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Comment by ende | Hacker News Reader

Do you think the central banking based currencies offer any democratic control? You'd be kidding yourself if you thought so. Central banking centralizes control of a currency under the influence and in the interests of the economic elite. Distributed currencies like bitcoin deny that control to a centralized authority. That alone makes it more democratic. It is important to note that it is not bitcoin itself that is revolutionary, but all the distributed currencies that follow it. It is the evolutionary modification and adoption of those currencies that is democratic, through the emergence of a competetive market of currencies all based on different ideas.

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Of course we can decide how the central bank works in the U.S.--we vote for new politicians whose views on money more closely align with our own. They install new administrators, who set policy that more closely aligns with our views.

Do we vote on central banking policies directly? No, of course not. Does that mean nothing ever changes? No, of course not.

I'm not sure who, if Mitt Romney had won, he'd have named as Fed chair, but I suspect it wouldn't have been Janet Yellen. (Just like, had McCain won in 2008, we sure wouldn't have anything like the Affordable Care Act--which, flawed as it is, is a big improvement over the old status quo.)

That's how democratic access to money policy works; we vote, power realigns in accordance with our votes, and a few years down the road, we do it again.

"That's how democratic access to money policy works; we vote, power realigns in accordance with our votes, and a few years down the road, we do it again."

And therein lies a problem. Under a system like this, policy is geared towards affecting the short term in order to affect the next election cycle and no heed is given to how things play out in the long run.

I think the economy is something we can revisit every couple of years, to see, do we still like the direction it's going? Should we keep the old people in, vote for new people?

Maybe 4 years is too short a time to revisit the question. Maybe too long. I don't know if 4 years is the best length of time, but it doesn't make sense to make it too long a period of time; we've got to have a chance to change course every so often.

We decide how central banks work by electing a new president, hoping the current chair expires during their term, having a new chair approved, hoping the new chair has the authority to and does implement the policies we want.

How is that better and more likely to happen than allowing 51% of the network to just adopt a new protocol and cut out all the middlepeople?

The Fed was established by an act of Congress and can be changed or abolished by an act of Congress. Congress is democratically elected. That's the connection to the people.

The reason Congress has not abolished the Fed is that most people think that the Fed is pretty good at what it is supposed to do.

You assume there is any real democratic control of Congress, and that the whole game hasn't been rigged by a duopolist oligarchy.

America doesn't even have democratically elected presidents (just ask Al Gore). Hoping that Congress will even halfway represent the wishes of the people is bold.

Most people have no idea what the Fed does (let alone that it even exists) nor do they have any framework with which to evaluate its work.

I assure you, if inflation reached 10+%, most every voter in the US would know what the Fed does and what they wanted it to do instead.

The non-conspiracy fact is the Fed has stayed quiet during the past 7 years because it has done a remarkably good job compared to their conservative-to-the-point-of-incompetency European counterparts. Europeans are quite familiar with ECB policy, because it has handled the crisis so astoundingly badly.

Thanks for your assurances, but catastrophic failure does not an understanding make. Also, "not break the economy" is not an actionable (or, I'd argue, even comprehensible) framework.

Inflation, by the government's own numbers which tend to under report it, reached over %10 during the bush administration (and has been probably over %20 for most of the Obama administration.) "Inflation" as reported by CNN et. al. every quarter is a propaganda number that has all of the key inflation indicators taken out of it and is effectively watered down. (making it so that you can't even compare it from one administration to another.)

Even the most cursory analysis makes it obvious your numbers are ridiculous. 20% inflation during 6 years of Obama would make items, on average, 3x as expensive as they were in 2008-- is your food 3x as expensive? housing? gas?

Mine is. I don't know about the rest of the country, though.

I'm curious where in the country gas costs $9/gal now. In 2008, it was around $3 across the country.

I'm also curious where in the county a loaf of bread is now $3-4, and I mean the cheap white/wheat bread that used to cost a buck and change (and still does here).

Housing, I know it's gone up a lot, but even so, 3x?

Can you provide any hard numbers on the 3x increase in gas, housing, and food?

I'm not sure he was talking about an annualized rate.

On a sidenote, why is economics so wrapped up in astrology?

I moved to Canada. Due to NAFTA/CAFTA/SPP, Mexico, Canada and the US are the same country now.

