Do we vote on central banking policies directly? No, of course not. Does that mean nothing ever changes? No, of course not.

I'm not sure who, if Mitt Romney had won, he'd have named as Fed chair, but I suspect it wouldn't have been Janet Yellen. (Just like, had McCain won in 2008, we sure wouldn't have anything like the Affordable Care Act--which, flawed as it is, is a big improvement over the old status quo.)

That's how democratic access to money policy works; we vote, power realigns in accordance with our votes, and a few years down the road, we do it again.

How is that better and more likely to happen than allowing 51% of the network to just adopt a new protocol and cut out all the middlepeople?

The reason Congress has not abolished the Fed is that most people think that the Fed is pretty good at what it is supposed to do.

The non-conspiracy fact is the Fed has stayed quiet during the past 7 years because it has done a remarkably good job compared to their conservative-to-the-point-of-incompetency European counterparts. Europeans are quite familiar with ECB policy, because it has handled the crisis so astoundingly badly.

On another note, we need a Godwin's law for "Conspiracy Theory". As soon as someone mentions the word, it's likely to set up a appeal to ridicule fallacy, such as used in the parent.

1. http://mises.org/library/death-m3-fifth-anniversary

I'm also curious where in the county a loaf of bread is now $3-4, and I mean the cheap white/wheat bread that used to cost a buck and change (and still does here).

Housing, I know it's gone up a lot, but even so, 3x?

Can you provide any hard numbers on the 3x increase in gas, housing, and food?

The prices mentioned are exactly in-line with what I'm paying overall, though gas has gotten to around $3.10USD/Gal recently. Food prices are astronomical, and labor wages are flat/stagnating.

I guess if you want to compare the situation in the US in 2009 with the situation in Canada in 2015, then, ok, but it's hard to see what point you're actually trying to make then.

On a sidenote, why is economics so wrapped up in astrology?

And therein lies a problem. Under a system like this, policy is geared towards affecting the short term in order to affect the next election cycle and no heed is given to how things play out in the long run.

Maybe 4 years is too short a time to revisit the question. Maybe too long. I don't know if 4 years is the best length of time, but it doesn't make sense to make it too long a period of time; we've got to have a chance to change course every so often.

Bitcoin is controlled by the few barons who own most of the coins, and unlike central banks, those barons are entirely, rationally aligned with their own personal profit. Same with the overseas miners who invested in infrastructure. The federal reserve may be influenced by politics, but at least it is aligned with keeping the USD currency stable, and usable by citizens.

The personal interests of the bitcoin elite are why bitcoin suffers from tragedy of the commons. Bitcoin will never be anything but deflationary because the ones who control it (barons, miners) do not profit from change that is beneficial for bitcoin.

The federal government has some influence over the federal reserve, but it's advisory at best. Their deal is that fed allows the government to deficit spend as much as they want and in exchange the fed gets an cut of the interest on every dollar (which are federal reserve notes-- eg: debt.)

The federal reserve has not kept the USD stable, and is, in fact, financially incentivized to destroy the USD via inflation, and is busy doing so. They are obscuring this destruction by using the power to print dollars to buy treasuries at auction making it look like there is massive demand for such treasuries, keeping interest rates low. They keep interest rates low, which boosts government spending (Because its "cheap"-- at least in the short term) and this boosts fed income because they get the interest.

The bitcoin protocol was clearly made by someone who understood economics an didn't want to allow such a scam to be perpetrated on the public the way the fed has defrauded us of %99 of the value of the dollar over the past 100 years. (probably more like %99.9999 ... but I'm not sure how many 9s there are after the decimal.)

It's not a deflection to point to central banking-- central banking is the reason for bitcoin being the way it is.

If the Fed is currently busy destroying the USD via inflation, it's doing a pretty poor job of it has kept inflation under 2% for quite some time now.

You talk about the inflationary behavior causing the dollar to lose value over the last century, and that is absolutely intentional. A good currency is expected to experience a 1-3% annual inflation, in order to decentivize hoarding and remove barriers to cash flow.

Bitcoin is deflationary by design, and this is a key distinction to make. There is a definite future for an international cryptocurrency, but the implementation known as bitcoin is not it - exactly because of what you said, it is designed to be a store of value, not a currency. Many bitcoin evangelists will claim that theoretical soft forks can be made to solve this, by adding more supply and making bitcoin inflationary, but to do so requires 51% of miners to agree to it - which is irrational because it would devalue the miners' holdings and infrastructure.

Hence we're back at Bitcoin suffering from tragedy of the commons, which is by design as you point out.

And inflation is quite specifically the point, to encourage people to spend money (on buying stuff, on reinvestment, on whatever), instead of sitting on it.

