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:



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.


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.


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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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.

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'.

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?

freewolf7's picture

A. Bernanke
B. Bitcoin
C. Trick question

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!

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.


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. 



Cathartes Aura's picture

couldn't agree more,


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.

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.

flacon's picture

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

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.....

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...

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.

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. 

nmewn's picture

Caveat emptor no doubt.

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

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

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.


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...

The Abstraction of Justice's picture

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

francis_sawyer's picture

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

The Abstraction of Justice's picture

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

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.

DoChenRollingBearing's picture


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

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.

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.

francis_sawyer's picture

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

Cathartes Aura's picture

   ^ love cats ^

=       )(           =

francis_sawyer's picture

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

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.


Sudden Debt's picture

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


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

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.

_ConanTheLibertarian_'s picture

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

Rustysilver's picture

Prove to me that banksters are not behind the Bitcoin.

unununium's picture

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

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.

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.

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:


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





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.

donsluck's picture

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

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.

The Abstraction of Justice's picture

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

stacking12321's picture

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

fonzannoon's picture

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