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Guest Post: Whom Do You Trust - Bitcoin Or Bernanke?

Tyler Durden's picture




 

Authored by John Cochran via The Circle Bastiat blog,

For those following Bitcoin, this interview with Gavin Andresen, the 46-year-old lead software developer for the Bitcoin project in today’s Wall Street Journal should be of interest.

Bitcoin vs. Ben Bernanke

“The chief scientist for the digital currency talks about its appeal - and pitfalls - in a world of fiat money.”

WSJ's Primer on Bitcoin:

 

Highlights:

As for the upside, small online merchants would welcome a global payment standard. For this reason Bitcoin or a similar technology could threaten the power of not just central banks, but banks, period. Unlike online payment services that give people with credit cards easier ways to transact business, Bitcoin works best when avoiding the traditional financial system completely.

And

Politicians and their appointees are entirely cut out of Bitcoin’s monetary loop. This is a significant difference between Bitcoin and government-issued fiat currencies. Federal Reserve Bank of Dallas President Richard Fisher calls the U.S. dollar a “faith-based currency.” In other words, its value rests on the belief that the government will not print so many dollars that each one becomes nearly worthless.

And

This [deflation that is predicted to be a consequence of Bitcoin’s fixed nature ] is portrayed as a recipe for economic disaster by those who like to inflate currencies to relieve the burden on borrowers, including spendthrift governments.

 

It’s true that deflations have sometimes accompanied economic disaster, but also economic triumphs. For example, in “Money, Markets & Sovereignty,” Benn Steil and Manuel Hinds describe the second phase of the Industrial Revolution in the U.S. between 1870 and 1896. Prices fell by 32% over the period, but real income soared 110% amid robust economic growth, expanded trade and enormous innovation in telecommunications and other industries.

The conclusion:

It’s almost time for Mr. Andresen to get back to work. He shares some useful advice about Bitcoin: “I tell people it’s still an experiment and only invest time or money you could afford to lose.” If only investors could as easily follow that advice with fiat currencies.

 

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Sat, 05/04/2013 - 13:36 | 3530153 Bastiat
Bastiat's picture

Neither

Sat, 05/04/2013 - 13:40 | 3530156 Jam Akin
Jam Akin's picture

Amen

Sat, 05/04/2013 - 13:43 | 3530165 Skateboarder
Skateboarder's picture

Yep. FRNs and BTCs can mean diddly squat tomorrow. I can hold in my hands and even eat food. You'd like a nice handful of granola or almonds when the almighty grocery store is no mo, I'm sure. 2x4s and plywood are useful as well, for building lots of shit. Oh, you need power tools? Too bad, Mr. Hasiteasy, electricity is only for the elites.

Expect mediocrity, prepare for absolute shit.

Sat, 05/04/2013 - 13:49 | 3530172 unununium
unununium's picture

Keep your gold.  But when it's time to buy more ammo, would you rather send BTC or USD to wal-mart?  That's all I'm sayin'.

Sat, 05/04/2013 - 14:02 | 3530197 flacon
flacon's picture

Why is there a photo of a person holding up a BitCOIN? I thought it was virtual money. Is that BitCOIN made out of silver? Even BitCOIN nerds can't get away from PHYSICAL COINS.... RIGHT?

Sat, 05/04/2013 - 14:38 | 3530256 freewolf7
freewolf7's picture

A. Bernanke
B. Bitcoin
C. Trick question

Sat, 05/04/2013 - 20:29 | 3530766 malikai
malikai's picture

Meanwhile, CCTV2 runs a 30 minute pro-bitcoin segment.

http://tv.cntv.cn/video/C10329/e5ee4fe9a62b4b24b1080327faaafcb7

Sat, 05/04/2013 - 23:00 | 3531053 HermesHiccups
HermesHiccups's picture

Jeez do we have any lovers of free enterprise here, I don't trust or understand bitcoin but i am all for it and any person who values liberty should be all for it as well. In a perfect world we would have private competing currencies, shit I hope every day there is new one popping up (and a shitty one shutting down). Lets have digital currencies, bank notes, letters of credit, coinage, and of course PM's plus whatever the else we can think up.

let free people decide through their actions what is the best currency and the more we have the better!

Sat, 05/04/2013 - 15:09 | 3530301 Croesus
Croesus's picture

I like the fact that the 10 BTC 'coin' is made out of silver, and "weighs a little over an ounce".

Here's the question:

10 BTC = 1 ounce of silver *(according to their values), while BTC currently is at $111, and silver is at $24.13.

SO, does that mean silver is undervalued, and should be priced around $1,110? 

OR, is bitcoin overvalued, and should be priced around $2.41?

Caveat Emptor.

 

Sat, 05/04/2013 - 15:18 | 3530314 flacon
flacon's picture

Yeah it makes no sense to stamp the "BTC" number into the coin - kind of like how my one ounce government-issued gold coin has "$50" stamped in it. Bitcoin is a free-floating virtual currency. Obviously the makers of these coins don't understand how or even what Bitcoin is - much like the government doesn't understand what gold is. 

 

THE ONLY THING THAT SHOULD BE STAMPED ON A COIN IS THE WEIGHT AND PURITY BECAUSE THAT IS WHAT IT'S VALUE IS. 

Sat, 05/04/2013 - 15:30 | 3530340 Cathartes Aura
Cathartes Aura's picture

couldn't agree more,

THE ONLY THING THAT SHOULD BE STAMPED ON A COIN IS THE WEIGHT AND PURITY BECAUSE THAT IS WHAT IT'S VALUE IS.

as long as the fake market created by and for the Banking Class to manipulate perceptions of worth/wealth, then let the metals steer clear of stamped "price" - put a nice bit of art on 'em if you like, but no deliberately confusing notions of "worth"

seeing a "bitcoin" coin, well that's just hilarious.  jump'd the shark BC boyz.

