also completely absent from orthodox neoclassical theories.


The cryptohayes excerpt also calls for comment...

reading Zoltan Pozsar’s missives is non-negotiable. He is a money markets and rates strategist for Credit Suisse and pairs an excellent understanding of the intricate plumbing of global money markets with a clear and concise writing style. I don’t know if he coined the terms “Inside Money” and “Outside Money,” but I rather like how simple yet informative these descriptions of money and collateral are.

Inside Money are monetary instruments that exist as liabilities on another player’s balance sheet. A government bond is a liability of the sovereign, but an asset in the banking system that trades like cash depending on the credit quality of the issuer.

Outside Money are instruments that are not liabilities on another player’s balance sheet. Gold and Bitcoin are perfect examples.

What the Credit Suisse article says is, "Commodities are collateral, and collateral is money"—but I take issue with that; commodities are commodities, collateral is collateral, and money is money. I don't take issue with the analysis, just with thinking of a commodity as money.


Energy will cost more, food will cost more, and increased military spending will further crowd out the civvy economy.

Here we have the "crowding out" argument, which is pure bullshit.
Denying the civilian economy is just a policy choice—not a consequence of some imagined scarcity of money.


Someone must lend to the government at a rate it can afford

A) The government doesn't need our money, the government needs us to need its money. Bond issue is not truly a borrowing operation (it's a "money printing" operation); bond sales drain bank reserves by swapping reserve dollars for bonds.
B) The government can afford to pay any obligation denominated in US dollars. The affordability question is nowhere. Don't even.
C) Since 2008 and the "full reserves" regime institued by the Fed (and arguably since 1971), the government doesn't even need to sell matching bonds when it deficit spends. Bond issue might still be desirable for monetary policy (its chief purpose anyway), so let the central bank sell (and buy) bonds to suit its goals (as Australia does now).
D) Ultimately the government does the private sector a great favor by offering risk-free, highly liquid, interest bearing instruments. However, most all of the interest payments go to people who are already rich (guaranteed income for the rich); a number of fixes could reduce that inequality.

Previously, when surplus countries believed in the sanctity of their reserves, America could count on foreigners (read: capital account surplus countries) to fund these deficits through debt purchases.

This might have been valid under gold standard constraints, but today foreigners just don't fund US budget deficits. Foreign countries park their surplus dollars at the Fed by exchanging bank reserve dollars for another form of US dollars, namely Treasury securities. There is no US sovereign debt crisis.


With foreign buyers on strike, governments must allow rates to rise to a level that entices domestic demand for bonds.

This doesn't apply to governments like the US, the UK, France, Japan, etc.; It can apply to countries like Sri Lanka who have massive foreign-denominated debt and harsh, counterproductive IMF loan conditions that impose austerity on the people and preclude investments in food & energy independence (Sri Lanka has had 16 IMF interventions). Such countries lack what you might call monetary sovereignty, and the IMF and Wall Street schemes perpetuate that missing financial independence.

But to the point, for monetary sovereigns, the above "bond vigilante" argument is dead. Some people lost hundreds of millions of dollars wagering that bond vigilantes would "bankrupt" Japan. It's called "the widow's trade." :shock:


But higher rates crowd out capital for private businesses. That leads to a recession

Higher rates might lead to less business borrowing, but they usually don't, until rates are severely high. Raising rates to reduce inflation is intended cause a recession and job losses—a stupid mistake by the Fed we're likely to regret.


Government debt interest rates will rise in order to pay for increased outlays, but that will cause a recession.

This is the invalid bond vigilante/"deficits drive up interest rates" argument. The interest rate is a policy variable set by the central bank, not by bond purchasers nor any mysterious Invisible Hand. Central bankers do make mistakes, especially when wedded to outdated, discredited paradigms.*


more government spending but paid for with central bank money printing. Currently they call this “Modern Monetary Theory,” although it used to be called money printing. Same sauce, different packaging.

All money is bank money "printing" but that's such a poor way of characterizing the creation of money, which happens on spreadsheets, not printing presses.

Central bank purchases of government bonds is not “Modern Monetary Theory." Modern Monetary Theory is not central banks purchasing government bonds.

I read the whole cryptohayes (Arthur Hayes) piece, it's full of interesting background and I learned things!—but he just fails at the nature of government "debt."

I dissected these articles to point out the fundamental mistakes that "hard money" believers make that help to explain why bitcoin will never work the way they think it will. Fiat currencies work because the issuer requires payment of taxes in its currency, and promises to accept back its issued liabilities in settlement of the tax obligartion. Bitcoin has no mechanism for universal adoption as medium of exchange, let alone unit of account. The "maximalists" can only hope for a currency collapse, and it's amusing and scary the extent to which they eagerly anticipate the destruction of the global economy.

:shrug:



* I'm resurrecting paradigm because I just read Thomas Kuhn's The Structure of Scientific Revolutions and it's about the fairly irreducable idea of a paradigm and the scientific paradigms that dictate how we see the world and investigate & interact with it—and how paradigms are overthrown and replaced. Essential for the RI thinker. 8) Kuhn seems to have brought the word into wide use; see the Ngram of "paradigm"—usage shot up after publication of the book. If you haven't read it, used copies are cheap, pick one up!
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Re: BitCoin

Postby Belligerent Savant » Mon Jul 18, 2022 12:41 am

.
I'll have to dedicate time towards reading the above replies when time allows, but my first thought upon seeing the breakdown is: have you considered replying to Mathew Crawford directly in the comments section of his Substack piece?
I certainly wouldn't be a suitable proxy for interpreting his musings.

While not directly related to Bitcoin, how has MMT factored into current market circumstances? Has Stephanie Kelton issued any recent commentary Re: current rates of inflation, for example?
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Re: BitCoin

Postby Agent Orange Cooper » Mon Jul 18, 2022 12:54 am

Elvis wrote:I dissected these articles to point out the fundamental mistakes that "hard money" believers make that help to explain why bitcoin will never work the way they think it will.


And yet day by day and block by block, Bitcoin continues to work exactly the way they think it does, despite fiat economists' continued insistence that it can't and doesn't.
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Re: BitCoin

Postby Elvis » Wed Jul 20, 2022 7:46 pm

Belligerent Savant wrote:Has Stephanie Kelton issued any recent commentary Re: current rates of inflation, for example?


Yes.

https://stephaniekelton.substack.com/
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Re: BitCoin

Postby Elvis » Wed Jul 20, 2022 7:47 pm

Agent Orange Cooper » Sun Jul 17, 2022 9:54 pm wrote:
Elvis wrote:I dissected these articles to point out the fundamental mistakes that "hard money" believers make that help to explain why bitcoin will never work the way they think it will.


And yet day by day and block by block, Bitcoin continues to work exactly the way they think it does, despite fiat economists' continued insistence that it can't and doesn't.


I was referring to the maximalists' imagined day when bitcoin replaces fiat money.
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