The prices mentioned are exactly in-line with what I'm paying overall, though gas has gotten to around $3.10USD/Gal recently. Food prices are astronomical, and labor wages are flat/stagnating.

We were talking about the cost of goods in the US.

I guess if you want to compare the situation in the US in 2009 with the situation in Canada in 2015, then, ok, but it's hard to see what point you're actually trying to make then.

Canada is the US, post SPP. so yes, we're talking about the costs of goods in the US.

I think you're probably using an idiosyncratic meaning for "in," so we may be at an impasse for going further with this discussion.

it all depends on what the definition of "we" is, I suppose.

Since the federal reserve stopped reporting M3 data, we don't know the actual inflation levels, and haven't known them since 2005 [1].

On another note, we need a Godwin's law for "Conspiracy Theory". As soon as someone mentions the word, it's likely to set up a appeal to ridicule fallacy, such as used in the parent.

1. http://mises.org/library/death-m3-fifth-anniversary

Why do bitcoin evangelists always deflect by pointing fingers at central banking?

Bitcoin is controlled by the few barons who own most of the coins, and unlike central banks, those barons are entirely, rationally aligned with their own personal profit. Same with the overseas miners who invested in infrastructure. The federal reserve may be influenced by politics, but at least it is aligned with keeping the USD currency stable, and usable by citizens.

The personal interests of the bitcoin elite are why bitcoin suffers from tragedy of the commons. Bitcoin will never be anything but deflationary because the ones who control it (barons, miners) do not profit from change that is beneficial for bitcoin.

Why do their detractors never read anything that they actually said, and instead resort to immature ranting?

Why do you commit an Ad hominem fallacy to avoid addressing the point?

You make good points, but they're completely drowned out by the noise of the derisive term. Seriously, leave the memes on Reddit.

Ah, I see the problem now. I had the "cloud to butt" chrome extension for bitcoin turned on. I totally agree - fixed.

Are you serious? Because if so, 1) that's hilarious, and 2) I'll gladly respond to your revised reply as absent the term 'buttcoin' you raise some legitimate points I'd be happy to converse over.

I agree - I find it quite hilarious, which is why I originally installed it. I'm still waiting for your discussion, beyond the ad hom attacks.

You should read the book The Creature from Jekyll Island and learn about how the Federal Reserve was created, what it is (hint, it's a private bank), who owns it, and what it has done over the past 100 years.

The federal government has some influence over the federal reserve, but it's advisory at best. Their deal is that fed allows the government to deficit spend as much as they want and in exchange the fed gets an cut of the interest on every dollar (which are federal reserve notes-- eg: debt.)

The federal reserve has not kept the USD stable, and is, in fact, financially incentivized to destroy the USD via inflation, and is busy doing so. They are obscuring this destruction by using the power to print dollars to buy treasuries at auction making it look like there is massive demand for such treasuries, keeping interest rates low. They keep interest rates low, which boosts government spending (Because its "cheap"-- at least in the short term) and this boosts fed income because they get the interest.

The bitcoin protocol was clearly made by someone who understood economics an didn't want to allow such a scam to be perpetrated on the public the way the fed has defrauded us of %99 of the value of the dollar over the past 100 years. (probably more like %99.9999 ... but I'm not sure how many 9s there are after the decimal.)

It's not a deflection to point to central banking-- central banking is the reason for bitcoin being the way it is.

While the Federal Reserve system has member banks, they only get a small slice (6% according wikipedia) of its profits with the rest going to the US Treasury. So it's not materially a private bank.

If the Fed is currently busy destroying the USD via inflation, it's doing a pretty poor job of it has kept inflation under 2% for quite some time now.

Congrats on completely ignoring how the Fed no longer publishing M3 data[1], therefore concealing all aggregate money supply, would completely distort[2] any later inflation numbers provided (such as the percentage you just listed).

1. http://www.federalreserve.gov/releases/h6/discm3.htm

2. http://mises.org/library/death-m3-fifth-anniversary

M3 might help you make predictions about inflation but you don't need it to measure it.

Indeed. you especially don't need to measure it if you're intentionally not paying attention to inflation.

I was too free with my pronouns. You might like to know M3 to think about inflation, but you don't need M3 to _measure_ inflation.

Yes, inflation is the point.

And inflation is quite specifically the point, to encourage people to spend money (on buying stuff, on reinvestment, on whatever), instead of sitting on it.

