One can build any amount of consumer protection required into most cryptocurrencies. In their bare form they don't have that, exactly like cash doesn't have that.
One can use the desired amount of third parties for fund protection.
The new thing about cryptocurrencies, is that some of these third-party services can be made non-custodial, so the third-party never has access to your funds. They arbiter, but not transmit.
What are you talking about? Fiat currency isn't reprogrammable--how would you implement a consumer protection mechanism on it?
Pick your favorite consumer protection mechanism, and I'll pick my favorite cryptocurrency and let's compare:
A) the up front implemention cost of the protection mechanism in fiat currency
B) the up front implemention cost of the protection mechanism in the crypto
C) the year-over-year cost in fiat
D) the year over year cost in crypto
I bet A and C are going to be in the hundreds of millions, if not billions, while B is going to be in the tens of millions and D is going to be in the thousands of dollars.
Here's an example of the kind of thing I'm talking about:
Consider the recent news regarding contaminated black market vape cartridges--that's going to be insanely expensive to fix, because there's nothing about high schoolers passing around dollars after school that gives those students any insight into the supply chain of the cartridges they're buying. But if some vape company did with their supply chain what Cardano is trying to do with coffee, they could provide consumers (and authorities) a way to trace their products back to their origins, a capability that already would have saved several lives.
It's not surprising that Libra is a dumpster fire, but let's not throw the baby out with the bathwater.
You've made some assumptions here about the impact of a verified supply chain for vape cartridges, and it sounds like you're proposing a solution to a non-existent problem.
A reputable supplier of vape cartridges gains nothing from having a verified supply chain - people trust them anyway and they maintain a supply of good cartridges to protect that reputation.
A non-reputable supplier of vape cartridges doesn't care, and only sells to people who don't care what they're buying. Their lack of good reputation doesn't matter, and their lack of a verifiable supply chain won't matter either.
If the customer wants a dodgy black market vape cartridge, that's what they'll buy. If they want a quality one from a reputable source, they can already do this.
That's a fair point. But I mentioned high schoolers in my example because they can't buy from a reputable source since they're not old enough (not that I think they should be vaping at all, but supply and demand...).
But still, the perpetrators here are not technically capable of pulling off a convincing forgery, so if the kids were sensitive to this issue in the first place then I guess there would indeed be no reason to insert a blockchain into the situation.
So let's take a scenario where the middle men are indeed capable of convincing forgeries: sneakers. Cardano is working on a supply chain integration there too:
And my wife's students (she's a teacher) are really into their sneakers. They're also largely unaware that chain/web of trust type measures exist at all for validation of product authenticity--but if Nike started doing this, they'd become experts overnight. And then, after school, when offered a sketchy vape product, they might think twice.
Maybe that's a weak argument too. Still, I like the ability to use the same channels you money would flow through to determine if your upcoming purchase came from where you think it did, and I think that that's a capability that's going to be hard for fiat currency to mimic.
>I bet A and C are going to be in the hundreds of millions, if not billions, while B is going to be in the tens of millions and D is going to be in the thousands of dollars.
Bitcoin is incredibly wasteful. If we're talking about digital transactions we already have credit cards and digital transfers. A block chain isn't required for those benefits.
Supply chain tracking is interesting but literally no one is talking about that. Its also an even harder problem. Its really not verifiable at all because you're now relying on data from outside the chain, ie how many widgets were created, whether the label on the real life widget is unique or forged, etc.
I expect the waste of Bitcoin will not carry forward into its successors. Nobody has yet proven that high value proof of stake currencies can scale, but I bet they will.
Also, what kind of consumer protections would you want to see in a currency? It seems to me that ensuring that you actually got what you paid for pretty much sums it up but I'm probably overlooking something.
> they could provide consumers (and authorities) a way to trace their products back to their origins, a capability that already would have saved several lives.
Why would blockchain be required for that? In case of drugs and food there recalls are being done using batch number of day of production.
Suppose somebody named Mary wants to sell you a vape cartridge which has a serial number, and they also give your a website which accepts the serial number and tells you:
> Joe runs the factory and gave this cartridge to Bob. Bob have it to Mary.
The assumption is that if you buy it then the site will then say:
> And Mary gave it to aiCeivi9
What reason do you have to believe that the website contents are accurate or that people accepting vape cartridges from Joe Bob and Mary are still alive?
In the blockchain case, you can see that Joe Bob and Mary have sold thousands of these and that very few of the transactions are in dispute over authenticity. Also, rather than trusting some faceless 4.6 star rating you can see which of the people that supplied the rating are ones that you know, and which of those are ones that you trust. You can also see if you trust people who trust Joe Bob and Mary. This let's you make a more informed decision about the quality of the thing you're buying.
Yea, having third parties capable of reversing transactions has an associated cost. But, it’s Billions relative to fraud, so Billions ends up being cheap.
Yeah, for now it's all we have, so I guess the juice is worth the squeeze. But in a world where our cryptocurrencies are a bit more mature I think we can stop being reactive by reversing transactions and start being preventative by using their structure to build chains and webs of trust that make fraud harder to commit up front, rather than just making it harder to get away with.
The amounts to giving the advantage to fraudsters until something that doesn't exist is invented.
Blockchains are irrevocable and unalterable, which removes two useful tools (reversing and changing transactions), and replaces them with nothing workable.
But so are events in the real world. When you think about "reversing or changing a transaction" what you really mean is creating a new transaction that brings an equivalent amount back to the person that paid it.
This is done in the real world by knowing the identity of the receiver person or entity and threatening them with consequences if the money is not returned. It seems to me more a problem of being able to identify the parties in a transaction rather than of mutability of the ledger.
The faults that people are attributing to blockchain are also applicable to cash, if you go the market and buy some magic beans from dodgy Dave with cash you won't be getting your money back. If you buy something from a reputable supplier with cash/blockchain then you would probably get a refund if you had some form of receipt.
