Off-Topic discussion about Bitcoin and cryptocurrency.

wim

https://www.nasdaq.com/articles/strike-launches-bitcoin-lightning-payment-app-in-el-salvador-full-eu-support-is-next-2021

Provides a little perspective on the transactional possibilities. It's basically a press release, so I don't vouch for its accuracy. But I found interesting the mention of El Zonta and Punta Manga, two Salvadoran towns whose local economy has used bitcoin via the Lightning Network since 2020 as a payment method.

On a side note ... I wonder how much Bitcoin El Presidente of El Salvador owns. 🧐
nah ... I'm sure it's impossible that he has any self interest in this move.

wim

https://www.forbes.com/sites/tatianakoffman/2020/07/14/this-el-salvador-village-adopts-bitcoin-as-money/?sh=63cdbd782044

Fascinating article.
Never-coiners may not enjoy it much though.

dendy

Devil is hidden in details. They did it right. Respect.

https://twitter.com/documentingbtc/status/1403084411160174601

wim

She seems to contradict @richardyot regarding the law forcing businesses to accept Bitcoin.

This move will be very interesting to watch, especially for me. My son's girlfriend is from El Salvador and has a very impressive intellect and understanding of the legal and social systems there. Coincidentally, she just started a job as a representative for a company that provides finances services primarily for Latinos.

richardyot

@wim said:
She seems to contradict @richardyot regarding the law forcing businesses to accept Bitcoin.

I'm basing this off press reports, but if you have a primary source that says otherwise I'm happy to be corrected:

https://www.theguardian.com/world/2021/jun/09/el-salvador-bitcoin-legal-tender-congress

wim

@richardyot said:

@wim said:
She seems to contradict @richardyot regarding the law forcing businesses to accept Bitcoin.

I'm basing this off press reports, but if you have a primary source that says otherwise I'm happy to be corrected:

I don't, and haven't tried to correct you. I only pointed out what the "Deputy Director of El Salvador," Diana Gonzales, claimed in their legislature about article 7 and 8 prior to the vote. It's up to you whether or not you accept that as authoritative or not. I have no way of knowing if she's correct without doing further research that I don't care to bother with.

richardyot

@wim said:

@richardyot said:

@wim said:
She seems to contradict @richardyot regarding the law forcing businesses to accept Bitcoin.

I'm basing this off press reports, but if you have a primary source that says otherwise I'm happy to be corrected:

I don't, and haven't tried to correct you. I only pointed out what the "Deputy Director of El Salvador," Diana Gonzales, claimed in their legislature about article 7 and 8 prior to the vote. It's up to you whether or not you accept that as authoritative or not. I have no way of knowing if she's correct without doing further research that I don't care to bother with.

Yeah, same

richardyot

OK I've found what claims to be the full text of the law in English and the mandate is indeed there, article 7:

https://freopp.org/el-salvadors-bitcoin-law-full-proposed-english-text-9a2153ad1d19

wim

@richardyot said:
OK I've found what claims to be the full text of the law in English and the mandate is indeed there, article 7:

https://freopp.org/el-salvadors-bitcoin-law-full-proposed-english-text-9a2153ad1d19

Article 8 seems to mitigate that by mandating that the State must provide mechanisms for "automatic and instant convertibility to USD" if the users wish.

NeuM

@richardyot said:

@NeuM said:

@richardyot said:

@NeuM said:

@richardyot said:

@NeuM said:

@richardyot said:

@NeuM said:

@wim said:

@NeuM said:
The fiat Dollar note is not now and will not become hard money because it has gone too far. Its next big goalpost is collapse.

I don't always agree with you, but this one I fear very much you are right about.

The US cannot inflate its way out of a $30 trillion national debt, which I believe is the current unworkable plan.

That's not the plan. The plan is to just let the debt be.

There are always two sides to a balance sheet: the national debt is made up of private savings. You can tax them away, but that just makes the private sector poorer.

The current plan is to inflate the debt away and print new money in the meantime. There’s no end to it because the hole keeps getting deeper, faster.

Well since most of the "new money" is in the form of QE there's no need to inflate (or indeed repay) anything at all. Why fear a debt that you owe to yourself?

I realize you will refuse to acknowledge this as a “valid source”, but I’m providing it anyway. The only proof of what are the downsides of a gargantuan unrepayable debt will be evidenced in the prices the normies pay for everything.

https://mises.org/library/who-bears-burden-government-debt-0

So I watched it, there is a fair amount to untangle here, but I actually don't disagree with his reasoning overall, but there are a couple of assumptions he makes that I do disagree with.

