Why Bitcoin Boomed During the Government Shutdown

Daniel_Stuckey writes "Just two weeks after the Feds shuttered the Silk Road, the notorious online drug bazaar, Bitcoin prices have touched a five-month high — with a single Bitcoin fetching nearly $156 on Tokyo-based exchange Mt. Gox. Bitcoin's resiliency can no longer be denied, especially as the digital currency continued its ascendancy even against the backdrop of a U.S. government in utter disarray. At the 11th hour of the crisis, President Obama signed a bill that ended the partial government shutdown and, more importantly, raised the debt ceiling, an arbitrary limit on the amount of money the country can borrow that would have been surpassed today. If Congress had failed to reach a deal and the U.S. was unable to pay its bills, the results might have been catastrophic, eclipsing the bankruptcy of Lehman Brothers five years ago, the domino that could trigger the worst financial crisis since the Great Depression."

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This is proof? Really?

[Anonymous Coward]

How many people honestly understand the relationship between currency prices and the government shutdown? Very very few I would guess.

Gold dropped when the goverment was down and bounced back after the deal was signed. Why? Gold is supposed to be a safe harbour.

Does the author of TFA see BTC as the opposite of gold, or does he see BTC as filling the same kind of role as gold?

Or is this simply a case of making using hindsight to construct an argument that fits a general argument that BTC is worth investing in?

Re:This is proof? Really?

[felrom]

Gold dropped because the market's built-in assumption that the Fed would keep printing money to finance the government's deficits forever was temporarily shaken by the possibility of maybe some sane fiscal policy showing its head for once. Then gold went back up when the deal was signed, signifying full steam ahead on printing and deficits. It made absolute sense.

But yeah, this article in particular is just a bad case of hindsight bias.

Re:This is proof? Really?

[niftydude]

Or is this simply a case of making using hindsight to construct an argument that fits a general argument that BTC is worth investing in?

Economics. The science of explaining tomorrow why the predictions you made yesterday didn't come true today.

Re:This is proof? Really?

[jwilloug]

But printing money was one of the possible outcomes of hitting the debt ceiling. Both the Fed and the Secretary of the Treasury have the legal authority to declare that they are covering the deficit by creating money rather than borrowing it, and they may well have done so. It wouldn't have been great monetary policy, but there is a reasonable argument that it's better than default.

Re:This is proof? Really?

[Bite The Pillow]

That is disingenuous at best. Gold peaked at 1900 in 2011 during the housing and financial crises from 400 in 2003. It has been on the way down since then, making a spike unlikely. It took a 3% dip from 10 October and came back to where it was.

All signs point to gold markets knowing this would be a temporary crisis that would not maintain price levels past its resolution. Bitcoin, on the other hand, does not seem to be valued by market savvy investors. Knee jerk irrational fools more like, so it follows the panic more closely.

I'm no economist or fund manager, so I'm probably wrong.

Re:This is proof? Really?

[Bite The Pillow]

I don't believe the possibility existed, or if it did the market was ignoring it. There was a dip and rebound 1 or 2 October, but 10 October is when it dropped. Republicans were clearly losing by then so it was not fear of fiscal responsibility.
I'm most curious about the drop at the beginning.

Re:This is proof? Really?

[Anonymous Coward]

Gold dropped when the goverment was down and bounced back after the deal was signed. Why? Gold is supposed to be a safe harbour.

There are 2 reasons why gold will go up (or down):

1. Gold only goes up if it becomes more less available or rare(hoarding, pirates burying it, locked up in industrial/personnel use, etc)
2. Gold goes up when the ratio of gold to dollars changes. The more dollars available compared to the amount of results in the price ratio goes up. (gold "costs" more).
 

So why did the price of gold go down, when the gov't "shut down" and bounce back when it started back up went back up. Easy, for two weeks the gov't stopped printing money and a bunch of people made a bet that it would drag on for some time, hence even less new money being dumped into the system which would "devalue" gold in terms of dollars, though the buying power of gold would remain about the same (due to new gold production being very low)

Gold is an excellent safe haven in the sense that if you have 1kg of gold about $40,000K and civilization collapsed tomorrow you would still have 1kg of gold. If you had that in hard currency all you would have is 40,000 pieces of paper. Though 40,000 pieces of paper would be very valueable as toilet paper. Hmmmmm maybe gold isn't as good of a safe haven as I thought. I need to stock up on US currency.

Conversly though if we ever get an asteroid mining program together and harvested just one of the medium sized asteroids. There would be enough gold for every man, woman, and child on earth to have 3-4 or tons each and then the value of gold would be on par with say the price of an equal weight of say drinkable water..
.

Re:This is proof? Really?

[Drakonblayde]

Gold is an excellent safe haven in the sense that if you have 1kg of gold about $40,000K and civilization collapsed tomorrow you would still have 1kg of gold. If you had that in hard currency all you would have is 40,000 pieces of paper. Though 40,000 pieces of paper would be very valueable as toilet paper. Hmmmmm maybe gold isn't as good of a safe haven as I thought. I need to stock up on US currency.

This is why I don't get folks that want to hoard gold as a hedge against economic fallout. If civilization collapses, gold becomes worthless. In a collapsed economy, gold has no practical value. If civilization collapses, I want things that will actually be useful. Food. Water. Shelter. Guns. Clothing. These are the currency of a collapsed economy, not pretty baubles or shiny bricks.

Re:This is proof? Really?

[Anonymous Coward]

That's because BTC people are speculators. The currency will never be adopted as long as it's not regulated.

It may function as an intermediary (eg it would make more sense for MMORPG's to use it, instead of making their own point/currencies so they don't have to keep repricing prepaid cards) but it's not a good storage of value itself.

Re:This is proof? Really?

[fa2k]

This is why I don't get folks that want to hoard gold as a hedge against economic fallout. If civilization collapses, gold becomes worthless. In a collapsed economy, gold has no practical value. If civilization collapses, I want things that will actually be useful. Food. Water. Shelter. Guns. Clothing. These are the currency of a collapsed economy, not pretty baubles or shiny bricks.

Nations fail frequently without a lot of violence or starvation. Gold is useful if the rest of the world keeps going, but your country/region/etc is in a bad crisis.

The goods you mentioned are easy to acquire, and you can't store a lot of wealth in them. If society truly has failed, it's no good to have a lot of land, food or water, this will quickly be looted. If one tries to protect it, one will be killed by the mobs.

Guns is interesting. If you actually try to store your wealth in weaponry, buying lots of guns, it is not sufficient to just arm yourself and the family -- you still will get killed by the mobs, and the guns will be stolen. It *may* be possible to manage the crowds such that this will translate into a lot of power in a disaster situation. This is highly volatile though. In a society which doesn't recognise the value of anything but the bare necessities, the loyalty of your comrades is all you have. I mean, every society is built only on the good faith of the majority of the constituents, but in a disaster scenario there wouldn't be so many people with such large bets riding on the current order of things.

Re:This is proof? Really?

[Anonymous Coward]

I'm no economist or fund manager, so I'm probably wrong.

the Fact that you aren't a fund Manager actually increases your chnaces of being correct on any Economical Issue.

Re:This is proof? Really?

[ultranova]

Economics. The science of explaining tomorrow why the predictions you made yesterday didn't come true today.

They didn't come true because making predictions about the behaviour of an economic system changes the behaviour of the economic system, because the economic "particles" are self-aware, are trying to outsmart every other particle and can read your predictions.

So, do I win an economic Nobel?

Re:This is proof? Really?

[VortexCortex]

But yeah, this article in particular is just a bad case of hindsight bias.

"I like big butts and I can not lie. You other brothers can't deny, that when a girl walks in with an itty bitty waist and a round thing in your face, you get sprung..."
-Johnathan Coulton.

Hindsight bias, combined with the fact that coins are predominantly round... Thus implying subtle application of the pejorative "Butt Coin". Very skillful.

Indeed: "It made absolute sense" -- Note the "cents" pun play here, but it's subtle... "market's build-in assumption ... showing its head", oh yes, tolling me ever so softly.

Re:This is proof? Really?

[ultranova]

Gold is useful if the rest of the world keeps going, but your country/region/etc is in a bad crisis.

Wouldn't it be even better to have cash from various countries? Because to use your gold, for example to import stuff, you need to convert it to currency anyway, which might be difficult to do in a crisis. On the other hand, foreign currency might help keep the local economy going, by being a medium of exchange backed by the rest of the world economy.

Re:This is proof? Really?

[Anonymous Coward]

If civilization collapses, gold becomes worthless.

No, it won't. Humanity has been in damned poor straits, and has murdered for shinies.

And that's why you shouldn't bother with it. If civilization actually collapses, you're going to get a bullet through your head, and someone else will have your gold.

Re:This is proof? Really?

[TheMathemagician]

They're not anticipating a post-Apocalyptic "Mad Max" landscape, just one where banks collapse and/or the government steals their savings. This has occurred in many countries within living memory to a greater or lesser degree.

Re:This is proof? Really?

[mysidia]

Gold dropped when the goverment was down and bounced back after the deal was signed. Why? Gold is supposed to be a safe harbour.

No. Gold is not a safe harbour. Gold can help hedge the risk of double-digit percent inflation in theory. The problem is -- in practice, the price of gold is very volatile, and there could very well be a gold bubble, since the price has been bid up to astronomically high levels in the past 10 years due to market speculation.

The price of gold is likely overdue for a drop of 70% or more.

Secondly, while gold can in theory be a hedge against currency risk: the risk that one's currency becomes worthless; gold is no good in a situation where your currency becomes worthless AND the economy experiences massive deflation.

For example: if the government can no longer borrow money due to high interest rates, and activities cease, then a cascade of ceasing of economic activity occurs through all the government contracters and employees.

In the short term, there is a potential for deflation; where the currency is worthless, AND hard money such as gold lose buying power, because the entire economy is grinding towards a halt -------- You can't use gold to buy and sell things, if you don't have partners to trade with, because they've all ceased economic activity.

You may have your gold, but all the supermarkets are closed, and the shelves are empty, because they can't pay the workers.

Re:This is proof? Really?

[someoneOtherThanMe]

This. During the Balkan wars, for example, Deutschmarks and later Euros were still usable while local currencies were worthless. In fact Kosovo and Montenegro just adopted Euros as the official currency.

Re:This is proof? Really?

[mysidia]

It wouldn't have been great monetary policy, but there is a reasonable argument that it's better than default.

Exceeding the debt limit does not mean default. It means that all further spending immediately gets reduced to the level of tax revenue; implying a 30% drop in spending.

It is up to the treasury to prioritize where the cash on hand goes.

Missing a debt payment would not occur, unless Obama's administration decided they wanted to cut off the government's nose, to spite their face.

More likely; government grants, tax refunds, employee payrolls, government contracters, welfare payments, and social security benefits payments would be delayed first.

Essentially; you would have to wait a few weeks for payment, until sufficient tax revenue were collected, and over time, the delays would be increasing.

Re:This is proof? Really?

[Anonymous Coward]

Gold is an excellent safe haven in the sense that if you have 1kg of gold about $40,000K and civilization collapsed tomorrow you would still have 1kg of gold. If you had that in hard currency all you would have is 40,000 pieces of paper. Though 40,000 pieces of paper would be very valueable as toilet paper. Hmmmmm maybe gold isn't as good of a safe haven as I thought. I need to stock up on US currency.

This is why I don't get folks that want to hoard gold as a hedge against economic fallout. If civilization collapses, gold becomes worthless. In a collapsed economy, gold has no practical value. If civilization collapses, I want things that will actually be useful. Food. Water. Shelter. Guns. Clothing. These are the currency of a collapsed economy, not pretty baubles or shiny bricks.

I don't get folks who equal the collapse of the US economy with the collapse of civilization. If you have 1kg of gold and "civilization collapses" your 1kg of gold will still be worth about 32k euros...

Re:This is proof? Really?

[Anonymous Coward]

Attributing the pinnacle of Sir Mix-a-lot's career to that Coulton hack is the greatest troll of all.

Re:This is proof? Really?

[mysidia]

So, do I win an economic Nobel?

Not quite... sometimes the published economic predictions do come true, even though people can read them. What gives? :)

Re:This is proof? Really?

[Anonymous Coward]

Wouldn't it be even better to have cash from various countries?

What if the "contagion" in your county spills over into some other country where you hold funds? You would have lost money. If you hold something else of worth (gold, silver, bitcoins, etc.), you can always exchange it and not lose value.

Re:This is proof? Really?

[jwilloug]

Exceeding the debt limit does not mean default. It means that all further spending immediately gets reduced to the level of tax revenue; implying a 30% drop in spending.

It is up to the treasury to prioritize where the cash on hand goes.

They say they have neither the technical ability (the software can't handle the use case) nor the legal authority to prioritize payments (a de facto line item veto). They might just be lying to us, but if you believe they are capable of that, you also believe they totally would default just to prove a point.

Besides, if the government is going to pay you in a couple weeks, we swear, that would be a debt. It has just been shifted away from the people who want to lend us money voluntarily.

Re:This is proof? Really?

[Richy_T]

Sorry, there is no economic Nobel. Stick around though, you might get a peace one.

Re:This is proof? Really?

[Richy_T]

The truth is, it's probably best to hedge and diversify with a bias towards whatever you think the likely mode or modes of failure are likely to be.

I always shake my head when I watch a show like "Doomsday Preppers" and the prepper in question has optimized their preparations for just one specific type of disaster and is totally blind to any other. If you're not going to prep, fine but if you are, at least be smart about it, it usually wouldn't take a lot more to what they've already done to prepare.

Of course, there was the one where the guy tested for the EMF protection of a steel trashcan by attaching jumper cables from his truck battery to the handles. That had me banging my head on the table.

Re:This is proof? Really?

[khallow]

This is why I don't get folks that want to hoard gold as a hedge against economic fallout.

I don't get this claim. Civilization has collapsed before. Gold remained shiny and valued. But as another replier noted, gold isn't worth much to the person who doesn't have the power to keep it.

Re:This is proof? Really?

[Anonymous Coward]

They say they have neither the technical ability (the software can't handle the use case) nor the legal authority to prioritize payments (a de facto line item veto).

Much like "we cut spending" is really DC-speak for "we cut the GROWTH of spending", saying they don't have the ability is just DC-speak for "we don't WANT to do it". Who wants to be on the receiving end of someone's ranting because their pet project (Bridge to Nowhere, more handouts, whatever) wasn't classified as a "priority". It's just another example of people in DC passing the buck.

Re:This is proof? Really?

[Anonymous Coward]

Gold hasn't been worth zero for thousands of years, so it's a pretty safe hedge. No, you can't eat it nor drink it without health issues but it's tradeable almost everywhere. The likelihood of an event so large as to utterly devalue gold for an individual's entire lifetime is extremely low, to say the least.

Re:This is proof? Really?

[Copid]

If they actually had the authority to pick and choose which creditors they'd pay, the debt ceiling nonsense would be a non-issue. Just pay the bondholders and anybody who doesn't reside in John Boehner's district. You'd have a vote on a clean ceiling increase on the floor as soon as the first Social Security or farm subsidy checks didn't make it.