Sat, 05/04/2013 - 16:06 | 3530386 Marco
Marco's picture

No one will steer clear though ... fractional reserve banking has nearly as much tradition behind it as gold as currency and no one had to put a gun to people's head to put their gold into those banks and start using gold certificates rather than gold.

All it ever took and all it will ever take is interest.

Sat, 05/04/2013 - 16:08 | 3530391 flacon
flacon's picture

Just wait until "money multipliers" become "money dividers". That should put things back into perspective for 99.999999% of the population. 

Sun, 05/05/2013 - 03:33 | 3531521 cynicalskeptic
cynicalskeptic's picture

If all it takes is interest, then you've just made the case for pulling everything you have OUT of banks - 'cause they're sure not paying any interst on the funds you've entrusted to them....errrr the funds you've 'lent them' or is it considered an 'investment' now.....   in any case, you've also been warned that anythign you have in a bank is now at risk if it fails (TBTF or not), despiute wha the FDIC may promise.....

Sat, 05/04/2013 - 17:52 | 3530554 Haole
Haole's picture

"Obviously the makers of these coins don't understand how or even what Bitcoin is..."

 

...the fuck?

 

A Bitcoin value on a casascius coin is the "weight and purity" of that key on the network blockchain.

It is you who don't have a clue what you're talking about in the first place, not that that's at all unusual in Bitcoin threads on ZH...

Sat, 05/04/2013 - 17:59 | 3530570 Matt
Matt's picture

The coin is double-backed. You can use it for its BTC value, OR its silver value, whichever is MORE. This provides enhanced stability from the volitility of the BTC, and to a lesser extent, silver markets. 

Why would you want your 1 oz gold coin to be ONLY 1 ounce of gold, when it can be a weight of gold, AND a number of dollars?

The complaint should be that you are not free to use gold coins as currency based on either value, rather than lementing the fact that the gold coin has a dollar value stamped on it.

Sat, 05/04/2013 - 18:23 | 3530592 Haole
Haole's picture

I'd like to see the look on the guy's face behind the counter at a coin shop or bullion dealer when someone takes a gold or silver casascius coin in to redeem metal value in the event Bitcoin goes into the toilet. 

Sat, 05/04/2013 - 18:30 | 3530599 nmewn
nmewn's picture

Caveat emptor no doubt.

Are they assayed and stamped for purity would be the next question.

Sat, 05/04/2013 - 14:29 | 3530240 francis_sawyer
francis_sawyer's picture

Here's a hint to you all if you don't feel like prepping, but still own useful things...

~~~

2X4's [listed above] are the cheapest and most standard of lumber... But their main utility is in framing & struts... Most of you wannabe farmers out there couldn't grow a fucking dandelion if you tried [unless you're blessed with great soil]... So here's the 'starter kit' where you can construct frames for SQ FT gardening [which can be assembled ANYWHERE ~ even on the roof of apartment buildings]... The thing is, you can store these 'materials' in a garage or shed & not bother putting them into play until you really need them...

- 2x12 lumber [or, 2x6]... If you're building frames, at least 12 inches of depth is necessary [a little more is better if you want to create a nice drainage well]... You also want to think about workability... 3x3 [feet] is a nice dimension & fits well with the sizes of other materials... Therefore ~ if you're gonna cut your lumber into 3' pieces, don't do something stupid & buy 8 or 10 foot lengths, get 12 [except if you're DC Fusor & cant put a ski rack on your Chevy Volt]... Simple math is that (2) 12' 2x6's, which will cost you about 5 or 6 bucks, will build one 3x3 frame... How many you build depends on how much space you have & what you want to grow... The 'hillbilly' solution to this is to buy a bunch of plastic 'kiddie pools'... You can punch holes in the bottom for drainage &, well, they work...

- Hammer & nails [in a powerless world]... Deck screws [get the 3"] in a power drill world

- I highly recommend corner struts you can buy [a little pricey ~ but the simplicity in assembly is worth it]... Otherwise ~ you can experiment with corner assemblies...

- Various lengths of hoses [& a whole shittin' lot of them depending on how much you need to irrigate... The longer term solution is to have 3/4" PVC piping [plus boxfuls of various couplings & valves]... This will help automate your irrigation needs... Some 'soaker' hoses should be in that mix as well as well as faucet Y splitters & manifolds...

- a bunch of 32 gallon trashcans [which are stackable in storage]... Plus, a bunch of 5 gallon plastic paint cans... These are versatile for many things from planting, to composting, to holding water, soil, & even doing weeding...

- A bunch of bags of Perlite, or Vermiculite... [help starter seeds]

- Some basic fertilizers [liquid & pellet], & a couple bags of limestone

- some commercial grade weed block rolls [this is actually to put UNDER your soil beds, whereby you can contain soil but allow drainage]

- a few rolls of burlap [various uses]

- some transparent plastic bins [mini greenhouses for when the weather is changing]

- trays & trays of plastic planting cups of different sizes [you can usually get these for free if you hang around nurseries or the garden dept of HD or Loews]...

~~~

2 is one & one is none

Sat, 05/04/2013 - 14:50 | 3530271 Race Car Driver
Race Car Driver's picture

Am currently using Sweet Gum trees out of my woods for raised bed frames. Cost = labor and a few drops of diesel and gas to move and process. I use the tree limbs to make stakes to hold the logs in place if I want to stack them.

