
Disturbing Rise of Modern Monetary Theory (MMT) - StuntPope
https://guerrilla-capitalism.com/articles/the-disturbing-rise-of-modern-monetary-theory-mmt/
======
apo
_Were an MMT system inevitably go awry, the outward manifestation would be of
course manifest as inflation, so central planners would of course try to get
ahead of it by draining more liquidity, faster, by increasing taxes. As this
fed on itself and accelerated, the populace, as if being swept up in a
hyperinflation isn’t bad enough, would be sandwiched between hyperinflation
and hypertaxation!._

I'm not convinced. Deficit hawks have been beating the inflation drums for
decades now, with zilch to show for it.

We do see inflation. But rather than inflated consumer prices, we see inflated
asset prices as measured by historical valuations of stocks and record-low (or
even negative) bond yields for example.

MMT seems like a prescription, not for Weimar-style hyperinflation, but a
world in which asset prices rise beyond any reasonable level only to collapse
in a terrifying catastrophe, only to be rescued by central banks which buy up
even more assets to continue the cycle.

The Bank of Japan has a leg up on the US here. It currently owns a sizable
share of the Japanese stock market:

[https://asia.nikkei.com/Economy/BOJ-is-top-10-shareholder-
in...](https://asia.nikkei.com/Economy/BOJ-is-top-10-shareholder-in-40-of-
Japan-s-listed-companies)

~~~
NTDF9
Asset inflation is THE problem in developed countries.

Why?

1\. Because there are people alive with large debts on the other side of those
inflated assets. Any deflation will kill the lender (if borrower defaults) and
the borrower (if the asset's value declines or they can't make any more
payments)

2\. There are entire populations unable to make asset purchases because assets
are too expensive, thus they are left out.

The Fed's actions jumpstarted the economy by creating this massive inequality
and has left out many behind.

~~~
0x8BADF00D
> The Fed's actions jumpstarted the economy by creating this massive
> inequality and has left out many behind.

This should not be surprising to anyone.

Bernanke’s stated goal was to inflate asset prices through QE, so that
consumers would feel an increased “wealth effect”[1] and spend more.

The lie at the root of this policy is that spending == productivity which is
probably the biggest bald-faced lie ever told. We don’t call an overleveraged
man with 30k in credit card debt rich or productive. That would be absurd.

Yet it is this lie that is at the root of quantitative easing and the
overleveraged American economy.

[1]
[https://www.federalreserve.gov/newsevents/other/o_bernanke20...](https://www.federalreserve.gov/newsevents/other/o_bernanke20101105a.htm)

------
tomrod
> The more I learned about MMT the more it seemed to be the same thing, in an
> economic sense and I have frequently made this quip expecrting MMT-ers to
> call it a strawman or point out some fundamental element that I’m missing
> but instead they usually confirm that I have it correct in broad strokes.

> MMT-ers believe that currency is nothing more than an economic scoreboard or
> tally, and any government that denominates it’s own currency can never go
> broke because they can always create more currency. Of course, as Weimar
> Germany, Hungary, Yugoslavia and more recently Zimbabwe and Venezuela have
> all found out, you have to watch out for hyperinflation.

> The MMT magic bullet for this is… taxation. Through taxation the government
> can drain excess liquidity from the system while printing as much currency
> as it needs to fund its projects and as long as the total value of currency
> printed doesn’t exceed the productive capacity of the economy as a whole.[0]

[0] [https://medium.com/@markjeftovic/the-disturbing-rise-of-
mode...](https://medium.com/@markjeftovic/the-disturbing-rise-of-modern-
monetary-theory-mmt-aefeeab9dde2)

~~~
pytester
>Of course, as Weimar Germany, Hungary, Yugoslavia and more recently Zimbabwe
and Venezuela have all found out, you have to watch out for hyperinflation.

Of course, as Japan awkwardly found out, you can have the _highest_ debt/gdp
in the world and _still_ get deflation.

(I remember hyperinflation frequently being predicted as the obvious outcome
of Japan's staggering deficits in the 90s though... by people who would
doubtless pour scorn on MMT)

The difference between all of those above examples and Japan is that their
economic output was substantially impared (e.g. with Zimbabwe by effectively
destroying their agricultural sector) and they were trying to pay off
_externally_ denominated debts as well as sustain themselves.

None of this requires deficits, it can happen even in surplus.

------
candiodari
So after 2008 and all the QE's (we're up to 5, I believe), government thinks
they can just keep going with more and more QE/outright money printing and it
won't matter ?

Call me unreasonable, but given recent (even last 80 years) history I can
certainly understand why they believe this. The truth is not just that I (and
I'm almost 40) can't remember any time it didn't work, you'd have to go back
to my grandfather's time (he died at >100 years old in 2015) to find
counterexamples. Even back then, in the US he would have been too young to
realize the last time the US was confronted with this.