Oh, you mean they wanted a bunch of magic flexibility added to the system so that Obama could prioritize payments the way they want them? Screw that. Pass a law.

Re:This is proof? Really?

[fauxjargon]

The issue isn't so much the collapse of civilization, but the possibility that your currency might become worthless. Obviously if civilization collapses you will have more pressing concerns than whether or not you converted your paper/digital money into gold or not, but if your country's currency experiences hyperinflation then the gold is a much safer bet. It's also worth noting that it's pointless to have paper gold, the government can take/devalue paper gold very easily but they can't do too much about physical gold.

Re:This is proof? Really?

[Copid]

In the short term, there is a potential for deflation; where the currency is worthless, AND hard money such as gold lose buying power, because the entire economy is grinding towards a halt -------- You can't use gold to buy and sell things, if you don't have partners to trade with, because they've all ceased economic activity.

Most economists would call what you just described "inflation" plus "stagnation" not deflation. Stagflation, if you want to use the popular term from the 70s. By most definitions, deflation would involve prices (as denominated in at least one form of currency) dropping.

Re:This is proof? Really?

[Anonymous Coward]

FWIW I'm a bitcoin zealot but I must admit you're probably right. Right now the BTC/USD market doesn't have much depth, and it's influenced far more by articles like this one than gold is. Hopefully over time we'll attract more experienced traders (including bears who just want to short sell), but yeah, it's still amateur hour.

Re:This is proof? Really?

[Lord Lemur]

http://en.wikipedia.org/wiki/Nobel_prize_in_economics

Not sure if grammer nazi, a dick or just ignorant.

Re:This is proof? Really?

[Anonymous Coward]

Bullets, the only thing that never decreases in value...

Re:This is proof? Really?

[gl4ss]

if all economic activity ceased, then at least potatoes and gold would still be traded.

Re:This is proof? Really?

[Archangel Michael]

Economic functions like the Internet, money routes around errors. We make governmental rules expecting economic functions to behave the way we "want" them to, and they don't behave like we want, they behave like they see broken bits and routes around it.

The moment you realize that the system functions exactly this way (eventually), you'll figure out why central planning doesn't work right, and why it fails. The best we can do is devise laws that punish people for criminal behavior (lying, cheating, stealing), and stop making it a crime to buy something with money.

The predictions that I've seen come true, are based on these premises.

Re:This is proof? Really?

[Anonymous Coward]

For thousands of years, horses were the best means of transportation on Earth.

Then, all of a sudden, they weren't.

Re:This is proof? Really?

[Anonymous Coward]

If society truly has failed, it's no good to have a lot of land, food, water, or gold, this will quickly be looted. If one tries to protect it, one will be killed by the mobs.

FTFY.

If gold is not valuable in such a situation, you would have been correct to leave it off that list.

But since you appear to be arguing that gold would still be valuable in such a situation, leaving it off the list is a mistake. People would loot your gold just as they would your land, food, and water. And they would kill for it just as they would your land, food, and water.

Re:This is proof? Really?

[Anonymous Coward]

The best we can do is devise laws that punish people for criminal behavior (lying, cheating, stealing), and stop making it a crime to buy something with money.

Actually no, the best we can do given your premises is that lying, cheating, and stealing are just another way to live. After all, if doing those things are errors, money will route around it anyways without laws to punish people doing it. So don't leave those options off the table when deciding on what you want to do, and don't rule out other people taking those options. The politicians certainly don't, and look how well they've made it for themselves.

The predictions that I've seen come true, are based on these premises.

And if you add in my advice, you'll make even more accurate predictions. You'll make predictions to how why corrupt people can get away with what they do. You'll realize why con men and scammers exist. You'll figure out why good things happen to bad people, etc. You'll figure out why evil wins (because good is dumb)

Re:This is proof? Really?

[Richy_T]

http://en.wikipedia.org/wiki/Nobel_prize#Prize_in_Economic_Sciences

Although not a Nobel Prize, it is intimately identified with the other awards;

Re:This is proof? Really?

[Richy_T]

Nice try with the link by the way. I guess you decided to ignore this bit:

Nobel Memorial Prize in Economic Sciences [...] (Redirected from Nobel prize in economics)

Re:This is proof? Really?

[Richy_T]

I do think I will be a dick, however, and become a spelling Nazi for your typo of the word "grammar"

Re:This is proof? Really?

[Lord Lemur]

TheSveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel(Swedish:Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), commonly referred to as theNobel Prize in Economics,[1][2]is an award for outstanding contributions to the field ofeconomics, generally regarded as the most prestigious award for that field.[3]Although not one of theNobel Prizesestablished by the will ofAlfred Nobelin 1895, it is identified with them, and prizes are announced with and awarded at the same ceremony.

Atleast quote the whole thing. It was not one of the initial nobel prizes, but is awarded by the same body, at the same time, and commonly known as a Nobel prize

Re:This is proof? Really?

[Richy_T]

Why would I quote that? It was never in dispute.

Re:This is proof? Really?

[Lord Lemur]

Got me there.

Re:This is proof? Really?

[david_thornley]

Except that the executive branch has no discretion on paying a whole lot of that money. Many benefits are defined by law, and failing to pay them means breaking the law. A lot of expenses are going to be for contracting goods and services, and not paying is going to be illegal.

In the short run, I don't think the government can cut much at all. In the long run, I'd be surprised if the President could legally cut spending by 30%.

Re:This is proof? Really?

[mysidia]

Except that the executive branch has no discretion on paying a whole lot of that money. Many benefits are defined by law, and failing to pay them means breaking the law. A lot of expenses are going to be for contracting goods and services, and not paying is going to be illegal.

When paying them is physically impossible without breaking the law, they must delay the payments.

However, the public debt is constitutionally protected and cannot be questioned by the executive.

Re:This is proof? Really?

[Anonymous Coward]

Guns is interesting. If you actually try to store your wealth in weaponry, buying lots of guns, it is not sufficient to just arm yourself and the family -- you still will get killed by the mobs, and the guns will be stolen.

An individual family with firearms has a severely limited capability for defence. Having extra firearms supports the formations of larger groups working together to provide for their mutual defence. It's a long term thing, since such groups take a while to form. A well organized and well led group, with appropriate weapons, and the willingness to open fire, will be able to repel most mobs.

Re: This is proof? Really?

[Anonymous Coward]

Boy when I think about the best source for economic expertise, the first place I think of is random off-topic slashdot threads ...

China

[Wonko the Sane]

The recent price of Bitcoin has far more to do with explosive adoption in China than anything happening in the United States.

Re:China

[JohnA]

Exactly. When Baidu added it as a supported payment method, the game changed.

Re:China

[Seumas]

Shush! Someone is busy trying to push their political bias, on the back of Bitcoin. Stop interrupting them!

Re:China

[Wonko the Sane]

I just love how quickly and how extensively Bitcoin is growing outside the United States, especially because the trolls who insist that the US will just shut it down someday are going to keep saying that well beyond the point at which it would matter to the Bitcoin economy if the US completely stopped existing.

Re:China

[Anonymous Coward]

So.... Anyone else suspect that the Chinese are the ones behind the Tea Party?

Re:China

[gizmo2199]

Gee, I wonder why? I'm sure billionaire oligarchs, and corrupt CCP members have no use for a new money laundering mechanism? (not to mention drug cartels and warlords)

Re:China

[PaolaMcneil]

I wouldn't be too confident with my dollars during a US government shutdown.

Re:China

[Anonymous Coward]

Are you trying to imply that there is a world beyond American shores?

Re:China

[Anonymous Coward]

Do you mean those that used to use dollars? So what changes? They are still oligarchs, drug dealers etc. but they are not using dollars and all those dollars go home and cause inflation upon their arrival. So this is about the US government not making as much from drug dealings?

Re:China

[Wonko the Sane]

Are you trying to imply that there is a world beyond American shores?

Shocking, right?

Re:China

[shentino]

Just because your biased doesn't mean your wrong.

Re:China

[Anonymous Coward]

Just because you're shentino doesn't mean your grammar isn't wrong.

Re:China

[Anonymous Coward]

Well, China is a big producer of tea. :-)

Re:China

[shentino]

+1 informative.

And mods? This is friggin slashdot!

Grammar nazis are more than welcome here, you should know that.

Re:China

[Archangel Michael]

Laws that prevent the free flow of money don't stop people from money laundering. It just makes it more expensive, and more lucrative. You just have to manage to stay out of jurisdictions that worry about such things. Money routes around blockages because it is a failure in the system.

Not to worry

[OhANameWhatName]

the domino that could trigger the worst financial crisis since the Great Depression

Since the US is so outrageously in debt and has no way to reduce it without selling the rest of the government assets, there's going to be plenty more opportunities for a global financial catastrophy. Then the knights in shining globalization armour will have the opportunity to save us all from terrible governmental mis-management, handing world power over to a single central body with another currency not backed by anything real or stable. Much in the same way as bitcoin isn't backed by anything real or stable, just demand.

This demand will continue to fluctuate wildly based on the extraction of gold deposits, the bribery of 13 lower house members of the United States congress and ancient religious predictions about the four horsemen of the apocolypse.

Re:Not to worry

[Copid]

Since the US is so outrageously in debt and has no way to reduce it without selling the rest of the government assets, there's going to be plenty more opportunities for a global financial catastrophy.

Our debt to GDP ratio has been higher in the past and we brought it back in line without a major crisis. Japan has gone substantially higher without any signs of collapse. These issues can be handled by thinking long term and making long term adjustments.

Re:Not to worry

[AK Marc]

Since the US is so outrageously in debt and has no way to reduce it without selling the rest of the government assets,

Balancing the budget is easy. Dump the military, nationalize all medicine into a single payer system, and you are done. That'll cut the budget in half. Raise capital gains taxes to earned income levels, and eliminate 99% of income tax deductions. Income will increase, spending will decrease, and the budget will have an instant surplus. The debt will be paid off in 10-20 years. If you want to pinch pennies, reform patents, and the NSA/CIA/FBI to minimalistic levels to defend life and liberty, but not property of those with means to enforce it themselves (megacorps don't need $10,000,000,000 of government effort going after grandmas with insecure WiFi).

Once the debt is paid off, that'll cut the budget in half again (all the interest paid). So, once that's done, cut taxes for everyone by 75%.

More services, 1/4 the taxes, balanced budget. 20 years. Guaranteed. Where do I run for office?

Re: Not to worry

[Anonymous Coward]

Higher only ONCE in the past. Do you really think we can pay it down now?

Re:Not to worry

[Anonymous Coward]

But today we do not have a rapidly expanding population/workforce and half the developed world does not need rebuilding.

  As a further black mark, the "normal" GPD growth rate has been moved down a few notches due to over regulation. Look back in history, Argentina had a much higher standard of living then the US. The mis/over management and socialism of Argentina resulted in just a sightly lower normal gdp growth rate. Compounded over a hundred years, it makes all the difference.

Re:Not to worry

[AHuxley]

Re" "globalization armour will have the opportunity to save us all from terrible governmental mis-management"
Think of the optics:
UN doctors treating US patients in huge deteriorating teaching hospitals for free.
UN teachers educating US students in deteriorating sandstone universities for free.
UN food aid bringing measured organic diets to US civilians in huge deteriorating cities for free.
UN engineers remapping the US coastline with protected nature sanctuaries to ensure none of the local population is flooded out ever again.
UN scientists remapping the US with protected nature sanctuaries. No more of that damaging walking, fishing, hunting ever again.
UN experts fixing roads, utilities been fully funded, building power stations and having real filtered water again via community collection points.
UN troops retraining US police with free AK weapons systems and fashionable light blue uniforms.
No more heavy belts, just an AK, torch, zip ties and radio to carry. The radio calls in the pretty white Hind helicopter when law enforcement support is needed.
Examining magistrates to help with the reformed legal system. Did the US gov have a file on you? Friendly UN archivists and historians will help you find and decipher yours..
Mexican and Canadian companies been lured back into the US with the assurances of a new stable UN backed currency, a more wage friendly and well reeducated local population.
Fast low cost optical internet of all as a human right and for job creation. Free for education and telemedicine needs.

Re:Not to worry

[Shompol]

Much in the same way as bitcoin isn't backed by anything real or stable, just demand.

What is backed by "real and stable"? US currency? Nop, it gets devalued pretty fast. Gold? Real Estate? (How much Real Estate do you put in your wallet when going grocery shopping?)

Humans used to use all sort of currency, from sea shells to alcohol to pretty pieces of paper we have today. None of them backed by anything, just convenience. Maybe bitcoin is the next "it"

Re:Not to worry

[Anonymous Coward]

Where do I run for office?

Land of Oz.

Re:Not to worry

[houstonbofh]

These issues can be handled by thinking long term and making long term adjustments.

You do realise that you are talking about the US, right? Where "long term" is next quarter or next election...

Re:Not to worry

[Copid]

But today we do not have a rapidly expanding population/workforce and half the developed world does not need rebuilding.

Rebuilding the developed world isn't really a good recipe for success. The correct way to look at it marcoeconomically is, "our trading partners were in ruins." There's a common myth that having Europe sitting as a smoking pile of wreckage was good for us. Most economists would disagree.

As a further black mark, the "normal" GPD growth rate has been moved down a few notches due to over regulation. . .The mis/over management and socialism of Argentina resulted in just a sightly lower normal gdp growth rate.

Yep. Overregulation. That's the ticket. It's not like it could be much more complex than that.

Re:Not to worry

[bored]

Balancing the budget is easy. Dump the military

While I agree with the sentiment, in actual fact the military is one ginormous jobs program, not only for the couple hundred thousand actually putting their lives on the line, but for the millions employed by the MIC.

You chop that off too quickly and the economy crashes leading to GDP losses in greater proportion to the cuts. See pretty much the last 50 years of austerity measures, all countries included.

That is whats fscked up about the economic system we have, the only time you can actually cut government spending is when the economy is growing enough to provide jobs for the laid off workers. Otherwise their belt tightening causes ripples in other businesses resulting in 2nd order layoffs and then 3rd order down the line. Its the same calculation used to compute economic growth in response to tax cuts, only in reverse and without fat cats that tend to be somewhat inelastic to spending in response to tax cuts.

Re:Not to worry

[ub3r n3u7r4l1st]

A quadrillion-dollar platinum coin will achieve the same results while strengthening our military, eliminate individual and business income tax, single payer health insurance, cover all unfunded suitabilities, instant debt pay off, and larger government to absorb all those unemployed (A guaranteed national employment plan), with money left over.

Now, where do I run for office?

Re:Not to worry

[AK Marc]

The inflation will crash the economy. Try again.

Re:Not to worry

[Anonymous Coward]

None of them backed by anything, just convenience. Maybe bitcoin is the next "it"

Except for the fact anybody and everybody would accept those things as payment (even without a world-wide communications/database to verify it)

I can't take a "bitcoin" to the vending machine in the breakroom where I work and get a drink with it.