This saves me gas for the round trip and the need for d0llars to purchase lumber to create raised beds.

Also - hit-up your local businesses for their trash cardboard (read: free) - makes good sheet mulch and worm food.

 

Sat, 05/04/2013 - 15:24 | 3530318 francis_sawyer
francis_sawyer's picture

I use the cardboard as weed block [but you're right about the worm bed part]... Newspaper works fine too... Just grab all those free press CITY newspapers that they usually have at grocery & liquor stores... With a nice machete & bow saw, you can get all the branches & limbs you want for poles...

Bamboo is best... If you can locate a bamboo forest patch near your home you're golden... Don't forget twine, rope & various string as well... Zip ties are also golden... I'm leaving out a bunch of stuff here... Another freebie I've put to use are those plastic trays that beverage manufacturers use to deliver product [made of hard plastic]... The owner of a liquor store near me just stacks them up behind his store... He told me I could take anything I wanted... They give about 2-3 inches of structure, so I turn them upside down at the base of my raised gardens [which have a H20 container underneath], lay some weed block over top, then put the soil in... Guaranteed drainage & H2O conservation... It works great...

Sat, 05/04/2013 - 14:53 | 3530276 The Abstraction...
The Abstraction of Justice's picture

Or just save time and buy two years worth of food and enough PM to procure the rest.

Sat, 05/04/2013 - 15:14 | 3530308 francis_sawyer
francis_sawyer's picture

You'll go nuts unless you can add some freshness & zest into any scenario...

Sat, 05/04/2013 - 15:34 | 3530345 DoChenRollingBearing
DoChenRollingBearing's picture

Habañero pepper sauce.

Sun, 05/05/2013 - 01:27 | 3531397 The Abstraction...
The Abstraction of Justice's picture

You would not believe how many sauces and spices I have stashed.

Sat, 05/04/2013 - 17:26 | 3530521 IrritableBowels
IrritableBowels's picture

"Simple math..."

 

(2) 2x6x12's make a 6x6 raised bed, guy.

 

And soil should be 1/3 peat, 1/3 vermiculite, and 1/3 perlite.

Sat, 05/04/2013 - 14:50 | 3530268 DoChenRollingBearing
DoChenRollingBearing's picture

unununium

+ 1  That's it!  CA$H and gold.  Spend cash on ammo (food, etc.), keep the gold for your kids.

Sat, 05/04/2013 - 13:50 | 3530178 donsluck
donsluck's picture

The major issue is shelf life. Food and lumber has a limited shelf life, as do almost all commodities. Capital accumulation is essential for capitalism, for retirement, for economic advancement. This is the trajedy of our current situation, that the authorities are literally killing the system responsible for the huge improvement in the human condition...capitalism.

Sat, 05/04/2013 - 14:02 | 3530199 Skateboarder
Skateboarder's picture

I understand the time sensitivity of perishables, but even ants know that you aint making it through winter without that stash of grub.

Sat, 05/04/2013 - 15:26 | 3530332 francis_sawyer
francis_sawyer's picture

If you're storing food ~ you'd better think about 'mouse protection'...

Sat, 05/04/2013 - 15:45 | 3530355 Cathartes Aura
Cathartes Aura's picture

   ^ love cats ^

=       )(           =

Sat, 05/04/2013 - 17:14 | 3530499 francis_sawyer
francis_sawyer's picture

cats work :-)... better add some catnip to your garden space...

Sat, 05/04/2013 - 18:54 | 3530629 Miffed Microbio...
Miffed Microbiologist's picture

Mama barn cat had her 6 kittens out today in the orchard. I walked out an hour ago and there were 2 rabbit heads left on our front door welcome mat. Thank goodness we had no guests come but they are getting used to macabre decorations that occasionally pop up during visits. I walked down to the orchard and saw the remains of the bodies being voraciously fought over. Momma cat trots over to me with an air of pride for her progeny and requests acknowledgement for the gift. Her eyes are just slits as I scratch her chin and I detect a soft guttural purr.

Miffed;-)

Sat, 05/04/2013 - 14:31 | 3530244 Sudden Debt
Sudden Debt's picture

Dito.
I'll stick to my PM's untill thhe day they can print those.

Sat, 05/04/2013 - 19:18 | 3530658 SILVERGEDDON
SILVERGEDDON's picture

Neither is the correct answer. Why ? Both are worthless collections of electrons and atoms, uselessly arranged, in a world that does not need them.

Sat, 05/04/2013 - 13:40 | 3530159 Gunga
Gunga's picture

Government and industry have joined to take the fruits of the peoples labor worldwide. Anything that helps to starve the fascist beast is good in my opinion.

Sat, 05/04/2013 - 13:42 | 3530161 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Bitcoin is the bankers's worst nightmare. EVIL HAHAHAHAHAHAHAHA.

Sat, 05/04/2013 - 13:45 | 3530168 Rustysilver
Rustysilver's picture

Prove to me that banksters are not behind the Bitcoin.

Sat, 05/04/2013 - 13:49 | 3530177 unununium
unununium's picture

They are shutting down BTC exchanges' bank accounts.  How's that?  They effectively killed Bitfloor and are affecting Mt Gox.

Sat, 05/04/2013 - 14:01 | 3530196 seek
seek's picture

Not to mention a half-dozen other exchanges in Europe.

I think there is a credible argument a government is behind bitcoin, but an equally credible argument that it was just Satoshi in the beginning. But in both cases, bankers were out of the loop and not wanted in the system, which is why you see so much posturing by mainstream banking in the anti-bitcoin camp.

