Krugman – bitcoinARL.com

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[Economics] Intrinsic value of bitcoin and Krugman's Op-ed

If you somehow have been living under a rock, go read Krugman's op-ed first: Bitcoin is evil. Possibly also read Brad DeLong, which I think reads a bit better.
I've been trying to understand the arguments put forward by Krugman (and Brad DeLong) that bitcoin lacks a value floor as opposed to e.g. gold or a currency like USD. I get the gist of the argument that bitcoin mining does not really produce anything of value in the event of a failure of bitcoin. However, I don't really understand the reasons for why gold or the USD is that much better in that regard. Or rather, why it matters if bitcoin has an intrinsic value.
Gold has industrial uses and can be used for jewlery as well. However, in as much as that is an intrinsic value, is the value floor not likely to be a lot lower than prices today?
The intrinsic value of a fiat currency seem to be based on taxes and government backing, which ultimately hinges on trust in the government/central bank.
Delong says it like this:
"commodity moneys can maintain their value via their cost of production, but fiat moneys maintain their value when some very large too-big-to-fail entity backs them."
and:
"In my view, BitCoin’s chances would be a lot better if there were some large and durable entity that promised to be a BitCoin sink if necessary. If, say, Google Cayman Islands were to start GoogleCoin, and announce that it would always stand ready to buy back GoogleCoins at a fixed real value, it could make a (small) fortune and, I think, eliminate BitCoin’s business in a month…"
Though having some entity backing bitcoin would relive much risk, isn't the crux of the problem not still that of volatility?
submitted by markgraydk to AskSocialScience [link] [comments]

This is why Krugman, Buffet and others ignore Bitcoin

This is why Krugman, Buffet and others ignore Bitcoin submitted by trakatan to Bitcoin [link] [comments]

Economist and Bitcoin Hater Paul Krugman Claim's Hackers Planted Child Pornography on His Computer

Economist and Bitcoin Hater Paul Krugman Claim's Hackers Planted Child Pornography on His Computer submitted by CryptoDangerousDave to btc [link] [comments]

Economist and Bitcoin Hater Paul Krugman Claim's Hackers Planted Child Pornography on His Computer

Economist and Bitcoin Hater Paul Krugman Claim's Hackers Planted Child Pornography on His Computer submitted by CryptoDangerousDave to CryptoCurrencies [link] [comments]

I am a kid from Greater India, and I want to know. Why does Paul Krugman keep negative things about Bitcoin?

Why does Paul Krugman keep saying negative things about Bitcoin?
P.S. I used to start my posts with: "I am a teen from Sri Lanka, and I want to know." I now no longer consider myself Sri Lankan. I call it Greater India.
UPDATE: I believe that Krugman may have gotten one or two things "maybe wrong". But look at his strike rate. Think about all the things he gets right. As for him being a Keynesian, that's not a crime the last time I checked.
submitted by aboutcode to btc [link] [comments]

Economist and Bitcoin Hater Paul Krugman Claims Hackers Planted Child Pornography on His Computer

Economist and Bitcoin Hater Paul Krugman Claims Hackers Planted Child Pornography on His Computer submitted by WaltWalrus to Bitcoincash [link] [comments]

Economist and Bitcoin Hater Paul Krugman Claim's Hackers Planted Child Pornography on His Computer

Economist and Bitcoin Hater Paul Krugman Claim's Hackers Planted Child Pornography on His Computer submitted by CryptoDangerousDave to CryptoMarkets_News [link] [comments]

Butter ranks famous people (Bill Gates, Warren Buffet, Krugman etc) based on their economics knowledge and if they support bitcoin - hint - everyone who disagrees with bitcoin "doesn't understand economics".

Butter ranks famous people (Bill Gates, Warren Buffet, Krugman etc) based on their economics knowledge and if they support bitcoin - hint - everyone who disagrees with bitcoin submitted by aoratos22 to Buttcoin [link] [comments]

Bitcoin is back. A middle finger to Nouriel Roubini, Krugman and every crap economical "expert" of this world

Bitcoin is back. A middle finger to Nouriel Roubini, Krugman and every crap economical submitted by chek2fire to Bitcoin [link] [comments]

We talked to Nobel Prize-winning economist Paul Krugman about tax reform, Trump, and bitcoin

submitted by SyntheticOne to Economics [link] [comments]

Paul Krugman: "So is Bitcoin a giant bubble that will end in grief? Yes. But it’s a bubble wrapped in techno-mysticism inside a cocoon of libertarian ideology. And there’s something to be learned about the times we live in by peeling away that wrapping."

