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The eternal "trade-off between freedom and security? The Cyber-Intelligence Sharing Protection Act (CISPA) would push information-sharing between business and government – to prevent “catastrophic attack on our nation’s vital networks.” The feds could access personal and private communications. Supported by Facebook and Microsoft, the bill is fiercely opposed by Google and the Electronic Frontier Foundation. EFF claims provisions are far too vague, using threat of cyber-crimes to distract from infringements on free speech. The sad thing? Our privacy defenders are clueless how to handle this. Concept-blind. They rail against inevitable things while failing to use leverage to demand real concessions. The kind that might actually defend freedom. See also: https://www.eff.org/deeplinks/2012/04/eff-opposes-cispa-hackers-and-founders-panelAnd: http://anewdomain.net/2012/04/16/cispa-infographic-what-is-it-and-how-is-it-like-sopa-infographic/
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Harold Chester's profile photoCharlie Hohn's profile photoPeter da Silva's profile photoPhil Stracchino's profile photo
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We are becoming more like China except that they are better at it than we are. Our representatives are all but useless at this point. At least in Vermont we get Bernie... But Leahy certainly let us down with SOPA. 
 
Should read "CISPA offers choice between security theatre and liberty".
 
To quote Jeff Poling, "Those who trade a little freedom for a little security will soon find out that they have none of either."
 
Opposed by Google? According to an article written yesterday, they're not telling which way they're leaning:

"Google has admitted that it is lobbying on the Cyber Intelligence Sharing and Protection Act (CISPA), The Hill has learned, but the company is not saying what position it is taking. Therefore, it is difficult to parse what effect its lobbying may have.

"Mike Rogers, the House Intelligence Committee Chairman, who wrote the bill, stated in the past that Google has been "supportive." Here's Google on its public stance on CISPA:'We think this is an important issue and we're watching the process closely but we haven't taken a formal position on any specific legislation.'"

http://thenextweb.com/insider/2012/04/23/google-admits-to-lobbying-on-cispa-but-wont-say-which-way/
 
"Those who would give up Essential Liberty, to purchase a little Temporary Safety, deserve neither Liberty nor Safety" -- Benjamin Franklin, "Pennsylvania Assembly: Reply to the Governor", November 11, 1755
 
+Phil Stracchino I have no idea who this Jeff Poling guy is, but apparently he was inspired by Ben Franklin's words:
“They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.”
 
Hey David, if you have time, I hope you say a bit more about what we should really be asking for, or point to articles where you have written about this.
 
Ron Paul is the only mainstream presidential candidate who opposes this - just fyi.
 
Props to him, but his stance on the gold standard is still disqualifying.
 
+Mike DeSimone Just to be clear, Paul actually opposes a gold standard, because that implies an exchange rate between gold and the dollar that would be set by political dictate. Instead, Paul favors free market money, competing currencies. He has a bill that would achieve this by repealing the legal tender law. This would reverse the impact of Gresham's law. He thinks things like gold and/or silver would win this competition for consumer preference, and that Federal Reserve Notes would lose, unless the Fed decided to stop inflating the currency. This position is a far cry from a gold standard.
 
BTW Mike, you're not alone in thinking Paul favors a gold standard. I suspect even most of his supporters think that, because he talks about gold all the time. But that's not the same thing as favoring a gold standard.
 
Ah, good to know. It would be fun for about a week watching financial markets come to ruin as power shifts to moneychangers.

I'd actually bet that the dollar would win out. Metal money would lead to Greece-style problems because the rate of production could not keep up with the growth of the entire economy, while a currency that can inflate doesn't have this problem. You'd still have the current set of pressures to not run the printing presses more than necessary.

Anyway, this is way off topic, so I'll stop now.
 
If you're right that inflating currencies would win then Gresham was wrong. Possible I guess. As for the rest, we already have competing currencies on an international basis. This would just be an elaboration of that. The Greece problem actually stems from a reverse situation, being stuck with the monopoly Euro.
 
And of course our liberty loving Democratic Senate and Executive will fiercely oppose and veto it.
 
Reading the Wikipedia article, Gresham's law (which has been traced back to Al-Maqrizi in the 14th century) originally dealt with metal currencies exclusively, for example, when a country engages in debasement. So Gresham doesn't have to be wrong for a paper currency to win.

The whole point of currencies like the dollar is that they're not metal-backed, but instead backed by the credit of the government and its central bank. It's a lot harder to print extra money without the market noticing than it is to debase coin.