I can't use a "bitcoin" to payback a co-worker in mere seconds for the coins loaned to me the previous day.

I can't take a "bitcoin" to "ANY" place on earth and expect them to honor it as a stable valued currency and purchase something with it.

I CAN take a dollar bill anywhere in the world and it will be accepted (at least for now until my govt. collapses it's value) and I assure you just about anyone would take a Gold coin or other valuable item for payment.

And all this talk of gold being useless if the civilization collapses, well first off it would require just about the entire world to collapse at once and the closest thing to anything that big was the collapse of the Roman Empire and lo and behold gold was still used before, during, and long after it's collapse.

sea shells and alcohol are still considered to be worth something and the pieces of paper "are" themselves worthless but their acceptance by banks and what backs it (at least currently) makes them worth their face value.

Re:Not to worry

[Anonymous Coward]

I CAN take a dollar bill anywhere in the world and it will be accepted

If you go to a random third world country, maybe. Where I live you can certainly not pay with USD, unless you have them exchanged to the local currency first. Strange view of the world some of you USians have...

Re:Not to worry

[Anonymous Coward]

While I agree with the sentiment, in actual fact the military is one ginormous jobs program, not only for the couple hundred thousand actually putting their lives on the line, but for the millions employed by the MIC.

Sounds like the broken window fallacy.

Re:Not to worry

[Anonymous Coward]

I don't think anyone is suggesting that the money is well spent. Rather that balancing the budget (to aid economic growth) by laying of workers employed by the government has a ripple effect in the economy which must be accounted for.

Re:Not to worry

[Anonymous Coward]

To further comment, we are talking about reducing spending to decrease government debt as a proportion of GDP.

A better plan, would be to take all the money spent on the military, and spend it on infrastructure projects. Fiber to every home, road, bridge and public transportation projects, and nuke plants to provide free energy. Then as the economy starts to grow reduce the spending.

Re:Not to worry

[Anonymous Coward]

Not if we start drilling domestically, produce domestically, cutting imports, impose a price ceiling and rationing of essential resources.

Re:Not to worry

[Copid]

People like to point to the broken window fallacy in these cases, but cutting government spending too fast is a real problem. The economy doesn't adjust instantly to these types of changes. We could certainly cut the military by a huge percentage and be OK, but you'd have to do it slowly. Why? The same reason it would be bad if the Feds sold off all of the gold at Fort Knox in one day. The market can't absorb the new resources fast enough at the current prices, so prices crash and cause all manner of secondary and tertiary effects.

So what resources does the military industrial complex consume? Prime labor-age literate men, engineers, oil, raw manufacutring materials and factory equipment and personnel. It would be great if we could free those resources up to do something useful, but you also don't want to see what an overnight glut in all of those markets does to the economy as a whole. I'd be totally up for a 10-20 year plan to eliminate most of our military spending. Cutting it by causing, say, a debt limit crisis and dumping all of those resources into markets that aren't ready to handle them? Not so much.

Re:Not to worry

[Copid]

Some less-than-quadrillion dollar coins would probably work, though, given that the Fed is running below its inflation target. It would have prevented a cashflow crisis and, if controlled, bumped inflation up into a region a little closer to what theory tells us it should be. Win win. Just kind of kooky behavior.

Re:Not to worry

[Shompol]

I CAN take a dollar bill anywhere in the world and it will be accepted

Your information is outdated. Dollar is not accepted everywhere anymore, not since it shed 40% of value in one year and people realized that dollar is not more stable for preserving wealth than their local currency.

but their acceptance by banks and what backs it (at least currently) makes them worth their face value.

Banks will not exchange your paper for bread or gas. Acceptance by banks is irrelevant. Only being able to exchange it for goods and services matters. I lived through a time when my national currency became not worth the paper it was printed on (yet still accepted by banks).

Re:Not to worry

[Copid]

Dollar is not accepted everywhere anymore, not since it shed 40% of value in one year and people realized that dollar is not more stable for preserving wealth than their local currency.

Which currency did the dollar depreciate 40% against? Over what timeframe?

Re:Not to worry

[Shompol]

Against other world currencies. Looks like it happened around 2001

Re:Not to worry

[peawormsworth]

I can't use a "bitcoin" to payback a co-worker in mere seconds for the coins loaned to me the previous day.

Yes, you can. Bitcoin transfers are as fast as your internet connection. The reason most transactions take about 60 mins is because they dont trust the sender. The transaction is posted onto the blockchain in no time at all. Complete trust of a payment transaction from a total strange can be almost 100% guaranteed in 6 confirmation blocks (about 1 hour). But you dont need 6 confirmations from your co-worker. Because if the transaction doesnt go through because he attempted to double spend the money, then you just approach him in 1 hour and say "hey buddy, your bitcoin payment bounced". Which will happen nearly 0% of the time from people you know and trust.

Try that with any other payment mechanism. With a cheque, you may not know it is NSF for weeks. With Credit card you may get a chargeback months later. With cash, you never know whether it is counterfeit or not.. and also, the government will not ensure you against counterfeit money that you may accept and have no way of verifying 100%.

Bitcoin is the fastest and safest payment mechanism ever (so far). People who complain about waiting 1 hour to be 100% sure of payment from complete strangers simply do not understand the current state of fraud and slow verification built into all other payment methods.

Derp

[girlintraining]

If Congress had failed to reach a deal and the U.S. was unable to pay its bills, the results might have been catastrophic, eclipsing the bankruptcy of Lehman Brothers five years ago, the domino that could trigger the worst financial crisis since the Great Depression."

Someone's been watching too much "news". The results wouldn't be catastrophic. They'd be annoying. Like everything else the government has done over the past decade. Catastrophic is the entire government collapses, food shortages and water become scarce, and people start killing one another in open anarchy.

Words. They mean shit, Slashdot. Choose them carefully.

Re:Derp

[dyingtolive]

Catastrophic to most people these days is not being able to afford their daily $8 Starbucks coffee.

The problem isn't that they're using the wrong words, it's that their worlds are too small for the proper order of magnitude for the word. Like a six year old.

Re:Derp

[Anonymous Coward]

Yeah, man, credit ratings aren't real, they're made up, just like words. And risk, even sudden changes of it in a fundamental part of the world economy like t-bills, that's, like, made up, too.

Not like equating 'catastrophe' with 'anarchy', that's completely honest and not hyperbole at all.

Re:Derp

[Trailer Trash]

It wouldn't have even been annoying unless someone - say, some jerk petty enough to put barricades around open air monuments - would have tried to stop payments on debt service. We had easily enough money coming in to cover the debt service, so it would have only been a problem had someone purposely done that to harm the US.

Re:Derp

[artor3]

Go on thinking that, Pollyanna, if it helps you sleep at night.

The shutdown wasn't really a big deal, sure, but if the US had defaulted on its debt, that would have been catastrophic.

We owe around $16 trillion right now. But it's really not a big deal, because we pay negative interest on it (relative to inflation). Countries are eager to keep investing in the US, and the high demand lets us pay very low interest. If US debt were seen as unsafe, we would need to pay MUCH higher interest in order to attract investors. We obviously wouldn't be able to pay the higher interest, since this scenario is based on the assumption that Congress refuses to even repay the principle. So we would have to start paying out $16 trillion without replacement investments coming in.

Goodbye, Medicare. Goodbye, Social Security. Goodbye, foodstamps and welfare and section 8. Hello, social upheaval. Hello, desperation-induced crime wave. Hello, Great Depression.

That's your idea of "annoying"? I'd say "catastrophic" is a far more apt description.

Re:Derp

[Anonymous Coward]

except there was nothing requiring the US to default on debts... there was (and is) plenty of money to make the minimum payment on our debt even if we couldn't borrow more; there just isn't enough coming in to make the minimum payment AND continue spending as we are now. If that wasn't the case (ie: we can't make the minimum payment without borrowing more) we would already be so far down the screwed path that it wouldn't matter anyway.

Re:Derp

[felrom]

The point was that the US was at 0% risk of defaulting on its debt.

You might as well write a long post about the potential ills of earth being invaded by married bachelors; it had an equal chance of happening.

Re:Derp

[Copid]

You seem to think three things:

1) That the Treasury has the power to pick and choose who gets paid.
2) That the payments are made all at the same time so we don't have cashflow issues for different payment dates.
3) That telling people other than bondholders, "Yes, we agreed to pay you, but we're not going to," is something other than a default and that the credit markets would see this as A-OK.

I don't think that any of these things are true, and even if some are, it seems pretty unlikely that all of them are true.

Re:Derp

[Anonymous Coward]

Does it bother you that the treasury department and most of the economics establishment disagrees with you?

Do you take the same damn-the-experts opinion with regard to global warming, for example?

Your point has been addressed by people far wiser than I, I suggest you browse around and read up.

Re:Derp

[Anonymous Coward]

> The point was that the US was at 0% risk of defaulting on its debt.

Since the deciding factor on what is keeping interest rates low is confidence from Non-US sources in the form of US bond demand, do you think the US controls that?
You're amusingly backwards in your understanding of what the crisis is.

Re:Derp

[Anonymous Coward]

Hahahaha. Yeah, if you don't pay your bills then all the people who expected you to pull imaginary money from thin air would be very disappointed.

The rest of us will keep growing food, making shelter, you know... REAL SHIT.

Re:Derp

[fredprado]

As long as something extremely catastrophic does not happen, like US being hit by a giant meteor, or nuclear war, the chances of the US government to default on its debt is exactly zero. The debt is mainly in dollars, a currency controlled by the US government and a currency it can produce at will. Sure it generates inflation, but guess what, inflation makes actually lowers the debt.

Re:Derp

[houstonbofh]

Goodbye, Medicare. Goodbye, Social Security. Goodbye, foodstamps and welfare and section 8. Hello, social upheaval. Hello, desperation-induced crime wave. Hello, Great Depression.

Of course a lot of the good science fiction starts right after that point, so I say BRING IT! :)

Re:Derp

[Anonymous Coward]

> Sure it generates inflation, but guess what, inflation makes actually lowers the debt.

The people we borrow from and pay back with inflated currency (meaning their debt is being depreciated) notice that they bought 50$ and can only buy 25$ with it. At some point (this 0% risk you pulled out of your ass) that is within sight, causes the market to flee that currency. You end up with Zimbabwe dollars. Inflated to a million dollars in a single bill to buy a box of popcorn. What is wrong with your brain that you think you can see over the economic forces? Your "understanding" has no bearing on reality.

Re:Derp

[ArbitraryName]

Known troll, nothing to see here.

Re:Derp

[TheResilientFarter]

The U.S. has $3 trillion in revenues and $500 billion in debt payments. We couldn't find room for that? Do you follow the logic of "we have to borrow money to be able to continue paying our deb"?

Re:Derp

[girlintraining]

The shutdown wasn't really a big deal, sure, but if the US had defaulted on its debt, that would have been catastrophic.

No, it was a big deal. But it wasn't catastrophic, and neither would us defaulting. Because all that means is our credit rating would be downgraded and so we'd have to borrow at a somewhat higher rate. Would this be a problem? Yes. Would it lead to the death of America? No. Catastrophic means unrecoverable to most people. It means a one way trip to fucking doomsday. This isn't that.

But go on thinking that, tin foil hat man, if it helps you stay awake at night. -_- It would not trigger another great depression. It wouldn't be the end of life as we know it. None of these things would happen. And it's not me saying that, it's the Federal Reserve saying that. The very people who oversee the debt.

Their take on it? "Failure of the government to pay its bills could undermine world confidence in the U.S. dollar, and in the extreme could cause a global financial panic." (emphasis mine). Am I saying the default wouldn't be a crisis? No. But to call it catastrophic is just tin foil hat brigade.

Re:Derp

[Drakonblayde]

Goodbye, Medicare. Goodbye, Social Security. Goodbye, foodstamps and welfare and section 8. Hello, social upheaval. Hello, desperation-induced crime wave. Hello, Great Depression.

That's your idea of "annoying"? I'd say "catastrophic" is a far more apt description.

Wow, the amount of pessimism here is amazing. Do you really believe that the entire health of US economy and society is dependent on our entitlement programs?

I don't think we've quite reach the point where the majority of Americans are proles on the dole, I don't think losing those entitlement programs would be a bad thing. Would it cause some problems? Of course it would, and the politicians would take a heavy beating in the media (which, don't kid yourself, is the *real* reason this was never going to default), but ultimately, it would be to the benefit of the country.

Re:Derp

[BoberFett]

So what you're saying is that we can never afford an interest rate hike? Sounds like a solid plan...

Re:Derp

[fredprado]

Sure, if inflation gets THAT high it will happen, but in practice it won't ever happen, because the payments relative to this debt during a few months or even a few years are not sufficient to produce anything even near the necessary impact on inflation, especially if the government reduces expenses to adjust which it would certainly do sooner or later. It would only get to that point after a lot of neglect or if US total economic production drops substantially and suddenly because of a global scale planetary disaster, and both things are very unlikely to happen. So in short, despite of your wild and absurd assumptions, while the debt is mostly in dollars US will not default on its debt.

Re:Derp

[Anonymous Coward]

it's 16500 billion of debt. The country has the biggest debt of the world. But go on, please...

Re:Derp

[fatphil]

As long as there's enough negative feedback, catastrophe will be averted, it will brake at annoying. However, the damping hasn't been put to the test yet, and there's some evidence of positive feedback in some parts of the system.

I'd like to amend your sentence such that instead of "If US debt were seen as unsafe ...", it reads "When US debt ..."

Re:Derp

[Dins]

He meant $500B to pay the INTEREST on the debt. Not the entire debt itself. Point is, if we couldn't borrow more money, we would still have more than enough revenue to continue paying the interest on the debt and thus not default.

It's like having a $10,000 credit card limit that you've maxed out. You want to go buy a new TV with money you don't have, but the banks won't increase your credit limit. So you can't buy the TV, but you can still afford the $35/month minimum payment on your credit card so the banks don't come to repossess your shit. If we hadn't increased the debt limit, the US government would not have defaulted unless we deliberately decided to. Which would have been a very real possibility...

Re:Derp

[ultranova]

It's like having a $10,000 credit card limit that you've maxed out. You want to go buy a new TV with money you don't have, but the banks won't increase your credit limit. So you can't buy the TV, but you can still afford the $35/month minimum payment on your credit card so the banks don't come to repossess your shit.

What if you need the credit to buy gas so you can go to work and earn money? You don't get credit -> you can't go to work -> you lose your revenue and end up bankrupt.

That is the situation in the US: modern economy requires modern infrastructure, which requires maintenance and development, which requires income. Since Americans don't want to pay for it with taxes, that leaves private sector (which usually demands subsidies, so the government ends up paying anyway, and then also bills their captive audience for profits) or credit. So a debt ceiling doesn't mean "living within your means", it means collapse - a spiral of cuts resulting in decreased means resulting in more cuts. Which would be bad enough if it was just Americans learning the difference between Randian ubermensch fantasies and reality, but it's likely to drag the rest of the world at least partway down with it.

