Abbatoir: n. a slaughterhouse.
In recent days, I’ve watched Bitcoin trade upwards of $140 per Bitcoin. On a lark, I mined 0.146 Bitcoin several months ago. When it started trading this high, I sold what I had mined because Bitcoin is not a store of value and hence not a true money. Let’s analyze Bitcoin using Aristotle’s qualities of a good money:
1) It must be durable, meaning it stands the test of time and elements. To the extent we believe digital data can last forever, Bitcoin passes this test.
2) It must be portable, meaning it holds high value relative to its size and weight. Bitcoins weigh nothing (meaning their value is irrelevant vis-à-vis assessing their portability) and are mobile even in the face of government currency controls. Bitcoin passes this as well.
3) It must be divisible and consistent. Bitcoin is digitally divisible into 100 millionths. Another pass for Bitcoin.
4) It must have intrinsic value. This is where Bitcoin fails. Let’s deal with the two major arguments in favor of Bitcoin’s intrinsic value: (a) it requires effort to acquire in the form of compute cycles and related electrical energy and (b) the number of Bitcoins that can be created is algorithmically limited.
Regarding A: The effort required to acquire a Bitcoin is not useful effort, and the result of the effort does not produce a good that has any intrinsic use. It would be akin to digging a hole and filling it back up again, and getting scraps of paper in return. Those scraps of paper do not have value simply because real effort was expended to obtain them.
Regarding B: Acknowledging that there is a finite number of Bitcoin available does not mean it is scarce. This point is lost on several Austrian economists I have been reading and listening to over the past weeks. Allow me to explain by taking the example of gold, which itself is (1) durable, (2) portable, and (3) divisible and consistent. Gold has (4) intrinsic value because it has inherent usefulness (jewelry, industrial uses, etc.) and also because it is scarce — meaning there is a finite number of gold atoms found on this earth. As such, it is a good money. Imagine for a moment that the technology existed to make another compound, say “gold2” that had the exact same number of protons, neutrons, electrons, the exact same physical properties and appearance, and with the exact same scarcity as regular “gold.” Would we be so keen on gold if gold2 were available? Perhaps gold would lose half its value, but then what is to stop technology from producing gold3, gold4, . . . goldN? How would participants in the marketplace value gold in comparison to gold283? (Initially gold would be preferred to gold283 since gold entered the market first, but this would evaporate once market participants realized they had identical properties). This is why Bitcoin is not scarce. The goodwill accumulated in Bitcoin as the first market-entrant digital currency is all that causes it to be preferred over other digital currencies–not its scarcity. Other digital currencies already exist that have all the same properties of Bitcoin, but are simply waiting to gain market acceptance. (See Litecoin, Namecoin, et al.). “Trust” backed currency is similar to fiat currency, having the additional limitation that Bitcoin and other such currencies do not benefit from legal tender laws mandating their use.
A scenario for Bitcoin’s destruction might be that a large corporation producing goods that people want to buy (e.g. Wal-Mart) begins its own digital currency, accumulates large amounts for itself before making them generally available for mining, accepts them in exchange for their products, and profits from the proliferation and use of the competing currency. In another scenario, a competing digital currency gets a super-cool celebrity endorsement . . . or maybe a whole lot of both happens and people realize what a fad digital currencies are. This is all that separates holders of Bitcoin from complete annihilation because Bitcoins are not scarce (because infinite material having identical properties can be created) and Bitcoins have no intrinsic value (nobody wants a Bitcoin for Bitcoin’s sake).
I got on an 80’s inspirational/montage music kick, so here are my favorites in no particular order:
catawampus: adj. 1. askew; awry. 2. positioned diagonally; cater-cornered. Haven’t heard this word in years.
If you want limited government, vote for Ron Paul:
Newt Gingrich is no Ron Paul, but luckily their voting records and political principles are easy to compare because they were in the house together for almost a decade and are now running against one another for president. Let’s see just how far Newt strays from the small-government conservative he fancies himself nowadays.
Gingrich would have invaded Libya: (Ron Paul would not have).
