Stocks up. Gold down. Bitcoin…waaay up.
The S&P 500 busted through the 1,500 mark this morning. Stocks haven’t been this expensive since 2007…right before they got a whole lot cheaper…for a whole lot longer. Gold, meanwhile, dipped a tad. This, despite central bankers of the world goading it on, promising to dilute the value of their respective paper currencies against the Midas Metal. Befriend the dips.
And what about bitcoin? Wait…what is bitcoin??
Why, it’s a speculation, of course; a dark horse, beloved by anarchists, ne’er-do-wells and fringe-dwelling lunatics, the kind of people you wouldn’t invite over for tea with your mother-in-law. It is the fascination of the ill-adjusted, the oddly-mannered, the heterodoxical hedonist. Indeed, the very idea of bitcoin, a “decentralized, cyber-crypto currency,” has to it a ring of the unknown…of disruption, rebellion…perhaps even revolution…
In plain English, it’s not to be trusted by members of polite society. And these are just some of the reasons we like it so much!
Since we first disgraced these pages with mention of the wretched thing, bitcoin has quadrupled in price…then fallen through the floor…then risen once again, like a Phoenix, nurtured by the fertile ashes of doubt and skepticism.
On the subject of cyber currencies, pointy-headed professors remain predictably divided. Economists, too, are split down the middle.
Even the libertarian camp seems unsure of its “official” stance…
“Can we fairly consider bitcoin a money? Is it even real? Can we take it to be intellectually ‘valid.’”
What a pompous band of academic lickspittles! You who criticize the mainstream for their blind adherence to rigidly archaic principles. You who admonish the stuffy Ivy Leaguers for their brittle little theories, lacking in dynamism and ill-equipped to deal with the world as it is and as it changes. You who rage against the concentration of power, against the arrogance of control and the folly of central planning.
Well then…Here is your misfit! Your champion of decentralized power…your catalyst for democratic, horizontal information dissemination. And with it, a price…determined by the free market you profess to adore. Here, within your grasp, lies a spectacular failure…or else the agent of change for which you’ve long been waiting. Have you nothing to say but, “Yes…but does it satisfy Aristotle’s requirements of sound money?”
Ah, Phooey to you all!
We first brought you word of this underdog currency a couple of years back, shortly after it began making waves on Internet message boards. The premise seemed appealing. It was – and still is – a bet against the omniscience of central bankers. Demand for the currency rests, in no small part, on the continued arrogance of the Bernankes, Shirakawas, Kings, Stevens and Draghis of the world.
“The demand for a totally free market currency arose, naturally, out of the dismal state of the current monetary environment,” we wrote at the time, an environment “in which governments around the world systematically debase the value of their printed monies in order to pay for the various welfare-warfare states they promised but can’t possibly afford. The resulting inflation is sometimes referred to as a ‘sneaky tax,’ one that silently, insidiously infiltrates the marketplace, with each freshly-inked dollar compromising the value and integrity of each and every currency unit already in circulation.”
What, if anything, has changed in the two years since we penned those words? Has a single central banker admitted a single mistake? Has one been reprimanded for his gross negligence – be it criminal, cerebral or a combination of the two? Is one of them serving time behind bars…or on the rack…for his crimes against progress and human advancement?
Not a chance! Indeed, it is to those who caused the mess that a brain dead populace look for solutions! These are the men, mind you, who worked – actually labored – to keep alive companies that ought now to be decomposing in the tar pits of corporate failure, breaking down in order that other creative agents might one day unlock its idle energy and potential. The very presence of these individuals at the solution table is an offense to decency.
In the end, bitcoin is a bet on the other side of The State’s coin; the free market side. It’s a bet that voluntary trade will, in the end, overcome neanderthalic force and coercion. It’s a wager that the conversation currently underway in the shadowy “black” market is far more intriguing, far more complex, far more nuanced and exceedingly more interesting than the yip-yapping that distracts the undead, mainstream TV-consumer for an hour or so around feeding time every evening.
If bitcoin goes to its grave tomorrow – and it may well do so – it will be in service of precisely the point free market enthusiasts have been advocating all along: That it is not for a committee to determine the price of a good (including money itself)…or for a state or a central agency or a law or an edict.
That is for the market to decide. Today, that market says a bitcoin is worth $19. Tomorrow, maybe 19 cents…or $19k. No one body knows…and that’s exactly the point.
Regards,Joel Bowmanfor The Daily Reckoning
Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.
Here’s a bright, peaceful individual who knows what he’s talking about. I knew the Daily Reckoning was good, but this is a whole new level! Congrats!!
Nice work, sir. You have a new reader.
I read every Bitcoin article that comes out. This may be my favorite, ever. Joel, I think you get it.
Preaching to the choir.
I have yet to read a single sentence from this web site which states clearly the
money concept and how sound money comes into existence.
You’re quick to discredit the present money system and its resulting destructiveness.
But in order to progress one must focus upon the positive and cease the obsession of chastising a perverse and broken contraption.
Perhaps you can elucidate for your readers the characteristics of sound money which reveal themselves in Bitcoin. You will find the necessary Cliff Notes under E.C.Riegel.
No, Erik. He doesn’t get it. He’s still counting his gold.
“It’s a wager that the conversation currently underway in the shadowy ‘black’ market is far more intriguing, far more complex, far more nuanced and exceedingly more interesting…”
Joel, this is most likely your key sentence for Bitcoin doesn’t need ‘legitimacy’ or a State blessing like many pretend. Bitcoin, in the more intriguing and complex markets, thrives and answers a need in spite of no State blessing and it spite of not intersecting via regulatory compliance.