~~~
zozbot123
The _only_ reason we'd needed QE in the first place is that we had been
printing _too little_ money when the Great Recession happened, and so we let
"natural" nominal rates drop well below the zero bound. QE is like a
"helicopter lift" for nominal rates (the "helicopter" metaphor is one that
economists and central bankers use routinely to explain how QE works) - having
to resort to it doesn't mean that we're printing too _much_ money, but too
_little_ of it.

~~~
abakker
Sure...the gist though is that the central bank responses to any situation
with only two tools, interest rate, and money supply. If the situations shows
them that there was too little money, they add money.

A reason why thy might not have had enough money in the system until QE was
that the steady state market equilibrium before the 2008 crash might have
genuinely required less cash. There is no law that says that after shocks that
the market will always equilibrate to the same place. it is specially the
nature of shocks that market conditions are shown to not be in the equilibrium
that we assumed they were. You may see signs of one happening, but it is far
from clear that you could correctly navigate all policies and market
participants to re-equilibriate peacefully.

------
leptoniscool
IMO MMT only works if the currency is a reserve currency.

~~~
abakker
If governments do not control debt, at least in theory, though, it is very
hard to remain a reserve currency. The definition of a reserve currency is one
you can have confidence in, one that will be managed well. If we decided we
were not going to do that anymore, we'd stop being a reserve currency.

It seems like the kind of policy that you can flirt with occasionally, but not
embrace or actually use. You can get forgiveness for periods of justifiably
high deficit spending in a Keynesian model, but if you tell people that you
don't think you'll ever need to pay it back...well, they'll try to sell those
debts real quick.

------
indigo945
>Think of an MMT crisis as an economic black hole sucking all value from
further and further future generations into a gravitational vortex of the
present moment, where all value collapses in on itself and disappears forever.

This is, without doubt, the most stupid sentence I have read in my entire
life.

I really wanted to write a comment that explains why I think that, but then I
realized I would be forced to pick the entire article apart piece-by-piece,
and I just cannot stomach that. In short, though, even if MMT were the very
worst economic theory ever invented (it's not), it would always be possible to
re-build the economy after a fatal crash. Value does not "collapse on itself
and disappear forever" under _any_ political regime, environmental
catastrophes threatening extinction being the possible exception.

------
rhacker
Any mirrors? This seems to be a good topic as MMT keeps coming up.

Newb question here: People that "advocate MMT" are basically saying it's fine
that our deficit keeps rising because geopolitics and inflation/tax control?

And the people disturbed by that actually want our existing tax structure to
start making headway against the debt instead of increasing it?

And secondary question to this, is MMT a mostly left theory (because we need
to pay for the free stuff)?

I'm not trying to cause arguments I just want to make sure I got how people
see this issue.

~~~
pja
No, MMT is pretty much how the monetary system operates in modern fiat
currency economies where the government both prints and taxes in a currency
they control. The essential insight is that taxes & spending are not joined at
the hip - the only real constraint on total expenditure in a fiat economy is
inflation.

It’s not a particularly leftist idea - the right has tacitly treated
government spending in this way for decades. It was Dick Cheney who said
“deficits don’t matter” after all.

The author of this article is confused: hyperinflations are a symptom of
collapsing economies, not a cause in and of themselves. Having external debts
that you can’t default on in a situation where your economy is shrinking is
what drives hyperinflation. Look at every major hyperinflation (Weimar
Germany, Zimbabwe etc etc) and you’ll see those are the drivers of
hyperinflation.

~~~
candiodari
Not at all. Another way of looking at money is that money represents value.
It's a way of abstracting everything against each other. And let's ignore that
that abstraction breaks as soon as you're talking even medium amounts of
money, because we can.

The total amount of money commands a fixed set of resources. Increasing the
amount of money in circulation does not matter at all for reality. It's just
an abstraction. An accounting fiction. If the government spends, there's
someone else not using those same resources the government's now using.

Even the Soviets didn't control 100% of the money supply. I once read that it
was about 99.6%.

And in both the Weimar and the Zimbabwe (and Venezuela) examples, it is very
much the case that the government made the economy collapse, not the other way
around. So yes, it is _definitely_ possible to cause hyperinflation through
government spending.

~~~
pja
Weimar Germany had to pay reparations which were not denominated in Marks.
Zimbabwe had to import food, which had to be paid for in $.

Neither had an economy that was capable (at the time) of sustaining these
payments. Hyperinflation was the inevitable result.

~~~
candiodari
Since this comment is made essentially 3 times, let me just ask the obvious
question. Yes my comment gives the impression that the government just decides
to overspend. The thing that matter is THAT the government overspent, why does
not factor in meaningfully. Nor how, nor the historical context. Zimbabwe
overspent by willfully destroying it's industry and agriculture for racial
justice, talk about finding an original way to overspend. That's akin to
quitting your 100k a year job and not changing apartments.

Do you seriously think it matters whether it was a choice to overspend or not
? In Weimar Germany's case it was not a choice and arguably it was not really
a choice in Zimbabwe either. In Venezuela I think it may have been a choice.

