Curt Doolittle

Form: Critique

  • DAVID MILLER : CONFUSING FACT AND VALUE ==DAVID MILLER== Regarding theories: –“

    http://www2.warwick.ac.uk/fac/soc/philosophy/people/associates/miller/oxdocs/science-tech.pdfCONTRA DAVID MILLER : CONFUSING FACT AND VALUE

    ==DAVID MILLER==

    Regarding theories:

    –“they are nothing more than conjectures or guesses about the unknown state of the world.”–

    –“the principal function of experience in science is to eliminate mistakes”–

    –“The principal function of science in technology is again to eliminate mistakes.”–

    –“Neither experience in science, nor science in technology, can determine that a problem has been solved in an ideal way. The best that they can tell us is that we could have done worse.”–

    -David Miller

    ==COMMENT AND CRITICISM==

    I want to state David Miller’s arguments somewhat differently, by converting them from the language of perception and experience, to the language of action and economics in time. The reason is that objective language assumes discounts that are the equivalent of something more than platonism and less than magic.

    COSTS

    Solving something an ‘ideal way’ cannot be stated without consideration of time and cost. As such, the ‘idea way’ that something can be done to satisfy a need is the ideal at that is available at the lowest cost at that moment in time.

    Induction was a biological necessity given that costs for organisms competing in nature are extremely high, and kept high through competition, just as costs of time and opportunity are very high in the market due to competition.

    But, induction tells us only about available opportunities for further action, neither about (a) the probability of expanding explanatory power, or about (b) the limit of utility in expanding explanatory power.

    Induction as a statement of PROBABILITY is an example of the ludic fallacy. If we could determine probabilities that would mean the set of possible permutations would be finite. But given that we have no idea what the ideal solution is to most problems we cannot conduct probabilities. But this criticism is not the only one available. Since efficiency of any given figure action in any given future where we have more knowledge, is determined by the total cost of arriving at that minus the intermediate rewards of production. Further, there are points at which no further increase in precision (efficiency) provides a return that covers the cost of the investment, until we invent additional utility to be obtained from the investment that has been made to date.

    However, for the purposes of action, our guesswork is informed by induction as a means of identifying opportunities for expansion of our efforts, and it does tell us what further actions are available for us to investigate, and test.

    THE LOGICS AS INSTRUMENTATION

    The principle function of the ‘logics’ and ‘methods’ is to reduce error through physical and logical instrumentation. That instrumentation allows us to test our imagination (or theories) against the real world, and limits our mind’s biases in the interpretation of those real world stimuli. This testing is made possible by reducing that which we could not sense without instrument and method, to analogy to experience which we can sense, perceive, compare and test given the help of symbol, measure, instrument and method.

    CERTAINTY OF FALSEHOOD, UNCERTAINTY OF TRUTH

    While we cannot prove that a general statement about the world are true, we can prove that specific instances of statements about the world are false. As such, we can say that science has demonstrated X to be false, but we cannot state that science has demonstrated X to be true. We can say however, that given our current knowledge the current candidates for truth available for further action are A, B and C. And we can also say that any further refinement of A,B or C would not sufficiently change the current argument about X, such that it would make any difference at this moment.

    TRUTH CANNOT BE USED FOR ARGUMENT, ONLY FALSEHOOD

    You cannot be sufficiently certain of anything such that you can use it in an argument to demand my agreement. You can only seek to obtain my consent by eliminating the possibility or desirability of my position in contrast to yours. This constrains science to voluntary consent, and does not allow science to override the contract for voluntary cooperation we enter when we enter into debate.

    THE FALSE MYSTIQUE OF SCIENTIFIC INQUIRY.

    **The difference between physical science and engineering, as between mathematics and computer science, is simply the UTILITARIAN VALUE we attach to either (a) the product of the test and (b) the extension of deductive power that results from the test. In either case the method is the the same.**

    Scientific language is LOADED with these value judgements, and it is this LOADING of scientific language with VALUE JUDGEMENTS that generally distracts us (pretty much all of us) from the fact that there is no difference at all in our actions or methods no matter what theory we pursue, but there is a great difference in which products we value.

    Science can be LOADED with this language because unlike other fields, science ignores costs in exchange for pursuing truths. Whereas, in all other disciplines, costs and utility are the equivalent of truth, since truth is time dependent for the purpose of satisfying human wants and desires.

    ***By failing to articulate our ideas in operational language we hide these incentives, and reasons from our discourse. And we are rapidly confused when we argue as if they are differences in fact, when they are but a difference in value.***

    As such:

    **As opportunity costs decrease, demand for truth increases.**

    **As opportunity costs increase, demand for utility increases.**

    This is the supply demand curve for truth and utility.

    An individual who seeks to estimate his own costs and utility is different from another individual demanding costs from third parties regardless of utility.

    A DIFFERENCE ONLY IN VALUE OF OUTPUTS

    It is a subjective preference, but not a difference in method. All theorizing is the same. We may not make truth claims about our theories, but that does not mean that we cannot LOGICALLY choose how to act on them.

    IGNORING COSTS AS CHEAP STATUS SIGNALING

    I guess I should say more clearly that I see scientific pursuit of truth independent of opportunity cost, and necessity for production, as one of the ultimate signs of conspicuous consumption and privilege.

    The same applies to progressives who ignore the cost of norms and treat them as non-existent, as a means of signaling their conspicuous consumption.

    One of the externalities produced by western aristocratic philosophy, and its permanent placement in our values, is the demonstration of one’s independence from the market for norms, and the market for production, as the ultimate source of signaling their conspicuous consumption. This is the level that all artists, journalists, and public intellectuals all seek as well.

    REWARDS FOR ORGANIZING PRODUCTION, INFORMATION, RENTS AND STATUS SEEKING

    Unfortunately, the material rewards for ORGANIZING PRODUCTION in the private sector, and ORGANIZING EXTORTION in the private sector, are more materially rewarding, than organizing RENTS and STATUS SEEKING in the non-commercial sector.

    Just as economists should be better trained as philosophers, most philosophers would better trained if they understood economics. And both would be better of if they understood all human behavior was in fact, economic: equilibrium exchanges in pursuit of signals, opportunities, alliances, and mates.

    So as far as I can tell, the scientific method is a continuous one independent of any form of problems solving, and argument to the contrary is the use of obscurant language to ridicule others for the fact that they must pay costs in time, and that scientists can signal their privilege of acting independently in time – and nothing else.

    Science may be useful for signaling purposes, but we should not let our signaling purposes interfere with our understanding that all theoretical processes work the same, and must work that way, and that the criticism that we make of one another is over the ECONOMICS of using knowledge for the purpose of persuasion and signaling.

    As such, the output of any process can be easily categorized as (a) amusement, (b) production (transformation), (c ) knowledge and (d) signal , – or some combination of all four, in exchange for material and/or opportunity costs in real time. But truth, and honesty, and ethics dictate that we understand that any process we follow consist in the value we attach to each output and who benefits from each output at the cost of whom?

    — Curt Doolittle

    Source date (UTC): 2014-01-04 08:08:00 UTC

  • ON GLADWELL’S SATIRE When we agree to enter into discourse, debate, even polemic

    ON GLADWELL’S SATIRE

    When we agree to enter into discourse, debate, even polemic, we grant each other the right of free speech, in pursuit of the truth, for shared benefit.

    Otherwise, if we do not agree to the pursuit of truth, there is no reason to lay down our weapons: we simply substitute the honesty of violence for the deception of words.

    Satire and ridicule are forms of deception. They are theft. A crime. A moral crime. And the majority of us sense it is a moral crime, even when we disagree with it. You cannot get around this logic.