From my point of view, if rare metals such as gold are getting hoarded, then the system is working. Gold can have plenty of value without being a currency. But then again, I'm biased, being from an industry which uses gold as a component part. If gold were a coin, then how could I tell that a circuit board shop didn't get its gold (used to plate connectors and protect copper from oxidation) from debasing the same currency that I'm trying to do business with?

http://en.wikipedia.org/wiki/Gresham%27s_law
 
Gold withdrawn from circulation as money to make circuit boards would actually tend to increase the value of the remaining gold currency, not debase it. But I want to agree with you in part -- if we had competing currencies then the Fed would be forced to stop debasing the dollar. This might possibly lead the dollar to beat gold and silver in the contest for consumer preference. That's a fine outcome. The key point is NOT to have a coercive monopoly, because then you get legalized counterfeiting and all of the social ills that derive from that. Some libertarians are fetishistic about gold. They shouldn't be. The real goal should be competing currencies. Ron Paul understands this, though he often isn't clear about it.
 
Yes, gold honestly withdrawn is not debasement. My point was that there is financial incentive for a company to be dishonest, acquiring gold at least partially via debasement rather than completely honest means.

That said, printing dollars is not debasement if it's open and transparent, and the market knows how much value per dollar is being lost (i.e. inflation). Just like how, with coinage, a country changing their coin's metal content would not be debasement if it is public information. Transparency of government in action.

Still, with a plethora of currencies, you still have the moneychangers getting the most out of it, since they can act as rentiers and create drag in the market.
 
+Mike DeSimone Yes, there are criminal ways to manipulate gold on a small level. Such things should be prosecuted when discovered. But the Fed has more than doubled the monetary base, legally. Should we prefer this level of counterfeiting as a supposed remedy to petty ante counterfeiting? And does transparency really fix it?

When the recent increases in the monetary base start to be lent out by banks it will be perfectly visible to everyone, but the value of our life-savings could still be cut in half, depending on how much of the increase the Fed can reabsorb by re-selling the assets it bought during the crisis. I think most of those assets are worth very little. So I suspect the debasement of personal savings to be vastly larger than any amount of petty ante gold fraud that has ever happened. But maybe I'm wrong. We'll see.
 
+Perry Willis Just to clarify -- if the expanded monetary base comes out into the economy it will be transparent, but that won't protect our savings.
 
And therein lies out fundamental disagreement. You want money to preserve value when it sits and does nothing ("savings"), like gold does when someone sticks it in a vault, whereas I want it to stay in motion as a market lubricant and don't care about protecting the hoarders.
 
+Mike DeSimone, it's true that you can debase a gold coin by reducing the amount of gold in it, by for instance making the coins thinner. However, everyone can tell you've done it, and can decline to take the lighter coins. The coins they already hold will retain their prior value.

The problem with paper fiat money is that it doesn't matter whether the Federal Reserve inflates the currency secretly or publicly. Either way, every existing dollar already out there still loses value - instantly - when they do it. Dollar holders get no choice to not accept the new inflated dollars, because all the dollars they already have get inflated as well.

However, if multiple competing, freely interchangeable and exchangeable legal currencies are allowed, all these things cease to be a problem. Because if you want your currency to be used, you have to manage it in such a way that it holds its value at least as well as the average of all currencies extant. Underperforming currencies that don't hold their value will simply be abandoned. At the same time, multiple legal currencies allow room for new currencies to be floated as new values is added to the economy by growth. (But don't fall into the classical economists' trap of forgetting that everything is finite, and no economy can grow without limit forever.)
 
+Mike DeSimone No, we actually agree. The money in my savings account circulates by being loaned out. That's how I earn interest on it. But I don't want the value of that savings to be debased by legalized counterfeiting. No hoarding is involved here.
 
Phil, not everyone can tell that the weight changed. Can you easily tell which coins you have are different weights from others with the same face value? Most people don't carry scales and touchstones, but if you go to an open currency market, they'll need to.

This is the part where you lose me, because I could swear you just described currently existing international currency markets, where the dollar is doing quite well. So it looks like you're just proposing to extend that market to the state, city, or family level, which takes the standardization (all dollars have the same value, as you said) and discards it.

Perry, if there's no inflation, the fact that you earn interest is getting something from nothing. The bank or government (via FDIC) is taking on risk so you don't. Even if that safety net weren't there, then you're not really saving money as much as you're having the bank act as your agent in loaning it out (proxy investment). So long as everyone saves and borrows mor or less evenly, things can stay balanced.