I find a lot of people are obsessed with this justice thing, in various
context. With guilt. As if some all powerful deity is just about to descend
and decide if you've been good or bad, despite being atheists. And for guilt,
of course choice matters. But being entirely innocent and a sac is worth one
sac. So is being 100% guilty and a sac. If I gave you a choice of being a
worker in Venezuela, Zimbabwe or Wiemar Germany what do you base your choice
on ? I would base my choice on in which case I would be able to change my
situation the easiest, so I'd pick Venezuela out of those options, because I
think my odds of successfully working my way out of that situation is the
highest, and that I think Venezuela is more "guilty" than Zimbabwe and more
than Weimar Germany just doesn't factor into it.

~~~
pja
What you’re missing is that in all these cases, some sort of series economic
fallout was inevitable. The German economy was going to be forced into crisis
& deep, unending depression by war reparations that it couldn’t afford to pay,
Zimbabwe was going to collapse due to inability to pay for food imports.

The governments in question could have chosen not to print money. All that
would have done would be to alter the distribution & order of the collapse.
Its occurrence was inevitably either way.

Obviously the Zimbabwean experience was caused by awful choices made by the
government. But these were not 'spending' choices. They were policy choices
that in turn led to the collapse of the Zimbabwean economy.

“Justice” has nothing to do with any of this. Economics does: Hyperinflation
is a result, not a cause.

~~~
candiodari
> What you’re missing is that in all these cases, some sort of series economic
> fallout was inevitable. The German economy was going to be forced into
> crisis & deep, unending depression by war reparations that it couldn’t
> afford to pay, Zimbabwe was going to collapse due to inability to pay for
> food imports.

No ! That's EXACTLY my point. There was a serious problem (self-inflicted or
otherwise) and monetary policy, whichever one was chosen, was just not going
to resolve it.

Just like TODAY monetary policy choice are NOT going to save us from the
impact of, say, free healthcare, or massive economic efforts to "fight"
climate change, or ...

We should choose to implement (or not) those policies assuming that the cost
for those projects is a very real cost that will have to be paid, one way or
another. It will be paid in real resources that individuals, meaning you and
me and everyone, won't have access to anymore.

If some policy costs 1.5 billion dollars you should judge that policy on the
basis it's going to cost you 1 less coffee at starbucks per month, or some
other 5$ worth of resources. Because that is true for government expenditure
regardless of where the money actually comes from.

And I would still argue that Zimbabwe, and for that matter Germany, got into
the issues they got into because of their ideas of "justice". Racial justice
in Zimbabwe's case. Imperialism in Germany's case (which they of course
considered just at that time, and it's just a fact of life that justice
changes over time). But you're right too, these were not monetary policy
choices.

------
dv_dt
While arguing against MMT, the author completely neglects the measures that
are required to prop up the supposedly stable operations of the current system
- one where the recessions have been periodic, getting deeper over time and
continued cycles, and with the last cycle, required extraordinary measures to
prop up the system as a whole.

~~~
manfredo
Granted, the other way of looking at it has been the fact that we've managed
to devise a system that has managed to be stable enough that investment yields
consistent growth over any 10 year period (including the Great Depression, and
the more recent "great recession"). The extraordinary measures needed to prop
up banks in the late 2000s was not really all that large of a catastrophe. How
many other economic systems can claim the same?

~~~
StuntPope
It's called "kicking the can" and the only reason it looks like a sustainable
system is because we haven't hit the end of the runway yet. But now that we're
trapped at the zero bound and cannot normalize, the next few years should see
the beginning the end of the debt supercycle and the USD as world reserve
currency.

~~~
toastermoster
When you say "trapped at the zero bound" are you saying the control output is
saturated basically? I'm thinking in terms of feedback control loops. I would
agree that the FOMC doesn't have a lot of room to work with if we were to
enter another downturn but they do have some range left in their controller.
During the last downturn they reduced the federal funds rates to 0% and that
stayed there for years but they are now back up to 2.4% I think. When dropping
rates to 0% wasn't enough in 2008 they also reduced longer term rates by
buying Treasury securities (operation twist etc). The ended up adding $4.5T of
Treasury securities to their balance sheet by the end of it. They have been
unwinding those positions for over a year now but the balance is only slightly
less than $4T. So I guess one could say there isn't much left in the
accelerator pedal if we need it again. Especially given the recent tax
reductions while the economy was already improving. That's just one less tool
that can be used for the next time. Hopefully we won't have a next time until
the Fed is able to get rates over 5% and the Fed balance sheet under $1T.
[https://www.federalreserve.gov/monetarypolicy/bst_recenttren...](https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm)

~~~
zozbot123
From a feedback control perspective, it amounts to trying to balance an
inherently unstable system. Think of a cart-and-pole apparatus where the top
end of the "pole" (that is, the _natural_ rate) is constantly being pushed
around by unpredictable, outside shocks, and you have to move the "cart" (the
_policy_ rate) in the same direction to make up for those and keep the whole
thing from falling over (into hyperinflation or extreme deflation - an
illusory "boom" or a very real and persistent "bust"). The zero bound is only
a leftwards boundary for the "cart", not the "pole" \- but when it's hit, you
do need something like QE to push the top end of the "pole" rightwards again
independently of the "cart".