Paul Krugman: submitted by Pilebsa to Freethought [link] [comments]

Bubble, Bubble, Fraud and Trouble: Krugman on Bitcoin

Bubble, Bubble, Fraud and Trouble: Krugman on Bitcoin submitted by turtleeatingalderman to EnoughLibertarianSpam [link] [comments]

Paul Krugman:"Bitcoin conference won't accept Bitcoin because it's too clunky and expensive. Yay!"

Paul Krugman: submitted by Egon_1 to btc [link] [comments]

Krugman on Bitcoin: "What we want from a monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. And that’s not at all what is happening in Bitcoin."

submitted by yeropinionman to Economics [link] [comments]

I am a teen from Sri Lanka and I want to know. Is Paul Krugman wrong about Bitcoin?

I am a teen from Sri Lanka and I want to know.
Is Paul Krugman wrong about Bitcoin? http://www.businessinsider.com/paul-krugman-says-bitcoin-is-a-bubble-2017-12
submitted by aboutcode to btc [link] [comments]

Why do Paul Krugman and other Keynesian Economists Fear Bitcoin so Much?

Why do Paul Krugman and other Keynesian Economists Fear Bitcoin so Much? submitted by redskinsfan1212 to Libertarian [link] [comments]

Bitcoin Is Evil, and a Bubble, Says Krugman

Bitcoin Is Evil, and a Bubble, Says Krugman submitted by calicub to Libertarian [link] [comments]

We talked to Nobel Prize-winning economist Paul Krugman about tax reform, Trump, and bitcoin

We talked to Nobel Prize-winning economist Paul Krugman about tax reform, Trump, and bitcoin submitted by PostNationalism to economy [link] [comments]

Paul Krugman makes a technical point that I think is often overlooked: fiat money is backed by taxation, and Bitcoin stands alone in being unbacked.

Paul Krugman makes a technical point that I think is often overlooked: fiat money is backed by taxation, and Bitcoin stands alone in being unbacked. submitted by Nielsio to austrian_economics [link] [comments]

