This is, in my opinion, the raison d’etre of blockchain. Public, immutable ledgers are immune to this kind of fraud (although they have other issues, of course).
Crypto fractional reserve like tether has no backstop and that’s a completely different beast. It’s what exacerbated the Great Depression.
As with all blockchain unless the state is 100% totally and utterly encapsulated within the blockchain, then it’s garbage in, garbage immutably recorded. Which is why the only thing you can do with crypto is currency and kitties.
If you sold short 140% of float and bought calls to cover, then we wouldn’t be having this conversation. Play stupid games, win stupid prizes.
Similarly if I bought a bunch of stuff on margin and it went under overnight, RIP my account. You can lose money in both directions.
“140% of float” doesn’t really mean more shares were sold than exist. There are after all only 100%. It means the same shares were sold more than once by the same or different people, and buying them back cancels the debt obligation.
This is the major weakness of proposals to put everything on the blockchain.
In real-world scenarios, accidents happen. Records must be corrected.
Voting is a great example. If we moved voting to the blockchain, it wouldn't automatically solve fraudulent voting problems. It would just record fraudulent votes on the blockchain. If your grandma accidentally loses her private voting keys to hackers, do we just roll over and let the hackers vote as your grandma? Obviously not.
Any future blockchain solutions to anything government-related will certainly have corrective measures and overrides overlaid on top. It's not like we're going to sit back and watch people lose their house because hackers stole the private keys to their property deed, or forbid someone from selling their car because they can't remember the password to their title wallet.
It's not obvious to me why not. It's a trade-off. You put the responsibility on the user to keep their keys but you save a lot by not spending anything on solving fake or real issues like this.
In this case if you want assurances like this you can trust a third party that handles that stuff for you.
> It's a trade-off. You put the responsibility on the user to keep their keys.
Just like for driving or flying or almost any important occupation, we don't only "put responsibility on the user". We have laws against abuse.
As for gold, gold is a commodity, and one that has industrial utility. You can use it for things, so of course, it’s not particularly controlled.
In this case, someone losing their voting ability because of the system on a regular basis is not acceptable. That's the obvious why not. We want to make a system to count the people's votes. If it bars a voter from casting their vote, it's a failure.
Debasement of the currency, however, has been…high.
So you didn't "lose" that dollar from a hundred years ago, it's just worth about a penny now. Where'd the other $0.99 go?
The whole point of inflation is to encourage investment as money is only worth something as it flows through the economy.
You’re not supposed to save money under the mattress you’re supposed to save value by purchasing assets. A hundred years ago buying roughly speaking any asset would have preserved your entire wealth or created tons of new wealth.
Wages have on average kept pace with inflation.
You keep a small slush fund for a rainy day in a savings account that at least partially offsets inflation and you invest the rest. You don’t save money, you save value. You transact money. If you’re saving money you’re doing it wrong.
This is ECON101.
The whole point of inflation is to monetize the crazy debt spirals by empires. Its why the romans did it, why the Germans did it, why the british did it , and its why we do it. It doesn't take an econ degree to know that. That was the reason the gold window was closed in the first place.
If the whole point of inflation, mind you, is to encourage investment, then why does the fed react by spiking interest rates in the , 60s' 70's, 82 to address inflation...yet introducing a bona fide investment meltdown ? Thats what reveals the facade. If the purpose of inflation was to encourage investment, it is certainly an odd to react to inflation by increasing interest rates, and destroying business investment in the process.
>>>>>>You’re not supposed to save money under the mattress, s you’re supposed to save value by purchasing assets.
This sure sounds like you know better than everyone else. Its probably an attitude that would be frowned upon by someone that believes in freedom of choice, like we do in USA.
>>>>Wages have on average kept pace with inflation.
I don't know if that is true since you have no sources, but the total count of people living in the US under the poverty line is exactly where it was in 1959, and now, post pandemic, it is certainly far higher. So even if wages kept pace, which is uncertain, with technology advances and the dollar as the reserve currency, you would expect the total number of people to be lower.
https://en.wikipedia.org/wiki/File:Number_in_Poverty_and_Pov...
>>>>>>>You keep a small slush fund for a rainy day in a savings account that at least partially offsets inflation and you invest the rest. You don’t save money, you save value. You transact money. If you’re saving money you’re doing it wrong.
This is valid because there is inflation. But it saddens me to think that you think it is perfectly rational and acceptable to steal money from the savings of hardworking people, who often have to fend off scams left and right...and thus keep the money for themselves, for no real reason other than that it is what... you think.