(The way out of the mess is to stop trying to use monetary policy to
manipulate market interest rates, and to instead shift to a short-term policy
target that fosters stability rather than instability. Such as, e.g. the
money-price of gold. Or some measure of the money supply. Or the market
forecast of nominal incomes _x_ months in the future. There are lots of
plausible choices!)

------
lenticular
This is a really ridiculous article written by someone with a libertarian,
rather than scientific, agenda. While MMT does have its issues, it is a
promising future direction for macroeconomics, especially as neoclassical
economics has shown more and more problems.

~~~
bromuro
It is ! I can’t say if MMT would be the solution of our problems, as I’m not
an economist, but I hope the debate to move on and not stay just black vs.
white. I studied some of these theories and actually the MMT was the most
refreshing one to me.

------
nec4b
Modern money theory is neither modern neither a theory in a scientific sense
of the word. It's more like a fake moon landing type of theory. It's a honey
trap for the type of people who mistake an appearance of science to be
science.

~~~
dv_dt
Why concentrate that criticism on MMT? It applies to all of economics -
neither MMT nor prevailing economic deficit frameworks come out ahead there.
Though I would say MMT is making more fundamental observations than the
"deficits must be cut" side of things which feel more like cargo cult
tradition.

~~~
nec4b
This is an article about MMT, isn't it? And no, not all economics is pseudo
science. Maybe you're looking at economics too much from the political point
of view and too little from a scientific perspective.

------
ahmedalsudani
Wayback Machine mirror
[http://web.archive.org/web/20190121183722/https://guerrilla-...](http://web.archive.org/web/20190121183722/https://guerrilla-
capitalism.com/articles/the-disturbing-rise-of-modern-monetary-theory-mmt/)

------
AnimalMuppet
The problem with MMT is that, as the article says, "MMT-ers believe that
currency is nothing more than an economic scoreboard or tally". That belief is
false.

Money is not just a unit of account, it's a claim on stuff. If you create a
bunch more claims on stuff, without creating any more stuff, that's going to
be a problem. (You might call it inflation.) If you try to solve the problem
via taxation, then you wind up with a bunch more claims on stuff, no more
stuff, _and the government holding most of the claims_. That's not going to
work out well for people who need to use those claims to get stuff - like
food, say, or housing, or medicine.

------
manfredo
I see this as another, albeit slightly subtler, way of trying to rationalize a
command economy. It's one where the government has unilateral authority to
marshal all of a society's resources. Do we really want, say, Trump to be able
to print as much money as he wants to fund his wall?

I'm not sure whether the fact that the government's method of doing so and the
unchecked nature of this power is obscured by currently makes this better or
worse than straightforward proposals for command economies.

~~~
jbob2000
I’m starting to think that a command economy is actually the default state.
Democracy and free market only work when people have tons of money, like they
did after WW2 (or when Rome and Greece were at the height of their conquests).

With wealth returning to the countries it was taken from, the western world is
finally returning the place it always should have been.

~~~
excalibur
Except that wealth _isn 't_ returning to those it was taken from. It's being
hoarded by a small group of oligarchs.

------
throwaway5752
What's the phenomenon like Dunning-Kruger where people think their expertise
on one domain (like software development and operations) has any bearing on
their knowledge in other domains like medicine or macroeconomics? Honest
question.

~~~
mlevental
simple: it's arrogance. lots of examples come to mind: Francis Crick and race,
Freeman Dyson and climate change, Elon musk and literally everything :)

~~~
r32a_
Well Musk went from making websites to building a space company and electric
car company and now a tunnel making company.

So maybe you're underestimating abilities of some people to master multiple
fields

~~~
krapp
Being founder and CEO of different companies doesn't imply a mastery of the
fields in which those companies operate, only control of the capital they
generate. Elon Musk could buy a Michelin starred restaurant tomorrow, that
wouldn't suddenly make him a world class chef.

~~~
r32a_
Disagree. the job of a founder + CEO is not to just control capital.

If Elon Musk built a 3 star Michelin restaurant himself from scratch then yes
I would classify that he has mastery of the fine dining industry. You could be
an amazing chef but couldn't run a restaurant if your life depended on it.
Just like how there are brilliant engineers that aren't good at being CEOs of
a tech company.

------
r32a_
I highly recommend people to read "The Bitcoin Standard".

Outside of all the noise and fud surrounding Bitcoin, within it lies a new
economic system which has lots of similarities with the gold standard and
Austrian economics.

~~~
nosuchthing
Gold to Bitcoin analogies are a marketing falsehood. On paper things might
look similar, but looking into the details and history behind Bitcoin and
other cryptocurrency software development it quickly becomes clear there's a
multitude of cascading flaws.