Gingrich voted for authorization of force in Lebanon and then against withdrawal of troops from Lebanon in 1983. (Ron Paul voted against our involvement in Lebanon). As Paul described in 2005: €œWe should remember Ronald Reagan’s admonition regarding this area of the world. Ronald Reagan reflected on Lebanon in his memoirs, describing the Middle East as a jungle and Middle East politics as irrational. It forced him to rethink his policy in the region.€
Gingrich voted in 1982 against reducing the number of US troops stationed abroad by 50% by 1987. (Ron Paul voted for). Gingrich also voted against troop withdrawal from El Salvador in 1983. (Ron Paul voted for).
Gingrich voted against a provision requiring congressional approval prior to deployment of U.S. troops into Central America in 1983. (Ron Paul voted for the congressional approval requirement).
Gingrich voted to allow the US military to participate in drug seizures outside the United States, other measures escalating the drug war in 1982 and 1998 (the “Western Hemisphere Drug Elimination Act” — an act that has clearly achieved its objectives). (Ron Paul voted against).
Gingrich voted for federal aid to Cambodian refugees, food aid to Uganda, aid to Rhodesia, voted for continued development assistance to OPEC nations, aid to the Caribbean, aid to Lebanon, and military assistance to the Philippines. (Ron Paul voted against all of it).
Gingrich voted to increase CIA secrecy and against any requirement that the President report covert activity to congress before it is initiated. (Ron Paul voted against it). Also voted for continued CIA covert ops in Nicaragua in 1984. (Ron Paul didn’t).
THE ENVIRONMENT AND ENERGY
Gingrich thinks he can solve global warming with Nancy Pelosi: (Ron Paul is against federal cap and trade initiatives).
Gingrich is for cap and trade. (Ron Paul is against it). Newt said:
I think if you have mandatory carbon caps combined with a trading system, much like we did with sulfur, and if you have a tax-incentive program for investing in the solutions, that there’s a package there that’s very, very good. And frankly, it’s something I would strongly support.
Gingrich voted to create the 19M-Acre Alaska National Wildlife Refuge in 1979, voted to create the 2.3M-Acre Idaho River of No Return Wilderness in 1980, voted to expand the 1.5M-Acre Mark Twain National Forest in 1982, voted for expansion of the Sipsey Wilderness, and voted for designation of wilderness areas in Wisconsin, and in North Carolina, and in Virginia, and voted for another 2.3M-Acre national forest in California in 1983. (Ron Paul voted against all these unconstitutional land grabs).
Gingrich voted for gasoline rationing and Jimmy Carter’s Emergency Energy Conservation Act. (Ron Paul voted against it).
Gingrich voted for Jimmy Carter’s “Energy Mobilization Board.” “Carter wanted the authority to ration gasoline, form an ‘energy mobilization board,’ create a bureaucracy to guarantee that we would ‘never use more foreign oil than we did in 1977,’ set oil import quotas and develop solar power. ‘These efforts will cost money,’ Carter explained, ‘a lot of money….'” (link). (Ron Paul voted against it).
Gingrich voted for federal wind energy research in 1979. (Ron Paul voted against it). He also voted for hundreds of millions of federal research dollars going toward environmental research and development in 1984 and 1985. (Ron Paul voted against it).
Gingrich voted for federal farm subsidies to encourage the use of green energy on farms. (Ron Paul voted against it).
Gingrich voted for the creation of a federal ocean and coastal resources management and development fund, which would block-grant money to the states to manage their coastal resources. (Ron Paul voted against it).
Gingrich voted for a bill “promoting conservation of migratory waterfowl and offsetting or preventing the serious loss of wetlands by the acquisition of wetlands and other essential habitat.” (Ron Paul voted against it). Also voted for federal funds to fisheries. (Ron Paul didn’t).
Gingrich voted in favor of a federal ban on pesticides used to control fire ants in 1979 (then voted to extend federal control over pesticides), then voted against states’ authority to request health and safety data and imposition of time requirements on federal rulemaking. (Ron Paul opposed the ban and voted against federal control).
THE ECONOMY, BAILOUTS, & TAXES
Gingrich would have “reluctantly voted yes” to the TARP bailouts since congress was backed in a corner and “given no choice.”