    Satire and Ridicule, unless they are, like the greek drama, directed at ourselves, rather than others, are a violation of the contract for cooperation.

    So one can state how and why we use satire. But one cannot legitimize it. It’s not possible.

    Source date (UTC): 2013-12-30 19:48:00 UTC

  • PRAXEOLOGY: THE PROBLEM, MURRAY, IS THAT THOSE CATEGORIES? THEY’RE ALL FALSE. So

    PRAXEOLOGY: THE PROBLEM, MURRAY, IS THAT THOSE CATEGORIES? THEY’RE ALL FALSE.

    Sorry Murray. Just how it is: Nonsense. On. Stilts.

    Rothbard’s False Praxeological Categories

    —————————————————-

    A. The Theory of the Isolated Individual (Crusoe Economics)

    B. The Theory of Voluntary Interpersonal Exchange (Catallactics, or the Economics of the Market)

    …1. Barter

    …2. With Medium of Exchange

    …….a. On the Unhampered Market

    …….b. Effects of Violent Intervention with the Market

    …….c. Effects of Violent Abolition of the Market (Socialism)

    C. The Theory of Propositional Exchange, or Law and Argumentation Ethics,

    D. The Theory of War – Hostile Action

    E. The Theory of Games (e.g., von Neumann and Morgenstern)

    HERE IS THE CORRECT ANSWER

    1) The human biological reaction to ‘cheating’ as a prevention against free riders.

    2) The organized use of violence to create private property from community property, and by homesteading. (Refutation of Crusoe Ethics)

    3) The organized use of violence to suppress involuntary transfers (cheating), and to force all consequential human action into the market for the production and distribution of goods and services. (Refutation of Non Aggression)

    4) The necessity of property, money and prices for calculation, incentives, and complex cooperation in a division of knowledge and labor.

    .

    5) The necessity of a monopoly of property definitions for the logical and non-arbitrary resolution of disputes, contracts, and common law.

    6) The necessity of organized production of commons and the contractual prohibition on their privatization, as a means of maintaining group competitiveness. (Refutation of total anarchism)

    7) The necessity of an insurer of last resort, for the promotion of risk taking.

    8) The prohibition on monopoly bureaucracy as a defense against interference in cooperation.

    9) The necessity of trade policy (collective bargaining) to neutralize competitive differences.

    (I’m sure I will extend this list to include prohibitions on inter-temporal transfers, obscurantism, pooling and laundering)

    Source date (UTC): 2013-12-30 07:08:00 UTC

  • CONTRA HIGGS’ CRITICISM OF LIBERTARIAN IDEOLOGY (important piece) The most effec

    CONTRA HIGGS’ CRITICISM OF LIBERTARIAN IDEOLOGY

    (important piece)

    The most effective form of resistance to the state is organized mystical RELIGION, predicated upon FAITH. Religions determine the moral limits of what a state can impose on its people. That is the POLITICAL PURPOSE of religion. Americans have succeeded in resisting government intrusion more so than europeans precisely because americans have retained religiosity as a means of fortifying the family and the civic society against the expansionary state.

    The most important property of IDEOLOGY is that it NOT be open to critical argument, while at the same time it must be “activating’ to the base. Because the purpose of IDEOLOGY is the accumulation of power, by means that are unassailable by critics. Ideology is just post-monarchial, democratic religion.

    The most important property of PHILOSOPHY is explanatory power: the ability to reorder the values of objects and relations in order to provide us with utility in response to the accumulation of new knowledge. Philosophy is a high barrier, and must be converted by public intellectuals into ideology to function as a means of transferring power.

    The most important property of SCIENCE is an increase in the inventory of facts that can describe causal relations as they factually correspond with reality. Science has been notoriously INEFFECTIVE at resisting the state, and in most cases, has accomplished the opposite: to replace the church and the previous status held by the church in the determination of the moral code, with academia. Except where the church and the state were competitors in the past, academia and the state are now dependent allies.

    It is a mistake for academics, intellectuals, scientists, and often philosophers (although not this one), to attribute to religion and ideology those properties which render them useless as a means of obtaining or resisting POWER.

    The MI crew, unfortunately, with full intent, took the strategy of the marxists and used the internet to promote rothbardian IDEOLOGY. This was so successful that Cato had to reverse its prior insularity, and GMU has had consider searching for new terminology for both libertarianism and Austrian Economics.

    This ideology was unsuccessful in obtaining sufficient power to enact change, because the moral content of Rothbard’s liberty was regressive compared to that of the aristocratic ethics of the high trust society that we call the christian west. Something which I feel I have largely corrected. so the Mises Institute program was unsuccessful because it was predicated on DEMONSTRABLY IMMORAL PRINCIPLES.

    Meanwhile no one has advanced the question of the business cycle sufficiently, (although PSST could have), and no one has advanced political or moral theory in the libertarian/Austrian community AT ALL other than Hoppe, and Hoppe’s arguments are buried in layers of unnecessary rationality and loadings that likewise hide his genius.

    As such, I’m glad Robert Higgs can make so many errors in less than 300 words.

    1- religion, ideology, philosophy, science and prescriptions for institutional models are all very different forms of advocacy for different people, with different knowledge and abilities. It is unwise to criticize them.

    2 – Ideology IS MORE IMPORTANT than anything other than religion. Because of the number of people it influences. TO fail to understand this, and to attack one’s religious or ideological or philosophical, wing is to confuse facts with POWER. And politics is POWER.

    3 – The correct response is to ask:

    (a) is that religious argument holding the state at bay and setting the moral terms of political discourse?

    (b) is that ideological argument succeeding in obtaining further acolytes, attention, publicity and political power?

    (c) Does that philosophical argument advance our argumentative ability against other philosophers, and the ideologies that develop as a result of their works?

    (d) Does this scientific explanation provide us with new knowledge that we can incorporate into our theory of action, which we call ‘philosophy’, or it’s means of propagation ‘ideology’, or its means of resistance ‘religion’?

    (e) If not, then one has nothing intelligent to say.

    Internecine warfare in the libertarian movement is the result of the tragic failure of anyone who seeks liberty to solve the problem of the social sciences, or articulate the cumulative effects of state intervention on long term assets we call ‘social and human capital’, and the ability of people to maintain innovation and therefore an expanding quality of life.

    The only advancement in liberty has come from the propagation of ideology on the one hand, and the resistance of the state by religion. In all other aspects, except those few that PeterB seems to regularly mention such as Olstrom’s; and a few contributions by Bryan and Tyler; or the insight into the structure of political incentives by Hoppe, the libertarian scholarly, and intellectual program has been a demonstrable failure.

    Instead, the only success we can claim has been achieved by conservatives who have set the terms of moral debate, and by that moral debate brought our government to a standstill; and the various anthropological and biological and neurological sciences have demonstrated that the conservative vision of man is and was accurate. Otherwise political science, and economics have done nothing for us at all in holding or obtaining liberty.

    Only a fool thinks politics is run by science. It is run by wealth, power, morals and argument, and science is but a convenient pawn for the furtherance of the same.

    That’s just how it is. Stating otherwise would be UNSCIENTIFIC.

    I’ll debate anyone in the community on these issues in an attempt to fix the current state of libertarian philosophy, and in an effort to, in political science, advance liberty, but I suspect vested interests are more preciously held than new truths are desired.

    Curt Doolittle

    The Propertarian Institute

    Kiev

    Source date (UTC): 2013-12-28 12:46:00 UTC

  • ON FEMINIST (female), POSTMODERN(male), SOCIALIST PHILOSOPHY Creating a polity b

    ON FEMINIST (female), POSTMODERN(male), SOCIALIST PHILOSOPHY

    Creating a polity by words for the purpose of rent-seeking and free riding.