Sure, cash has some of the same shortcomings of BTC, but that's why cash isn't touted as the future of payments and in modern economies is mostly used for transactions which are either small or illegal, and isn't considered to be a smart way of storing or carrying large amounts of money.
The initial question was whether cryptocurrencies have the capacity for consumer protection measures, not whether those measures are ready for prime time. I'm just arguing that when they're ready, they'll be more efficient than what we have, so we should encourage their development in the meantime (though maybe not in Libra's particular case).
Also, there are limits on how old a transaction can be when a bank goes and rewrites history. In my experience the limit is about six months. Transactions older than than are considered settled.
If this is a feature that people want in a cryptocurrency, it shouldn't be hard to achieve with smart contracts. The problem right now is just that you need a solid settlement layer before you work on features supporting the politics of rejiggering unsettled transactions.
Also, provided there is community consensus (this differs based on whether your currency is proof of work or proof is stake) blockchains can be altered after-the-fact to undo a threat. It happens:
https://spectrum.ieee.org/tech-talk/telecom/internet/ethereu...
It's just that for most currencies, it's currently a political affair that occurs at a risk to the stability of the overall system. But there are (what appear to be) good technical solutions to that (decred, for example, has a neat approach to post-fork-attempt stability https://medium.com/decred/detailed-analysis-of-decred-fork-r...).
As far as deciding whether a transaction ought to be settled in the first place, people are experimenting with some really interesting approaches (https://particl.wiki/learn/market/mad-escrow for instance).
It's probably not time to forget your bank password and switch to crypto, but if we want to eventually have good solutions to our fraud problems then we should be working to shape crypto into the system we want, not dismissing it as inflexible.
Out of that entire list, the one thing that exists now is the Ethereum blockchain fix, and that basically required global agreement to respond to a single theft. That's not particularly scalable.
The rest of the things on the list aren't in significant use at the moment, and might never be. Measures that are not ready for prime-time are as good as nonexistent. We're talking about money here!
> Measures that are not ready for prime-time are as good as nonexistent
That's not how technology works. To become fruitful it requires patience and investment. Nobody is saying you have to be an early adopter of these currencies.
> We're talking about money here!
...and particularly whether it's current feature set is amenable to fraud prevention. I work at a traditional payments company and the waste is infuriating--there has to be a better way.
> Nobody is saying you have to be an early adopter of these currencies.
This here is probably the source of our disagreement. As far as I can tell, tons of people actually are saying "get in now", which means we're no longer in the patience and investment stage, and any deficiencies in the cryptocurrency ecosystem have real consequences.
Yeah, I think you're right. There are all of these people who bought in because they just wanted to make money, and they're getting impatient and trying to get the rest of the world in too.
I'm interested in the tech and I want to work on it--so I'm just arguing that we shouldn't dismiss it.
If you have the interest, now might be a good time to diversify in that direction, but it's nowhere near ready to compete with fiat currency in terms of usage by the masses.
The logical followup question would be which problem is actually the most serious?
It's difficult to argue that low and predictable rates of USD inflation has had more of an adverse impact on holders of USD over the last few years than crypto fraud on holders of crypto.
Indeed, given that most cryptoassets have actually lost significant amounts of value against the USD since the end of 2017, it's difficult even to argue that the crypto world has adequately solved 2
Your wallet can be stolen and when using crypto so it doesn't solve 3 very well.
Credit card fraud is regulated such that the consumer is protected after a manageable amount of theft, $50 in the US last I looked. If you use a bank you receive some protections but at that point the implantation is abstracted and not that relevant.
If you use a smart contract wallet you can actually protect yourself from losing all your money even if someone gets your private key.
You can set a withdrawal limit of say, $50 and you can set a few recovery addresses (of friends, family or other personal wallets).
So if I have $10,000 in my ethereum wallet and I post my private key in every forum and every chatroom on the internet then the most I lose is $50. Before 24 hours pass I send my remaining $9,950 to a pre-defined recovery address which is excluded from the withdrawal limit.
Consumer protections are actually pretty good. The trouble is getting these tools in the hands of users.
The cost of doing that is making the wallet largely useless for purchasing anything over 50$. The independent ability to send all your money to a recovery address is a new security risk. Further, you need to notice the issue which means you could be our far more than 50$ unless you happen to be checking how much is in the wallet constantly.
So, this is strictly worse than using a credit card.
>The cost of doing that is making the wallet largely useless for purchasing anything over 50$.
I don't think I ever spend that much in a single day though. The limit will differ from person to person.
>The independent ability to send all your money to a recovery address is a new security risk.
It's not new and it's not a risk. You could always send all your money to another address. And the recovery addresses are meant to be trusted. I could send my money to a secondary wallet sitting in a safe or to a trusted family member. That isn't a risk.
>Further, you need to notice the issue which means you could be our far more than 50$ unless you happen to be checking how much is in the wallet constantly.
Your balance is printed in big letters whenever you open the wallet. It's hard to not notice really. There's also these things called automatic notifications, not difficult to set up.
>So, this is strictly worse than using a credit card.
But this is supposed to replace cash not credit cards. It is objectively better than cash in terms of consumer protections.
It’s the “independent ability” that’s new. Without that you just need to keep your key safe. With it your key could be safe and you still end up with a problem.
> objectively better than cash
Many people don’t use cash just credit cards. They might keep 50$ or less in their wallets, but that’s about it.
Further, Billions of people can hack my PC, only those I come into contact with can take my cash.
You still need the private key to make a transfer. This is for cases when you key is stolen.
>Many people don’t use cash just credit cards. They might keep 50$ or less in their wallets, but that’s about it.
Because they value convenience over privacy and freedom.
>Further, Billions of people can hack my PC, only those I come into contact with can take my cash.
Even if someone managed to gain access to your wallet they would still have to decrypt your private key. So, it isn't an issue if you use a strong password.
In general the answer for consumer protection is to use any escrow service. Multi-signature schemes can even prevent you from a bad escrow, as long as no two parties are colluding.
