Debunking Economics and Why Bitcoin Will Fail With Steve Keen
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- Опубликовано: 9 июл 2024
- In this episode, I talk with economist Steve Keen, author of Debunking Economics and Can We Avoid Another Financial Crisis. We discuss the inherent flaws in capitalism and why Steve believes that Bitcoin will fail.
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*****
“One of the great weaknesses of the human species is we have this belief of a perfect world.”
- Steve Keen
Interview location: Skype
Interview date: Monday 29th October
Project: Debunking Economics
Steve Keen is challenging modern economic theory which led us into the 2008 crisis. With his two books: Debunking Economics and Can We Avoid Another Financial Crisis, Steve outlines the inherent flaws in the capitalist system which are required to make them work.
Bitcoin is often praised by proponents of Austrian Economics, but Steve believes that Bitcoin will fail due to flaws in the protocol design. In this interview I talk to Steve about why the 2008 financial crisis happens, the flaws in the current capitalist model and what Steve like and dislikes about cryptocurrencies.
Visiting this podcast 4 years later it's interesting to see how little Steve Keen understands about Bitcoin and energy and how wrong he's been
Just hearing the podcast now and thinking the exact same thing.
some actual examples because it adds nothing on its to others
Steve on Austrian econ: "it's wrong because the value function isn't objective".
Something only a person with a computer model-centric view of society would say.
do you believe in equilibrium supply and demand chase and market selforganisation this way naturally?
love for free market wisdom is like love for communism and equality
never happens but everyone wants to believe in it to view world as more magically positive
I don't agree with most points that Steve made but it's good to hear contrary opinion anyway. More Bitcoin/crypto sceptics on the show please.
As a Bitcoin believer this gives me a lot to think about. Thanks to both of you for this challenge!
It's time for an update, appreciate your content 👏🏾
Great revisiting this talk in light of recent technical and geopolitical developments. Bitcoin is fixing. Steve's critique is exactly what was required at the time and hope you can get him back on.
Learn far more from Steve Keen than most others!
But then he goes tabloid rubbish about Trump has Alzheimers because he does not like him.
@@MikeNewland when you're learning from an idealog you should be worried. Steve Keen is a skeptic about what he does not understand. Like most effective skeptics he points out b*******, but his solutions are nightmarishly worse.
@@danimal118 Often true. Marx has a lot of good analysis of capitalism but no good answers. Varoufakis too. His latest world improvement scheme would founder on human nature.
His biases cloud his thinking about Bitcoin though.
I love Steve and his points of view and have followed him for ten years but ……….. Insert comment Here...……. "Ego is a hell of a drug." I am a better person for the knowledge he has passed on and will continue to be.
Because of stupid people like you, part of me wants people like Steve Keen to plan our society. Just watching their dreams burn up with yours would almost be worth it. You can't fix stupid as the saying goes.
Currently the cost of mining gold exceeds the cost of bitcoin. Are we going to ban the mining of gold?
Arrogant mumbo jumbo and obvious superficial understanding of Bitcoin. I was hoping to hear a solid explanation from such an esteemed commentator, economic or technical, of some fundamental flaw(s) in the Bitcoin protocol. Nope. Just another old man shouting at Bitcoin. Keen dismisses Bitcoin on its electricity usage. He doesn't understand that energy used to mine Bitcoin is variable, it depends on the difficulty miners have in solving the 'hash puzzle' in a block.The protocol adjusts this difficulty over time and can go down as well as up. Besides the electricity used to mine Bitcoin is not even 0.1% of that used by the global banking system. The system Bitcoin will eventually replace. Gold mining and paper currency printing and minting all use orders of magnitude more electricity. I could go on, including the type and source of electricity used by Bitcoin, ie, nothing like the "same as Belgium' type fallacies he mentions
thank you for saving the time. obviously this man is full of shit
Interesting. You don’t have much of an understanding of the gold mining industry if you believe it uses a lot of electrical power. I don’t know about the rest of your statement but I’m about to find out how much of your statement is complete bullshit.
10/10 Outstanding interview!
Bitcoin white paper is interpreted as a new peer to peer "money". But, bitcoin has emerged as a peer to peer property. Unlike a car or a house, bitcoin as property only has one purpose to preserve economic energy. I find Steve Keen to be fantastically insightful and informative. He does a great job presenting the "inherent flaws" in economic systems. Where he fails in this conversation is to acknowledge bitcoins solution alignments with his own criticisms. He, like the detractors of Copernicus he describes, is part of the problem. What he does well is point out flaws. What he does not do well is point us towards solutions or even say if we are heading the right direction. It's 5 years later, and bitcoin is still not perfect. But it offers you and I a shelter from an inherently dangerous and predatory global financial system. And it does this for everyone every where. Copernicus and Satoshi have something in common don't they!
51:25 Can you feel it? He's salty. Good!
Thanks Peter, I appreciated this interview. I would like to hear you do another interview with Steve Keen after he has developed a good understanding of the lightning network. I did wonder if you could have pushed him a little more - ie would he reconsider his position on bitcoin if lightning addressed his concerns about transaction and energy scaling...
You missed the whole point. Money is not a commodity, it is a unit of account for tax credits. Taxation backs the State currency. Nothing backs bitcoin, so the fair price for bitcoin is ZERO - or at most the energy cost to mine it and ledger it, but even that cost is pointless, what good use is that use of energy, since bitcoin is functionally nothing but a secure payments system. GNUTaler is far superior in that function and does not pretend to be money. So bitcoin is doomed.
@@Achrononmaster keep learning. Bitcoin is like an onion.
I agree with a lot of the things he is saying about the flaws in Bitcoin. Some of them have already played out that's why we have had Forks. Ultimately in the end I believe Bitcoin Will Survive and Thrive not as a currency but as a trusted store of value unlike anything else we've ever had digitally. I really think the sooner the Bitcoin Community accepts this and stop spending all their time trying to become a currency the better off we will be
That doesnt make sense. Thats like telling people in the 90s to stop working on the internet. It's so many things being built on bitcoin that people are not aware of. Revisit what you said in 5 years. Bitcoin will come to a point it can be use as a currency and will also be a store of value.
@@jamesm2881 bitcoin will not be used as a currency AS “bad” money will always be spent faster than “good” money. This is without getting into how it’s probably a bad idea to rely on miners to put Bitcoin into circulation to fund productive enterprise.
@@cyberftbitcoin should have never become a stock exchange
it pumps it value by speculation overshadowing it's basic function
less is more
not being only one thing isn't wrong but trying to be best in two things means it makes it harder in competition with things best best in just one thing clearly understood what they are for
Saying its not going to work is like saying aircraft aren't going to work. It is working and has been for almost a decade. They should also clarify what function exactly they don't think will work because bitcoin performs multiple different functions.
It's working as a virtual scarce commodity which is perfect for hoarding. In that sense it's more akin to a ponzi scheme than a monetary system. It's also very bad for the environment. And it will never be adopted in the real world except for crime because privacy.
@@swordscytheHappened to stumble on this comment after 4 years. All the insights we have now aside, You seem to be completely clueless of what bitcoin even is, esp considering some of your statements such as bitcoin "privacy" lol
@@thenoobprincev2529 reading my comment after four years I'm happy I was spot on.
It's a shame. I would actually like to hear an argument against bitcoin from a knowledgeable economist, but - so far - every one I've heard are from people who are utterly clueless as to how bitcoin actually works other than the superficial understanding Prof. Keen displayed here. (Don't get me wrong, he's a likeable guy).
