An entertaining week to say the least up in Toronto. Mayor Rob Ford is being hung in the public square for the crime of, wait for it, drinking and using drugs (victimless crimes) while reducing city spending. For shame, Mr. Ford. For shame.
If only the angry masses were able to read past the sensational headlines. Poor, poor sheeple…
Want to join in the discourse? Send your questions, comments, queries, and concerns to tdv@dollarvigilante.com, comment on a post, or get on the forums.
On to the feedback…
BITCOINS, BITCOINS, BITCOINS
Hey Jeff,
I just saw your interview at SilverSeek.com. As always good job and very interesting!
I was curious on one point that you made … You said that governments can't regulate Bitcoins. While I understand that concept, isn't it true that they could put capital controls in place to crush the value?
For example if they made it illegal for any bank to trade in Bitcoins and/or shut down exchanges what value would Bitcoins have?
Seems to me (and I admit that I am probably paradigmed and need to be woken to a new reality) that once the sheeple no longer have confidence that their Bitcoins could be used to exchange for Federal Reserve notes (generic term for all central bank currencies) doesn't the value collapse?
The only remaining value I see is in a pure barter situation. But in order for barter to have true value the underlying infrastructure would have to be so large … meaning that it would be widely accepted as a form of barter with some large subset of the population. I could trade you my Bitcoins for some gasoline, or for a carrot, or for a bottle of whiskey and some Don Rey Cigars.
Lastly, what if the government tries to put a throttle on the internet? in other words block it somehow like they do in China or make it a pay for use model? In other words making it cost prohibitive for the average person to use it? Wouldn't this also in a defacto manner essentially wipe out the value of Bitcoins?
Thank you in advance for either answering me directly or on your newsletter. I am an avid reader and subscriber to TDV.
Sincerely,
Todd R.
Jeff’s Response:
Hello Todd R.,
Thank you for writing in! Very, very interesting questions indeed.
I am not positive I ever said that governments can't regulate bitcoins. What I did say, though, if I recall correctly, is that they can't STOP bitcoins. And this I still believe wholeheartedly.
As for capital controls and the like – yes, this is something governments can and will do. Capital controls at heart are social engineering. The US and other Western nation-states have already imposed strict capital controls on bitcoin businesses (actually, all sorts, and this is another reason why bitcoin is only part of a solution that also includes TDV Offshore to help protect your assets.)
In the US, you need many licenses to operate a bitcoin business. Also, you're limited to $10,000 worth of bitcoin per day per customer, since bitcoin is essentially considered cash. Some lawyers even say it is $10,000 per year per customer!
What value do bitcoins have at this point? Lots! They just won't have value in the US where overbearing regulations will leave no wealth (bitcoin or otherwise) in the nation anyway.
There will be many, many countries where bitcoin will be used, if the US decides to go full-commie.
As for the government putting a throttle on the internet, this is something I know we have covered in our paid newsletter. Our argument is this: they can't. The free market will organize itself and alternatives will coalesce. The NSA scandal has already led to other nation-states pondering the security of their own internet from the NSA. What's to keep the free market from doing the same as well?
RIGHTING WRONGS FROM WITHIN
To Gary:
On my daughter's 21st birthday, after everyone else had gone to bed, I spoke with my step-daughter (my daughter's sister) about her decision to join the US Navy as a prospective intelligence officer. We debated the realities vs. the promises until close to dawn. This brilliant young woman has convinced herself that somehow she can right the wrongs of generations from within.
I counseled her that the system would break her, then rebuild her in their preferred image. Whatever values she entered the system with would be stripped away and replaced to further the agenda of the military. Naiveté, while sometimes sweet can be horrific as well. She held her ground and completed basic some time ago. I invited her to keep in touch so she would have access to the Anarchist point of view. I've not heard from her since.
The Boot-Strap Expat
Gary’s Response:
I'm sorry, GSE. Anarchism and a voluntary society is a big step to take for most. Did you explain to her the basic immorality of what she is doing? First of all, she is knowingly accepting stolen money for her pay. She may not fully accept that it's stolen, but taxes are taken from tax cows with an "or else" attached. They literally get made an offer they can't refuse. And working for the goverment means she is one of those gangsters.
