04.15.13

The Gold Bugs

Posted in Culture of Lickspittle, Fiat money fear and loathers at 8:57 am by George Smith

My since long exited drummer was a gold bug. That is, he was a Fed hater, a true believer in the idea that the US should return to the gold standard and that “fiat money” was a fraud. Perhaps not that strongly, but enough to think the escape from gold and the Fed were the cause of lots of economic problems.

If you’re still checking, Mark, I still love you. That’s the arrangement of “Letter to the Taxman” we played.

Coincidental with the crash in gold is one for Bitcoins.

I’ve briefly addressed Bitcoins before here.

“Sounds like a Ponzi scheme,” said my departed old friend Don, about two years ago. More recently, one of the Internet mags, Slate or Salon, said the same.

Bitcoin enthusiasts have the same underlying mania as old-time goldbugs, an intense dislike of government, a toxically libertarian ethos. Like traditional goldbugs, they’re also hoarders.

Krugman has ragged on the virtual currency a few times over the years.

Today he devotes a column to it, hilariously calling Bitcoin “The Antisocial Network:”

What is bitcoin? Itís sometimes described as a way to make transactions online ó but that in itself would be nothing new in a world of online credit-card and PayPal transactions. In fact, the Commerce Department estimates that by 2010 about 16 percent of total sales in America already took the form of e-commerce.

So how is bitcoin different? Unlike credit card transactions, which leave a digital trail, bitcoin transactions are designed to be anonymous and untraceable. When you transfer bitcoins to someone else, itís as if you handed over a paper bag filled with $100 bills in a dark alley. And sure enough, as best as anyone can tell the main use of bitcoin so far, other than as a target for speculation, has been for online versions of those dark-alley exchanges, with bitcoins traded for narcotics and other illegal items.

But bitcoin evangelists insist that itís about much more than greasing the path for illicit transactions. …

The similarity to goldbug rhetoric isnít a coincidence, since goldbugs and bitcoin enthusiasts ó bitbugs? ó tend to share both libertarian politics and the belief that governments are vastly abusing their power to print money. At the same time, itís very peculiar, since bitcoins are in a sense the ultimate fiat currency, with a value conjured out of thin air.

It is momentarily amusing to peruse pictures of Bitcoin-mining rigs, the piles or racks of computers the enthusiasts use to carve the currency out of “thin air.” Actually, it takes electricity. Lots and lots and lots of electricity.

Since Bitcoin has been in the news during the past week, I’ve often thought of what would happen if I interviewed my fellow shoppers at Baja Ranch in Pasadena about it.

I am certain security would be summoned.

Another way of characterizing Bitcoin hoarders is to note the Winklevoss twins are two.

Call them the Nelson Bunker Hunts of Bitcoin.

The Winklevosses are famous for being in a pistachio commercial, that as a consequence of their legal brouhaha with Mark Zuckerberg over who originated the idea for Facebook.

In relation to that, Lawrence Summers once described the Winklevosses, in a brief comment that seems very broadly broadly applicable to Bitcoin true-believers.

This makes good sense because … well, just look for yourself.

And here.

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