Comments on: Ponzi Logic: Debunking Gary North Property - Prosperity - Peace Sat, 09 May 2015 08:06:55 +0000 hourly 1 By: Arturo Fri, 18 Jul 2014 21:14:34 +0000 Lindsay Lilburn, selfishness is never off-topic to which I would add the quest for power.
Here we have an example of how the ego creates unnecessary conflict. It is not important to the intention of a statement but as it is received, the claim that Mr. North had a wrong prediction was taken from him as a personal attack.
I write from Italy ‘and I ended up here because I had read perhaps the most important lesson in real politics I’ve ever heard or read written by Mr. North :
These are also aware that other issues from my point of view, highly questionable.
I also remember that eminent experts at the time of the birth of cars and computers and other things now common use of made ​​predictions that later proved ridiculous.
In this period I’m working on bitcoin and reading the statement of Mr. North here I am.
This situation has produced a nice explanation of bitcoin compared to fiat currencies, which from my point of view they are a nice scam now. From the response of Mr. North we find that bitcoin is not a ponzi scheme but to limit a system Supermoney. The thing had to stop here, the rest are useless polemics and rhetoric. I do not understand where the problem is, would a unit like the other currencies but when the man puts his hand disasters arise as always.
There are other things highlighted to analyze, but I will talk about in the next post which deals with the same subject, the answer to the answer …..
We should never forget, and then, that we live in kleptocracies !

By: Arturo Fri, 18 Jul 2014 18:48:08 +0000 The evolution of the masses is compulsorily slow otherwise would not masses, the problem is that there is “someone” who works to slow down more and takes advantage ……

By: lisa Tue, 04 Feb 2014 17:21:50 +0000 I read the Article:
Bitcoins: The Second Biggest Ponzi Scheme in History

I do not agree with the author… ( Mr North)
I will not call him names.
I believe he does not understand Bitcoin.. and what has happened over the 1st 4 years of Bitcoin….you cannot think linear when bitcoins distribution is Logarithmic
Do your own due Diligence…
I believe Digital currency (CryptoCurrency) has a place in this world…

By: BrunoT Sun, 29 Dec 2013 17:01:58 +0000 Yes, just like fiat currency.

By: Lindsay Lilburn Thu, 26 Dec 2013 08:59:10 +0000 “I believe it will take a few hundred more years at the rate we’re going.”

Steve, did you mean stop the endless cycle through peace or complete self-destruction? 🙂

Bitcoin has re-ignited the debate about what money actually is – and as you can see even the experts don’t agree…

At the heart of human failing is selfishness and nowhere is this more evident than how humans interact with that poorly defined thing called money. Bitcoin ( and many other financial systems) have gone to great lengths to create intrinsic safeguards against what essentially amounts to selfishness. (almost all crime is a selfish act at the end of the day)

For instance, we could fix our global population growth problem in a heartbeat by insisting that every man have a vasectomy are fathering two children. But we would never agree to it because its a infringement of our civil liberties. How selfish is that when you consider what civil liberties could be forfeited by our great-grand children living on a polluted planet with another 15 billion others (according to UN prediction, assuming we don’t self destruct beforehand)

A bit off topic I know but I couldn’t resist a response to this comment….

By: guy Tue, 24 Dec 2013 05:33:30 +0000 Fellow Austrian here.

I reject bitcoins for good reason. They are mathematically beautiful, but I want nothing of them as a currency.

There may be a limited number of bitcoins, but there is an unlimited number of altcoins.

By: Bill Tue, 10 Dec 2013 17:51:34 +0000 The long-term stability argument against the dollar is an empty one for a currencies usefulness. For a currency to be useful as a medium of exchange is must maintain its relative value from the moment a producer agrees to produce a good at a set price or wage until the moment that earned income is spent. Generally days, weeks or a few months.. NOT years, certainly not decades. Money is not hoarded as a “long-term store of value” any more, it is spent quickly or exchanged for assets that are expected to appreciate faster than the currencies devaluation. Bitcoins stability can be measures in minutes to seconds and as such is completely useless for such exchanges.

By: Jörg Janssen Tue, 10 Dec 2013 13:45:18 +0000 Maher starts with a personal attack:

Perhaps his most famous one is his widely publicized prediction that Y2K would end civilization as we know it.

Mr North made other valid predictions, e.g. a very early one on the housing bubble. This does nothing to strengthen or weaken his argument on Bitcoins. Maher next goes on with an appeal to emotion:

One reader who linked North’s article on a message board even commented that the article made him want to stop referring to himself as Austrian.

