WordPress is giving me 40 days to tell them my cell phone number or else they won’t let me write new articles. No way, Jose, am I giving them that info.
But it’s OK. Over 300 articles is a nice body of work. And I have run out of steam.
So time to sum up.
Most popular article: By far, the one explaining how to fix a java problem in Windows.
Most Important Contribution: Solving Zeno’s Paradox. So much confusion until I cleared it all up. Even Bertrand Russell was confused.
Most controversial: The bitcoin series, where I prove that Bitcoin is doomed to fail. Devil’s Advocate is telling me bitcoin has risen to an all time high, but that’s a short term thing. It will go to zero within 20 years, as all fake monies have. The key theoretical insight is that it will never, ever, be used as money, which, of course, is proving true. Nobody actually buys anything with bitcoins. They merely hoard them, hoping its price will go up. [Note: I had a first draft of this paragraph up earlier that Pete Surda pointed out was unclear. See comments.]
Which means, of course, that it is inherently a scam and a mania. Imagine a thing whose only use is sitting on it, hoping to sell someday to a bigger fool who can only sit on it, hoping to sell some day to a bigger fool, and so on forever. It cannot last.
As for all the wonderful ideas people have for using bitcoins to transport or store information or whatever nonsense they are telling you about, that is talking about the technology, not ownership of the bitcoin. It’s like someone telling you how wonderful television is, then trying to sell you one piece of airwave for a thousand dollars. What can you do with ownership of an airwave?
Thing I was in over my head: Mises’s calculation problem. I still cannot say I have 100% clarity on it. One person asked me why, in theory, a computer cannot do what an entrepreneur does. The entrepreneur must have some kind of thinking process going on. Why, in theory, can’t a computer be taught to do the same thing? I do not know.
What I should be doing now: Politically, supporting President Trump in every way possible. He is our guy, our hero, and by “our” I mean anyone who is not a parasite on innocent people, like Hillary and Obama and their ilk.
I’d love the chance to sit down with him and teach him some Austrian Economics, because he is making and going to make some big mistakes, all because of ignorance of AE. Of course, it doesn’t have to be me. I’m slowly forgetting the details of AE, as my interests move on. Ron [not Rand] Paul would be ideal.
So good bye folks, it was fun. The deadline is April 17, 2017, at which point wordpress will turn off the lights.
Thank you for reading and commenting.
Dave
Devil’s Advocate: Seen the last of him, hahahahaha.
Smiling Dave on Austrian Economics. 
> Devil’s Advocate is telling me bitcoin has risen to an all time high, but I was not talking about its price.
Since the beginning, one of your many arguments has been that the price of Bitcoin must go to zero. I have your quotes on my blog and the good folks at archive.org have a copy of your blog. So you’re contradicting yourself again.
In one of your earliest bitcoin articles, “Bitcoin takes a beating” (dated June 21st 2011), you write: “But bitcoins were never generally accepted at any price but zero. They have no reason to be.”
On November 18th 2013, you wrote this in a comment on your blog:
“I will admit bitcoin is here to stay as a commodity of some sort, even though it might not be money because it does not fulfill the criteria above, when two things happen:
1. 20 years pass.That’s how long the longest lived phony money, the Ithaca Hour, survived before dropping to zero.
2. A deep recession sweeps the world and bitcoins do not drop to zero then.”
I’ll be waiting until November 18th 2033, and if the price of Bitcoin is not zero, will write a big “Well Smiling Dave, you’ve been wrong all along” article on my blog. I’ll keep the blog up just for that. Or should that be January 3rd 2029, 20 years after the bitcoin network went live? Or is it June 23rd 2031, 20 years after you wrote on the mises.org forums that “If for a solid twenty years [and absent a law imposing it as money] it becomes the accepted medium of exchange for all goods and services in, say, a community of 5 million people.” (although that is yet a different argument)? Who knows which of your contradictory statements are they supposed to take as relevant at what stage of debate.
Of course, once you realise that the price of everything will eventually go to zero (due to the heat death of the universe or similar), you’ll realise how utterly nonsensical and meaningless your writings are. That you apparently can’t even remember what you wrote in the past is just a cherry on the top.
I predict that should you still be alive, you’ll try to weasel out of it and make up a new lie again, instead of admitting that you were wrong. If anyone except me actually paid attention to you, you’d be remembered as the Harold Camping of Bitcoin.
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I’m glad you quoted my earlier articles saying that bitcoin will not survive past 2033. It’s just a shame you did not read this last article to the very end, where I said the very same thing. In this last article that you are commenting on, I wrote about bitcoin that it is a scam and a “mania”. Manias are things that got to zero. But just to make sure everyone understood, I added the words, “It cannot last.”
DA: But Dave, you didn’t say a date of 2033 this time. You just said it’s a mania and cannot last.
