In 2021, Ulbricht's prosecutors and defense agreed that Ulbricht would relinquish any ownership of a newly discovered fund of 50,676 Bitcoin (worth nearly $5.35 billion in 2025) seized from a hacker in November 2021.[78] The Bitcoin had been stolen from Silk Road in 2013 and Ulbricht had been unsuccessful in getting them back. The U.S. government traced and seized the stolen Bitcoin. Ulbricht and the government agreed the fund would be used to pay off Ulbricht's $183 million debt in his criminal case, while the Department of Justice would take custody of the Bitcoin.[79][80]
Bingo. US always has been about commerce and money. It wouldn’t shock me if Ross has at least a few million hidden in some “lost wallet” printed out in a vault some where. He was smart enough to know he would get caught one day.
It's unlikely he has a hidden stash that is truly hidden. Back then the government wasn't all over the blockchain (compared to today) and obfuscation was not like what is available today.
So even if he does have a stash, it is likely marked, and he will get a knock on the door real fast if it starts moving.
I'm no blockchain forensics...icist, but coins were moved from let's say one main Silk Road wallet to many other people's wallets legitimately, or as legit as a illicit drug transaction can be. Silk Road wallet A transfers coins to rando person's wallet B. Also, wallet A occasionally transfers to wallet F which he owns. Who's to say which wallets he controls?
One of the possible ways Ulbricht got caught was a single Google Captcha that showed his IP address (San Francisco, go figure). So he covered his tracks pretty well.
I’m not suggesting that. I’m trying to understand what benefit you believe Trump received out of this whole scenario, and specifically how the handling of the bitcoin played a role.
Because in absence of this there was zero benefit to anyone with any power to make it happen. Getting clear $5bln without any legal objections is a clear benefit to many parties involved. I'm sure many people close to it have many ideas how to skim some off the top for themselves.
I think Gene Wolfe is the one of the greatest authors of all time across any genre. I highly highly recommend the Fifth Head of Cerberus which is 3 short interconnected novellas and Peace, which isn't traditional Sci-Fi but is absolutely worth a read.
He's not just writing, he's constructing beautifully crafted puzzle-boxes that take a lot of time and thought to unpack.
I think the problem here is what you're really asking for is DRM free content. None of the content producers themselves are willing to license their content that way so it would be very difficult to build the service.
I would be willing to accept DRM as long as the convenience of using the files matches an illegally-obtained rip.
For example, Apple already allows to move files in-between devices associated with the same account. If they would now release an Android TV app, then I could download the movie on my laptop, move it over to the TV, and play it offline there with the app. Of course, Apple will probably never do that, but it illustrates that DRMed content is OK for my intended use.
I mean it's pretty straightforward right? There are now more dollars in play all after the same amount of goods, each dollar has less purchasing power. Why are you so quick to throw out the simplest explanation?
Because the 'simple straight forward explanation' doesn't make much sense.
As economies grow and expand, they need more money supply to keep prices stable. If you're using 100 tons of Gold as your 'fixed money supply' then you run into deflationary problems.
Also, if there is a crisis in which people get really anti-liquid and tend to hoard and do other bad things, and/or the system needs to allocate resources somewhere fast or else face destruction - then if you only have a big pot of gold split between owners, you are screwed. Mad Max style. If a country is invaded or has a pandemic, most regular levers may not work. But helicopter money can help. It implies an 'unfair' re-balancing of who owns what, but so long as the community at large accepts that, then it's fine. It means a price adjustment for everyone.
Some good questions. The answer isn't simple, but I'll try.
It comes down to how banks work with fractional reserve banking. (To keep this post short, I'll refer you to google if you don't know what it is.) Banks loan out a multiple of their deposits. In other words, banks create money when they make loans. Amazing, isn't it? But, banks don't loan money unless there is collateral. The next part is tricky to understand. If I, Picasso, create a painting I create value. I can use the painting as collateral for a bank loan, i.e. because I created value, I also indirectly created money!
With me so far? Next, what happens when I repay the loan? The money disappears!
If you think about it, you'll see that the money supply, through the blind forces of Supply & Demand, tracks the value in the economy, almost like magic. While the gold it represents can sit buried in a vault somewhere and needn't actually be traded.