But if there are people who tend to get more interest than they pay out, then over time they will get more and more dollars, leaving fewer actually in the economy, things start grinding to a halt (in markets that use that currency), and people have to move to another currency that is actually available. Ergo, the market encourages hoarding.
 
+Mike DeSimone — If it works internationally, why would there be a problem with it domestically?


You're also neglecting a few points that your own argument opens up. To start with, the US dollar was strong largely because the US has had the world's largest economy since the end of World War 2. (It staggered badly in the 1920s-1930s, and before that in the 1860s-1870s. Who'd have thought it...?) It has continued to be ... well, not strong, but holding its own with the US economy stalled, principally because it is the world's reserve currency and because everyone else was hit by the same banking crisis - some nations worse than the US. (The Icelanders fired their government over it and are jointly writing a new Icelandic Constitution.) As long as the US dollar remained the world's reserve, it bolstered the US economy, and as long as the US economy dominated the world, the US dollar remained the reserve currency of choice. Now, with the US economy staggering and being threatened by China's, there are growing calls to diversify beyond the dollar or even change to a different reserve currency. The US will not dominate the world's economy for much longer; China now has the second largest economy in the world, more than two thirds that of the US, and is the worlds fifth fastest growing economy. Meanwhile the US economy is stalled and going nowhere, and the Fed is printing dollars and calling it "quantitative easing" (which is no more than a ten-dollar phrase for "diluting the dollar").

So, sure, don't count the US dollar out yet; but it's far from unassailable, and we're managing it very poorly. It takes two 2010 dollars to equal the actual buying power of one 1990 dollar. $3.30 to equal one 1980 dollar. $6.60 for a 1970 dollar, $11 to equal one 1950 dollar. Would you say it's held its value well?


As to the weight detection issue, when you're talking about a currency issued in billion-dollar quantities in an internet-connected world, you don't need everyone to have a currency scale. (Though in mediaeval times, when debasing the coinage was common, many merchants did.) It only takes one person to notice, and then a few others to check the report and confirm it, and the secret is out.
 
Why not smaller scales? You answered in the very next sentence: with scale comes power. Divide the dollar market into 50 state markets and every state has to set up an equivalent to the Fed. Plus, the states do not have the "does not default" history the US does, so it's highly unlikely any of them will be considered a reserve currency. So either we're back in the Middle Ages with a lot, or the world shifts to the next largest economy's currency... the yuan? Yen? I'm not sure. Probably not the Euro, given its issues.

The 1860's to 1870's, that would be the Civil War and the Gilded Age, and the 20s-30s, when we were on the gold standard. Both times with notoriously little regulation. Iceland has actually done a great job recovering from the crisis since they didn't nationalize their 1%'s debts like Ireland did.

China isn't a threat to the dollar because it's pegged to the dollar. If it became a free-floating currency, China would take the brunt of it as their labor would no longer be such a sweet deal. Hence China needs the dollar to stay stable. China also does not have the infrastructure to grow like we do. We'd be even better off if we invested in our infrastructure, but a certain right-wing party is too busy telling everyone the government has to liquidate itself.

Quantitative easing is needed because short-term bond rates are up against the zero lower bound. Yep, the world is perfectly willing to loan the US money for close to 0% interest for up to about 10 years, and has been willing to do this for four years now. We're never going to get a better deal, so of course we're not taking it. Any sane entity would refinance everything they could. Oh, wait, that's what the Fed is doing by buying up high-interest 10-years...

Your numbers are indicative of a 3-4% inflation rate, which is quite good. Having paid attention to this since the 80's, I haven't seen it as a real problem (unlike the late 70's/early 80's when it was), and there are straightforward, simple ways to deal with it. Namely, invest your money in something that pays better than inflation. Problem solved. It's a lot like dealing with so-called "savings time": just adjust your clock and be done with it.

To your final point: a Chinese-scale media control could break that feedback loop and destabilize the system. Within China, at least.

All in all, even in these messed-up times, I think the dollar is doing fine and should be left alone.
 
There is no "has to" there. You're over-extending the analogy again.

....Oh, the heck with it. I could answer your individual points (some to agree, like Iceland; others to refute), but your mind is clearly made up, so I'm not going to argue the issue further.
 
I wasn't asking for you help making up my mind. I wanted to see your side of it. You laid it out clearly. Thanks! It was nice to talk to someone who had a lot more to work with than "we should go back to the gold standard".
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