Gingrich voted to strengthen the federal home loan agencies “to ensure the availability of home mortgage loans” — condoning the federal involvement in the mortgage industry that led to the housing collapse. He also voted for $1B increase in federal mortgage subsidies in 1982. (Ron Paul voted against).
Gingrich was paid $1.6 million dollars to offer “strategic advice” to Freddie Mac:
Gingrich voted in favor of the Chrysler Bailout in 1979 (including a 3-year wage freeze on Chrysler workers). (Ron Paul voted against them both).
Gingrich voted for increased powers to the FDIC to bail out struggling savings and loans through reorganization, purchase of bad assets, or recapitalization. (TARP-Lite). He also voted to reaffirm that the cash deposits are backed by the full faith and credit of the United States. (Ron Paul voted against).
Gingrich voted to permit the Federal Reserve to purchase Treasury Debt, thereby allowing monetization of all fiscal deficits through inflation. (Ron Paul voted against it).
Gingrich voted for an oil windfall profits tax in 1979, which was signed by Jimmy Carter. (Ron Paul voted against).
Gingrich voted for an increase in taxes on coal producers in 1981. (Ron Paul voted against it).
Gingrich voted for a 5-cent increase in the gas tax to fund highway and other mass-transit projects. (Ron Paul voted against it).
THE REGULATORY STATE
Gingrich voted for increased regulations on automobile manufacturers as to the construction of domestic vehicles. When the bill was poised to pass, Ron Paul voted for an amendment to change the description of the bill to: “To reduce competition in the automobile industry, protect jobs in one industry to the detriment of jobs in other industries, and to increase the price of automobiles to consumers.” Newt Gingrich voted against this change.
Gingrich voted against a states rights provision for the regulation of insurance and then voted for federal regulation of property and casualty and life insurance activities. (Ron Paul voted for states rights and against federal regulation of insurance).
Gingrich voted for increased authority to the FDA to regulate baby formula. (Ron Paul voted against it).
Gingrich voted to increase federal regulation over solid waste and strengthen enforcement mechanisms. (Ron Paul voted against it).
Gingrich voted for stricter regulations and greater funding for the Federal Water Pollution Control Act. (Ron Paul voted against it).
THE WELFARE STATE
Gingrich was, or is, in favor of federally-mandated healthcare: (Ron Paul is against mandated healthcare).
Gingrich stated that “All of us have a responsibility to pay for healthcare” – but said the Ryan plan went too far: (Ron Paul says it didn’t go far enough).
Gingrich voted to extend HUD programs in 1979. (Ron Paul voted against it).
Gingrich voted to extend the public works act of 1965, which established the Economic Development Agency, an agency in the United States Department of Commerce that provides grants to economically distressed communities to generate new employment, help retain existing jobs, and stimulate industrial and commercial growth. The agency exists to this day (www.eda.gov). (Ron Paul voted against it).
Gingrich voted for federal subsidies on milk prices, federal research into potatoes, extension and expansion of farm subsidies in 1980 and 1981, and establishment of modern Federal Crop Insurance. (Ron Paul voted against).
Gingrich voted against cutting the food stamp budget, then voted for increased “emergency” appropriations, and was also against reinstating the purchase requirement for foods stamps. (Ron Paul voted opposite to Newt on each measure). (Also, read about the purchase requirement). Gingrich also voted for a resolution stating “that the federal government should maintain correct efforts in federal nutrition programs to prevent increases in domestic hunger.” (Ron Paul voted against it).
Gingrich voted for the creation of federal job training programs twice in 1982, and again in 1983, and supported increasing the federal budget for community service employment for senior citizens. (Ron Paul voted against).
Gingrich voted for the extension of the Domestic Volunteer Service Act in 1983, which established VISTA (Volunteers in Service to America), its stated purpose to supplement efforts to fight poverty in low-income communities by engaging Americans from all walks of life in a year of full time service. Voted for continued funding in 1984. (Ron Paul voted against it).
Gingrich voted for federal preventative health programs in 1984. (Ron Paul voted against it).
Gingrich voted to create the Department of Education in 1979. (Ron Paul voted against it).