I agree, but the points he makes are diluted for me when it's obvious his understanding of the complex mechanisms and incentives is lacking. e.g. he doesn't seem to see P.O.W. as a necessary security feature and assumes that the P.O.W. is proportional in some way to the transactions per second - they are totally unrelated. The scaling problem is not about computing power / energy - That's a pretty elementary misunderstanding which makes me kind of not take his opinions on the subject too seriously.
@@LadyJaneF0x : He said everything you need to know you just didn't hear it. BTC misses the root problems and creates new ones which are much, much worse ones than the existing system. If anything Keen went easy on the audience, likely intentionally.
@@luckylui3282 I'm afraid you haven't understood my point. Perhaps went over your head.
@@LadyJaneF0x : True to the typical type of response from the crypto community. Don't challenge the actual point or support your own with anything meaningful, nope, immediately devolve to meek ad hominem attacks. Thanks for yet another demonstration of clueless crypto community of shills.
Lucky Lui No it’s simple. You didn’t understand my point. You spend the energy to address the point if you feel like it. Doesn’t sound like you’re capable. Ad hominem is energy efficient and valid in some circumstances (this one)
I assume from the youtube date that this video is relatively current (about a fortnight old). If this is accurate, How is it that prof. Keen is still only refencing mainchain transactions, how does he not know about lightning network and sidechains like Liquid? I can only assume he has not given it enough of his attention to have a more informed input on the subject...
Agreed. He doesn’t even consider the possibility of side chain scaling solutions for increased transactions. Perhaps the interviewer should have brought this to light.
I agree, the interviewer did a great job of listening and guiding him towards important topics but left almost everything unchallenged. On the one hand, Prof. Keen is adamant about global warming... but then he talks about stimulating growth in an economy without considering the damage to the environment this growth may cause. We currently see housing being used as a hedge against inflation... and building houses certainly requires great energy, along with clearing habitats to do so. I think it’s okay to have an incentive to live within our means, build efficiently, share, and really feel acknowledge the consequences of materialism... right now that can is being kicked down the road and we’re losing diversity and peace in the process.
@@ElectricBikeReview I wonder if Steve would live in a tiny house.
So either we are saying that the financial sector knew what they were doing, or they were completely incompetent! So what in the final analyses will be the conclusion?
Having worked at Goldman, the financial sector is just trying to make money. The whole thing is schemes (I say that as a neutral word) to generate fees from issuing credit. This is well and good as long as we let them fail when they go to far. The bailouts and lack of jail from 2008 will haunt the world for a generation.
Can anyone explain what he means by “money can’t be gold” to me in another way? Gold has been used for money for thousands of years up until the 20th century so im not really understanding what his point on that is, to me money obviously needs to be tied to something existing in physical reality with gold being the best option, Bitcoin the best option for a digital form of gold.
now money is credit
every sound money system will be undermined by credit spilling into it and eroding it's value like world imports dollar inflation not just using but only storing and accepting it
@@szymonbaranowski8184 thank you that makes sense now, I was just not understanding the context of what he was saying, but yeah that totally makes sense that you can’t just all of a sudden back a currency with a commodity once it’s been fiat for like 60 years and have it work like it once did
I wonder what Steve would say about Jason Lowery's thesis that bitcoin represents a new form of digital-age warfare that will transform national security, cyber security, and possibly even the base-layer architecture of the internet? That it's really "bitpower". @@szymonbaranowski8184
@ProfSteveKeen is probably one of the smartest economics professors i've seen and one of few with his head screwed to his body.
I do listen to others from many schools of thought and there are few that that half the grasp of what is happening than him! Been an avid follower of him since about 2010.
I too did start out in thinking he had no idea what he was talking about till i actually fact checked him and i gotta say that changed my view of him greatly!
The British empire doesn’t exist anymore. Care to clarify?
I’m confused he says Bitcoin is bad for the environment because it uses a lot of energy but than says people won’t spend their Bitcoin because it is deflationary and will go up in value. He then calms you need money that will circulate but doesn’t that encourage using energy which is bad for the environment?
Gold isnt money... spoken like a true keynes
"I can't see how the mining scales".
It's probably because you don't understand how it works. Mining is also a permissionless mechanism to distribute the coins to a vast network of participants. It is not only designed to provide security for the network. This is not just a technical consideration but a game theoretical approach.
Energy consumption is a function energy pricing. If you misprice energy types, you get inefficient outcomes. You can't blame that on the consumer. Get your prices right.
"Mining is also a permissionless mechanism to distribute the coins to a vast network of participants." Define "vast" for us. It's an arms race, maybe of oversight by Satoshi but "vast participants" is beyond laughable. Not to mention the slow but steady centralization of mining into the hands of fewer and fewer (hey just like how it works in a capitalist system). Can't wait to see the fallout when the price really capitulates. Oh, the mindless delusions of the crypto community. HODL!
@@luckylui3282 It's worse than a capitalist system because there's no inflation and thus a great incentive for hoarding. Hoarding slows the velocity of money thus hindering the economy. Real money is hard to hoard except in asset bubbles, Bitcoin IS an asset bubble, so by design it will become very concentrated very quickly and lose its value.
steve, wasn't the gold standard of the 19th century the least worst money standard, ie the best to date?
Steve Keen understands economics really well but also needs to be more open on studying bitcoin as a store of value without his personal emotions, Steve as some one who emphasizes strongly on eco side of things global warming/wasting energy fails to realize encouraging money circulation and consumption creates unnecessary needs and purchases which I don't translate into progress and this is a fact we are facing today people mindlessly purchasing absurd products ending up in trash and ocean.
@MrGnardo Most commodities are in fact suitable as a store of value since their value historically adjusts with inflation and economy, problem with money is that it can't be store of value. I would differ between money and currency. Money at a basic level was to be standardized medium of exchange removing complexity of other underlying assets such as gold/silver or the popular commodity of the time and the region it was being used in or even trading peer to peer. Also a need for a mean to measure wealth and assets agreeable by most market attenders who wish to transfer or exchange their assets into something else so liquidity is the priority, money is the liquid! considering there has to be public consensus, trust and certain value at any given time too. There are a few commodities that have these properties. Currency on the other hand is the idea of a political power of a country about what money is and should be I consider them a form of derivative with an underlying such as gold, or in modern economy a more complex underlying that I don't wanna get into. Historically currencies are fragile and always evolving but never suitable as a store of value, people love spending it because keeping it is worthless hence the monetary policy and capitalistic systems advertise consumption and positive inflation rates to keep this engine going. But at the end money is anything interesting for the people who you want to buy an asset from, what I consider money is a unit of measure that can be hold as an asset itself that its value is determined freely by all the market attenders. keep in mind this is my opinion
I think its important to remember that money is not equivalent to value. It is also important to remember that economies are aspects of societies relating to the creation and distribution of value. Economies are non-linear, non-equilibrium complex systems of resources, producers, consumers and waste streams embedded in, and interacting with the environment. They are subject along with everything in the universe to the laws of thermodynamics. These points have an important bearing on any discussion about money as a store of value versus money as a means of exchange. Any system of money is a solution to the problem of how to facilitate exchange events constituting flow and distribution of value in the economy; accounting as far as possible for changes in value during those flows and exchange events and finally as a store of value bridging time and space within those flows between exchange events. The concept of the value of money is only meaningful in the context of economic flows and exchange events understood in terms of the thermodynamic flow of material and energy of which resources, intermediate and finished goods and services and waste consists. The second law of thermodynamics means that stocks of value will deteriorate into waste over time regardless. That means the flow of material and energy must be maintained just to maintain stocks of value, let alone increase them. Anything that reduces or impedes those flows and exchange events inevitable impoverishes the whole system. Any model of money that is deflationary so acts, and so ultimately destroys its own value by snuffing out the flow of value creation on which that value of money depends.