In general the need for consumer protection mechanisms is of course already a failing of the justice system. Virtually every case where consumer protection is useful is covered by existing laws and shouldn't require anything from the payment facilitator.
> In general the answer for consumer protection is to use any escrow service.
No, it's not, because the problem being addressed with consumer protection is power imbalance in the marketplace; mutually voluntary mechanisms cannot be the answer to it.
Also, escrow notionally solves exactly the same problem as cryptocurrency: providing the ability to rely on a transaction with an untrusted counterparty. If you need escrow for anything with cryptocurrency, the cryptocurrency is not doing the one thing that is it's defining purpose. So, why cryptocurrency at all?
Yes, that’s the failing. Ideally, justice should be cheaper in both time and monetary costs.
I don’t know of any state that has ever tried to optimize for a low-overhead justice system “in the small” (e.g. many, more efficient, more convenient small-claims courts; or the introduction of another triage layer of “medium-claims” courts, where most all civil contractual disputes would land) which is an interesting fact all by itself. Speedy+cheap justice goes somewhat hand-in-hand with things like red-tape reduction, in that both are attempts to “oil the wheels” of the state apparatus—yet you’d never hear the same people (e.g. libertarians) espouse both.
Aren't small-claims courts precisely an attempt to optimize for a low-overhead justice system in the small? Doubtless you feel they don't succeed or don't go far enough, but it seems odd to claim that nobody's tried.
That's what cryptocurrencies allow, since Bitcoin. People can pick a dispute mediator who gets involved and can reverse the transaction only if there's a dispute. It's all done with OP_CHECKMULTISIG. The mediator is not an escrow service and can't steal the money. So you end up with a competitive market of tiny "courts".
> I don’t know of any state that has ever tried to optimize for a low-overhead justice system “in the small”
Both small-claims courts themselves and rules giving effect to binding arbitration agreements are attempts to do that, as are many specialized, domain-specific administrative forums.
I mean, except that it's actually not cheaper, you've just moved the trust and security problems around (to your own opsec and your trust in the counterparty) and the privacy most cryptocurrencies provide is pseudonymity rather than anonoymity...
but I think, with traditional money exchange the reliance is on regulatory and legal enforcement, rather than making the technology itself watertight, which increases the risk profile, and thus cost. You can do this in traditional approaches because you just pass on these costs and there's no need to improve beyond what people are willing to pay. Crypto represents an asymptote for what a rigorously applied technological approach (as opposed to beaureaucratic/legal approach) can do, using commodity equipment, which is much more available at the endpoints of these transactions now ... (because most people have high-powered, always connected computers available to them).
> but I think, with traditional money exchange the reliance is on regulatory and legal enforcement, rather than making the technology itself watertight,
A lot of money and research has gone into this, and the tech is being tightened up all the time.
> which increases the risk profile, and thus cost.
Except the cost isn't actually higher.
> You can do this in traditional approaches because you just pass on these costs and there's no need to improve beyond what people are willing to pay.
In the US perhaps, not in places where these costs are regulated.
> Crypto represents...
A much more expensive and more risky way to do basically anything, because you have neither solved security nor trust problems, you've just moved them.
> A lot of money and research has gone into this, and the tech is being tightened up all the time.
Yeah, but it's not being deployed at consumer level, nor are the savings being passed on.
> A much more expensive and more risky way to do basically anything
Risky, yeah. Like any new technology. But transaction cost is cheaper.
Sorry, I didn't mean to get involved in some holy war. I can see there's people with a lot vested in both sides of the debate. I'm neither. Just pointing out the obvious.
> Yeah, but it's not being deployed at consumer level, nor are the savings being passed on.
It absolutely is, not sure where you're getting your ideas from here.
> Risky, yeah. Like any new technology. But transaction cost is cheaper.
It's not risky because it's new technology, it's risky because you've passed all the risk to the end user and their opsec. The cost per transaction of something like the VISA network is utterly tiny compared to most cryptocurrency transactions, particularly if you factor in the externalities (mining) and it's a pretty small cost to the merchant as well in places where regulation has been put in place (i.e. not the US). To the consumer it's free. See also bank transfers in most advanced economies.
> Just pointing out the obvious.
You're not pointing out anything that's actually true though.
> it's risky because you've passed all the risk to the end user and their opsec.
This was exactly my point. With pervasive crypto end users can assume this to a greater degree, whether you believe that appropriate or not.
Visa e.g. requires specialist terminal equipment, complicated issuer and acquirer and banking relationships and is heavily dependent on legal enforcement wherever you use it. Try using mastercard or visa in a third world country.
For “actual” money transfer, compare with western union where toure talking about ~10% fee.
> ... nothing that’s actually true
Oh you’re a rude one. But I’m sure to somebody you’re very special. Good boy.
It's not a point you made before this, you just said it was "more secure" and "cheaper" without qualification. Now you're just trotting out 'coiner memes about the third world and Western Union.
I'm confused by your last paragraph. How does the existence of laws that protect consumers actually protect consumers if the payment systems we use don't allow reversals?
If an ebay seller delivers me a faulty product I can sue them for not delivering what I payed for and when I win the court orders them to pay the money back (plus my expenses). If they don't pay I can go after their assets.
It's basically the same how a business would recover money from a bad supplier. With small claims court it's even somewhat efficient for small sums, but of course still orders of magnitude more work than a credit card dispute.
That's an enormous burden. If we require lawsuits to enforce even minor cases of consumer protection, I argue that there is effectively no actual consumer protection.
The law not working for "minor cases" (which includes cases over hundreds of dollars) is exactly the failing of the justice system I mentioned. This isn't universal, in many places you can get theft of a Mars bar or possession of tiny amounts of drugs prosecuted very effectively, all cases much more minor than the typical credit card dispute.
