Grasping Reality on TypePad, by Brad DeLong

...If you can look past all this (and I know that's asking a lot) at its core, Bitcoin is attempting to introduce the concept of "cash" to the digital realm. And by "cash", I mean something with a very specific property: money that Person A can hand off to Person B without Person C telling them they're not allowed. Now most people probably don't have much use for "cash" tbh, but it should be obvious that there's all kinds of people who would like money that has this property to it. Examples of people who might want to use cash include political dissidents, drug dealers, sex workers, free speech zealouts, enemies of oppressive state regimes and so on.

So the first thing people should ask themselves is whether they can understand why some people might want private money (cash) and then secondly they should ask whether they think a world in which private transactions simply cease to exist is desirable. And if you do think that cash is an important component of a free society, then you should answer what's a superior way to get there. Because it's obviously a very difficult problem. Because to create cash requires a difficult problem for computers (which tend to be good at destroying data scarcity, not enforcing it) and it also requires a cultural solution so that people coalesce around something neutral as a medium of exchange.

This last part is why evangelism is part and parcel to Bitcoin's culture. The meme isn't going to propagate itself. People need to bang the drum. And anytime there's something totally new, the first people who will be open to it will be the cranks and the crazies. So while the shortcomings of the currency are easy to point out, and the arguments of many True Believers are easily debunked, there's still a strong case for why people value it and promote it that's not inconsistent with the priors of "normal" people.

And if you strip away all the Austrian rhetoric-which IMO is not at all essential to the case for the existence of digital cash-then there's nothing inconsistent at all between Bitcoin and a Keynesian worldview....

Brad DeLong: We have cash: Kruegerrands, each one currently worth $1315. Perhaps 15 years ago there was some hope for a better, electronic "cash". But I think the last 15 years have been a fairly conclusive demonstration that power consumption, programming difficulties, and social engineering make it overwhelmingly unlikely that Dunning-Kruegerrands will ever be a better cash than Kruegerrands. Maybe there are people currently working on the better-cash-as-an-ingredient-in-a-robust-and-strong-civil-society dream. But if there are any such people in the BitCoin-cryptocurrency space, they are not obvious to me. Instead, as you said, it is now all "scammers, charlatans, misanthropes, and Austrian economics adherents"—a sinister carnival of grifters, griftees, griftees who think they are grifters, etc...

Adam Ozimek @ModeledBehavior: LOL Dunning-Kruegerrands

Brad DeLong: @cstross denies responsibility for creating the word "Dunning-Kruegerrands". But it is not clear who else the creator might have been.

Jodi Beggs: @jodiecongirl: In other words, roll your eyes all you want but cryptocurrencies are trying to solve a really interesting and relevant problem.

Brad DeLong: But he's wrong! Maybe 15 years ago cryptocurrency researchers were trying to solve an interesting better-cash-payments-for-a-robust-civil-society problem. But that was long ago. In another country. And the program has crashed.

Jodi Beggs: think (know) those people are still out there, they just kind of get drowned out by the others. Hell, I am one of those people (paging @KarlMuth)

Brad DeLong: So why is Niall Ferguson and not you on the "advisory board" of Ampleforth? Enough said...

Karl T. Muth: Those of us who are involved in the crypto space because we enjoy thinking about its interesting economic or technical sets of problems tend to be quiet. And I'm fine with that. Crypto isn't an "industry" or "sector," or even a product or a feature... it's just a technology. The space is still purging itself of people with little or no technical expertise, half-baked philosophy ranging from low-commitment libertarianism to Galt's-Gulch-but-online fantasies, and "projects" that will never become companies. I suggest putting those people on "mute." And I think "innovations in cash" gets said but is really not what anyone is talking about. People are talking about innovations in transactional systems, transfers of value, and payments/settlement. Those are three species of a genus that does not necessarily include cash. Well if @TheStalwart (@business) wants to chat about it, I'd love to. Some people (@TheSmokingTire, @AlexRoy144) have accused me of being a not-boring podcast interviewee...

Brad DeLong*: But do any of the people doing interesting stuff related to interesting economic or technical problems in the general area of "cash" as an aid to a robust civil society ever break through the noise to reach @TheStalwart? Or is it, from his perspective, grift all the way down?

Rebecca Spang @RebeccaSpang: Coming to this a few hours late bc I wasn't on Twitter this morning (!) and was alerted to it by @delong's blogpost https://www.bradford-delong.com/2019/02/on-twitter-i-think-most-keynesian-types-see-bitcoin-as-a-horribly-inefficient-medium-of-exchange-whose-loudest-advocates.html What my friend @TheStalwart misses in his tweet storm about #crypto is the two very DIFFERENT significances of the word "private" when it applies to money and transactions [at least I did not see it discussed] .

1. We might call cash "private money" because cash transactions are difficult to trace. They do not announce themselves in public. ("unmarked bills" and all that)...

2. BUT nearly all the cash with which we moderns are acquainted is (in its production) PUBLIC money. It is issued by governments, for the public good. [note to self, do NOT hashtag MMT this point...]

Cryptocurrencies, in contrast, are doubly private: anonymous (supposedly) AND privately issued. No governments involved!! So I conceptualize #crypto as part of the general skepticism about/critique of the state's ability/suitability for providing #public goods for the common benefit. Finis: I personally belief in #public education, roads, communication, and money. But the last has been under attack, because who IS the public for money? As my friend @MerleHazard reminds us, it's divided (Dual Mandate):

Brad DeLong So:

A. Transactions (and hence activities/networks) hidden from the gaze of the state, and thus a source of social power that can be deployed for ill or good in the regulation of the public sphere...

B. Stores-of-value (and hence the transmission of social power across time) independent of government and hence not vulnerable to government decisions to confiscate via inflation...

C. Technology to make (A) and (B) easier—they had always been possible with human effort

D. Projectors—those who want to change the world (and do well for themselves) by bringing (A), (B), and (C) together

E. Grifters: "Soon Moon! Soon Lambo!"

F. Griftees: "When Moon? When Lambo?"

G. Underlying epistemoi that make (F) highly vulnerable right now...

Does that get it? Should we get you a fellowship for a sabbatical at the Hoover Institution for War, Revolution, and Peace to study this?

Brad DeLong: Interesting thing about the name "Ampleforth" for this new attempt to mine Dunning-Kruegerrands that Stanford Hoover Institution senior fellows are signing up for. Ampleforth claims that its name comes from a character in Orwell's 1984) who "when tasked to replace the word 'God”'in a Kipling poem... refuses, not out of righteousness, or subversiveness, but rather, a simple love for language and respect for the truth. To Ampleforth, no other word makes sense in context and therefore no other word should replace it." But if you go to the text of _1984, you discover that Ampleforth kept "God" because he needed something to rhyme with "rod", and "I could not help it!... Do you realize that there are only twelve rhymes to 'rod' in the entire language? For days I had racked my brains. There was no other rhyme." To claim that you are naming your Dunning-Kruegerrand after a heroic martyr for honest thought and God smells to me like an attempt at affinity fraud. But it is a strangely incompetent one...

#noted #finance #orangehairedbaboons