Krugman on Bitcoin and Gold

Henry Ford once said, “It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

There were so many things wrong with what Krugman said it was obvious he only read the cliff notes on Bitcoin. I started reading the comments and the one below stood out amongst some other great commentary. It is certainly better written and more considered than the learned Professors arguments. 

The Netherlands
September 7th, 2011


Your crusade for more dollars, how noble it seems. But it is so hard to believe in.
There is no debt without money and no money without debt, the essence of fiat money. The external debt of the United States, for instance, is 14.3 trillion dollars. So somewhere in this world there is preying 14.3 trillion dollars on the population by demanding interest, revenue, dividend or whatever. Between 2001 and 2008 massive amounts of money have been “earned” by fraud and corruption. This is a criminal offence, socially legislated by…..economists. Read the books of Matt Taibbi. He may not always be 100% correct but definitely 90% of what he writes is reliable.
So what do we need? More money? Hell no. It will end up in the pockets again of people that don’t need it: “When it is raining reach for a bucket not a thimble” remember? More money will weaken the power of people who actually earn money; it will ruin our earth even more than it has done before.
So, what do we need?
The damn youngsters that looted in Londen have been punished severely. Fine! But what about these banksters and corrupt officials? Get the money back they stole! Put them behind bars where they belong. Get their money to work for us not against us.


Warren James said...

I just wish Krugman would read FOFOA and get over it. Mr Krugman's anti-hoarding comments are really tired - I suppose it is a common wish to 'free up' the savings of other people .. I mean, how dare anyone choose to store their wealth until they need it! What are they thinking? (sarcasm).

FOFOA's stuff reconciles it all once you distinguish between store of value and medium of exchange. I'm with Ben Bernanke - we need unrestricted amounts of additional fiat to help lubricate the moving parts of the economy, Paul Krugman is right - that hoarding fiat will stifle things and cause depression. And Central Banks (like the swiss) will act in their own national interests to balance whatever they need to balance, store of value be damned. The FOFOA lens makes it make sense. So fiat is a poor store of value, contrary to what we've been educated for most of our life.

Finally for what it's worth, Patrice Ayme had an interesting comment on that Paul Krugman story, about using 'Absolute Worth Energy' as an anchor "Evaluate everything allowed for trade in term of the energy spent to acquire it". That would be impossible to implement, but because gold production takes very large amounts of energy, then gold is already an excelent proxy for that - i.e. established, accessible, divisible, etc. Yes, gold is just a dumb inert metal, but all it's qualities make it a great reference point. Hopefully it will get us through these turbulent times.

Louis Cypher said...

You got to love economists. At one point in time the problems of the world stemmed from the fact that not enough people were saving. Now it's because we are not spending. Well jackasses, that's because all the money is in the bankers hands. Make them spend it or take it away from them.
I would love to gather up all the economists and bankers and isolate them on one little island and tell them "you don't get off the island until you have a working society" The first thing they would do is set up a central bank and fix interest rates. Then they would sit around waiting for the working and middle class to show up and feed them. They would all starve to death before it dawned on them the game only works if the majority works for the minority. What a game. We all work a couple of steps removed for the banks and they have no responsibility towards their contract employees.
I'm in a pissy mood after watching that crap that GM posted. Ugh!