So, rather than having a financial system with basic consumer protections (which would allow transaction reversals and contestation), you would prefer we have a criminal justice system which aggressively enforces and prosecutes minor offenses? I think there is a weak connection between the two, particularly since most situations where we do things like dispute a credit card charge are civil matters. And, as stated above, requiring civil suits for something like disputing a credit card charge is an enormous burden, and puts the burden on the consumer. (Which will also disproportionally affect the poor.)
Anyone saying blanket "we don't need consumer protection mechanisms" because it's a "failing" of something or the other must be taking the piss.
As a parent of children, consumer protections are overall a "good thing" to help prevent bad actors from doing harm. It goes for any space that can do harm to you or your family in any way.
It's why you have exchanges like Gemini in place that seek to be the "most regulated" crypto exchange - to instill trust in the service and market... and your investment.
That being said there is still a ways to go... it will be interesting to see if the market can solve some of these issues through natural growth and competition.
I think it's weird how family gets invoked to change the moral gravity of an issue. It suggests orphaned children, for instance, should care less about humanity.
It's not about the moral gravity but about an illustrative example of a particular category of people who have access to devices where buying stuff is possible - children. Our marketplace has at least some customers that clearly are unable to protect themselves and need protection, e.g. these children. This places some contraints on the properties that this marketplace must have - e.g. reversals must be possible without undue burden. And this places some limitations on what technologies can/can't provide these properties and thus would/wouldn't be suitable.
How does being an orphan make one care less about humanity?
Personally, I want orphans (as defined as minors with no living parents) to be well-cared for regardless, either by relatives or by an outside agency ("orphanage" or foster home).
Absolutely, that's my point. We should care about people, period. Whether one has a family should be irrelevant to the question of how to engineer a society.
The legacy monetary system may have nice consumer protections on the micro scale, but it fails on the macro scale:
1. Inflation eats 2-4% of everyone's purchasing power each year, disproportionately affecting the poor. This inflation is desired by the central planners.
2. The American system of banking regulations introduces systemic risk into the financial sector.
Sure, if you can prove that your transaction was fraudulent, you can get a couple thousand bucks back into your savings account. But you'll have to gamble your money in the market to beat inflation just to break even. And then, every so often, the entire system will collapse and destroy trillions of dollars of wealth.
As an aside, you also get the bonus of having political control of banking relationships, so you can conveniently freeze and take the money of those who find the political winds aren't blowing their way.
Edit: PLEASE don't take this is an argument for Libra (sorry I wasn't clear), merely an argument for sound monetary policy and decentralization.
I’m consistently amazed by how many people here dont understand inflation at all and are confident they need to throw out the financial system before they figure it out.
Inflation is an incentive to invest. If you invest in literally anything other than cash under your mattress inflation stops mattering completely to you, and all you have to think about is constant dollar returns. That’s why we have it. So long as your wages track inflation (broadly they do) you benefit from implicit depreciation in your debt obligations. It costs you nothing if you don’t hold cash like you’re supposed to, and it costs you effectively nothing if you hold money in a savings account as many offer 1.8% interest these days, matching inflation.
What nobody arguing for a deflationary currency can tell me is why they think money should be worth more later solely by virtue of them having gotten it first. A risk-free guaranteed return at the expense of the next generation! It makes no sense.
This is basic ECON 101. High school level home ec probably. Not some big conspiracy perpetrated by the central banking cabal.
Bitcoin in particular seems to be driven by people who are really obsessed with the idea of having a store of wealth with zero risk (assuming they never make a mistake handling it, or get tricked by swindlers, which I think they're seriously underestimating).
But as you say, inflation is a tool; it motivates investment. Expropriation is a tool; I don't see how eliminating it is appealing at all to the billions of people with no savings at all. They may want to take money from the wealthy at some point.
If there's ever a point where "the masses" really understand bitcoin, and how a few HODLers possess most of it's value, they're not going to want it.
I’m referring to a US audience (Ally offers 1.8%). These rates are designed to incentivize you to allocate capital accordingly. The point is you not put much of your money there. Depending on how you feel about the future exchange rates between the EUR and USD you’re welcome to invest in US treasuries, for instance.
I'm not sure that is "why we have it". It sure is why the central banks are pumping money into the system (they quite rightly want people and companies to invest), but it's far from clear why we have it a priori.
As I mentioned before a dollar today should be worth more than a dollar next year since, if you are smart, you can make that dollar work for you for a whole year.
You have not explained why; you've explained why you think we should have inflation. And why someone thinks something should be is a long way from explaining why something is.
The same amount will be worth less in the future! That's really all there is to it. A certain amount of money is not value, money is a number that has a value associated with it, that value will continuously change depending on what you can do with it.
Inflation (deflation) simply reflect the change in value for doing something today versus tomorrow. When the economy works well you have inflation, when the economy works badly it becomes deflation.
> The same amount will be worth less in the future! ... When the economy works well you have inflation, when the economy works badly it becomes deflation.
This is backward, actually. If the economy is working well then withholding consumption (i.e. saving) means that more goods are available for others to either consume or invest. The portion that ends up invested should result in higher future productivity and, in the absence of currency supply manipulation, decreasing prices (deflation), a natural reward for producing more than one consumes.
Only in an economy which is consuming capital—investing so little that productivity is actually decreasing—should prices increase over time. In that case we need more investment to bump up production—the investments don't need to be all that good to be better than the status quo, and anything with a positive return is superior to just waiting for prices to increase further. In the deflationary case, however, we should be more selective about where we invest. It's better for the economy to simply hold our funds in reserve rather than actively compete against more competent investors to expend resources—not just money, but the labor and material it represents—on ventures that will provide lower-than-average returns.
If we expand the currency supply to manufacture inflation and thus make it look like we need more investment when we actually don't then the net result is malinvestment, wasted resources, and a lower average rate of return. It's not good for the economy or the average citizen, but the extra transactions and higher nominal prices directly benefit the bankers and tax collectors with influence over monetary policy.
