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mrbluze writes:
"An interesting blog post by Charles Hugh Smith on Why Banks Are Doomed: Technology and Risk.:
The funny thing about technology is that those threatened by fundamental improvements in technology attempt to harness it to save their industry from extinction. For example, overpriced colleges now charge thousands of dollars for nearly costless massively open online courses (MOOCs) because they retain a monopoly on accreditation (diplomas). Once students are accredited directly--an advancement enabled by technology--colleges' monopoly disappears and so does their raison d'etre.
The same is true of banks. Now that accounting and risk assessment are automated, and borrowers and owners of capital can exchange funds in transparent digital marketplaces, there is no need for banks. But according to banks, only they have the expertise to create riskless debt.
...
One last happy thought: technology cannot be put back in the bottle. The financial/banking sector wants to use technology to increase its middleman skim, but the technology that is already out of the bottle will dismantle the sector as a function of what technology enables: faster, better, cheaper, with greater transparency, fairness and the proper distribution of risk.
There may well be a place for credit unions and community banks in the spectrum of exchanges, but these localized, decentralized enterprises would be unable to amass dangerous concentrations of risk and political influence in a truly transparent and decentralized system of exchanges.
It's still early days, but can new electronic currencies such as Bitcoin become mainstream without the assent of governments?"
(Score: 5, Interesting) by Thexalon on Monday February 24 2014, @12:53PM
There are at least two problems with this:
1. There's a good question as to whether humans have ever lived without any kind of government. Early humans lived in groups of up to 200 people or so, and those groups had leaders who had the authority to reward and punish people, which is the basics of what a government does. This matches what other current primates do as well: There are leader chimps who have the power to punish other chimps if they step out of line within the chimp group.
2. The earliest civilizations that we know of with money also had government. For example, Sumerians had a fairly complex banking and monetary system, but they also definitely had a government to enforce that banking system.
Because it is. The big things that government provides for the money supply:
1. Government, and central bank in particular, prevents wild fluctuations in the value of the currency through its control of interest rates.
2. Preventing counterfeiting, so that you know you're holding, say, 20 Euros or 20 Dollars rather than a worthless piece of paper that you think is worth something.
3. An inherent value to currency by demanding that the currency be used in transactions with the government. To pay a tax to the US government, you must pay them in dollars. If a person or organization gets any money from the US government, it will be in dollars. The inherent value is that if you don't cough up a certain number of dollars as part of regular taxation (or fines, if you are convicted of a crime), the government will eventually send armed officers to help explain things to you.
Yes, I know the US government could go massively into debt, inflate the currency like crazy so that you need $11 trillion to buy a loaf of bread a la Zimbabwe or Weimar Germany, but the fact is that it has never done so. And it almost definitely never will: Almost all politicians are on the take from very rich people, and hyperinflation is really really bad for rich people as well as poor people (remember, we've just made Bill Gates' entire fortune worth less than 1 loaf of bread), so those very rich people will do whatever it takes to prevent politicians from even considering that course of action.
Every task is easy if somebody else is doing it.
(Score: 2, Interesting) by migz on Monday February 24 2014, @01:23PM
(Score: 3, Insightful) by Thexalon on Monday February 24 2014, @01:51PM
All governments use force and punishments to enforce a set of rules of behavior. You can't get away from that: Even in a modern democracy, every single day police use force to capture people who want to avoid standing trial, and every single day prison guards use force to make inmates follow the rules of the prison. At its core, government is a claim by an organization or person to determine when and how force may be used among a particular population or over a particular area.
You seem to be equating "Sometimes might is necessary to enforce good behavior" with "Might makes right". If you've determined, for reasons that have nothing to do with superior force, that murder is wrong, and someone commits a murder and refuses to submit to legal judgement for that murder, does that not justify the use of force against the murderer to compel him to stand trial?
Every task is easy if somebody else is doing it.
(Score: 2) by mhajicek on Monday February 24 2014, @02:42PM
What one person calls murder another may call accidental death, self defense, or justifiable homicide. The one who makes the call is the one with the most power; the biggest gang with the most guns. The only difference between government and thuggery is the matter of scale and the pretence, illusion, and often belief, of righteousness.