Sat, 05/04/2013 - 14:56 | 3530282 Bunga Bunga
Bunga Bunga's picture

Why government would create something, which they can't control? Bitcoin is open source and a flaw or back door would have been discovered years ago.

Sat, 05/04/2013 - 16:21 | 3530406 seek
seek's picture

There are certain agencies within the government that have a need to pay for things that may or may not be legal surrepticiously. This used to be done with cash but that requires physical interaction. Also, other agencies may have been worried about the development of a competiting system and felt that issuing their own to prempt this might have made more sense.

While governments like control, they dislike other governments having control even more. It's entirely reasonable they'd make a premptive move.

We'll never know for sure. Bitcoin developers that were close to Satoshi before he disappearred lean towards him being a brilliant, but shy lone individiual with a healthy dose of paranoia, but don't dismiss that it was a government plant out of hand. (If it was the government, I would suspect the NSA.)

My personal belief is Satoshi was a genius lone wolf. But others think otherwise: http://www.nasdaq.com/article/legendary-vc-paul-graham-suspects-bitcoin-...

 

Sat, 05/04/2013 - 16:50 | 3530455 dark pools of soros
dark pools of soros's picture

So it was either created by evil governments or evil governments will destroy it..

 

you all are fucking fit to be buried.. why even come to this site?  You can't order MRE's or Ammo here.. or even gold and silver..  I just bought gold with bitcoins and a lot of other things.. at some point you'll realize you are the sheep that won't walk out of an open gate

a bunch of broken men

 

 

 

 

Sun, 05/05/2013 - 09:47 | 3531825 debtandtaxes
debtandtaxes's picture

In Canada ScotiaBank will no longer deal with Bitcoin. And some banks are closing the accounts of people who move their money into Bitcoin. 

I own some. It's more a political statement right now. As is owning PMs. Which I do.

Sat, 05/04/2013 - 13:52 | 3530180 donsluck
donsluck's picture

Fool, you cannot prove a negative. Ask Saddam Hussein.

Sat, 05/04/2013 - 14:00 | 3530190 The Abstraction...
The Abstraction of Justice's picture

For every negative, X, assume double negation of X, apply Law of Double Negation Elimination, ergo X for any X. QED.

Sat, 05/04/2013 - 13:58 | 3530187 The Abstraction...
The Abstraction of Justice's picture

Assume the double negation that it is not, apply Law of Double Negation Elimination. Ergo they are not.

Sat, 05/04/2013 - 14:52 | 3530275 stacking12321
stacking12321's picture

i will do so, as soon as you prove that banksters are not behind the statement that you just posted.

Sat, 05/04/2013 - 13:42 | 3530162 fonzannoon
fonzannoon's picture

He should have thrown the gold etf in there if he was having a piece of shit contest.

 

Sat, 05/04/2013 - 13:42 | 3530163 Vlad Tepid
Vlad Tepid's picture

I trust Au and Smith & Wesson.

Sat, 05/04/2013 - 13:48 | 3530173 IdeasRbulletproof
IdeasRbulletproof's picture

Don't forget Ag & Springfield

Sat, 05/04/2013 - 14:03 | 3530201 StrangerThanFiction
StrangerThanFiction's picture

Au, Ag and Remington!

Sat, 05/04/2013 - 14:16 | 3530221 Rustysilver
Rustysilver's picture

Vlad Tepid,

Slight correction: First I trust Glock and than Ag.

Sat, 05/04/2013 - 14:52 | 3530277 resurger
resurger's picture

that's what i wanna read

Sat, 05/04/2013 - 13:46 | 3530169 unununium
unununium's picture

Is this some kind of trick question?  Do I trust "fair" or "rigged"?

Kudos to the WSJ for mentioning deflation in a neutral light.  Of course deflation is actually an excellent thing; they'll get there someday.

Speaking of voting, vote for Dropbox to support BTC payment
https://www.dropbox.com/votebox/6425/buy-storage-with-bitcoin-e-currency

 

 

Sat, 05/04/2013 - 13:46 | 3530171 Kaiser Sousa
Kaiser Sousa's picture

"I tell people it’s still an experiment and only invest time or money you could afford to lose.” If only investors could as easily follow that advice with fiat currencies."

experiment???? only invest what you can afford to lose?????

with that which has been what it is for 5,000 years there is no experiment and there is no losing....

There r only 2 forms of money....Physical Gold and Silver

 

Sat, 05/04/2013 - 13:56 | 3530184 FEDbuster
FEDbuster's picture

Gold and silver are just two very good barter commodities.  There are a host of other items common and precious that will also fit the definition of "money".  Not trying to argue, but diversification of your barterable goods is not a bad strategy.

Sat, 05/04/2013 - 14:11 | 3530213 Kaiser Sousa
Kaiser Sousa's picture

" According to Herodotus, the Lydians were the first people to introduce the use of gold and silver coins. It is thought by modern scholars that these first stamped coins were minted around 650–600 BC."

and...............

"The history of Joseph affords evidence of the constant use of money, silver of a fixed weight. This appearsalso in all the subsequent history of the Jewish people, in all theirinternal as well as foreign transactions. There were in common use intrade silver pieces of a definite weight, shekels, half-shekels, andquarter-shekels. But these were not properly coins, which are piecesof metal authoritatively issued, and bearing a stamp. Of the use ofcoined money we have no early notice among the Hebrews. The firstmentioned is of Persian coinage, the daric (Ezra 2:69; Neh. 7:70) andthe 'adarkon (Ezra 8:27). The daric (q.v.) was a gold piece current inPalestine in the time of Cyrus. As long as the Jews, after the Exile,lived under Persian rule, they used Persian coins. These gave placeto Greek coins when Palestine came under the dominion of theGreeks (B.C. 331), the coins consisting of gold, silver, and copperpieces. The usual gold pieces were staters (q.v.), and the silvercoins tetradrachms and drachms."