Because it is my choice? If you want to use an inflationary currency, go ahead. But other people should have the option of opting out, and using a different currency, with different properties
That’s not a reason. Give me a justification for why you think money should be worth more later. Because it would be sweet for you isn’t really compelling. I gave you a reason for inflation and your counter was “because I would be rich” - see if you can make a better case and if not, maybe reconsider your position.
> Give me a justification for why you think money should be worth more later
My justification is freedom of choice. Or, in other words, the reason is "because I want it to, and I am justified in making my own free decisions".
I believe it is people's right to choose which money system that they want, and you should not have the right to prevent other people's voluntary choice to use a different money system.
I am justifying why people should be allowed to make their own decisions about what money system that they use.
Freedom of choice is a valuable principle in and of itself.
You cannot just dismiss this important concept of freedom of choice. It applies to all parts of society.
The only justification I need, is that I do not want people's freedoms to be infrindged upon.
> My justification is freedom of choice. Or, in other words, the reason is "because I want it to, and I am justified in making my own free decisions".
You're intentionally not answering my question which is: explain to me what benefit to society could potentially arise from money being worth more over time?
I'm not saying you can't do it I'm asking you why. It seems you and everyone else can't point to anything other than making yourselves wealthy.
The benefit is that people are allowed to use money of their own choosing.
Freedom is something that many people care about and value.
The benefit is also that different people want different things in their own money system, and a diversity of things and monetary systems is good, merely because of the money systems being different.
There is value in having differing money systems with different properties (merely because they are different!), and letting the market decide which one is best.
So a direct answer to your question is "because it is different from what we have now", and more diversity in monetary properties is a good thing.
Dropping a flaming turd on someone’s porch is an alternative to putting up with someone but it’s strictly worse for obvious reasons. Providing that alternative is not better if you can’t even begin to speculate on why it might be better. The entirety of your case is "#freedom" and you refuse to speculate on why it might actually be better. Nobody's arguing with your right to do stupid things, I'm just asking why your suggestion might be better and you keep refusing to even speculate.
> is an alternative to putting up with someone but it’s strictly worse for obvious reasons
If the person has the choice of this happening, and chooses, for whatever reason, to have this happen to them, then yes, I would say that it is positive, and not negative.
I am specifically referring to people voluntarily choosing something for themselves. And no matter how ridiculous, I'd still say that it is positive, if they choose to do it.
> Nobody's arguing with your right to do stupid things
I am saying that if someone chooses to do it, then it is not stupid. People can have whatever reasons that they want, for doing anything, and I am not going to argue against it.
> I am saying that if someone chooses to do it, then it is not stupid.
That may be the worst argument I’ve heard in support of anything ever. People do stupid things a lot and I’m your model that’s never true solely because they chose to do that. I don’t think you’re arguing in good faith, anymore.
I am absolutely arguing in good faith. If people want the free choice to choose a different set of properties, for their own money, then the fact that they want it is a good enough reason, in an of itself, for such a money to exist.
No other reason or justification is necessary. “Because people want it”, is good enough.
Freedom of choice is something, in an of itself, that people value. And because people want something, is a good enough reason, alone, such that it is justified.
People can want things that you think are “stupid” or “ridiculous” things if they want, and your opinion that they are stupid or ridiculous, does not overrule their own value system and wants.
There are basically no situation where your opinion on this, would matter. It would be like saying “Why do you like ice cream! That’s stupid!”. Such a statement is just meaningless. The fact that you think it is stupid that someone else likes ice cream is irrelevant and doesn’t matter.
The fact that I just like ice cream, is a good enough reason, in an of itself, for me liking ice cream. Me liking something, or not liking something, is circularly, self evidently true, and I need no other justification or reason for it. I like it, because I like it, and that’s it.
The fact that I like ice cream, is axiomatically true, because I am the one who decides what I like, not other people, and so it make no sense, and is just a meaningless statement to say that it is “stupid” that I like ice cream.
> No other reason or justification is necessary. “Because people want it”, is good enough.
Some people want to dump chemicals in the river, and yet, when its bad for society we decide not to let them do that, and I'm totally okay with that. Which is why if you want to make a broad social decision like changing how money works (even allowing for a new option) that conversation needs to be had on merits. We weigh pros and cons. Then we decide. That's how society works broadly, at least in a democracy.
Remember, your freedoms end where my rights begin. In so long as something doesn't impact anyone else, they're free to have at it. Once it starts to impact those around them, it's no longer solely their decision -- and degree matters. If you want to eat a ton of ice cream, do it. If you want to change the way a broad swath of society functions, we need to have a chit-chat. Much of our day to day is in between.
> Which is why if you want to make a broad social decision like changing how money works
No, I don't want to force you to use any money that you don't like.
It is pretty silly for you to argue that people are infrindging on other people's rights, just because they prefer to use a different method of voluntarily exchange with other people.
It is interesting that you are jumping to this argument, because you previously tried to pretend like you didn't want to force other people to make certain decisions for themselves, and now you are totally backtracking on that.
It seems like you didn't really mean anything by those statements previously then?
If you cared so much about what type of paper that other people are using voluntarily, so much that you are willing to compare it to dumping chemicals in water, then why didn't you just say that from the beginning instead of pretending like you didn't care about what voluntary decisions other people were making with their own means of exchange?
Freedom is a valuable property in and of itself, and that is the only justification I need, to say that this is a good thing.
Since this has been long and winding let me try and simplify:
- I asked you to attempt to justify the positive social value and implications of a deflationary currency, and you replied a number of times "freedom" and told me that there was no such thing as a stupid decision because someone made it. You re-iterated "freedom" as though it was an answer to my question many times, and then said that "freedom" was intrinsically awesome, which is again, not an answer to my question.
- I don't care if some people want to barter. I was trying to have a conversation about whether a deflationary currency is good for society as a whole, and what the impact would be if it took over more of society. I made numerous arguments why this would be a bad thing, to which you again replied "#freedom".