    Feminist Philosophy questions the foundations of ETHICS, not LOGIC. And that Feminist Rhetoric, with whom Postmodern, Totalitarian, and Socialist authors share identical tactics:

    1) the purpose of their language:is not to construct categories which can be measured, but to conflate categories so that they cannot be measured. This is perhaps the most important insight that we can use to deflate totalitarian claims. The attempt to claim a group where there is diversity, in an attempt to seek rents and free ride.

    2) is to create ‘unity’ or ‘group’ out of involuntary participants in that group, by loading, overloading, framing, shaming, and obscuring the differences between individuals. The purpose of this unity is so that feminists can seek extractive policies by the state, against individuals outside their group. In other words so that women can seek free riding and rents on males.

    3) While it is true that in the workplace, in the aggregate, men and women are equally productive, the statement is an artifact of above-said logic of aggregation: the fact is, that 1% of people, produce almost all the material value in a society, 10% apply those insights, and another 10% communicate them effectively to all others. This is why the Pareto Rule applies to all human behavior: 20% of people own and do everything. The rest are engaged in production and consumption. And they must be. Because they can’d do anything else. And the data is the data, the upper ten percent is dominated by males, because males dominate the upper regions of intelligence by no less than four to one. Female solipsistic reasoning is solipsistic and nothing more.

    4) THE PURPOSE OF FEMINIST LOGIC IS TO LIE. While I tend to keep track of feminist writing, because much of it is interesting, the fact is that women are biased much more solipsistic, just as men are biased much more autistic. And the division of knowledge and labor is painful for many women who feel isolated and unable to function in the division of knowledge and labor. Philosophy in the pursuit of truth is one thing. It is a precursor to measurement, and therefore the precursor to science. Philosophy in the pursuit of feeling better about the world we live in is something else: religion. I don’t criticize religion, simply because we ARE unequal, and I don’t feel it is my right to deny people solace. However, religion is not science, it does not correspond to reality, and we must, in science, commerce, and politics, correspond to the constraints that reality places upon us.

    I wish I was six inches taller. I’m not. I can’t play basketball. I wish a lot of the time, my Aspiness wasn’t such a burden for me to constantly carry. I wish I hadn’t been born into a family with so many internal problems. I wish I hadn’t lost my first three fortunes, and each time had to make a new one.

    Fantasies are fantasies. And fantasies have no place in economics and politics. We all live better lives because of science, economics and those aspects of politics that are scientific: the common law. Religions are not scientific.

    Feminist philosophy as put forth in this article is just another secular religion of totalitarianism like postmodern and socialist influences that it draws from.

    Source date (UTC): 2013-12-15 07:43:00 UTC

  • WHAT THE H___ IS WRONG WITH MISES INSTITUTE? Rhetorical question. I know the ans

    WHAT THE H___ IS WRONG WITH MISES INSTITUTE?

    Rhetorical question. I know the answer.

    –Give. Up. On. The. Jewish. Model–

    It’s a proven failure. It hasn’t worked for the jews. It’s let do their persecution. The public hates it because they intuit correctly that it’s immoral. And logically it can’t work. We must pay high costs to hold land and create property rights, and Rothbard all but ignored moral costs, just like progressives do. Moral and social capital are the most important wealth that all material wealth drives from.

    I mean, are you stuck in 1965 or something? Beat the dead horse? Beat it some more? Do you feel that you’ve vanquished the dead horse?

    It’s like some kid with a paper hat and cardboard sword standing over his sister’s teddy bear. I mean, the family will clap at the charade and all, but you can’t really keep grasping at childhood faux heroism.

    Socialism is a non issue. Marxism is a non issue. We are facing state CORPORATISM, not some WW2 Era philosophy. Where marxists failed, Postmodernists and Totalitarian humanists have succeeded by redefining morality – even while consumer capitalism has succeeded.

    GIVE IT UP. ROTHBARD FAILED. JOIN THE 21ST CENTURY.

    Do you wanna know why you can’t raise money? Wrong century. The source of liberty was always and only aristocratic egalitarianism. They invented it the nurtured and evolved it. And they spread it around the world. Property is a construct. It is made. And it is made by an armed militia who demands it at the point of a blade or the barrel of a gun.

    But it wasn’t articulated,it wasn’t written down as a system, which is why it remained dynamic. And Aristocratic peoples (conservatives) still don’t understand it.

    No high-trust people desirous of liberty will ever accept Rothbard’s ethics. EVER, because they are in fact, the immoral ethics of the high-fraud low-trust society. PERIOD. They are the ethics of the bazaar and the ghetto. It’s an outright lie, and now a demonstrated empirical falsehood, that market forces are sufficient to suppress fraud, fraud by omission, externalization of costs, free riding and various rent seeking schemes too numerous to mention.

    MOVE FORWARD. LEAVE THE LOW TRUST SOCIETY BEHIND.

    I moved on because I realized it’s not possible to help you.

    You need to move on too, before you can’t raise a dime.

    The market has tested and discarded the ideology.

    The market has proven it a failure.

    Move on.

    Otherwise thirty years plus of hard work will have been wasted.

    Source date (UTC): 2013-12-09 11:54:00 UTC

  • OF ROCKWELL VIA GORDON ON ROCKWELL “Fascism is an aggressive nationalism and imp

    http://mises.org/daily/6603/Fascism-Is-a-Current-Political-and-Economic-SystemCRITICISM OF ROCKWELL VIA GORDON ON ROCKWELL

    “Fascism is an aggressive nationalism and imperialism.”

    Well, that’s a pretty inarticulate morally loaded expression for Lew Rockwell to use, even if it’s mostly accurate. Fascism, on the Asplund chart, which I think is the best we have, is a totalitarianism of the moderates, as a reaction against the totalitarianism of the left and right. Rather than devolve to anarchy as we recommend, fascists maintain the moderate position by totalitarian means. On the Doolittle Chart it’s just Indo-European paternalism, or via Todd’s chart, it’s just the expression of traditional paternal families for the good of the extended family.

    “The state, for the fascist, is the instrument by which the people’s common destiny is realized, and in which the potential for greatness is to be found. “

    This statement just plain isn’t true. Fascism was a reactionary movement to resist the communists. Fascism isn’t anything people desire. It’s a means of resisting ideological conquest. We don’t like war either. But we must often concentrate our efforts to resist conquest, at no small personal sacrifice. Fascism was, and remains, a resistance movement, for moderates, not an aspirational movement.

    HERE IS THE REALITY

    Egalitarian Aristocracy is the one and only source of liberty. Period. Liberty is obtain in exchange from those who agree to institute liberty (property rights) using the organized application of violence.

    If one does not have liberty then, one fails to pay its cost: constant sacrifice and constant vigilance of your rights and all others whose rights you agree to protect.

    That’s all it is.

    Rights MUST be contractual.

    They cannot otherwise exist.

    Unless you say they’re given by god.

    Source date (UTC): 2013-12-09 09:56:00 UTC

  • Disagreement: A Response to Gary North’s Criticism of Bitcoin

    (I’ll leave it to the reader to suggest which one of us makes a better argument. But I think I have the better argument.) Gary argues that Bitcoins (BTC) aren’t money, and that they are speculative shares. Both of these statements are true, but neither of them is a weakness. They are strengths I agree bit-coins aren’t money (a commodity). Nor are they are fiduciary media (redeemable). But they do qualify as a money substitute as either token money, or shares of a stock that is highly liquid (non-redeemable tokens).