(Score: 1) by Silentknyght on Monday February 24 2014, @04:25PM
No. I don't have time to distill years of philosophy study to elaborate on the proof, but your statement is a fallacy, and one of the earliest ones I learned about in my philosophical education (presumably, among the earliest everyone learns about).
Let's try this: You could make the argument that nothing exists except in the state for which it is perceived or defined (i.e., by us). I could make an argument that such is not the case. The whole "tree falls in the forest" bit. Extending that from "things" to "actions," an action (e.g., murder vs. accident) exists as it "is", not merely as it is defined by others.
(Score: 2) by mhajicek on Tuesday February 25 2014, @12:30AM
The events themselves are indeed as they are, but "murder" is a human concept. If it's so cut and dry, why would the same action with the same motivation be murder in one jurisdiction but self defense in another?
(Score: 2) by Sir Garlon on Monday February 24 2014, @02:25PM
Paying the taxes you owe would be a start.
[Sir Garlon] is the marvellest knight who is now living, for he destroyeth many good knights, for he goeth invisible.
(Score: 2, Interesting) by migz on Monday February 24 2014, @02:55PM
I pay my taxes. I use my vote, and withholding my productivity, to create pressure abolish this extortion, but I do pay it.
Your government has made promises in order to raise those taxes (e.g. Social Security). Then instead of using that money for the intended use they used it to do other things. So now a whole bunch of people are expecting to collect on something they spent their whole lives paying for, but the money is gone. And it's not just that money, the government has borrowed money based on taxes it expects to collect in the future.
Realize there are only two ways to get out of this mess, raise the taxes, or make the debts worthless (inflation).
Unfortunately government has grabbed this future money by selling Treasury bonds to pension funds (amongst others). So the inflation route will compound things.
Increasing taxes? I tell you what once I hit that top tax rate, I STOP WORKING. Why should I pay 54% of my earnings to government? They are just going to use it to enrich themselves and their friends, while telling the public the lie that it is for the benefit of the poor.
It's just not worth getting out of bed in the morning when you are a tax slave. Some other sucker can do the work. But the other suckers will also figure it out. Eventually productivity will get really low.
This is what happened in USSR. Why bother if no matter what you do, the politically well connected get richer, and you can't get ahead, no matter how hard you work?
This is bad news, either way.
How about for a solution, stop using tax money to enrich yourselves and your cronies. Stop programs that you cant afford, and come clean, that you cannot hope to meet those promises you have made (viz. social security, medicare, etc.)
How about stop trying to be the worlds policeman? Not that I mind (I like a lot of American values), but you can't afford it. Let the rest of the world sort out their own problems, or fail on their own terms.
(Score: 2) by Sir Garlon on Monday February 24 2014, @03:19PM
Sorry, didn't mean to put words in your mouth, but I took
to mean you're one of those jerks who refuses to pay taxes. But since you clarified you do pay your taxes (presumably to a non-US country, shocking as it is to realize they exist), then I've got nothing bad to say about you. :-)
Not *wanting* to pay taxes isn't obnoxious, it's normal.
[Sir Garlon] is the marvellest knight who is now living, for he destroyeth many good knights, for he goeth invisible.
(Score: 3, Interesting) by istartedi on Monday February 24 2014, @01:23PM
Some of your rebuttals to the radical Libertarian ideology
are good; but your last paragraph takes it a bit too far. Some
wealthy people actually benefit quite nicely from hyperinflation,
especially if they help orchestrate it. Those who see it coming
are well positioned to do things such as buy a motel for a few
gold coins, while most ordinary people suffer. Bill Gate's fortune
wouldn't be worth a loaf of bread under hyperinflation. The last
time I looked into this whole bloody issue, IIRC holders of equity
during the Weimar period lost only half their wealth. One is tempted
to think that stocks would retain their full value just as gold does.
The 50% haircut is due to the fact that businesses must manage the
monetary stress. It cuts into the bottom line, and may even cause
some of them to fail. Larger firms like Microsoft wouldn't fail
outright; but would have several bad quarters as they struggled to
manage the hyperinflation and engaged in unproductive activities such
as making sure that Excel accommodated humongous dollar values.