BTC inflation is currently higher than USD

Historically, Bitcoin started off as a hyperinflationary mint in order to
produce the supply rapidly for a small user group before the general public
would be able to access the production methods and before the difficulty
settings Satoshi chose would increase the cost of production and reduce the
ROI and increase the CAPEX/OPEX dictacted by the BTC mining software and
network.

Aprox 4.11% of Bitcoin users (addresses) control 96.53% of all bitcoins in
circulation. Also there's a chance that something will make Bitcoin obsolete
in the near future - immediately destroying the trade value of Bitcoin, either
a new cryptocurrency, a quantum computer or cryptographic breakthrough that
would allow theft of BTC private keys or more predictably a bug like what
recently happened in the main Bitcoin core wallet client software which
allowed a user to inflate the supply of Bitcoins past 21 million and mint more
BTC for free.

[https://www.livebitcoinnews.com/cve-2018-17144-the-
aftermath...](https://www.livebitcoinnews.com/cve-2018-17144-the-aftermath-of-
a-catastrophic-bitcoin-bug/)

Here’s an explanation on how the Bitcoin market differs vastly from Gold
speculation markets:

[https://www.youtube.com/watch?v=6r04gfWfRkE](https://www.youtube.com/watch?v=6r04gfWfRkE)

Then there's the story of Bitfinex, assumed to be a lingering MTGOX scale exit
scam using a "stablecoin" which is pegged 1:1 with USD across all other major
cryptocurrency exchanges. With no audit, Bitfinex has printed aprox
$2,042,257,000 USD as of today. Much of which is alleged to be used by their
own accounts to manipulate the levered futures markets.

[https://medium.com/@bitfinexed](https://medium.com/@bitfinexed)

~~~
r32a_
Every point you have written is incorrect. I suggest you spend 5 minutes
researching all of your points and you can see that. But to summarise, all
those coins in those addresses are held in known wallets of exchanges and
wallets, bitcoin inflation is halved every few years, breaking bitcoin crypto
will have devastating effects on the entire world including all banks and
governments, Bitcoin crypto tech can be changed, bitfinexed is a joke and has
been proven to be wrong many, many times.

~~~
AnimalMuppet
nosuchthing actually presented the results of research. You presented nothing
but claims with no support. Advantage: nosuchthing.

~~~
r32a_
The points he presented are so ridiculous that I don't see any point in
convincing him, his mind is already made up.

~~~
nosuchthing
You're attempting to argue with nothing to offer? hmm looks like your mind is
made up but you have nothing to show for it?

The main points I presented are provable, leaving only the Bitfinex'ed theory
up to the evidence and allegations presented which have been backed up with
additional university studies. [1]

A] Bitcoin hyperinflation and low cost ROI/CAPEX/OPEX supply acquisition by
Satoshi's Bitcoin mining rule set can be understood by reading the original
Bitcoin white paper and factoring in the low difficulty and tiny user base
during the initial period of hyper inflation.

B] The current inflation rate for the United States is 1.9% for the 12 months
ended December 2018, as published on January 11, 2019 by the U.S. Labor
Department.

Bitcoin inflation rate per annum: 3.83% [3]

C] Control of the Bitcoin supply being owned by an oligarchy. This is provable
by looking though any of the Blockchain explorer APIs or by analyzing the
blockchain yourself.

Even if we were to assume the 4.11% of Bitcoin users (addresses) who control
96.53% of all bitcoins in circulation were actually the main exchanges, this
is still much worse than the traditional banking/financial markets due to the
current unaccountable nature of how those exchanges operate. An ongoing trend
in the Bitcoin markets is the famous BART phenomenon, presumably one of the
largest owners of Bitcoins is manipulating the entire market though short
squeezes which last a few minutes before the market returns to where nearly
exactly where it was before. The most plausible explanation is one or more
exchange operators are capable of mixing fractional reserve deposits with
manipulation of the futures markets to fraudulently terminate market contracts
with those extreme temporary spikes in volatility and minimize their risk by
returning the market price back to where it was prior before any
deposits/withdraws can be confirmed between exchanges.

[1]
[https://www.bloomberg.com/news/articles/2018-06-13/professor...](https://www.bloomberg.com/news/articles/2018-06-13/professor-
who-rang-vix-alarm-says-tether-used-to-boost-bitcoin)

[https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066&...](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066&download=yes)

[2] [https://www.usinflationcalculator.com/inflation/current-
infl...](https://www.usinflationcalculator.com/inflation/current-inflation-
rates/)

