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What kind of economy will emerge in a post oil world?

General discussions of the systemic, societal and civilisational effects of depletion.

Re: What kind of economy will emerge in a post oil world?

Unread postby MonteQuest » Wed 05 Nov 2014, 14:15:06

careinke wrote:Monte, I understand very well that BAU currencies today, are based on debt and centralized banks. But they don't have to be.


But I keep asking. What will the value of a bitcoin be based upon if not faith in GDP growth?

What of credit? How will BItcoins be loaned with interest? Where will the interest money come from?
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Re: What kind of economy will emerge in a post oil world?

Unread postby DesuMaiden » Sat 08 Nov 2014, 15:19:05

How does bit coins have anything to do with an economy in a post oil world?
History repeats itself. Just everytime with different characters and players.
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Re: What kind of economy will emerge in a post oil world?

Unread postby radon1 » Sat 08 Nov 2014, 19:49:55

MonteQuest wrote:
vtsnowedin wrote:Currency will remain due to it's utility.


But what will it be based upon? Currently, it is debt-based and loaned into existence. And without growth in GDP, there is no debt-based currency possible.


In a non-growth environment, we can take any tradeable item, such as a measure of wheat, or a golden coin, or anything else alike, and use it as a benchmark for exchange. This will be the new money.
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Re: What kind of economy will emerge in a post oil world?

Unread postby radon1 » Sat 08 Nov 2014, 20:12:15

Pops wrote:The point of capitalism is not growth but profit, growth may be an offshoot but is not a requirement - and not on everyone needs to be profiting either, creative destruction being a central tenet. Obviously no or negative growth doesn't equal the end of capitalism or it would have long since went kaput.

Since much of the modern, especially the rich world economy is based on waste enabled by cheap energy, if/when cheap energy leaves us there will be a very long period of deflation as the fat (then meat) is wrung out. But again, since capitalism is not defined by growth but by profit from private property and private labor, it will survive as long as the legal framework allows. There is profit to be made in any situation; even the worst disaster and humans will not become 100% self-sufficient next Tuesday, so opportunities will abound.


How is profit different from growth?

Capital is nothing else but the other side of the balance sheet, the equity, i.e. assets less liabilities. Profit is nothing else but the growth of the capital (or a crucial component thereof). If you cannot ensure the growth of capital, the notion of capital (and capitalism) becomes pretty meaningless. A feudal lord does not need to care about capital, he is perfectly OK with his assets. He can squeeze as much as he pleases from them.

For the same reason, capitalism is impossible without the financial sector. Financial sector essentially ensures the fluidity of capital, giving the meaning to that other side of the balance sheet. Absent the financial sector, we will again have a feudal lord milking his assets.

The growth of the financial sector is quite natural. Its role is to enable interaction between various markets, and as the distances travelled between the markets become longer, the share of the financial sector grows. Also, the financial sector tends to concentrate in particular locations. So, while the total share of the financial sector may remain stagnant or increase slowly, its share in a particular location may experience a rather dramatic rise. This is actually a blessing, because these locations tend to pay abnormally high salaries for the same type of work as a result of anomalous money concentration.
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Re: What kind of economy will emerge in a post oil world?

Unread postby radon1 » Sat 08 Nov 2014, 20:15:47

DesuMaiden wrote:How does bit coins have anything to do with an economy in a post oil world?


Arguably, a post-oil world is a non-growth world - meaning the world whose GDP is stagnant or declining - and fiat money lent on interest will be dysfunctional in such a situation. Bitcoins are non-interest based and thus, the argument goes, should be operational.

Having said this, bitcoins are little more than another ponzi, which are kinda always faith based.
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Re: What kind of economy will emerge in a post oil world?

Unread postby dolanbaker » Sat 08 Nov 2014, 20:29:34

radon1 wrote:
MonteQuest wrote:
vtsnowedin wrote:Currency will remain due to it's utility.


But what will it be based upon? Currently, it is debt-based and loaned into existence. And without growth in GDP, there is no debt-based currency possible.


In a non-growth environment, we can take any tradeable item, such as a measure of wheat, or a golden coin, or anything else alike, and use it as a benchmark for exchange. This will be the new money.