At least gold would continue to exist (though without its value) if the thermodynamic flow of material and energy that is the real economy withered away. In what sense would bitcoins even continue to exist if the computers and networks in which they and associated processes are embodied could no longer be energised and maintained?
Thank you. That knocked the rust off my bell. Always refreshing and stimulating to hear a different view on economics. It's been a while.
His opinions didn't age very well.
I wonder what the energy consumption of the legacy system is ? Great interview.
You mean all the banks in the world that use materials to build the brick buildings, steel vaults, parking lots, etc, and the data centers to store ledger info, the employees that get in a car each day to drive to work.... in the US alone, there are about 8,000 banks/credit unions. That does not include the tech centers that would be separate from an actual bank. I am sure it easily exceeds the cost of the Bitcoin network.
@@YouCanCallMeDon exactly, I won't even entertain talk of Bitcoin's energy usage without first asking the person I'm speaking with if they have both considered and estimated energy usage for the legacy financial system.
@@YouCanCallMeDon make sure you include the energy used by all militaries as well
@@hexrayvision5954 Also all the energy consumed as a result of inflation forcing them to frantically spend money rather than prioritizing their use of resources more frugally. Steve actually makes fun of people cutting back.
I'm not one of the people who think BTC will be the global currency at some point but this guy just likes to hear himself talk. It's pretty obvious that when people talk about a Bitcoin centric monetary system that it wouldn't be a debt based system like we have in the US today.
Also, the point about 'money can't be a commodity' just sounded like a verbal slight of hand to me. Or perhaps someone can explain what he was saying to me but THB i really don't care.
what's impossible to make as it can't exist in isolation and inflation of other assets priced in it will still spill into it
nothing is priced perfectly in nature
either making bubble in it or crashing it as regular psychologies still apply to it
we will never escape reality of funding gdp growth with debt and imbalances in perception of value of things it causes
you will literally accept cryptos with inflation when they be both accepted as legit funds and will guarantee scrutiny of funding enterprises with positive roi so productive once not destructive ones in startup model
the difference in type of investments funded between constructive or consumption waste decides if money it's used for will gain value or not
if most folks will buy BTC to buy bullshit cryptos sadly it's lowers BTC value except if in this startup model something becomes a global unicorn and make all guys spending on it rich and pumping bitcoin back going back to original source of funding
if unicorn is a crypto itself... there is no reason to go back from it to bitcoin and it looses it's investment vehicle purpose and purpose as money
The distributive ledger also ends the creation of money through lending. Accurate ledgers is not the only reason to distribute
Gold and Bitcoin is literally mined/created through lending.
@@nilskp Do you even understand how gold and Bitcoin work?
@@sl523 yes, but I'll grant that my comment looks weird even to me, now a year later.
I think my point was that, like any entrepreneurial enterprise, investors "lend" money to entrepreneurs.
I probably wouldn't write that today 🤷♂️
@@nilskp you id10t! 😂😂😂😂
Yeah right bitcoin is created by lending!😂😂😂
I agree on a lot of the points except the energy point scailing doesn't come from more minners, you get security.
So let's say bitcoin is worth one million by time the bitcoin gets halved to 0.5 bitcoin per block that means the total cost will be 0.5 million worth of energy as no minners will mine if it isn't profitable and alot of miners are starting to cut there costs by creating alot of there on energy by wind or solar
Also have got to put in play the total costs that banks have to run there massive server rooms and keeping them up time also the truck loads of money getting shipped around each country.
Keen's comments about Bitcoin like his comments about most things have not aged well. Recently governments have agreed to accept bitcoin as a payment method. Businesses already accept it.
What does he mean with an n commodity and an n+1 commodity? He said money can't be a commodity, but I think where he is wrong is that money is a human concept and a commodity can be money but not the other way around. In german there is a distinction between money (the general term or concept), a "monetary symbol" (the good seen as money) and a currency (a medium of exchange. Gold would be a monetary symbol, whereas gold-backed paper money would have been companion currency.
I'm new learning about BItcoin, but he's off on so many things I've learned from Andreas Antonopoulis, Craig Wright, Ammous Saifedean who wrote "The Bitcoin Standard: The Decentralized Alternative to Central Banking" and a number of other experts about how deflationary money works, the end of credit and debt, etc. I've heard there's 7 billion, not 9 billion people (there's been a lot of genocide not being taken into account and sterilization and other vaccination deformity's, starvation, etc). Energy innovations have already been forthcoming with new chips and more efficient machinery and solar is another possibility, and comparing the costs of electricity to a country like Belgium...I don't think he's able to compare to the number of computing power being used world wide by corporations/govts that must far exceed the number of computers used to mining. If billions of dollars weren't being skimmed or misappropriated to corruption and military with fiat money that is easy to hide expenses and lie about it, there would be more money for energy costs anyway. I believe we're more likely to have global cooling (It's important to study how infomation, figures they use and events can be manipulated so the deep state can create a slant in their favor to create fear and control people) There's technology for plasma and water engines that are proven technology's (in use but not spoken of) for airplanes and engines and such that is being suppressed--we don't need to use oil which is putting so many toxins in the air and creating scenarios of heat production. I don't know... I just don't have much respect for his knowledge level. He's one of those that is looking for what's wrong, not what's right, and you always find what you're looking for! We're dealing with the millenials that are hip to the economic scene and will be the majority rule by how they vote with their dollar. As the old guard dies out, thank god the new guard is more intelligent and peace-minded. Banking needs this evolement and transformation and it may take a few more years, but it's already mainstream with the 100's of major corporations dealing in Bitcoin, the financial institutions and wealthy that are heavily invested in it. He doesn't consider ANY of these factors....If I'm wrong, I love being corrected!
“I believe we're more likely to have global cooling.” ?? !! Correction. You are talking about the climate? Oh, dear. Here, read STORMS OF MY GRANDCHILDREN, by James Hansen, for a start. I'm glad you love correction; otherwise I would nor have done so..Good luck!
money is information on a ledger which should keep track of who has what ....wondering which is the best ledger ....
If Bitcoin spends as much electricity as Belgium and it can do 7 transactions per second, then it will need to spend the electricity of 100,000 Belgiums to do 700,000 transactions per second. LMAO! No, that's not how it works! If an economics professor has an IQ of 140, he better listen to 5 Bitcoin miners with an IQ of 100 each! Ridiculous? You bet! Let's leave the problem of scaling to the kinds of people who scaled the Internet! And let's leave the HUGE problem of global warming to AI which will be empowered by Bitcoin.
Or you simply replace Bitcoin with Solano or something similar and life goes on for everybody except the people who decided to hitch their future to Bitcoin.
By the way, I think you skipped a couple of steps with the "AI which will be empowered by Bitcoin". I think if Bitcoin continues to have value it might be taken over by AI, but I don't understand how any empowerment can happen in the other direction.
