People are trying to offer financial advice (to me - offline) on how to get more money in an economy with a diminishing money supply. After I explain to them how the money supply (in reality) increases and decreases, they continue defending it (because they already know everything). Why are people so stupid when it comes to money? Why do borrowers keep agreeing to repay back more money than is borrowed which is "created" by the bank, when the bank can't "create" that money without the borrower? There is nothing complicated about this AT ALL. What is it about people's psychology that I'm missing here? It's like they're on auto-pilot "Yeah, you make a good point, but ya just need to keep investing, blah, blah, blah". It's like I've told a customer that they've been over paying all this time, but instead they reply "Nah, it's good. I like having less money. I like worrying about money." I feel like I'm on a Universal prank show. What is going on?

I can't speak for any of the people trying to advise you, but I have the impression that what's going on is some combination of you not being quite as sharp on economics as you imagine and/or not expressing your arguments as clearly as as you might like. These aren't meant to be harsh comments towards you but rather an observation that your complaint of your unsolicited advisers (that they feel they already know everything) seems like it could apply to you in this thread as well.

I've been interested in some of the deconstructions and analyses you've put forward here. But your use of some terminology is, at best, nonstandard. Some of the assertions that you have made either don't track well or seem to fit better with economic ideas which you haven't advanced here. It is 100% possible that I have misunderstood some of your posts. Your core positions expressed in this thread seem, to me, to be that:

1. Money does/should have some sort of inherent value, and that fiat currency and fractional reserve banking undermine this. A "hard currency" view.

2. Charging interest on a loan (especially, or perhaps only, in the case of fractional reserve lending) is immoral/a scam/some other nefarious thing.

3. Credit creates transactions but not currency notes, expanding commerce today at the cost of contracting the money supply tomorrow.

I understand from a previous post of yours that you had intended to post three times as much information as you've put forth so far, so in addition to my maybe misunderstanding you I may not have enough information to even potentially summarize your views correctly. But from what I have read in the thread, and what I think are reasonable (if incomplete) interpretations of what you have written, it's no surprise that cryptocurrencies have come up.

Sorry if I am mistaken but is there any real value of mined hashes? What purpose bitcoin serves other than being present without a central authority so quite untraceable?

If I were looking for a ransom or shady transaction, I'd consider bitcoin but other than why should I?

Sorry if I am mistaken but is there any real value of mined hashes? What purpose bitcoin serves other than being present without a central authority so quite untraceable?

If I were looking for a ransom or shady transaction, I'd consider bitcoin but other than why should I?

What do you mean by "real value", exactly? A mined hash can't do anything other than be passed from hand to hand, and in that way is similar to any other modern currency. They are anything but untraceable though, at least with regard to BitCoins-- the blockchains that validate a coin can trace it back to anyone that ever had it. I've heard them referred to as "prosecution futures". I don't find cryptocurrencies appealing myself, but what I've seen of people that do like them is that the lack of a central issuing authority (and any manipulations that come with such an authority) is the whole appeal.

Thank you for your appreciation here. This is really helpful writing mate.

When it's created money and a borrower is an essential component, yeah, the borrower is undervaluing themself as a member of society and agreeing to a bad deal. They are overpaying because they are not properly informed. The worst part is how it changes the mindset of borrowers. Now they have to get more money than was given to them and so does everyone else. It's an economy that is based on "lack", profits before people etc. (sorry to sound idealistic - that's not my intention).

3. Credit creates transactions but not currency notes, expanding commerce today at the cost of contracting the money supply tomorrow.

Home loans, for example, range from 20-30-40 years. So it takes a little time to feel the negative effects of overdebt. It takes time for deflation to catch up with inflation, meanwhile new loans are issued, however deflation has got more speed, as deflation starts overtaking inflation - the market starts to notice and worry - but they never examine the cause. It's everybody's loss when no one is willing to identify the true cause.

Thank you for your appreciation here. This is really helpful writing mate.

Thank you. Thank you very much.

Sorry if I am mistaken but is there any real value of mined hashes? What purpose bitcoin serves other than being present without a central authority so quite untraceable?

If I were looking for a ransom or shady transaction, I'd consider bitcoin but other than why should I?

