So a big round of thanks to everyone that participated in yesterday' discussion of Cryptocurrency. I am somewhat comforted by the fact that the takeaways from the conversations are similar to my own thoughts:
1) It seems complicated.
2) It seems interesting.
3) It has possibilities.
4) It could be a limited for investment, like many others.
5) You could lose everything.
The other question - the more interesting one, the more I thought about it - is the nature of currency, the market, and mediums of exchange.
One of the concepts from yesterday's discussion is the fact that an underlying economic system - one that somehow involves a government - has to exist. It is odd that when I think of the "economy", this is not something that I consider as I am thinking only of the buying and selling of goods between individuals and businesses - but "the government" seems to underlie the whole thing. Yes, in maintaining the system, but also in a sense continuing to allow it to exist.
Perhaps it has always been so and I have never considered it as such; but it certainly seems to me that any economy or mechanism that relies on the government allowing it to be used as an economic medium of exchange is really all and only dependent on the government allowing it to exist at all.
Which brings up currency and mediums of exchange.
A currency is, per Merriam Webster, "something which is used as a medium of exchange" and only dates to this use in English back to 1624 - which is not very long at all, if you think about it. The fact that it could be "something" implies it could really be anything to be used as a medium or exchange, although traditionally it was precious metals as they had value - now, of course, virtually every nation uses bank notes and to a lesser or greater extent coins which are magically linked (to Ed's comment yesterday of dark matter and black holes) to the country's repository of precious metals or (more alarmingly) its "ability to pay".
So now, really, paper and electronic currency is really a medium of exchange on a theoretical value that we all choose to believe in and accept, even though we can neither see it nor take hold of it.
Now, to be fair I use this system as much as anyone else. My "check" goes into the back: taxes are withdrawn, retirement withheld, and various forms of payments made without me ever seeing or touching this "currency". Nor does anyone that receives these payments question them: the government does not write me an ugly letter, my electricity continues to be on, and my retirement account to continue to be funded.
But all of this presumes that we use the official currency, the government's decreed medium of exchange - in my case, the U.S. Dollar (your mileage may vary).
An interesting historical note is that in the U.S. constitution (Article 1, Section 8, Clause 5), only the U.S. government has the power to coin money and determine the value thereof - and that it is a violation of federal law for individuals or organizations to create currencies to compete with the official currency system. This supposed to preserve the value of the currency and give everyone a level playing field; in point of fact it does create a bit of a monopoly as well.
A medium of exchange can be anything, of course; that is whole point of the barter system. Barter can be difficult to manage for larger amounts of goods (one ton of wheat, for example, is not very portable), which is a major reason that currency exists. Barter is also limiting in the fact that it only allows me to trade what I own. If everyone needs carrots I am in luck; if no-one needs carrots I will either have to find something else to trade or eat a lot of carrot soup and carrot cake. So currency has its practical place.
Is there a way for currency to exist without overall government control? I really have no idea - in theory cryptocurrency is an example of something filling this niche, although it could be declared illegal for use by any or all of the world's governments - and while they may not control the systems this currency exists on, they do control the world in which it operates. Which would limit its usefulness to the small items not easily traced or electronic bits and bytes that exist only on your electronic devices (neither of which is very practical for daily living).
I have no solutions of course, only more questions. But given this considerations, the whole system certainly seems rife for abuse and with a high potential for failure as soon as someone - a person, a nation, a world system - declares another country's currency to be "worthless.
Markets will always exist regardless of govt. you just have to decide where your moral boundaries are and how much control you give to the govt. The markets for anything from guns, to drugs, to child prostitution are huge and can be tapped with a few clicks on the mouse. They exist because they are careful to exclude hostiles and non-users and they fly under the radar whenever possible. No govt has ever been able to get rid of them.
ReplyDeleteEven a collapse will not hinder the market. In Cypress - when the govt began giving their citizens “financial haircuts” by raiding their savings accounts at the bank - a “parallel” currency set up within WEEKS. As a plumber I could walk into your house, make repairs and charge you in credits. The ‘credits’ were managed and tracked by a hastily assembled cyber banking utility and only functioned within a small community of users. As soon as I finished repairs in your house and walked out - Ed could walk in and buy your carrots with credits - provided he was in the community of users. The government of Cypress was livid because they couldn’t track or tax the transactions at all. If they got too close the system was crashed until the heat was off... and then restarted in literally the blink of an eye. It had its limitations, but it was the only way the private citizens could do business under a predatory govt. They only way to prevent it would be to physically attack the citizens and rob them... and when govts start preying on their own people... they tend to get dealt with.
