05 Feb 2018

Contra Krugman Ep. 124

Contra Krugman 1 Comment

In this episode, we kinda sorta agree with Krugman’s take on Bitcoin. Then Tom gives a low blow when I say I think Bitcoin is fiat.

We keep it real, kids. This isn’t scripted. It comes from the heart.

One Response to “Contra Krugman Ep. 124”

  1. Tel says:

    I’m on Tom’s side.

    https://www.thefreedictionary.com/fiat

    1. An arbitrary order or decree.
    2. Authorization or sanction: government fiat.

    Bitcoin is voluntary, therefore no fiat.

    As for what is backing these currencies, I still support Warren Mosler’s 9mm theory of currency valuation. The practical value of a fiat comes down to how successfully governments can enforce that fiat, which basically means poking a gun in someone’s guts and demanding payment (normally called “taxation” in polite society).

    It goes off the rails in places like Venezuela because the government is printing a lot more than what it can collect in taxation now that various social infrastructure is breaking down their ability to maintain the “fiat” is weakening. They still have plenty of guns in Venezuela, but as they become disorganized people understand that from here on in the property confiscation and outright killing is going to be somewhat arbitrary and largely unrelated to whether you followed the rules as a good taxpayer. That’s the other side of a protection racket… you do actually have to also provide protection.

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