 

There r only 2 forms of real money...

Sat, 05/04/2013 - 14:22 | 3530231 Rustysilver
Rustysilver's picture

Kaiser Sousa,

No argument here. Egyptian Pharaohs were recognized the value of gold a couple of thousands years before that. Some excavation showed pharaoh buried in silver coffin.  The commentator stated at that time silver was worth half of gold. (about 3000 years ago).

Sat, 05/04/2013 - 14:51 | 3530273 The Abstraction...
The Abstraction of Justice's picture

Gold, and cat helmets.

Sat, 05/04/2013 - 14:50 | 3530272 The Abstraction...
The Abstraction of Justice's picture

I invested heavily in silver, and so far I am losing money. No losing is bullshit from the priviliged who do not recognize that some people are forced to sell in the bad times.

Sat, 05/04/2013 - 13:51 | 3530179 IdeasRbulletproof
IdeasRbulletproof's picture

Funny, I've never seen bitcoin in the bible anywhere...

Sat, 05/04/2013 - 13:53 | 3530182 donsluck
donsluck's picture

Or ANYTHING modern, for that matter. Damn Christian fundamentalists...

Sat, 05/04/2013 - 15:51 | 3530362 Boxed Merlot
Boxed Merlot's picture

Or ANYTHING modern, for that matter...

Matthew 13:44

 “The kingdom of heaven is like a treasure hidden in the field, which a man found and hid again; and from joy over it he goes and sells all that he has and buys that field."

 

Sounds pretty applicable to todays environment to me. 

jmo.

Sat, 05/04/2013 - 16:47 | 3530451 Jean Valjean
Jean Valjean's picture

Agree.
Or how about:
Render to bernake that which is bernake's and to God that which is God's

Sat, 05/04/2013 - 17:11 | 3530495 Long_Xau
Long_Xau's picture

Well there was also no mention of Jesus... in the Old Testament.

It is true that you can stick to what is already known and be just fine, but every once in a while something completely new happens and refuses to go away.

Sat, 05/04/2013 - 18:09 | 3530576 Matt
Matt's picture

Check again, major and minor prophets. The entire point is that Jesus supposedly fulfilled the prophecies.

Sat, 05/04/2013 - 13:52 | 3530181 Aeternus
Aeternus's picture

Au, Ag, Sustanance, Pb and Long XAU/JPY - XAU/USD - XAU/EUR ad infinitum!

 

http://www.youtube.com/watch?v=deuC8GPr31A

Sat, 05/04/2013 - 17:16 | 3530506 Long_Xau
Long_Xau's picture

Thanks. Don't forget the Xau Vietnamese Dong pair!

Sat, 05/04/2013 - 13:58 | 3530185 dryam
dryam's picture

If somehow there could be an oil-based currency the financial system would take care of itself.

Sat, 05/04/2013 - 14:45 | 3530263 Darth Rayne
Darth Rayne's picture

Hi dryam, there is an oil backed currency - the dollar.

That's what we are meant to believe. However, some think more deeply and research accordingly.

Gold is currently the money which buys oil. QUIETLY. (More accurately, a flow of gold into the right hands ensures a good supply of oil denominated in dollars.)

No real proof but from 1954 to 1971 the price of oil and gold was constant.

After 1971 gold and oil track each other resonably well and still do. I expect the recent drop in spot price for gold, if maintained, will result in lower oil prices.

However, I bet you knew this. The US Govt is in a real mess. They need a reasonably high dollar price for oil so the world has a reasonably high demand for dollars. The problem is a reasonably high oil price kills the global economy which only functions well with cheap oil.

No real proof but oil went from 20 to 30 bucks a barrel to 100 which caused much stress in the global economy. In 2007 oil hit 140 bucks a barrel and the global economy died. The increase in oil price corresponds with the increase in gold. Could be a coincidence?

Time will reveal the link between gold and oil. Or I could now.

70 million barels of oil a day (consumed). 7 tonnes of gold a day (mined).

70 million barrels of oil / 7 million grammes of gold = 10 barrels of oil per gramme of gold.

Or 300 barrels an ounce.

All the remaining oil in the ground for all the remaining gold in the ground. Who would deny the oil producers that?

It isn't quite that simple yet but things can change real quick.

For those who only understand the price of things in dollars and not the value of things, let me explain.

One $1500 American gold eagle today could easily have the purchasing power of 400 barrels of oil tomorrow. If you want to price oil at $90 a barrel then 400 * $90 is $36,000

I haven't mentioned silver. I like silver. Oil producers like gold. Get over it.

The global economy is a game for a powerfull few. It is a bit like poker. Perhaps the oil producers will settle for half the mined gold for their oil. The gold eagle then gets you twice the oil. Again for the dollar blind muppets, that's a price of $72,000 per gold eagle.

The problem is, once gold is globally accepted as the 'oil based currency' then the dollar no longer has reserve status. This could cause difficulties. Someone with $72,000 mght well struggle to buy a gold eagle. At that point one million dollars US wouldn't buy any of my Gold Brittanias.

 

Sat, 05/04/2013 - 16:56 | 3530470 dark pools of soros
dark pools of soros's picture

the dollar was backed by oil and now it is backed by bombs

Sat, 05/04/2013 - 13:59 | 3530188 Atomizer
Atomizer's picture

The fight will commence between USD vs. BRICS.

 

Mystery solved. IMF, BIS and World Bank will scream like a child whose pacifier fell out of the crib.