Money is loaned into existence, that's correct. There is nothing to stop a future economy from replacing it with a money system that requires the currency to be spent into existence and taxed out.
Money as in the notes and coins in general circulation can and most likely continue to be used in most places in the world as long as there is faith in the "value" that currency.

Barter was, is and always will be useful under certain criteria as in the "value" of the goods traded are considered equal.
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Re: What kind of economy will emerge in a post oil world?

Unread postby careinke » Sun 09 Nov 2014, 01:02:13

MonteQuest wrote:
careinke wrote:Monte, I understand very well that BAU currencies today, are based on debt and centralized banks. But they don't have to be.


But I keep asking. What will the value of a bitcoin be based upon if not faith in GDP growth?

What of credit? How will BItcoins be loaned with interest? Where will the interest money come from?


Like all fiat currencies they are backed by faith. What tangible items back the dollar? Nothing, that's why it is a Fiat currency.

Bitcoin is not a fractional reserve system. Bitcoins are "mined" by computers working on the block chain. There are 21,000,000 Bitcoins, they get harder to "mine" as more are "mined." this rate is known, and written into the program. It's a little hard to explain, but basically Bitcoins are paid to the servers (and anyone can run a server) to run the system. As long as there are at least two computers running, (and there are thousands doing this now), the currency remains.

You can aquire bitcoin in several ways, mine it, buy it, sell or offer a service and accept bitcoin as payment, recieve it as a gift. It's value is determined by the market. You can buy Bitcoin with just about all currencies right now. Once you have bitcoin, you can use it just like cash with anybody who accepts bitcoin. You can also convert it back to another currency.

Interest payments are a contract between two or more parties. It has nothing to do with the currency. Personally, with a deflationary currency, I would be reluctant to take a loan that I had to pay interest on.

It's value is in it's usefulness as a currency. Migrant workers can transfer money across borders at virtually no cost, as opposed to up to 20% charged by the likes of Well Fargo for an international money transfer. you can transfer the funds by e-mail, it's that easy.

In addition, you do not have to keep your cash in any financial institution with the inherent risk of losing your funds.

I predict within five years, at least one country will adopt a crypto currency, (or start their own), as its national currency. It is way cheaper than trying to manage a traditional currency.

I guess cryptocurrencies just appeal to my Anarchist leanings. 8) Still the fact remains that crypto currencies exist, and their use is expanding.
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Re: What kind of economy will emerge in a post oil world?

Unread postby MonteQuest » Sun 09 Nov 2014, 11:53:32

radon1 wrote:In a non-growth environment, we can take any tradeable item, such as a measure of wheat, or a golden coin, or anything else alike, and use it as a benchmark for exchange. This will be the new money.


Which makes the amount of money available dependent upon what it is based upon, unlike debt-based money.

Credit will be backed by tangible assets, not a promise to pay or upon future growth projections.

Money will therefore be quite scarce.
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Re: What kind of economy will emerge in a post oil world?

Unread postby MonteQuest » Sun 09 Nov 2014, 11:56:59

dolanbaker wrote: There is nothing to stop a future economy from replacing it with a money system that requires the currency to be spent into existence and taxed out.


Correct. But what do you base that money you create and spend into existence upon?
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Re: What kind of economy will emerge in a post oil world?

Unread postby MonteQuest » Sun 09 Nov 2014, 12:01:10

dolanbaker wrote: Money as in the notes and coins in general circulation can and most likely continue to be used in most places in the world as long as there is faith in the "value" that currency.


With no growth in GDP, there is no possibility to have faith in the "value" of a currency that is based upon growth. The IOU cannot be paid.
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Re: What kind of economy will emerge in a post oil world?

Unread postby MonteQuest » Sun 09 Nov 2014, 12:10:01

careinke wrote: Bitcoin is not a fractional reserve system.


Therefore they cannot possibly replace fiat currency, just like any other currency that has a limit.

While it's value is in it's usefulness as a currency, you can't increase the bitcoin supply.

Bitcoins will be scarce.
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Re: What kind of economy will emerge in a post oil world?

Unread postby dolanbaker » Sun 09 Nov 2014, 12:23:21

MonteQuest wrote:
dolanbaker wrote: There is nothing to stop a future economy from replacing it with a money system that requires the currency to be spent into existence and taxed out.