When people sit on piles of money, it doesn't do anyone any good. It's not destroying the USD to keep that money moving around the economy, it's part of its basic deal.

Bitcoin was designed to be a cryptocurrency that stores value, and because it is deflationary, bitcoin makes a terrible currency. The bitcoin forking scheme to fix this is controlled by people who profit from bitcoin staying deflationary.

The economic majority controls Bitcoin, not the miners alone. Have you even heard about nodes?

What is the minimum number of people you think it would take to decide on a change to some rule of bitcoin and have enough combined power to force the change through?

Pools are in fact very democratic systems for this reason. Users can change pool at any moment's notice.

Miners still have to obey the rules of the Bitcoin nodes. If a miner tried to generate more coins, even if 100% of miners tried, it would fail as the several thousand active Bitcoin nodes would simply reject the blocks.

Softforks cannot add more coins into the network, they can, at most, restrict earlier valid transactions.

It's always been known that someone with over 51% of the power can rewrite the blockchain, but only within the rules of the Bitcoin nodes.

For example, a softfork could never spend coins from your wallet without your key, it could never make more coins or delete a users balance.

This is a good post on the difference: http://bitcoin.stackexchange.com/questions/30817/what-is-a-s...

51% certainly gives someone a lot of power, but it's power with limits, and the limits are the rules coded into every Bitcoin node.

Why should we expect that 99/100 people have anything insightful to say about currency? Even the person who is college-educated and took maybe 1 or 2 economics classes is way out of depth talking about it. There are maybe a "handful" of people who could give a meaningful evaluation of bitcoin or some alternative currency... similarly the requirement that someone be code-literate and have algorithmic "chops" to change bitcoin is good -- you don't want a person who doesn't even know what a distributed system is trying to make changes to something they don't understand because they read an article on huffington post about it and decided it was "problematic" because it didn't fall quite in line with something they believed rather strongly but without good reason to be true.

I'm not saying, "everything must be direct democracy."

I'm saying, "people have a right to access political power."

I've never been ok with "you're too stupid to know how this works, I'll take away your ability to decide," even though there are lots of things where I'd consider myself better-informed about stuff than the typical dumb idiot on the street.

(Yeah, even those typical dumb idiots, I want them to have a say in how society is structured too. That's how strongly I believe in democracy as a human right.)

Right now, bitcoin is totally a choice, and one very, very few people are making. If bitcoin ever spread beyond this very fringe state, to where people would be compelled to use it for whatever reason, that's where it's important that those people have a say in how it's designed and how it operates.

I am sympathetic to the idea of "let the people decide and let the best ones fall out of the mix," but the problem I see is:

Having multiple "competing" currencies defies the usefulness of currency at all. If, as a medium of exchange, I have to keep several around to do business with you (because you accept dogecoin, kanyecoin, and I'm carrying dogecoin and Frondocoin), then I don't think that's a very good situation.

And say Frondocoin wins out; for whatever reason, it takes over and 90% of people accept and carry some with them. Well, great, right? Except for the people who are growing up in the Frondocoin regime, whose economic lives are now dictated in some ways by the Frondocoin design goals.

Telling those people, "well, just start your own, and then persuade enough people in your local economy to start using it, and then maybe it'll grow enough to let you do interstate trade..." gets us right back to the start. Now people are once again stuck using a currency they didn't ask for and have no say in the operation of.

You might say "vote with your actions, your actions will help pick the winner."

I say, "vote with your vote, you have a right to periodically refresh your government by a well-defined, accessible process."

So, I guess I just still don't see how what you're proposing is either effective as currency or as democratic governance.

The idealism of common currencies emerged largely as the result of rapid globalization among hard currency regimes (case study: the eurozone). The obstacle of exchanging currencies in that context makes sense. I think this obstacle is / can be largely removed however in the context of digital currencies. I don't see the competing market of digital currencies as a king of the hill scenario seeking currency monopoly (as centralized national currencies current do), but rather as a continuous plurality more akin to one's stock portfolio. The key here is substitution of software processes for physical processes in transactions, and the inherit flexibility that such a transition results in. Now if you're thinking that trying to figure out how to manage a complex portfolio of competing currencies for every day financial transactions seems incredibly confusing, I'd agree with you! But simplifying that process is precisely the role that software enabled currencies can address.

In this respect, electing new currencies is analogous to electing new governments, consistent with a well-defined accessible process. The difference is that the election of (multiple) currency regimes is now decoupled from the election of representative intermediates. It's nice to think that our political institutions provide us democratic control over central banking, but who actually takes the nomination of the next Fed chairman into account when that consideration must share the collective attention span with so many other issues de jour?

