By scrooge on The Great VC Coin Rush: At The Bitcoin Convention
@Jeremy Mesiano-Crookston I was only quoting you: "The broad way in which I understand QE is that it was designed to solve the fact that all credit availability in the US, and internationally had become paralyzed".
That was not QE, that was the bailout. The paralysis occurred after Lehman and was gone within a couple of months.
As for the "wealth effect", just try googling: "Ben Bernanke" wealth effect, and he'll explain it to you.
Really, with as little knowledge as you apparently have about these things you are not qualified to argue about it. Over and out.
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By Gef the Talking Mongoose on Job Open
@Denial : Is that the 2013 where every site has to have parallax css scrolling with big ol' interstitial images? Thanks, but noooooooooooooo.
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By scrooge on The Great VC Coin Rush: At The Bitcoin Convention
@Jeremy Mesiano-Crookston You are actually confusing the original bank bail-out with QE. In the original bail-out, the US did not directly buy toxic assets but essentially either loaned money to banks or took actual equity stakes (as in AIG, for example, which had the effect of bailing out Goldman Sachs from their CDS counterparty risk at AIG, and in Fannie Mae and Freddie Mac in the case of bad mortgages). The key was to maintain confidence that the whole banking system wouldn't collapse because of the irresponsible behavior of the financial institutions.
But we are past the dire panic that hit the markets after Lehman. The point of QE was to stimulate the economy via bank lending. In practice, it seems to have worked more by exerting a "wealth effect" (people with stocks and houses, for example, feeling richer and so spending more) than through banks increasing their lending (except to large corporations which don't really need the loans anyway but can't resist the low interest rates and often enough have used the money to buy back their own stock -- see Apple recently, as one spectacular example).
Who knows whether QE has worked or not? As with most economic claims, there is never a proof, because there is no "control" - you don't know what would have happened had they not done what they did. Hence, it doesn't have the more compelling claim of a scientific experiment.
My own feeling is that after QE1 it should have been phased out. Let those who took the risks suffer the consequences, and purge the leverage out of the system. More fiscal stimulus would have been a better way to go, but it was politically impossible because of the right wing of the Republican party.
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By Ellsworth on The Great VC Coin Rush: At The Bitcoin Convention
This was a thoroughly enjoyable article. As someone participating in the bitcoin space, the perspective of someone looking at the conference "from the outside in" is valuable to me. The writing was descriptive and coherent, the research level was far higher than the norm, and the points of criticism were mostly valid.
Bitcoin's continued growth and adoption is not guaranteed. It brings inherent advantages over current wealth storage and transmission options (very low fees, extreme portability, lack of 3rd party confiscation risk) and weaknesses (relatively small illiquid exchange market with high volatility...large amounts of cash, gold, and bitcoin require security protocols that are the responsibility of the owner alone)
I agree with the author that the possibilities offered to the currently unbanked are more compelling than those offered to those in western countries with highly developed financial systems. The large global remittance market is another space ripe for innovation.
Unbelievable success, pain-filled failure, both are possible at this juncture. Some will invest in their vision of the future, others will scoff and snicker, this is a hallmark of all revolutionary attempts at change.
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By scrooge on The Great VC Coin Rush: At The Bitcoin Convention
@TheRtHonPM The Fed is buying US sovereign debt and mortgage securities every month. When they buy them, the entities they buy them from get dollars, or dollar balances in their bank accounts. This is how dollars are "printed". (See "Open Market Operations" -- but in a less traditional way since the QE programs began). Because the economy is so depressed, this money has not found its way into traditional bank lending -- rather it seems to have gone into assets, like stocks and houses. Hence, the inflation is in asset prices rather than in consumer goods (although many people think that consumer price inflation is actually significantly higher than the official figures would suggest). I'm not saying the Fed shouldn't have done this -- maybe the alternative was worse, I don't know.
Guarantees are no different, really -- they are just softer. If the guarantee is ever called upon, the result is the same.
I don't believe the Bitcoiners want to create a Cyprus situation. They just want to be able to rely on a currency which can't be devalued by governments, or bankers, or anyone. As I understand it, there is no way to create a bitcoin bank, because banks in their nature "create money" whereas bitcoins cannot be double spent the way banks rely effectively on double-spending of currencies. If there were a bitcoin bank, your bitcoins would be transformed into a bank IOU, which is not the same as a bitcoin.
The chaos to which you refer in Cyprus may yet come to countries which are printing money. Only instead of a levy on your bank deposits, you get reduced purchasing power through inflation. Note that Cyprus was, in fact, bailed out by the ECB. The levies on deposits, initially targeted at all deposits, was ultimately restricted only to rich-guy deposits (just as in the FDIC there is a limit on deposit guarantees).
So bitcoins force discipline on governments and banks in the first place. Blame the governments and banks which allowed the overleveraging to occur in the first place, not the bitcoiners.
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By scrooge on The Great VC Coin Rush: At The Bitcoin Convention
@Jeremy Mesiano-Crookston All money is based on faith. As one who lived through the 70s inflation, my faith is a little eroded. I guess only time will tell which of us is right.
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By scrooge on The Great VC Coin Rush: At The Bitcoin Convention
@Jeremy Mesiano-Crookston But my dear fellow, haven't you been watching what governments have been doing with their fiat? The Fed is currently buying Treasuries and mortgages at the rate of $85bn per month! The Fed balance sheet has expanded enormously since the financial crisis, because they had to bail out the banks. The Europeans and, more recently the Japanese, have been doing the same with their own currencies. I don't know why you would think this is in the long term more stable than a currency which, according to reputable experts in cryptography and programming, has a slow and predetermined rate of expansion.
Your faith in the probity of politicians and bankers is, though, very touching.
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By namedropper on Remember When We Fixed Iraq?
Ari Fleischer failed to mention that Dubya didn't want to see war the way soldiers see war when given the chance.
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By libmas on Take An Internet Break To Learn This One Thing About A Popular Web Browser That Turns 20 Today [PHOTO]
@BadUncle Are you sure they wouldn't? Don't you think you should at least try it on a couple of them and see?
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By Eric Spiegelman on Woah! It's Lame Twitter
Guys, what's with this trend of people answering the phone with "Hello?" It's like so overplayed.