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A Brief Bitcoin Q&A

We were recently contacted by someone who had seen our volume on Bitcoin, cryptically entitled “Bitcoins:  What they are and how to use them” which was written on one of those weekend trysts which economic thinkers are prone to, in which a flurry of ideas flies at one’s mind from all quarters and scream to be put on paper.

Bitcoins: What they are and how to use them
Bitcoins: What they are and how to use them

The book, which was literally cobbled together over the span of four days, has been our bestseller recently, which naturally has more to do with Bitcoin than ourselves.

In their inquiry, the reader had three further inquiries which we present below for those who are interested in such matters.  Enjoy!

Q:  What do you think about the relation between physical and virtual currency?

The Mint:  Generally speaking, the relation between physical and virtual currencies can be judged by examining the price for the physical currency expressed in the virtual currency.  However, I think it will be helpful to make a distinction, as the concept of virtual currency is simply another extension, or “strata”, as I like to call it, of something I refer to as the “Monetary Premium.”  Allow me to explain:

The concept of currency stems from the Monetary Premium that is attached to something, ultimately giving it value in trade.  (please read this post for a description of the Monetary Premium concept and its origins: https://davidmint.com/2014/02/08/the-division-of-labor-gives-rise-to-the-monetary-premium/ )

Over time, as the division of labor has increased, the need for credit and, by extension, something by which to exchange the monetary premium (i.e. serve as money) in order to settle the debt, has increased as well to the point that, today, all currency issued by government’s is a credit instrument (a liability of the Central Bank) and has only an indirect relationship to anything physical.

Given this, virtual currency, to the extent that it is accepted in trade, is synonymous with all other forms of currency in that it represents an indirect claim on physical wealth.

What many consider to be hard, or physical currency, such as gold and silver, will then have a relationship to either virtual currencies (such as Bitcoin) or credit based currencies (such as US dollars or Brazilian reais) which is expressed as a ratio, or price.  By extension, both virtual and credit based currencies will serve as pricing mechanisms for goods and services.

I hope the above makes sense, as it is getting to a key misconception that many have regarding money in general.

Q:  What is the future of Bitcoin? 

The Mint: As with any currency, bitcoin will have value and be traded until people lose confidence in it.  That said, bitcoin has two flaws that will make it increasingly difficult to use in trade:

1)  By design, there can only be a very limited amount of debt denominated in Bitcoin.  While most see this as attractive (indeed, it is what helps support its value), it will severely hinder the expansion of Bitcoin proper in trade as the algorithm ticks closer to the limit of ~21 million Bitcoins (never mind that many Bitcoins that previously circulated are trapped in wallets on hard drives which are in rubbish heaps now, never to be “mined” again!).

2)  The limitation on Bitcoin creation will dramatically reduce incentives to support the Bitcoin transaction validation process (known as “mining”) right at the time when it is most necessary.  This is where Bitcoin will shoot itself in the foot, and nobody knows what will happen then, but what is certain is that transaction processing will become a paid feature by providers or that it will become so slow that people will gravitate away from Bitcoin to other digital currencies who have no such flaw.

What is likely to occur is that Bitcoin will assume its place as the “gold standard” against which all subsequent virtual currencies will be measured.  In the same way that many national currencies are still measured against gold on the open market, so it will be that Bitcoin, given its finite production, will become, as gold has become, little more than an important point of reference for whatever virtual currency is currently predominately used in trade.

Q:  What is the effect on the world economy?

The Mint:  While the origins of Bitcoin and other virtual currencies may have been experimental and ideological in nature, their increasing acceptance is owed to the fact that they are filling a void in trade.  Namely, mediums of communication facilitated by the Internet have expanded trade exponentially and created needs for mediums of exchange (a way to transmit the monetary premium mentioned above) that national currencies cannot keep pace with. 

The current system of national currencies and banking provide a number of barriers to currency creation which leaves a void that solutions such as Bitcoin are able to fulfill, in the process creating a windfall for those who have successfully speculated in such currencies.

The effect of virtual currencies such as Bitcoin on the world economy, then, has been and will be to further facilitate trade and, by extension, the division of labor in the world economy.  This is a very good thing as it will ultimately lead to a more perfect balance of trade, one that is not subject to the whim of a Central banker’s assessment of the need to expand or contract the money supply.

The latter has implications for the current nation-state which I won’t go into, but the people of the world now can, through the Bitcoin and broader virtual currency story, begin to envision a world economy that is not dominated by currencies emitted by National Central banks, what will happen with that vision is something that is likely to play out in our lifetimes.