We should minimize the amount of decisions people make about government. The best way to do this is to mostly do away with the federal government and maybe the state government, deferring as much as possible to small, local communities where it's possible for people to be reasonably informed.

It happens that the matter before us - the process by which state-sanctioned currency is created and distributed - is a wonderful example of the failure of voting to create policy which is in line with the civic polity of the voters in question.

Very, very few people believe that the current configuration of the federal reserve is just, yet over 40 million people voted for the current US President.

Thus, there is obviously a chasm between the beliefs of the voters and the outcome of their democratic exercise.

One of the most important (in fact to me, the most important) critiques made by the open source collaboration model is that, in some cases, a seemingly more chaotic system of decision-making can (but of course doesn't have to) result in a power dynamic more consistent with the underlying politics of the constituency.

Bitcoin, while obviously flawed in many ways, and blockchain technology generally, are formulations of this critique. They say, "here's a different imperfect way of making decisions about the operations of power structures."

In this way, it makes more sense to judge them on how they apply the desires of a constituency to the power structure, not merely the matter of whether or not they facilitate one particular mechanism for doing so (ie, voting).

By my assessment, Bitcoin is actually somewhat less horrible than USD when judged this way. Future cryptocurrencies may emerge which are not at all horrible.

(Critation needed). From my vantage point, very very few people - mostly cranks and charlatans - are against fractional reserve banking or the Federal reserve.

I agree that it isn't a popular viewpoint, and I don't think it is even feasible with fractional reserve banking as well as other nation state risks to a currency, like foreign manipulation, but I don't argue that it's all that crazy to call for the end of the Federal Reserve.

For those opposed to the general system of fractional reserve and central banking. I also said "mostly" because I do beleive there may be eventually a better system.

I think there's plenty of room to debate the policies and structure of the United States federal reserve.

Isn't it exactly the other way round?

For Bitcoin I can at least inspect and understand the economic assumptions, by looking at the source-code or having someone I trust explain it to me.

What are the economic assumptions for the USD? Who can I ask and how do I know they won't lie to me?

Also in terms of democratic recourse I find "learn to code or pay someone" a much lower barrier than "get rich enough to bribe influential politicians".

The US Dollar on the other hand is flexible to changing economic realities. The Mint can change the rate of production, and the Fed can change interest rates. We've seen this in the recent recession, where the Fed dramatically lowered interest rates in order to avoid a liquidity trap. There is the danger that the US Gov't might set the wrong monetary policy, either due to corruption or (more likely) incompetence. But to be worse than a fixed monetary policy, they essentially have to be choosing worse than random, which I doubt they'll do over the long run.

> What are the economic assumptions for the USD? Who can I ask and how do I know they won't lie to me?

The Fed can't really lie about the interest rate. I suppose the Mint could secretly hoard bills, but that would be a huge scandal and pretty quickly noticeable if they did it at a large enough scale to make a difference.

I would argue that we're all collectively part of this experiment right now. We can't tell which is worse because afaik there hasn't been a competing system with a more rigid policy to compare to yet.

The Fed can't really lie about the interest rate.

Well, policy is not so much about what someone has done but more about what they will do.

As for democratic resource, I don't see how there is any comparison possible between "learn (or pay someone) to code, and then persuade every money-holder to accept your code" and "receive your ballot in the mail, cast your vote for the politician whose money policy you like".

One looks like a frictionless spherical cow, the other looks like an imperfect but still workable democratic process.

That seems very optimistic to me.

The fiscal policy in Bitcoin boils down to a few small chunks of logic; block rewards, difficulty settings, transaction fees. Those are relatively easy to explain even to a non-techie.

And the resulting policy is definitive. It doesn't quietly change. All changes are broadcasted to everybody, and anyone who cares can stay up-to-date.

The US fiscal policy is not only infinitely more complex, it might also have quietly changed before you even finished explaining it to me...

"learn (or pay someone) to code, and then persuade every money-holder to accept your code" and "receive your ballot in the mail, cast your vote for the politician whose money policy you like".

To me the former is a pull-request on github, with open discussion and a realistic chance to get merged. The latter a symbolic gesture, hoping to bring someone in power who might perhaps hopefully one day implement a change that is at least similar to what I had in mind.

As opposed to paying for 8 years of law school and getting elected using the money of special interests? Setting the bar at knowledge freely available to anyone is about as good as you can do.

In practice, it only takes a handful of programmers to provide value for billions and stave off corruption. See: Linux

Where I live (Oregon, USA), they mail us ballots every year or two, and we vote on things. You don't need to own property or have a car, you still get to vote on stuff.