Inflation happens when the government prints money that has no collateral, and has no correspondence to added value in the economy and so it dilutes the value of the money that is already in circulation.
> Banks loan out a multiple of their deposits. In other words, banks create money when they make loans. Amazing, isn't it?
I've heard about that, and it's really amazing.
If i understand it correctly, the loan interest i have to pay is money that also does not exist yet, at the point of time, when i get the cash. The bank faces the risk of me not being able to generate (get from others, who potentially also take loans) that extra money, so they demand a collateral as an insurance against that risk.
> Inflation happens when the government prints money that has no collateral, and has no correspondence to added value in the economy and so it dilutes the value of the money that is already in circulation.
What instance decides, if some printed money does or does not have collateral?
Banks retain assets for loans they make. They don't print money.
But imagine this scenario: you deposit $10 at bank A, they loan that $10 to person B, that person B puts their $10 account at Bank C, thank bank loans out that $10 to person D etc..
You can see all of a sudden, $10 turns into $100! or $1000 in assets!
So what we require banks to do is keep a part of the assets they receive. So if they get $100 in deposits, they can only lend out $90 i.e. they have to keep '10% in reserve'.
This means that banks are leveraged at 90%.
It also means that if there is a calamity, and a 'run on the bank' or it loses 10% of it's assets, the bank is wiped out.
So what all of this means is that there is 'leverage' in the system, and it means there is 10x money going into the economy than is released by the Fed. It definitely adds a lot of flexibility to the system. Banks are still responsible for evaluating risk of their loans and paying the price if they fail.
"The interest on the loan" is mostly a function of risk and the cost of that bank managing that money i.e. getting the depositors to loan you the money in the first place.
The OP's definition of 'inflation' is a bit warped.
Inflation is when there's more money than demand for stuff.
If stuff is harder to make or is more rare, prices will go up irrespective of money supply.
If you throw money in the economy for no reason inflation will happen.
But most economies are expanding a bit, and so they need more money in the supply to keep prices stable, which is why we like to have just a bit of money printing.
All money loaned out - even given out by the central banks has collateral. The Fed keeps mostly TBills (Government Debt) and real estate as collateral.
Oh, absolutely they do. That's why currency is called "banknotes". The banks printed them. Each bank printed their own banknotes. You can find their images in numismatics books.
In 1914, the government took over the function of printing banknotes. But the banks still print money. We just call them "cashier's checks", "money orders" and "travelers' checks". But more normally, they simply credit your account with created money.
> If stuff is harder to make or is more rare, prices will go up irrespective of money supply.
That isn't inflation, because extra dollars are not being created. For example, tomatoes going up in price in the store because of crop failure isn't inflation, because more money doesn't appear in your pocket to pay the premium. What happens is you wind up with fewer dollars in your pocket, meaning you buy less of other things, and with the annoying Law of Supply and Demand, the prices of those other things drop.
Listen, you are really confusing yourself and others here.
That banks used to print notes in the past is not relevant in this discussion, when we talk about 'printing money' what we are referring to is how money comes into circulation. Physical bank notes are barely relevant to the equation as it makes up a tiny portion of the money supply, and of course, they are only printed by the Central Bank.
Money comes into circulation when the Central Bank 'buys' TBills off the free market. That's when the Central Bank 'creates' money.
Then, through fractional lending, a considerably larger amount of money ends up getting into the system by way of accounting.
Finally, the 'credit market' - which is really 10x bigger than even money in circulation, and which is the real thing that matters in business, develops like a bubble on top of that.
"That isn't inflation, because extra dollars are not being created."
Yes - it is 100% inflation and you are absolutely spreading false information at that point.
The 'result' could be as simple as 'less of that product is bought' - meaning, we use 'less gas' when gas prices rise - while every other aspect of the economy remains mostly the same. That is 100% inflation.
Aside from 'buying less of the product with price increase' or 'buying less of other stuff' we can also borrow, use savings, buy on credit etc. to adjust for the price inflation - so it's not going to necessarily work out to be some kind of net price levelling in the economy.
Increasing prices = inflation [1]. That's it. It's not necessarily related to money supply.
And finally - as the economy expands, more money needs to be introduced into the system just to keep prices even. This is an example of where there is more money supply and it does not change prices.