[3] [https://www.bitcoinblockhalf.com/](https://www.bitcoinblockhalf.com/)

~~~
r32a_
Bitcoin inflation rate will reduce to be less than gold. Unlike Gold or U.S
Dollar, this number can be predicted to perfect accuracy.
[https://bitcoinvisuals.com/misc-future-
supply](https://bitcoinvisuals.com/misc-future-supply)

Bitcoin hyperinflation during the early period is part of the design? It gave
incentive to people invest money into the network and asset.

Many of those addresses are known addresses of exchanges, yes it's a problem
that everyone puts money into the exchanges. However that is changing, new
decentralized exchanges, atomic swap technologies already exist for people to
move away from centralized exchanges. The industry has come a long way and
still has further to go. Also the "regulated" banks that you speak of, plunged
the world into the financial crisis and got away with it no harm. These
"regulated" are constantly caught break multiple laws and manipulating
markets.

[https://en.wikipedia.org/wiki/Libor_scandal](https://en.wikipedia.org/wiki/Libor_scandal)
[https://www.telegraph.co.uk/business/2017/12/11/hsbc-
spared-...](https://www.telegraph.co.uk/business/2017/12/11/hsbc-spared-us-
money-laundering-sanctions-battles-clean-act/)
[http://www.cityam.com/269831/goldman-sachs-hit-52m-fine-
shor...](http://www.cityam.com/269831/goldman-sachs-hit-52m-fine-short-
selling)
[https://www.bloomberg.com/news/articles/2018-05-01/goldman-s...](https://www.bloomberg.com/news/articles/2018-05-01/goldman-
sachs-to-pay-110-million-to-n-y-fed-for-forex-conduct)

~~~
nosuchthing
The issue you're ignoring is accountability.

Decentralized exchanges are a myth. Someone is creating the software and with
the added complexity, lack of accountability with anonymous developers comes
the risk of malware hidden in software updates.

The only reason I can imagine you or anyone would try to argue that the answer
to an imperfect legal, regulatory, and financial system is to abolish it and
move to a new system designed to bypass accountability and where the money
supply was designed to be minted very rapidly to an anonymous group of
oligarchs who then simply horde it, would be because there's a strong
psychological motivation for you to attempt to convince other people to "buy"
into your deregulated penny stock database not because there's any real world
benefit over a regulated system, but because you simply want to sell your
stock for a higher price - leaving the greater fools who buy database tokens
holding a bag of something they can't use anywhere.

Deregulation helps against malicious actors how??

[https://medium.com/cryptopay/list-of-known-bitcoin-scams-
bew...](https://medium.com/cryptopay/list-of-known-bitcoin-scams-beware-of-
fraudsters-de8f7442acd0)

[https://bitcointalk.org/index.php?topic=576337](https://bitcointalk.org/index.php?topic=576337)

Bitcoin and cryptocoins have been plagued with malicious actors since its
inception. From Satoshi's wallets to MTGOX, the countless Bitcoin hacks and
scams.

[https://en.wikipedia.org/wiki/Mt._Gox](https://en.wikipedia.org/wiki/Mt._Gox)

[https://bitcointalk.org/index.php?topic=576337#post_linode_h...](https://bitcointalk.org/index.php?topic=576337#post_linode_hacks)

[https://bitcointalk.org/index.php?topic=576337#post_allinvai...](https://bitcointalk.org/index.php?topic=576337#post_allinvain_theft)

[https://bitcointalk.org/index.php?topic=576337#post_bitfloor...](https://bitcointalk.org/index.php?topic=576337#post_bitfloor_theft)

yet another major Bitcoin bank/exchange has exit scammed.

[https://www.blockhaven.ca/releases/quadrigacx-a-potential-
ri...](https://www.blockhaven.ca/releases/quadrigacx-a-potential-risk-for-
investors)

[https://www.theguardian.com/technology/2015/mar/18/bitcoin-d...](https://www.theguardian.com/technology/2015/mar/18/bitcoin-
deep-web-evolution-exit-scam-12-million-dollars)

[https://bitcoinmagazine.com/articles/fraudulent-south-
korean...](https://bitcoinmagazine.com/articles/fraudulent-south-korean-
exchange-pure-bit-nabs-28m-ico-exit-scam/)

When was the last time a Bank collapsed and FDIC insured deposits were lost?

[https://thenextweb.com/hardfork/2018/01/17/bitconnect-
bitcoi...](https://thenextweb.com/hardfork/2018/01/17/bitconnect-bitcoin-scam-
cryptocurrency/)

[https://coinnewstelegraph.com/ethereum-news-new-zealand-
base...](https://coinnewstelegraph.com/ethereum-news-new-zealand-based-
cryptopia-exchange-suffers-hacker-attack-exit-scam-suspected/)

[http://blogs.telegraph.co.uk/technology/willardfoxton2/10000...](http://blogs.telegraph.co.uk/technology/willardfoxton2/100007836/bitcoin-
pirate-scandal-sec-steps-in-amid-allegations-that-the-whole-thing-was-a-ponzi-
scheme/)

[https://en.bitcoin.it/wiki/MyBitcoin](https://en.bitcoin.it/wiki/MyBitcoin)