      So at this point I felt I might take the issue up with North directly. I think he is distracted by the term ‘money’ when it comes to Bitcoin. And while he is CORRECT that the price of Bitcoins are speculative for INVESTORS in Bitcoins, he is incorrect that the price of Bitcoins are intolerable for CONSUMERS of Bitcoins when they are used as a means of clearance. The speculative nature of bitcoins is the means of compensating investors in the infrastructure needed to process and prove bitcoin transactions. This is not a weakness. It is a virtue. It is a cashless means of compensating investors, and the act itself creates some demand. And we have seen that demand. Once Bitcoins have had speculative bubbles burst a few times, the speculation will diminish as it has with other speculative commodities – altough because of low volume, volatility should continue. But holding Bitcoins for ten minutes while you make a purchase on your credit card, then use the Bitcoins for an online purchase is not going to impede the transactions. My self, I’d love to see a credit card service for doing just that, instantaneously charging my card, transferring the funds to someone else via bitcoins, or at least just resolving exchange between parties via bitcoins. THEY ARE’T MONEY – BUT THEN LITTLE *IS* Bitcoins are NOT MONEY. They are speculative shares of stock in a custom stock exchange, whose advocates seek those shares to be universally owned, and therefore usable as a money substitute. Fact is we don’t know if it can work or not because this particular attempt at creating a money substitute has not been tried as a pre-purchase good, and similar efforts have been previously limited to evolutions on the wire transfer system – which is high cost and omnidirectional. I am arguing that like pornography built the Internet, the grey market will build Bitcoin or some equivalent. And I think that it is very hard to argue against those facts simply because one is confused by the marketing use of the term ‘money’, and failing to see this particular media as non-redeemable token-money, or highly commoditized shares of stock. BUSINESS MODELS We can think of any number of business models where the transaction costs are low, but lower transaction costs are meaningful (retail), and the grey market (online). I think it is unwise to be fooled by the environmental legitimacy of the enduring credit system that is used to manage human beings. And wiser instead, to look at business models that serve different needs because of different transaction costs and therefore different purchasing power. Something I found very obvious when we built software for check cashing services. Classes serve each other. They use the same money. But in different forms. With different transaction costs. Cash has a VERY HIGH transaction cost to the lower classes. It is easily stolen. It is nearly impossible to secure. And I suggested, for example, a payroll service in Bitcoin that would bypass the check cashing services, and therefore the need for the lower classes to have bank accounts. This eliminates the need for low income areas serving low income people, cash that can be stolen in robberies. It eliminates bank fees on checks, debit cards. It eliminates clearing times on funds. In fact, on a moral basis, I’d push Bitcoins as a public service for the poor on that basis alone. Where the WEAKNESS of Bitcoin as a non-redeemable good is a benefit precisely because it is NOT redeemable: it helps transform cash into abstract property that cannot be easily stolen, as we have transformed MOST assets into abstract property that cannot be stolen, and which is one of the reasons for the decline in crime: you can’t steal what’s hard to steal. SUCCESS ON THIS BASIS ALONE I do not see Bitcoin fulfilling the libertarian fantasy of an alternative to fiat currency or hard currency at any particular point in the future. However, the low transaction costs of these goods for markets currently NOT served by the banking system, (or tolerated by regulation) is, as we have seen with online pornography and drug purchases, sufficient to drive demand for this product. (But if and only if the user interface problem can be sufficiently solved to serve as I’ve stated above.) CONTRA AUSTRIANISM I do not let my consensus with the Austrian trade cycle, and the Austrian recognition of opportunity costs, or my distaste for (hatred of) the immoral socialist, totalitarian state, interfere with my analytical reasoning. We should not defend the ‘brand’ money, by reducing it to as an ideological term subject to sanctity and reverence. And we should not fail to understand the multitude of uses for the multitudes of mediums of exchange. If you want to argue that Bitcoins are not money. That’s well and good. Because as a store of value they are as weak as a fiduciary media, without the benefit of being redeemable. They are in a speculative phase right now like any stock that is issued and has low volume. They are likely to crash. CLOSING : NO REASON NOT TO SUCCEED So if you are an investor in Bitcoin, then you may or may not succeed. I’m betting that people are not buying low and selling at the highs on the way up and taking advantage of the lack of transaction costs. We can’t do that with stocks because of high transaction costs. We can manipulate Bitcoin prices more easily for this reason. But investors will be ruined in waves, and that’s fine. That has no bearing on the short term use of BTC. It only has bearing on its use as a store of value over longer periods of volatility. And even that volatility will be eliminated by more extensive use. The grey market is sufficient incentive for BTC success. (EDIT: ADDITIONAL POSTS:) Well, I mean, no. lol Because commodity money degrades to a still-consumable commodity that is still subject to pricing by market forces independent of its use as money. Bitcoins do not. BTC are issued as a fiduciary instrument, like notes or stocks, but they are not redeemable like notes. They are not a claim against assets like stocks. Instead, They are “token money”. A non-redeemable token used as a money substitute. They are just like the tickets you must buy at amusement parks in order to access rides, so that the vendors of the rides don’t misreport their income, and therefore their ‘tax’ by the amusement park holder. In this case, these tokens exist to PREVENT the use of the vendor ‘the state’ or the financial banking system from laying claim (rent, commission, or tax) on the financial transactions. I mean. It’s not money proper. It’s token money. I use the word shares because they are issued like shares in exchange for work performed. The fact that it’s open source doesn’t mean anything. It is still a private, unredeemable token money with an unarticulated, common law, unenforceable shareholder agreement. The fact that it is marketed as ‘money’ can fall under three interpretations: (a) ignorance by the manufacturer, (b) fraud by the manufacturer, or (c) aspirational language commonly used in advertising, that the consumer is expected to be smart enough to understand. We do not consider aspirational language fraud, we consider it tolerable since it is difficult and expensive to police. Although the public, in general, objects to this use of language as obscurant and misleading. BTC are not money. They are money substitutes. They can be used as a money substitute. The genius of BTC is that they are indexed to fiat currencies, and as such form clearing function without the necessity of reserve currencies, and un denominated, so that they appreciate as do stocks – at least in the early phases. I see BTC as nothing more than a brilliant means of financing a new digital commerce network, and a network that insulated from regulatory capture, and limited monopoly rent-seeking and free riding (banking), and the rest of it is just advertising, and silliness. Anything can be USED as a money substitute, and we use many money substitutes, whether natural or fiat. But to state that something is in fact, money, is, by any rational measure, an act of fraud. This is why some libertarian theorists object to bitcoin. Because it is not money. And because libertarians and austrians are very particular about protecting the misuse and appropriation of the term money, since money is so terribly important for the retention of property rights. I do not see how not being classified as ‘money proper’ and instead being classified as ‘a non-denominated token money’ which is a ‘money substitute’, and free of regulatory capture and rent seeking is damaging to bitcoin. In fact, given what I have read, I think the misrepresentation of bitcoin as money has been the soure of most negative representation of it. We forget that most economists do not understand the properties of money. And as far as I can tell, I haven’t found anyone else who understand it any better than I do. And given that it’s not particularly interesting to me, that means that it’s very very hard to say it’s sold honestly. (EDIT : ADDITIONAL POST) I don’t dispute the value of bitcoin or I wouldn’t invest in it. I simply state that it is not in fact ‘money proper’ as mises defined it. it is an exceptional innovation, brilliantly constructed, and brilliantly conceived. I can’t say enough good about it. But as a philosopher, I must hold to the truth, and the truth is that BTC are not money. They are a money substitute most closely analogous to undenominated token money (red, blue, green coins etc) that are purchased with some other form of money and can be used as a substitute for money, where they are accepted. Because they are undenominated, and their price determined by fiat money, they appreciate and depreciate independent of the price of fiat money. I think something above that I said is pretty insightful. That is, that BTC is the OPPOSITE of rent-seeking fiat money. And I think that’s important. Because that’s why libertarians should like it. 2 hours ago · Like Curt Doolittle @Roman. BTC’s need ‘the permission and sanction of the third party network’ to be put to use, and can only be used within the context of the third party network. And without the network they fail. The fact that this network is widely subsidized by the internet cost structure, and the voluntary participation of gamblers (miners) does not compensate for the fact that the BTC structure can disappear and BTC are unusable, whereas the state can disappear and fiat currency retains its utility. Maybe more so. As such, if you could trade copies of software somehow. (We do use them that way when licensing permits) the software would still function on your computer even if the manufacturer went out of business. And if it didn’t, I think you could sue the corporation, and obtain rights to decrypt it or whatever. This is not true of BTC. BTC is most analogous to undenominated token money, fully dependent upon the token network (a third party), and usable as a money substitute. It cannot be used without the sanction of a third party, and does not persist without the third party. It is not redeemable, but is sellable. It most closely resembles token money, but it is not money proper. Money must : 1) have a physical unit (a number, weight, or volume) so that it provides commensurability, and serve to function as a unit of account. in other words, goods must be expressed and expressible as units. This unitary number must be stable enough to use for the purpose of pricing. Otherwise it cannot not even function as a money substitute. 