What do you mean by "real value", exactly? A mined hash can't do anything other than be passed from hand to hand, and in that way is similar to any other modern currency. They are anything but untraceable though, at least with regard to BitCoins-- the blockchains that validate a coin can trace it back to anyone that ever had it. I've heard them referred to as "prosecution futures". I don't find cryptocurrencies appealing myself, but what I've seen of people that do like them is that the lack of a central issuing authority (and any manipulations that come with such an authority) is the whole appeal.

By "real value", I mean that "Is bitcoin better than some people accepting to trade certain type of seashells?" . Is there any issuer to guarantee it will be cashed out anyway? Is there any mechanism to retrieve them back in case you lost them somehow (server crash, hdd failure, lost password ...)?

And for traceability, I didn't know it is that much traceable although seems there are mixers etc. Then why it is popular among Tor networks? (For example ransonware viruses accepts Bitcoin, why do they if it is so traceable when you can use good old Western Union with fake name?)

Since selective quote is down I'll do the layout myself (hopefully it will be clear enough).

Unduli:

By "real value", I mean that "Is bitcoin better than some people accepting to trade certain type of seashells?" . Is there any issuer to guarantee it will be cashed out anyway? Is there any mechanism to retrieve them back in case you lost them somehow (server crash, hdd failure, lost password ...)?

It's not really different from seashells except that there are probably more seashells created in a year than there are bitcoins. Restoration after a loss is, as far as I know, impossible. Loss of your bitwallet loses the coins both for yourself and for the system as a whole. If bitcoins are intended to be used as currency, that means that cashing out is a nonissue. It would be odd to try to "cash out" a stack of dollar bills, for example. When bitcoins operate as a commodity then you cash out by selling them to someone else who wants them, for whatever currency or bartered item you want, and a central authority is unnecessary.

You can be pretty anonymous as long as your wallet is never associated with your real identity, but I get the distinct impression that bitcoin fans split into three major groups: speculators, who treat the coins exclusively as a commodity and invest conventional currency to turn a profit; fans, who understand the system and find it appealing for various ideological reasons; and bandwagoners, who like what they imagine the coins to be and are mistaken in one or more significant areas. And a lot of the people who think that they are in the second group are really in the third, a la the Silk Road guy.

BrianRhinheart:

I love fractional reserve banking. I hate overdebt (so should everyone else).

Could you expand on this a bit more? Because your issue with issuing debt seems hard to separate from fractional reserve practices. Is it just the scale that makes the difference, that there is a point where debt topples into what you call overdebt? It may be that the "over" part is the hinge that your position turns on and I'm just not clear on exactly what you are describing.

When it's created money and a borrower is an essential component, yeah, the borrower is undervaluing themself as a member of society and agreeing to a bad deal. They are overpaying because they are not properly informed. The worst part is how it changes the mindset of borrowers. Now they have to get more money than was given to them and so does everyone else. It's an economy that is based on "lack", profits before people etc. (sorry to sound idealistic - that's not my intention).

I'm a little unclear on your position here as well. If you are looking at this from the perspective that money has inherent value I can squint and kind of see your point. I would disagree with it, but that doesn't seem to be your position anyhow. If I borrow money to start a business that provides a new service, and run that business adequately, then the economy expands. The "overpayment" is the cost of risking a loss of the amount of the loan (on the bank's part), the cost of getting access to seed money upfront (on my part), and a representation of the additional production that the economy is now capable of (from a broader, whole-economy perspective). That's not to say that I can't take out a foolish loan, or that people can't be stuck in cycles of debt, but rather that the mechanism you're critiquing doesn't seem to be as awful as presented based on the arguments you've made. Again, maybe it's an issue of scale? Maybe of what the loan is used for? A loan used to consume (like a mortgage or car loan) is different from an investment in new commercial activity; is that where you are drawing the line?

I'm also still not clear about how you view "money" as a concept, which might clear up some of my confusion over the rest. You agreed with one of my earlier posts, where I described money as a claim on future production. If you do agree with that, then money is just a token used in commercial activity and the amount of money that exists and changes hands describes commerce as a whole-- the production and consumption of goods and services. If the economy is expanding we should have more money so that we can engage with it. It's not a system based on lack so much as it's based on growth.

Home loans, for example, range from 20-30-40 years. So it takes a little time to feel the negative effects of overdebt. It takes time for deflation to catch up with inflation, meanwhile new loans are issued, however deflation has got more speed, as deflation starts overtaking inflation - the market starts to notice and worry - but they never examine the cause. It's everybody's loss when no one is willing to identify the true cause.