[https://bitcoinist.com/canada-maplechange-exit-
scam/](https://bitcoinist.com/canada-maplechange-exit-scam/)

~~~
r32a_
This is a feature not a bug of bitcoin.

As the saying goes in the community, "Not your keys, not your coins", you're
not supposed to store coins on an exchange. But nearly everyone does. Everyone
is encouraged to hold their own keys and be responsible for their coins. As UX
and wallets improve more and more people are holding their own coins. The
people that store coins on exchanges must understand the risk of holding coins
on exchanges. It's a reality of crypto.

It's true, current iterations of DEX are not really DEX, they are all
centralized companies, these things take time to build, it's not a simple
photo-sharing app. If it turns out that is impossible to build a true DEX then
you can always do shapeshift style atomic swaps and those are here today!

Bitcoin hacks and scams are not related to Bitcoin. There are even more hacks
and scams that happen in the regular finance industry. From SWIFT being hacked
to countless and countless of scams by small and big companies. Are you
seriously saying that Bitcoin only suffers from scams??

The difference between a Bitcoin bank failing and regular bank failing is
that, if Bitcoin bank fails, for people who have stored their coins safely
won't be affected. Sure the price will fluctuate because of the news but I
still have my coins.

When a regular bank fails the entire country has to pay the price and money is
printed and currency is debased. Everyone has to pay for the mistake of a few.

~~~
nosuchthing
No customer protection and irreversible transactions = "This is a feature not
a bug of bitcoin."

Shapeshift is not an atomic swap, it's an exchange and they charge a large fee
on top of the current spot price determined by other major exchanges.

Bitcoin hacks are related to Bitcoin because Bitcoin/Ethereum is software.

See: [https://www.livebitcoinnews.com/cve-2018-17144-the-
aftermath...](https://www.livebitcoinnews.com/cve-2018-17144-the-aftermath-of-
a-catastrophic-bitcoin-bug/)

When was the SWIFT protocol hacked? I'm guessing you're confusing stolen
credentials with "hack" in that case which is indeed similar to the many cases
where cryptocoin exchanges get hacked though stolen credentials and user funds
are taken - except if that happens to your account at a normal bank you're
protected with FDIC insurance or something similar depending on your bank.

You're confused. Regular banks fail, and customer funds are protected. When a
regular bank fails, that has absolutely nothing to do with debasing currency,
nor does it affect the inflation rate.

When you use Bitcoin there's a lot of trust needed that can't be guaranteed or
verified, and while problems exist with traditional payment systems at least
customers have protections and criminals or bad businesses can be held
accountable.

I'm not sure why you think avoiding a legal system, or avoiding financial
regulations would help solve any of the problems with malicious scams and
abuse?

It sounds more like you're attempting to sell a product that does not fix any
of those things, hoping to convince an audience to buy into an oligarchical
penny stock

ala
[https://en.wikipedia.org/wiki/Company_scrip](https://en.wikipedia.org/wiki/Company_scrip)

~~~
r32a_
I'm sorry your arguments do not make sense, I recommend you read about the
multi-faceted nature of Bitcoin. You have a poorly researched and simplistic
view of the topic, which is very common on HN.

You are confusing Bitcoin with a payment network like VISA or PayPal. Hacks of
exchanges are not related to Bitcoin itself, it is like saying, someone broke
into my Gmail account because my password was easily guessed but you say
TCP/IP broken. It does not make sense at all!

> No customer protection and irreversible transactions = "This is a feature
> not a bug of bitcoin."

Bitcoin has the economic principles of gold.

* Pure raw gold has no consumer protection and it is irreversible.

* Government cannot give FDIC insurance to gold bars, because governments cannot print gold bars out of thin air.

* Unlike gold, Bitcoin is digital, which means it can be sent across borders at a low cost, (Almost free with LN)

* You're comparing multiple things (Payment network, economic system, and governance system) with 1 piece of software.

if you want to compare payment network features, then you have to compare
bitcoin/LN transactions to VISA, PayPal..etc

If you want to compare the economic system, then it's mostly Austrian vs
Keynesian.

If you want to compare governance then it's about
libertarian/anarchist/decentralization vs Centralised governance.

Unfortunately, you are coming across as very closed minded with same old tired
arguments that were laid against bitcoin from inception, because the general
population has a poor grasp of what it really is.

Have a read of this, it's a bit dated but it's still good, if you want to have
a better understanding of what bitcoin is: [https://www.coindesk.com/nobody-
understands-bitcoin-thats-ok](https://www.coindesk.com/nobody-understands-
bitcoin-thats-ok)

~~~
nosuchthing
You seem to have no familuarity with software or computer science, and you're
intentionally ignoring and evading addressing the issue with the Bitcoin bugs
and hacks on BTC client wallet software, which keeps having bugs/hacks in the
protocol itself allowing more free Bitcoins to be generated by hackers:

[https://en.bitcoin.it/wiki/Common_Vulnerabilities_and_Exposu...](https://en.bitcoin.it/wiki/Common_Vulnerabilities_and_Exposures)

    
    
      CVE-2010-5141 remote attack can spend anyone's balance 
    
    
      CVE-2010-5139 On 15 August 2010 over 184 billion bitcoins were generated 
      in a transaction, and sent to two addresses on the 
      network. 
    