Why it is Never a Good Idea to Talk to the Police

Today we came across some information that may literally be a question of life or death.  It is regarding the much vilified Fifth Amendment, better known for its Miranda translation, “The right to remain silent.”

We came across this crucial bit of information via the following article published at priceonomics.com:  http://priceonomics.com/how-sergey-aleynikov-learned-never-to-talk-to-the/

The jest of the article is that, rather than being a hiding place for criminals, the Fifth Amendment, the right to not incriminate oneself, serves an extremely important function in today’s culture where persons are all too often presumed guilty until proven innocent.  The best advice, when approached by a police officer, is to draw on the fifth amendment first and then ask questions later, with an attorney present.

The logic is that, the police, even under the best of circumstances, may unintentionally twist one’s words in a way that implicates them in a crime that one did not commit.  In the worst of cases, the Police use anything one says to frame them.

The article draws on information from the following lecture given by a law school professor and former criminal defense attorney, which deals extensively with this very issue:

With the incredible pressure and awkward situations in which those who are entrusted to serve and protect us are placed in daily, invoking the Fifth Amendment may also be the best way to get them out of a difficult situation.

Paradoxical as it may seem, the next time one is approached by the Police, the best course of action is to simply state, “I invoke my right to remain silent.  If you wish to speak with me, I will do so only with my attorney preset.”  When they ask why, simply state “Because, anything I say can and will be used to incriminate me.”

As society has made the Subtle Change from Principles to Rules, simply being alive and breathing may cause one to break any number of rules, both written and unwritten, no matter how much one tries to do the right thing.

The Police are there to enforce the rules, and we praise them for it, unfortunately the rules themselves all too often serve to pervert justice rather than serve it.  For innocents simply trying to live their life peacefully, the Fifth Amendment may be the best and only source of protection against random prosecutions.

Remy: Raise The Debt Ceiling Rap

What happens when Rap meets Federal spending? Via Reason TV:

Bitcoin hits $200 just ahead of our eBook release

4/9/2013 Portland, Oregon – Pop in your mints…

The Bitcoin is currently trading at $235, and fortunately, by forfeiting a few hours of sleep and employing the miracle of digital distribution channels, we have been able to deliver on yesterday’s promise to have our small contribution to the Bitcoin universe available.

Bitcoins:  What they are and how to use them:  A Beginner’s Guide to adopting the Gold Standard in Digital Currencies

It is now available and can be had for just $0.99, or roughly 0.00442340 Bitcoins at the current USD/Bitcoin conversion rate.  You can pay in Bitcoins and download a the PDF here at The Mint.  It is also available in multiple formats over at Smashwords.com and on Amazon’s Kindle.  For the time being, you will have to pay the later two distributors in US Dollars.

However, should Mark Coker and Jeff Bezos read and implement the steps in our guide, they will no doubt be well on their way to Bitcoin adoption, as you will be, by the time you read these words.

Bitcoins: What they are and how to use them
Bitcoins: What they are and how to use them

While it is by no means a complete Bitcoin bible, it is akin to a Bitcoin gospel, full of observations, setting, and the practical implications of the Bitcoin’s emergence.  The information contained in the guide will leave the reader with both a solid understanding of what a Bitcoin is, its usefulness in trade, and finally and most importantly, how to use it.

Admittedly, it is a roughly hewn gem.  However, the Bitcoin phenomenon is moving at a pace unimaginable just years ago and time is of the essence.  As such, we are presenting the introduction to Section II as well as the first and most important step to personal Bitcoin adoption, establishing a Bitcoin wallet, today as a public service here at The Mint.  You may click here to read it.

A final note that those of you who have taken the step of purchasing the eBook, to whom which we are eternally grateful, if you do not need to be convinced of Bitcoin’s usefulness, we recommend diving straight into Section II of the guide:  It contains a roadmap which, if followed, will set you well ahead of your online peers in terms of being able to accept and trade in terms of Bitcoins.

As the Bitcoin phenomenon takes off at lightening speed, this may be one of those rare times that it pays to leap before looking.  There will be plenty of time to reflect and read section I and the appendix once you are comfortably retired as a result of being an relatively early Bitcoin adopter.