When people sit on piles of money, it doesn't do anyone any good. It's not destroying the USD to keep that money moving around the economy, it's part of its basic deal.

I think that's a very key point that people miss with Bitcoin.

Bitcoin was designed to be a cryptocurrency that stores value, and because it is deflationary, bitcoin makes a terrible currency. The bitcoin forking scheme to fix this is controlled by people who profit from bitcoin staying deflationary.

Thanks, I'll add that to my reading backlog, but I think you hit the nail on the head for the problem with bitcoin.

You talk about the inflationary behavior causing the dollar to lose value over the last century, and that is absolutely intentional. A good currency is expected to experience a 1-3% annual inflation, in order to decentivize hoarding and remove barriers to cash flow.

Bitcoin is deflationary by design, and this is a key distinction to make. There is a definite future for an international cryptocurrency, but the implementation known as bitcoin is not it - exactly because of what you said, it is designed to be a store of value, not a currency. Many bitcoin evangelists will claim that theoretical soft forks can be made to solve this, by adding more supply and making bitcoin inflationary, but to do so requires 51% of miners to agree to it - which is irrational because it would devalue the miners' holdings and infrastructure.

Hence we're back at Bitcoin suffering from tragedy of the commons, which is by design as you point out.

You should know that control over bitcoin is given to those with more than 50% of the total hashing power and this is not really equivalent to 50% of the users.

Right. I believe there are a few bitcoin derivatives (or unrelated blockchain currencies) that do denominate control by the number of users, though?

And just how do you prove each user is tied to 1 person as opposed to one elite running a million copies? You can't.

50% of the total hashing power only gives you certain powers, and certainly not "control over Bitcoin". For instance, you can't change the protocol any more than you could without the hashing power.

The economic majority controls Bitcoin, not the miners alone. Have you even heard about nodes?

>Distributed currencies like bitcoin deny that control to a centralized authority.

What is the minimum number of people you think it would take to decide on a change to some rule of bitcoin and have enough combined power to force the change through?

Isn't it 51%? Im not really sure. But I don't really see changes occurring through that route, but rather by forking off derivative currencies with modifications. Democratic selection decides which currencies gain value. To me, modifying the rules in mid-game seems the wrong point of entry.

Yup which at the moment would take 4 people(The heads of the 4 biggest pools). 4 people with no real reason for it being them except that they run successful pools. Hows that for centralization?

Glad you read the first 7 words of my reply to satisfy your cleverly devised bait. I encourage you to read the rest.

Your original statement was that Bitcoin removes that centralized control. Saying you wouldn't do it doesn't stop it from being possible.

Ah, I see the ambiguity in my wording. I meant that distributed currencies as a general concept (invoking bitcoin as an example of a single digital currency) removes centralization. You're right that any one such currency may retain the potential for centralized control, but what interests me is the opportunity for digital currencies to evolve through the emergence of improved implementations. In that manner we can escape centralized control. I'm more interested in blockchains than Bitcoins.

This isn't true. A protocol change would require every Bitcoin user to change their software. 51% regards miner based attacks on the network such as double spends.

Miners still have to obey the rules of the Bitcoin nodes. If a miner tried to generate more coins, even if 100% of miners tried, it would fail as the several thousand active Bitcoin nodes would simply reject the blocks.

it is true. Google softforks for more info.

I guess I wasn't very clear, good point!

Softforks cannot add more coins into the network, they can, at most, restrict earlier valid transactions.

It's always been known that someone with over 51% of the power can rewrite the blockchain, but only within the rules of the Bitcoin nodes.

For example, a softfork could never spend coins from your wallet without your key, it could never make more coins or delete a users balance.

This is a good post on the difference: http://bitcoin.stackexchange.com/questions/30817/what-is-a-s...

51% certainly gives someone a lot of power, but it's power with limits, and the limits are the rules coded into every Bitcoin node.

I never claimed those abilities just that a small group of people had feature control over the currency.

No, these 4 peoples have no power to "force" (your words) the change of some rule, against the will of the users. Because the moment they would try to force something the users disagree with, the users would simply change the pool they mine on, thereby removing any power the pools had.

Pools are in fact very democratic systems for this reason. Users can change pool at any moment's notice.

It's not 51%. A protocol change requires the vast majority of the Bitcoin nodes to agree to new software. 51% only matters for miners and if they can double spend, but has nothing to do with protocol changes.

Interesting, thanks for the clarification.

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