This part confused me too. When you say "inflation" and "deflation" I'm interpreting that as inflationary and deflationary pressures, which seems like what you are describing. Does that sound like a fair interpretation? Either way, I'm still not quite seeing all of the connections in your arguments. Inflation and deflation, as I understand the terms, don't seem to fit how you are using them, and I do not see how different market participants fit into "notice and worry" here.

Houses are expensive, and it may not be a good idea for any given person to buy one, and viewing one as an investment is... troublesome. But at the same time, basically all of the money "created" when a mortgage is taken out is spent at once and diffused into the economy. Unless it's hoarded (which does happen sometimes), that money is then used in additional commerce. If (and when) something like the housing market goes off kilter it's a problem. Sometimes a massive problem, as we saw very recently. Taking out a loan always involves a bet on your future productivity. But I do not see how the practice of accessing a lender to make a large purchase is market-shattering, morally/practically invalid, or a massive scam perpetrated on the public.

When 100k is loaned, perhaps 105k is owed. The 100k is spent, but needs to be returned to the bank someday. But what about the extra 5k, where it will come from? Money that is loaned to another person, but then that person will be short 5k, and they'll still need to repay their bank all they borrowed plus extra "the interest".

Meanwhile, nobody is wondering "Where did the bank get all that money?". The answer; they made it up. Don't trivialize this, not only can they can make up money when a borrower asks for a loan, they expect so much in return. The borrower can't keep any of it - it's all debt. It's a disaster.

Nothing what I'm describing to change would deprive banks of their profits or their shareholders of dividends.

Don't believe the bullshit economists tell you. I didn't want to mention this before, but the central bank system was considered to be an effective substitute for slavery.

If the average person doesn't want to learn how the system is rigged against them (and how to easily fix that), it's their loss. I won't care either after a while.

When 100k is loaned, perhaps 105k is owed. The 100k is spent, but needs to be returned to the bank someday. But what about the extra 5k, where it will come from? Money that is loaned to another person, but then that person will be short 5k, and they'll still need to repay their bank all they borrowed plus extra "the interest".

Meanwhile, nobody is wondering "Where did the bank get all that money?". The answer; they made it up. Don't trivialize this, not only can they can make up money when a borrower asks for a loan, they expect so much in return. The borrower can't keep any of it - it's all debt. It's a disaster.

Nothing what I'm describing to change would deprive banks of their profits or their shareholders of dividends.

Don't believe the bullshit economists tell you. I didn't want to mention this before, but the central bank system was considered to be an effective substitute for slavery.

If the average person doesn't want to learn how the system is rigged against them (and how to easily fix that), it's their loss. I won't care either after a while.

That's where it seems that you're stuck in a hard money view. The borrower earns additional money through work, just as they earn money for any other purpose. They pay a fee for the risk the bank takes of not being paid back. As I'm sure you know, the extra $5,000, in terms of the actual "money", comes from the central lender (the Federal Reserve in the U.S.). The currency notes themselves come from the Treasury. The value those notes represent come from the production of people that participate in the economy. That the money supply expands and contracts isn't that important to this, though if the expansion or contraction is really extreme relative to production and consumption there would be problems. What matters is that there is enough money in circulation that commerce can accommodate what the population produces.

Why should a borrower want to keep X dollars from a loan, especially if it's somehow not real because the bank "made it up"? If it isn't spent, ever, it has neither purpose nor value. If it is spent, the money is gone anyways and in return you have the result of someone else's production. If you want to take out a bank loan in order to have a pile of cash under your mattress, you're a fool.

All money is made up, whether it's gold or seashells or cryptocurrency or cotton with green ink on it. In the case of the current system in the U.S. the government has a monopoly on issuing additional currency notes in the current system, and can do so at need/will. You clearly are unhappy about the specific methods by which money enters and leaves the economy but your rationale seems to be centered in the previous two sentences.

You have not established enough credibility in this to declare the entirety of economists bullshit and be believed. That some unnamed people apparently consider central banking a substitute for slavery is unimpressive and unpersuasive. There are at least some who compare anything you care to name as effective slavery, and others that will disagree. Arguments please, not empty rhetoric.

Again, I know that there is more to your argument than you've yet posted. Maybe another installment will convert me completely. If you have an easy solution, maybe that will help to clarify what you feel the problem to be more than what you have presented so far. So post it or move on. I find what you have posted to be unpersuasive, and apparently others feel similarly. Tossing out the same assertions will probably not be effective.