For, if we are correct, the Bitcoin represents not merely another fad, it will come to represent digital gold, the measuring stick by which all subsequent digital currency issues will be measured.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for April 9, 2013

Copper Price per Lb: $3.44
Oil Price per Barrel:  $93.94
Corn Price per Bushel:  $6.44
10 Yr US Treasury Bond:  1.75%
Mt Gox Bitcoin price in US:  $235.11
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,586 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.6%
Inflation Rate (CPI):  0.7%
Dow Jones Industrial Average:  14,674
M1 Monetary Base:  $2,534,800,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,501,300,000,000

Tekoa Da Silva: A Bigger Boom Now Baked In The Cake – Gold and Silver Commentary

3/11/2013 Portland, Oregon – Pop in your mints…

With the precious metals seemingly trapped in a state of suspended animation, it is nice to come across analysis that digs into the fundamentals of the precious metals, both at the retail level as well as at the source, the miners.  For a time, we have seen a steady supply of silver at around $30.  The recent push under $30 has almost immediately raised the issue of supply shortages of the white metal.

Supply, of lack thereof, is the most compelling reason to hold silver.  With this in mind, we were fortunate to come across this fine analysis piece by Tekoa Da Silva which we present here for your perusal and enjoyment.  In this video presentation, Da Silva exhibits obvious enthusiasm for the prospects, if you will, for the gold and silver markets based on his conversations with the Perth Mint, who say all of their retail clients are holding their metals in the face of this down draft, and an adviser for the BMO group, who is again seeing a dearth of supply on the horizon as marginal mining projects are shelved.

It all adds up to a continuation of the bull market in the precious metals, as their production is inextricably linked, and demand for them at the retail level is just now increasing.

The much awaited spring rally may be just around the corner.  Enjoy!

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for March 11, 2013

Copper Price per Lb: $3.51
Oil Price per Barrel:  $92.04
Corn Price per Bushel:  $7.34
10 Yr US Treasury Bond:  2.06%
FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,582 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  14,447
M1 Monetary Base:  $2,481,500,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,377,900,000,000

To Build up the Land part III – The Myth of Overpopulation

3/4/2013 Portland, Oregon – Pop in your mints…

We return to the series that started earlier this month, “To Build up the Land.”  If you need to refresh yourself, please take time to read the first two segments by clicking the links below:

To Build up the Land – part I

To Build up the Land part II – Maintaining the Peace

It has been so long even your easily distracted author had to do a bit of review!

It is common in modern day urban environments to lament the lack of open spaces.  Living in structures that are surrounded by other structures and spending time overcrowded streets or public transportation systems tends to solidify the perception that there are too many people in one’s immediate environment.  The feeling is completely normal and understandable.  What is not normal is to wish evil or impose limitations on others because of this perception, for a sober look at the data suggests that, while one’s immediate surroundings may appear to be hopelessly overpopulated, the earth continues to suffer from chronic under population, or a lack of people willing to build up the land, in the parlance of Old Jules.

The answer, then, to a personal state of dissatisfaction with a perceived state of local overpopulation is to remove oneself from the overpopulated environment to a lower density locale.

There is no doubt that the world today is more populated than at any other time in its brief history.  There is also no doubt that increasingly, mankind struggles to adequately nourish itself.  It is an error, however, to blindly assume that an increased population is the root cause of relative shortages of food and potable water.  It is equally erroneous to assume that there are limits to what the land can produce.

In Old Jules’ day, the Sandhills of Northwestern Nebraska were harsh and relatively uninhabited.  Old Jules recognized this as a problem.  Untamed land is largely unproductive land.  The land requires men and women to interact with it so that it will produce fruit and, in turn, allow the men and women to produce their own fruit, so to speak, and so on.

Old Jules, like many inhabitants of what Nabokov called the “Rotting old world,” or Europe, had come to America either in pursuit of greater opportunities or in flight from what was decrease of opportunities in Europe.  This phenomenon was most notable in England, as the Industrial Revolution brought about an exponential improvement in general living conditions and life expectancies, it also brought a population boom which overwhelmed the British Isle.  It was there that the idea of overpopulation bloomed.

As war seemed to grip Europe from time to time, it seemed that the continent was suffering from an overpopulation as well.  However, this feeling had nothing to do with actual scarcity of land.  It was, rather, a result of the various wars, socialist policies, and other acts of aggression which hindered man’s ability to build up the land to its full potential in Europe.

For this reason, during the 1800’s and continuing, in many respects, through today, the greatest immigration known to man has been taking place on both the Northern and Southern Hemisphere of the Americas.

The land was harsh and virgin yet, with a bit of luck and help from neighbors such as Old Jules, those who braved the frontier found an abundance of both resources and freedom beyond their wildest dreams.

What is surprising, or perhaps not, is that this untamed frontier produced not a chaos of fiefdoms waging war against one another, but rather gave birth to perhaps the most honest and upstanding society that exists on the face of the earth.  It is a society largely untainted by the banes of urban existence.  It is a society that understands that the planet, far from having an overpopulation problem, suffers from a lack of people willing to roll up their sleeves and build up the land.