E-Trade Baby Loses Everything

/LOL

Sat, 05/04/2013 - 14:02 | 3530189 toadold
toadold's picture

The  most interesting thing that I have read about the bit coin is from small businesses who use it because they can avoid the 3% transaction fee that they have to pay to banks when they use their credit or debit cards.  I wonder how much of that 3% fee is net profit for the banks?

How much damage woud the credit card banks take if they could only charge say 0.5%?

Sat, 05/04/2013 - 14:06 | 3530205 seek
seek's picture

The entire credit card system is a massive revenue source for the banks. Not only the 3% fee to the merchants, there's card fees, interest, penalties. They make so much from credit cards that they can afford to absorb the fraud costs because it's cheaper than upgrading the system. Some banks, BofA in particular, actually encourage credit card abuse leading to charge-offs and debt sales, because they've rigged their accounting to be profitable from that, too.

A key to bank profits is creating credit out of thin air, which is what credit cards do. Bitcoin doesn't, the transaction fees are limited, and there's zero risk of chargeback or conventional steal-the-account-number fraud. I know the haters here will dismiss bitcoin as an investment or a store of value, but it's a nearly perfect trasactional currency online, and with a small amount of infrastructure, offline as well.

Sat, 05/04/2013 - 15:22 | 3530325 JR
JR's picture

Why do bankers fear Bitcoin like the third rail? Because Bitcoin flies in the face of Fabian Socialist Keynesianism with its commitment to wipe out Christianity, to wipe out free trade with monopolies, to wipe out the middle class small businessman, and to set up an international socialist One-World-Government.

Bitcoin philosophy is the antithesis of the proposal by reliable Keynesian economist most beloved by the media, Paul Krugman, to have the federal government simply create a platinum coin with a face value of $1 trillion that would immediately be deposited at the Federal Reserve with the sum credited to the government’s account. “And the government could then write checks against that account, continuing normal operations without issuing new debt.”

That’s creating money for nothing, pure and simple, with the emphasis on the latter.

As Ron Paul said, it took Professor Hans-Hermann Hoppe just a few short sentences to point out the obvious: If the governments or central banks really can create wealth simply by creating money, why does poverty exist anywhere on earth? Why haven’t successive rounds of quantitative easing by the US Fed solved our economic recession?  And if Fed money creation really works, and doesn’t create inflation, why haven’t Americans gotten richer as the money supply has grown?

Says Paul: “The truth is obvious to everyone. Fiat currency is not wealth, and the creation of more fiat dollars does not mean that more rice, steel, soybeans, Ipads, or Honda Accords suddenly come into existence.“

But it can create a Marxist welfare and surveillance state as intended by the Fabian Society’s founders, Sidney and Beatrice Webb (Beatrice also was co-founder of the London School of Economics and Political Science). And if there is one institution more closely connected to central banking, I don’t what it what it is.

And, it can enable the Fed’s cabal of private owners to dictate the economic and political life of all peoples in America and Europe and to decide who will be the ultimate owners of all those nations’ industrial and commercial undertakings, i.e., mainly themselves.

You know what? It’s all fraud. And as Ron Paul told attendees recently at the Mises Circle Lecture in Houston, “There will be a day when the Fed will be ended.”

Sat, 05/04/2013 - 14:07 | 3530206 nonclaim
nonclaim's picture

Neither Bitcoin nor Bernanke: two sides of the same shit.

Sat, 05/04/2013 - 14:14 | 3530218 TheMeatTrapper
TheMeatTrapper's picture

I will trust bitcoins when they are shiny, silver and fit in my pocket.

Sat, 05/04/2013 - 14:17 | 3530222 sitenine
sitenine's picture

False choice - I'm not falling for it. Gold is just fine, thank you.

Sat, 05/04/2013 - 14:20 | 3530227 GrinandBearit
GrinandBearit's picture

Neither.  What kind of choice is this anyway?

Au and Ag... for the win.

 

Sat, 05/04/2013 - 14:21 | 3530229 Atomizer
Atomizer's picture

Bitcom will end as the confiscation of Liberty dollars arose.

Feds raid Liberty Dollar offices

 

Different year, same outcome. 

If the opposition disarms, well and good. If it refuses to disarm, we shall disarm it ourselves.

-Joseph Stalin

Sat, 05/04/2013 - 14:39 | 3530241 sitenine
sitenine's picture

Yup. Same as it always was. Competing currencies are, shall we say, 'frowned on' by the monopoly. Even non-threatening ones. Bitcoin is especially dangerous, because it was designed to be electronic, portable, anonymous and international. Genius, really. I genuinely fear what lengths the monopoly might go to to stop it if it really posed any kind of serious threat. Political risk is not to be taken lightly with this product. Oh, I'm sorry, did I say product? I meant 'currency' (yeah, good luck with that) ;)

Sat, 05/04/2013 - 15:01 | 3530289 Bunga Bunga
Bunga Bunga's picture

How governments wanna confiscate bitcoins? Waterboarding every citizen who might own a brainwallet?

Sat, 05/04/2013 - 15:54 | 3530364 seek
seek's picture

This is one of the main reasons cited that Satoshi remains anonymous.

However, unlike the Liberty dollar, bitcoin can't be confiscated. It's a ledger entry, one duplicated across millions of systems in hundreds of different political jurisdictions. It can be harrassed, and suppressed, via interfering with the interaction with the existing banking system, but it can't be confiscated without shutting down communications globally.

The outcome will be different than LD. It may not be more favorable, but it will certainly be very different by the very nature of how bitcoin is constructed.