Correct. But what do you base that money you create and spend into existence upon?

The Japanese used to base it on the rice harvest, good harvest = more money and of course bad harvest = less money.
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Re: What kind of economy will emerge in a post oil world?

Unread postby MonteQuest » Sun 09 Nov 2014, 12:31:09

dolanbaker wrote: The Japanese used to base it on the rice harvest, good harvest = more money and of course bad harvest = less money.


I don't think you can use something you can eat as a base for your currency. Has to be something durable and relatively rare.
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Re: What kind of economy will emerge in a post oil world?

Unread postby radon1 » Sun 09 Nov 2014, 13:07:51

careinke wrote: What tangible items back the dollar?
The state.

It's value is determined by the market.
Which requires fiat currencies to be in place.
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Re: What kind of economy will emerge in a post oil world?

Unread postby careinke » Sun 09 Nov 2014, 21:01:04

MonteQuest wrote:
careinke wrote: Bitcoin is not a fractional reserve system.


Therefore they cannot possibly replace fiat currency, just like any other currency that has a limit.

While it's value is in it's usefulness as a currency, you can't increase the bitcoin supply.

Bitcoins will be scarce.


Yes but you can have .00000001 bitcoin. So in effect there are 2,100,000,000,000,000 bitcoin units (Satoshi's).
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Re: What kind of economy will emerge in a post oil world?

Unread postby careinke » Sun 09 Nov 2014, 21:12:55

radon1 wrote:
careinke wrote: What tangible items back the dollar?
The state.


And therein lies the problem......

If you accept the fact that "the state" backs the dollar, then I guess bitcoin is backed by thousands and thousands of miners scattered all over the globe with each having the freedom to withdraw and everybody else having the ability to join. Truly an anarchistic currency, not backed by violence (the state).
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Re: What kind of economy will emerge in a post oil world?

Unread postby careinke » Sun 09 Nov 2014, 21:35:37

radon1 wrote:Having said this, bitcoins are little more than another ponzi, which are kinda always faith based.


I'm not sure if Ponzi was the word you meant to use.

Wiki:
A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.


First, bitcoin does not pay investors. It is a currency not an investment. The "profits" made by the operator is bitcoin paid to the "miners" so no money comes from investors. Plus it would be to the miners disadvantage if the value of bitcoin falls.

I think you are mixing apples to oranges.
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Re: What kind of economy will emerge in a post oil world?

Unread postby radon1 » Sun 09 Nov 2014, 22:09:22

careinke wrote:
radon1 wrote:
careinke wrote: What tangible items back the dollar?
The state.


And therein lies the problem......

If you accept the fact that "the state" backs the dollar, then I guess bitcoin is backed by thousands and thousands of miners scattered all over the globe with each having the freedom to withdraw and everybody else having the ability to join. Truly an anarchistic currency, not backed by violence (the state).


The state undertakes to ensure delivery of tangibles against the state's currency at prices, which are reasonably stable over a reasonably long period of time. Because if this fails, then the state will likely experience problems itself.

With bitcoin, no one has either motivation or ability to provide for this.
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Re: What kind of economy will emerge in a post oil world?

Unread postby careinke » Sun 09 Nov 2014, 23:29:51

radon1 wrote:The state undertakes to ensure delivery of tangibles against the state's currency at prices, which are reasonably stable over a reasonably long period of time. Because if this fails, then the state will likely experience problems itself.

With bitcoin, no one has either motivation or ability to provide for this.


Why do you want the state to do that, when the market does it automatically?
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Re: What kind of economy will emerge in a post oil world?

Unread postby radon1 » Mon 10 Nov 2014, 02:44:27

careinke wrote:
Why do you want the state to do that, when the market does it automatically?


Well, that's a part of the state doing that (securing the delivery). If the market is an environment where this goal is achieved, than the state is happy with it and ensures that it operates smoothly.

And what does the market do automatically? Paying state pensions?

Anyway, it is a bit weird to observe how the bitcoin "mining" is considered as a sensible commercial operation, while at the same the shale gas extraction is lambasted as an overhyped bubble just a few clicks away.
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