> What instance decides, if some printed money does or does not have collateral?
A great question. No actual decision is made, it's just that there are more dollars floating chasing the same value, so the price in dollars gets bid up.
There is a 'decision' made and there is always collateral - at the bank, and even at the Fed.
The 'decision' that might be made, is what kind of assets to accept on the Feds balance sheet.
At a private bank, they can do whatever they want with respect to what kind of assets they accept as collateral, within regulatory requirements. They have capital ratios to uphold, but if they take stupid risks, well they are going to go out of business.
The OP is implying that money is printed out of thin air and that is not what is happening.
Your retort that 'money money, in a system of all other things being equal, will raise prices' - but the implication of 'all other things being equal' is never a reality. Economies are usually growing, in which case, they need more money to keep prices from going down actually, and, there can be external shocks, which we see every decade or so.
The Federal Reserve assumprion of bank's underperforming loans was done in 2008 with funds created out of thin air. The value of the underperforming loans was significantly less than face value, which is why banks could not sell them on the market. The Fed gave full value with magic money it created.
I think you are misunderstanding fractional lending and collateral.
Fractional lending seems a bit odd, but it's not like there is 'no collateral' - rather, there ends up being 'partial collateral'.
As it turns out, that 'partial collateral' is enough - it's actually reasonable thing to do, because the vast majority of loans are repaid, it's not necessary to fully collateralize everything on the whole.
Banks have to have some capital requirements, which means, if they 'screw up' too badly, then they go bankrupt! So they are acting in a capitalist manner and have to be careful about how they lend, and at what rates. If random bank acts irresponsibly, then random bank will go kaput by regular market forces.
Instead of thinking of fractional lending as 'missing money' think of it more like leverage.
Basically - the effect of fractional lending is that it's a 'multiplier' to whatever the Central Bank decides to do.
So it exacerbates effects in one direction or the other but on the whole, it doesn't change the real nature of the system.
The way we manage money is sound.
We need money to expand and contract, and we have good ways to measure that.
The 'danger' of fiat of course is political intervention, or a failure of controls.
We had a broad intervention in 2008 that favoured home owners over others, and there are attempts to use the Central Bank to do 'Social Justice' type things, which I think is very risky.
It's a bit like Nuclear Energy: it's very potent, you just have to watch it responsibly.
Finally - currency should be a 'current' asset, not a store of value. We just want it as a medium of exchange. So as long as it's not shifting too much one way or another, then it should work.
For 'stores of value' there are other things, like real estate etc..
"Inflation happens when the government prints money that has no collateral, and has no correspondence to added value in the economy and so it dilutes the value of the money that is already in circulation. "
This is misleading.
The 'government' does not print money, the Central Bank does. And as you indicate, the bank ultimately creates credit via fractional lending.
'Inflation' happens when the cost of goods rise faster than the money in circulation.
Thus 'inflation' can happen because 'stuff is more costly to make'. Like gas in Europe, is more expensive, not because 'money printing' but 'Russia'.
Also, inflation can feasibly happen without money printing or even a rise in inherent cost of goods, if the economy shifts in a way that ends up in excess cash.
But ultimately, if during normal course of 'growth' if there is no expansion in the monetary base, then you'll have deflation, which has bad externalizes.
So the goal then is to adjust interest rates / print or extract money from the economy so that prices stay roughly flat, with just a tiny bit of inflation. That is a dynamic process, not a static process.
Rather bluntly, a central bank is central economic planning. Central economic planning always falls short of what free markets do. The idea that a central bank is able to control the financial markets better than free market forces is shown to be false (with actual data) by Friedman in "Monetary History of the United States".
> The 'government' does not print money, the Central Bank does.
I said "print money" as a euphemism for what the Fed actually does, which is the same thing, it just doesn't involve doing the old fashioned way. They do it by issuing debt with no collateral.
So why is it that essentially every developed country in the world today has a central bank? How can they all be wrong? If a 100% "free market" solution was more effective than central banking, I would expect at least one of them to have given it a shot and succeeded in doing so.
Also, "A Monetary History of the United States" argues that the Federal Reserve should have done more to combat the Great Depression, not less. How can you think that the book advocates against central economic policy?