[https://www.webcitation.org/6IwX8oDIN](https://www.webcitation.org/6IwX8oDIN)

    
    
      CVE-2012-2459 2012-05-14 This could be used to fork the 
      blockchain, including deep double-spend attacks. 
    
      CVE-2013-3219 Attacker can double-spend with 1 confirmation
    
      CVE-2018-17144 Multiple double spend bugs allowing a user
      to send more funds then available in wallet balance. 
    

This book offers a more comprehensive and detailed insight into the history
and technical details of Bitcoin and the history of those involved within "the
Blockchain community":
[https://davidgerard.co.uk/blockchain/book/](https://davidgerard.co.uk/blockchain/book/)

If you look at the previous comments you keep ignoring the specific points
explained against why your claims are disingenuous and naive and repeating the
same tired marketing falsehoods in your attempt to convince rubes into buying
database software which may very likely become obsolete at any moment in the
immediate future. Why would you want to store your "money" in a fragile
software system with no protection or safeguards? At least with gold, you
won't have someone on the other side of the world capable of breaking into
your house remotely and stealing your savings.

Here's a recent research paper analysis on Bitcoin and the lightening network:

[https://ftalphaville.ft.com/2019/01/23/1548238967000/BIS-
tro...](https://ftalphaville.ft.com/2019/01/23/1548238967000/BIS-trolls-
bitcoin/)

[https://www.bis.org/publ/work765.pdf](https://www.bis.org/publ/work765.pdf)

[https://www.ft.com/__origami/service/image/v2/images/raw/htt...](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net%2Fproduction%2Fadd09a38-cf8e-4b8a-afe8-c159dc5d850d_FINAL.png?source=Alphaville)

~~~
r32a_
No one is under the illusion that Bitcoin is not a human written piece of
software. However, the network has a an incredible uptime of 99.9832335764 %
since jan 2009 ([http://bitcoinuptime.com/](http://bitcoinuptime.com/))

Yes, of course. Like all software Bitcoin has bugs, however, none of Bitcoin's
bugs has been catastrophic, or else it would have collapsed to $0 and stayed
there. The odds of catastrophic bugs still exist but with the most development
moved to layer 2, it's hard to see any more changes coming to the core
software for the foreseeable future.

I'm not saying Bitcoin is perfect and it has many problems. However, the
problems you bring up are mostly incorrect.

* Mining centralization is an issue. Due to the fact that Mining hardware is currently produced mainly by 1 company. Hopefully, simple economics will change that and larger companies will start making dedicated mining chips.

* On chain transaction costs. If the number of transactions on BTC spikes, the fees will also skyrocket. LN is the solution to this problem but the network is still in development.

* Confidential transactions (CT) and fungibility. Currently, Bitcoin is not fungible and you must go through several steps in order to clear coin's history. Gold is fungible and so is cash. However Bitcoin devs have been working on CT for some time now and hopefully, we might see an implementation this year and pushed on to the network within the next 2 years.

* Push of centralization. Everything naturally trends towards centralization. A centralized bitcoin is useless, no matter how secure the chain is or how stable the software is. The community must reject all centralization efforts so BTC can keep its value

To your point that if a catastrophic bug is discovered which enables double
spend and/or inflation, the Ethereum community showed that it is possible to
hard fork and reverse the chain given unanimous approval by all factions of
the network. So if you wake up one day and the network has collapsed due to
some bug in Bitcoin Core then Bitcoin's governance system will kick in to save
the network.

To your point that you think i'm "scamming" you. I couldn't care less if you
bought Bitcoin or not, that's the beauty of Bitcoin. No one is forced to use
it and no one really cares about what anyone thinks. You can sit there and
call everyone a scammer, you can sit there and point out all the problems it
has (Like anything man-made is perfect), people can write all the research
paper they want about how it will fail HOWEVER, The reality is that the
Bitcoin network and ecosystem is thriving and has survived incredible
obstacles. The fact that you've pointed out at all the past issues and the
fact that it has overcome just says that Bitcoin works!

Have a good day sir :)

------
kortilla
Why would someone choose a US 30 year bond as a long term investment with the
government having the explicit intention to go massively over its budget?

The more a government borrows through bond issuance, the more it has to borrow
later to service the debt they didn’t pay for before. Eventually this runs
away to the point where there are not enough buyers for all of the debt
issuance at reasonable interest rates so the borrowing costs sky rocket. This
means even more debt has to be issued to service that debt... you see where
this is going.

A country’s spending is capped by it’s ability to find borrowers of its bonds.
Given that normal tax rates aren’t covering the spending, it’s not likely that
even 100% tax rates would be enough revenue to offset these scenarios.

Do MMT proponents just advocate literally printing money that is never tied to
an instrument to be paid back?

~~~
jhayward
> Do MMT proponents just advocate literally printing money that is never tied
> to an instrument to be paid back?

They don't see any problem with that, and they have some evidence to support
the idea.

