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The sparkly bitcoin danced into my peripheral vision a few months ago; it was so intriguing, a currency pulled from nowhere, operating parallel to to those other  big, powerful world currencies, for mysterious purposes (what could sound more alluring than a Silk Road?) Learning the technical minutia was like burrowing into a secret society, mining its shibboleths, much as its members pursued the elusive bitcoin.

But Paul Krugman says it is evil,* and, sadly, I have to believe him. Not only was it used to pay for sordid, as we now know, Silk Road goods, it’s sucking up resources like nobody’s business.  While its boosters paint a romantic picture of a cowboy currency with infinite possibilities, the reality is that bitcoin is essentially conservative. Because only 21 million bitcoin can be mined, it can only increase in value; as more bitcoin flow into circulation, inflation goes from unlikely to impossible, and money can no longer be added to the economy to rescue a country from recession or depression; debts can only grow and can never be diminished by inflation.  So yes, it’s new, but its goal is old: getting money and keeping it.

That said, if it becomes less volatile (in the last 30 days it’s had a low of $455 and a high of $1094) and more widely accepted, it could be still find a niche as an online currency.

*Here‘s Krugman:

,,,(Keynes) went on to point out that the real-life activity of gold mining was a lot like his thought experiment. Gold miners were, after all, going to great lengths to dig cash out of the ground, even though unlimited amounts of cash could be created at essentially no cost with the printing press. And no sooner was gold dug up than much of it was buried again, in places like the gold vault of the Federal Reserve Bank of New York, where hundreds of thousands of gold bars sit, doing nothing in particular.

Keynes would, I think, have been sardonically amused to learn how little has changed in the past three generations. Public spending to fight unemployment is still anathema; miners are still spoiling the landscape to add to idle hoards of gold. (Keynes dubbed the gold standard a “barbarous relic.”) Bitcoin just adds to the joke. Gold, after all, has at least some real uses, e.g., to fill cavities; but now we’re burning up resources to create “virtual gold” that consists of nothing but strings of digits.


Reopening Worlds on Fire

It’s been almost 5 years, and it’s time to jump back into the Lake of Fire.


If you want a long view on what went wrong with the economy and how to fix it, this is the most lucid account I’ve read yet.  It’s written by Simon Johnson, former head economist at the IMF:

In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts. Although lobbying and campaign contributions certainly play major roles in the American political system, old-fashioned corruption—envelopes stuffed with $100 bills—is probably a sideshow today, Jack Abramoff notwithstanding.

Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system.

An impassioned plea from the masses…

The Economist reiterates their position that the War on Drugs is not helping developed countries, and is devastating developing countries.

Nowadays the UN Office on Drugs and Crime no longer talks about a drug-free world. Its boast is that the drug market has “stabilised”, meaning that more than 200m people, or almost 5% of the world’s adult population, still take illegal drugs—roughly the same proportion as a decade ago. (Like most purported drug facts, this one is just an educated guess: evidential rigour is another casualty of illegality.) The production of cocaine and opium is probably about the same as it was a decade ago; that of cannabis is higher. Consumption of cocaine has declined gradually in the United States from its peak in the early 1980s, but the path is uneven (it remains higher than in the mid-1990s), and it is rising in many places, including Europe.

This is not for want of effort. The United States alone spends some $40 billion each year on trying to eliminate the supply of drugs. It arrests 1.5m of its citizens each year for drug offences, locking up half a million of them; tougher drug laws are the main reason why one in five black American men spend some time behind bars. In the developing world blood is being shed at an astonishing rate. In Mexico more than 800 policemen and soldiers have been killed since December 2006 (and the annual overall death toll is running at over 6,000). This week yet another leader of a troubled drug-ridden country—Guinea Bissau—was assassinated.

Yet prohibition itself vitiates the efforts of the drug warriors. The price of an illegal substance is determined more by the cost of distribution than of production. Take cocaine: the mark-up between coca field and consumer is more than a hundredfold. Even if dumping weedkiller on the crops of peasant farmers quadruples the local price of coca leaves, this tends to have little impact on the street price, which is set mainly by the risk of getting cocaine into Europe or the United States.

Would you have used more drugs if they were legal?  Do you think your kids would, or would have?


I’m a sucker for these 3D chalk drawings!

That was my thought, too, when I saw the video of him addressing CPAC: “I’t’s Tony Soprano, only fatter!”

With unemployment up, I suppose we’re going to be seeing more of this sort of thing!

I did wonder if Eric Holder was referring to blacks as well as whites when he said this.  Bill Maxwell gives his take:

I do not have a problem with what Holder said. I do have a problem, however, with what is not being publicly talked about in this controversy: On matters of race, blacks are cowards, too. We may be the worst cowards of all. First, we have perfected the crude art of controlling the terms of race talk. Second, we have developed various ways of avoiding and squashing the truth about our complicity in matters of race that are self-destructive.

I’m interested in your thoughts about this article.

Anyone watch GPS?  Fareed gives us a tough question every week.  This week it was:  If the insurgency can never be defeated, then what is the United States doing in Afghanistan? What should it be doing?

This one is a little too tough for me.  The Taliban are really surging, and we seem to be retaliating by eradicating poppy crops & bombing civilians.  I’m sure we’re doing more than that, but I’m not sure what.

I really recommend GPS; way superior to any other Sunday news show!

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