I think there is an erroneous understanding/implication in your statement, which is likely leading you to erroneous conclusion.
The Fed is not 'Central Planning' so much as it is actually trying to make the market more 'neutral' in normal cases.
We'll get to the 'crisis' cases in a bit.
If we just had a hard currency, like Gold (which 'feels' neutral) we'd get into trouble, because of deflationary issues. People would treat it like Bitcoin, and as prices fell slightly would be oriented a bit towards 'store of value' as opposed to currency.
The Fed 'targets' just a 'bit above zero' inflation by policy. That is basically 'neutral'.
That is not really 'central planning', it's more like 'central neutralization'.
As for 'crisis' situations, i.e. when the Fed does start to 'intervene' and does things which you might argue are 'central planning' - well - the government in many cases can absolutely do it 'better than free markets' because only the government has the scale to do it.
For example, 'free markets' could have not have created and executed the Highway road system of the 1950s. It was of a scale and scope far, far beyond any economic actor. That required 'strategic vision' on behalf of the government. Now - private contractors actually did the 'building' - which is how we want it because the government doesn't need to hire individual workers. But it's a government project by virtue of scale and other things.
The meltdown of 2008 was a very scary time - if the government did not intervene, the banks would have collapsed, and it would have taken down the entire economy.
It would be like a human having a 'heart attack' - the heart stops - everything stops.
So the government put together a plan and intervened. A lot of it had to do with 'confidence signals' and other things, extra regulation, but it worked.
There is of course the 'Too Big To Fail' argument i.e. moral hazard i.e. banks take on more risk knowing the 'gov will save' us - that said, the worst actors did definitely lose a ton of money. Also - the problem was not just the banks, it was a systemic failure in a number of sectors.
Basically - the US had an economic cancer and no individual organization was going to be able to contend with it.
So -> intervention. Much like a war, or pandemic.
Having a fiat currency allows that opportunity. If it were a 'Gold Based Economy' it would have fallen down like a house of cards.
Like a brick building during a rare earhtquake: brick 'feels' strong like Gold, but an earthquake will ravage it, which is why you need steel reinforcement - the steel can bend and absorb different kind of tensions.
Milton Friedman is wrong.
Yes, when there is hyperinflation, it's probably because some stupid government is printing too much money, but inflation is not just a function of money printing.
Deflation means people who save increase their purchasing power without gambling on stonks. The savers mentality is called low time preference.
Any problems from less consumerism would be felt by junk producers: plastic spinner toys, yet another streaming service, iGadget yearly upgrades. High time preference people are the market for short-lived trash. A currency with disappearing value encourages such consumption because it does not hold value.
Due to technology and manufacturing advances, price decreases (deflation) are natural.
Because sometimes you lose the important details in the generalization. Counter example would be that the dollars created aren't spent depending on how they're distributed. If put under people's mattresses, put into the stock market, or sitting in a savings account, those don't enter circulation and increase the flow of money.
Another example:
A big tech company goes bankrupt, threatening thousands of jobs to disappear.
The gov prints some billions to restore the liquidity of the company, which then recovers.
After saving the company and its employees, those employees get the same salary as before and therefore aren't spending more.
In that case the printing of money did not generate more demand, which could cause the prices to increase, or am i missing something?
So? The argument is that inflation always happens when there is fiat printing. We printed a shitload of dollars between 2000-2020, yet inflation was low throughout that period. So the explanation is clearly insufficient.
> The argument is that inflation always happens when there is fiat printing.
The whole point of fiat money is to print excessive amounts of it. It's attractive for governments because they can then spend money buying votes without having to raise taxes (though inflation is a tax). Meanwhile, they blame "speculators" and "profiteers" as scapegoats for the inflation.
> yet inflation was low throughout that period
The cumulative was a lot, and note that there was never any deflation.
The government is sandbagging CPI figures in order to lower its obligations that are tied to the official inflation rate, like Social Security payments. This isn't some underworld conspiracy theory; look at some of the academic discussion around ShadowStats.
If we take home prices, comparing 2000 to 2019 (before the pandemic-related craziness in the real estate market took place), they went up by 85% in that time period[0], compared to 48.5% in the CPI[1].
Compare 2000-2020 on that M2 graph compared to 2020-2022.