Krugman and Bitcoin and Me: Radical Thoughts on Fixed Supply Currency

My dad asked me how I reconciled Bitcoin's fixed supply with the Keynesian model of supply. I understand that most people around here don't hold much stock in what Paul Krugman has to say. But much of the real world actually does, what with his Nobel prize and all. So I put some serious consideration into what he had to say about deflation, how it relates to Bitcoin, and other vague currency questions. What follows is my email back to my pa. Many of these ideas have come from my time spent in this forum, so feel free to chop it up, edit, and distribute away if you find any of it worthwhile.
Thoughts from a liberal after reading Paul Krugman's 2010 NYT piece: Why is Deflation Bad?
Krugman and Bitcoin and Me
Krugman's argument against deflation is built with a dependency: that there is a central authority which controls the money supply. So in a sense he has two core points.
(1) Krugman prefers that a centralized authority control the currency supply in order to manipulate the economy.
I'll allow that this tool can be a good, stabilizing force. But if that's the case, I want to be able to vet that institution from the bottom up before handing them the keys to the kingdom. And I want that institution to unequivocally work for society, not for Goldman Sachs. If I thought the current system worked well, I wouldn't be exploring other options in the first place.
(2) Krugman prefers that that centralized authority manipulate the economy such that it encourages spending and lending. In other words, manipulate toward small inflation.
This could be a good thing. And maybe the economy it creates is more fluid than a deflationary one. But when you bake into the system incentives to spend now and borrow from the future now, you get exactly the problems that you'd expect: over-consumption and a society largely ridden in debt.
Control of the supply of the currency carries tremendous power. It can be used to smooth natural economic cycles and encourage specific consumer and producer behavior. This supply-manipulative ability is not in and of itself a bad thing. The question is whether it is necessary- because with Bitcoin (as it stands) it is impossible. Within the theoretical bounds of crypto-currency, the abilities for algorithmic, "smart" money-supply, one that rests on mathematics rather than the banking elite, are endless. There are truly exciting developments to come in this space.
A First Consideration on Currency
Think, for a moment, of the unit of currency as sort of a creditor's note. It is an IOU from society; a placeholder for some unit of production. It says, "I produced something valuable (for someone else who takes part in this system). In return I got this note. I have reasonable assurance that one day I can cash this IOU in for something that I'll need in the future."
The unit of currency acts as a placeholder for its owner. Under this system, people trade their current productivity for the placeholder, and later (given the system still has integrity) they can trade that placeholder for something that raises their standard of living. It allows us to "time-shift" our production with respect to our consumption.
But don't forget!: A unit of currency as "just a thing". It only carries value if it is actually valued by somebody else you want to do business with. The dollar, the gold bar, the Bitcoin. the Euro, all work the same way: they are nothing but numbers or paper or metal. They are just atoms arranged in a way that make them valuable to a group of people only because they trust in the future of their common system.
Currencies are a subset of commodities. Commodities are things (oil, clothing, food, televisions) that are valuable to humans because they have useful properties. Like we said above, a currency's use is to "time-shift" production and consumption. The properties of the object that afford this advantage are usually a combination of irreproducibility, fungibility, scarcity, ease of transport, and securability.
Why is Deflation Bad?
In his 2010 NYT piece, Krugman argues that deflation hurts the economy due to three factors:
(1) People become less willing to spend, because sitting on money becomes an investment. Your dollar tomorrow will buy you more than what it can today, so why spend today? Therefore, spending goes down.
(2) Those in debt get into serious trouble awfully quickly, because the nominal amount-owed appreciates in value. As a result, they spend significantly less. At the same time, creditors have been shown to not spend enough such that it make up for this difference. Therefore, borrowing (and spending) goes down.
(3) Psychologically, people hate nominal wage decreases. With a fixed supply currency, year over year, wages will have to decrease in name. Even if the value of your wage rises, the amount written on the paycheck is lower. Therefore, people freak out.
These are troubling scenarios, though I think the first two are more substantial than the third. I don't mean to underestimate the psychological factor- in economics psychology is everything- but we'll talk about this later.
Krugman presents the first two points as bugs in a deflationary system. I see them as features.
"Your dollar will buy you more tomorrow than what it can today."
I think this is natural. We are a rapidly advancing species; through technology we are becoming more efficient, automating crappy tasks, raising the standard of living for less work, of course a dollar (that placeholder for your unit of production) is going to go further tomorrow than it does today.
Personally, I find this appealing. It provides every incentive to work now and spend later. That falls very much in line with good ol' American hard-working values and non-consumptive ethics.
Krugman finds this worrying though. If people have less incentive to spend, their is a crisis in demand. Hello liberals?! When was the last time we complained about lower consumption? In a country wracked with hyper-consumption that has put an unprecedented load on Earth's environment and ignited a climate crisis, I see a drop in demand as a breath of fresh air! Furthermore, you don't have to worry about people never spending. People will always spend now- but only on the want/need products, rather than the maybe-want-need-this-now-really-might-as-well-because-my-currency-is-losing-value-and-all-these-things-meet-my-zillion-useless-ephemeral-wants products.
I do believe there are much higher economic principles at work here. The United States is the world's default consumer. The global economy needs us to consume as much as it needs the million child laborers to produce. The economy would come crashing down if we stopped consuming immediately. But if we're trying to aim for a more sustainable economy, one that is compatible with the Earth's environment, let's move slowly and use a deflating currency as an incentive!
"Deflation rewards creditors and hurts debtors. Debtors spend less and creditors don't spend more enough to offset."
The impassive Krugman is beating around the bush. There is a problem when debtors suffer at the expense of creditors, and it's more than just a net loss in consumer spending. If you're concerned about a reduction in spending, see my previous point. But the remaining ethical problem is glaring- a power imbalance already exists in a creditor-debtor relationship, and it seems that deflation only widens this gap, crucifying the debt class on a cross of deflationary coin.
There's no doubt that this is a problem. And wealth redistribution may ultimately be easier with an inflationary currency- again, a word on that later. But there is also an incentive here: borrow less. Credit card debt is at an all-time high, up 1200% in the US since 1980, all while student loans have ballooned out of control. But neither of these problems even compares to the $7.8 trillion of mortgage debt our country has dug itself into.
Now debt is not a bad thing. The right combination of debt and saving, that is- using both capital previously earned with capital borrowed from future earnings- indicates a healthy economy. I don't want to have to work my entire life only to afford a house at the very end. I want to be able to borrow from my future economic output, buy the house now, and live in it while I work to pay it off. The same goes for student debt, corporate debt-financing, etc. Access to credit is crucial to a healthy middle class.
But ever-increasing debt is not sustainable. Nobody lives- and produces- forever, so you cannot always borrow from your future economic output. In the end, regardless of the money tricks you play, you have to produce enough value to cover your consumption. The world recently found out, in a mild manor, what happens when a currency's incentive and a nation's culture favors borrowing. When given the opportunity to build houses they never could have dreamed of paying off in their lifetime, millions of people took the offer and the biggest lenders took the risk. The echoes of their mass default still burden the global economy 6+ years later.
The point is, if Krugman says "inflation promotes borrowing", I say, "is this debt-ridden wreck what we really want our economy to look like?"
"People would freak out when their paycheck goes down."
I say get over it. Other possible proclamations in a deflationary world:
Better yet, this reflects reality! Technology makes everything cheaper every day. You should be paying lower phone bills tomorrow. Has the infrastructure gotten less efficient?
Here it feels like Krugman's grasping for straws. He pounces on people's reaction to their one source of income rather than their many expenses. This point also invokes that ugly liberal side: "The people don't know what's best for them."
The Central Authority as a Tool for Wealth Redistribution
Now we're talking. As a Liberal, I consider this to be a most important necessary evil. But let's call it what it is: stealing from the rich to give to the poor. (Unless we reject the modern notion of property- stay tuned...)
In an inflationary economy, value is constantly leaching out of everyone's savings. Those who control the monetary supply have a means of reaching into every dollar, and skimming off a little bit of value. We can choose to do a lot of good with this. Right now the skimmed dollars are "lent" to banks- the theory is that they then have more to lend to the general public and everyone benefits. Lending is good right? It introduces liquidity. But continue this cycle ad infinitum and all the spending in the economy starts in the form of bank debt! It is no coincidence that Americans households are more in debt than ever before.
If wealth redistribution is the only benefit of a central supply authority (which can fall out of trust at any time), this is a weak foundation. We already have a mechanism for wealth redistribution: taxation. Let's be proud of it, call a duck a duck, raise taxes on the wealthy, and introduce that liquidity with massive infrastructural programs, education spending, science spending, etc, rather than in the form of bank loans.
One last point- inflation appears to be a flat tax. That's already bad. It affects every dollar proportionally, rich or poor. Worse, the middle class and poor have a higher percentage of their net worth in USD- so inflation then becomes a regressive tax... given to banks... to be lent out to again to the middle class. All in the name of wealth redistribution?! In the name of kick-starting the economy?! Something's fishy here, and "you wouldn't understand, it's more complicated" doesn't cut it as an answer for these practices.
Bitcoin
So. What are we even doing here?
In 2009 a great mind developed a tool, the first in the history of human civilization, for "minting" a currency according to a fixed and open sourced algorithm. Without the involvement of any third party, you can now send an irreproducible digital object of fixed supply to anyone with an internet connection. The implications are mind-boggling. But the first such currency, Bitcoin, happened to be fixed-supply and ultimately deflationary, which has re-sparked the deflation vs. inflation debate.
This is happenstance. The protocol that gives rise to these digital currencies- the bitcoin protocol (small b)- could easily implement a different supply model. Paul Krugman can start a currency, KrugCoin, with any supply model that he likes! Which begs one last question.
Let's say I'm presented with an option: I may collect my paycheck in a currency that deflates- that is, my paycheck will gain value over time. Or I may collect my paycheck in a currency that inflates- it loses value over time. Why would anyone choose the latter? Must a population be forced into using an inflationary currency? Are we?
submitted by dpxxdp to Bitcoin [link] [comments]