- Freedom of choice is intrinsically valuable, what people choose to do with it may or may not be, and worth a conversation on a case by case basis. Especially if impacts a lot of people, and we as a society reserve the right to curtail said choices if they don't make sense. Nobody's arguing you shouldn't be able to choose things, and similarly, you can't possibly believe anything you choose is good because you chose it, and that choices shouldn't be curtailed if they lead to negative outcomes. You know, like crimes.
- I also made the argument that the current model provides maximum freedom of choice by decoupling a long-term store of value from a unit of exchange and account. That way you can choose what you want to back your personal economy with. It also represents a voting mechanism for capital allocation. Switching to a "backed" model for currency removes the freedom by stapling back together two things that don't need to be stapled together and drags in a number of negative social consequences. Unbundling represents maximum freedom, something I figured you'd be a fan of.
> Nobody's arguing you shouldn't be able to choose things
You made a comparison to people's right to swing their fist, and that this right ends. So in other words, you did, at the very least imply that what currency people used should not be their choice.
So yes, it does seem like you want to take away people's choices on what money they should be aloud to you.
You can't have it both ways here. Don't say "I am not trying to take away your choice!", And then at the same time say that the right should be curtailed.
> Switching to a "backed" model for currency removes the freedom by stapling back together two things that don't need to be stapled together
Or... You could use it if you want, and don't use it if you don't want.
> Unbundling represents maximum freedom
Or... A person could individually decide if they want it bundled, or not bundled, for themselves, by choosing which currency to use.
I won’t reply until you answer my question. You’re intentionally trying not to understand it appears. If switching to a different currency model leads to negative social consequences then we should have that conversation. That’s where the freedom to and from intersect. If you can’t see that there’s no point in talking.
Also, please avoid these long tit-for-tat arguments that don't go anywhere and only continue because it's hard to let go. They don't interest other readers, and they end in ill feeling.
Cool. Fine. Then you should have just said that, and you shouldn't have said the previous stuff about not wanting to prevent people from making decisions about what money that they voluntarily choose to use.
Please avoid these long tit-for-tag arguments on HN. They almost always turn into arguments about the argument itself, and get unpleasant if not aggressive at the end. None of this is good reading or interesting to other users.
Short version: Deflation benefits society by preventing malinvestment in ventures with a below-average (i.e., below-deflation) rate of return which would divert labor and materials from actually profitable investments.
I think you didn’t read anything I wrote because my core focus is that inflation is 100% avoidable through investment which is the behavior explicitly being incentivized via, to your point, a stick and not a carrot approach.
It’s theft like taxation is theft: it’s not.
> a GSE creates money from nothing
Yes that’s the point. The economy gets bigger and more people are born and the money supply expands. To not do so would create deflationary pressure which, again, creates a risk free return for existing money holders for no justifiable reason. In fact you haven’t justified it either, you say it as though it’s self evident.
If you don’t believe the value of existing money should go up then you agree the money supply must expand to match economic growth and population growth. All were then arguing about is how much.
> money grubbing banks...
Banks are paid for the role they serve in the economy: liquidity and security. Look at how much they make, it’s all publicly disclosed. Banks make around a 1% return on deposits (you know, the collateral for this lending thing). Almost nothing. It’s a shit business. The remaining “free magic money” is cost of doing business and paid out to employees, landlords, suppliers and so on. You know, business expenses.
> If you don’t believe the value of existing money should go up then you agree the money supply must expand to match economic growth and population growth.
The unit of exchange (money/currency) should remain relatively constant. That's the point. Maybe it will go up some, maybe it will go down some, but having it manipulated for the profit of large banks is theft.
It's a complete perversion of free market banking and benefits the few over the many.
> 100% avoidable through investment
Not true, unless you're talking about investing in financial instruments. Investing in almost anything else subjects you to property taxes almost everywhere.
I sure hope you don’t need the army, police, schools, fire, water, roads, air and so on. Most adults came to realize at some point that some things need to be provided as a group, and they’re not free. For those everyone has to pony up.
If you don’t want to pay taxes there’s a few countries you can do that in but in most paying taxes is social contact: it’s a take all the benefits and pay taxes, or leave to a society with a contact you view more amiable.
> unit of exchange should remain relatively constant.
Well if I have 100 people and my economy had $100, and Steve has $20 of them, then Steve invented the steam train and 100,000,000 more people show up then the value of my dollar has gone up millions of times over and Steve is now the single wealthiest human on earth even though he’s only got $20. To keep it stable I’d make more dollars. If you see how this works on the macro timescale you must see how it translates to the micro.
> to the profit of the large banks
We’re paying them to provide liquidity to the economy via lending and again they only make 1% on assets on deposit. It’s not the system you seem to think it is.
> avoidable...
You just have to factor that in to the investment minimum yield. This isn’t rocket science. You are not guaranteed a risk-free return on capital. To ease this Trump is considering indexing capital gains against inflation, another approach (which I wholeheartedly disagree with).
> I sure hope you don’t need the army, police, schools, fire, water, roads, air and so on. Most adults came to realize at some point that some things need to be provided as a group, and they’re not free. For those everyone has to pony up.
I'd be willing to pay for some of those. Lots of people have an inability to separate 'goods and services required for society' and 'government.'
Society can have all of those things, there need not be a government and there need not be taxes.
> paying taxes is social contact
This is just an empty phrase used as propaganda. There's no such thing as a 'social contract.' Taxes are taken under threat of physical harm and death, always have been.
> To keep it stable I’d make more dollars
This has the presumption that you, or someone should be in charge of what money is worth. That should not be a function of the government.
> This is just an empty phrase used as propaganda. There's no such thing as a 'social contract.' Taxes are taken under threat of physical harm and death, always have been.
Tell that to the judge haha
> Society can have all of those things, there need not be a government and there need not be taxes.
Yeah no, not really.
> This has the presumption that you, or someone should be in charge of what money is worth. That should not be a function of the government.