@@jefflittle8913 solana? Lol
How is his prediction going?
Keen's prediction of Bitcoin failing is going like sheet !! Bitcoin coin now accepted as payment by many government organizations as well as Amazon and others.
Steve, would you accept Bitcoin?
Bitcoin is ponzi. Check back in 10 years and tell me I was wrong. Plenty of my friends are getting super rich from bitcoin investment. They're no longer friends, they got too greedy, and to me it's unethical. They are profiting of no real work and someone else will lose big to finance their gain in real State currency. But what real work and goods are they actually investing in? It's vaporware. You can only bid up the price because of mob psychology, it has to crash eventually and the poor buggers who do not cash out of bitcoin early will lose their houses.
Distributed secure payments systems are goo d things, lei GNUTaler. The e GU folks know it's not money, just a good anonymous payments system using the State tax-driven currency. It's foolproof, and not designed as a commodity to invest in, just pure payments one-to-one in dollars forever.
Steve cannot see how the mining can scale?! He has obviously forgotten that this was the same criticism of the internet itself, over and over and over again. And yet "miraculously" these internet scaling problems have one by one been solved. I believe the same will apply within the bitcoin and general cryptocurrency environment.
I agree with Max Keiser's assertions on a recent RT segment when he said "Steve Keen is totally unqualified to talk about Bitcoin"
Bitcoin's been here for 10 years Mr. Keen, it's not going anywhere and the longer you maintain it will fail the more egg will build on your face.
@Harmony 369 I agree with you. I don't agree with Steve keen's views on Bitcoin and Gold.
@@@bamboozled1618 I respect your opinion. I am a big fan of Steve Keen but doing my own research and working 20 years in banking I disagree with his views on Bitcoin and Gold. You should keep an open mind and actually learn some key economic theories from people like James Rickards, Alaistair Mccleod, Mike Maloney and Peter Schiff. Alaistair Mccleod publishes his research material at www.goldmoney.com. He is the best of them all and his research makes sense. Why do you think China and Russia are buying tonnes of gold. They are not stupid!
All fiat/floating exchange rates currencies eventually return to their intrinsic value of zero. They are just promises written on pieces of paper and is not sound money. Gold is real money and has been used for hundreds of years and is not a commodity as Steve Keen understands it. Fiat/floating currencies are the currencies of choice in "developed" countries as they need to manipulate the exchange rates to cater for the many imperial wars they will undertake around the world. This is the intrinsic reason why they do not want a gold standard and practice sound money.
Bitcoin does not exhibit the many charactristics of a currency but it has not failed yet. It is early days still. Also it is only the price of bitcoin that is severely overvalued now but it has stable long term potential once it reaches its fair price. The same with Litecoin and some of the other currencies. Blockchain is very useful but it will never gather speed if crypto's fail. When currencies start to collapse crypto's will be back in favour whether its a speculative asset class, currency or not.
@@bamboozled1618 I think this particular blog attracts people who are fans of bitcoin. Anything you say, will not be interpreted from an objective perspective. I suspect the only thing that would gain traction here would be things that would entertain their confirmation bias. At one point a lot of my colleagues genuinely believed that bitcoin will be $50,000 in a few weeks, any argument against it would be dismissed as heresy. I'm fascinated by human psychology. Steve Keen appears to have a rational perspective with a decent track record, however, in complex systems, I wouldn't be making any predictions. :)
@@@bamboozled1618 I respect your point of view but disagree on some points. Please explain how a gold backed currency can eventually be worthless? Even if the currency price falls dramatically it can be exchanged for gold at the agreed price and that gold can be used as currency if needs be. Gold will never be worthless as it is a precious metal and there is limited supply of gold in this world. Supply and demand are the basics of economics.
Digital currency does have its flaws but it is still very early days. It will never vanish. The only problem is it's current bubblemania price. I think your mindset maybe looking at digital currency from a western and developed point of view whereas I look at the currency from an worldwide perspective. For example if you live in Zimbabwe with hyperinflation and high banking transfer costs then digital currency becomes an easy means of exchange. Whether it really takes off in the developed world is anybody's guess but in developing countries it will have long term potential.
China and Russia are using gold to get around the dollar...yes... but it is also needed for every country's central bank when fiat currencies eventually begin to collapse at some point. It really is impossible to have a stable banking system without gold being needed for sound money. We in the west have forgotten the basics of sound money and it is now catching up with us. When this financial system eventually collapses over the next two years we will see the price of gold reach $10k an ounce.
@@@bamboozled1618 I have no doubt about your knowledge and expertise in economics and respect your opinion. The problem I have with people like Steve Keen and that may indirectly include yourself is that the economic theories are sound and make total sense and are also rational but human beings do not always behave in a rational and logical way. Look at the quantitative easing mess which has poisoned our financial system. It will eventually lead to the collapse of the financial system and some fiat currencies collapsing also. From all my years working in finance, being a practitioner in my industry always trumps the so called economic experts with Phd's and other qualifications on economic theory because reality is king and any analysis has to be based on reality including what has happened in the past which gives us an indication of what will happen in the future. The past is always an indicator of future behaviour as history does not repeat but it rhymes.
Gold will intrinsically have value because it has a viable use and is in limited supply.Moving away from the "economic theory" way of thinking...nothing is worthless in this world otherwise it would not exist. Everything is needed for something and has some use. Therefore it will have an intrinsic value of some monetary value even in abundance. Value in the true meaning of the word is not a social construct. That is the textbook way of thinking. Even if you do not know the value of something it has value. For example there are many planets in the solar system that we do not or may not know its value or true purpose but it has value and provides a use otherwise it would cease to exist.
From all my years of working in finance human behaviour is what amazes me. The only way a gold backed system can be corrupt is if the real gold is watered down and replaced with something inferior. Or that the gold is not available and the cash cannot be exchanged for gold. Hence gold backed monetary systems has stood the test of time. I still fail to see how gold by itself can become valueless. The only way gold could possibly ever lose its value is if we moved back to the stone age barter system and that won't happen as it has been proved it does not work and hence we have evolved to money. I admit trying to pay for groceries in gold might be problematic but if we had digital gold (gold monetised digitally to spend in increments and nominal values) for good and services it will work. Even pure gold coins would work and once the dollar loses its value quite rapidly I can assure you this will be the favoured currency accepted. Even if it is for a short while. We have not got there yet economically as the masses are still complacent. It is still early days. Gold is intrinsically money that has a value and cannot be printed.
We have not outgrown sound money. We have foolishy evolved away from sound money since Richard Nixon took the US off the gold standard when the US was technically bankrupt after the Vietnam war and moved onto the petrodollar system with the Saudi/middle east cartel. The population of the planet can and will be able to afford the problems with gold. The only issue is its price which should be much higher and not its supply. Fiat currency is backed by a countries economy but when the economy is in trouble trust will disappear and the fiat currency will become worthless. All economies one day will collapse and so will the currency. It is only a matter of time for the US. Yes Zimbabwe is an example but if their currency was denominated in gold it would retain its value at market price...
it’s good when I hear people who are ignorant about btc energy consumption because I can then pay them no mind
Steve is right about problems but wrong about solutions.
Very similar to Peter Schiff.
