Gary North’s False Dichotomy

Bad Quaker Podcast
With Ben Stone false-dichotomy

Gary North says Bitcoin is a Ponzi scheme for fools. Ben says Gary North is uninformed and is arguing a false dichotomy.


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20 Responses to Gary North’s False Dichotomy

    • Bad Quaker says:

      Thanks Annors,
      It looks like he put more thought and effort in this latest attempt, but sadly he is committed to his old uninformed position.
      He’s clinging to his false premise the same way he did back with the Y2K issue.

  1. IkeFeen says:

    Ben, could you please explain why you think investing in bitcoin(holding it) is a bad idea. I’m with ian freeman, i think its way undervalued.

    • Bad Quaker says:

      I would agree that Bitcoin are likely undervalued.
      As I see it, the main motivation to invest in something is that you believe the thing will be valued higher in the future than it is now. The problem with investing in any form of money is that banks and governments run their scams by controlling money. I agree with many, that Bitcoin is currently the best shot we have at a free market currency. However, the bankers and governments of the world aren’t going to give up their control without a fight. Right now they don’t know how to fight Bitcoin, so they are doing almost nothing.
      On the other hand, someone in banking/government could wake up tomorrow and realize the weak point of Bitcoin, namely; Gresham’s Law. When currencies compete, people hoard good money and dump bad money into the market.
      Bankers and governments could, tomorrow, wake up, produce $1 trillion and buy every available Bitcoin. The price would hit the sky and no one would want to trade. Then the bankers could dump their Bitcoin at $1 per bitcoin, driving the “investors” to sell as quickly as possible. Repeat this process a couple times and you could bankrupt most investors while discrediting Bitcoin. Governments could also make this happen faster by using laws to “fix” the price of Bitcoin, furthering Gresham’s Law.
      Most likely they won’t try this.
      Most likely the dollar will collapse, be replaced with a “basket” IMF currency, and the whole Fed scheme will start over again. Meanwhile they will find trumped up reasons to outlaw Bitcoin and eventually confiscate every wallet that appears on the internet. They may not be able to open or use the wallets, but they will grab them.
      Invisible wallets will be invented, but governments will continue confiscating every wallet the can.
      As an investment, a person could make a lot of money in Bitcoin, but since bankers and governments are unpredictable and control money, investing in money of any kind is tricky at best.

  2. Just finished it. Excellent episode, Ben. Though you did say “BitCoinS” once in the middle. North tainted you. lol.

    I passed this episode on to some hardcore Crypto-AnCap hyper-nerd computer genius guys. They’re BitCoin folks whose names I don’t even know, but who dig the Feens and trust my word. They’re folks who were in near the start, and also have known of North since the 80s.

    They were excited and will pass this episode around.


  3. Jon says:

    Here is the Sinai Strategy in PDF format:

    As far as I can see, the facts are all there. There is some stuff that at least looks pretty gruesome, although I might be missing some fundamental point in all the religious gobbledygook that makes it okay.

    • Bad Quaker says:

      Jon, Thanks a ton for the link.
      I found the quote right away.
      This is really weird. In the hard copy I have (paperback, actually) pages 59-60 talk about the accumulated wealth of families being passed from father to son in Egypt and whether or not God punishes the son for the sins of the father.
      I don’t see any indication that the PDF or my physical copy are revised editions, but they are quite different.

  4. aletoledo says:

    I hate to say this, but I agree with Ben Bernanke when he says that bitcoin is a payment processing system. It’s really no different than Visa or MasterCard, in that it allows exchange of Federal Reserve Notes in an online setting. Bitcoin therefore is no more “money” than Visa is money.

    Consider how people value bitcoin. The most diehard advocates will view it’s value in FRNs, not as a standalone currency. When merchants list their prices in bit coin, it’s never a fixed amount, but rather just a conversion from FRNs. Even when people give donations/tips, they vary based upon the exchange to FRNs.

    So where something might have cost 1 BTC a year ago, today the same item costs 0.001 BTC. Thats a huge deflation and if this was an actual currency, then people should be scared of it’s stability. However since thats not how BTCs are used, prices are stable in FRNs.

    BTC is a proxy for FRNs and when FRNs fail, so does BTC. As Ben said in his podcast, there are opportunists inflating the price at the moment, but there can also be a some people that really want BTC as a currency. The question is how many opportunists are there at the moment? If FRNs crashed tomorrow and BTC was left to stand on it’s own, how many merchants would really be changing their prices to reflect a standalone BTC price?

    For these reasons, I agree that BTC is a ponzi scheme. It’s just as much a ponzi scheme as FRNs and Visa/MasterCard are, since all are tied together. While the bankers profit from FRNs, the creators of BTC (with their identities hidden) are the ones profiting from BTC.

    • Tel says:

      You are mixing a few things up here. VISA charges about 2% on transactions, AmEx slightly more, and writing a bank cheque in foreign currency is even more expensive. This proves that payment systems are intrinsically valuable, they must be worth something because people have been paying these fees for a long time, and nobody freaks out over it.

