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Comment by soulofmischief | Hacker News Reader

It's so much more complex than "young naive devs want to throw out the manual". Extremely valid criticisms towards central banking have existed since before central banks even existed. Just ask my man Thomas Jefferson what he thinks about central banks.

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> It's so much more complex than "young naive devs want to throw out the manual". Extremely valid criticisms towards central banking have existed since before central banks even existed.

Isn't a lot of Bitcoin/cryptocurrency ideology basically "Wasn't the gold standard great? Lets go back to something like that."? The gold standard may be have some positive attributes, but it also had problems that lead to its abandonment, and any new system should at least try to intelligently respond to those problems that central banking solves than to deny their existence or impact.

Does central banking solve them though. The fact that negative interest rates exist suggests otherwise.

The existence of central banking criticism doesn't justify throwing out the financial manual on what makes a good payment system.

The number of conversations I've had with bitcoin evangelists where they argue about the lack of refunds, chargebacks, or dispute handling being a feature, not a bug, is not solving problems with central banking.

Payment networks which supply such functionality can be built on top of crypto as secondary escrow layers. This practice is already common in decentralized marketplaces.

Aren’t those issues primarily handled by credit lenders like Visa and Mastercard?

I do find it funny how just by strength of community alone the most successful cryptocurrency may be the very most centralized one.

I have a feeling the centralization will allow it to have decent transaction speeds and volume which seems to be BTCs biggest flaw (addressed by the lightning network? I’ve kind of stopped following) since all the other nodes (ebay, 26 other companies) can afford the bandwidth.

It’ll be interesting to see how it plays with regulators if it takes off in any way.

That was just one example. Transaction rates are another. The idea that we need to throw out the manual and then repeat all the same mistakes that the manual helped prevent, because of a technology fallacy, is a problem.

> Just ask my man Thomas Jefferson what he thinks about central banks.

Appeal to authority.

No- they just told you to read Jeffersons musings on the topic of central banks.

Yes, but why Jefferson? Why not Arglebargle? Or me? I have musings on the topic of central banks, would you like to hear them?

It seems like OP just thinks Jefferson has written some "extremely valid criticism" of central banking, from before the US had the system. Who knows? I think central banking is probably fine and cryptocurrencies are stupid and I don't see where the appeal to authority is.

> Yes, but why Jefferson

Because they thought Jeffersons thoughts on the matter were relevant.

> Why not Arglebargle?

Because I know what that word means.

> Or me?

Because "lisper central banks" doesn't produce any meaningful results in a search engine.

> I have musings on the topic of central banks, would you like to hear them?

Sure.

OK: there are two fundamental problems that have to be solved in any monetary system: how to keep the records, and how to control the money supply. With regards to the latter, there are only two options:

1. Let the money supply be controlled by the laws of physics, e.g. use a scarce material as money.

2. Let the money supply be controlled by some policy.

The second option subdivides into two further sub-options:

2a. Let the free market produce money competitively like any other product.

2b. Let the government (or a private entity acting on behalf of the government) do it as an artificial monopoly.

That last option is a central bank.

Those are all the possibilities. All of them have been tried at one time or another in human history. Flawed as it may be, the one that has produced objectively the best results in terms of economic stability and prosperity has been 2b. And there isn't really much more that can be said about it.

Oh, almost forgot:

> > Arglebargle?

> Because I know what that word means.

Arglebargle is the name of an obscure author who wrote on all manner of topics, but whose work has been largely forgotten.

> Flawed as it may be, the one that has produced objectively the best results in terms of economic stability and prosperity has been 2b.

I'm certainly no expert, but I've read a bit into 2a (so called "free banking" eras) and they seemed overwhelmingly quite stable. On what do you base an objective dismissal of that approach?

Mainly my knowledge of the history of the financial system in the U.S. which was characterized by regular panics, crises, and bank runs before the Federal Reserve was founded. (Of course, the Fed bungled it badly in the Great Depression, but has done a pretty reasonable job since then.) Looking now at the history of free banking in other parts of the world it looks like it is not invariably catastrophic. Maybe it's a cultural thing. I suspect that free banking works better in a world where everyone knows everyone else, and the banker's customers know where the banker lives so if he screws things up too badly there's a real risk that people will literally show up on his doorstep with pitchforks.

The system in the US before the creation of the Fed wasn't free banking; after the civil war, the National Banking Acts of 1863-64 created a network of chartered national banks with a single currency backed by the US Treasury. Then in 1879, the US went back to the gold standard, so you're on (1), not (2a).

On that view there has never been a 2a system. No one would honor a private bank note that was not backed by some asset or government fiat. Such a note would, quite literally, be worth no more than the paper it was printed on.

There's a difference between people freely choosing what assets are acceptable to back a given currency and having many currencies floating in value against each other, or the government deciding what each currency can be backed against and at what value (the National Banks had to accept each other's currency at par value).

Yes, of course. But if you have currencies backed by too many different kinds of assets those currencies aren't money any more, they are tokens in a barter economy.

Your thoughts are clear and interesting. It appears we've always had a ratio of 1, 2a and 2b with some collapses or perhaps even more illusive is the [slow] migration. Like paper gold, man-made diamonds or the private entity stops acting on behalf of the government and ends up owning it.

I think you replied to the wrong comment. I'm guessing you meant this to be a reply to:

https://news.ycombinator.com/item?id=20216673

In any case, thanks for the kind words.

This is not Appeal to Authority fallacy. He's simply citing a historically accessible example of similar criticism that here is being dismissed as "lots of people are hasty to throw out the old without really understanding it".

Sorry, try again.

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