Warren Buffett: Stay Away From Bitcoin. It's A Mirage

Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by HarryHirsch on Friday March 14, 2014 @11:06AM (#7399216)

Let's face it: catastrophic devaluations as seen in Weimar Germany or Zimbabwe are actually rare and preceded by political instability. With currencies you know where you stand, the political history of a nation tells you.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by pjc50 on Friday March 14, 2014 @11:59AM (#7399685)

Moreover, that kind of currency collapse is connected to balance of payments; in the case of Weimar, having to ship a substantial amount of gold continuously to France, and in the case of Zimbabwe a collapse of local agriculture due to land confiscation and redistributing to people who couldn't farm.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by dllthomas on Friday March 14, 2014 @02:01PM (#7400623)

"having to ship a substantial amount of gold continuously to France,"

And having to print Marks to buy that gold, at whatever price was being asked, from people who had no particular need for Marks.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by VMG on Friday March 14, 2014 @11:51AM (#7399621)

You might want to brush up on that list of yours:

http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hype...

Anyways, insuring against political instability is not a bad idea

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by dllthomas on Friday March 14, 2014 @12:01PM (#7399700)

"Anyways, insuring against political instability is not a bad idea"

So, because A precedes B, we're assuming B causes A?

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by VMG on Friday March 14, 2014 @12:38PM (#7400005)

no reason to assume that, it is smart to insure against inflation regardless of cause

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by dllthomas on Friday March 14, 2014 @12:47PM (#7400065)

But if the cause is political instability, then that looks like making sure we don't have political instability, not like making sure we have a fixed M0.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by atom-morgan on Friday March 14, 2014 @11:49AM (#7399599)

Rare? Quite the contrary. The average life expectancy of a fiat currency is 27 years [1]. This is across 775 currencies.

[1] http://georgewashington2.blogspot.com/2011/08/average-life-e...

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by dllthomas on Friday March 14, 2014 @12:06PM (#7399733)

I expect that's dominated by "infant mortality", because situations that cause currencies to die aren't fixed by rolling out a new currency. If that's the case, it tells us very little about the safety of well established currencies.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by atom-morgan on Friday March 14, 2014 @12:22PM (#7399867)

They aren't fixed by rolling out a new currency if they're just repeating the previous process (printing money aka inflation, backed by nothing, etc).

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by dllthomas on Friday March 14, 2014 @12:40PM (#7400019)

Sure, but the ones rolling out a new currency here are bitcoin, which fixes only some of the issues.

Incidentally "printing money" is not "aka inflation" - it causes inflation if the money supply grows faster than demand for the money but they are different things.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by mpyne on Friday March 14, 2014 @12:09PM (#7399760)

A figure that might actually mean something, if we were able to assume that any given fiat currency was the same as another.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by atom-morgan on Friday March 14, 2014 @12:21PM (#7399852)

Well they're almost all monopoly currencies (not a reference to the game) that are run by people who can increase the money supply.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by mpyne on Friday March 14, 2014 @12:26PM (#7399910)

So basically we can just plug your 27 year figure into a probability density function to find out how many more years we can expect the USD to be kicking around? How many years does it have left, at varying levels of probability?

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by dllthomas on Friday March 14, 2014 @12:44PM (#7400046)

The incentive of a monopoly is to underproduce.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by atom-morgan on Friday March 14, 2014 @01:32PM (#7400409)

The Fed and a government that likes to spend has proved otherwise.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by dllthomas on Friday March 14, 2014 @01:59PM (#7400614)

Not at all. If production of dollars was competitive, they would be priced near the cost of production. I'm not saying there are no valid critiques of USD and our monetary system. I'm saying that it is not bad for the reasons monopoly is usually bad.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by jtbigwoo on Friday March 14, 2014 @11:35AM (#7399491)

If your standard high enought to make fiat money a mirage, most of what modern people do is also a mirage (e.g. software, sales, finance, art, music, insurance). Buffet is setting his standards a bit lower than that. Bitcoin at the moment does not have the utility to offset its price.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by kaonashi on Friday March 14, 2014 @11:05AM (#7399205)

Well, usually with state currencies, their worth is directly tied to the states ability to levy taxes (which is often very real). With independent currencies, no such obligation exists.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by atom-morgan on Friday March 14, 2014 @12:01PM (#7399698)

Their worth is not tied to the government's ability to levy taxes. The currency's advantage over others may be that the government only accepts that form of payment but that still doesn't give the currency value.

Look at any country with hyperinflation that still collected taxes and you'll see the true worth of the currency. The government's backing of a currency, even through taxes, does not inherently give it value as we've seen before.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by kaonashi on Friday March 14, 2014 @03:22PM (#7401146)

Hyperinflation is a symptom of a collapse in output. Taxes bind the value of the currency to that output. If the output goes, also goes the value of the currency; we are in agreement.

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Re:Warren Buffett: Stay Away From Bitcoin. It's A Mirage by Ma8ee on Friday March 14, 2014 @11:11AM (#7399251)

One that I can pay my taxes with.

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