Bitcoin replaces cash and banks, and after you have tried it once you will never go back to the old ways.
BitCoin is “THE SOLUTION” to the financial crisis and the future of ALL money and its distribution.
BitCoin is a “CURE” because it heals the world financial system.
BitCoin is a “divine” solution and benefits everyone.
BitCoin empowers people. It means you are your own bank, and provides individual, and global financial security and responsibility.
BitCoin will end ALL Hunger & Poverty (at last) through humanities caring and sharing, by instantaneously providing funds to those in need. (and removing the need for a 3rd party in the contract).
BitCoin will end ALL currency wars and other acts of financial terrorism.
BitCoin will end the financial raping of humanity by interest rate manipulation, money printing and other financial tools of fraud.
BitCoin empowers and revitalises the financial wealth of ALL that use it.
BitCoin rebalances financial inequality in a harmless way, without force or manipulation.
BitCoin heralds the end of the misuse of money and other ponzi schemes including, pensions, copyright, patents, insurance, etc.
BitCoins ends the reign of financial vampires, by depriving them of food.
BitCoin will bring an end to the affliction of taxes, debt and government dominated societies. Thats a kicker!
BitCoin is a revolutionary gift for the world.
Quote: “I have yet to read a single sentence from this web site which states clearly the money concept and how sound money comes into existence.”
Funny, this reminds me of a thought I had when reading an astronomy blog: “I have yet to read a single sentence from this web site which states clearly the
concept of addition and subtraction”.
Days later, after deep analysis, I realized that that blog existed because its authors and readers had ALREADY read, understood and grasp that BASIC concept.
PS: You recognize a troll when he starts his “argument” with “pathetic”. If you’d treat people with more respect, you probably would’ve found the answers you are looking for already, or transmit your knowledge effectively if you think the other party is wrong.
“I have yet to read a single sentence from this web site which states clearly the money concept and how sound money comes into existence.”
The author wasn’t writing a textbook on monetary theory. He was writing satirical commentary, and did an excellent job of it. How can you not love this…
“What a pompous band of academic lickspittles! You who criticize the mainstream for their blind adherence to rigidly archaic principles. You who admonish the stuffy Ivy Leaguers for their brittle little theories, lacking in dynamism and ill-equipped to deal with the world as it is and as it changes. You who rage against the concentration of power, against the arrogance of control and the folly of central planning.
Well then…Here is your misfit! Your champion of decentralized power…your catalyst for democratic, horizontal information dissemination. And with it, a price…determined by the free market you profess to adore.”
Aristotle would disapprove, it is not “good money”. Bitcoin is just another money that has no intrinsic value. Fiat money is fiat money, whether its value is derived from government fiat or market fiat.
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Aristotle, I imagine, would rapidly adapt to thinking that actually money is an abstract concept that does not need an intrinsic value beyond that of its own utility. Bitcoin perfectly represents that ideal since it is entirely mathematical in nature.
I would just leave out one word: “democratic”. Fortunately, it is not democratic.
Bitcoin Is truly revolutionary, I’ve decided to do something good with my Bitcoins and I donated over 400$ worth of bitcoins to charities. I encourage you to do the same http://bitcoinstocharity.org
Nothing has “intrinsic value”; value is subjective. That said, consensus about subjective valuation counts for something. In the case of gold, it asymptotically approaches being an objective value, which is almost what you mean by “intrinsic”.
The test of whether bitcoins circulate lies in their marketability in the small. Technically the hurtles are still significant and only a century of experience will begin to match the economic entropy of gold coin; but maybe it’s not a scam. Adventurous folks should not feel crazy if they put some due diligence and maybe a little skin in the game.
Intrinsic value is a croc – no such thing. All value is subjective, the value people place on something. Bitcoin has value because it has qualities that makes it ideal as money. Some of these values include the fact it cannot be manipulated by government, cannot be “printed” and cannot be politically controlled. In today’s world of fiat money debasement, such values have market value – something which is clearly true with Bitcoin.
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Becareful this guy is a scammer, he has set up a fake website to try and collect money into false bitcoin addresses which do not belong to the charities listed on his fake website he has set up, The real website is bitcoinforcharity
Two things important to a ‘money’ standard are stability…and the absence of counterparty risk.
Stability: If my great grandchild finds a hoard of it under a rock some place will they be able to buy the same things — the same quantity of things — with a unit of it, than I can buy today. Another way of asking: Will it maintain its purchasing power?
If I convert it to a common currency unit, which I then invest, will I be sure that I earned interest at the historical long run rate — or better? I want to find, that when I sell the investment, and convert back to units without counterparty risk, that each units purchasing power has not been diminished. I also want to find, that I have increased my purchasing power by now having an increase in those units — and therefore, I will be able to accurately measure the effectiveness of my investment.
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When you've got a room full of 200 oil insiders scratching their heads at current high prices, something's gotta give.
For most investors, it’s weird to think of stocks as their go-to investing option.
The petropoly has bills to pay and setting the price of oil was a simple way to balance their budgets.
Investors don’t seem to care that what's propping up their investments is what will ultimately destroy them: government monetary policy.
For the next decade the energy revolution will be likely confined to the US, displaying the robustness of American entrepreneurship.
Why the Sage of Baltimore’s commentary persists through America’s changing times.
After attending Platt’s oil conference in London I want to relay two important themes you need to know.