RE: How should we think about today's cryptocurrency prices?
This is one of those weird areas.
You can use value, to make more value, to make more value in a virtuous cycle.
The FED makes more inflation, to make more taxes, to make more theft, in a destructive cycle.
So, when you go and invest money into capital, then the whole world becomes better. With the flow of cryptos, capital is actually being formed. Capital that is providing service/value.
Or, basically, instead of having all of these houses mortgaged, and all these people saving in banks, if the people's savings where actually used on the mortgages, basically, all the mortgages get paid off. And, we are still left with all the houses. It is only by creating money out of thin air, that the houses can continually have a mortgage, that can never be paid off.
If we could get a person to pay off their house with cryptos, and then, that person helps the next, and then, that person... We truly would have all the houses paid off. And the banks would go nuts.
The banksters hate cryptos because it is giving capital to the wrong people.
Oh, and also: I agree. But at the moment, a great deal of that capital is probably just on paper -- that's the "thin air" part of my question. Is the cryptocurrency world generating enough economic activity to back up that paper capital?
Why would I pay off a 4% mortgage with capital I could invest at much higher returns in, say economic-activity-producing startup companies? I'm better off borrowing that money and having it invested in the economy. If I just close the loan, the money disappears and doesn't do anybody good any more.
That is, if you're interested in a little devil's advocate action.
Because, only in fractional reserve lending does buying a house create a sink. You pay four or five times for a house, and the money goes the bank to die. The houses never get paid off. Everyone just gets deeper in debt.
Mortgage - a french word meaning Death Note. Or, you will pay until you are dead.
With actual lending, all the houses get paid off, and because of that you get more and more people out of debt. First one, then another, then another. It is what happens when you do not send your hard earned labor to the banks to die.
Yes, I understand, if you have some ability to invest in these times, make better than 4%, you are basically paid to own a house. Both through the taxes, and through the banking system. But, the real number is the actual inflation which is about 12%, that is how much we are dying buy each year.
Inflation at 12%? This must be a case of using the same word to describe different things. I'll believe 12% when I see it, but I've certainly not had any personal experience of any such thing.
What's the tangible effect of your 12% inflation? (I'm assuming you mean something related to money supply, rather than something related to price levels.)
I like using shadow stats for numbers concerning the govern-cement.
And I personally use the burrito index or a similar, and much more tedious price tracking one (which I cannot remember the name)
Most of the created money is going into the stock market, so, the inflation is there... but most people consider it a good thing.
Hm. Last time the stock market collapsed, it was accompanied by a decrease in consumer price levels, which suggests that the high stock prices weren't being caused by anything quite as simple as money-printing; rather, the asset bubble was debt-related.
But your whole complaint is against fractional reserve anyway, so perhaps you agree.
So here's an interesting question, maybe we should start a top-level post to discuss it: how does a voluntaryist society prevent the emergence of fractional-reserve lending? It seems like fractional reserve banks are a very natural product of free markets.
Well, with block chain smart contracts, all those derivatives and debt swaps would have been triggered and all the money would have exchanged hands already. To the destruction of umpteen trillion dollars.
It is only because of obfuscation, and nobody pulling the trigger, that they remain.
If you do fractional reserve lending, at say 10%. You lend out the money 10 times. If one of those goes bad, you have lost all your money. So, in the realm of smart contracts, you go bust almost instantly.
If a bank / coin decided it was going to do fractional reserve, then the block chain using community would demand transparency on it, and you would very soon see the ponzi scheme of it.
Fair answer. For what it's worth, I bet you overestimate peoples' desire for transparency. Case in point: BitConnect and Tether. Both making billions of dollars in the blockchain-using community with business models that essentially cannot be made transparent. At least one of which almost certainly started as a ponzi scheme.