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Krugman On Bitcoin and the Gold Standard

Posted by timothy on from the break-enough-windows-to-encourage-spending dept.

twoallbeefpatties writes "Prominent Keynesian economist Paul Krugman has left a note on his blog at NYTimes about his view of Bitcoin, discussing its similarity to the gold standard and suggesting a drop in 'real gross Bitcoin product' as its users hoard the currency rather than spend it."

5 of 601 comments (clear)

  1. This oughtta be good for... by Anonymous Coward · · Score: 0, Troll

    This oughtta be good for at least 50 Libertarian ragers ragging on Keynesian economics, and 100 or so knock-on posts of rebuttald and counter-rebuttals. Throw in another 50 "bitcoin slashvertisement" complaints and carefully crafted trolls. You've got yourself 200 posts or so, not including this one, and some nice pageviews. Keep the ad revs rollin' in.

    1. Re:This oughtta be good for... by reboot246 · · Score: 1, Troll

      Okay, I'll bite. He's a Keynesian. Nothing he says has anything to do with reality so why take him seriously?

    2. Re:This oughtta be good for... by jmorris42 · · Score: 1, Troll

      > In particular, the WSJ was saying years ago that rampant inflation was just around the corner. When again?

      Been to Walmart lately? Everything except tech is going up. The government is suppressing the official inflation figures with a lot of smoke and mirrors but for an ordinary person wages are pretty flat and the price of everything is going up. Same for unemployment, when you can't apply for another extension you aren't considered 'unemployed' anymore, which is the only way the rate is staying under 10%. But Bushitler isn't president anymore so the media play along. Remember when 6% unemployment was 'a jobless recovery?'

      As for Krugman, if that idiot said the sky was blue I'd look up from the TV and peek out the window half expecting cavorting unicorns and rainbows under a pink sky. He deserved his Nobel Prize less than Obama deserved his, if that is possible. Most Nobels these days are political trophies for being a socialist or terrorist (Arafat).

      Might as well go for the gold and trash bitcoin as well while I'm in snark mode. Remember e-gold? That will be bitcoin's fate. The only people who will be doing anything with it will be criminals laundering their ill-gotten gains. And once a service gets that taint on it there is very little that can be done to attract enough reputable business to get rid of it since nobody wants to associate with a criminal enterprise. Paypal succeeded because of a symbiotic relationship with eBay, which is why they were bought out. Unless bitcoin quickly finds a legitimate source of commerce to own they are toast. And that is making the assumption for the sake of argument that the tech isn't bogus. Which it almost certainly is. They talk out both sides of their mouth. On the one hand it is anonymous enough for money laundering but on the other they promise accountability.

      --
      Democrat delenda est
  2. Krugman is not an economist. by roman_mir · · Score: 0, Troll

    Why do people care about what Krugman has to say? This is the guy who believes that destruction of wealth is the necessary stimulus that USA needs and that it would be great to have destruction even if by wars or natural disasters?

    He believes there is a real difference in economics between 'micro' and 'macro', which is same nonsense as when the same differences are applied to evolution, so if you ask him - would he like his own house to be destroyed by a tsunami/tornado/flood, I am sure he'd answer - no. It's not good when done to a particular person. Only entire nations need to suffer altogether in wars and alien invasions.

    This is guy is a Keynesian charlattan, he has nothing to do with economics, but his type of 'economics' is pervasive, because the politicians love these guys. The politicians invite these sort of 'economists' to be in the white house to help with policy, and this is the kind of help you get, while the universities then decide to have only these kinds of 'economists' propagate this nonsense further, so you end up with only Keynesian ideology in higher education. Thus all the underlying problems in the economy - because politicians use this charlatanism to give excuse for their only real agenda - stealing your money.

    OK, from TFA:

    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.

    - that's the problem. The entire fiscal policy of USA destroys the value of savings by inflation and this is what destroys the economy.

    Bear in mind that dollar prices have been relatively stable over the past few years â" yes, some deflation in 2008-2009,

    - RELATIVE TO WHAT, YOU DUMBO? Relative to other flawed currencies? :) Well, not to Swiss Franc. Not to Canadian dollar. Not to NZ dollar. Not to Australian Dollar.

    Besides, 2008-2009 is a TERRIBLE time to compare, as too many people completely misunderstood what was happening in the real economy and plunged head first into the dollars, which was the absolute wrong thing to do (and it is wrong thing to do now too, but now people understand it. Look at kitco.com) Too many people actually think that Keynesian charlatanism is economics, so they fall in this trap of following completely wrong ideas.

    Anyway, yes, it's deflation of assets in real terms, so in terms of gold/silver assets are falling in price. It's cheapest gasoline ever today - under 10cents for a gallon, but those are silver cents.

    But the inflation is in dollars, which is why real money is going up.

    then some inflation as commodity prices rebounded, but overall consumer prices are only slightly higher than they were three years ago. What that means is that if you measure prices in Bitcoins, they have plunged; the Bitcoin economy has in effect experienced massive deflation.

    - GOOD. Good for those who hold Bitcoins. Bad for those who hold dollars.

    And because of that, there has been an incentive to hoard the virtual currency rather than spending it. The actual value of transactions in Bitcoins has fallen rather than rising. In effect, real gross Bitcoin product has fallen sharply.

    - This Keynesian wants you to be poor, do you understand that?

    He wants you to pay 3.50USD for your gas, and BTW, he doesn't think it's high enough. They have a target to make it much higher. But he doesn't want you to pay 10 cents for that gallon.

    So to the extent that the experiment tells us anything about monetary regimes, it reinforces the case against anything like a new gold standard â" because it shows just how vulnerable such a standard would

    --
    You can't handle the truth.
  3. Re:STOP by bonch · · Score: 1, Troll

    I can't believe anyone would take this silly currency seriously. Dear Bitcoin fans, have fun with your internet fun bucks, I guess.