Jan 2000 - 4,666.2
Jan 2020 - 15,401.8
An increase of 10,735.6 over 120 months, average monthly increase of 89.46.
Aug 2022 - 21,711.4
An increase of 6,310 over 20 months, average monthly increase of 315.52
M2 grew 3.5x faster on average since 2020 than previously.
I'm not directly stating this is the main or only reason for inflation, but I imagine the rate of increasing the money supply 3.5x faster than before could have some kind of effect.
I predict a massive backfire on this one.. I know Netflix is struggling but as competitors (see HBOMax) get better and better now is not the time to both raise prices and give people a reason to revisit their active subscription. I know plenty of people who only continue to pay for Netflix because they share it with a bunch of people. They don’t really have any killer content right now and as far as I can tell no streaming service has figured out how to deal with people who just cycle between services… This is not the right problem to focus on right now.
At one point the beanie baby market was up billions as well. I'm not saying there won't be winners, but there is going to be an absolute mountain of losers.
Well ignoring the fact that beanie babies still sell for thousands of dollars today, they also never became a countries legally enforce currency (el salvador) or were utilized by the EIB (europes federal reserve equivalent) to issue bonds.
I think you'll struggle to find many comparisons to short-lived hypes with cryptocurrency as a category.
True, but something being new doesn't make it more worthy. The subprime lending catastrophe was due to a novel, very popular, idea and people got rich off that as well at first.
You're right. Worthy was a bad choice. I simply meant that doesn't mean it would turn out to be useful or stand the test of time as being a good investment just like how for the vast vast majority of people beanie babies weren't and still aren't either.
The people who are still holding, or the people who sold at its height, to people who were hoping for more? If the former then they haven't gained anything yet, if the latter, that's the greater fools.
The top so far. I have no idea about the future. Regardless, when do people sell? When it's at the top? When is that? If it's going up shouldn't you continue to hold? And should you sell when it drops? You haven't. So what's your line in the sand? Should new people be buying in? When should they stop? And then who are you going to sell your coin to? The greater fool.
Comparing bitcoins volatility to fiat is ridiculous but regardless, you haven't made any actual guaranteed monetary gains until you sell.
Ok, sure, avoid the other questions, but to be clear, paying for something with bitcoin is the same as selling it, you're just pretending that there isn't a conversion to fiat somewhere in the chain.
When I buy a house in Dubai with bitcoin, there is no fiat involved. I receive the house, they receive the bitcoin. Simple. You could call this selling your bitcoin, but in the same sense you could say selling your fiat.
You seem to think that fiat currency is somehow a base unit like meters. But it isn't. Maybe you have noticed the inflation all over the world recently, some countries more than others. Like I said before, all asset classes have risks. The statement "cashing out" makes no sense to me. I have various stores of my value. Fiat, crypto, companies, real estate, jewelry, bullets, ...
> When I buy a house in Dubai with bitcoin, there is no fiat involved.
I'll bet you they didn't buy and pay for the materials for said house with bitcoin.
I don't really know what your point is now as you apparently view bullets as an asset class, so I've kind of lost your story. If you think you're going to make a much of money on bitcoin I'm not sure why you'd get rid of it. I invest in securities because I think it'll outperform the default choice, I don't invest in things that I think will under-perform it.
That is the difference between you and me. I can see both your worldview and mine, but you can only see yours. I know your worldview because that's the old me.
Here is a challenge: try to imagine a world where bullets are an asset. A world where an "asset" is:
An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit. (https://www.investopedia.com/terms/a/asset.asp)
Maybe you should open your worldview a bit to see various ways on how you store value, not only the obvious financial instruments. But if you don't, no problem.
Yes, it's a big bubble that's going to implode quite hard.
There's an implicit phase change in this system: solid to gas. It'll sublime like dry ice in a moment, when bitcoin block is priced at its transaction processing fees.
When this all disappears, nothing of value will remain.
> By 1635, a sale of 40 bulbs for 100,000 florins (also known as Dutch guilders) was recorded. By way of comparison... , a skilled laborer might earn 150–350 florins a year.
