We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
Morning everyone. Bulldog here, bringing you today's links because Doc Mercury wanted a day off so he could sleep in, and I am happy to oblige.
We're two days past the Labor Day holiday weekend, but is it a day off when you're always off?
This is exactly what happened when I walked into the office at 8am yesterday.
Harvard study discovers what most of us already knew. Guns don't kill people, people kill people. Do not expect this to impact the national conversation.
What to expect with Obamacare. The NHS is the obvious goal. At least it's 'free'.
One side of the minimum wage debate. I wish everybody could be rich, but that can't happen. If it did, then the whole concept of 'rich' would be meaningless, so it's good to understand rents. The value of anything is based on its relative ease of obtaining it. If you can only dig ditches, and 90% of the population can dig ditches, too, you have to accept a lower wage or find some new skills.
If the minimum wage is increased, we will have higher unemployment, higher prices, and stagnant or reduced profits. So we'd be paying more tax dollars for people who aren't working, paying more for goods and services we need, and stocks would take a hit. Sounds like a plan to me. It doesn't take much to understand why minimum wage legislation fails as a ham-handed attempt to make a nation wealthy via legislation. If it actually worked, we could set the minimum at a very high level, say $100,000 a year, and we'd all be working and all be happy because consumers would have lots of money to spend. Better yet, let's make it $100,000 a year and no layoffs, ever. What could possibly go wrong with that?
More work on the Austrian Business Cycle Theory points to external influences in the boom and bust cycle, rather than irrational behavior. This has been a critical missing piece of Neo-Classical Economics as macroeconomic theory, and is part of the reason why Keynesian thought has dominated. That dominance is eroding.
Calvo sees as one of the great strengths of ABCT that it is able to explain the financial distrubances without recourse to irrationality. The source instead lies in the manipulation of money and credit which distorts the guiding and weeding functions of the price system for the time being, but the market eventually pierces that distortionary fog and a process of recalculation ensues.
In other news, Ronald Coase died. A winner of the Nobel Prize for Economics (which, by the way, is not really a Nobel Prize at all), Coase's work opened new windows on the nature of corporations and their optimal size. His work is often cited by conservative activists when government looks to regulate business. Below is Rodney Dangerfield, as Thornton Melon, explaining his version of Coase's work to an economics professor.
Covered regularly here on Maggie's, but of interest to me lately since I have one in college and another to follow - garbage degrees and the ultimate outcome of wasting 4 years to study an otherwise useless topic. I have a number of teachers in my family, but I'd still put "Education" on the list of degrees which won't get you far in terms of career or income. No offense to teachers, I have the highest respect for what they do. We parents can be the biggest problem many teachers face. And vice versa. I continue to believe what my father told me, "You go to college to get an education. You go to grad school to get a job." His point, obviously, was to challenge me so I would study something meaningful.
I believe the US government will seek to shut down Bitcoin. For now, they are trying to figure out if it is a threat to the Fed. It is.
Bill Maher praises Obama for 'restoring the Constitution' by asking for Congressional approval to strike Syria and takes a potshot at the Tea Party. Obama's 'restoration of the Constitution' is a purely face-saving measure designed to shift blame. After all, he never sought Congressional approval for Libya and continues to insist he doesn't need Congressional approval. Hillary remains invisible, though she helped craft this foreign policy. Perhaps she is spending time consulting on her upcoming Hollywood biopic?
Some interesting views about well-known people and events. I happen to like the first three. The rest aren't quite as good.
Drudge rightfully asks "Why would anyone vote Republican?" But why vote Democrat, either? Neither party is specifically looking out for the best interests of the nation, but rather for themselves and their position in society. As a Libertarian, I view Republicans as a sometimes useful first step toward the goal of reinstating the Constitution as the law of the land. But not the guys currently pushing for attacking Syria or voting for NSA funding of Prism. They need to get back with the program.
The world is a Rorschach Test. I've always disagreed with the concept that perception is reality. If perception is reality, does that mean demons really were coming from the WTC? I believe the job of the individual is to utilize facts to help overcome limitations of our basic perceptions. Just because we like what we perceive doesn't make it reality. This can be applied to Syria. The main tool to utilize in cutting through to the facts is cui bono.
Ending on an up note, I'm surprised I didn't read anything about Diana Nyad on Maggie's. On Monday morning I learned she was only 5 miles from shore. 53+ hours of swimming, at age 64, is quite an accomplishment. I've done a mile in a lake and it was murder, so I can't imagine what she went through. Her accomplishment is one which is consistent with our values. Persistence, hard work, and a desire to achieve. You really are never too old.