You’ve again completely ignored my point which is that your share of the value of the economy if the dollars in the system remain constant goes up by inaction. Maintaining a constant Value of the dollar as you yourself suggested requires active management. Once you agree on that we’re just chatting degrees.
> Maintaining a constant Value of the dollar as you yourself suggested requires active management
I don't think that it requires any management. If the value of a currency increases, then the ratio of currency to goods decreases. If a currency became so valuable that people can't trade with it, they'd trade with something else.
You argued for a constant value of a single dollar and then told me what would happen if the value of the currency increases, which is the opposite of what you were telling me before. If it does increase then it leads to massively disproportionate accumulation of wealth for existing holders, which you cannot justify.
> This has the presumption that you, or someone should be in charge of what money is worth. That should not be a function of the government.
That's (a) very much your opinion stated as self-evident and (b) not currently the job of the government, it's the job of an independent private central bank specifically designed to separate monetary policy from fiscal policy and the whims of the elected officials.
The Federal Reserve is federal in the same way that Federal Express is: it's not. Doesn't this line up with the libertarian ethos?
> The Federal Reserve is federal in the same way that Federal Express is: it's not
It's analogous to hiring a contractor. The government wants a program, it simply outsourced the operation to another entity.
Here's what I actually said:
> The unit of exchange (money/currency) should remain relatively constant. That's the point. Maybe it will go up some, maybe it will go down some, but having it manipulated for the profit of large banks is theft.
It should remain relatively constant. That's the entire point of a unit of exchange. There might be periods where the relative demand for the currency outstrips the supply, and if it becomes such a dramatic situation as your presented in your contrived example, then it would cease to be useful as a currency, and something else would/should become the currency.
> (b) not currently the job of the government
Congress has the power to coin and regulate value, per the US constitution. I'm not sure how we ended up talking about the US specifically here, I'm referring to governments generally.
> It's analogous to hiring a contractor. The government wants a program, it simply outsourced the operation to another entity.
No, it isn't, explicitly so. The reason the Fed operates at arms-length is explicitly to avoid having the government set monetary policy. This degree of stability allows businesses to plan and reduces their currency risk. Otherwise you face D vs. R every 4-8 years totally reversing monetary policy.
> It should remain relatively constant. That's the entire point of a unit of exchange. There might be periods where the relative demand for the currency outstrips the supply, and if it becomes such a dramatic situation as your presented in your contrived example, then it would cease to be useful as a currency, and something else would/should become the currency.
Yes, and my whole point is to avoid a large dramatic change you apply small amounts of pressure over time. This is called managing the money supply. And once you agree that this kind of adjustment achieves your objective of "relatively" stable currency (it does), then we can talk degrees, but we're now having a very different conversation.
> Congress has the power to coin and regulate value, per the US constitution. I'm not sure how we ended up talking about the US specifically here, I'm referring to governments generally.
Government handles the fiscal policy, federal reserve handles monetary policy. They're explicitly separated. This is true in many developed countries in the world operating under a central banking model, including Canada (Bank of Canada), and all of Europe (ECB) and England (Bank of England -- privately owned from 1694 to 1946).
> Government handles the fiscal policy, federal reserve handles monetary policy.
This is entirely semantics.
> And once you agree that this kind of adjustment achieves your objective of "relatively" stable currency
I can prove to you that it doesn't result in a stable currency. See the purchasing power of the US dollar over the last 100 years.
> This is called managing the money supply
That's what you call it. I call it theft. If an individual does not have the power to create money, then neither should a group of individuals, regardless of what color robes they're wearing.
> Otherwise you face D vs. R every 4-8 years totally reversing monetary policy
I don't think there's any risk there. They're the same party, both are spend-spend-spend.
Simply being born is no justification for stealing by fiat. People should be rewarded for saving capital. Forcing people to gamble their money only to maintain the wealth they already earned is not ethical. It is sufficient for people to be incentivized to spend money on things that are useful or interesting and to invest for higher return where the investment is sound.
EDIT: the money stolen by fiat is not evenly redistributed, and definitely not in favour of the poorest.
Accumulation of savings is valuable as it can be used for capital investment at the best opportunity. Forcing people to spend prematurely on crappy mal-investment is not optimal. Spending for the sake of spending is not optimal investment.
You're telling me in the market today, there's absolutely nowhere for you to productively allocate capital for an expected return of over 1.8% per annum? Even though Ally offers savings accounts that yield 1.8% per annum? And treasury bills yields are 2.2%? Remember, a savings account or CD are also valid investments assuming they yield more than inflation. What I'm saying you shouldn't do is store literal cash in a mattress. A savings account serves as collateral for loans which are in fact productive investments.
A savings account pays below the real inflation rate here in New Zealand. The cost of housing has increased hundreds of percent over the last 20 years thanks to central bank monetary policy that artificially manipulate interest rates. A shoebox apartment is now ridiculously unaffordable. I can put money into savings that loses money after inflation, and funds a system that is fundamentally corrupt, which leaves me worse off overall than if we had a real free market without centralized manipulation of currency and interest rates.
This centralized artificial interference has caused major imbalances in the economy here. It didn't work for the Soviet Union and it's not working in the "capitalist" world either.
> A savings account pays below the real inflation rate here in New Zealand.
That's a market force designed to disincentivize that investment. Nobody's guaranteed a risk-free return, or even retention of value in what's not a long-term store of value. Pick something else to invest it in.
For what it's worth, NZ's inflation rate is tracking at 1.5% per annum and Rabobank offers a 2.4% online savings account.
> The cost of housing has increased hundreds of percent over the last 20 years thanks to central bank monetary policy that artificially manipulate interest rates. A shoebox apartment is now ridiculously unaffordable.
Cost of housing is a total red herring and largely unrelated to this conversation. Cost of housing is overwhelmingly supply-side driven. If you want cheaper houses demand municipalities permit new construction. You can always build up, there's no limit on that. Build enough, the cost will drop substantially. There's plenty of markets that exemplify this effect, like Houston and Tokyo. SF on the other hand routinely forbids totally reasonable construction and the pricing speaks for itself.