Actually he was wrong about both the problems and the solutions!
wow around the 1h mark he just goes off on an unorthodox realistic view of how economies work
I like many of Steve Keens ideas, but here he comes across very dogmatic and narrow minded that he is right and everyone else is wrong. Many aspects of his understanding of Bitcoin are indicative that he has approached Cryptocurrency with a very strong bias. He is very mainstream in this regard.
Blah, blah, blah, no specific critiques or references. He specifically mentioned some obvious flaws in the context of a useful money system.
@@luckylui3282 which were what?
@@jcantonelli1 : Without trying to be facetious I suggest listening to the segment.
@@luckylui3282 I appreciate your politeness, but I already listened. Specifically, Keen's first contention regarding the reasons a commodity "cannot be money" started off something like, '...because then you simply go from an N economy to N+1 economy...', and then he's onto his next point without clarifying - what, exactly, did he mean by that? I couldn't parse it after several attempts on re-listening.
@@jcantonelli1 : It's not that a commodity can't be money (really anything can be money) it's just how useful it is. For this particular point what he is saying is that a commodity money, say gold for example, can go up and down in value for various reasons outside of GDP transactions in the real economy. So those effects would need to be accounted for in addition to measuring the real economy. At it's core money (even fiat) is a proxy for credit, it is here, through this abstraction, where money gets hijacked by all kinds of interests/ideologies. Commodity money just adds another proxy layer.
Steve Keen and Balaji Srinivasan would be a great crossover
Roubini has been riding off his one right call for how many years, he’s been wrong in everything since.
It's a good thing this aging demographic is now talking about the definition of money because you know what the killer app for bitcoin is?
Money. (The new version of it)
Yeah cause bitcoin is now at 29000 us dollars...
There hasn’t been changes in the algorithm
We will have many POS and than many many country use an alternative way to produce energy such in Paraguay who will use the solar energy.
Interesting Pod, You kind of missed an opportunity to remind him of the Patreon censorship scandal. Mr Keen may be open to Bitcoin if he ever fell foul of their donation rules surrounding Free speech etc.
Yes poor Julian Assange wouldn't have a penny if it wasn't for wonderful bitcoin
What is the energy demand of all the servers, data centers, bank buildings, manufacturing, and transport of the physical dollar bills? I would guesstimate the support system for fiat contributes much more to the worlds emmissions problem than a scaled bitcoin.
Money supply is currently growing at 3.8%
I think the scary thing is Steve Keen is still saying the same arguments. He has helped many see the flaws in modern economics but may be missing some points in crypto. He has this tick against mining (proof of work) and really should have gotten the research spoken about in the interview before it even began. I would like to add that there is a possibility that some of the fairly created alt-coins could also pick up transactions maxing out their capacity as well. They are already being mined all this time along side bitcoin but is unnoticed in these calculations. I don't know why he still thinks that mining power needs to increase to increase the transaction throughput. These points are not linked. Another point that is missed is that Bitcoin is an ALTERNATIVE. Do we need to be able to censorship resistance-ly buy a cup of coffee?? Bitcoin only needs to grow to fill in the gaps that tradition banking and finance has shunned or overlooked, but we may need.
RESEARCH GLOBAL GREENING
A lot of people don't get decentralization even when they are excited by things like EOS, but decentralization is the only reason Bitcoin or Ethereum would have any value. Its a pity he didn't discuss Ethereum's POS plans. I'm sure he prefers EOS over Ethereum because he did seem to dislike the idea of decentralization and want the continuation of trust. It won't work, as it has not been working. He's right about deflation for sure though, this love of deflation is probably going to take it down a bad road.
I suspect Keen works for the FED. He doesn't even mention the FED. He focuses on the banking system as if it is a foregone conclusion. I agree his charts are good and sound. But I suspect his true role here because he seems to be blaming capitalism. When it is crony capitalist Fiat money systems that are the problem not capitalism.
And he is tracking you and reporting you to Homeland Security right now! Name one single thing he has done or said to support this idiotic view? He is a blatant supporter of capitalism, which he mentions usually at least once in each segment. It's likely the sole reason he makes it onto MSM periodically.
@@luckylui3282 if you aren't actively opposing the FED. you're not a capitalist
@@S.A.F.Australia : One thing I give the crypto community is the ability to come up with creative, albeit invalid, and/or wildly ignorant arguments. You know, the kind you can pull out of your arse and state them with a matter of fact tone in a effort to make it so.
My guess is you don't have the slightest clue what the Fed actually does. Please, give me some hope and prove me wrong.
If you do not struggle for world socialist revolution, you are a freaking parasitic capitalist.
Steve Keen makes so many good points, not only on Bitcoin (which I really like) but he makes some great points on the current economic problems and also the problems with the education system at the end of the video.
Steve doesn't understand Bitcoin and so do you!
He said in a round about way that we need a global CBDC... (50min or so)...
but only by his design 😂😂😂
I prefer Werner
If he has a model then he should be able to tell us the formula and we should be able to work it out to exactly what the next crisis is. If it fails then it’s not a model at all
You can read all about it in his orange book. Of course, you can't talk about exact timing but you can talk about risk levels, which can inform you as to which countries will get hit the hardest when bad things happen, which has value even if you don't know the timing.
I’m kind of annoyed u didn’t hammer this guy especially on energy. Btc is up not down in terms of energy use. Difficulty is at its highest ever. There is now diminishing returns on mining. It now costs more to mine than what u will earn. Couple that with the fact that ASIC’s are smashing into moore’s Law btc will not be increasing much more in energy consumption
Steve. Bitcoins energy consumption is proportional to security not transactions.
in 10 years it hasn't failed. If it was destined to fail, it would have failed already. The fact that it still hasn't failed after dumping from it's $20k high should be telling.
"hasn't been" doesn't preclude that it can be.
It's like saying self-driving cars have failed.
And now steve is understanding bitcoin which is not BTC he is like BSV now not BTC has he has studied that btc is flawed
What?! Does this guy not know that the pound is named quite literally after a pound of silver
MITCHELL INNES -- READ HIM --LEARN THE "HARD" MONEY FANTASY.
Bitcoins energy consumption is not related to transactions per second.
Disappointed he got sucked into the energy debate, instead of arguing about the lack of price stability and necessary debt creation from national treasuries
with crypto currency, wouldn't a new gold standard based on tokenized gold work?
No
Lol nope! You mean to trust someone to issue gold IOU?😂😂😂
@@bahmak2003 i'm invested in the version of bitcoin that has massive transactional volume potential (millions of tx's/second)
how much energy is being consumed today - GLOBALLY - by all financial entities . how much energy is that?
please consider: all banks globally, all servers hosting the banking info, all shoppes dealing with money, maybe all stores? since they need to run equipment to be on the visa or such? then consider all the employees that work in the Banking industry, how much energy is required to get the people to and from work? of course you can't forget the transfer of fiat by trucks/planes to and from banks, international banks and such, also I would include the transfer of GOLD to and from institutions? , and what about the energy consumed by construction and maintenance of all financial buildings?
I really wonder what that dollar number would look like.
Nano, in my view, could be a good currency. Zero fee, low power. But is it spam proof? Can it be as secure as Bitcoin? That is to be determined. Right now, it is not.