To encourage and help people to choose to build up the land has proven difficult, especially in the aftermath of the farm crisis of the 1970s and 80s in America.  The crisis, which was largely the result of the sinkhole left in the money supply by erratic Federal Reserve policy, left thousands of family farms in ruin.

Even in Old Jules’ day, it was difficult.  It required someone who had a vision for the land and could see past the allure of temporary personal gain so that both the people and the land could carry on their productive intercourse.

Again, we pick up with Mari Sandoz in Old Jules describing Jules’ efforts to assist homesteaders to take advantage of the Kinkaid Act of 1904, an amendment to the original Homesteaders act passed in the 1860’s.  Jules had hoped that the act would reign in the cattlemen and bring in the people that the land so desperately needed to build it up:

“In the evening Jules, rifle across his arm, limped about among the newcomers and felt young again.  It was like Valentine {Nebraska} in the eighties, but different too – many more people and not so young, not nearly so young   Many of these were old – defeated men…

“…The day of the opening long queues of homeseekers waited for hours, only to find that even the sad choice of land that was free had been filed earlier in the day.  There was talk of cattleman agents who made up baskets full of filing papers beforehand and ran them through the first thing.  One woman was said to have filed on forty sections, under forty names, at five dollars a shot.  The land was covered by filings that would never turn into farms.  Yes, the Kinkaid Act as a cattleman law, as it was intended to be……

“Nevertheless Jules was busy.  His buckskin team, colts of Old Daisy, threaded in and out between the hills.  In six months, all unoccupied filings would be subject to contest.  For twenty-five dollars Jules showed the land, ascertained the numbers, took the settler to Alliance to the land office, helped him make his filings, and later, when he was ready to fence, surveyed the homestead completely.  If the homeseeker found nothing to please him, there was no charge.  Otherwise, Jules pocketed the twenty-five dollar fee……

“And every few days some land agent or attorney from, say, Chicago suggested that Jules charge fifty or a hundred dollars and give him a fourth or half of the fee for steering prospects to him.  Jules stuck his cob pipe between his bearded lips and threw the letters into the wood box.

“I am not in this business for the money.  I’m trying to build up the country.”

At the end of this discourse, Old Jules pins down the crux of the matter.  If one is in pursuit of money, overpopulation will always be a problem.  Money, as the good of highest order, is indirectly sought but all, and each additional person on the planet represents another competitor. This is an inescapable fact of the rigid debt based money supply of today.

However, if one’s aim is to build up the land, as was the case with Old Jules, they will quickly see that the truth of the matter, which the failure of the debt based money supply, as do all socialist machinations, serves to mask, is that money really does grow on well tended trees, and what is truly lacking are men and women brave enough to perform their conjugal duty to the land.

For without it, both the land and mankind will grow frigid, and the earth will become a cold and desolate place indeed.

more to come…

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for March 4, 2013

Copper Price per Lb: $3.50
Oil Price per Barrel:  $90.24
Corn Price per Bushel:  $7.23
10 Yr US Treasury Bond:  1.88%
FED Target Rate:  0.14%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,575 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.9%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  14,128
M1 Monetary Base:  $2,421,800,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,412,400,000,000

What the World Needs Now is Anarchy

We send you into the weekend here at The Mint with a brutal rendition of a sixties classic. Enjoy!
To the tune of “What the World Needs Now is Love

What the World Needs Now is Anarchy

(With apologies to the Dionne Warwick and the more than 100 other artists who have previously crooned this wonderful tune)

What the world needs now is an-ar-chy,
It’s the only thing that there’s just too little of.
What the world needs now is an-ar-chy,
no not just for some but for everyone.

Lord we don’t need another government,
There are governments and governors enough to rule,
There are rules and regulations enough to obey
Enough to make us all look like fools

What the world needs now is an-ar-chy ,
it’s the only thing that theres just too little of,
what the world needs now is an-ar-chy ,
no not just for some but for everyone

Lord, we dont need another lawman,
there is justice and kindness enough to give,
there is honor and duty in every heart,
If only we’d be left alone, to live and let live

What the world needs now is an-ar-chy ,
its the only thing that theres just too little of.
what the world needs now is an-ar-chy,
no not just for some, oh but just for every every everyone.

what the world (whoa whoa) needs now,
is an-ar-chy
what the world ( oh oh) needs now
is an-ar-chy
what the world (whoa whoa) needs now
is an-ar-chy