SD: And yet, Pete found that 2033 date with great ease.
DA: But Dave, you have to make predictions that are verifiable within a week or two, not years from now.
SD: I would love to do that. But that other fake money, the Ithaca Hour, took 18 years to collapse. Why shouldn’t bitcoin?
DA: And what about Pete’s point that the universe must die, which shows how foolish you are?
SD: The universe must die by 2033?
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Sad news buddy, loved your blog as I said before. Hopefully you and DA can pop up somewhere else if you build up some steam again. Best wishes.
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TY Guilherme
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Sad news…
If you want a new place to write a blog, let me know, and I can set you up on my server. Better yet, start your own. I rent a server with 1TB / month of bandwidth and it costs only $5 a month. They even accept bitcoin! I kid, I kid 😉 I won’t mention the provider here so I don’t get accused of promotion, but send me an email and I’ll let you know the details.
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TY Tim.
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“One person asked me why, in theory, a computer cannot do what an entrepreneur does. The entrepreneur must have some kind of thinking process going on. Why, in theory, can’t a computer be taught to do the same thing? I do not know.”
A computer can only do what it’s told – it cannot use the prices that consumers willingly pay to anticipate what it is that consumers want to do with their purchases.
So, while a computer can make monetary profit and loss decisions for current, static prices, it cannot plan for future demand.
Entrepreneurs must know something about their customers’ demands in order to plan profitable production processes, which is why economies cannot be planned, whether by a person or a computer.
A computer can be taught to augment what the entrepreneur does, but it cannot be taught to *be* an entrepreneur.
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“I’ll be waiting until November 18th 2033, and if the price of Bitcoin is not zero, will write a big “Well Smiling Dave, you’ve been wrong all along” article on my blog.”
*Yawn*
The FRN isn’t backed by anything, *and* people treat it like they think it’s money, and I say it *still* isn’t money even after having been treated as such for over 100 years (really, it was originally understood to be a money substitute, not money proper).
It is not enough that people believe something to be money – it must have a link to subjective economic valuation (use-value), not just “some other guy will accept it because he believes it’s money”.
Rothbard rightly called that a circular argument.
Bitcoins [small “b”] are the equivalent of the dummy-data that is used to test the functionality of databases and spreadsheets. Intermingling Product IDs for non-existent products with the IDs of products that actually exist does NOT give dummy-text value.
Anyone who is willing to take dummy-text product IDs in exchange for real products can only make a profit if he finds other gullible people to accept them in return.
The dummy-text does not represent real products, and therefore cannot be used as a money-substitute – let alone money proper – no matter how many people believe that it can be.
Maybe in your article 20 years from now you can finally address why you’re averse to using handfuls of dirt as money (which also lowers costs, because you can just go outside and pick it up), even though your paradigm commits you to the notion that simply agreeing upon something as money makes it so, and makes it profitable.
It’s the difference between subjective value and arbitrary value.
Pulling a number out of a hat and having people simply agree to use that number as representation of some good will not create wealth. That’s what was done with bitcoins when they were originally traded for pizza.
At best, the crypto-currency scheme transfers wealth from the suckers to the accidental beneficiaries.
Real money isn’t agreed upon as a collaborative effort – it’s accepted individually by each user because it makes him, personally, better off; And millions of individuals accepting different things as mediums of exchange logically results in some commodities being used more as a medium of exchange than others.
Which means that this process of individual valuation of a commodity as a medium of exchange logically leads ultimately to the widespread use of a small number of commodities as a medium of exchange.
It’s not the agreement on the medium of exchange that it gets its value from – it’s the other way around: It’s that medium of exchange’s value to the trading individuals in any given transaction that gives that medium its value as money.
In short, it’s the commodity’s link to use-value that sustains its trade value absent fraud or coercion.
The FRN gets its value from fraud and coercion, while crypto-currencies get their value from just fraud (and when governments force you to use crypto-currencies, it will be based on fraud *and* coercion).
One final point. Bitcoins have been compared with FRNs in the sense that it is believed that credit/debit card purchases in FRNs are just accounting entries.
But what is actually believed is that claims to printed FRNs are what’s being transferred from your account to the seller’s.
So, as mistaken as people are that the paper is money, they actually believe authority over physical things are being transferred – not that it’s just an accounting entry with no backing.
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I am very impressed with this comment. Here is someone who knows what’s what. In particular, I enjoyed these lines.
“Real money isn’t agreed upon as a collaborative effort – it’s accepted individually by each user because it makes him, personally, better off;”
“It’s not the agreement on the medium of exchange that it gets its value from – it’s the other way around: It’s that medium of exchange’s value to the trading individuals in any given transaction that gives that medium its value as money.”