You must have been talking to the boss of nano, you know the one that makes the coin for free and adjusts it's supply accordingly
Let’s say there’s no more banks. All the buildings all the armored trucks all of car is it pollutes that’s a lot of energy compared to the bitcoin mining
I think there is a fundamental misunderstanding here. Bitcoin DOES NOT need massive energy consumption to verify transactions. Back in 2010-11, the network was perfectly operational with laptops and regular PCs verifying and processing the network. It has a huge energy consumption now because miners see an economic incentive starting and maintaining their business. The Bitcoin network could be perfectly safe and operational with 10% of the current ASIC miner power. Moreover, even the Bitcoin Core team can decide to increase block size, which will help in transaction size when it is needed in the real world. This really show how even a brilliant economist such as Steven Keen does NOT understand how Bitcoin works. So do not believe him when he says Bitcoin will not survive. I do not see the future, it might not survive, but definitely not for Keen's reasons!
So pretend the mining arms race and the resulting massive energy consumption isn't a reality? He also mentioned some key, non tech, reasons why it is dysfunctional as money. Like the obvious contradiction of why would someone spend it if they expect it to be worth more in the future, among other points.
@@bamboozled1618 : I think we agree on the general idea but I am a stickler for details when it comes to money due to the general lack of understanding and common myths about it among most everyone, especially those in the "sound" money crowd. The "deflationary" money "attribute" many in the BTC community perpetuate is flawed on many levels. Aside from my point above (why would someone spend it if they thought the value was going to rise) this notion leads to the next obvious contradiction that is also "inflationary" if the price goes down (vs fiat). Many in the space use this trick but only draw from the deflationary perspective to feed off the inflation (read: monetary inflation) boogie-man. Which in itself is clear demonstration they don't know how money works (I digress). So, BTC is one of the most inflationary / deflationary forms of money ever??? A selling point, I guess??? Finally, the inflation/deflation comparison just assumes "currency" status but until the average person references commodity prices in terms of BTC it should hardly get currency status. Just because something is relatively easy to move around does not make a money system any more than a train ticket makes a train system. Within an existing standard all commodities are measured by that standard including BTC. Fiat is the language of money, this is a fundamental fact and I would argue it's core function.
As for your assertion "yes, it has an intrinsic deflationary value" I am not sure what you are driving at but, as is, without trying to be critical, it is meaningless.
@@bamboozled1618 : Whether some money thing is or is not money is not the most meaningful way to look at it. In my view it is more meaningful thought of as a sliding scale of how useful a given money thing is. This is primarily determined by 1) who accepts it and 2) how convenient it is to use.
There is little doubt about the social aspect of money but I am slowly arriving at the point where the credit theory of money, at it's core, is something akin to a natural law. Although, I am not totally clear with my thinking on this yet.
BTC, as currently structured, perpetuates the massive swindle of the almost wholly fallacious metallic theory of money, it would be a tragic day for most if it were ever to become the numeraire for the dollar. Surely you haven't thought this through?
I am curious have you read the articles on the subject of money by Mitchell Innes?
@@bamboozled1618 : For long ones, when I am inclined and have the time, I do it to as a way to organize my own thoughts and if I can get some meaningful feedback and/or enlighten a random soul or two all the better. When you have more time I would be interested in reading a more specific response, especially to the alternative functions portion of the post as well as the reading suggestions.
Also, for what it's worth, I am generally familiar with MMT and very well up to speed on the bookkeeping aspect of money.
@@bamboozled1618 : Glad you found the second article interesting. A few responses below, focusing on points from your first response which I don't fully understand or may currently hold a contrary perspective;
"If a unit/dollar is valued as measure of all commodities, then the fact that our developing civilizations haven’t “declined” in the aggregate, would mean that the unit can only depreciate. That is, until commodities in the aggregate begin to decline, but that would also have to be measured by how many of these units are circulating actively in action (how many credit/debits are in existence at any one time). Since this circulation is constantly changing, it is impossible to measure with accuracy."
Not sure I follow your point here as I understood it to be domestic in nature. Also the terminology "if a unit/dollar is valued" seems confused. The value of commodities are relative to one another measured in the monetary unit, which has no value. And the unit being distinct from money, where the money part of the unit/money pair is really a proxy for credit.
---------------------------------------------------------------
“We are accustomed to consider the issue of money as a precious blessing, and taxation as a burden which is apt to become well nigh intolerable. But this is the reverse of the truth. It is the issue of money which is the burden and the taxation which is the blessing. Every time a coin or certificate is issued a solemn obligation is laid on the people of the country. A credit on the public treasury is opened, a public debt incurred. It is true that a coin does not purport to convey an obligation, there is no law which imposes an obligation, and the fact is not generally recognized. It is never¬theless the simple truth. A credit, it cannot be too often or too emphatically stated, is a right to "satisfaction." This right depends on no statute, but on common or customary law. It is inherent in the very nature of credit throughout the world… “What is of consequence is the result of what they are doing, and this, as I have said, is that with every coin issued a burden or charge or obligation or debt is laid on the com¬munity in favor of certain individuals, and it can only be wiped out by taxation.”
Yet another wonderful counter-argument to the flawed libertarian “taxes are theft.”
I did find this section interesting and had not thought about taxes in this light before. Ultimately though I came away focused on the spending side of the equation, both in terms of the obligation it places on tax payers and the potential effects on the purchasing power of the unit.
---------------------------------------------------------------
“The fact, however, is that the more government, money there is in circulation, the poorer we are. Of all the principles which we may learn from the credit theory, none is more important than this, and until we have thoroughly digested it we are not in a position to enact sound currency laws.”
I don’t think this still applies because the government is now an issuer of currency and not a user of currency. This is where I agree with MMT. The government is not a king or small group of managers/feudal lords, the government is “we the people” with government being representational. The debt/obligation operates different as it is more of a debit (an account of total issuances) than a debt. If you (a total population) create a credit/debt to yourself (again total population) it can be canceled at will.
I was a bit confused by this paragraph (by Innes) and was thinking it maybe in reference to the time period. I am short on details here but it is my general understanding that government money was more dominant vs bank money at the time of writing. And that Inness clearly seems to be coming from a place of support for the banks. Worth noting is the timing of the articles with the passing the Federal Reserves Act.
It is my understanding that today the Gov't has effectively outsourced 100% of money creation to commercial banks. Deficit spending by the gov could be as you indicate above but is it not true that banks ultimately finance 100% this spending too (albeit through a convoluted process)? If so, the debt is actually owed to the banks not to ourselves. Finally I will side step the comparison of "we the people" today vs "feudal lords" of days past and just say that I am not convinced the current system is a benevolent as you appear to imply.
Economics is extremely useful as a form of employment for economists.
John Kenneth Galbraith
The economics profession has ignored the depreciation of durable
consumer goods since Sputnik and of course they cannot recognize planned
obsolescence. I asked a PhD economist at the University of Chicago to
explain how an automobile engine worked. He admitted that he could not
do it.
What did Henry Ford do to economics? He was called a "class
traitor" for the $5/day salary. But still brought down the price of the
Model-T from 1908 to 1922. We have an economic wargame that most people
are not supposed to know how to play.
www.toxicdrums.com/economic-wargames-by-dal-timgar.html
i don't know about you, but i think bitcoin deserve that amount of energy more than the entire nation of Belgium if you think about the benefit it can bring to the human race
@44:40 no mate, money is not really built on trust, not the way you think. Since antiquity to the present day all State currency is based on the force of an army that can enforce taxation. The "trust" is the bloody trust you have that the police or army will come after you if you do not pay tax liabilities. Tax drives the demand for money, this is how it's been for over 4000 years. Nothing backs bitcoin so a bitcoin's fair price is close to ZERO (or the energy cost to mine a coin). The tax driven currency system sounds horrendous, and it was, but it need not be. The currency issuer has the moral obligation to make sure everyone can pay their tax liability, if they do not they've created unemployment in their currency, which is the true evil. But an unnecessary evil.