      Bitcoin is competitive as a payment system, especially for online shopping. This gives it a value because it is useful and cheaper than alternative methods.

      Now there is the entirely separate matter of pricing reference, yes Bitcoin is a bit volatile for use as a reference, but no it is not tied to the FRN in any way. People can base their reference on Euros, or Yen, or ounces of gold, or barrels of oil, or anything you like. Since every webpage already includes a free calculator, there is almost no overhead involved in updating prices based on whatever reference seems like a good idea at the time.

      One would presume that something will emerge as a convenient reference, but that does not require Bitcoin users to personally own that reference item, any more than I need my own platinum kilogram standard in order to use a set of electronic scales.

      • aletoledo says:

        When you say that Visa and Amex charge fees, while so does BTC. When you goto exchange your domestic currency at MtGox, there is a fee. This is merely changing the point at when the fee is paid and by whom (merchant versus consumer). If at some point in the future BTC was to become a currency in and of itself, where merchants priced their goods in BTC, then this exchange fee would go away and it could then be listed as a significant benefit.

        • Bad Quaker says:

          Doesn’t this exchange fee pretty much happen when you exchange any currency for another currency? If I were buying and selling in rupees and wanted to convert my profits to dollars, wouldn’t I have to pay an exchange fee? Isn’t that basically what happens with Bitcoin? If you trade in Bitcoin only, direct peer to peer, there is no fee. Or you can buy gold with Bitcoin without a fee, then sell the gold for dollars, without a fee.


          • IkeFeen says:

            I may be mistaken, but assuming the dollar dies and btc rises from its ashes as the new worldwide monetary unit, btc would be the new currency and ltc and others would be what btc is now to the dollar. I don’t see why this couldn’t work. It would be entirely crytpocurrencies, no more centrally planned currencies. They would be unable to compete.

          • Tel says:

            I’m pretty sure there is a small fee imposed in bitcoin-to-bitcoin transactions as well, because someone must pay for the overhead of the network itself. There was some argument recently that this fee was not high enough, but I guess I’m not qualified to judge that.

            At any rate, so long as there are people willing to pay the fee… there are also people who accept that this service has a value. As I mentioned above, AmEx is more and people pay those fees happily.

            I wonder how long before a Bitcoin Concierge service pops up?

          • Bad Quaker says:

            No, that is absolutely not correct. First, there is no overhead. No one owns/operates Bitcoin so there is no network to run and no one to run such a network. It is true peer-to-peer. If you use Bitcoin between two people, the exchange is direct without any third party involved. There is absolutely no fee. You only have a fee if a third party is involved. This is not opinion, it’s an absolute fact of how Bitcoin works. Fees happen with Bitcoin when you use a go-between service like Silk Road or Mt Gox.


          • aletoledo says:

            I agree with your comment below that there is no fee for the network maintenance. Your gold example above though requires you first to buy the bitcoin at MtGox (fee), then use BTC to buy gold (no fee) and then use gold to buy FRNs (no fee). I’m being generous here, because we know when buying gold/silver that we do pay a fee over sport per ounce, but lets just assume it’s sold to a private person and thus no fee. Therefore acquiring the BTC in the first step is still a fee.

            My whole point is that we must remember that BTC is a payment system first and foremost. We can dream that one day it will be a standalone currency, but thats not reality today.

            Also Ben, this point is directed solely at you, because I know you’ll appreciate it and most people I say this to brush it off. BTC is usury at the moment. People are dreaming of all the riches they’ll get from selling it to others and they won’t have to lift a finger, almost like hitting the lottery. I’m not against profit, but you can’t cheat an honest man and if/when the price drops and people lose, we’ll see the downside. Todays praises of BTC remind me of the tech stock bubble, when everyone thought their new job was being a stock trader while on the beach.

          • Bad Quaker says:

            We are mostly in agreement. Technically though, you don’t have to pay a fee to buy Bitcoin with dollars if you do it privately. There are forums where you can connect with someone locally and directly exchange without third parties, or if you know someone or have established trust with someone you can exchange directly. Also you can safely trade directly with a stranger without a fee, by placing conditions in the Bitcoin chain whereas the exchange is not completed until a set circumstance is achieved. For example; one person writes a bank check, mails it through the post office, and the Bitcoin exchange is held as unconfirmed until the check arrives and is cleared. These all involve risk, but the same goes for most any exchange.
            Also, you can buy Bitcoin directly with silver or gold using the same confirmed/unconfirmed process.
            Stefan Molyneux has a video titled “The True Value of Bitcoin: What You Really Need To Know” where he covers some of the hidden/unknown aspects of Bitcoin. It can be used to record contracts, create a will, establish future payments, and a ton of other stuff.


  5. I used to like that guy.

    He’s silly on modern ideas. Which makes sense, since he also wants to turn America into a Christian Saudi Arabia.


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