The cost of housing roughly boils down to this: the narrative is that housing "should be an investment" and that it "should go up over time" so the directionality is accepted. Homeowners tend to be older, wealthier, have deeper ties to the community and vote. Renters tend to be younger, less affluent, transient and don't vote. As such policies are enacted that benefit homeowners. This includes zoning restrictions, building restrictions and tax deductions benefiting homeowners. Too few new units are built relative to influx of population, and price goes up. It's simple market economics.
Want to solve the problem? Get people to vote to allow more housing.
For what it's worth in the US housing prices on average tend to track inflation. It's certain municipalities like SF and NYC that far exceed due to asinine policy. The monetary policy was the same in all regions of the US so why then would pricing changes be uncorrelated across markets?
> I can put money into savings that loses money after inflation, and funds a system that is fundamentally corrupt, which leaves me worse off overall than if we had a real free market without centralized manipulation of currency and interest rates.
New Zealand ranks routinely as the world's least corrupt government. A system that maintains stability of money and debases it over time slowly and predictably helps keep wealth inequality down, and benefits the less well off by inflating away debts and encourages productive allocation of capital.
> This centralized artificial interference has caused major imbalances in the economy here. It didn't work for the Soviet Union and it's not working in the "capitalist" world either.
This doesn't make sense. The Soviet Union fell for all sorts of reasons that weren't inflation related or even central planning related. Authoritarian states tend to do so in time.
I'd say it's working just fine, inflation is roughly 1-2% per annum and incredibly well controlled. We've got plenty of actual problems (like the cost of housing), though, this isn't one of them.
New Zealands actual inflation is way, way higher than 1.5%. You are very naive and gullible if you believe that number. You also have no idea how the cost of housing is determined. Central banks have artificially manipulated interest rates to an extremely low level, where savers are forced to malinvest in things such as housing, which is also encouraged by mortgage rates being way below the reasonable cost, because again, the interest rates are artificially low. The reserve bank governor even admitted they were at fault.
> New Zealands actual inflation is way, way higher than 1.5%. You are very naive and gullible if you believe that number.
It's defined with a mathematical formula based on a basket of goods. You haven't provided any sources other than your gut and a baseless assertion about gullibility. I have references [1, 2].
> You also have no idea how the cost of housing is determined.
It's literally on the investopedia write-up. [3] And also, it's basic, fundamental market economics. More supply, price goes down. Less supply, price goes up assuming constant demand. Sure lending makes unaffordable places more affordable. That doesn't really matter if you flood the market with supply though does it? [4]
FTA [4]: "Tokyo rent is cheaper because it builds lots of housing. Every year, the city adds about 100,000 new homes. This increase has more than kept up with the increase in population, leading to a housing surplus." Average rent is $2.50/sqft in Tokyo vs $6/sqft in SF. And they have negative interest rates. Supply. Matters.
> Central banks have artificially manipulated interest rates to an extremely low level.
Set them at a low level. That's their job. To maintain a consistent, low, predictable rate of inflation.
> The reserve bank governor even admitted they were at fault.
Look I'm not saying they're perfect, I'm saying inflation has little to do with the very real issues you call out.
You are fundamentally off the mark at every single point. The basket of goods specifically excludes things such as housing which is the by far the number one cost of living here, which leaves that "inflation" figure as an utterly meaningless metric.
>> Set them at a low level. That's their job. To maintain a consistent, low, predictable rate of inflation.
Your reading comprehension failed here. I am referring to control of interest rates, which has far reaching consequences beyond inflation. This is the "fatal conceit" of socialist minded people such as yourself. No one on this planet is qualified to control interest rates.
As for the Soviet Union - I was talking about their centralized / planned economy. Socialism. We have a socialist monetary system in the West.
Yes New Zealand is the least corrupt government in the world, apparently, and despite that, the divide between rich and poor is increasing. It has become way less affordable to live here since the mid 2000's and is not getting any easier. We are locked in to a corrupt global system. Our monetary policy is a slave to the global socialist monetary system.
(traditional, not "American") Socialism isn't central planning it's the state owning the means of production. To my knowledge, there's no concerted effort in New Zealand to have the government own the means of production.
> ...the divide between rich and poor is increasing...
For sure, and it shouldn't. At least in the US it really started to get bad after Reagan dropped the top income tax from 90% to the current 35%. And the estate tax from 80% to the current basically-zero. Nothing to do with inflation, in fact, inflation would reduce this spread as it would disproportionately affect those with more money, and aid those with debt.
Who would have thought that letting the wealthy keep more money would lead to the wealthy having more money? Shocking.
> We are locked in to a corrupt global system.
Explanation needed.
> Our monetary policy is a slave to the global socialist monetary system.
Is the global government (United Nations?!) trying to own the means of production?
Listen man, you’re obviously a very smart guy (I’m assuming your gender), but it seems that you haven’t been exposed much to the “Austrian School” of economics.
Keynesian theory is the orthodox economic religion, which you have fully subscribed to. Austrians are heretics and we are burned at the stake for our beliefs.
I’ve read both sides. The Austrian school is far more compelling and rational. It cuts through the obscurantist bullshit with precision.
To me, Keynesian theory with its justification for continued economic chaos, is for those suffering from “battered wife syndrome”. To accept the Keynesian excuses, is akin to a wife getting brutally raped and beaten by her husband every day, while telling everyone “It’s OK, I deserve it, he knows what’s best for me”.
If you haven’t seriously examined the Austrian side of the debate, have a look at this:
EDIT:
In the first link, read the paragraph that begins with "In the face of overwhelming arguments against inflationary expansion ..." . The entire article is good but that really gets to the point of inflation.
You can replace Libra quote above with your favorite cryptocurrency and that pretty much sums up what I feel on the crypto space.