What do 40 bitcoins go for now? About 1 mil USD. What's that compared to an average salary? Only 20x. Much less than the 300x of some tulips
The existence of past bubbles is in no way an indicator that something rising quickly with a lot of volatility is a bubble. We're talking about an asset that has national buy-in. When's the last time a national currency went to zero? When's the last time the european bank utilized a financial tool that went to zero?
I guess it depends whether you think people actually starting to use this stuff, as intended, will be a good thing.
I think the more people actually "take the bullshit seriously", it'll be like trying to take the emperor's new clothes and sell them at your local discount store.
Ie., there is no actual use case for any of this. Its only useful insofar as it exists as a ponzi asset (ie., it only has value because other people want it because other people want it... because other people want it...).
It doesnt actually solve any problems.. so the more a recession deflates bubbles, the more that businesses/projects/etc. will need to show actual economic value to survive.
Bitcoin has a "marginal productive value" in something, i'd say, c. 100 USD region. As in, the slow, largely useless, bitcoin transaction network provides the service of "publically, reliably, slowly" processing a block of transactions between parties.
How much value does that have? AS A SERVICE, really... almost none.
You could create a better competitor service tomorrow, and charge much less to use it (hence: all the other coins).
Crypto isnt like gold: there isnt a limited supply. You can just create more coins: doge, eth, etc. THere's an infinite supply of self-liming coin systems. It's trivial to create a competitor service.
So think about bitcoin as an actual product: trivial to out-compete, provides basically no useful service, horrifically slow. As a business model, its DOA.
> Crypto isnt like gold: there isnt a limited supply.
There is a much stronger guarantee that there is limited bitcoin when compared to gold. We have no idea what tech advancements will allow mining gold from comets or neighboring planets. A bit more far fetched, but maybe not impossible in the future would be changing other elements into gold.
Bitcoin has a codified contract that is being upheld socially with vast amounts of resources proving that society agrees on the limited supply. Sure, you can fork the codebase and create another chain. That has happened many times, which just proves a new chain does not do anything to the agreed upon, codified, limited supply of bitcoin.
As for your other points, they're presented constantly as serious arguments and debated ad-nauseam. Either you've just not witnessed it, or you're just trying to present things as uncontested facts which appears disingenuous and does not strike me as an honest argument.
I sincerely have had no reply to any of these points.
Either bitcoin is a deflationary currency, in which case it repeats the servre financial crises of the 19th C. and early 20th C. in which an economy is imprisoned into a rate of inflation set by blind non-economic forces. In which, as an economy, is horrifying: consumer protection is impossible by design, the owners are the controllers (feudalism), it's entirely public (so you're entire economic life is available to be profiled by used by others), etc.
Or its an asset. If it's an asset its a ponzi scheme.
It's clearly mostly being held as an asset, and traded as an asset by criminals and dictators because it has some ponzi-value. This ponzi-value will disappear as soon as anyone actually tries to use this as a serious currency, as with someone planting a tulip bulb for the flowers... no one wants tulip flowers (lol).
No one wants an incredibly deflationary economic system, controlled by the holders of coins, forked on behalf of the landed gentry, with one's private economic history plastered across the whole internet, with incredibly slow transactions, with immutable histories, and so on.
As soon as anyone actually "plants the tulip bulb" crypto is, quite seriously, f*ked. No one wants tulips. If I were holding crypto the last thing I'd do is actually try to get any one to take is seriously as a currency.
The number of delusional far-right libertarians who dream of being feudal lords is the c.5% of young angry men it's always been. And likewise, if they ever achieved anything, the state would put a stop to that immediately. No one wants your tulips. But i'd just love to see you plant them!
Go, run something on bitcoin, you'd wipe crypto off the map over night.
I wasn't aware that "crypto-bro" was considered an attack of any sort. If you took it as insulting I'll avoid its use in the future (Edit: and I apologize for the inadvertent insult).
Edit: I though "crypto-bro" is just a short hand for "ardent cryptocurrency supporter". Does it have some other negative meaning/connotation that I am not aware of?
no worries, but yeah it's widely considered an insult the top ranked definition on urban dictionary
> A nerd with too much spare time and video cards. Thinks he is smarter than you because he buys and resells burnt forests. Will ignore any meaningful arguments against what he does by repeating something about "serious business" 1000 times.
for that matter, the '-bro' suffix is almost exclusively used as an insult