Re:Derp

[Anonymous Coward]

But it's really not a big deal, because we pay negative interest on it (relative to inflation)

That's what Greece thought too. And then interest rates went up. Assuming that interest rates will stay low forever is idiotic.

Re:Derp

[Dins]

How much debt is too much? 17 Trillion? 20 Trillion? 50 Trillion? When does it stop? How much money do we continue to borrow from foreign creditors before we realize this model is NOT workable long-term? How much do we borrow before other countries refuse to lend any more to us?

Unless your plan is to significantly raise taxes. And if you think THAT won't have a negative impact on the world's economy, try it and see... Or maybe the plan is to collapse the entire system and start fresh with a new one in which the government provides for all, but that's not sustainable long-term either. Somebody has to pay for things. And if the people who normally work to pay for things realize that they don't really have to work and can just live off the government and thus decide to stop working, then what?

Re:Derp

[mysidia]

What if you need the credit to buy gas so you can go to work and earn money? You don't get credit -> you can't go to work -> you lose your revenue and end up bankrupt.

The world doesn't end. You take the TV back, or you walk over to the nearest neighbor or pawn shop, and hoc the TV for the $50 in gas money you need.

And you praise the lord, that the credit card company put a stop to your out-of-control unsustainable spending at $10,000, instead of at $50,000.

Re:Derp

[mysidia]

We had easily enough money coming in to cover the debt service, so it would have only been a problem had someone purposely done that to harm the US.

A constitutional violation of oath.... a high crime worthy of impeachment....

Re:Derp

[Anonymous Coward]

Except in this case it isn't a television, it's social security payments.

So you're happy with the treasury arbitrarily deciding what does and what doesn't make the cut? I thought spending power was in the hands of the congress.

Re:Derp

[Richy_T]

Interest rates being kept artificially low is not a good thing. C.f. housing bubble and disappearing savings.

Re:Derp

[khallow]

The shutdown wasn't really a big deal, sure, but if the US had defaulted on its debt, that would have been catastrophic.

Anyone who cared sold off their US debt some time ago. They aren't going to care that much about some retarded political bickering that doesn't actually change debt payments past a few weeks out.

Goodbye, Medicare. Goodbye, Social Security. Goodbye, foodstamps and welfare and section 8. Hello, social upheaval. Hello, desperation-induced crime wave. Hello, Great Depression.

You mean we'd get rid of the two biggest spending burdens the US has? That's a pretty big silver lining for that cloud.

Re:Derp

[Copid]

So your goal here is to raise interest rates during a slow recovery from a recession? By artificially creating a credit crisis? Please lay out your model for how that will be good for us.

Re:Derp

[Joey Vegetables]

Goodbye, Medicare. Goodbye, Social Security. Goodbye, foodstamps and welfare and section 8.

Some of us would welcome a return to a society based on rule of law, personal responsibility, and voluntary charity, in spite of the temporary upheaval that we do realize would occur during the transition.

Re:Derp

[Copid]

The market prices in expected inflation when setting the interest rate. Inflation has been low and will likely stay low for some time, so I'm really not sure what you're worrying about. It's not like the proposal is to drive inflation to 15% and see what happens. We're operating below typical inflation levels right now.

Re:Derp

[Copid]

I love it when people say things like, "Let me reassure you, this might only cause a global financial panic. It's not like full scale nuclear war or anything." And this is something we did to ourselves that was entirely optional because a noisy minority is really upset that they didn't get their way on a lukewarm public/private health insurance program. Holy shit.

Re:Derp

[Copid]

Yes, taking care of the elderly is a burden. Let's stop. Thus solving the problem once and for all.

Re:Derp

[khallow]

Yes, taking care of the elderly is a burden.

Social Security and Medicare isn't just "taking care" of the elderly. They're huge wealth transfers from poorer, younger people to wealthier older people.

Re:Derp

[Anonymous Coward]

Social Security and Medicare isn't just "taking care" of the elderly. They're huge wealth transfers from poorer, younger people to wealthier older people.

How's that bad? Wealthier older people are the great job creators who knows how to manage wealth better than those damn whipper snappers. In turn, their concentrated wealth will trickle down and help the rest of society!

Re:Derp

[felrom]

I would argue that they don't disagree with me, but rather that we're talking with different sets of assumed semantics. Let me explain.

If you ran past the debt limit deadline, and the US couldn't borrow any more money, then **someone** would have to make some choices on who gets paid and who doesn't. Either the President, as head of the executive, would order the treasury about who gets paid, or the treasury would decide on its own, or congress could pass a balanced budget effectively doing the same. Regardless, not everyone who was promised money would get paid. By any definition, that is absolutely a default.

The problem is that it's only a general default on our promised expenditures. It does not have to be a default on our debt service. Any default on our debt obligations would be undertaken on a purely voluntary basis by the President or SecTres, not withstanding any debate over the effect of amendment 14 section 4.

So yes, not raising the debt ceiling or not ignoring it on 10/17 would have been A default on our promises, but it would not have been THE cataclysmic default on our debt obligations. It would have meant we had a balanced budget instantly, and, if certain people chose to, it could have also meant that the US's credit rating went to pot and then all the doomsday stuff happened, but again, that decision rested entirely in the executive branch in the short term.

Does it bother you that the treasury department and most of the economics establishment disagrees with you?

The treasury department is partisan by virtue of its head being appointed by the president. It quite simply can't be taken at face value. On any given issue it may be right or wrong, but it simple being the treasury and saying something doesn't make it correct.

As far as the economic establishment disagreeing, I've seen a lot that doesn't, and I've seen a lot that does. I've also seen plenty of "economics" "journalists" who are, on a daily basis, baffled by the movements of stocks, gold, unemployment, business, etc when they are all easily explainable with a supply/demand curve and a little reasoning on human behavior. There are a lot of hacks in the economics world, so being at odds with any in particular doesn't bother me.

Re:Derp

[felrom]

No resource allocates well at a cost of zero, credit included. Keeping interest rates near zero is hurting a lot of people and is not a wise strategy.

Please see my other post a couple up for my explanation of the "crisis."

Re:Derp

[khallow]

Kind of explains the flaws in "trickle down", doesn't it? We'll assign the wealth to whoever we want and you'll like it because some of it will trickle down to you. I must admit I'd rather be a trickler in this situation than a trickle-ee.

Re:Derp

[ultranova]

How much debt is too much? 17 Trillion? 20 Trillion? 50 Trillion?

A dollar does not have fixed value, and is in fact constantly and exponentially devaluing, so neither does the expression "17 trillion dollars".

When does it stop? How much money do we continue to borrow from foreign creditors before we realize this model is NOT workable long-term? How much do we borrow before other countries refuse to lend any more to us?

Whether or not it's workable in long-term doesn't really matter. Like I said, upkeeping a society requires money and like you demonstrated below, Americans don't like taxes. So it's either borrow or die.

And, frankly, it's the apparent insanity of half your politicians (the Republican half) that's more likely to make anyone hesitant to give you credit, rather than the amount of debt you already have.

Unless your plan is to significantly raise taxes. And if you think THAT won't have a negative impact on the world's economy, try it and see...

Like you said below: someone has to pay for things. Modern society - or any kind of society, for that matter - is a thing. So you get to choose: rise taxes, keep on borrowing money, or let infrastructure rot. Of these, taxes are likely to have the least negative impact.

Or maybe the plan is to collapse the entire system and start fresh with a new one in which the government provides for all, but that's not sustainable long-term either.

Get on with the times. Soviet Union is long dead. The boogeyman of the day is terrorism.

And if the people who normally work to pay for things realize that they don't really have to work and can just live off the government and thus decide to stop working, then what?

Unemployment goes down? You do realize that for all the fearmongering about moral hazards, all industrial countries have a surplus of people looking for jobs, rather than a deficit?

Re:Derp

[Richy_T]

Not really. I'd prefer not to operate in the surrealist world of market manipulation. Allow interest rates to find their own correct level and go from there.

So no, I'm not advocating artificial anything, just pointing out that low interest rates is not a valid aim in and of itself.

Re:Derp

[Copid]

Allow interest rates to find their own correct level and go from there.

What is the "correct" level and why is it correct? That is, what criteria do you use to determine whether one interest rate is better than another?

Re:Derp

[Anonymous Coward]

Half decent troll, though. Reminds me of the old days.

Now if only OOG_THE_CAVEMAN would come back. Gawd, I miss him.

Re:Derp

[david_thornley]

They're also legally guaranteed benefits that people have been paying for all their lives.

I'm getting close to retirement age. I've got a fair amount stashed away, but Social Security is a large part of my retirement plans. Similarly, for nearly forty years I've been paying for it. That's why it's politically impossible to do away with it. I'll consider doing without it if I get back everything listed in my Social Security statement, with interest and adjusted for inflation.

Also, Social Security benefits are, last I looked, roughly equal to Social Security taxes. Cutting out the Social Security system would result in no real change to the deficit, and tens of millions of irate people who are normally the most likely to vote.

Re:Derp

[Anonymous Coward]

I don't think we've quite reach the point where the majority of Americans are proles on the dole, I don't think losing those entitlement programs would be a bad thing. Would it cause some problems? Of course it would, and the politicians would take a heavy beating in the media (which, don't kid yourself, is the *real* reason this was never going to default), but ultimately, it would be to the benefit of the country.

I love how you libertarian asshats try to smooth-talk people literally starving and freezing to death as a mere bump in the road on the way to a glorious welfare-free future where ultraproductive Randian supermen freed of the shackles of taxes will deign to trickle some of their wealth down to the moochers.

It's not about "proles on the dole". That's repugnant propaganda spread to make you think that anyone who needs help is just mooching. It's about it not actually being a simple thing for everyone who wants work to find it. Particularly in the modern context, where the march of technology (read: many productivity multipliers stacked up) has measurably reduced the demand for labor. And it's also about the demonstrated inadequacy of private charity to deal with such issues. (The Great Depression was a thing. Read about it sometime, okay?)

Re:Derp

[Anonymous Coward]

Rule of law: we need to "return" to that? Seems like we've got it.

Personal responsibility: we've got that too.

Voluntary charity: yup, that too! It's almost as if charity funded by taxes takes none of these things off of the table!

You, translated: "fuck the fact that voluntary charity demonstrably doesn't do enough, and never has. I wanna starve everyone who can't survive on their own because it makes me feel better about being a Productive Member of Society. I will cover my eyes and plug my ears whenever anybody tries to point out that a healthy dose of random chance stands between me and those who are less well off, because I believe with every last fiber of my being in the Just-World fallacy, in which negative outcomes always, always imply that the person suffering deserves that suffering."

You're a real piece of shit, "Joey Vegetables".

Re:Derp

[Richy_T]

The "correct" level is the one that is agreed between those who want to lend and those who want to borrow.

With the proviso that magicing huge amounts of money out of nowhere is not a valid way of entering into this.

Re:Derp

[Copid]

With the proviso that magicing huge amounts of money out of nowhere is not a valid way of entering into this.

You didn't answer the question why? What, exactly, is wrong with changing the amount of money in the economy? Is the current amount exactly the right amount for the circumstances? Is it a moral objection? Superstitious? The appropriate money supply for an economy is kind of a big piece of 20th century economic thought, so the assertion "never change it, ever" seems like it should have some fairly solid theoretical grounding.

Re:Derp

[khallow]

They're also legally guaranteed benefits that people have been paying for all their lives.

So what? The people getting the guaranteed benefits aren't going to be the ones paying for the guarantee.

Also, Social Security benefits are, last I looked, roughly equal to Social Security taxes.

Twenty years ago they were well below Social Security tax revenue. Twenty years from now, unless the US reduces the benefits, they be well above tax revenue.

Cutting out the Social Security system would result in no real change to the deficit, and tens of millions of irate people who are normally the most likely to vote.

If something can't continue, it won't. Here, it just won't matter how these irate people vote. Their benefits will eventually get reduced. The only question is how much harm to the rest of society will they inflict in the process?

Re: Nobody cares about bitcoin

[Anonymous Coward]

Are you freaking kidding? Why is it that every half wit thinks that bitcoin is all about drug transactions and prostitution?

Re:Nobody cares about bitcoin

[Anonymous Coward]

Insightful? That's pathetic. This guy is just saying something similar to 'nothing to hide, nothing to fear,' which is a notoriously illogical argument that imbeciles use.

Crisis not solved, made worse

[KiloByte]

So they made the mistake of raising the debt ceiling yet again, after removing safeguards made the last time. Seriously, it's time to put it into the US constitution, like a number of countries have done. Come on, if even my parliamentcritters in Poland somehow managed to make it a part of the constitution, it's not a lost cause for the US. Hopefully.

When the last raising of the ceiling led to a credit rating downgrade, some public figures pretending to be serious went as far as calling for arrest of S&P officers because the rating downgrade was "treason" and hostile propaganda. According to that "worst case" scenario, the public debt would go from 62% in 2010 to 78% in 2013. Instead of that 78%, it is around 104%...

Re:Crisis not solved, made worse

[Copid]

When the last raising of the ceiling led to a credit rating downgrade...

Correction. Threatening not to raise the debt ceiling lead to a credit rating downgrade. Explicitly saying in public that you're thinking about not honoring your financial obligations does that.

Re:Crisis not solved, made worse

[artor3]

You liar. The credit rating downgrade wasn't because we raised the ceiling, it was because the Republicans threatened not to.

The ratings agency EXPLICITLY SAID SO:

The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

Re:Crisis not solved, made worse

[Anonymous Coward]

> Threatening not to raise the debt ceiling lead to a credit rating downgrade

[insert face palm here] Borrowing more money does not help your credit. The last time the US's credit was downgraded, it was because they did another huge round of borrowing.

Re:Crisis not solved, made worse

[roman_mir]

No, you are the liar. The agencies that downgraded the US debt (and it is JUNK today, anybody who doesn't understand it has his or her head up their own asshole) were sued by the US gov't.

Of-course they were supposed to downgrade it to junk, the only agency that really downgraded the US bonds (Egan Jones) was stripped of their license to rate US debt. The sequester (cut to the spending) was the condition, the promise, under which the US gov't wouldn't be downgraded further (and eventually the worthless 'rating' agencies brought the US debt rating up again after getting scared of the feds and the SEC, etc.).

The Chinese don't want the US debt to grow, they just don't want the threat of not being paid what they are owed, so that's nonsense and that's why Chinese rating agencies downgraded US debt now, after the so called 'ceiling' was raised again.

The real crisis in USA is the debt, not the fake ceiling. The ceiling would have actually put a lid on ability of USA to continue running this enormous, biggest in history of the world ponzi scam, made up of the US bonds, dollars (the SS and Medicare are second in size ponzi scams after the bonds and the dollars).

USA is bankrupt, it can't pay its debts.

USA did NOT have to default on its creditors, 2300BILLION USD are collected per year by the feds, less than 300BILLION USD need to be paid out as the interest.