Well done, indeed, guest. Would you care to identify yourself? No need to hide modestly behind anonymity.
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“…it cannot be taught to *be* an entrepreneur.”
That’s the heart of the matter. Why not? The presumption is that an entrepreneur has some internal algorithm for planning for future demand, be it conscious or unconscious. Why can’t we figure out how he makes his plans, and then have that programmed into a computer?
Maybe it’s because what he does is go by his internal feelings. “I suddenly feel a desire to gyrate my hips in such a way as to keep a circular band that is placed about them in constant motion.” Thus is born the hula hoop. A computer cannot do that because it has no internal feelings.
I was assuming that the entrepreneur gets his clues from the outside world, and thus I was stumped. Why can’t a computer be fed the same info that entrepreneur gets from the outside world, and then use the same thinking process the entrepreneur does? But like I say, I think I found a possible answer. If we assume the entrepreneur decides by introspection, well a computer cannot introspect.
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“Maybe it’s because what he does is go by his internal feelings. “I suddenly feel a desire to gyrate my hips in such a way as to keep a circular band that is placed about them in constant motion.” Thus is born the hula hoop. A computer cannot do that because it has no internal feelings.”
Right. That’s my position.
And it’s not just the consumer’s demand, but the producer-consumer’s own time-based preferences that determine how low a profit he is willing to make.
Maybe the entrepreneur *could* make a higher nominal profit if he were to spend more of his time pursuing it, but he wants to spend that time doing something else, and so is willing to make less.
Only he can know what the proper investments would be toward that end.
“No need to hide modestly behind anonymity.”
Some great stuff can come from anonymous bloggers:
About
“… You see the articles, which you can judge on their merits. You have an internet connection, to fact check my claims. …”
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Here’s a helpful quote from Mises, who held the same view as me that money-substitutes were not money proper, and that only the fraudulent expansion of money-substitutes counted as inflation, it not being possible to inflate real (commodity) money.
(Bitcoins not being commodities, its seeming plausibility as money is limited to being a money-substitute. But since bitcoins aren’t a claim to a commodity, it can’t even be that.)
Human Action
Part Four: Catallactics or Economics of the Market Society
Chapter XVII. INDIRECT EXCHANGE
11. The Money-Substitutes
“Claims to a definite amount of money, payable and redeemable on demand, against a debtor about whose solvency and willingness to pay there does not prevail the slightest doubt, render to the individual all the services money can render …”
“… We may call such claims money-substitutes, as they can fully replace money in an individual’s or a firm’s cash holding. …”
“… A money-substitute can be embodied either in a banknote or in a demand deposit with a bank subject to check (“checkbook money” or deposit currency), provided the bank is prepared to exchange the note or the deposit daily free of charge against money proper. Token coins are also money-substitutes, provided the owner is in a position to exchange them at need against money free of expense and without delay. …”
“… If the debtor—the government or a bank—keeps against the whole amount of money-substitutes a reserve of money proper, we call the money-substitute a money-certificate. …”
“… Changes in the quantity of money-certificates therefore do not alter the supply of money and the money relation. They do not play any role in the determination of the purchasing power of money. …”
“… If the money reserve kept by the debtor against the money-substitutes issued is less than the total amount of such substitutes, we call that amount of substitutes which exceeds the reserve fiduciary media. …”
“… The issue of money-certificates does not increase the funds which the bank can employ in the conduct of its lending business. … The issue of fiduciary media enlarges the bank’s funds available for lending beyond these limits. It can now not only grant commodity credit, but also circulation credit, i.e., credit granted out of the issue of fiduciary media.
“While the quantity of money-certificates is indifferent, the quantity of fiduciary media is not. The fiduciary media affect the market phenomena in the same way as money does. Changes in their quantity influence the determination of money’s purchasing power and of prices and—temporarily—also of the rate of interest.
“Earlier economists applied a different terminology. Many were prepared to call the money-substitutes simply money, as they are fit to render the services money renders. However, this terminology is not expedient. The first purpose of a scientific terminology is to facilitate the analysis of the problems involved. The task of the catallactic theory of money—as differentiated from the legal theory and from the technical disciplines of bank management and accountancy —is the study of the problems of the determination of prices and interest rates. This task requires a sharp distinction between moneycertificates and fiduciary media.
“The term credit expansion has often been misinterpreted. It is important to realize that commodity credit cannot be expanded. The only vehicle of credit expansion is circulation credit. …”
“… Credit expansion is present only if credit is granted by the issue of an additional amount of fiduciary media …”
(Aside, for clarity: In the last two paragraphs, the ellipses leaves out an explanation by Mises that once fiduciary media has been fully discounted – that is, it’s real value ascertained by everyone using it – it can serve as money-substitutes at the discounted value.)