"I'm surprised I didn't read anything about Diana Nyad on Maggie's."
Now hold on a second there, fella. Perhaps you were unaware of the huge controversy surrounding this event and how the delicate, sensitive Maggie's bloggers might not wish to just jump in, blindly supporting one side? While Diana had her supporters, there were others involved in the swim who feel a little left out. All that hard work and preparation on his part -- down the drain!
Well, I hate to break the news but in America we are all rich, yet the poor are still with us. And they will always be with us a long as poverty is defined as a relative condition to that of others.
But if you look at the amount and quality of goods even the "poor" are able to have in the U.S. we are all rich by historical and global standards. I suppose we could define poor as a state of financial vulnerability but then some with very good income would also be "poor" due to living beyond their means in that row of McMansions.
"So we'd be paying more tax dollars for people..."
Well, tax revenues would be down due to fewer people working and thus having lower or no income. The same goes for lower or no profit upon which make up taxable income. I suppose they could raise the taxes rates to capture more of the residual but that would then cause more unemployment and lower profits causing lower tax collections. But fear not, they will then tax assets, which will, after a surge lead to fewer assets. Assets that were used to create profits by putting people to work but are now unavailable to cause workers to be employed nor to generate profits.
The only real question is does it circle the other way in the Southern Hemisphere?
Poverty will always be defined as a relative term. It shouldn't, but it will be. Just the way it is.
Which is why I was really pleased when my son countered his high school teacher, who was discussing how widespread poverty is in the US, with the statement that compared to the kings of only 200-250 years ago, our poor live extraordinarily well. This generated quite an uproar, and when the teacher discussed it with me, I told him my son was correct and, in fact, I'd say they live better than some of the robber barons of the 1800's. I'm not sure the robber barons had cell phones and TV, did they?
Revenues would be down, but people who work would likely see taxes raised. But I was really referring to the payouts we make to the non-working, which would by necessity rise. Technically not tax dollars, because they are borrowed, but you get the drift.
No, it doesn't circle the other way, because we install a special machine to make sure Americans feel at home to see it circle the proper way. We have to spend more to make sure we're all comfortable seeing how we flush it all away.
Poverty. The U.S. version of poverty is a crock. Go down to Mexico City and drive out to the hills with all those million dollar homes surrounded by high walls edge in jagged glass to deter burglars. Look directly below. Families of eight, maybe ten, living out of cardboard packing boxes protected from rain by roofs of metal stolen from construction sites. Or go to the beaches. Not too far from the luxury hotels and homes are the shacks of those serving the elite population. Same thing. No wonder they pour over the border to seek the riches of the norteamericano.
I love it when teachers pander to the liberal dialogue that indoctrinates the next generation to the cause. Parents have to be hypervigilant or they find they're living with young socialists.
Or Brazil. So much "education", so little perspective. If people learned instead to appreciate how well off they are right now, what a different country we'd live in. I think it was more like that in the past. I seem to remember people taking pride in what they had and having a generally optimistic, can do attitude. I miss the WWII and depression generations. It's strange that recent hard times flowers into a golden period but then the fruit sets and rots if there isn't another round of hard times for perspective. I wish we as a species were smarter than having to re-burn our hand to discover how good it is to never touch a hot burner.
I gave a "poor" family member a chance to earn $30 by helping me for thre hours. I gave him a ride back to the rent subsidized apartment and he wanted me to stop at the 7-11 for "a few things". "a few things" turned out to be a pack of cigarettes and as much beer as he could buy with the remaining money. I then brought him to the girlfriends apartment where he stays with his little baby. They get food stamps for food (or sell them to buy things food stamps can't buy). They get rent paid by the taxpayer. They get dental and medical (for the mother and baby only I guess dads don't qualify somehow). They get WIC for the baby. They get a check each month, actually she gets a check and he gets dinged for child support. Child support seems fair, right? So why isn't she paying child support too? Because he is behind on his child support they took his drivers license and this makes it just about impossible to get a job. But to the point; we will always have "poor" because food stamps won't pay for alcohol and cigarettes so the "poor" have to scrimp for these necessities...
I'll try to keep it as simple as I can, but if anyone else wants to chime in, they can.
Bitcoin is an online 'currency'. A currency, in its simplest form, is just a unit of exchange. Rather than me trading a chicken to you for a goat, currency allows me to give you money for you goat, because I sold my chicken to someone else, and you can go buy a chicken from anyone else rather than me (possibly at a lower price than a full goat).
Anyway, the point is virtually anything can be a currency. You don't need a government to say "little green slips of paper are a currency and nothing else is", because they can't stop barter. Witness the black market that ruled in all the Eastern Bloc nations. You really can't stop the market from working.