The gold window was closed because gold was garbage money. A money supply you can’t adjust cannot respond to shocks and it can’t respond to changes in the economy or society. The crash in 2008 and again now would have been much much much worse without an ability to control supply. Inflation is defined in terms of supply and velocity. Velocity plummeted so supply was raised to offset and lo and behold the fed nailed its 2% inflation target in 2020 in spite of epic global chaos. Gold would have ruined us.
>>> wages have kept pace with inflation.
Wages are up 10% since 1963 on an inflation adjusted basis (https://www.google.com/amp/s/www.pewresearch.org/fact-tank/2...). Google is your friend.
Yes wealth inequality is a problem, that’s a fiscal and social issue not a monetary policy issue. Tax the rich.
>>>> slush fund
Nobody’s stealing anything. The inflation target is public and goaled on. Inflation has a purpose. You don’t like that purpose maybe because you don’t understand it maybe because you do, but it’s not theft. There is every chance we’d all be worse off under a 0% inflation environment because it would drastically reduce the liquidity that underlies the entire global economy.
Think about it: if poor people have no money and real salary has kept pace with inflation what wealth is inflation reducing? And if we use a 0-inflation or negative inflation currency, what’s to say wages wouldn’t stay flat or go down.
Again if you want to help the poor and narrow the gap, tax the rich, this inflation thing is just the game, and railing against it is tilting at the wrong windmills.
The gold windows was closed because the French decided to redeem their dollars for gold, and due to the rampant debasement of dollars, there wasn't enough gold available to do so.
Source: history.
And they're down 5% since 1970. Claiming that chart shows growth is a gross misreading of that source. The slope of the trendline since 1963 is practically zero.
Believing in freedom of choice has never stopped anyone from believing that there are bad choices.
Hyperinflation is what happens when the economy collapses and you are deep in debt both at the same time. When people talk about inflation as a policy goal they usually talk about a moderate amount like 2% or maybe 4% if you have an appetite for risk but also greater potential gains. Hyperinflation is never a policy goal, it's what happens when things have gone wrong entirely.
>If the whole point of inflation, mind you, is to encourage investment, then why does the fed react by spiking interest rates in the , 60s' 70's, 82 to address inflation...yet introducing a bona fide investment meltdown ? Thats what reveals the facade. If the purpose of inflation was to encourage investment, it is certainly an odd to react to inflation by increasing interest rates, and destroying business investment in the process.
Too much inflation is a bad thing. It means there are not enough workers/there is not enough production capacity to meet all needs. Interest rates reduce inflation and thus demand for workers by making sure only the most productive investments stay on the market. A dead company can just borrow money to hire people and waste their time if interest rates are negative. If interest rates are low like 3% then your company has to make a moderate profit. They have to put people to good use. If interest rates are too high it means only the most productive companies can even make it in the market. Some industries like agriculture have low yields (as in dividends) that cannot afford high interest rates but they are extremely important for our society. We must hit a balance between a non productive and too productive economy and interest rates can contribute to this.
>This sure sounds like you know better than everyone else. Its probably an attitude that would be frowned upon by someone that believes in freedom of choice, like we do in USA.
The reality is that if someone has 20 years of salary in their bank account and another person is unemployed for 20 years the value of your money is gone because that person that owed work for your money didn't work during that time. Food rots, people age. Your money exists purely as a representation of labor and its products and thus even money has to rot.
If your money doesn't rot but there are less apples in the future then you can still buy the same number of apples (or more) and thus your share of apples grows even though you have done nothing to deserve them. People save with precious metals, real estate and stocks (technically just the land) because they do not deteriorate. Well, that's not entirely true. If you save in gold you are betting that an economy will exist in the future that can give you apples in exchange for gold. If you save in land you are betting that people will gather around you and live and work around your plot of land. If you save in stocks you are betting that the company will not go bankrupt in the future.
How do you make sure that people will work both work today and tomorrow? You just pay them more tomorrow. That's why inflation is a policy goal.
>I don't know if that is true since you have no sources, but the total count of people living in the US under the poverty line is exactly where it was in 1959, and now, post pandemic, it is certainly far higher. So even if wages kept pace, which is uncertain, with technology advances and the dollar as the reserve currency, you would expect the total number of people to be lower.
Inflation is generally driven by a shortage of labor and a shortage of labor drives salaries. There are some exceptions. You can build an economy that is unable to employ everyone but that's not an argument against inflation. It's an argument against specific policies. The government can just ban work and everyone will agree that this is stupid. There are less nefarious policies that can have the same harmful but lesser effect.