Firstly he does a decent enough job of explaining rational expectations and Ricardian equivalence, which he rightly dismisses because they're idiotic (one area where I agree with Austrians is that stylised models of the economy are a waste of time).

On the second point though, "we owe it to ourselves" he does make a couple of mistakes in my view, firstly because he is looking at it from a purely monetary point of view rather than looking at resources, which is a pretty crucial distinction.

So firstly: can we borrow from the future, so that our grandchildren have to pay for our profligacy? In terms of resources, no. We can't grab resources from the future to use now, we can only use the resources we have now.

If Biden's infrastructure plan goes ahead, it will employ the people who are alive now. It will make use of the raw materials that are available now. These obviously can't be borrowed from the future.

Aha you say, but we're not paying for it now, we're borrowing the money by deficit spending!

That mindset assumes that the outcome is zero-sum, that what we do now can't possibly benefit the future. But of course the economy of the future can (and surely will) benefit from money spent now, if it means that people are put to work, and that businesses thrive from the reduced unemployment, and of course that infrastructure improves.

Better roads, bridges, rail networks, communications infrastructure all benefit the private sector enormously. It's not zero-sum.

And of course it will be better for our children to grow up in an economy where unemployment is low. So that's a direct benefit of putting people to work now, using deficit spending if need be, because their income will be spent in the economy, benefitting private businesses who will then be able to hire more people in what becomes a virtuous cycle. Maintaining demand by putting people to work is not zero-sum, it lifts the entire economy and has long-term benefits.

The second assumption he makes, and this is central to his entire thesis, is that the debt will be repaid in full. That is not what happens, the debt will be rolled over forever, just like bank deposits are rolled over forever from one generation to the next: some people withdraw their balances, but others will deposit new balances and so the cycle continues.

You have to remember that Bonds serve a vital purpose in the financial sector: they offer investors a safe asset for their savings. The demand for bonds will always exist, and so will the government debt, since one can't exist without the other. As long as investors want Bonds, the government will offer them for sale. It's a symbiotic relationship. The government is not a household, it's much more akin to a bank, and no-one freaks out when a bank takes on more deposits, the mechanics at play here are exactly the same.

So yes, he makes the point that when the bonds have to be paid back that will make future generations financially poorer - and that's a point I agree with completely, in fact that's the same point I was making when I said this yesterday:

@richardyot said:
There are always two sides to a balance sheet: the national debt is made up of private savings. You can tax them away, but that just makes the private sector poorer.

The debt is a debt on one side of the balance sheet (the government side), but of course on the private sector side it's an asset. You can tax it away, but that necessarily makes the private sector poorer, so why do it?

When governments run deficits they are by definition spending more into the economy than they are taking out - that means that the private sector benefits from this additional spending.

When the government runs a surplus it is taking more out of the economy in taxes than it is spending back in - this by definition makes us all poorer.

The mistake lies in conflating a government with a household. Governments that issue their own currency are not fiscally constrained. They could QE all of their debt away if they wanted to - I'm not saying they should, just that they can. They have the power to eliminate the debt completely if they so wish.

But fundamentally it's about putting resources to use. Our children will be better off if they grow up in a world of high employment and working infrastructure.

To give a practical example: after WW2 the UK had a debt-to-GDP ratio of 250% (twice what the US has now), yet they built the National Health Service and the Welfare State. As one of the grandchildren of that generation would I be better off if they had "paid off" the debt instead? No, because I would have fewer real resources available to me now. The health service is a net benefit to future generations, and growing up with that debt was never a burden, no-one was even aware of it.

Glad you watched it.

You appear to be saying so-called “infrastructure spending” is an unambiguous benefit to businesses. But that’s not reality. Bills are cobbled together among members of Congress through a process of bargaining and members will only support a bill which benefits their political interests first, therefore layers of waste and corruption are pre-built into bills prior to becoming law. How do businesses benefit from kickbacks to unions, the building of “bridges to nowhere” or the like?

(Article from March 2021) https://fee.org/articles/9-crazy-examples-of-unrelated-waste-and-partisan-spending-in-biden-s-2t-infrastructure-proposal/

Are all bills hopelessly full of waste and corruption? Some spending may theoretically be necessary, but what is “necessary” cannot be determined as political interests are permanently attached to their imagined value like a parasite.

Governments misallocate resources because they are a monopoly. Full stop.

