The Danger of a Bitcoin Economy

here’s the interesting story I am I’m
I’m curious
if you have ever had any experience with
bitcoins I have not I’ve been watching
this thing I’ve talked on the
on the radio and television a few times
about how I think the big queen is the
new Dutch tulip bulbs its
the new South Sea issue it’s the new
the the mountain Mount GOx which is
eighty an acronym for Magic the
Gathering online exchange which was
originally a place an online exchange
sir online version of the eBay I suppose
or some variation that where people
traded do
cards trading card game
an arc trading game cards or whatever I
don’t know all the details but they
started accepting bitcoins and then they
became a big coin exchange in they
became the largest
are one of the largest but can’t change
exchanges in the world
and they just went black yesterday
the website they took down their Twitter
feed they just
vanished with what might be four hundred
million dollars for the big points
or I shouldn’t say worth I
bitcoins that people worry they’re
willing to pay for or had paid $400
million dollars for
and there’s a buncha protesters out
front of the now empty office buildings
with signs like
where is our money 744 thousand bitcoins
2.6 percent above the 12.44
million big points in circulation and
nobody knows exactly what happened
as a couple articles about today’s
financial times elsewhere all around the
web you can easily find an
are the effect the headline in the
financial ties between exchange
fears $400 million dollar theft now
what i think is particularly interesting
about this is
if you’ve all heard the libertarian
argument and the
in the Rand Paul argument eg in favor
putting the US back on the gold standard
which is that without the gold standard
we have what’s called a fiat currency in
other words a currency that is
brought into being with nothing behind
it and I would argue that the US dollar
is not a fiat currency
at least not in the sure a sense of the
term but the
it quiets that
big wind does not have a sovereign
nation behind it
there is nobody guarantee net with
assets whereas the US dollar is
EPA you could say well what are the
assets the back up the US top dollar
the fifty six trillion dollars worth of
assets that the federal government owns
is the full faith and credit of the
United States it’s every federal
building it’s all our parks it’s all our
natural resources that are federally
and beyond bad it’s the it’s the
the power and vitality and strength over
$15 trillion dollar a year
GP economy it’s america
the backs up the dollar and
just like the countries of Europe back
up the euro and in fact
I would submit to you that it would be
stupid to go to a gold
base currency would be a big mistake
you want the amount of currency in
circulation to be a reflection
up the amount of economic activity is
happening so that at
as economic activity contracts never
dollars contracts
as economic activity expands number
dollars expands
so that basically he the value of the
dollar remains the same over time
or close to the same you want a small
amount of inflation every year
a for a whole variety have rather
arcane reasons
the most obvious one being that if you
get at zero are you start seeing
deflation bending
the good economy sirs to spiral down and
slides into
deflation equals depression
now a lot of inflation can be very very
but this is this is the the problem the
Richard Nixon was facing in 1971
when we were arguably still on the gold
and that was that as the economy was
deal on a goal that we had to have in
order to back the dollar’s the number
dollars in circulation Inc grew and he
couldn’t get the gold
so do you you know and I or as the value
of gold as the price of gold rather
varied wildly used to fix it at thirty
five dollars an ounce and simply make it
illegal for Americans to hold gold
that’s what FDR did
during the Great Depression in order to
stabilize the dollar
and Nixon said now and I can do that
we’re gonna let you know goal float
and we’re gonna diss disconnected from
the dollar
which i think was the right thing to do
say the dollar
you know is represented by the full
faith and credit United States
but this whole big going thing shows you
what a true fiat currency is
bitcoins a fiat currency it’s a currency
that has been brought into bean
by virtue of a computer algorithm
that does not have an issue an agency
that stands behind it and says we will
make you whole
if you are you know if if your currency
collapses or if your currency is gone
now course the US government if you if
you’re robbed if order billion dollars
is not gonna go get come in and say okay
here’s your forty million dollars back
but when your currency exists virtually
on computers
n mine bitcoins by just running their
computer all day long like the you know
we use to participate
in the early days in the said he thinks
some love you may be old enough to
remember that back in the late 80’s
early 90’s
where a lot I was I did this for
like a year when your computer’s not
running in the background he just run
this program where we’re
were researching this massive database
that nasa had
of satellite you know de beers listening
to outer space
looking for recurrent
patterns in the noise that might
a distant intelligence civilization and
there was so much data available because
we had so many these
satellites and satellite antenna arrays
and so little computing horsepower
because we were just early on in the
state in in a in the early days at the
computer revolution
that the government didn’t have the
budget or the ability to actually listen
all this data
and so people would dedicate computer
processing power to it
and hundreds of thousands millions of
people were
we having their computers discretion
away in the background when they were
using their computers
looking for intelligent life it was like
a really cool thing
but that’s kind of a different thing
than saying I’m gonna have my computer
crunching away in the background
making me money bad
very much sounds to me like the
the Dutch tulip bulb thing or the South
Sea Island issue these were
you know famous inflationary bubbles in
back in the 17th and 16th centuries as I
and you know where
where the value of something just went
nuts because
everybody thought they had to have it
everybody thought they get rich on it
was like you know agreed on steroids
any others is my thoughts on on big
clinton and if Rand Paul really
you know objects to Ino wants us to go
back to bosnia New Year got a real
problem or you get all I bought from
what’s going to the price a goal was to
go to the value of the dollar
and what happens when we can’t get more
goals but we have to expand our
our economy what happens is that the
value dollars starts going south it
actually go up the value will go up the
ability to get dollars you go down on
you throw the economy into a depression
15 minutes past


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