We could do the same thing right on your blog - as long as we agreed on the value of the ‘credit’. Information is considered to be currency in that it translates easily into power. That is why certain parties want certain other parties excluded from the social media, I think. The next step will be to get them off the internet entirely... and even that won’t stop the parallel and black markets from flourishing.
Everything we do truly revolves (devolves) around money and power for many of us. Perhaps that is why we are in the straights we are in?
I sometimes enjoy the works of Junius Maltby on OyTube. He’s a gold stacking hobbyist that sometimes has informed and fascinating viewpoints on currencies and exchange.
Glen - What a fascinating story about Cypress. I knew about the "Bail In" of course, but had not heard anything about the system you describe. Makes sense, of course - and with technology it is all the easier.
DeleteAgreed that information is power, and I, like you, think we are entering a period of controlled information or even removed information.
I appreciate the recommendation and will give it a look.
I agree with Glen that currencies will survive, just not the dollar. If something akin to Greece were to happen here, the top 10% that largely has their money in digitized pieces of code online somewhere in the form of stocks and such will instantly have nothing. They will still have X amount of dollars as before but it will be worthless when a loaf of bread now costs $100,000. I think in such a situation, bartering will instantly be king for those positioned to deal with it. I think those who have access to creating or just owning the essentials like food, clean water, maybe textiles will do the best. Those who don't like painters, writers, government servants, etc. with nothing in a post apocalyptical world to trade, will not last long. If we haven't drug the entire world with us, perhaps pesos will be the currency of choice or maybe bitcoin. I'm just not optimistic of any currency that depends on the internet in an apocalyptical world. I figure the internet will go bye bye early on along with most things that depend on electrical signals.
ReplyDeleteThe nasty flip side of that, Ed, is that if the only people in a position to survive are those that have the material to barter - they will become targets. If I am starving, and my kids are starving - and TB has a great big tasty carrot patch going... what is going to happen? Imagine you are the local leader of the new People's American Communist Party and you need to feed not only yourself, but your fiendish army of henchmen... and TB's got that carrot crop coming along. What would you do?
DeletePeople think I am nuts - but it is my conviction that there will be no safety in sitting on the sidelines or going grey in the event of a full collapse. As proof of my viewpoint, I submit the failed banana republics of Africa and south America. Bartering in those countries is liable to get you shot, and probably the safest place to be in those countries is in the military or aligned with the local warlord.
Personally, I think the people that will be most likely to survive a full collapse will be those that can form viable communities based on the order of law and mutually profitable Christian principles - and even they are going to go through the meat grinder as our esteemed ruling class endeavours to 'build back better'...
Absolutely agree. I know a few preppers and one of the questions I have asked is, "how do you know that you will want to live in a post apocalyptic world?" It might not be all roses. Kind of reminds me of that old movie called "The Day After" about life after a nuclear shootdown.
DeleteEd - Agreed that currencies will survive in some form or fashion. They always do, I think in part because they are an agreed upon medium of exchange and represent portability. Any sort of non-physical currency does, of course, include the idea that technology still works and the currency is available - which is not a scenario anyone has pressure tested (probably because it seems so unlikely).
DeleteThe most recent example I can think of - to Glen's point - is Venezuela. The Organic Prepper had an individual reporting from Venezuela and then from where he ended up. The descriptions of how things "worked" there was upsetting - and all too real.
Another fine question for "would you want to survive" is The Road, which if anything was darker than The Day After.
I meant to comment yesterday and had no time.
ReplyDeleteOn Greg Gutfeld Sunday night they were talking about, and laughing, about some person who had over two million in bit coin or some such and had been trying for many years to remember their password.
Apparently there was no way to recover it after forgetting.
As to currency, beads, shark's teeth, shells, hand made goods, many things have been used throughout history for that purpose.
These days ammo and seeds come to mind also.
Linda, that is my understanding as well. At least now, they are pretty clear about that up front: Here is your password. You will never see it again.
DeleteGiven the state of the world, seeds and ammo would make for fine currency. Useful and portable.
I saw an ad just a bit ago to buy fake land with your fake money (at least that is how I see this... electronic money). I just don't trust it.
DeleteStill, I pray you do well if you want to. :)
Thanks Linda. I doubt I will ever have enough fake money to buy fake land - if I do, it very well may mean that the world is ending.
DeleteGlen Beck back in his first couple of years had a man on that was involved in the creation of bitcoin (fuzzy memory) to explain to him and his side kicks how bitcoin actually worked. Went over my head and apparently theirs. I'm sure it's probably on the utube or somewhere on his site.
ReplyDeleteSM, I have read several different explanations, including the Wikipedia version which (I would generally assume) is the "dumbed down" version. I still do not get it.
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