Sat, 05/04/2013 - 14:24 | 3530235 IdeasRbulletproof
IdeasRbulletproof's picture

I wonder if playstation network will ever start accepting bitcoins. Maybe then I can afford my virtual kitchen set in my virtual gold mansion on my playstation home™ account.

Sat, 05/04/2013 - 18:13 | 3530580 Matt
Matt's picture

Maybe after Yen collapses, Sony and the rest of the Japanese will rush into BTC.

Sat, 05/04/2013 - 14:33 | 3530248 gbresnahan
gbresnahan's picture

When I heard Al Gore was a "big fan of BitCoin," a red flag went up for me.

Sat, 05/04/2013 - 15:07 | 3530294 defencev
defencev's picture

When I heard Al Gore was a "big fan of BitCoin," a red flag went up for me.

Even if it is true , not to the extent that he accepted payments from AlJazeera for his Current network in bitcoins...

Sat, 05/04/2013 - 14:33 | 3530249 noses
noses's picture

To answer the original question: Neither. In Gold I trust.

Sat, 05/04/2013 - 14:39 | 3530257 Jorgen
Jorgen's picture

Neither. I trust PM's and good quality agricultural land with fresh water access.

Sat, 05/04/2013 - 14:33 | 3530250 css1971
css1971's picture

1. Bitcoins don't scale. i.e. it works ok with small numbers of users but doesn't work with very large numbers of users.

2. There is nothing about Bitcoins that would prevent banks from loaning them out. In exactly the same way you don't touch physical paper when making a transaction, you wouldn't come in contact with the Bitcoins. You would simply using bank credit exactly as you do now, but backed to some fraction with Bitcoins.

i.e. Bitcoins don't change anything and frankly aren't technically good enough anyway.

Sat, 05/04/2013 - 15:29 | 3530324 Amagnonx
Amagnonx's picture

Your Pt.1 isnt a point, you make an assertion but dont even bother with an example, let alone any evidence.  I would say that the more people who use BTC, as with any money - then the more useful it becomes.

 

As for Pt2. if they lend you something that is not BTC, and people only accept BTC - the value of what you borrowed is zero.  In other words, they will need to lend you actual BTC - which means they cannot fractional reserve it.  Only if they are able to introduce another currency and convince people it is the same as BTC (as was previously done with dollars and gold) could they begin fractional reserve.

 

Due to the prior logic being unfounded, your conclusion is also unfounded - your throw away 'arent technically good enough' has no support anywhere in your previous text, and seems purely a subjective opinion.

Sat, 05/04/2013 - 15:45 | 3530343 css1971
css1971's picture

1. All transactions are stored in the block chain which has to be distributed to all processors. Without the entire chain (an orphan or invalid chain), your transaction is invalid. This doesn't scale. Not even close in a peer to peer environment. You plan to centralise it? Because that is the only way it can be made to work. This turns the block chain into nothing more than a centralised set of accounts. i.e. exactly where we are now.

2. Don't be ridiculous. Of course they lend out real Bitcoins. How the hell do you think they did it with gold? They lend out the real thing, fractionally reserved. 99% of the population will never touch "their" bitcoins and will be happy leaving them with the bank and making do with credit.

Bitcoins don't solve any problem.

Sat, 05/04/2013 - 14:46 | 3530261 InspectorBird
InspectorBird's picture

Bitcoin is your typical pyramid scheme, where creators and early adopters hope to get rich in expense of those who come in later. A lot of bloggers where given bitcoins for free to get them promote this scam (so they would have a stake in it). Im surprised it has gone as far as it is and many otherwise intelligent people even promote it, because its clear as day that its your old pyramid scam in new dressing.

Bitcoiners are trying to sell you some worthless strings of characters and convince you that you will be able to sell them to a greater fool for a greater price down the road...

Sat, 05/04/2013 - 15:10 | 3530303 Bunga Bunga
Bunga Bunga's picture

Why do you consider those strings are worthless, when it is even accepted as payment for drugs, illegal weapons, ammo etc.? No buyer would use credit cards, debit cards or cheques to pay for illegal stuff.

Sat, 05/04/2013 - 15:41 | 3530352 InspectorBird
InspectorBird's picture

You are foolish if you use bitcoins to buy illigal stuff. Bitcoin anonymity is a myth, bitcoin transactions are very trackable indeed...  You will be way better off using cash if you want anonymity.

Sat, 05/04/2013 - 18:14 | 3530584 Matt
Matt's picture

By your definition, Gold is a ponzi too. People hoarded tens of thousands of tons of it, then try to get us to buy a few ounces now that it is worth a lot. Those bastards!

Sun, 05/05/2013 - 04:24 | 3531550 InspectorBird
InspectorBird's picture

Well, unlike bitcoins, gold have been around and has been valued for thousands and thousands of years. Bitcoins on the other hand have been around for what, 2-3 years? Also, bitcoins are not tangible (just some strings of characters in virtual reality) and have zero intrinsic value (you cant do absolutely anything with them except try to sell them to a greater fool). And the creator of bitcoin doesnt even have decency to come forward... why is that?? if he created such a good thing...

Sat, 05/04/2013 - 14:48 | 3530270 Town Crier
Town Crier's picture

Won't the Legisbankture just pass a law making Bitcoin use illegal, and start imprisoning users?

Sat, 05/04/2013 - 15:15 | 3530310 Amagnonx
Amagnonx's picture

To me, that is almost guranteed - and when that happens you can say that BTC is starting to reach towards its potential.

 

The question is - if you could get paid in BTC, avoiding tax - and had a ready market to spend it into and it was increasing fast in value - would you obey that law?