2) And it must persist. Existence is persistence. Only persistence satisfies the criteria of a store of value. It must persist in the absence of any external authority, or it is not an independent store of value. 3) It must serve as a medium of exchange between two parties without a proxy. If it requires a third party is is a fiduciary media. Fiduciary media can be redeemable or not. A note is redeemable, and a share of stock is not. It must be sold. I haven’t compared BTC to credit money yet. Credit money consists largely of a vast network of notes, that at various stages can be converted into fiat money, and then into money proper. a) a stock (now) b) a non-denominated token money (future) c) a money substitute (far future) The reason I don’t think it’s a pyramid scheme, is becuause the point of selling the shares of stock (BTC) is to provide incentives to finance the development of the network, at which piont the digital token money can serve as a money substitute. The reason I want to encourage bitcoin is because it has business value and it promises a rare opportunity to decrease dependence upon the state and the banking system, and their vast system of rents. d on’t want anyone to think I am other than an advocate of bitcoin. On the other hand I sort of have this job I do, and my job is to figure this shit out so to speak. BTC isn’t money. But then, that doesn’t mean it isn’t BETTER THAN MONEY in many cases. Money proper, is not an ultimate good. 2 hours ago · Like · 1 Curt Doolittle He does a good job of making one point: 1) eliminates labor in almost all financial transactions. And therefore all the rents on money between the banks and the state. Bureaucrats, Bankers, Lawyers, Accountants lose their jobs. I agree with all of this. But this just means that BTC are BETTER than fiat money, in that BTC prevents rents and free riding. But these are moral, social, and business reasons. Money is still money. BTC may be better than money, but it isn’t money. The sweet spot for BTC is that it’s when it is mature and less volatile so that BTC prices can form. (MORE ) I have careful of confirmation bias. It’s unscientific. skeptical empiricism. I’m not a marxist. I can’t do advocacy for the purpose of creating reality by chanting. I’m a scientist. I have to deal in correspondence with reality. There are places where one pays for things with cattle, sheep, goats, pigs, chicken or corn. Bt that’s barter. (MORE ADDITIONAL POST) You can’t print more bitcoins arbitrarily (as far as I understand). Although, as I understand it, it may be possible to decrease the weight and intentionally inflate the rate of BTC production. I don’t know the protections against that. You cannot inflate hard money. That is why it is a store of value. That is why backed paper money (notes) currency are a store of value. And why unbacked, fiat CURRENCY (a money substitute) is not a store of value. or rather, is a weaker store of value. Because the rate at which fiat currency can be inserted into the market is somewhat limited without extreme externalities being caused. Rapid inflation is caused by printing of money by the state to pay workers with money it doesn’t have, not the existence of any money in the first place. Money doesn’t expand naturally. It is printed and intentionally expanded so that wheelbarrows account for it. Russia did it. Germany did it. And so does everyone else now. So, no, hard money is not based upon faith. Currency (notes) are based on faith that the money is held in reserve, and the note is redeemable. Fiat currency is based on the faith that the government will in fact mandate its use, and that it will not arbitrarily inflate the currency and destroy it’s ability to function as a store of value. Commercial notes are based upon the faith that the debtor will be capable of paying, and the notes redeemable. Shares are based upon faith that the company will continue to maintain a stable income such that the stock value will appreciate because demand will increase. Token money is based upon faith in the commercial network’s persistence and the demand for the use of that network. What we get with BTC token money, is a discount on transaction costs, and a discount on rent seeking and free riding by third parties, who are eliminated from the process by digital media. Escrow is perhaps the best function that eliminates expensive third parties and legal fees. Instead, what occurs is that the BTC network accumulates an inventory of unused BTC’s as a sort of store of wealth, and the money that once went to third parties stays in inventory instead. I am not sure whether this was all in the design or whether it is a consequence of it. But it’s a genius of incentives management really. Everyone has incentives to make it all work. It’s wonderful. I’m all for criticizing and analyzing but I’ think we know what the problems with BTC are, and that most of them should be solved,and paid for, by early entrants. And at the end, if they are successful, we will have a very nice utility that provides greater benefit to the bottom of society than the existing system does to the top. ( EDIT ) 1) RE:”Certainly, it meets the colloquial definition which is simply “medium of exchange”. ” The colloquial definition is “a store of value, a unit of account, and a medium of exchange”. The necessary property of money is that it possess those three values in order to form prices, since prices are necessary for economic calculation, coordination, and incentives in a division of knowledge and labor. A goat is still a medium of exchange in much of africa. A goat does not meet the criteria of money. That is merely barter. The reason is that goats are not marginally divisible, nor are they universally desirable. Money must be both. 2) RE: MISES: ” arguments of considerable weight may be urged in favor of including all money substitutes without exception in the single concept of money. . . . Whether this is the most advisable course to pursue, whether perhaps some other procedure might not lead to a better understanding of our subject matter, must be left to the judgment of the reader.” Since the reason to distinguish between monetary products is to prevent fraud, then the properties of different products are MORALLY REQUIRED and under the common law, legally required, and a violation of property rights and the NAP under fraud. I do not need to guarantee that an ounce of a precious metal is anything other than an ounce of whatever metal. I must increase my guarantees. If you wish to call something money in oder to give it greater market legitimacy then I that is an act of loading : fraud. The test of whether you are committing fraud or not, is simply whether you are willing to let BTC stand on its actual properties, benefits and risks, or whether you must load BTC with the false attribute of ‘money’ in order to do so. BTC is not a store of value, any more than a stock is. If you can list all the possible properties of a stock, and all the possible properties of money, then you will do what we do with any product comparison. That comparison will demonstrate that BTC is not a store of value, and that it is dependent on a third party,yet the third party cannot be forced to redeem it. Again. If we call BTC money proper, rather than a money substitute, that is fraud. If BTC cannot survive on its own, and must be falsely labeled to survive in the market, then it is fraudulent marketing. This is actually the criticism of BTC. I do not understand why calling it a money substitute, that in many ways is superior to other money substitutes because it has lower transaction costs, is not an adequate way of marketing it. The fact that there is so much confusion over BTC is precisely because of this misrepresentation of BTC as money. It is not money. It is a money substitute. BTC are infinitely divisible shares of token money, that discount transaction costs. The various side effects of these infinitely divisible shares of token money are wonderful, in that they disempower the state, and the financial system, that is used as a supplement to law and religion as a means of controlling us. I like that. But BTC are not money. Right now they are only token money. At some point they may be viable for their retention of PURCHASING POWER (store of value). At that point they will be a money substitute. But they are not yet. They are token money with an ambition to function as a money substitute. (MORE) It has nothing to do with the future, nothing to do with technology. It has everything to do with being a store of value, a medium of exchange and a unit of account, that facilitates intertemporal coordination across various structures of production via the pricing system, and which is independent of manipulation and therefor the source of fraud and distortion in the pricing system that is required for human cooperation.