Lost among all the posts about Bitcoin crashing, Bitcoin critic and economist Paul Krugman made the news.

Lost among all the posts about Bitcoin crashing, Bitcoin critic and economist Paul Krugman made the news. submitted by rydan to Bitcoin [link] [comments]

HEADLINES: Tuesday, July 31st, 2018 - Petition to Trump: Pardon Julian Assange, Manafort Trial, Paul Krugman on Bitcoin, Destroy Alex Jones, Countering Censorship, Facebook, Fake News, Anarchists and More — Steemit

HEADLINES: Tuesday, July 31st, 2018 - Petition to Trump: Pardon Julian Assange, Manafort Trial, Paul Krugman on Bitcoin, Destroy Alex Jones, Countering Censorship, Facebook, Fake News, Anarchists and More — Steemit submitted by ContextFactsLogic to The_IW [link] [comments]

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PAUL KRUGMAN: Bitcoin is a More Obvious Bubble than ...

Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube. Nobel prize-winning economist Paul Krugman talks to Business Insider senior political editor Josh Barro about bitcoin. Krugman says the price of bitcoin is h... Nobel Prize Winning Economist Slams Bitcoin and Crypto. Old Man Krugman Calls Bitcoin a Ponzi Scheme Paul Krugman wrote a column in the New York Times today slamming bitcoin and all ... Bitcoin and cryptocurrency news - Ripple supports Madonnas fundraiser, Paul Krugman trash talking Bitcoin again, Australia love crypto, Ravencoin goes to Zambia, and Blockchain marriage is a thing ... Money, Krugman argues, is "a lubricant" that facilitates transactions, so the entire history of money has been about making it as invisible and frictionless and moving it into the background as ...

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