Sat, 05/04/2013 - 18:23 | 3530593 Kirk2NCC1701
Kirk2NCC1701's picture

Yours is a rhetorical question, I hope.

Only a fool or an idiot would take that bait.

Sat, 05/04/2013 - 14:57 | 3530284 q99x2
q99x2's picture

Peer to peer exchanges.

Sat, 05/04/2013 - 15:10 | 3530302 Amagnonx
Amagnonx's picture

WHile BTC is new - it is unmistakably money - the only real questions are; is it really counterfiet proof, can it survive against the banksters and will we have a technological future where BTC can survive.

 

I believe in money, and I know what it looks like - I hold gold and silver, and I also hold BTC.

 

There are people who try and deride BTC for a range of non reasons, but the opening questions seem to be the only valid issues with BTC.

 

I think BTC has an excellent chance for success, most of its its monetary properties far exceed those of gold and silver - it does however carry some risks that do not effect PM's - however, its extraordinary monetary properties compensate somewhat for its vulnerabilities.

I trust nothing, and I trust no-one - gold can be counterfiet in bars and coins, BTC may have a backdoor, silver could be confiscated.

BTC has the potential to have more impact on human beings than even agriculture - as it may destroy the domination of the banks - which would destroy the nations (as national govts are merely retail outlets for the banks).

An important monetary property is acceptance - try and buy something with a silver coin and get the spot value for it - for BTC this is the hurdle it will have to pass to reach its potential.

 

Sat, 05/04/2013 - 17:07 | 3530485 dark pools of soros
dark pools of soros's picture

Sadly the ZH crew here can be left behind if you want to march on.  I stop by less and less.

Here is a breath of fresh air:

http://www.forbes.com/sites/kashmirhill/2013/05/01/living-on-bitcoin-for-a-week-the-journey-begins/

this hole is dark, stale and dead

 

Sun, 05/05/2013 - 08:56 | 3531745 Sean7k
Sean7k's picture

Great informational article. Thanks for the cite. 

Sat, 05/04/2013 - 15:20 | 3530320 mydogisprettier...
mydogisprettierthanyou's picture

I trust neither

Sat, 05/04/2013 - 15:26 | 3530331 StarTedStackin'
StarTedStackin''s picture

What a fuggin stupid title........as if there is no third, fourth or fifth.......option

Sat, 05/04/2013 - 18:19 | 3530590 Matt
Matt's picture

There is an infinite number of choices, but such a conversation would take an infinite amount of time. The question is, between these two, which do you prefer?

Sat, 05/04/2013 - 15:58 | 3530372 Lost Wages
Lost Wages's picture

At least Mr. Andresen is more realistic than Max Keiser who screams "PUT YOUR ENTIRE SAVINGS IN BITCOIN IT IS THE CYBERCHRIST."

Sat, 05/04/2013 - 18:43 | 3530618 terryfuckwit
terryfuckwit's picture

that is simply a complete misquote......

Sun, 05/05/2013 - 11:15 | 3531985 Monedas
Monedas's picture

Thanks for the plug, Max !    Paper Jihad .... Cyber Jihad .... Comedy Jihad World Tour

Sat, 05/04/2013 - 17:03 | 3530478 dark pools of soros
dark pools of soros's picture

One other major benefit of bitcoin is its ability to uncover all the scared dipshit sheep that infest this site.

Talk big and walk small

 

 

Sun, 05/05/2013 - 01:24 | 3531395 Tango in the Blight
Tango in the Blight's picture

The ones who keep polishing their guns but will probably hand them over pronto when a heavily armed Swat unit turns up at their door and demands them.

 

Sat, 05/04/2013 - 17:20 | 3530516 thisandthat
thisandthat's picture

Neither.

Sat, 05/04/2013 - 17:43 | 3530547 Kirk2NCC1701
Kirk2NCC1701's picture

An interesting article. But the blogs are even more interesting. They're not educational, but they sure are revealing and entertaining. Keep it coming, boys.

Sat, 05/04/2013 - 18:38 | 3530611 terryfuckwit
terryfuckwit's picture

ok zh numpties....which country yesterday downloaded the most bitcoin app's from source forge.... that would be china... and the number would be over 14,000...china national tv did a positive documentary on bitcoin.. ie government approval for our volatile baby bitcoin currency...dont ever say you were not told....

Sun, 05/05/2013 - 05:29 | 3531583 jonytk
jonytk's picture

I found doubtfull that cctv did a documentary on bitcoin, but anyway this could be related with the launch of CHN chinacoin reciently on bter exchange? only time will say, it will not surprise me a bit Central banks start their own cryptocurrency. What is there to lose anyway? create a crypro is free, what is an idiocity is buy an alt-coin with bitcoins, you can only lose money.

Learn more about bitcoin in 5 min on my website www.getbitcoins.tk

Sun, 05/05/2013 - 06:57 | 3531633 jonytk
jonytk's picture

I will suggest putting your money on Namecoins by the way:

read this:http://dot-bit.org/Main_Page they don't even have a wikipedia article yet,

so i advice to get into the NMC train early!

they will skyrocket as soon as the next halving block happens, in january 2015!.

or if they get into mtgox.

Sun, 05/05/2013 - 11:12 | 3531979 Monedas
Monedas's picture

We are the Chinese Communist Government .... we're here to help you !

Sun, 05/05/2013 - 11:09 | 3531970 Monedas
Monedas's picture

They should be call "BitBits" .... truth in advertising ?  (I'm starting to write like a foreigner ?)

Sun, 05/05/2013 - 11:07 | 3531973 Yperkeimenos
Yperkeimenos's picture

I trust Gold.

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