Obama, other politicians, the MSM all came out and told the bond holders: you are the low men on the totem pole, we won't pay you if we can't borrow more from you even though we collect almost 10 times the money in taxes that we need to pay you.

Anybody in their sane mind would see this as a direct threat against their assets (US bonds or dollars) if they have any and would immediately start unloading, but then again, this was obvious for a couple of decades now what is going on, specifically after the real default in 1971, when Nixon defaulted on the gold dollar.

The real story of-course is that USA is bankrupt, US bonds are junk, USA will never pay any of its debts and would rather cause massive inflation (maybe even hyper inflation) and the credit agencies are bought and paid for not to report that truth.

GS came out with a recommendation to dump the gold to its muppets^C^C^C^C^C 'investors'. Somebody was dumping large quantities of gold on the market of a few days straight, in an attempt to move the price down, most likely trying to weed out the weak hands so that they could buy much more back at lower prices.

Anyway, enjoy your Marxist/Keynesian ideology, certainly the only thing it will bring you will be a total economic and societal collapse, maybe that's your cup of tea of-course but you desire it so much, you should get to experience it.

Re:Crisis not solved, made worse

[Wonko the Sane]

USA did NOT have to default on its creditors, 2300BILLION USD are collected per year by the feds, less than 300BILLION USD need to be paid out as the interest.

Obama, other politicians, the MSM all came out and told the bond holders: you are the low men on the totem pole, we won't pay you if we can't borrow more from you even though we collect almost 10 times the money in taxes that we need to pay you.

Anybody in their sane mind would see this as a direct threat against their assets (US bonds or dollars) if they have any and would immediately start unloading, but then again, this was obvious for a couple of decades now what is going on, specifically after the real default in 1971, when Nixon defaulted on the gold dollar.

Apparently you got downmodded for speaking the truth.

Re:Crisis not solved, made worse

[rhodium_mir]

In summary, the United States' debt is junk. Also, they have plenty of money to make the payments. Thank you, Roman--you make a compelling argument and in no way sound like a crazy person.

Re:Crisis not solved, made worse

[RoccamOccam]

In 1995, Republicans were almost able to pass a Balanced-Budget Amendment (which would have needed ratification by the states). After passing in the House, it fell one vote short of the two-thirds needed. Senate Republicans voted for it 52-1. Democrats voted against it 33-14. Of course.

Re:Crisis not solved, made worse

[Anonymous Coward]

Go stuff a fucking gold bar up your ass already. Get that through your tiny fucking brain: no one takes your voodoo Austrian economic crap seriously. No one. It's not real. It's not valid. So just sit there and let some people capable of abstract thought do the thinking.

Re:Crisis not solved, made worse

[Anonymous Coward]

Wow! Holy confirmation bias batman! The mental gymnastics required to spew that revisionist version of history boggles my mind! That has been your interpretation of the recent episodes of debt ceiling chicken? I was with the Tea Party back when they were underground(back before Glen Beck started wearing glasses and dressing up like a frog-boiling-Nazi). They have completely lost touch with reality in their little isolated echo-chamber of group think. In late 2009 all of the neo-cons started throwing around the acronym "RINO" and dressing up like colonialists. It was really sad to see a movement that was essentially started by Ron Paul hijacked by the same morons who collected Yellow Ribbon bumper-stickers/car magnets in 2003-2006. These retards were all for blowing money out of our collective-ass on cruise missile strikes on tents in the desert and paying survivors benefits to families of the veterans who they enthusiastically pinned targets on when they put them to work as rent-a-cops in the middle of a civil war. The minute O-bummer takes office they're suddenly fiscal conservatives/deficit hawks despite the deficit decelerating from the freefall that GWB set us down.

Here's a crazy idea: next time the Tea Party wants to extort terms from a Debt Ceiling, why don't they offer the Democrats a proposal to cut the F-35, defund "foreign aid"(IE. economic sabotage), close foreign military bases, increase VA benefits, remove tax exemptions for religious organizations, remove mortgage exemptions for 2nd & 3rd houses, increase the federal minimum wage(increasing income tax revenues in the process), and removing oil subsidies?

Oh, that's right! Because ever since faux conservatives like Michelle Bachmann turned the Tea Party in to a circle-jerk of Koch Bros. astroturfing, the Tea Party hasn't stood for anything other than the most regressive aspects of small government that exacerbate the plutocracy and increase the deficit by attacking high ROI social programs while doing little to nothing about tax loop holes or increasing revenues.

If the Tea Party wants to run the Government like a business, then they are clearly modeling their approach on the corporate leadership of Hewlett Packard.

"Republican In Name Only" my ass. The entire party has given itself a lobotomy trying to ignite enthusiasm in their aging and increasingly irrelevant base: xenophobic, morally-conservative, religious nut-jobs with an itchy trigger finger on the money furnace labeled "military intervention". Their obsession with free-markets only extends as far as obstructing government intervention where blatant externalizes are socializing the risk of privatized profits. They are nowhere to be found when it comes to cutting back the portions of military industrial gravy train or special treatments in the tax base.

If the average schmuck was allowed to deduct living expenses in the same way that businesses get away with itemizing every bottle of Dasani they give to clients during a game of golf, the tax base would instantly topple over on to the top 1% of the country that own the majority of all private assets.

It's all bread and circuses to keep us distracted from the fact that the tax codes are deliberately obtuse to create make-work for accountants and lawyers. Hired guns in the process of liquidating public assets and funneling them to the private slush funds of our corporate oligarchs. If the Tea Party had the intellectual honesty to recognize that they were useful idiots buying the GHB being used to fuck them while they're obliviously offering to fetch the lube, they would see that the invisible hand rhetoric is a one-way street that only gets trotted-out when it suits the interests of the wealthy. Small government as it applies to increasing the wealth gap, and a devil-may-care attitude when it comes to policies that increase that same GAP.

But hey: good luck with the costume parties at town halls and that whole Posse Comitatus thing. Let me know if your strawman arguments get you out of any speeding/parkin

Re:Crisis not solved, made worse

[Sqr(twg)]

I think the reason why GP is currently at "-1 Troll" is that the first line of the post says that US Treasury bonds have junk status. When you lead with an easily verifiable, factually incorrect statement like that, nobody will take you seriously.

But since there is, apparently, a large crowd (including several senators) who believe that the rest of what he wrote is "the truth". I will try to respond.

Yes, it is true that the US, like most other countries, will never pay off its debt. The way fiat currency works is that inflation continously transfers wealth from those who save to those who borrow. This means that if you have the credibiliity to be able to borrow, then you should do so. The federal government has this credibility, and therefore it is more profitable for it to invest in things like infrastructure and education than to pay off debt. (Even feeding the poor can be seen as an investment, because they will likely generate tax revenue in the future.)

I personally dislike the idea of fiat currency. I think it is deeply unfair the way we transfer wealth from those who cannot borrow to those who can. But since those are the rules we play by, I do the best of the situation and borrow to invest. The US government would be stupid not to do the same thing.

The idea that the US could keep paying interest on its debt, without raising the debt cieling (popularly known as "prioritization") is simply false. Even if it were legal (which it is not) it wouldn't work. If the federal government stopped paying any of its bills, then the credibilty that allows it to borrow cheaply would be destroyed. At that point, you get the equvalent of a run on the bank. It would not be a matter of paying $300 billion per year in interest, but instead repaying the principal at a rate of $5 000 billion per year, which would cause bankrupcy in a matter of weeks even if all other payments are halted.

Re:Crisis not solved, made worse

[Anonymous Coward]

Bingo. My children owe $50K each in debt, which my generation will not pay.

Re:Crisis not solved, made worse

[roman_mir]

first line of the post says that US Treasury bonds have junk status. When you lead with an easily verifiable, factually incorrect statement like that, nobody will take you seriously.

- you should read it again, you are one of the people with your head far up your own ass, that's where your problem lies.

Here, let me demonstrate some more, the following statements are presented as 'verifiable facts' by the establishment political system and the media:

• Inflation in USA is low.
• USA gov't pays its debts.
• SS has a trust fund.
• Government spending is investment.
• Income taxes are legal and are collected legally.
• USA gov't behaves legally with its data collecting programs.
• USA gov't behaves legally with its drone strike programs.
• The job of Congressmen is to allow USA government to keep borrowing to spend.
• The Congress is not doing its job when it selects, which programs (laws) to fund or not to fund.
• POTUS can legally start a war without declaration by Congress.

All of the above statements are false, however they are 'easily verifiable' to be true if your sources for this 'easy verification' come from the establishment.

-----

Yes, it is true that the US, like most other countries, will never pay off its debt. The way fiat currency works is that inflation continously transfers wealth from those who save to those who borrow.

- USA defaulted on its obligations back in 1971, everything past that is just a consequence of that action. USA doesn't pay bills, it runs a gigantic ponzi scam and eventually all ponzi scams come to an end. USA will never pay off its debts to the debtors, but it will pay for what it is doing with a severely reduced living standard.

Fiat currencies do not work, they all fail given enough time.

----

The federal government has this credibility,

- no, the USA federal gov't does not have the credibility, it has the printing press, that's the only true statement - US gov't has the credibility that it will attempt to print away its debts. As to credibility that USA can actually pay for the borrowing it does, there is no such credibility. USA licenses the rating agencies to give fake credit ratings to its debt in order to force people to accept this theft (inflation) by forcing the pension funds and various other institutions to buy this type of debt that cannot be repaid. As to the foreign debt holders, they are other central banks, who also have no credibility and are distributing this theft (inflation) among their own citizens the way USA does within its borders.

and therefore it is more profitable for it to invest in things like infrastructure and education than to pay off debt.

- none of these things are investments, investments imply that there is a return. Gov't doesn't look for return, it looks for increase in power and to enrich those, who have the closest ties to the politicians. So certain construction companies, "educational" institutions get the money and the people are used as the collateral.

Eventually, when many Americans would want to get up and leave USA because of the diminished standard of living, the gov't will attempt to make it illegal one way or another to just leave. They are already doing it with the IRS preventing people from getting travel passports if they have more than certain amount of IRS debt. To prevent young people from leaving, all they have to do is declare that anybody with a student loan cannot get a passport before they pay out their loan, and these loans are not dismissed in bankruptcy, so the entire young portion of the USA population will be stuck in USA for decades at least (practically forever).

(Even feeding the poor can be seen as an investment, because they will likely generate tax revenue in the future.)

- feeding the poor is just a w

Re:Crisis not solved, made worse

[Copid]

[insert face palm here] Borrowing more money does not help your credit.

Which helps your credit less?

A) Borrowing money.
B) Saying that you are not going to repay your creditors.

I'm pretty sure the answer is (B).

The last time the US's credit was downgraded, it was because they did another huge round of borrowing.

Holy crap, did you read S&P statement on the reason for the downgrade? They explicitly wrote that threatening not to raise the debt ceiling was the reason for the downgrade.

Re:Crisis not solved, made worse

[Copid]

Fiat currencies do not work, they all fail given enough time.

I always love this line of reasoning. "Every fiat currency in history has failed. Except for the ones that haven't. Therefore, all of the currencies that haven't failed will eventually fail." I suppose it's trivially true that everything we build will fail sometime before the heat death of the universe.

implications of default

[Anonymous Coward]

Smart people -> Is the summary impaling the fate of the world rests on the USA forever borrowing money that it can never hope to pay back?

Re:implications of default

[Anonymous Coward]

There was a surplus about ten years ago, doomsaying is idiotic, the US needs to raise gdp growth, raise taxes and decrease spending, until they do so they need to raise the debt ceiling, remember that the debt ceiling is only agreeing to pay for what you've already bought.

Re:implications of default

[kwbauer]

If we had a surplus ten years ago, why did the debt never decrease? Oh yeah, because their was never a surplus.

Re:implications of default

[PseudoCoder]

Yes, the Clinton surplus was fictitious. The DotCom boom brought in a surplus in Social Security revenue and instead of putting that in the SS trust fund as legally required, they went and "borrowed" it for the usual overspending that has now become baseline. If you or I took money from a trust and used it for another purpose not stated in the trust we'd be in jail.

Re:implications of default

[Copid]

The DotCom boom brought in a surplus in Social Security revenue and instead of putting that in the SS trust fund as legally required, they went and "borrowed" it for the usual overspending that has now become baseline. If you or I took money from a trust and used it for another purpose not stated in the trust we'd be in jail.

The better way of putting that would be that instead of sitting on cash, the SS Trust Fund bought US government bonds which will be paid back to them just like all of the other bonds as long as we don't let the Republicans have their way. The surplus was accrued by design because the trustees were well aware of the fact that Baby Boomers will get old. As long as we don't do something stupid like default on our debt, Social Security is just like any other pension plan that holds US bonds.

Re:implications of default

[PseudoCoder]

The better way of putting that would be that instead of sitting on cash, the SS Trust Fund bought US government bonds which will be paid back to them just like all of the other bonds as long as we don't let the Republicans have their way. The surplus was accrued by design because the trustees were well aware of the fact that Baby Boomers will get old. As long as we don't do something stupid like default on our debt, Social Security is just like any other pension plan that holds US bonds.

Yes. I too prefer to live beyond my means on credit cards and panic when something unexpected happens instead of having a cash reserve. That's a blissful way to live indeed. That's how I achieved my dreams of staring at code for 10 hours a day instead of being a millionaire, which I could have been by now.

I get it that having cash sitting around is not necessarily great considering the policy is to intentionally devalue the currency, but it does not promote strength and growth and it's awfully short-sighted. Our children and their children will judge us harshly for going along with this.

Re:implications of default

[Copid]

It's just a very weird way of looking at bonds in a trust fund. If you had a private pension plan full of US government bonds, it would be fully funded and you'd be happy. But move the same pension plan with the same rules and the same payment schedule to the government ledger and suddenly it's a ponzi scheme and we "owe money to ourselves" or some such nonsense. It's a bizarre analysis. It's like saying, "I bought these Ford bonds to retire on, and Ford went and borrowed the money from my retirement kitty and spent it in on stuff! Where's my cash??" Macro is clearly more complicated than people think.

Re:implications of default

[Anonymous Coward]

If we had a surplus ten years ago, why did the debt never decrease? Oh yeah, because their was never a surplus.

It did drop slightly at the end of the 90s. That was the surplus.

Re:implications of default

[JesseMcDonald]

The better way of putting that would be that instead of sitting on cash, the SS Trust Fund bought US government bonds which will be paid back to them just like all of the other bonds....

The problem with this—and what makes it different from investing in any other organization's bonds—is the disconnect between who the money is being spent on and who will be forced to pay back those loans to keep the SS trust fund solvent. The Baby Boomers paid into the fund, supposedly setting funds aside for their retirement. That money was lent to the rest of the government to cover current expenses (i.e. for the Baby Boomers' benefit). Now, when it comes time for those Baby Boomers to retire, the rest of the government must take resources away from those still working to pay back the trust fund so that the Baby Boomers can receive their SS payments. The Baby Boomers get all the benefits, while the next generation is stuck with all the costs.