It does not matter what some other unnamed reader thought. Maher should trust in our own cognitive faculties. He does so by finally presenting arguments:

There are several key differences between a Ponzi scheme and Bitcoin. First, Ponzi scheme vehicles are inherently fraudulent.

Mr North makes a prediction about Bitcoin’ future based on its promise – a stable means of exchange – and its reality: large value flucations. He does not make predictions based on the intention of Bitcoin’s creators. But Maher continues:

The second key difference between Bitcoin and a Ponzi scheme is revealed in Wikipedia’s differentiation of a Ponzi scheme from a pyramid scheme. A Ponzi scheme requires an operator.

I do not see Maher disputing Mr North’s conclusion but rather his choice of words. Maher’s next argument is semantic as well:

The third difference is this: “A Ponzi scheme claims to rely on some esoteric investment approach and often attracts well-to-do investors….” Bitcoin is the opposite of esoteric. It is open source.

This again is beside the point. For the average buyers and sellers, Bitcoin will remain as esoteric as the general theory of relativity. Maher then declares:

Now that the fundamental premise of North’s article has been dispatched, …

No, it hasn’t. The fundamental premise is that a supposed medium of exchange with such unstable value will not be used as currency. This premise has not yet been mentioned, let alone dispatched. Maher goes on:

North says Bitcoin is made “out of nothing.” (…) The fact is that the Bitcoin currency and payment network is comprised of computer code.

In other words, it is not backed up by any tangible asset, which is what Mr North saying. Maher then finally gets more serious:

North writes, “Something that was valuable for its own sake, most likely gold or silver….” Nothing is valuable for its own sake. All value is assigned. (…) The existence of a mutually reinforcing cycle of demand is known as a network effect.

As Maher mentions Austrian Theory, he will be able to answer WHO assigns value to an asset and HOW. The asnwer is IIRC the individual assigns value to an asset depending on its usefulness to help him achieve his goals. As Mr North IMHO correctly points out, this is done among others by looking at the asset’s past value in that respect. Bitcoin’s claim is that it vakue is in its echange capability. But as Mr North points out, Bitcoin has rather more been used as a speculative asset.

North writes, ‘But Bitcoins are unique. The money was siphoned off from the beginning.’ By calling it money, North is contradicting himself. And unique? With every fiat currency, the state siphons off a portion of the money it prints.

I found Mr North’s remark not hard to understand: the Dollars coming in in exchange for bitcoins are what he calls money and those were immediately collected and not invested.

North observes, “Money develops out of market exchanges.” Yes, and that’s what is happening with Bitcoin.

Bitcoin is being acquired for Dollars, as Mr North describes, not to exchange it for goods but to exchange it for more Dollars in the future. That may be a “market exchange” insofar as it isn’t coerced, but not in the nature of a currency. Maher then jumps to another semantic argument:

When North proclaims, “Bitcoins cannot serve the consumer. There is nothing to consume,” he makes an absurd statement. As if a customer cannot be served without consumption! When was the last time North consumed a gold coin? Never, because gold is not consumed.

“To consume” an asset in economic terms means “to exclude others from using” the asset. Of course Mr North isn’t eating his gold, as little as he is eating his house. But he is served in his goals by both gold and his house and he is excluding others from using both. Bitcoins have no such asset value. They are, as Maher himself pointed out earlier, a mere fiat currency. Due to its unstable value, it isn’t a particularly useful one.

North continues with more nonsensical statements: “But the fundamental characteristic of money is its relatively stable purchasing power.” Stable purchasing power is desirable in a money, but it is most certainly not the fundamental characteristic of money. Rather, the fundamental characteristic of money is that it is the most widely demanded commodity in a given economy.

A currency that becomes unstable soon ceases to be widely demanded, as history has amply shown.

North keeps pointing to the US dollar as money, yet even the US government’s inflation calculator (…) shows that since 1988, the US dollar has lost half its purchasing power.

Bitcoin in its short history was much less stable than the Dollar, which makes the Dollar more useful than Bitcoin.

Perhaps upside volatility is acceptable to North, with the exception of Bitcoin of course.

Nowhere does Mr North make this claim. And to Maher’s enlightment: An asset that constantly gains value will be hoarded, not exchanged and thus loses its usefulness as a currency.

North goes on to set up a straw man argument, framing Bitcoin not as an open source international currency and payment system, but rather as a mania-driven, pump-and-dump investment.

I see no reason why the one (open source) precludes the other (mania-driven) and Maher fails to show so.

Perhaps Bitcoin is in a bubble and the price will crash. Maybe it will be overtaken by another crypto-currency some day. Perhaps the rapid price increase is pointing at an acute worldwide demand for a secure, borderless, person-to-person, expense-free form of payment. The fact is nobody knows why the price of Bitcoin is what it is right now (…)

In other words: Maher cannot explain Bitcoin’s current high value with any fundamentals. So, it walks like a mania-driven boom.