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Dave,
Sad news. Does it mean the 300 articles will be definetely lost for your regular readers? Will it be possible to consult (or download) them somewhere?
I wish you all the best.
Thank you
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I think the site will still be here. I just won’t be able to add material.
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Regards, Dave. Fan and follower for some time. Shame you’re giving it up. Hope the family is well.
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Thanks. I’ll let you in my thoughts, since I remember you being here a good while.
It seems to me that the problems the world faces are beyond economics at this stage.
Worrying about economics now is like worrying about the waiter stealing the silver as the house is being destroyed by an earthquake.
Just look at what the whole world is being pushed to. Letting men into little girl’s bathrooms. Murderers and rapists being let loose and protected by the courts and the politicians. I need not go on, because everyone knows about it. In short, someone with a huge amount of power, worldwide, is determined to destroy everything good and decent in Civilization. And it’s not just Western Civilization. It’s happening in China and Japan and everywhere else, too.
The only decent people I know about with any power that are trying to put a stop to these evil plans are Donald Trump, and, yes, Vladimir Putin.
What maniac would want to do this, and why? It doesn’t make any sense at all. The only answer that seems likely to me is that a Satan worshiper, or more accurately, a large group of Satan worshipers, are the ones behind it. No other answer makes sense. And you know what Sherlock Holmes said about when you have eliminated all other theories as impossible, and all you have left is an unlikely one, that’s the right one.
We have seen power hungry maniacs before. But never have we seen what is going on now, politicians and judges almost everywhere determined to destroy their own country. And for what?
Of course, delving into a big question like this one with most of the relevant info kept secret is way different that studying AE, which is based on abstract reasonng.
What can we do to save the world? All I can think of is first, to turn off the TV and the movies and most of the internet, because the single goal of the mainstream media in all its forms is to corrupt mankind into accepting evil.
Second, to live ones life as decently as possible, setting an example of rejection of the evil they are trying to make us embrace. I’m sure each individual has some talent he can use to fight the good fight, once he realizes what the fight is about.
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Dave,
I am sad to see this blog go. Thank you for the work you put in it.
If I could ask one question before you leave. What do you think about Tucker’s idea that Bitcoin gets its value not from it just being a money, but that it is a money that stands on its own as trustworthy in transactions. In other words it is kind of like PayPal, but you don’t have to pay for PayPal’s services to use it. That is its use-value.
https://fee.org/articles/what-gave-bitcoin-its-value/
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Thank you for the kind words.
I think you mean bitcoin is good way to move money around the globe. If that is what you mean, then I wrote about this in two articles, here and here
In short, bitcoin and PayPal are very different. When you buy a book from an online store and pay for it with PayPal, the PayPal company legally obligates itself to hand over dollars to the bookstore. You give 10 dollars to PayPal, they give the 10 dollars to the bookstore, minus a fee.
What happens with bitcoin? You give ten dollars to buy a bitcoin. Minutes later it is worth a mere ten cents, because nobody legally obligated himself to make sure a bitcoin is always worth ten dollars. What kind of money is that?
A key feature of money is that one can more or less rest assured that it will not suddenly lose value. Which rules bitcoin out.
Maybe people think that from now on bitcoin will never drop in price. But on what do they base this belief? Because people want to have bitcoins to use as money, meaning to buy pizzas with it? No, because almost nobody uses bitcoin for that. It’s main use is to buy and hold onto, hoping it will, for some unknown reason, rise in price. This is the exact definition of a commodity in the midst of a bubble.
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I read those articles a couple years ago and have always remembered parts of them but not as related to the PayPal argument. Thank you for the clarification.
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yw
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“… (and when governments force you to use crypto-currencies, it will be based on fraud *and* coercion)”
Like so, Peter Surda:
WARNING Federal Reserve to Launch Its Own E-currency: Fedcoin
http://www.economicpolicyjournal.com/2017/09/warning-federal-reserve-to-launch-its.html
“The U.S. Federal Reserve will not only issue its own cryptocurrency but will also make sure Americans use it, according to Doug Casey. …”
“… Casey warns that with blockchain and the Fedcoin technology, the government will be able see everything, everywhere…Without cash, you have no privacy. If you have to put everything through a bank account, the government knows exactly what you’re buying, what you’re selling, how much you are earning. They’re in complete control; able to take what they want…including your entire account if you become politically undesirable.”
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Sad to hear but I understand. Been a great blog and I’ve learned a lot over the years. Thank you!
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YW. I truly think the place to go nowadays to fill out gaps in ones education is that wonderful subreddit, The_Donald.
As I’ve said elsewhere, economics, though important, now has to take a backseat to more fundamental and bigger problems, which are discussed there.
TPTB have so many evil designs upon us, many so horrific and already in place, that their fleecing of us takes second place.
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