Inflation is down because there is a complete lack of domestic demand for a certain segment of the population. College educated people tend to do far better than those with just a high school diploma. There are two reasons for this. Globalization makes unskilled labor unnecessary domestically. That means less work where you can sell your body but the work where you use your brain hasn't moved. That portion is actually growing. The second problem is that employers have absolved themselves of the responsibility to train their workers. That means you are now responsible for your own education. This means people must go to college but it also means there are some unfortunate souls that did not acquire the right skills for the current labor market.
>This is valid because there is inflation. But it saddens me to think that you think it is perfectly rational and acceptable to steal money from the savings of hardworking people, who often have to fend off scams left and right...and thus keep the money for themselves, for no real reason other than that it is what... you think.
That's not savings. That's rotting paper. It's not even stealing because you can get interest on your savings if inflation is high.
- CPI(-U) is not a suitable measurement of inflation anymore since it discarded fixed basket goods somewhere in the 90s and that
- inflation measures with "old-school" fixed baskets report inflation rate in the range of 6-10%/year
- production of goods became much more efficient but instead of being reflected in cheaper prices it increased shareholder profits and wealth inequalities?
Re (2) I’d be very interested in learning more about the delta between CPI and these baskets. Do you happen to have a reference? I’m always down to learn more.
Re (3) I agree that inequality has gotten worse but I see that as a social and fiscal policy matter and not a monetary policy matter. If we’d been using gold, the same trend would have manifest. Poor people don’t hold onto money anyways they’re hand to mouth. And any extra they happen to hold onto could have been invested anyways. Frankly minimum wage over the period hasn’t been indexed to inflation either!
I’m a huge advocate of decreasing the gap between the rich and poor, I have more than I need to be sure, and the best way to do that is taxation.
This gap between rich and poor really started widening after the Reagan era tax cuts and trickle down economics. If you look back the top marginal tax rate in the US in much of the 1900s was 80-90%. Estate tax the same. If you reduce that to 37%, rich people get richer because they keep more and more of their wealth. A practically 0% estate tax ensures the next generation starts on a monopoly board where there’s a hotel on every square. To me that’s a much clearer correlation than the spooky action at a distance of this 2% (a figure you admittedly contested) inflation rate. Do the ultra wealthy really hold cash? Do the poor? Does anyone?
If we had inflation at 10% the economy would be smaller now than it was in 2010. It's under 2% and we can't get it up no matter how hard we try (not that hard so far.)
> If you look back the top marginal tax rate in the US in much of the 1900s was 80-90%.
Note that the effective rate was nothing like this because there were also lots of deductions.
Apparently that was changed in the 90s. An example I read (of which I am not sure if it is entirely accurate) was: "if steaks become too expensive, its weight in the basket will be reduced because people are expected to buy more chicken instead. this results in lower inflation estimates".
If true, why do you feel a fixed basket should not be used to determine inflation even though it is probably what most people would expect in such a measure?
For instance, industrial agriculture, the farm bill subsidizing corn to below the cost of production starting in 1933, and many other things may change the relative cost of beef over time as compared to, for instance, pork and chicken. That's not inflation, and as such it doesn't really make sense to define inflation in terms of these factors which affect only a specific industry.
Live in the pod! It's still shelter.
Fuck the computer peripheral! It's still sex.
Dystopian. At least the official inflation metric is low.
Just that factors outside inflation influence the pricing of certain commodities. Nobody's guaranteed a specific commodity forever, and the definition of luxury, and commodity expectations, changes over time.
For instance, pig feet are having a moment (or at least were pre-pandemic). They used to be discarded as waste, but now you'll find them in haute cuisine. [1] Sweetbreads too!
Tastes change, expectations change, cost structures change. The world isn't static, and nor should our metric be.
[0] https://recipes.timesofindia.com/us/articles/food-facts/thes...
[1] https://www.jancisrobinson.com/articles/pierres-worldfamous-...
I don't think this applies to the general population's understanding of inflation. The layman's interpretation would be "how much more expensive would it be today if I bought the exact same things 1/2/5/10 years ago". This is actually how inflation was measured up until the 90s.
"Removing" (i.e. reducing the weight) of a good when it becomes more expensive is contradictory to measuring the price increase of an average basket of goods. Especially if you do it on short timeframes. CPI-U is reweighed every 2 years and C-CPI-U is reweighed every month. How are you expected to measure inflation* beyond those timeframes? Housing too expensive? Rent. Cars too expensive? Public transport. Steaks too expensive? Eat chicken. Chicken too expensive? Ramen. Ramen too expensive? Food stamps.
The result? Population on food stamp in the US rose from ~6% in 2001 to ~15% in 2017, while unemployment rate and wages stayed the same. They can't protect themselves via buying stocks or other assets because they need their money to survive months by month. All the while, the riches are getting richer by pocketing efficiency gains and bailouts.