For example, last year we decided to legalize cannabis in our state. I'm quite sure the millions of people who voted for that didn't spend 8 years in law school.

There are plenty of political scientists who think that, as a mechanism for changing power structures, voting is ineffective and poorly conceived.

The same thing's going to happen in Oregon, when our legalization starts rolling along.

Watching an industry move from mostly-black-market (excepting the medical marijuana scene) to exploding with life and all on the level--as one example--it makes it tough for me to accept that voting does not substantially matter.

(The other example I bring up is the Affordable Care Act. I can now buy insurance out of pocket that caps my annual expenses at around $6000. Huge improvement over the old status quo for me and other independent professionals. I'm pretty sure that, had McCain won in 2008, that we wouldn't have anything like McCainCare. Another place where voting has lead to policy that has improved structures of power and trade.)

I get the point, but Linux's success isn't purely the result of a few programmers banging their fingers against a keyboard. There has been billions of dollars poured into its development over the years by corporate interests in the form of pure money and developers being paid to work on it.

Whereas in cryptoeconomy, once you decide you don't like the terms of this currency, you get a new currency made for free(call me if no programmer would give you 10 minutes of their time) and then you go on persuading people. You don't wait for any day and people vote on the spot whether they'd use it or not and then you don't even care if the elected govt does what it promised.

Pure democracy. Current America (and India where I live) is oligarchy with the power lying with the elite few.

To get really extreme I'd go suicide in front of the Indian parliament tonight if it simply bans people with criminal backgrounds to participate in elections. Guess what, many people have and nothing changed. You can hold my this comment as a written promise.

It's important to realize that bitcoin is two things:

- A decentralized payment network

- A store of value

Whether it has merit as a store of value has yet to be seen, but bitcoin has already proven itself as an innovative payment network. For this purpose I believe your argument is less important - the underlying invention of the blockchain can now be duplicated in other competing networks (altcoins, sidechains) if bitcoin itself does not prove satisfactory.

In future I believe bitcoin governance will look more similar to how the internet is governed today. For now, I think we have established that an unaccountable foundation is not the best structure.

1) the design of a currency might require paradoxical decisions - that is, popular choices for how they should work could lead to them being worse for people in the large

2) the democratic decision process might be satisfied by people choosing to adopt this currency or not

If the people chose to adopt a digital currency, that choice should be something that's also revisited periodically. Either directly (i.e. a citizens' initiative to change its inflationary/deflationary policy) or by way of our elected officials (i.e. "Vote for me, my stand on digital currency is X!"), it should be possible for the people to decide a new course of action every so often.

After a few years of living in a digital currency-enabled world, we'd have a sense of whether we wanted to keep the policy the same, change it, roll it back entirely, whatever. If it's something we could vote on, then great, democratic principles intact.

Bitcoin on the other hand has a set supply and supply schedule, making it deflationary and inadequate as a currency.

"The various currencies, which were all maintained on a stable basis in relation to gold and to one another, facilitated the easy flow of capital and of trade to an extent the full value of which we only realize now, when we are deprived of its advantages. Over this great area there was an almost absolute security of property and of person."

Keynes was one of the great advocates for dropping the gold standard, calling it a barbarous relic - as his biographer Skidelsky says, "useful as a constitutional monarch but disastrous as a despot".

The various central bankers clinging to gold - against all evidence - caused the great depression's deflationary spiral.

I really don't care - but the point still stands that Bitcoin is still almost a century behind other currencies because it is deflationary.

See, what Bitcoin really is about is moving money from the public to the private realm. In the same manner that nowadays you don't get to democratically vote the color of my living room's couch or what I'll have for supper tonight, tommorrow you won't either get to vote the monetary policy of the currency that I fancy using.

And that's perfectly fine because my choice won't "govern your life" as you put it. If for whatever reason you don't like Bitcoin you can stick to fiat money or use any other cryptocurrency with a different policy baked in. If I ever have to pay you money I'll just exchange some of my coins for yours at current market price (there'll be convenient services for that, rest assured), and you could do the same for me. Hakuna matata.

However:

Here in Colorado, we have legal(ish) marijuana. However, there is a federal law that says that banks can't deal with these businesses.

The result of this is lots of armed robbery. This doesn't seem very responsive to the needs of people in Colorado.

It would absolutely not "control" people's behavior. Control is a very charged term, that implies coercion. Unless there is coercion, there is absolutely no justification for banning Bitcoin so that people are only left with the "democratic" alternative you favor.

By all means, promote your democratic currency, but don't try to give it a competitive advantage by prohibiting people from using alternatives that don't meet your ideals.