    • Disagreement: A Response to Gary North’s Criticism of Bitcoin

      (I’ll leave it to the reader to suggest which one of us makes a better argument. But I think I have the better argument.) Gary argues that Bitcoins (BTC) aren’t money, and that they are speculative shares. Both of these statements are true, but neither of them is a weakness. They are strengths I agree bit-coins aren’t money (a commodity). Nor are they are fiduciary media (redeemable). But they do qualify as a money substitute as either token money, or shares of a stock that is highly liquid (non-redeemable tokens).

        So at this point I felt I might take the issue up with North directly. I think he is distracted by the term ‘money’ when it comes to Bitcoin. And while he is CORRECT that the price of Bitcoins are speculative for INVESTORS in Bitcoins, he is incorrect that the price of Bitcoins are intolerable for CONSUMERS of Bitcoins when they are used as a means of clearance. The speculative nature of bitcoins is the means of compensating investors in the infrastructure needed to process and prove bitcoin transactions. This is not a weakness. It is a virtue. It is a cashless means of compensating investors, and the act itself creates some demand. And we have seen that demand. Once Bitcoins have had speculative bubbles burst a few times, the speculation will diminish as it has with other speculative commodities – altough because of low volume, volatility should continue. But holding Bitcoins for ten minutes while you make a purchase on your credit card, then use the Bitcoins for an online purchase is not going to impede the transactions. My self, I’d love to see a credit card service for doing just that, instantaneously charging my card, transferring the funds to someone else via bitcoins, or at least just resolving exchange between parties via bitcoins. THEY ARE’T MONEY – BUT THEN LITTLE *IS* Bitcoins are NOT MONEY. They are speculative shares of stock in a custom stock exchange, whose advocates seek those shares to be universally owned, and therefore usable as a money substitute. Fact is we don’t know if it can work or not because this particular attempt at creating a money substitute has not been tried as a pre-purchase good, and similar efforts have been previously limited to evolutions on the wire transfer system – which is high cost and omnidirectional. I am arguing that like pornography built the Internet, the grey market will build Bitcoin or some equivalent. And I think that it is very hard to argue against those facts simply because one is confused by the marketing use of the term ‘money’, and failing to see this particular media as non-redeemable token-money, or highly commoditized shares of stock. BUSINESS MODELS We can think of any number of business models where the transaction costs are low, but lower transaction costs are meaningful (retail), and the grey market (online). I think it is unwise to be fooled by the environmental legitimacy of the enduring credit system that is used to manage human beings. And wiser instead, to look at business models that serve different needs because of different transaction costs and therefore different purchasing power. Something I found very obvious when we built software for check cashing services. Classes serve each other. They use the same money. But in different forms. With different transaction costs. Cash has a VERY HIGH transaction cost to the lower classes. It is easily stolen. It is nearly impossible to secure. And I suggested, for example, a payroll service in Bitcoin that would bypass the check cashing services, and therefore the need for the lower classes to have bank accounts. This eliminates the need for low income areas serving low income people, cash that can be stolen in robberies. It eliminates bank fees on checks, debit cards. It eliminates clearing times on funds. In fact, on a moral basis, I’d push Bitcoins as a public service for the poor on that basis alone. Where the WEAKNESS of Bitcoin as a non-redeemable good is a benefit precisely because it is NOT redeemable: it helps transform cash into abstract property that cannot be easily stolen, as we have transformed MOST assets into abstract property that cannot be stolen, and which is one of the reasons for the decline in crime: you can’t steal what’s hard to steal. SUCCESS ON THIS BASIS ALONE I do not see Bitcoin fulfilling the libertarian fantasy of an alternative to fiat currency or hard currency at any particular point in the future. However, the low transaction costs of these goods for markets currently NOT served by the banking system, (or tolerated by regulation) is, as we have seen with online pornography and drug purchases, sufficient to drive demand for this product. (But if and only if the user interface problem can be sufficiently solved to serve as I’ve stated above.) CONTRA AUSTRIANISM I do not let my consensus with the Austrian trade cycle, and the Austrian recognition of opportunity costs, or my distaste for (hatred of) the immoral socialist, totalitarian state, interfere with my analytical reasoning. We should not defend the ‘brand’ money, by reducing it to as an ideological term subject to sanctity and reverence. And we should not fail to understand the multitude of uses for the multitudes of mediums of exchange. If you want to argue that Bitcoins are not money. That’s well and good. Because as a store of value they are as weak as a fiduciary media, without the benefit of being redeemable. They are in a speculative phase right now like any stock that is issued and has low volume. They are likely to crash. CLOSING : NO REASON NOT TO SUCCEED So if you are an investor in Bitcoin, then you may or may not succeed. I’m betting that people are not buying low and selling at the highs on the way up and taking advantage of the lack of transaction costs. We can’t do that with stocks because of high transaction costs. We can manipulate Bitcoin prices more easily for this reason. But investors will be ruined in waves, and that’s fine. That has no bearing on the short term use of BTC. It only has bearing on its use as a store of value over longer periods of volatility. And even that volatility will be eliminated by more extensive use. The grey market is sufficient incentive for BTC success. (EDIT: ADDITIONAL POSTS:) Well, I mean, no. lol Because commodity money degrades to a still-consumable commodity that is still subject to pricing by market forces independent of its use as money. Bitcoins do not. BTC are issued as a fiduciary instrument, like notes or stocks, but they are not redeemable like notes. They are not a claim against assets like stocks. Instead, They are “token money”. A non-redeemable token used as a money substitute. They are just like the tickets you must buy at amusement parks in order to access rides, so that the vendors of the rides don’t misreport their income, and therefore their ‘tax’ by the amusement park holder. In this case, these tokens exist to PREVENT the use of the vendor ‘the state’ or the financial banking system from laying claim (rent, commission, or tax) on the financial transactions. I mean. It’s not money proper. It’s token money. I use the word shares because they are issued like shares in exchange for work performed. The fact that it’s open source doesn’t mean anything. It is still a private, unredeemable token money with an unarticulated, common law, unenforceable shareholder agreement. The fact that it is marketed as ‘money’ can fall under three interpretations: (a) ignorance by the manufacturer, (b) fraud by the manufacturer, or (c) aspirational language commonly used in advertising, that the consumer is expected to be smart enough to understand. We do not consider aspirational language fraud, we consider it tolerable since it is difficult and expensive to police. Although the public, in general, objects to this use of language as obscurant and misleading. BTC are not money. They are money substitutes. They can be used as a money substitute. The genius of BTC is that they are indexed to fiat currencies, and as such form clearing function without the necessity of reserve currencies, and un denominated, so that they appreciate as do stocks – at least in the early phases. I see BTC as nothing more than a brilliant means of financing a new digital commerce network, and a network that insulated from regulatory capture, and limited monopoly rent-seeking and free riding (banking), and the rest of it is just advertising, and silliness. Anything can be USED as a money substitute, and we use many money substitutes, whether natural or fiat. But to state that something is in fact, money, is, by any rational measure, an act of fraud. This is why some libertarian theorists object to bitcoin. Because it is not money. And because libertarians and austrians are very particular about protecting the misuse and appropriation of the term money, since money is so terribly important for the retention of property rights. I do not see how not being classified as ‘money proper’ and instead being classified as ‘a non-denominated token money’ which is a ‘money substitute’, and free of regulatory capture and rent seeking is damaging to bitcoin. In fact, given what I have read, I think the misrepresentation of bitcoin as money has been the soure of most negative representation of it. We forget that most economists do not understand the properties of money. And as far as I can tell, I haven’t found anyone else who understand it any better than I do. And given that it’s not particularly interesting to me, that means that it’s very very hard to say it’s sold honestly. (EDIT : ADDITIONAL POST) I don’t dispute the value of bitcoin or I wouldn’t invest in it. I simply state that it is not in fact ‘money proper’ as mises defined it. it is an exceptional innovation, brilliantly constructed, and brilliantly conceived. I can’t say enough good about it. But as a philosopher, I must hold to the truth, and the truth is that BTC are not money. They are a money substitute most closely analogous to undenominated token money (red, blue, green coins etc) that are purchased with some other form of money and can be used as a substitute for money, where they are accepted. Because they are undenominated, and their price determined by fiat money, they appreciate and depreciate independent of the price of fiat money. I think something above that I said is pretty insightful. That is, that BTC is the OPPOSITE of rent-seeking fiat money. And I think that’s