People have learned that the 2% inflation (of a fixed basket) is nothing to worry about in the past. The same measurement would now yield a 10% inflation rate which is unprecedented and worrisome. So the inflation measure was changed to a dynamic basket in which expensive items are reduced, cheaper items are increased and magically inflation* is around or even below 2%. Nothing to see here, nothing to worry about - we always had 2% and 2% is fine. Except the poor are getting poorer and more desperate and susceptible to fascism.
So the idea people have about "inflation" as the increase of costs of a fixed average basket of goods is as obsolete as the idea of "money" being backed by gold.
The layman's interpretation of a lot of things isn't right or useful - just ask antivaxxers. As our standards for what luxury is change, what we're willing to pay for them (in the supply and demand sense) changes.
Things that used to be "poor-mans food" like lobster and caviar are now high-end food. Monkfish, oysters, foie gras. Even sushi was street food. Skirt steak was crap meat! Now they're incredibly expensive. Is that inflation? Of course not, that's a change in tastes.
Similarly, spices like clove, nutmeg, cinnamon and pepper used to be hugely expensive but are now dirt cheap. Is that deflation? Of course not, that's a change in productivity and availability.
The fact that the basket wasn't adjusted seems like a huge oversight to me.
> The result? Population on food stamp in the US rose from ~6% in 2001 to ~15% in 2017, while unemployment rate and wages stayed the same.
This is a completely unfounded leap. You have not presented any evidence for a cause-effect relationship, just simply asserted it. Correlation is not causation.
This is a social policy issue and not a monetary policy issue. Even if we pretend for a second that the situation was exacerbated by monetary policy, it doesn't matter - it's still a social policy issue to resolve.
> People have learned that the 2% inflation (of a fixed basket) is nothing to worry about in the past. The same measurement would now yield a 10% inflation rate which is unprecedented and worrisome.
Sure only if you ignore that that's not how inflation is calculated and for a good reason.
2. Cough, Tether audits, cough.
I think OP's point was more about things which exist entirely on-chain, i.e. the idea of having stock ownership tracked directly there (rather than as a proxy for real shares tracked somewhere else).
In that frame, a better example is something like the DAI stablecoin, which is backed by assets that are on-chain. So at any block, you can audit exactly how many DAI there are, exactly which assets exist to back it, and exactly what the last reported oracle prices are for those assets.
While Tether's bank accounts being private is a problem for auditing, even if that were removed, you'd still have to somehow "snapshot" all the bank accounts an transactions, freezing things in time so you could ensure there wasn't a shell game going on while you audited.
This just isn't feasible with a federated system where each bank has their own ledger, and asynchronously tries to align it with a bunch of other ledgers.
Blockchains overall reduce throughput compared to this model, because they enforce a single ledger. But they do this while still preserving decentralized control, resulting in a tradeoff where you lose some scalability, but also remove need for a trusted mediator(s), and now anyone can audit a snapshot of the state at their leisure.
Also fractional reserve banking is a thing of the past. We've now evolved to no reserve banking. The banks' ability to create money from thin air is almost unrestrained.
Let’s stick to fact.
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
Not fraud though, because "When the president does it, that means it is not illegal"
I can pay occasionally my lunch by crediting my assets with $10 plus creating an interest-free liability for $10. Yes, and that is what the banks in effect do. And no, it is not a fraud, just a massively misunderstood thing.
Say I have a network of businesses and individuals who trust each other, or that agree to establish some way to maintain trust with each other. Say we wish to do away with banks. So a person wants to open business A, needs to buy things to get their business up and running. Rather than begging the bank for access to capital [0], I buy things from my fellow businesses in this community on credit. They agree to give me their goods in exchange for my promise to pay back (and in exchange I do the same for their goods).
This still doesn't work because of one simple reason: dollars (or your local currency) are legal tender, and you need legal tender to pay taxes. You cannot legally function on "community credits" alone.
[0]: Which in itself it's a pretty wretched thing that this is in the hands of private individuals, who can decide who gets to start businesses and who remains a wage-slave.
That's not what fraud means.
"In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right."
The reason some things are illegal and others aren't is because for the system to function, certain powers and responsibilities are delegated to certain entities. You can't own nuclear warheads, you can't kidnap people, and you can't print money. The act of doing those things isn't illegal. What makes that act illegal is the context. If those who were delegated that power are doing it, it's not crime, it's your responsibility. If you decide to build a reactor in your back yard, that's crime.
Just because someone else can do something you can't doesn't mean it's fraud.