So, the point is, our nation's dollar is the paramount currency simply because, well, everyone kind've agrees it should be. The fact we had a stable economy for so long helped tremendously, too. But we've done so much damage to it many nations are starting to look for alternatives.
Back to Bitcoin.
Value is derived from scarcity. Too much of something means it's easy to get - or inexpensive. Cheap. Not worthless, but pretty close to it. Air is free because, well, it's everywhere. It's not worthless, obviously. But it is pretty easy to get.
Money, if you print too much of it (or counterfeit it) becomes cheap. This is Gresham's Law - bad money drives out the good.
A fiat currency has never lasted very long. Fiat currency can be manipulated (see the post today about the Austrian Business Cycle) and create bubbles or shortages, depending on how it is managed.
Online entrepreneurs felt they needed an online currency which could not be easily manipulated. The Bitcoin currency was developed. It has a limitation on how much can be created - it is an algorithm. So to 'get Bitcoins', you have to 'mine' them. The details of this are hazy to me, but you need a Bitcoin wallet and computer program which goes searching for these Bitcoins.
If you don't want to do that kind of work (and who wants to go to San Francisco and pan for gold? Miners didn't get rich, the people supplying the miners did.), you can just get your wallet and start exchanging in the Bitcoin currency.
Because its creation is limited, it can't be easily manipulated or aggressively inflationary. It's like pegging the dollar to gold, as we used to do. Explaining why this is important would require a discussion of value and how it is created. In the short form, value is derived from scarcity (mentioned above), but can be created through productive and creative work. Computers were very expensive when they first were created, now they are (in real terms) ridiculously cheap. But what they can do creates more value, because they add productive power to the economy.
At any rate, because Bitcoin fulfills the role of a currency so well, it has become a very popular online tool for payments and exchange. It has also become a popular tool of foreign exchange.
When Cyprus collapsed, it seems that fortunes were transferred to Bitcoins, because they were a relatively safe haven compared to dollars or Euros. This external influence drove a brief bubble in the exchange value of Bitcoins compared to everyday currencies, but it is a currency which is becoming more popular. Sites are now beginning to accept Bitcoins as payment because the Cyprus situation, rather than making Bitcoins seem 'fake' or 'useless', confirmed their value.
Whether this actually was driven by Cyprus is open to question. The US government is concerned because they feel Bitcoin is being manipulated by drug cartels. They've shut down other, similar, online currencies for the same reason. But the continued growth of acceptance of Bitcoin seems to indicate governments which oppose Bitcoin are incorrect. Obviously, if you're hoping your currency is going to be the 'Reserve Currency of the World', as the dollar is, then Bitcoin is a threat.
Now, if you think you need dollars in order to transact business and live, then you might agree with the US government. But you have to keep in mind that the concept of 'the dollar' is merely a concept. In reality, our dollar today is not a dollar at all. At least, it's not the dollar your great-grandparents used. It's only worth about 1/20th of THAT dollar.
So if you could exchange your dollar for something which is more likely to retain value over the long term, and is less likely to be manipulated by a central bank which is buying up worthless debt and issuing new green slips of paper for that worthless debt in order to pack in extra bonus money for the Wall Street crowd that has to fulfill their contracts, would you be willing to do that?
I still don't get it. Where is the value and can it be exchanged for other currencies? Can I walk into a bank, whip out the smartphone and say "I'd like to exchange 20 Bitcoin for $10 US"?
And how does one "earn" Bitcoins? Say I do a consult and want to be paid in Bitcoins, but the client doesn't have Bitcoins. What then?
Additionally, what/where/how is the virtual currency protected from the Internet itself? How can I pay for something in Bitcoins when the local ISP is down or something like Katrina happens and wipes out all access to the web?
Too many questions - it looks awfully like a scam to me.
Any currency can attain value simply by being accepted as a means of exchange. That doesn't mean it's valuable, it just means it's accepted. That is what the dollar, and almost every other currency in the world is right now. There is no more value in the dollar than there is in anything else.
In that sense, Bitcoin is still in its infancy, since it is not widely accepted and no, you can't walk in to a bank and exchange it. However, you can exchange it online for real dollars. Call it another form of PayPal, in that respect.
I'm not quite sure what you mean by where/how it is protected from the internet itself? No online payment method is protected from the internet itself, and neither is any credit card that isn't online (I had mine stolen and used far more often before the internet). The currency is 'protected' in the sense that its total existence is driven by an algorithm and the algorithm itself sets the limit on how many Bitcoins can exist. You can't counterfeit them, in other words. The details of that are available on the site, but I'm simply not technically inclined enough to understand the nature of how this is done.