Bitcoin down 64% ytd. How is that hedge against inflation working?
Against monetary inflation (money printer)? It works excellent
bitcoin is growing in low rates environment so in environment of lot's of hot money and weak economies with printers doing brrrrrr
before bitcon becomes bug enough to be called sound money it will be just a measure of bullshit in global economics lol
normal inflation grows in strong economies with strong money and strong growth too
as any growth is these days funded with credit and debt
the difference is only in what is funded with it bullshit waste of consumption or investment that actually produces something adding to gdp
bitcoin itself adds nothing
but can absorb money escaping bubbles except becoming bubble itself
modern finance is very confusing as some things mean two things and hard to measure which part of it what
I mean the bubble virtual value of bitcoin is one thing
and there is the base value that grows as it stays longer in game and gains trust and so usability and better spot in race
alts also absorb bullshit money even better but better loose it too while still by fact of ability to diversity and psychological pricyness of bitcoin absorb some of it's base value too
like silver Vs gold 😂
bitcoin would have some value just because of noise, some people existing who would invest in any possible existing bullshit in general
like the stocks of similar name to well known stocks 😂
idiots also fund innovation 😂
What is the electricity consumption that supports the current banking system vs the electricity consumption that supports the cryptocurrency environment??
My guess is at a minimum they are comparable and at worst, it still favors the crypto environ.
Gratitude also, to Steven Long - ABC
A well distributed sharing of qualified Education..
If +/- Debt ratios are adverse volatility, then why isn't the money pumping into an attempt to maintain a buffered economy "keeping the wheels lubricated", ..does that mean even minimized chaos will still lead to an inevitable crash because deregulated markets are probabilisticly "designed to fail"?, because the functional/computational universe is indeterminate, and natural evolutionary processes eventually lead to extinctions, by one path or another. "The only thing constant is (still) change".
Planning works to fulfill expectations in the short term, (centralised or distributed..), if cost is not the issue, eg the Manhattan project or Moonshots.., and maybe most Government political promises.
But effective Organization(s) responds to intention by optimizing circumstances to reach the best outcome for the least cost, and planning is subjected to naturally "designed" conditions of reasonable and rational proportions of potential probabilities. (?)
Therefore all predictions of potential probabilities are either an established probability/risk-assessed or subsidized systematically along the lines of the Ponzi schemes.
It's a matter of fact that the "Primary Acquisition" system remains an evolved basic intent in all human behaviour, so "Right of Conquest" is a fact of life.(?)
"Money", as the quantized valuation of economic trust has some backing in commodities such as gold and sometimes energy wasting services such as open ledgers, but in general it's the cause-effect of integrated social organizations and institutions, up to the point of forced trust by being backed by "gunboat diplomacy".(?)
I listened to this and all I kept saying in my head was WRONG WRONG WRONG
THINK! If the government decided to tax everyone in bitcoin, then bitcoin would be State currency. The oligarchs could pass laws to do this. Wanna guess why they don't? When you've done thinking you'll realize bitcoin is ponzi. It's fair price is zero.
Distributed ledger systems on the other hand are great tools. A fair payments system like GNUTaler is what you might want to use for anonymity. GNUTaler is ethical, it knows it is not money.
@@Achrononmaster Not sure what your point is, or how exactly you get from point A to B. They don’t tax in other currencies because that would invalidate fiat being payment “for all debts public and private.”
Your ontology is incomprehensible, it’s hard to argue with your conclusion because there’s really no reason to come to it based even on your words taken at face value.
Steve has been banging on for years about global debt and as soon as Bitcoin comes along with zero debt, and will always have zero debt, it's too scary for him. It's 300 billion in value (for now) versus a 100 trillion dollar industry. It's current best case use is it sits outside the system as a hedge like digital gold although infinitely more useable. He can hold his breath and stamp his feet but unstoppable open public blockchains are here and he better start figuring out how to incorporate into his economic models or he will be left behind.
that's why its a speculative asset not a currency .a currency is issued under liability and is taxable ...
We’ll see in 5 years, or two halving’s.
The rationale that will be used to outlaw bitcoin.
Bitcoin is not controlled by a central entity, so it cannot be outlawed or terminated. And not to mention that the rationale that Steve provided isn't true, to begin with. Gold mining is far more energy inefficient. So do VISA and MasterCard server systems. Oh, and energy expenditure of financial systems of the world!
all our energy comes from the stars most of it from our sun and it outputs magnitudes upon magnitudes more than we will need for the next millennia. the energy fud is lazy and fundamentally broken. good points on the nature of useful money tho.
good point you'd probably need to build a dyson sphere for the energy required for bitcoin in the future lmao
@@tixchicken bitcoin consumes as much energy as it can. no more no less. as hardware ages and becomes uncompetitive with the rest of the market it can only harness waste energy for dirt cheap. for example on the energy transmission topology 2 main points exist for waste energy where old miners can still turn that into stored economic energy: the production site and the distribution site (substation). waste defined as the gap between between demand and contracted power.
there way more potential in bitcoin than the downsides as it incentivizes building overcapacity of sustainable sources and grid.
great talk
I respect this guy for his deep knowledge of economics of the current and past economic systems....Bitcoin is a new system he never studied. And he seriously lacks any deep understanding of the Bitcoin ecosystem, its unique design, game theory, its miner reward/incentives design and its tamper proof design to be shutdown easily by gov'ts. He kept saying it will fail because it will be shutdown due to excessive energy consumption but he doesn't explain the technical and practical ways of how to shut it down---EXPLAIN THE "HOW!". If it was that easy it would have been shutdown 10yrs ago. He assumes the govt go into every basement in the whole world and shutdown miners! How naive? If all tech folks have failed to explain how gov't can shutdown bitcoin, will not let a non-tech person convince me otherwise!
Steve reveals the Laws of Thermodynamics to fanboy.
Lol what now?😂😂😂
Didnt age well
Although I agree that Bcash is a scam, saying that it was proven to be the false way to scale the network is false.
These economists are worse than lawyers
I find it interesting that some of the most intelligent people are still quite oblivious to what bitcoin actually is and does. My jaw dropped when he said maybe bitcoin would work if it was entrusted to 100 financial institutions because the processing power was too great to have everyone verifying the transactions. Then I nearly fainted when he said the energy consumption was too large and there for too expensive. Interesting. How much has it “cost” the economy to use fiat money? Entrusted by “financial institutions”? Just in terms of inflation alone! Inn1930 a pound of hamburger meat was .12 cents. What is it now? $3-$4? Inflation shows you EXACTLY how devalued our dollar is. Add in the cost of all these “financial buildings” with their snazzy corner offices and billion dollar CEO’s. And you want to stand their and say it costs too much for the general public to verify transactions? For a currency that will never have inflation? Ok...again. Very smart man. Very ignorant in what bitcoin in. Particularly when they speak of gold as having value. It doesn’t. Jewelry some industrial uses. There are far more things with far greater use. Gold has value ONLY because we said it does. Same with bitcoin.
"How much has it “cost” the economy to use fiat money?"
Good question. How much of our global warming energy budget *has* it cost to use fiat money? Educate us.