That's the moral part. Then there is the argument from effect. Government is immoral, as we've just covered, but most people accept this little bit of immorality because they honestly believe (thanks to a lifetime of being told so by the state which makes sure that any argument against the state comes to be seen as the stuff of paranoid cooks) that it results in much greater good. But it doesn't. In fact, as your example gives us, many accept that it does not result in the greater good, but can…maybe…
The free market rewards people who make our lives better. In the case of crime and invasion, the market would concentrate on prevention instead of cure. In the case of the government, which gives no market utility, there is every incentive to keep the problems going. That is why we have a problem with a military-industrial complex that foments wars. And a law-prison complex that loves prohibition. And a welfare complex that loves and encourages poverty. The state, afterall, is the opposite of the market. It is coercion not cooperation or meeting needs. It is imposition at gunpoint and like a self-licking ice cream cone it creates its own demand.
In any case, I've found that while my loved ones may get annoyed at my philosophy at least I get them to start thinking. And it's worth a few months or years of silence or awkward interaction if the seed of consideration I plant grows into a new anarchist.
What value is there in Twitter?
Imagine you own twitter. Imagine that you run millions upon millions of auto sentence generators which twit on your behalf under different accounts daily, slowly but surely turning around so called public opinion. It doesn't take much to change it. Had you have 100 perceived persons leaving a comment about Bitcoin being rumored to be a product of Russian mafia, most of your readers would not want to do anything with Bitcoin.
There are no proof, but note, that today no one is looking for any proof.
So, with twitter in your hand, you could obtain some extremely powerful friends, exactly the kind of friends that would be interested in public having a particular opinion on some issues.
For this reason, venues like Twitter, which were designed to be the propaganda mouthpieces, upgraded for the digital age, will not be very profitable in traceable funds.
Yet, they will continue to be sold for more and more, meaning that they do turn profit.
Mava
Jeff’s Response:
Hello Mava,
Thanks for writing in! The thought experiment you give to us is certainly insightful, as your contributions always are. I know many people who run big businesses who use strategies around social media like Twitter. One thing that is nice about social media is that you can get results for free. But, when you have lots of capital, you can likely do much to control lots of what is on Twitter. But, that's true of everything in a command-and-control econometric system.
While I didn't outright say Twitter was a terrible investment, I did write recently say in a blog that Twitter is no Bitcoin.
With that said, there is some value in Twitter, but not the stock. As I pointed out in that particular blog, the ability to communicate instantly is a very powerful tool. I think therein lies the power of Twitter. For how long, I am not sure. Certainly, some new, even better technology will come about in the near future. But, for now, Twitter is a great tool for journalists.
Some researchers recently came out and said that, just like in your thought experiment about somebody controlling the Twitter dialogue, miners in the Bitcoin complex could control the Bitcoin block chain! But, the developers of Bitcoin, from what I've read, say that is unlikely.
Similarly, I think that what you say could happen to Twitter is also unlikely. Why? Because people aren't listening to mainstream media anymore. So, they can spend billions of dollars on marketing campaigns (and do), and nobody will listen to them, not even on Twitter.
As for covert operations and the like, they better promote a world of no government or I am afraid their calls to actions will also increasingly fall on deaf ears.
So what value does Twitter have? As a stock pick, it has promise from advertising, which isn't saying much in the form of utility. And that promise can't even be backed up by past revenue. If Twitter really wanted to up its' game, it would enable micropayments so people could be incentivized to create quality tweets. So, for the tech sector, TDV's pick is Bitcoin. Not Twitter.
ON BANK BAIL-INs
Gary,
In a free market, it would be the depositors & other creditors who hold the bag if the bank fails. What problem can you suppose free marketeers have with this?
You deposit money in a bank, you are a creditor of the bank. Full stop. End of story.
JR
Gary’s Response:
JR…true! If a bank fails, there would be no state to steal from other people to make the depositors whole. We have no problem with things working themselves out in the market. And we don't know how things would shake out with free market insurance or other free market ways and means should a bank fail. But, it can't be too much more of a wild ride than this commie complex.
To be clear, what we take issue with is when the government gets involved. As explained above, when the government gets involved things get hopelessly warped. So bank failure? Fine. But this is a world of central banking where the banks are inherently criminal enterprise ("money-creating factories" as Rothbard put it) and any failure isn't a pure market event. It is something more…
Depositors who lose their money under these conditions aren't just suffering from a bank failure; they are victims of a government-backed swindle. That's why we suggest alternative methods for storing wealth. Gold, silver…bitcoin…and some offshore options to diversify risks.