important. Because that’s why libertarians should like it. 2 hours ago · Like Curt Doolittle @Roman. BTC’s need ‘the permission and sanction of the third party network’ to be put to use, and can only be used within the context of the third party network. And without the network they fail. The fact that this network is widely subsidized by the internet cost structure, and the voluntary participation of gamblers (miners) does not compensate for the fact that the BTC structure can disappear and BTC are unusable, whereas the state can disappear and fiat currency retains its utility. Maybe more so. As such, if you could trade copies of software somehow. (We do use them that way when licensing permits) the software would still function on your computer even if the manufacturer went out of business. And if it didn’t, I think you could sue the corporation, and obtain rights to decrypt it or whatever. This is not true of BTC. BTC is most analogous to undenominated token money, fully dependent upon the token network (a third party), and usable as a money substitute. It cannot be used without the sanction of a third party, and does not persist without the third party. It is not redeemable, but is sellable. It most closely resembles token money, but it is not money proper. Money must : 1) have a physical unit (a number, weight, or volume) so that it provides commensurability, and serve to function as a unit of account. in other words, goods must be expressed and expressible as units. This unitary number must be stable enough to use for the purpose of pricing. Otherwise it cannot not even function as a money substitute. 2) And it must persist. Existence is persistence. Only persistence satisfies the criteria of a store of value. It must persist in the absence of any external authority, or it is not an independent store of value. 3) It must serve as a medium of exchange between two parties without a proxy. If it requires a third party is is a fiduciary media. Fiduciary media can be redeemable or not. A note is redeemable, and a share of stock is not. It must be sold. I haven’t compared BTC to credit money yet. Credit money consists largely of a vast network of notes, that at various stages can be converted into fiat money, and then into money proper. a) a stock (now) b) a non-denominated token money (future) c) a money substitute (far future) The reason I don’t think it’s a pyramid scheme, is becuause the point of selling the shares of stock (BTC) is to provide incentives to finance the development of the network, at which piont the digital token money can serve as a money substitute. The reason I want to encourage bitcoin is because it has business value and it promises a rare opportunity to decrease dependence upon the state and the banking system, and their vast system of rents. d on’t want anyone to think I am other than an advocate of bitcoin. On the other hand I sort of have this job I do, and my job is to figure this shit out so to speak. BTC isn’t money. But then, that doesn’t mean it isn’t BETTER THAN MONEY in many cases. Money proper, is not an ultimate good. 2 hours ago · Like · 1 Curt Doolittle He does a good job of making one point: 1) eliminates labor in almost all financial transactions. And therefore all the rents on money between the banks and the state. Bureaucrats, Bankers, Lawyers, Accountants lose their jobs. I agree with all of this. But this just means that BTC are BETTER than fiat money, in that BTC prevents rents and free riding. But these are moral, social, and business reasons. Money is still money. BTC may be better than money, but it isn’t money. The sweet spot for BTC is that it’s when it is mature and less volatile so that BTC prices can form. (MORE ) I have careful of confirmation bias. It’s unscientific. skeptical empiricism. I’m not a marxist. I can’t do advocacy for the purpose of creating reality by chanting. I’m a scientist. I have to deal in correspondence with reality. There are places where one pays for things with cattle, sheep, goats, pigs, chicken or corn. Bt that’s barter. (MORE ADDITIONAL POST) You can’t print more bitcoins arbitrarily (as far as I understand). Although, as I understand it, it may be possible to decrease the weight and intentionally inflate the rate of BTC production. I don’t know the protections against that. You cannot inflate hard money. That is why it is a store of value. That is why backed paper money (notes) currency are a store of value. And why unbacked, fiat CURRENCY (a money substitute) is not a store of value. or rather, is a weaker store of value. Because the rate at which fiat currency can be inserted into the market is somewhat limited without extreme externalities being caused. Rapid inflation is caused by printing of money by the state to pay workers with money it doesn’t have, not the existence of any money in the first place. Money doesn’t expand naturally. It is printed and intentionally expanded so that wheelbarrows account for it. Russia did it. Germany did it. And so does everyone else now. So, no, hard money is not based upon faith. Currency (notes) are based on faith that the money is held in reserve, and the note is redeemable. Fiat currency is based on the faith that the government will in fact mandate its use, and that it will not arbitrarily inflate the currency and destroy it’s ability to function as a store of value. Commercial notes are based upon the faith that the debtor will be capable of paying, and the notes redeemable. Shares are based upon faith that the company will continue to maintain a stable income such that the stock value will appreciate because demand will increase. Token money is based upon faith in the commercial network’s persistence and the demand for the use of that network. What we get with BTC token money, is a discount on transaction costs, and a discount on rent seeking and free riding by third parties, who are eliminated from the process by digital media. Escrow is perhaps the best function that eliminates expensive third parties and legal fees. Instead, what occurs is that the BTC network accumulates an inventory of unused BTC’s as a sort of store of wealth, and the money that once went to third parties stays in inventory instead. I am not sure whether this was all in the design or whether it is a consequence of it. But it’s a genius of incentives management really. Everyone has incentives to make it all work. It’s wonderful. I’m all for criticizing and analyzing but I’ think we know what the problems with BTC are, and that most of them should be solved,and paid for, by early entrants. And at the end, if they are successful, we will have a very nice utility that provides greater benefit to the bottom of society than the existing system does to the top. ( EDIT ) 1) RE:”Certainly, it meets the colloquial definition which is simply “medium of exchange”. ” The colloquial definition is “a store of value, a unit of account, and a medium of exchange”. The necessary property of money is that it possess those three values in order to form prices, since prices are necessary for economic calculation, coordination, and incentives in a division of knowledge and labor. A goat is still a medium of exchange in much of africa. A goat does not meet the criteria of money. That is merely barter. The reason is that goats are not marginally divisible, nor are they universally desirable. Money must be both. 2) RE: MISES: ” arguments of considerable weight may be urged in favor of including all money substitutes without exception in the single concept of money. . . . Whether this is the most advisable course to pursue, whether perhaps some other procedure might not lead to a better understanding of our subject matter, must be left to the judgment of the reader.” Since the reason to distinguish between monetary products is to prevent fraud, then the properties of different products are MORALLY REQUIRED and under the common law, legally required, and a violation of property rights and the NAP under fraud. I do not need to guarantee that an ounce of a precious metal is anything other than an ounce of whatever metal. I must increase my guarantees. If you wish to call something money in oder to give it greater market legitimacy then I that is an act of loading : fraud. The test of whether you are committing fraud or not, is simply whether you are willing to let BTC stand on its actual properties, benefits and risks, or whether you must load BTC with the false attribute of ‘money’ in order to do so. BTC is not a store of value, any more than a stock is. If you can list all the possible properties of a stock, and all the possible properties of money, then you will do what we do with any product comparison. That comparison will demonstrate that BTC is not a store of value, and that it is dependent on a third party,yet the third party cannot be forced to redeem it. Again. If we call BTC money proper, rather than a money substitute, that is fraud. If BTC cannot survive on its own, and must be falsely labeled to survive in the market, then it is fraudulent marketing. This is actually the criticism of BTC. I do not understand why calling it a money substitute, that in many ways is superior to other money substitutes because it has lower transaction costs, is not an adequate way of marketing it. The fact that there is so much confusion over BTC is precisely because of this misrepresentation of BTC as money. It is not money. It is a money substitute. BTC are infinitely divisible shares of token money, that discount transaction costs. The various side effects of these infinitely divisible shares of token money are wonderful, in that they disempower the state, and the financial system, that is used as a supplement to law and religion as a means of controlling us. I like that. But BTC are not money. Right now they are only token money. At some point they may be viable for their retention of PURCHASING POWER (store of value). At that point they will be a money substitute. But they are not yet. They are token money with an ambition to function as a money substitute. (MORE) It has nothing to do with the future, nothing to do with technology. It has everything to do with being a store of value, a medium of exchange and a unit of account, that facilitates intertemporal coordination across various structures of production via the pricing system, and which is independent of manipulation and therefor the source of fraud and distortion in the pricing system that is required for human cooperation.