"Just in terms of inflation alone! Inn1930 a pound of hamburger meat was .12 cents."
Sorry, I really don't follow. If you buy a pound of hamburger using a 1930 .12 cents (sorry, did you mean 12 cents?) and if you buy a pound of hamburger using today's $4 then that is exactly the same energy budget for both transactions, right? You burn the same number of calories moving your hand, the cow consumed the same number of calories at the feed lots, and the same amount of energy had to be generated to run the saws and the ice trucks, etc. Net zero difference in the dimension being measured.
Sounds to me he’s a central planner . as far as energy use if you have all the minors compared to all the bankers and their trucks to haul paper for you at all over the place which is more energy consumption?
I love these guys who claim they know it all. They absolutely know everything and why it happens. They are such amazing experts if we would only listen to exactly what they say we would have a utopia. Get outa here with that BS. Oh and NAFTA is why jobs went over seas
when did he claim to "know it all". and utopia isn't a possibility because nature is emergent not static. The idea of utopia is a "myth" (logical fallacy).
NAFTA was one reason. Reaganomics was another. You can't have a trade deficit without financial payments moving the other direction. In our case, the payments constituted a ponzi scheme.
Those that want a better world, without central Bankster’s, need to call those running, you need to support bitcoin if you want my vote!
This guy seems not to know that the miner industry is moving towards capturing waste energy to mine BTC, thus, causing 0 increase in energy consumption.
@@quantum_ocean Yet...
@@quantum_oceanbitcoin mining must go where the electricity is the cheapest, were there is electricity otherwise wasted -- to electric damn operating in excess capacity, where wind farms operate in excess capacity, where gas would be otherwise burned and flared into the atmosphere, where solar energy cannot be used because of daily low demand, where it is cold. That's why all new rigs are being build in cold countries where there is no one living and there is stranded sources of energy that cannot be utilized because it is not economically viable to transport that energy to where people live. To mine BTC all you need is a internet connection.
I know this is bitcoin focused but Steve Keen's analysis is correct.
I'm not sure if he was aware of Hedera Hashgraph but it satisfies his requirements.
1) It can scale to greater than 700,000 t/s with each shard handling 100,000 t/s and subdividing into more as the network grows.
2) It requires zero mining and nodes only require an average graphics card to handle digital signature verification. The algorithm itself was tested on raspberry pi(s) so basically anyone can run a node and everyone who does will be compensated for every full 24hrs they are on the network.
3) Fees are estimated to be in the 1/1000ths of a US penny per transaction (adjustable by the governance council to cover costs of nodes to incentivize participation)
Steve didn't focus on level of security or fairness of event ordering and event timestamping but those are critical for markets where order of sequence matters - blockchain data structures have challenges with this and it gets more challenging with larger block sizes). Lightning breaks up the network so timestamps are not universal.
I'm aware of the patent, being open-review but not-free-to-copy source, and corporate governance. Some people will have goals that don't align with that so they'll have to continue with current designs, invent something new, or wait for the Hashgraph patent to expire. There's room for everyone.
Here's how the algorithm works:
ruclips.net/video/cje1vuVKhwY/видео.html
And here's an interesting overview of the initial Hedera governance council
ruclips.net/video/SfYLsHFXyGQ/видео.html
Hedera has limited the tokens to 50 billion hbars which theoretically unchangeable... but I'm hoping will be able to be voted on by the council if things get bad.
BSV ftw. :)
Bravo. A real economist for once!
Keen makes a lot of definitions and statements without actually stating how that is a fundamental criticism of bitcoin.
Off the bat, he says that BTC isn't money and then goes on to state his and other economists definition of money without stating why that is important. I.e. he assumes that money must have a 3rd party to arrange the money transfer, therefore it's not money (by his definition). But so what..?
He keeps defining BTC as a commodity when it obviously isn't because it has no underlying intrinsic value hence why it is money! I.e. it has the characteristics of limited supply making it more like a commodity but is also all credit meaning that it's money.
"Increasing debt burden out of deflation" - you could have variable interest rates or very low interest rates on debt to counter this. It is also self correcting since in the downturns and the upturns money represents the same proportion of the total economy i.e. your debt remains the same in real terms.
"If things are getting cheaper in terms of bitcoin then those who own bitcoin are accumulating wealth" - yes, but if everyone holds their wealth in bitcoin everyone is accumulating wealth whereas as he stated earlier it is the banking sector that accumulates wealth in traditional financial cycles.
Which is better?
He doesn't know about second layer solutions to scaling. He doesn't realise that waste energy and environmentally friendly energy can be used to power mining. Was just embarrassing. Thank God the conversation was kept strictly to bitcoin! Bit disappointing overall.
This is the first time I have heard anyone refer to BTC as credit (please show us anyone else from the BTC community running with this narrative). Although I wouldn't be surprised as the narrative seems to change monthly.
BTC is automatically relegated to a commodity within the fiat system. Within an existing standard all commodities are measured by that standard including BTC. Fiat is the language of money, this is a fundamental fact and I would argue it's core function. Until the average person references commodity prices in terms of BTC it should hardly get currency status. Just because something is relatively easy to move around does not make a money system any more than a train ticket makes a train system.
Money doesn't necessarily "need" a 3rd party but it facilitates trust among a large community of people. A money system definitely requires some intermediation to function. In the case of BTC the software takes the place of the 3rd party. So technically there is still a 3rd party. The critical omission here is the 3rd party in the current system (i.e. banks) facilitate virtually anyone to create money and subsequently destroy money.
Among many obvious contradictions you do realize that credit/debt is created and destroyed endlessly? Failing to see how BTC remotely could be defined as credit as currently structured. It is fundamentally based on the metallic theory of money as Keen indirectly pointed out.
The "deflationary" money "attribute" many in the BTC community perpetuate is flawed on many levels. Aside from why would someone spend it if they thought the value was going to rise the next obvious contradiction that is also "inflationary" if the price goes down (vs fiat). Many in the space use this trick but only draw from the deflationary perspective to feed off the inflation (read: monetary inflation) boogie-man. Which in itself is clear demonstration they don't know how money works (I digress). So, BTC is one of the most inflationary / deflationary forms of money ever???
The massive energy consumption is a fundamental flaw of BTC. Aside from all the BS spewed from the community imagine any CFO saying "look how fast our energy costs are growing, it's massive, this is going to be our best year ever!"
Upvoted, but not for his brilliant misunderstandings of history and sound money :D its just interesting in a way.
As if Gold failed because it was expensive. Lol. As if transaction capacity and energy is an issue. As if Bitcoin as a protocol would care, just lol. As long as people use it, is has value and will use as much energy as to reflect that value.
There is only one way to force an inflationary 'spending' currency on the people: by violence and government coercion.
It seems like he doesn't understand how it works. He thinks that the number of transactions scales with energy input? No. And it seems like he thinks that high energy costs are a fatal flaw? Why? He never explains that. Does he think... what, we'll make it illegal in literally every country? Decentralization is the key there. And he thinks that deflationary money can't be money. Again, why? It being bad for most people doesn't mean it can't happen. Its bad for most people if we don't turn around global warming too - but here we are. He seems to conflate "this would be bad for people" with "this can't happen" and that is naive.
Steve has done really valuable work, but frankly, speaks with little doubt on anything which should make anyone suspicious. His understanding of Bitcoin basics is puerile.