Of course, the same applies to any retirement fund which holds U.S. government bonds, not just Social Security. The problem is really about intergenerational debts rather than the SS trust fund's choice of investments, beyond the fact that the fund is acting as an enabler by buying U.S. government bonds, with repayment from future taxes, instead of investing in something which is actually productive.

Re:Nobody cares about bitcoin

[infinitelink]

Your first statement is a rather unargumentative (i.e. no persuasiveness to it) comment. At least a few millions in America with millions in Europe and elsewhere nowadays care about currency devaluation and manipulation and that, if not formally declared then in substance that using fiat or legal currencies to store value means that they are slowly robbed. And I mean a few million ordinary people, while economists and businesspeople up-high care even more (short term at least). Plenty of people may care about it to attempt to hide money but given it's an open transactions system, using unmodified Bitcoin protocol is a bad idea for them. On the other hand, your second is quite good.

Re:Nobody cares about bitcoin

[fisted]

yeah. also, think of the children!

Re:Nobody cares about bitcoin

[Anonymous Coward]

OH well.. if we are in the simple business of making baseless assertions then let me make a contradictory one... i FEEL like you are wrong. Care to back your feelings up with anything that is actually worth refuting?

Re:Nobody cares about bitcoin

[grub]

I use BitCoin to make donations to various Linux projects. That way when I download all those Linux ISOs on BitTorrent, I really feel like I'm sticking it to The Man.

typo

[Anonymous Coward]

I meant 'implying'! Sorry.

Re:Nobody cares about bitcoin

[Anonymous Coward]

You do not represent everyone's opinion. Bitcoin is booming right now. And the people who have their panties in a bunch are the ones still holding onto fiat thinking "the government will never inflate it that much".

Wouldn't have been catastrophic

[Anonymous Coward]

This "zomg horrible things will happen, KEEP SPENDING MONEY" mindset is tired, old, and wrong.

As long as we let fear of the unknown drive policy, we have no path out of this mess. None.

If nothing had happened, the budget would have been balanced. Only the debt payments must be made; everything else - including all entitlements - are not true debts, not true obligations of the government. They can be taken away just as easily as they were granted, and granting things which trivial understanding of exponents guarantees to be unsustainable should be grounds for immediate automatic ejection from office.

The US Federal government takes in on the order of 10 times as much money as is required to pay interest on the national debt, every month. This would not have been a crazy, sky-is-falling catastrophe. The only result would have been:

An immediate balanced budget. Not paying down debt at all, just not adding to it. Can we live within our means? If so, then this would have been a non-issue.

It appears instead of forcing fiscal responsibility, we have opted to continue blindly flooring the gas all the way up until we impact that immovable concrete barrier. And just like in the analogy, the outcome is not in question - it's only getting messier.

Buckle your seatbelts.

Comment removed

[account_deleted]

Comment removed based on user account deletion

Re:Nobody cares about bitcoin

[Anonymous Coward]

+1

How long before big business realises the tax-benefits of bitcoins? The main point seem to be to derive society of taxes. If you do not want to pay taxes to live in a society then move away, you have no right to get the benefits.

We need paper-money to "come back in style", they give you a reasonable amount of anonymity with regards to how it is spent. - That and some social responsibillity of people wouldnt hurt either.

Re: Nobody cares about bitcoin

[Anonymous Coward]

They aren't even anonymous transactions... if you convert bitcoins to cash, that's a major weakness.

And they have a great use: eliminating payment processing costs. Those costs are distributed among the people who run the mining software.

Banks Tried to Shut it down

[Deliveranc3]

Banks made transferring out of MTGOX impossible, MTGOX refunded my $. They are about 8 weeks behind processing withdraws.

Bad news, banks and government attacking at same time interfered with each other.

Also, they had this guy, he sold drugs... lots of drugs... but did they bust him? Nope, they did an elaborate sting to bag him for something REALLY REALLY evil... (I hate drugs btw) Why? So he wouldn't be a martyr for free wealth exchange.

Also the whole BTC aren't totally anonymous thing is a good to know.

Re:Banks Tried to Shut it down

[peawormsworth]

Also the whole BTC aren't totally anonymous thing is a good to know.

I dont know why anyone claims that bitcoin is anonymous. Bitcoin is the most public payment system ever devised. Every single transfer of funds from one account to another is public knowledge. Imagine, if every stick of gum you paid in cash was in a publicly accessible ledger somewhere online. This is exactly what bitcoin does. So the "anonymous" features of bitcoin are the minimum required in order to allow for this public ledger. ie: the identity of the payer and receiver is hidden from the public online ledger. And thank god.

So stop repeating the fluff about bitcoin being anonymous. The anonymous portions of bitcoin are far less then any other payment method used so far.

Bitcoin is not the payment system for anonymous nuts. Its the payment system for people who simply dont want every payment they ever made to be known by everyone and forever.

Correlation doesn't imply causality

[Anonymous Coward]

The mere observation that the bitcoin rose relatively to the dollar in a time of fiscal turmoil in the United States is not enough to establish a causal relationship of the type hinted at in the parent.

Besides, I find your "safe haven" theory questionable because bitcoins are still quite volatile. I simply don't see them as the conservative store of value during a crisis and think something like gold would be more suitable.

Re:Nobody cares about bitcoin

[Anonymous Coward]

Don't blame me. I voted for John Kerry!

Do hitmen take Bitcoin?

[Anonymous Coward]

How many Bitcoin would it take to put a hit on Ted Cruz and his idiot cronies? Perhaps someone should take up a collection.

Re:Do hitmen take Bitcoin?

[Anonymous Coward]

I say we just feed him some Green Eggs and Ham.

Re:Do hitmen take Bitcoin?

[Anonymous Coward]

Won't work. I was Gold Crew on a boomer, and after awhile the eggs were green - we still ate 'em and lived to tell the tale.

modl doWn

[Anonymous Coward]

BitTorrent) Second, Distro is done Here fastest-growing GAY Usenet posts. milestones, tellIng is dying and its you loved that *BSD is dying It is want them there.

Re: Nobody cares about bitcoin

[Sarten-X]

So as new coins become rarer with the diminishing rate, there will be fewer miners, and that means more validating workload dumped on the miners still running, increasing their costs as their expected profit diminishes, right?

I have not paid much attention to the implementation of Bitcoin, rather focusing on the economic implications. What happens as miners drop off the network?

Default Only If We Chose To

[geoffrobinson]

The U.S. Government gets somewhere between $200 billion and $225 billion a month in tax payments. I forget the exact figure, but let's say debt payments are around $50 billion a month.

We would only default if we chose to pay our debt with the lowest priority.

Re:Default Only If We Chose To

[bill_mcgonigle]

We would only default if we chose to pay our debt with the lowest priority.

Right, spending cuts could have covered the difference, if credit worthiness was the top priority. Oh, but that's an unmentionable inside the beltway.

Re:Default Only If We Chose To

[Anonymous Coward]

> I forget the exact figure, but let's say debt payments are around $50 billion a month.

This number is currently not being released publicly after it was shown to be somewhere in the 300billion a month range. The recent "50 billion" is for government services and not counting budgetary needs outside of that...like entitlements and loans which are not technically part of the government expenditures. They are the responsibility of the government to the Fed as a proxy. Most of the 30+ here were taught this would happen from our high school sociology teachers. I'm going to bet you're younger than that.

Re:Default Only If We Chose To

[Anonymous Coward]

The U.S. Government gets somewhere between $200 billion and $225 billion a month in tax payments. I forget the exact figure, but let's say debt payments are around $50 billion a month.

We would only default if we chose to pay our debt with the lowest priority.

Yes. About $225B and $32B. So your point is even more stark and correct. The news will never state the truth.

Re:Default Only If We Chose To

[kwbauer]

"not technically part of the government expenditures" which is why people, falsely, claim that Clinton left us with a surplus. We sort of had an excess of funds in the category we have to count, technically, and ignored the larger portion that we, technically, ignore.

Re:Default Only If We Chose To

[Anonymous Coward]

No one is saying that debt payments are 100% of income or anythign similar to that in fact.

What people are saying is that government obligations, government promises of payment, have to be met in order for the government not to default.

If the government pays bondholders but does not pay anyone else, it is a default.

If they owe you $1,000 as a tax refund and don't pay, that's a default

If they don't pay their suppliers (anyone from the office supply company to the tank supply company) for stuff they've ordered, that's a default.

Etcetra.

That, at least by my reading, has been the argument in the 'liberal' organs like the BBC and NYTimes.

Do you disagree with their analysis? If so why?

Re:Default Only If We Chose To

[khallow]

The 1999-2000 budget came within a billion dollars of break even by this metric. Given that GDP grows at a significant rate, just coming close like this on a regular basis would improve the US's fiscal outlook.

Re:Default Only If We Chose To

[Xylantiel]

Not paying for contracted work is still default. Or worse.

This is one of the great hypocrisies of people who say it would be okay to hit the debt ceiling. They claim that government should be fiscally responsible while simultaneously claiming it would be okay for the government to not pay its bills, which is the most fiscally irresponsible thing that could happen. If you want to change something, change the budget -- future commitments -- don't default on past commitments. (See how "default" doesn't apply to just debts.) If you don't have enough votes to get your way, wake up and realize that you live in a democracy, speak your mind and compromise.

Re:Default Only If We Chose To

[PseudoCoder]

It's not a matter of paying for contracts that are active; it's a matter of all the contracts they WANT to get into with money they don't have. The default behavior is to overspend; they've built the system around it and it needs to stop soon. Don't want to default on contracts? Again, priorities. There's plenty of waste that's been pointed out already by GAO, CBO and others and nothing's being done about that, because it's better to keep people uselessly employed, and they see all gov't funded activities as "stimulus". Problem is everything is a priority for people who have none. That's why they haven't passed a budget as required.

Re: Nobody cares about bitcoin

[MightyYar]

If people stop mining, then the currency stops being created... no matter - that will happen eventually anyway.. More likely, the price of bitcoins will continue to rise as usage does, and this will drive more people to mine. If usage does not increase, then who cares if they are mined or not?

bogus one sided claim

[frovingslosh]

If Congress had failed to reach a deal and the U.S. was unable to pay its bills, the results might have been catastrophic ...

While I realize that most /. synopses are just cut and pasted from the referenced article, it would nice if we could avoid clipping one-sided political hype at the same time. While a default might have been bad, there are many who believe that letting a man destroy the value of the dollar and the country by unchecked borrowing is even worse. This latest surrender by the Republicans tells him that there is really no limit to what he can spend. He can even borrow money from China and give it to China as "foreign aid".

Re: Nobody cares about bitcoin

[WaywardGeek]

The algorithm compensates, and delivers bitcoins at a predicable rate, unlike the US government's payments. If miners drop out, those who remain split the spoils.

I sold all my coins and bought my wife a nice silicon-carbide necklace fashioned out of Cree's materials, for about $500. I don't feel good about the use bitcoins are being put to, even if I do support the freedom that untraceable electronic money represents.

Re: Nobody cares about bitcoin

[fredprado]

Sure they do. They benefit all of us who want to keep our dealings private or not be hostage of what a credit card company thinks we should be able to buy and where, for example. Yes, you can do all sorts of illegal things with bitcoin, but guess what the preferred currency for doing illegal things in the world? It is the dollar.

Re: Nobody cares about bitcoin

[Ultra64]

>Buying pirated software.

>Buying
>pirated software

ok

V-Neck Drivel

[xdor]

Marxist cake-eaters logging mock-panic to cement allegiance to their socialist mafia. Hark nerdary! Bow before your propagandist masters!

Re: Nobody cares about bitcoin

[Anonymous Coward]

sounds like your problem is with all forms of cash

Re: Nobody cares about bitcoin

[Anonymous Coward]

Are you retarded?

Honeypot?

[ridgecritter]

I thought this was an interesting take on Bitcoin:

http://ianso.blogspot.com/2013/10/bitcoin-as-law-enforcementnatsec.html

Re:Honeypot?

[Anonymous Coward]

Here's where you stop reading:

"1) Bitcoin was almost certainly a team effort. The design has been peer-reviewed and is found to be remarkably secure, complete and well-rounded[1]. I argue that this suggests that a peer-review or quality control process has already been applied. If one individual cryptographer had written Bitcoin, it would contain far more idiosyncracies than it does, not just in the cryptosystem design but also in the C++ code itself."

Now... go get a copy of the 0.1 bitcoin client - the one that Satoshi wrote - and take a look at the code. It's hideous. Really bad.

Re:Honeypot?

[Wonko the Sane]

Here's where you stop reading:

"1) Bitcoin was almost certainly a team effort. The design has been peer-reviewed and is found to be remarkably secure, complete and well-rounded[1]. I argue that this suggests that a peer-review or quality control process has already been applied. If one individual cryptographer had written Bitcoin, it would contain far more idiosyncracies than it does, not just in the cryptosystem design but also in the C++ code itself."

Now... go get a copy of the 0.1 bitcoin client - the one that Satoshi wrote - and take a look at the code. It's hideous. Really bad.

I've seen other articles where people consider Bitcoin evidence of some kind of post-singularity intelligence at work.

It's clueless n00bs who didn't notice Bitcoin until 2013, and are apparently so narcissistic that since they weren't paying attention during 2009-2012 they assume nothing of importance happened then, so Bitcoin must have been dropped in our laps in its present form by some kind of omniscient cyber-god.

Re:Honeypot?

[Pseudonym Authority]

A codebase can change a lot in five years, ya no?

Re:Honeypot?

[ultranova]

I've seen other articles where people consider Bitcoin evidence of some kind of post-singularity intelligence at work.

Well, we're living creatures so we have almost ridiculous amount of interal complexity compared to nonliving things. We are sapient, so we've gone past evolutionary singularity too. And a large and rapidly increasing number of us live in an utopia of wealth, peace and equality that resembles heaven on earth from the point of view of, say, a medieval peasant.

So, we've already past two singularities and on our way through third. And of course the universe itself has gone through number of phase shifts in the past. So Bitcoin is a work of a post-singularity intellect. It's just that developmental singularity is like an onion: once you're inside it's just business as usual to you, and there's always another one ahead.

Re: Nobody cares about bitcoin

[Anonymous Coward]

If people stop mining, each miner gets more per time interval. Which makes it very attractive to mine again. Its a self-regulating system.

Re: Nobody cares about bitcoin

[Deliveranc3]

Luddites control the media?

The internet for example, is for porn - http://www.youtube.com/watch?v=eWEjvCRPrCo

Re: Nobody cares about bitcoin

[shentino]

Part of the incentive for mining is also in earning transaction fees for confirming transactions.

Re:Nobody cares about bitcoin

[Anonymous Coward]

Nice username to go with that statement.

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[account_deleted]

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Re: Nobody cares about bitcoin

[cheater512]

The difficulty parameter autoadjusts depending on the number of miners. Less miners = easier difficulty.
There should always be a new block every 10 mins (on average).