I don't see any corruption in that list of proposals, just because you might not agree with them politically doesn't mean they are corrupt. Legislatures are elected to deliver an agenda, and obviously it's impossible to separate that from ideology, since that's what politicians are elected to do: deliver a political and ideological agenda.

You just proved my point. You don’t see it because you (I’m using “you” in a general sense) may actually be the beneficiary of profligate spending, misallocated resources, corruption and waste.

wim

@NeuM said:
You just proved my point. You don’t see it because you (I’m using “you” in a general sense) may actually be the beneficiary of profligate spending, misallocated resources, corruption and waste.

He's from the UK. That kind of thing never happens there.

NeuM

@wim said:

@NeuM said:
You just proved my point. You don’t see it because you (I’m using “you” in a general sense) may actually be the beneficiary of profligate spending, misallocated resources, corruption and waste.

He's from the UK. That kind of thing never happens there.

LOL. Yes, I know he is. But he almost never comments on UK matters for some reason.

dendy

@richardyot said:

@wim said:
She seems to contradict @richardyot regarding the law forcing businesses to accept Bitcoin.

I'm basing this off press reports, but if you have a primary source that says otherwise I'm happy to be corrected:

https://www.theguardian.com/world/2021/jun/09/el-salvador-bitcoin-legal-tender-congress

Yeah, now you see why i don't like mainstream media, they're spreading bullshit ... i really hope we can both agree on fact that deputy of the Republic of El Salvador is more serious trustworthy source regarding this than The Guardian Otherwise i don't think this is meaningful conversation.

That guardian article doesn't surprise me, this is standard method used by antibitcoiners, they always say just half of truth. Same scheme again. Nobody can accuse them they are lying .. context is always important (in this case article 8 about instant convertibility to USD, if wanted).

wim

I wish USA laws were as plainly and simply written.

dendy

btw. i especially like the part "unless they lack access to the necessary technology". That is very nice.

Can't imagine something like that generous in western so-called "democracies" where usually the way how government builds laws is "here is law, either you do it this way or fuck off, we will throw some penalty or jail on you, we don't give a fuck about your objective obstacles, it's just your problem".

Starting to have more and more sympathies with current El Salvador government:-)

richardyot

@NeuM said:
You just proved my point. You don’t see it because you (I’m using “you” in a general sense) may actually be the beneficiary of profligate spending, misallocated resources, corruption and waste.

Nonsense. You pointed to legislative proposals that you disagree with and called them "corruption". They simply don't fit that description. Just because you might consider something "wasteful" doesn't make it corrupt. The entire line of argument is pure strawmaning.

Corruption would entail politicians taking bribes or otherwise breaking the law. And while this does actually happen on rare occasions it doesn't pertain to the economic arguments that are being made.

richardyot

@wim said:

@NeuM said:
You just proved my point. You don’t see it because you (I’m using “you” in a general sense) may actually be the beneficiary of profligate spending, misallocated resources, corruption and waste.

He's from the UK. That kind of thing never happens there.

I don't recall ever claiming the UK or US systems to be perfect and beyond criticism. What I have done is to make measured economic arguments in favour of government spending. That doesn't mean I then have to defend every idiotic decision ever made by a government in the course of history, or that I think states are beyond criticism.

I can make a general argument in favour of state intervention or government spending and still criticise specific implementations on a case-by-case basis, it's not an all or nothing proposition.

richardyot

@wim said:

@richardyot said:
OK I've found what claims to be the full text of the law in English and the mandate is indeed there, article 7:

https://freopp.org/el-salvadors-bitcoin-law-full-proposed-english-text-9a2153ad1d19

Article 8 seems to mitigate that by mandating that the State must provide mechanisms for "automatic and instant convertibility to USD" if the users wish.

My understanding of this is simply that if a citizen wants to pay in Bitcoin the payment has to be accepted. Article 8 refers to the State fund that was announced a few days earlier whose purpose is presumably to mitigate the risk to merchants because of Bitcoin's volatility, so that they can cash out to USD immediately if they don't want the risk of holding BTC. I don't think I've misrepresented any of this.

ervin

@richardyot said:

@wim said:

@NeuM said:
You just proved my point. You don’t see it because you (I’m using “you” in a general sense) may actually be the beneficiary of profligate spending, misallocated resources, corruption and waste.

He's from the UK. That kind of thing never happens there.