      • A RESPONSE TO GARY NORTH’S POSITION ON BITCOINS (I’ll leave it to the reader to

        http://www.garynorth.com/public/11828.cfmDISAGREEMENT: A RESPONSE TO GARY NORTH’S POSITION ON BITCOINS

        (I’ll leave it to the reader to suggest which one of us makes a better argument.)

        I agree bit-coins aren’t money (a commodity). Nor are they are fiduciary media (redeemable). But they do qualify as a money substitute as either token money, or shares of a stock that is highly liquid (non-redeemable tokens).

        1) GREY MARKET TOKEN MONEY

        The very worst I can see, is that Bitcoins or some equivalent will evolve into a grey market money for grey market goods. This has already begun to occur.

        2) LOW TRUST TRANSACTION MONEY

        Their value is lower costs and protecting your credit card information. It lowers the consumer’s perception of risk.

        Bitcoins eliminate the problem of recurring charges from online transactions and subscriptions.

        3) LOW FEE HIGH RISK TRANSACTION MONEY

        As soon as someone creates an escrow service for more expensive grey market transactions, that will succeed.

        As such it is an exceptional currency for elites.

        4) A MONEY SUBSTITUTE FOR LOW CONSUMER VALUE TO MONEY BROKERS

        Bitcoins eliminate the problem of needing a ‘bank’ that can identify you by abstract means. In other words, it is an exceptional currency for the margins of society, just as credit cards are an exceptional currency for the upper quintiles, debit cards for the lower middle, and cash is for the lowest.

        BUSINESS MODELS

        I have proposed a number of business models where the transaction costs are low, but lower transaction costs are meaningful (retail). The grey market.

        I think it is unwise to be fooled by the environmental legitimacy of the enduring credit system that is used to manage human beings.

        So at this point I think I might take the issue up with North directly. Because while I agree with his position on MMT as permanently inflationary, I think he is confused by the term ‘money’ when it comes to Bitcoin, and while he is CORRECT that the price of Bitcoins are speculative for INVESTORS in Bitcoins, he is incorrect that the price of Bitcoins are intolerable for CONSUMERS of Bitcoins when they are used as a means of clearance.

        Once Bitcoins have burst a few times, the speculation will drop as it has with other speculative commodities, and because of low volume, volatility should continue. But holding Bitcoins for ten minutes while you make a purchase on your credit card, then use the Bitcoins for an online purchase is not going to impede the transactions. My self, I’d love to see a credit card service for doing just that, instantaneously charging my card, transferring the funds to someone else via bitcoins, or at least just resolving exchange between parties via bitcoins.

        THEY ARE’T MONEY – BUT THEN LITTLE *IS*

        Bitcoins are NOT MONEY. They are speculative shares of stock in a custom stock exchange, whose advocates seek those shares to be universally owned, and therefore usable as a money substitute.

        Fact is we don’t know if it can work or not because this particular attempt at creating a money substitute has not been tried as a pre-purchase good, and similar efforts have been previously limited to evolutions on the wire transfer system – which is high cost and omnidirectional. I am arguing that like pornography built the Internet, the grey market will build Bitcoin or some equivalent.

        And I think that it is very hard to argue against those facts simply because one is confused by the marketing use of the term ‘money’, and failing to see this particular media as non-redeemable token-money, or highly commoditized shares of stock.

        CLASS OF MONEY SERVES DIFFERENT CLASSES OF SOCIETY

        Something I found very obvious when we built software for check cashing services. Classes serve each other. They use the same money. But in different forms. With different transaction costs. Cash has a VERY HIGH transaction cost to the lower classes. It is easily stolen. It is nearly impossible to secure. And I suggested, for example, a payroll service in Bitcoin that would bypass the check cashing services, and therefore the need for the lower classes to have bank accounts. This eliminates the need for low income areas serving low income people, cash that can be stolen in robberies. It eliminates bank fees on checks, debit cards. It eliminates clearing times on funds.

        In fact, on a moral basis, I’d push Bitcoins as a public service for the poor on that basis alone. Where the WEAKNESS of Bitcoin as a non-redeemable good is a benefit precisely because it is NOT redeemable: it helps transform cash into abstract property that cannot be easily stolen, as we have transformed MOST assets into abstract property that cannot be stolen, and which is one of the reasons for the decline in crime: you can’t steal what’s hard to steal.

        ON THESE BASIS ALONE

        I do not see Bitcoin fulfilling the libertarian fantasy of an alternative to fiat currency or hard currency at any particular point in the future. However, the low transaction costs of these goods for markets currently NOT served by the banking system, (or tolerated by regulation) is, as we have seen with online pornography and drug purchases, sufficient to drive demand for this product.

        But iff and only iff the user interface problem can be sufficiently solved to serve as I’ve stated above.

        CONTRA AUSTRIANISM

        I do not let my consensus with the Austrian trade cycle, and the Austrian recognition of opportunity costs, or my distaste for (hatred of) the immoral socialist, totalitarian state, interfere with my analytical reasoning.

        We should not defend the ‘brand’ money, by reducing it to as an ideological term subject to sanctity and reverence. And we should not fail to understand the multitude of uses for the multitudes of mediums of exchange.

        If you want to argue that Bitcoins are not money. That’s well and good. Because as a store of value they are as weak as a fiduciary media, without the benefit of being redeemable. They are in a speculative phase right now like any stock that is issued and has low volume. They are likely to crash.

        So if you are an investor in Bitcoin, then you may or may not succeed. I’m betting that people are not buying low and selling at the highs on the way up and taking advantage of the lack of transaction costs. We can’t do that with stocks because of high transaction costs. We can manipulate Bitcoin prices more easily for this reason. But investors will be ruined in waves, and that’s fine.

        That has no bearing on the short term use of BTC. It only has bearing on its use as a store of value over longer periods of volatility. And even that volatility will be eliminated by more extensive use.

        The grey market is sufficient incentive for BTC success.

        Source date (UTC): 2013-12-02 02:41:00 UTC