Also while the benefits of mining diminish, the 'fees' should increase with the use of bitcoin.
At some point the fees overtake the benefit of finding a new block.
Remember the fees get paid to the block finder.

Off topic summary?

[duke_cheetah2003]

Why the heck is this summary about 1/3rd's about bitcoin, and 2/3rd yet another reposting of the government shutdown conclusion?

Re: Nobody cares about bitcoin

[Drakonblayde]

Or maybe because what I buy is my business and my business alone? Without anonymity, it makes it trivial for people to track my purchases. If people can track my purchases, they can target me for their sales campaigns in order to try and manipulate me into giving them more money, Since I'm not terribly fond of being manipulated, nor am I terribly fond of junk mail or spam, I prefer my transactions to be as anonymous as possible.

But yeah, I guess you're right, it's all about the hookers and blow, Couldn't possibly be any other reason I don't want folks up in my business.

Re:China exchange controls

[Animats]

Right. China has tight exchange controls - it take special permission from the State Ministry for Foreign Exchange to exchange yuan for dollars, euros, or yen. But at present, China residents can buy Bitcoins with yuan. They can also sell Bitcoins for dollars, bypassing exchange controls. So if you've made money in China and want, say, to buy an apartment in London, Bitcoin provides a way to bypass the government exchange controls.

That seems to be what's pushing up the price of Bitcoin. The volume on exchanges in China is way up, while volume at Mt.Gox is way down.

However, there's no guarantee that this situation will last. The People's Bank of China can change this policy at any time. There's plenty of info available about PBOC policy; it's as least as important as US Fed policy. But that's enough for Slashdot readers.

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[account_deleted]

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You know what to do....

[Anonymous Coward]

16ruGpyLDdD2dHvvgT8nHQt2vZJCj13sJm

you know what to do...

Re:You know what to do....

[Richy_T]

I'm not sure whether to ROT13 or run it through a Perl interpreter.

Re: Nobody cares about bitcoin

[Anonymous Coward]

why do I want some hacker to know I bought an e cig just because the gov thinks it needs to track everything?

Re: Nobody cares about bitcoin

[viperidaenz]

Blame Silk Road?

Re:Nobody cares about bitcoin

[Zontar The Mindless]

As opposed to all of that nice, clean cash in your wallet, which very likely carries only trace amounts of cocaine?

Re: Nobody cares about bitcoin

[Anonymous Coward]

They benefit all of us who want to keep our dealings private or not be hostage of what a credit card company thinks we should be able to buy and where, for example.

Wut.

Embedding every transaction you ever make with bitcoin into the public block chain that everybody in the world has a copy of, forever... is somehow "keeping your dealings private?"

"Hey guys, here's a copy of my check register. Why don't you check out what I've been doing with my money since i started using bit coins?!"

Re: Nobody cares about bitcoin

[Anonymous Coward]

Without anonymity, it makes it trivial for people to track my purchases

And bitcoin fails to offer you anything resembling anonymity, or proof against tracking.

So why do you have such a raging hardon for bitcoins?

You want untrackable? cash or barter, motherfucker. And even then, you better hope the people you deal with have some sort of memory syndrome that causes them to forget everything about 5 minutes after it happens.

You all missed the real reason for the increase

[SuperKendall]

Swiss banks now making financial data available to governments. Switching to bitcoin as an anonymous alternative is inevitable.

Re: Nobody cares about bitcoin

[fredprado]

Despite your feeble attempts to trivialize the process, it adds considerable difficulties to identify the owner. Depending on the way you acquire it and the transactions you make it goes from very unlikely to be identified, to at least significantly harder to identify than any bank operation.

currency base on vapor ...

[Anonymous Coward]

"with a single Bitcoin fetching nearly $156 on Tokyo-based exchange"

So some idiot bid one up cuz he had to have one.....
At the same time what was the average price?? Ofr disclosing that would make this a NON-story ???

Let me know when 1000s are being traded at that rate.

Hey all you dolts out there, I have a new vaporous currency TURD_COINs ready for you all to buy with lots of lovely real money.

They are self limiting as they deteriorate unless they get encased in plastic so they will definitely keep their rarity....

BitCoins - a swindle the fools are afraid to admit to falling for....

Re: Nobody cares about bitcoin

[goose-incarnated]

If people stop mining, each miner gets more per time interval. Which makes it very attractive to mine again. Its a self-regulating system.

Unless there are no more coins left, at which point the miners will only do verification. It's probable that the mining network will shrink to a fraction of its current size as miners realise that it's not profitable to run that rig just for a percentage of transactions.

Re: Nobody cares about bitcoin

[lucame]

its useless to argue with buttcoiners, they are truly drinking that kool aid

Re: Nobody cares about bitcoin

[Anonymous Coward]

That "percentage" is not an actual percentage, but a minimum fee you have to pay for a miner to accept your transaction into their verification process... and each miner can set their own.

When miners become scarce, the remaining ones can rake up higher amounts of transactions with higher fees, set by themselves to be always higher than what they would consider as a profitable minimum.

Nothing arbitrary about National dept

[Anonymous Coward]

The dept ceiling is an arbitrary limit. However, there is unfortunately nothing arbitrary about the US rapidly becoming incapable of handling it's depth. While I despise many of the things republicans stand for, I cannot fail to see the irony of how the current democratic presidency (as well as Bush I suspect) overspend ridiculously.

Re: Nobody cares about bitcoin

[Ultra64]

No, but someone who pays for pirated software is.

Re:Nobody cares about bitcoin

[Anonymous Coward]

I note when RIAA went after Napster, they got the US to shut them down, even if they were doing business out of Australia.

There are several nations around the world who unabashedly represent themselves as "tax havens" for the world's wealthy. Yet I note my own government (USA) lets it slide.

There is no way I have any confidence in anything they say about not having money to pay the bills. They just seem to me like a bully running an extortion racket against those who are too small to protect themselves. Besides, the government runs the printing press and can simply legislate whatever they want, unlike the little guy who has to do whatever he has to do in order to survive.

Re:China exchange controls

[gl4ss]

they will have to either change it or relax yuan export controls.

which they just as well might because it would make it simpler to buy material goods and bring them to china.

Triple A status

[Errol backfiring]

Now I know what "triple-A" means: the sound of falling into the debt abyss: AAA...

Question

[aaaaaaargh!]

Okay, this is bothering me for some time. A friend told me during the shutdown that the government could, as a last resort, create a trillion dollar coin (or some such amount) and start paying their debts without congressional oversight. He also claimed that this method would have had essentially no bad effects on the economy and was just a way to circumvent the debt ceiling. Is that true? Can someone explain to me in layman's terms how it would work?

Obviously, if that was so easy they'd have done it, so there is a catch, isn't there?

Re:Question

[Anonymous Coward]

I think it's a hack.Congress won't let them raise the debt ceiling, so they do something that has exactly the same effect as raising the debt ceiling (due to the black magic of economics) except doesn't need cogreessional approval.

It's probably legal, but does go rather against the spirit of the law. Raising the debt ceiling has the same effect, and is the legally corect way to do things.

Re:Question

[Bob the Super Hamste]

Some of what your friend told you is true and some is kind of questionable. So here is my best attempt at an unbiased explanation:

1. Yes it is entirely possible and legal for the US mint to create a coin with some arbitrary huge dollar value associated with it. The reason for this is a quirk that came out of the law that allows the US Mint to create platinum coins for collectors. Usually congress has to approve any new designes, values, dimensions, compositions of coins issued by the US Mint. As such there is a huge effort when ever something other than the date changes on coins and this is applicable to all copper, nickle, silver, gold, and palladium coins issued by the US government. But for platinum coins the mint is left to it's own devices to create what it wants. Now nice even those collector bullion coins are actually legal tender with a legally enforceable face value, which is much much lower than their worth as collector items and bullion, they are never used in regular commerce, but are actually legal tender. Now the idea behind the trillion dollar coin is that the mint could create a bunch (usually 10 - 20 I hear quoted) platinum coins each with a face value of $1,000,000,000,000 and deposit them as needed at the federal reserve bank thus paying of $1,000,000,000,000 of debt each time. Now since the mint (part of the executive branch) doesn't have any laws stipulating the weight or value of the platinum coin they could create a coin with a very small weight (1/10 oz is typically the smallest) stamp a value of one trillion dollars on it and poof it is legally worth a trillion dollars. So yes your fried is correct that the US mint can create a trillion dollar coin, but it couldn't create a trillion dollar bill without an act of congress

2. Now to the tricky part on if there would be economic impacts because of it and this is an economics question which means that it is a highly charged political argument with evidence to back up both sides so no one really knows what will happen. The bad things being massive inflation and/or damage to the US's credit rating. The claim that nothing bad will happen is usually made by people on the left end of the spectrum who often cite the fact that during the finical meltdown of '08 the federal reserve created money out of thin air and made loans totaling something like $16 trillion and we didn't see a decrease in the US's credit rating or massive inflation. Yes this entirely true but is incomplete, since the federal reserve isn't the US government but is a private banking institution put in charge of the US monetary supply so it wasn't the US government doing some cloak and dagger crap that would damage the nations credit rating. Also the money that popped in to existence also popped out of existence almost as fast since that $16 trillion was made as overnight emergency loans at an APR of something like 0% to cover the banks reserve requirements. So it was a bunch of revolving loans with a very low APR that over the course of several months managed to total $16 trillion that never actually entered circulation where it could create inflation. Now for the other side of the proverbial coin. Those on the right believe that doing such a thing will mean that the sky is falling and that we will soon be the next Zimbabwe with runaway inflation and no one will ever buy US debt again. The rational behind this is that creating these coins effectively means that the US has admitted default but legally won't like other countries have (see the Weimar Republic, Zimbabwe, or the Hungarian Pengo) and thus is just inflating it's way out of debt. The claim is that this will lower the nations credit rating since while you will be paid back it will be with worthless money thus requiring all new debt to carry huge interest rates further the cycle of inflation. Again here they are not being entirely truthful since the debt that the trillion dollar coin would service has already been turned into money that is in circulation as US Federal Reserve notes (those bills in your wallet we

Re:Question

[Reziac]

Interesting... well, maybe if debt was too expensive or unavailable, the gov't would stop getting into more of it.

Re: Nobody cares about bitcoin

[VortexCortex]

Because, like I said, anonymous transactions do not benefit ANYONE, except those who wish to hide their transactions. Why would they want to hide their transaction? To hide the activities for which such transactions have taken place.
Example: Selling drugs. Buying drugs. Buying guns. Selling guns. Selling pirated software. Buying pirated software. And of course, reaping investments without paying income tax, aka TAX EVASION. As well as building up ponzi schemes, of course.

I guess you want to outlaw cold hard cash too then, eh?

Re: Nobody cares about bitcoin

[VortexCortex]

Or maybe because what I buy is my business and my business alone? ... Couldn't possibly be any other reason I don't want folks up in my business.

Well, if you don't want anyone else in your business, and what you buy is your own business, then you're buying from yourself... I imagine the "employee discount" is amazing.

Re: anonymous transactions

[TaoPhoenix]

Yes, Hi "gapagos".

"Anonymous transactions do not benefit anyone", hmm? Give me your name and address right now. I will drive over and say hello.

Unless you decide that "anonymous" has its uses.

the US Govt is so corrupt

[FudRucker]

that i may abandon all trade the US Federal Reserve Notes and do all my buying & selling in BitCoin,

fuck the govt, they are a bunch of mooching criminals, and i dont approve of what they spend the tax revenue they collect,

Re: Nobody cares about bitcoin

[CurryCamel]

How did we get from

And they have a great use: eliminating payment processing costs. Those costs are distributed among the people who run the mining software.

to

That "percentage" is not an actual percentage, but a minimum fee you have to pay for a miner to accept your transaction into their verification process... and each miner can set their own.

in just 5 posts?
No wonder I haven't grokked bitcoin yet.

Re: Nobody cares about bitcoin

[Anonymous Coward]

The algorithm compensates, and delivers bitcoins at a predicable rate, unlike the US government's payments.

Really? Because it seems to me that until the government actually does default, their payments will be on the exact schedule they set.

Re: Nobody cares about bitcoin

[ultranova]

So as new coins become rarer with the diminishing rate, there will be fewer miners, and that means more validating workload dumped on the miners still running, increasing their costs as their expected profit diminishes, right?

Actually, miner workload stays the same while profit increases, due to collecting transaction fees from more transactions.

I have not paid much attention to the implementation of Bitcoin, rather focusing on the economic implications.

Well, as we're demonstrating here, you can't predict the economic implications of a thing without having at least some idea of how the thing functions. So maybe you should start researching the things you want to make predictions about, be they Bitcoin or anything else.

What happens as miners drop off the network?

If miners drop off the network, the total hash rate of the network goes down and blocks start taking longer to find, causing their difficulty to drop, making it easier for a blockchain fork to supplant the current one, making cancellation of transactions with many confirmations somewhat less implausible. But not so much that scammers would bother - it still makes more economic sense to try to collect transaction fees through honest mining even when coinbase reaches zero.

Re: Nobody cares about bitcoin

[Anonymous Coward]

They should be careful though. Bitcoin transactions aren't that anonymous - assuming the typical competency of most people at hiding their tracks in practice...

They are analogous to email addresses in anonymity. Keep using the same address in certain ways at certain places at certain times for certain things and someone really interested might be able to figure out who you are.

Re: Nobody cares about bitcoin

[hodet]

I am not sure what the issue is. You can send an unlimited amount of bitcoin for a fee of .0005 BTC which is less then 10cents. Pay 10k with Mastercard and they take a 3% cut. ($300)

Re:Nobody cares about bitcoin

[hodet]

Nobody uses cold hard cash anymore, except people who have a reason to hide where their money goes. E.g. drug dealers and pirates.

See how easy that is to turn around? There is a need for a currency that can be used without giving a cut to major payment processors, I am surprised that you cannot understand that.

Re: Nobody cares about bitcoin

[hodet]

Bitcoin value as an anonymous way to pay for things is dubious at best. Every transaction is logged in the blockchain. It is easier to trace then cash. The real advantage is in frictionless payments (i.e. cutting out money processors like visa, paypal or even western union). You should take the time to learn about something rather then spewing out your nonsense. The bitcoin protocol itself can even be leveraged for other uses besides currency. There are many many legit uses of bitcoin. You can buy all kinds of legal goods with it and is not diminished because criminals use it. With that line of thinking we should outlaw cash which is ridiculous.

Bitcoin - What if?

[brxndxn]

I would be scared if I didn't have some Bitcoins right now. If they go to zero, oh well.. If they get adopted as a major international currency, then I completely miss out by not having them now.

There will never be enough Bitcoins for everyone to have one. If they do catch on, each one will be worth a fortune. So far, no government has been able to figure out a way to shut them down. Large governments such as China and Germany have announced no intentions against Bitcoin. It makes me believe the people that are Bitcoins' biggest detractors are the ones that don't own any yet.