A final piece of Northian Ponzi logic masquerading as sound argument: “The mania has destroyed Bitcoins’ use as money. Bitcoins are too volatile in price ever to serve as a currency. Which is money: dollars or Bitcoins? The answer is obvious: dollars.” (…) Going from money-status to worthlessness is the most extreme case of volatility – terminal volatility so to speak.

The Dollar has remained in use as a currency because its loss in value is still quite moderate and because of legal tender laws. See below for more detail.

Bitcoin has not done that – quite the opposite – making North’s argument contradictory.

I do not see a contradiction. Mr North does not compare Bitcoin to a failed currency, but to an asset within a mania-driven boom.

During the adoption phase of any good as money, the purchasing power rapidly increases from its initial value as a non-monetary good as more and more people adopt it. If we are in the adoption phase of Bitcoin as money, it would be normal for its purchasing power to rapidly increase.

In other words: But for explaining it with Bitcoin’s infancy, Maher acknowledges Bitcoin’s rapid price increase. So, it quacks like a mania-driven boom.

If Bitcoin can never be money for the reasons North argues, how is it that the US dollar has been money for so long while violating North’s own self-imposed standards? Legal tender laws aren’t a valid answer because legal tender laws have not stopped other fiat currencies from becoming worthless.

Mr North’s standard is the Austrian standard: An asset becomes money if it is found to serve the individuals’ need for exchange better than any other asset. Despite inflation, the Dollar is still the best of all other alternatives – including Bitcoin. Due to its rapid price increase Bitcoin, as Mr North argues, is less useful to exchange goods than to hoard it in hope of a high return later. Nowhere has Maher addressed this point. Rather, he finishes in a tone that sounds eerily familiar:

North was spectacularly wrong about his technological prediction that Y2K would be the downfall of civilization. Nobody knows if his prediction that Bitcoin is destined for worthlessness will come to pass. But if it does, the cause of Bitcoin’s downfall won’t be because of the empty arguments North has made against it.

I have seen a couple of bubbles: The tiger-state bubble, the dot-com bubble, the British property and US housing bubbles. One feature they shared became obvious when one challenged their defenders: These started with fallacies and ended with getting personal. In this respect as well, Bitcoin flies like a mania-driven boom.

By: Menger Mon, 09 Dec 2013 09:53:12 +0000 Mather has already responded to North’s response here:

By: Carpenter Mon, 09 Dec 2013 02:23:20 +0000 North writes, “Something that was valuable for its own sake, most likely gold or silver….” Nothing is valuable for its own sake. All value is assigned. This is Subjective Theory of Value 101. North doubtless knows this, but it appears he’s attempting to imply gold and silver possess some sort of intrinsic value.

Wow, Mather, just wow. Gary North has never said that gold has intrinsic value. To the contrary, he has always argued that it doesn’t have intrinsic value. Gary North’s first article on this was written in 1969, called “The Fallacy of Intrinsic Value”.

But after this paragraph you go on … and on … and on … about the nature of value as if he had claimed that gold has intrinsic value. Talk about strawman argument.

And by the way, the economist is Karl Menger, not Carl. Carl was his son.

Now, Mather: can you go to a store and buy a loaf of bread with bitcoins? Can you go to a store and buy anything with bitcoins? No? As long as the average guy doesn’t use bitcoins for purchases, it will fail in its competition with the dollar. The dollar is the currency used for on-the-ground trade in the strongest economy in the world. Bitcoins aren’t accepted in a single store in this nation, or any other nation. Who do you think will win?

Bitcoins are enjoying their biggest surge right now because of hype. Problem is … you can’t do much with them. Except hopefully trade them in for dollars, real money. Which is what most people interested in bitcoins hope to do. Because they need to eat, pay rent, buy clothes, buy gas, pay off loans, etc. All done in dollars, not bitcoins. Once the hype is over, this fact remains.

Question: Who here would bet his future on bitcoins? Who here would place 90 percent of his wealth in bitcoins as opposed to dollars? No one? Didn’t think so either. Until Mather puts his money where his mouth is, and changes most of his dollars to bitcoins, he is a hypocrite when he says he is sure bitcoins will successfully compete with dollars.

And Mather: you also misrepresent Gary North’s definition of a Ponzi scheme. You instead use … Wikipedia’s definition of a Ponzi scheme, and then proceed to attack Gary North as if he had used that definition, which you know he doesn’t. Bad form, Mather. Real bad form.

Gary North’s response to Mather’s Tucker-ordered hatchet job: