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Thread: [SPLIT] "intrinsic" value

  1. #61
    Quote Originally Posted by Madison320 View Post
    But if people don't know the money supply has doubled, why would they subjectively decide for the value to go down?
    Okay, so you are just trying to play silly "gotcha" games now.

    The Fed increases the money supply by adding newly-created money to the reserves of member banks, who then lend that money to borrowers, who then spend that borrowed money, etc., etc. This cannot happen without interest rate changes, pricing signals, Cantillon effects, etc. propagating through the markets.

    IOW: One cannot "secretly" double the money supply.

    And with that, I am done here. At this point, it's pretty clear that I am just going to end up (1) repeating things I have already repeated multiple times, and/or (2) explaining the most basic principles of economics, which are explained much better and more thoroughly by others elsewhere.
    Last edited by Occam's Banana; 01-26-2024 at 05:49 PM.



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  3. #62
    Quote Originally Posted by Madison320 View Post
    Yeah well, most economists said that printing money doesn't cause inflation so I'm a little skeptical of the profession.
    Jorg Guido Hulsmann is Austrian and he is as anti-central banking as you can possibly get, he's written a book about why central banking is inherently immoral, The Ethics of Money Production.

    Besides that Ron Paul disagrees with you.
    Ron Paul was speaking rhetorically in the passage you quote where he speaks of intrinsic value. Ron Paul well understands the subjective theory of value and I've seen him explain it himself in various clips. It is common to speak of PMs as having "intrinsic value" when speaking to the general public, which is abysmally economically illiterate. But going beyond this short-hand and arguing that economic goods actually have real "intrinsic value" is ridiculous. You will find no quotes from RP to that effect.

    Can you tell me where the critical part is in that video?
    I would set aside 45 minutes of your time, maybe on a weekend or something, grab a notebook and pencil, and watch the whole thing. It's really not long.

    Hulsmann primarily recommends reading Chapter 1 from Rothbard's Man Economy and State, so if you prefer reading, here it is online.

    Since economic value is subjective, what's wrong with a paper dollar?
    "Subjective" doesn't mean "arbitrary". It means that value comes from a subject (person) and not from the object itself. We could say "personal value" and that would be roughly synonymous. How valuable is a 1980 Ford Pinto? Well, it depends on who you ask. Some people collect them, and value them highly. Other people couldn't be paid to have it. That is what we mean by "subjective" here --- value varies from subject to subject (from person to person), and even for the same person at different times! Perhaps you went through a Pinto-collection phase for a few years, but then you got tired of them and now you won't own one even if you're paid. That is why value is subjective. From these subjective valuations comes market prices.
    Last edited by ClaytonB; 01-26-2024 at 06:10 PM.
    Jer. 11:18-20. "The Kingdom of God has come upon you." -- Matthew 12:28

  4. #63
    Quote Originally Posted by Madison320 View Post
    ...
    Ok, let's say I agree that value is always subjective. But I can usually tell what most people think the subjective value of something is based on certain characteristics. And bitcoin has none of those.
    Quote Originally Posted by Bern View Post
    ... The value we assign to it lies in it's utility and function as money:

    The Seventh Characteristic of Money
    ...
    The Six Characteristics of Money

    We are roughly a century into the grand experiment with a central bank fiat monetary world order (half a century on a pure fiat system). For many people, pure fiat money is all that they have ever known. The lessons of history with respect to money have been ignored, but not forgotten.

    Over thousands of years of civilization, people have used many different mediums for money. The accumulated wisdom of those years are often distilled into these simple truths:
    Quote Originally Posted by The Federal Reserve
    ...
    Money functions as (1) a medium of exchange, (2) a unit of account and (3) a store of value.
    ...
    But what features does your money need? Six characteristics have been identified: Money must be durable, portable, divisible, scarce, uniform and acceptable.
    ...
    https://www.dallasfed.org/~/media/do...yday/money.pdf
    ...
    Seventh Characteristic of Money​

    It is the advent of computing technology and power which facilitates both a digital alternative to physical cash and the systems for surveillance and control that comes with third party clearing functionaries. This is new ground for monetary systems - there is no direct historical analogue for what is developing today.

    That is probably why history only records six characteristics for money. It is with the development of digital money systems that a seventh characteristic for money becomes apparent:

    Money should be free of counterparty entanglement

    Where digital money systems require even the most basic transactions to involve third parties for payment clearance, there is no guarantee that money will fulfill it's function as a medium of exchange.
    ...
    Bitcoin (and other crypto) can easily fulfill the 3 functions of money (medium of exchange, unit of account and store of value). They also meet the bar for the six commonly understood characteristics of money (durable, portable, divisible, scarce, uniform and acceptable). They fall short in comparison to gold on the 7th characteristic, but they are way, way better on the counterparty risk front than a CBDC, which is what everyone is going to end up with if the war on crypto is successful. $.02

  5. #64
    Quote Originally Posted by Bern View Post
    Bitcoin (and other crypto) can easily fulfill the 3 functions of money (medium of exchange, unit of account and store of value). They also meet the bar for the six commonly understood characteristics of money (durable, portable, divisible, scarce, uniform and acceptable). They fall short in comparison to gold on the 7th characteristic, but they are way, way better on the counterparty risk front than a CBDC, which is what everyone is going to end up with if the war on crypto is successful. $.02
    If value is 100% subjective, what criteria are you using to determine that bitcoin is a store of value?



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  7. #65
    Quote Originally Posted by ClaytonB View Post
    Ron Paul was speaking rhetorically in the passage you quote where he speaks of intrinsic value. Ron Paul well understands the subjective theory of value and I've seen him explain it himself in various clips. It is common to speak of PMs as having "intrinsic value" when speaking to the general public, which is abysmally economically illiterate. But going beyond this short-hand and arguing that economic goods actually have real "intrinsic value" is ridiculous. You will find no quotes from RP to that effect.
    [/URL].
    Do you have a link? He literally wrote that paper dollars have no intrinsic value and I'm supposed to just accept from you that he meant the opposite?


    Quote Originally Posted by ClaytonB View Post
    "Subjective" doesn't mean "arbitrary". It means that value comes from a subject (person) and not from the object itself. We could say "personal value" and that would be roughly synonymous. How valuable is a 1980 Ford Pinto? Well, it depends on who you ask. Some people collect them, and value them highly. Other people couldn't be paid to have it. That is what we mean by "subjective" here --- value varies from subject to subject (from person to person), and even for the same person at different times! Perhaps you went through a Pinto-collection phase for a few years, but then you got tired of them and now you won't own one even if you're paid. That is why value is subjective. From these subjective valuations comes market prices.
    Yeah, but pretty much everything can be considered subjective if you use the dictionary definition. The constitution is subjective. Laws are subjective. That doesn't add much "value" (ha ha) to something to call it subjective.

    Why doesn't your definition of subjective mean arbitrary? What is it that makes subjective values non-arbitrary?

  8. #66
    Quote Originally Posted by Madison320 View Post
    ... what criteria are you using to determine that bitcoin is a store of value?
    I did not say that Bitcoin *is" a store of value. I said that it "can easily fulfull" that function. If Bitcoin were made legal tender tomorrow, what do you think would happen to it's value?

  9. #67
    Quote Originally Posted by Bern View Post
    I did not say that Bitcoin *is" a store of value. I said that it "can easily fulfull" that function. If Bitcoin were made legal tender tomorrow, what do you think would happen to it's value?
    Ok, so how can bitcoin "easily fulfill" that function?

  10. #68

  11. #69
    Quote Originally Posted by Madison320 View Post
    Do you have a link? He literally wrote that paper dollars have no intrinsic value and I'm supposed to just accept from you that he meant the opposite?
    No, I don't have a link, because I don't remember where exactly Ron Paul spoke about this. I've watched many hours of his podcasts and other speeches and interviews, and I did not mark down the timestamp where he spoke about subjective value. But he has indeed spoken about it multiple times. Ron Paul will often make extemporaneous comments on basic economic concepts in order to explain them to his audience, which he is aware is generally economically illiterate, even though people who listen to Ron Paul are much more economically literate than the population average! What you are overlooking in this entire thread is that most people have anti-education on the topic of economics, that is, they have been brainwashed in government indoctrination "schools" to not understand economics, and to believe nonsense which is directly refuted by the basic principles of economic theory, such as Marxism.

    Yeah, but pretty much everything can be considered subjective if you use the dictionary definition. The constitution is subjective. Laws are subjective. That doesn't add much "value" (ha ha) to something to call it subjective.
    There are two common uses of the word "subjective". The first is the vernacular usage that you are using throughout this thread -- as a synonym for arbitrary or capricious. "My subjective opinion is that this statue should be moved to the foyer." The second is a technical, jargon use from philosophy, where subjective and objective are contrastive categories of knowledge. "It's about 18 inches" is a subjective assessment of length. "I placed a tape-measure next to it, and it was 18 inches" is an objective assessment of length. Notice that the subjective is not arbitrary -- if I'm an adult who has been regularly making estimates of length for some time, my subjective assessment of length should be quite good, plus or minus one or two inches. What makes my assessment subjective or objective is not its quality, rather, what makes it subjective or objective is its source. A doctor's subjective opinion is sourced from himself. It is called subjected because he is the subject, as in the subject of a sentence. "I am of the opinion that..." The "I" is the subject of the sentence. Objective means that something outside of the self is the source of knowledge.

    Thus, the subjective theory of economic value means that value of goods is assigned by subjects, by individuals. There is no "tape measure" of prices in general. There is no object in the world which can assign a price to just any item. Rulers are objects that can assign a length to any item. Scales are objects that can assign a weight to any item. Thus, numbers like length and weight are (or can be) objective. But not so with prices. Even though prices are numerical, they are not objective. The confusion of many economists (and all Marxists) is that the fact that prices are numerical quantities means that they are objective. In my opinion, this is a psychological mistake that results from the fact that we are so used to treating numerical quantities as objective. There are numerical quantities which are subjective. And, in the case of prices, their numerical value is necessarily subjective, and cannot be objective.

    Like OB, I'm bowing out of the discussion. I have explained this way beyond necessity. Google exists. YouTube exists. I have provided links and explanations, now go forth and avail yourself of them.
    Jer. 11:18-20. "The Kingdom of God has come upon you." -- Matthew 12:28

  12. #70
    Quote Originally Posted by Bern View Post
    Answer my question first.
    Bitcoin would go way up in the short run if it was made legal tender. Not sure about the long run.
    Last edited by Madison320; 01-29-2024 at 09:41 AM.

  13. #71
    Quote Originally Posted by Madison320 View Post
    Bitcoin would go way up in the short run if it was made legal tender. Not sure about the long run.
    Inflation occurs when the rate of money production exceeds the rate of real growth. This is why the Fed's magic fiat dollar has not been a good store of value. They inflated it's growth far beyond the rate of real economic growth.

    Gold has held a stable value for millennia because the rate of production (exploration, mining, refining and minting) is low - comparable to the rate of real economic growth.

    The rate of Bitcoin production is hard coded in the design. The rate of production is slowing down (the "halving" events) and there will ever only be 21 million bitcoin. It is capped by design. The amount of BTC in existence is therefore deflationary (and it's value should continue to increase over time). This is why Bitcoin can "easily fulfill" a store of value function. If if were made legal tender, I agree that it's value would initially surge as you suggested. I also think that it's value would eventually reach equilibrium and the wild volatility that has been evidenced through the last decade would diminish.

    Different crypto platforms have varying structures (some with capped issuance like BTC and many with unlimited issuance potential) with different rates of growth (some inflationary and some deflationary and most that can be adjusted after a democratic vote on the governance).

  14. #72
    Quote Originally Posted by Bern View Post
    Inflation occurs when the rate of money production exceeds the rate of real growth. This is why the Fed's magic fiat dollar has not been a good store of value. They inflated it's growth far beyond the rate of real economic growth.

    Gold has held a stable value for millennia because the rate of production (exploration, mining, refining and minting) is low - comparable to the rate of real economic growth.

    The rate of Bitcoin production is hard coded in the design. The rate of production is slowing down (the "halving" events) and there will ever only be 21 million bitcoin. It is capped by design. The amount of BTC in existence is therefore deflationary (and it's value should continue to increase over time). This is why Bitcoin can "easily fulfill" a store of value function. If if were made legal tender, I agree that it's value would initially surge as you suggested. I also think that it's value would eventually reach equilibrium and the wild volatility that has been evidenced through the last decade would diminish.

    Different crypto platforms have varying structures (some with capped issuance like BTC and many with unlimited issuance potential) with different rates of growth (some inflationary and some deflationary and most that can be adjusted after a democratic vote on the governance).
    How are all these objective valuations possible when according to you value is 100% subjective? Are you saying that supply is objective but demand is subjective?

    Are you saying that anything that has a stable amount of units can act as a store of value? What about a ford pinto?

    Another big problem is that the supply of bitcoin is infinite for 2 reasons. One is that there's an infinite supply of other crypto. Two is that bitcoin is infinitely divisible but the units will have the exact same functionality. Just divide a bitcoin into a million pieces and each millionth piece can act like a whole bitcoin. You can't do that with gold where a millionth ounce of gold has 1/million the functionality of a whole ounce.
    Last edited by Madison320; 01-29-2024 at 01:45 PM.



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  16. #73
    Quote Originally Posted by Madison320 View Post
    If value is 100% subjective, what criteria are you using to determine that bitcoin is a store of value?
    Each person decides that for themselves.

    Just like they do with gold or anything else.
    There is nothing to fear from globalism, free trade and a single worldwide currency, but a globalism where free trade is competitively subsidized by each nation, a continuous trade war is dictated by the WTO, and the single currency is pure fiat, fear is justified. That type of globalism is destined to collapse into economic despair, inflationism and protectionism and managed by resurgent militant nationalism.
    Ron Paul
    Congressional Record (March 13, 2001)

  17. #74
    Quote Originally Posted by Invisible Man View Post
    Each person decides that for themselves.

    Just like they do with gold or anything else.
    Ok, so they should drop "store of value" off the list of criteria for money since everything is at the whim of what people are going to decide something is worth in the future.

  18. #75
    Quote Originally Posted by Madison320 View Post
    Ok, so they should drop "store of value" off the list of criteria for money since everything is at the whim of what people are going to decide something is worth in the future.
    Not as long as it's understood that value is subjective.
    There is nothing to fear from globalism, free trade and a single worldwide currency, but a globalism where free trade is competitively subsidized by each nation, a continuous trade war is dictated by the WTO, and the single currency is pure fiat, fear is justified. That type of globalism is destined to collapse into economic despair, inflationism and protectionism and managed by resurgent militant nationalism.
    Ron Paul
    Congressional Record (March 13, 2001)

  19. #76
    Quote Originally Posted by Invisible Man View Post
    Not as long as it's understood that value is subjective.
    Ok, so using that logic either everything is a store of value or nothing is. There's nothing to distinguish between "good" and "bad" stores of value.

    Anyway you bitcoiners are wearing me out. This is my last post on this, at least until it crashes.

    To sum up my position on why bitcoin is going to fail eventually:

    - It has no utility

    - No history of maintaining value

    - Unlimited supply (bitcoin can be infinitely divided and logically still function the same and there's an infinite amount of other crypto)

    - Can't work without electricity.

    - Not a true private transaction (compared to trading a gold coin like John Wick for example)
    Last edited by Madison320; 01-29-2024 at 06:20 PM.

  20. #77
    Quote Originally Posted by Madison320 View Post
    Ok, so using that logic either everything is a store of value or nothing is. There's nothing to distinguish between "good" and "bad" stores of value.

    Sure there are ways to distinguish between good and bad stores of value, just like there are ways to distinguish between good and bad songs and paintings. But these ways are are dependent on people with minds doing this distinguishing.
    There is nothing to fear from globalism, free trade and a single worldwide currency, but a globalism where free trade is competitively subsidized by each nation, a continuous trade war is dictated by the WTO, and the single currency is pure fiat, fear is justified. That type of globalism is destined to collapse into economic despair, inflationism and protectionism and managed by resurgent militant nationalism.
    Ron Paul
    Congressional Record (March 13, 2001)

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