The media tries to associate Bitcoin with lawbreakers and it calls it an insanely risky bet. But, the media does everything it can to preserve the status quo. Then, limit your risks.. You cannot risk more than the price you pay for the Bitcoins. I think it is a bigger risk to decide you will completely ignore the obvious next form of currency.

Re:Bitcoin - What if?

[Xylantiel]

If they get adopted as a major international currency, ...

There will never be enough Bitcoins for everyone to have one.

Do you know what currency is?

Re:Bitcoin - What if?

[Anonymous Coward]

You could say the exact same thing about every penny stock out there. There are millions of things that might be worth a fortune some day. I know people with houses full of crap they hope will become collectable. It's the same exact logic.

But, the media does everything it can to preserve the status quo.

That's a very odd thing to believe.

Re:Bitcoin - What if?

[brxndxn]

You do know that a Bitcoin can be divided, right? Your argument implies that you did not know that.

Yep

[koan]

Grow dope and mine Bitcoins, fuck the feds.

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[account_deleted]

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Not Raising Debt Ceiling != Default

[PseudoCoder]

I wish someone would stop propagating this lie.

Not raising the debt ceiling means that the government would have to do something many of us do all the time; live within its means. On a monthly basis we bring in 10 times more revenue than necessary to service the debt. Another 10% of the monthly revenue would service pensions and other such obligations. There's plenty of money for the basics including granny's Social Security, Medicare, Medicaid, etc. But there won't be enough money for all the less-than-essential bureaucracy, subsidies to political allies, government-backed loans for this or that, the gaggle of entitlements, ad nauseum. That's why we saw the political equivalent of the tantrum when an addict sees all the people in the room and knows he's in for an intervention.

Only if the President instructs the Treasury Department NOT to service the debt do we ACTUALLY go into default. At which point he runs afoul of this 14th Amendment, at which point he could very well be impeached. Again, we only go into default if the President wants to.

Re:Not Raising Debt Ceiling != Default

[Copid]

Sounds like an awesome plan. Give the Treasury the authority to decide what is "less-than-essential" and the infrastructure to do fine-grained control on who gets a check and the crisis is indeed solved. I just suspect that you won't always agree with the Treasury about what's essential.

I like your idea of pulling support for government backed loans. "He defaulted, so you're on the hook." "Well, I'm not paying, but this isn't to be considered a default." The markets love it when borrowers do stuff like that.

Re:Not Raising Debt Ceiling != Default

[PseudoCoder]

Who said the Treasury would have the authority? That's Congress' job; constitutionally they have the power of the purse. They're the "elected representatives" in this representative republic (for what it's worth).

And who said anything about pulling support for Gov't backed loans? How about not getting into the ones that are deemed too risky or not viable from the get go, instead of approving them anyways because we must "go green" at any cost? Like Solyndra; they knew they'd never compete with Chinese cells on cost and that their business plan was not viable during the application process; and knew they were not going to survive even before they finished building the $200M manufacturing facilities.

I expressed a general fact and pointed out that there are many places to start when it comes to defining priorities. You're trying to shoot down an idea based on fact, not a plan.

Re:Not Raising Debt Ceiling != Default

[Copid]

Who said the Treasury would have the authority? That's Congress' job; constitutionally they have the power of the purse. They're the "elected representatives" in this representative republic (for what it's worth).

Sure, Congress could do that, but they didn't. That's the whole problem. There are no rules about who gets stiffed when the government runs out of money except for a vague statement in the Constitution that the government won't stiff its creditors. So the Treasury is in a difficult spot. Congress has said, "You legally must spend this money that we haven't given you, and don't borrow to make up the difference." They're not tooled up to pick and choose who gets paid (Why would they be? The Feds aren't supposed to default on any payments!), and even if they were, there's no clear authority or guidance on how to do it. Whatever they did was going to piss somebody off and probably be technically illegal that they'd lose in court over it.

If Congress could pass some legislation cutting certain types of spending, that would be just fine and you wouldn't hear us howling. In fact, that would be them doing their job. But they didn't do that. They just dumped an impossibly big turd into the punch bowl and walked away, expecting Treasury to make everything work out. That's either an indication of terrifying levels of irresponsibility or a woeful misunderstanding of how the financial system works.

Which bank will print BC paper currency first?

[davidwr]

I'm waiting for a big-name, trusted bank, insurance company, or sovereign state to print "Bitcoin Certificates" that are designed to be used as spending money (i.e. not just as a stuff-in-the-mattress currency) backed by BC, similar to the Gold and Silver certificates of days gone by.

Speaking of which, it would be nice to have Gold and Silver Certificates redeemable for a specific quantity of gold as well.

Re:Which bank will print BC paper currency first?

[JesseMcDonald]

I'm waiting for a big-name, trusted bank, insurance company, or sovereign state to print "Bitcoin Certificates" that are designed to be used as spending money (i.e. not just as a stuff-in-the-mattress currency) backed by BC, similar to the Gold and Silver certificates of days gone by.

Why bother, when the actual bitcoins are both easier to transfer and easier to secure than any paper certificate? What would the selling point be?

This has been attempted before, several times, with Bitbills, Casascius coins, and even print-your-own paper wallets. While the goal is generally to enable offline person-to-person transfers, my impression is that these are used more for "cold storage" than as cash-analogues. For actually transferring funds around, even face-to-face, a smartphone app is far more convenient.

Americans Flee to Canada to Protect Investments

[floops]

It's happening again. Americans are bailing out and buying property in Canada to save their life-time investments from falling through the floor. Prince Edward Island is the place they are flocking to. Almost half of all properties, and most of the waterfront, is owned by Americans already. Not necessarily as places to live but just vacation homes and places to go when the end arrives south of the border. It's just a matter of time. How much longer can Americans keep borrowing and not paying back? It doesn't matter which government is in power, there's nothing that can be done to save that country.

Re:China exchange controls

[Anonymous Coward]

Right. China has tight exchange controls - it take special permission from the State Ministry for Foreign Exchange to exchange yuan for dollars, euros, or yen. But at present, China residents can buy Bitcoins with yuan. They can also sell Bitcoins for dollars, bypassing exchange controls. So if you've made money in China and want, say, to buy an apartment in London, Bitcoin provides a way to bypass the government exchange controls.

Once again, Bticoin's main use seems to be money laundering. One problem with your scenario. For every trade there must be someone on the other side of the trade. People willing to take what in your estimation is a very bad deal. Trades don't usually work like that, so who is ending up with yuan instead of dollars?

Re:Nobody cares about bitcoin

[Anonymous Coward]

The amount of currency in an economy is a political issue. The amount of value in an economy is an economic issue.

In particular, the millionaires are not being slowly robbed by governments. They are being slowly robbed by the devaluation of economies as objects of value break down. This would happen whether they hold cash or not. Whether governments respond by printing money or not. Government action is simply the most efficacious form of correcting what the market cannot. The market cannot correct for scarcity rent.

Let's say your dad worked at a Ford plant in the 1950s. And he made thousands of cars and saved thousands of dollars. Notionally, the value of those dollars is backed by the cars he made. And those cars don't exist anymore. The nominal dollars are not backed by value, which has been removed from the economy by the physical force of decay.

NSFW Link FYI

[drakesword]

*Reading Reading Reading* Cunnilingus! My what a surprise.

you don't understand how it works

[SuperBanana]

Also, they had this guy, he sold drugs... lots of drugs... but did they bust him? Nope, they did an elaborate sting to bag him for something REALLY REALLY evil... (I hate drugs btw) Why? So he wouldn't be a martyr for free wealth exchange.

Police/prosecutors commonly initially charge someone with crimes they think they have a high chance of conviction on, to keep them locked up, enable search warrants where additional evidence is collected, stings are set up, etc.

The case on more complex charges gets built in the meantime, further investigation happens, etc. If they charge him with drug crimes now, they might have to expose evidence that tips their hat to a number of people. They're probably much more interested in the people distributing/dealing, and more serious crimes (like if anyone was offering explosives, killing, etc.)

Re:China exchange controls

[Animats]

so who is ending up with yuan instead of dollars?

People who want to buy goods priced in yuan. China's exchange-control scheme allows flows of yuan for sales of goods. But "capital flows" and external debts in yuan are tightly controlled. It's possible to try to evade the exchange controls by selling goods in exchange for something else, like real estate. But trading a container load of manufactured goods for a house in London is difficult to arrange and involves high conversion costs if you're not in the export business. Bitcoins are more portable.

Whether the People's Bank of China will do something about this remains to be seen. So far, the CNY/USD rates on the Bitcoin exchanges remain close to the official exchange rate. So this isn't a strain on official exchange rates, which is their top priority. Bitcoin is just too tiny to affect exchange rates between the two biggest economies on the planet.

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[account_deleted]

Comment removed based on user account deletion

Re:Nobody cares about bitcoin

[wavedeform]

You mean just like cash, at least in amounts > $10,000, in the U.S.?

I've heard this one before

[Anonymous Coward]

"the domino that could trigger the worst financial crisis since the Great Depression"

Huh, we're getting a surprising number of these 'worst financial crisis since the Great Depression' things lately. I know, let's spend more money. That's what I keep hearing will solve the problem.

Re: Nobody cares about bitcoin

[goose-incarnated]

Lets see if I understand it correctly. I can wait until there are no more unmined btc. At that point the miner's only reason to continue mining is to get his fixed fee for verification. I can then spend a few thousand on mining rigs and provide the lowest fee (or for free) for verification, thus making it financially unfeasible for the existing miners to continue. In a few months of running at a loss I *should* be controlling more than 51% of the network because all the other miners have quit.

At that point the entire btc concept breaks down. I can seize coins (by never verifying them), transfer coins to myself, reverse verified transactions and possibly even "magically" create new bitcoins that I then proceed to verify.

Re: Nobody cares about bitcoin

[ThatFunkyMunki]

Except you don't get to set what transaction fee you charge for processing them. The fee per transaction is defined here: https://en.bitcoin.it/wiki/Transaction_fees

Re:Nobody cares about bitcoin

[Anonymous Coward]

Actually, I normally don't like BitCoin, but for microtransactions, it is the only currency that can be broken up finely up for sub-cent items. The fact that block chains are public also helps because if there is any issues with the IRS, the info is there and auditable.

Bitcoin value

[RepliCounts]

The main importance of alternative currencies is to allow economic exchange to proceed, even if things go wrong with the official currencies. And what could possibly go wrong with them?

Re: Nobody cares about bitcoin

[OdinOdin_]

Are you sure you have this right ?

My understanding is the difficulty increases as the limited block range pool gets exhausted, kind of like a quadratic, it just so happens over time that the number of folks mining and the mining performance has also increased.

The fee's get paid to parties involved in signing a transaction. The longer the transaction history of the block the more computationally expensive it is to assist signing. Multiple nodes need to sign a transaction before a systemic consensus is reached that the bitcoin did change possession (i.e. proof of spending) and also ensure double spending is difficult. So over time no one will sign transactions for free, since they become computationally expensive.

The original block finder simply got to spend that block first, he needed other nodes to sign this spending and he may have needed to pay fees to those signing nodes as well as the bulk to the receiving node.

There is no situation that all fees for the infinite lifetime of the block get paid to the original finder. (This is my interpretation of your comment).

My knowledge of bitcoin is very limited and it has been a while since I first looked up on what it is. Please feel free to correct me.

Re: Nobody cares about bitcoin

[lpq]

Why is it that every half wit thinks that bitcoin is all about drug transactions and prostitution?

Because it's the propaganda spread by Federal law enforcement to get people "not to care" about something that is only used for such. That way, they have far more freedom trample on rights w/o the public at large being shocked or as upset...

I'm sure the ""Federated"-LargeBankClub (sometimes called the Federal Reserve Board, or "the Fed", like it has anything to do with the Federal government) is also trying to manipulate public perception. If they lost control of both issuing and constantly devaluing the currency -- and a currency like Bitcoin was perceived as not devaluing, (relative to other currencies), then deliberately devalued currencies (like the dollar -- usually only 2-3%/year, but, since Bush handed over ~ 50% of a years budget to his finance buds, it's been closer to double that (~6%/year).

The standard of living in the US as a whole continues to drop as we are told that a shrinking dollar is really "flat" inflation... yeah, right.

Now try to buy foreign-made products that would normally have gotten cheaper over the past 6-7 years as tech ages and becomes cheaper to produce. Instead of that -- prices have remained flat or gone up in areas where before there were about 15-20% price drops/year (as measured in $$/constant unit, where constant unit= things like CPU seconds (of some fixed generation), or $$/processor, or $$/diskspace unit, or memory... you name it, hasn't dropped nearly as much as before we were Bush-Wacked!

Re: Nobody cares about bitcoin

[Meski]

Unlike printing dollars.

Re: Nobody cares about bitcoin

[JesseMcDonald]

I can then spend a few thousand on mining rigs and provide the lowest fee (or for free) for verification, thus making it financially unfeasible for the existing miners to continue.

That's probably closer to "a few million", plus ongoing costs, if you want to have enough mining capacity for your fee schedule to make any difference. Keep in mind that if you only control 1% of the network, you will only solve 1% of the blocks and your users would have to be willing to wait 100x as long, on average, for verification. The transactions don't automatically go to the miners with the lowest fees. To ensure inclusion in the next block or two, users would still need to attach a fee acceptable to >=50% of the mining network.

In a few months of running at a loss I *should* be controlling more than 51% of the network because all the other miners have quit.

At that point the entire btc concept breaks down. I can seize coins (by never verifying them), transfer coins to myself, reverse verified transactions and possibly even "magically" create new bitcoins that I then proceed to verify.

A 51% attack doesn't let you do most of those things. You can choose not to include specific transactions in the blocks you mine, but others can still include them and you would have to spend extra resources to replace those blocks with your own. Reversing verified transactions, while possible, still requires resources which increase exponentially with the depth of the transaction in the block chain. You can't transfer anyone else's coins to yourself without their private keys, regardless of how much of the mining network you control, and if you fail to adhere to the coin-creation schedule specified in the protocol then no one else will recognize your blocks, rendering them worthless.

Re: Nobody cares about bitcoin

[JesseMcDonald]

My understanding is the difficulty increases as the limited block range pool gets exhausted, kind of like a quadratic, it just so happens over time that the number of folks mining and the mining performance has also increased.

No, the GP is correct. The difficulty is adjusted every 2016 blocks based on the difference between the actual time and expected time (two weeks), targeting an average of 10 minutes per block. More miners mean this checkpoint is reached sooner, causing the difficulty to increase, and vice-versa for fewer miners. The quadratic decay, and the limit on the total number of bitcoins, come from the block reward dividing in half every 210,000 blocks (about four years).

There is no situation that all fees for the infinite lifetime of the block get paid to the original finder.

All the fees "for the infinite lifetime of the block" are determined from the transactions in the block when it's solved; all these fees immediately go to the original finder. Any fees for later transactions which build on the transactions in a block (including the coinbase transaction with the reward for solving the block) will go to the finder of the later block which includes those transactions, not the finder of the original block.