Gingrich voted to extend the Higher Education Act of 1965, which increased federal money given to universities, created scholarships, gave low-interest loans for students, and established a National Teachers Corps. This program exists to this day, and is the primary reason that higher education costs have skyrocketed, education quality has eroded, and students are saddled with insurmountable debts. (Ron Paul voted against it).
Gingrich voted for the creation of the U.S. Travel and Tourism Administration in 1981 and voted for continued funding in 1983. (Ron Paul voted against). By 1996, the USTTA was correctly abolished.
Gingrich voted for continued authorizations of the federal Corporation of Public Broadcasting in 1981, and again in 1984, and resisted efforts to cut the public broadcasting budget. (Ron Paul voted against it).
Gingrich voted for a congressional pay raise. (Ron Paul voted against it).
Gingrich voted against a 33% across-the-board cut to the Department of Transportation budget. (Ron Paul voted for).
Gingrich voted for an increase in HUD appropriations by increasing EPA research by $25 million. (Ron Paul voted against it).
Gingrich voted against a bipartisan 1% cut to the Department of Defense budget for 1983. (Ron Paul voted for).
Gingrich voted for continued federal research and subsidies into Guayule rubber. (You may not know what that is, but you know Ron Paul voted against it).
Gingrich voted for federal funds to train child care workers on prevention of child abuse. (Ron Paul voted against it).
Gingrich voted for federal alcohol and drug abuse programs and federal mental health programs in 1984. (Ron Paul voted against it).
Gingrich voted to preserve the Selective Service in 1979, and again in 1980, and then voted to increase its budget by 30x. In 1983, Gingrich even voted to make selective service registration a requirement for federal student loans and grants. (Ron Paul voted against).
Gingrich voted for the failed Civil Rights Act of 1984, which would have prohibited discrimination by any recipient of Federal financial assistance, and defined the term “recipient” to include any State or local governmental unit, any public or private agency or entity, including members of congress and the federal judiciary. It did have one loophole: it stated that nothing in the Act should be construed as changing the status of historically black colleges and universities. (Ron Paul voted against it).
Just wanted to make sure that everybody caught Ben Bernanke’s description of Social Security, because it provides a pretty clear illustration of why people consider it to be a pyramid scheme.
On entitlements, you’re also correct that they’re not true insurance programs – I think many Americans think the money they put in Social Security is, or in Medicare is, “somewhere in the bank” someplace–that’s not really quite right. What’s happening mostly is that younger generations are paying for their taxes for older generations’ benefits, and that worked OK as long as the population was shaped in a (gesturing), more like a pyramid, instead of like–(gesturing) more like a rectangle as it’s becoming now, the case.
7/13/2011 Remarks of Ben Bernanke before the House Financial Services Committee, Chairman of the Federal Reserve
Here’s the video:
At 4:00 into the video, Chris recounts that he was enthusiastic about libertarianism in his youth but no longer espouses those views “because the idea of total freedom doesn’t seem to work.” You can tell by the way Chris moved on from that statement so quickly that he was caught in a candid moment. Ron Paul’s principled position on all the issues, informed by a single theory of government, brings out the fundamental question: do you believe in freedom? If you believe total freedom is “disgusting,” understanding that total freedom is the ability to do anything you want so long as you do not cause harm to others or infringe the property rights of others, then Ron Paul is probably not your candidate.
Does Chris Matthews really believe that if the federal government did not criminalize heroin, that heroin use would be any greater a problem than it is today? Doesn’t government cause more problems than it solves by telling people what they can and cannot put in their own bodies? Does Chris Matthews believe that property owners would brandish their stores with “whites only” signs if the government did not tell them to do so today? Were not government laws mandating segregation and “whites only” signs the reason why those practices persisted well into the 1960s? Are these failures of freedom or failures of government?
If the only ideological counter to Ron Paul is that freedom is a broken system, he has an entirety of human history to soundly refute those arguments. This candid moment in Chris Matthews’s interview sums up the entire debate so succinctly that Dr. Paul’s ideological opponents should simply adopt this “freedom fails” philosophy as their campaign slogan:
Update: Bumper sticker now on sale!