As for earning - what if you did a consult and wanted to be paid in British Pounds and the client didn't have those? Would you do the consult? Obviously, at this stage, that's an issue you'd have to work through regardless of the currency you want to use. But Bitcoin is becoming much more common.
I've been paying attention to it since it started, and it's only recently that it's really taken off. I set up my wallet, but as I said I'm not technically advanced enough to know how to 'mine' for the bitcoins, so all I have at this point is my wallet.
I made the wallet in the expectation that this could become something big.
Jerry's question - what is the value? Well, as I said, it's not like it is pegged to gold the way a dollar used to be. But, in a sense, it is. Since there is only a limited amount of potential bitcoins, let's say 1 million, and only a limited amount of gold, there is a natural link between the two and therefore it is, in a very indirect sense, 'pegged' to gold.
I'm not telling everyone to run out and get your Bitcoins. I haven't even done that yet, all I've gotten is my wallet.
But Friedrich Hayek, in his criticism of fiat currency, said the only legitimate method of fiat is to have competing currencies, and let the most acceptable one win. In the international community, for years, the dollar has been the winner.
Lately, many nations who are hamstrung by the petrodollar have sought an alternative. The Euro showed promise for a while, but then proved to be manipulated as much (if not worse than) the dollar. The Renminbi is hardly an international currency yet, but some rogue nations are using it as an oil currency.
But in the world of the internet, the digirati are accepting Bitcoins. It's not a scam at all, which is precisely why the US government is taking part in conferences on the concept of virtual currencies.
I suppose if you're a Star Trek fan, it's something like the credits they use?
Bitcoins appear to be such an abstraction that it is difficult for me to get my feeble mind around the concept. My gut reaction to them is that they are an 'emperor's new clothes' type of currency. It is all way over my head.
I think that if it does indeed take off there will be an enormous incentive for someone(s) to try and manipulate the system in their favor. I am skeptical that the currency is incorruptible.
Having said all that, I do like the idea of a currency that can compete with the fiat currencies and I recognize the threat if bitcoin succeeds.
No currency is completely incorruptible, except the precise exchange of precious metals.
However, ownership and maintenance of these is obviously an issue.
These facts are among several which led Hayek to propose a competition between currencies. He realized that fiat currencies are faulty, and ownership of gold and silver a bit inefficient.
Competition is the best way to keep a currency 'clean'. Which is one very good reason the US dollar has been abused so badly by the Fed - there really is no competition to speak of.
Back in the day before the Federal Reserve, states and even local banks issued their own currency, some of them worked quite well for awhile but nearly all of them ended in ruin with worthless currency. Just hard for me to see how Bitcoin ends differently. I hope I am wrong.
Variety of reasons why they ended in ruin. And for what it's worth, virtually every currency ends in ruin at some point.
But back then, it was usually due to one of three things. Corruption on the part of the bank officials, lack of precious metal reserves to cover the notes issued, or lack of acceptance of a bank's notes at other banks.
Right now, the only thing that impacts Bitcoin is the last point.
But let's also not forget the question of what is the value of a bitcoin?
Just like the gold advertisements "Gold is SO valueable that I'll give you mine in exchange for those "becoming worth less" dollars.
What?
For a change of pace, via the Telegraph, proof dog is man's best friend.
USA Today does have a brief press release from Clinton which reads like any partisan press release with enough wiggle room she can be both for it and against it.
Why vote Republican? All politics are local, when one party seems more interested in openly enriching its friends while pettifogging while the other is more discreet about doing so and remembers to say )and occasionally do) things about your interests, which do you go with?
I live in an overwhelmingly blue state. I used to live in the only local district that remained Republican in a sea of blue, but my state representative resigned and she was replaced by a Democrat in the last election. On the national scene, my vote for a Republican won't ever matter because it will be overwhelmed by all the loyal Democratic votes. So now that the Republicans are showing signs of giving Obama the authority he wants to wage a pointless war in my name, I have to wonder whether I'll be sitting out the 2014 election. The next few days will be crucial.
I for one have pretty much washed my hands of both parties. Both irredeemably corrupt, as evidenced by this latest farce called "limited military intervention in Syria." This is a no-brainer--why would any sane person do this? Especially when everyone is telling us not to, including the U.N.
I know there is talk of forming a new party, the "Liberty Party" or the "American Party" or the like, but so far it sounds pretty much like libertarian nonsense. I just want a party where people are honest, aren't lying all the time and aren't trying to steal everything that isn't nailed down.
And I never thought I would have more respect for a former KGB agent than I do for the "leaders" of my own country.