I don't recall ever claiming the UK or US systems to be perfect and beyond criticism. What I have done is to make measured economic arguments in favour of government spending. That doesn't mean I then have to defend every idiotic decision ever made by a government in the course of history, or that I think states are beyond criticism.

I can make a general argument in favour of state intervention or government spending and still criticise specific implementations on a case-by-case basis, it's not an all or nothing proposition.

You're bringing nuance to a bitcoin fight, just sayin.

richardyot

@ervin said:

@richardyot said:

@wim said:

@NeuM said:
You just proved my point. You don’t see it because you (I’m using “you” in a general sense) may actually be the beneficiary of profligate spending, misallocated resources, corruption and waste.

He's from the UK. That kind of thing never happens there.

I don't recall ever claiming the UK or US systems to be perfect and beyond criticism. What I have done is to make measured economic arguments in favour of government spending. That doesn't mean I then have to defend every idiotic decision ever made by a government in the course of history, or that I think states are beyond criticism.

I can make a general argument in favour of state intervention or government spending and still criticise specific implementations on a case-by-case basis, it's not an all or nothing proposition.

You're bringing nuance to a bitcoin fight, just sayin.

I've been trying to bring nuance for a while, as you may have noticed it's not going well. 🙃

Gavinski

@richardyot said:

@ervin said:

@richardyot said:

@wim said:

@NeuM said:
You just proved my point. You don’t see it because you (I’m using “you” in a general sense) may actually be the beneficiary of profligate spending, misallocated resources, corruption and waste.

He's from the UK. That kind of thing never happens there.

I don't recall ever claiming the UK or US systems to be perfect and beyond criticism. What I have done is to make measured economic arguments in favour of government spending. That doesn't mean I then have to defend every idiotic decision ever made by a government in the course of history, or that I think states are beyond criticism.

I can make a general argument in favour of state intervention or government spending and still criticise specific implementations on a case-by-case basis, it's not an all or nothing proposition.

You're bringing nuance to a bitcoin fight, just sayin.

I've been trying to bring nuance for a while, as you may have noticed it's not going well. 🙃

I appreciate your posts, Richard, keep 'em coming

richardyot

@Gavinski said:
I appreciate your posts, Richard, keep 'em coming

Thanks, I'm sure there's plenty more to say, on all sides

ervin

@richardyot said:

@ervin said:

@richardyot said:

@wim said:

@NeuM said:
You just proved my point. You don’t see it because you (I’m using “you” in a general sense) may actually be the beneficiary of profligate spending, misallocated resources, corruption and waste.

He's from the UK. That kind of thing never happens there.

I don't recall ever claiming the UK or US systems to be perfect and beyond criticism. What I have done is to make measured economic arguments in favour of government spending. That doesn't mean I then have to defend every idiotic decision ever made by a government in the course of history, or that I think states are beyond criticism.

I can make a general argument in favour of state intervention or government spending and still criticise specific implementations on a case-by-case basis, it's not an all or nothing proposition.

You're bringing nuance to a bitcoin fight, just sayin.

I've been trying to bring nuance for a while, as you may have noticed it's not going well. 🙃

No, it doesn't tend to work with abnormies (or whatever the linguistically correct opposite of "normies" is, which we apparently are - English is not my first language 🤷)

richardyot

Cato Institute economist has some thoughts on the El Salvador law, that seem pertinent:

https://twitter.com/GeorgeSelgin/status/1402576511828434944

And his response to the claims made by the deputy in parliament:

NeuM

Oh my goodness gracious me… George Selgin has a problem with the new legalization of Bitcoin as currency in El Salvador. Whatever will they do now?

richardyot

Well those crazy socialists at the Cato Institute are probably closet statists.

ervin

@richardyot said:
Well those crazy socialists at the Cato Institute are probably closet statists.

Well, I have to admit dendy has consistently come out against the enslavement of people and against scheming states and overreaching governments forcing people to do things. His condemnation of this textbook government abomination should be out any minute now, surely.

NeuM

@richardyot said:
Well those crazy socialists at the Cato Institute are probably closet statists.

You may not realize this, but the Cato Institute the national Libertarian Party in the US have also been infected by the mind virus of wokism.

richardyot

LOL, when the Cato Institute and the Libertarian Party is too far left for you.

NeuM

@richardyot said:
LOL, when the Cato Institute and the Libertarian Party is too far left for you.

Hmm. Looks like I finally found something you are completely unaware of, eh? Just look up economic historian (on Twitter) Tom Woods and his very public disagreements with them.