Economics

The Cost of Bitcoin

Published by Anonymous (not verified) on Thu, 09/11/2017 - 9:21am in

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Economics

How the structure of the ‘proof of work’ has driven the price

Bitcoin continues to provide interesting data on the way value is determined. As a reminder the Bitcoin algorithm automatically adjusts its ‘proof of work’ calculation system so that a ‘winner’ is selected about every 10 minutes. So no matter how much computing horsepower is thrown at the problem, Bitcoin alters the difficulty of the problem to hit the 10 minute target every couple of weeks.

Despite this, competition deploys more and more physical computing power to the Bitcoin system, drawing ever more power to run the network.

I found a link today describing the cost of power to mine Bitcoin back in 2011 using the best technology of the day, and I thought it would be fun to re-run the calculation using an example of the best available technology today (the Antminer S9). The results are as follows:

Apart from realising that the Bitcoin network has gone from consuming 62kWh every 10 minutes to 167MWh (yes that is a GW of power), the running cost of electricity used to create a block has stayed a relatively constant percentage of the price of Bitcoin in US dollars. More so when you consider that the cost of power in the network is available at industrial prices.

Once again this demonstrates how the effort of mining Bitcoins feeds back into the value in USD terms because the real resources required to run the network are not available in the Bitcoin currency zone. One of the functions of taxes and fees in a proper currency is to ensure a wide availability of real goods and services for sale in the currency.

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Them That Has, Gets

Published by Anonymous (not verified) on Thu, 09/11/2017 - 9:15am in

There is no starker measure of inequality in the United States than net wealth—and over the last four years, the divide has only grown.

Ten Years after the Crisis: Discredited Ideas (Video - Krugman)

Published by Anonymous (not verified) on Thu, 09/11/2017 - 8:39am in

Trade Policy and the Macroeconomy

Published by Anonymous (not verified) on Thu, 09/11/2017 - 8:30am in

Barry Eichengreen:

Trade Policy and the Macroeconomy, by Barry Eichengreen, IMF: It’s an honor and privilege to have been asked to deliver the Mundell-Fleming Lecture. It’s also a bit intimidating. I won’t read off the entire list of luminaries who have given this lecture. But they include our master of ceremonies and my Berkeley colleague Maury Obstfeld. They include Stanley Fischer, my boss when I worked at the IMF. And they include my oldest and closest childhood friend from the age of three. (If you don’t know who that is, you get to guess.)

My topic today is trade policy and the macroeconomy. I chose this as my topic for several reasons.

The first is, of course, Donald Trump. President Trump has controversially argued that tariffs are good for economic growth. This makes now an important time to reconsider the question.

A second reason is: Paul Ryan, or more precisely the idea of a border-adjustment tax...

Third, the framework most widely used to analyze these issues is, appropriately for this venue, the Mundell-Fleming model. ...

Fourth, the literature on this subject is importantly informed by research here at the IMF. ...

Fifth, these are issues on which historical evidence has been used to shed light. ...

Sixth and finally (perhaps I should say “sixth and self-indulgently”), this is where I came in. My Ph.D. dissertation was on the macroeconomic effects of trade restrictions...

My remarks are in three parts. First, I will consider the evidence on tariffs and growth from an historical vantage point. Next I will review what we know about trade policy and macroeconomic fluctuations. Although the first part is about growth and the second part is about fluctuations, similar issues arise in the two contexts. In concluding, I will then return to the current policy debate.

I will argue that both theory and empirics in this area have ambiguous implications. Even more than other areas of economics perhaps, conclusions are sensitive to assumptions. Theoretical results are fragile, and empirical findings are context specific. Given this uncertainty, I will argue that the best guideline for practitioners tempted to deploy trade policy for macroeconomic purposes remains Hippocrates’ dictum, “first, do no harm.” ...continue...  [conference papers]

Are renewables and batteries part of the power generation & storage solution?

Published by Anonymous (not verified) on Thu, 09/11/2017 - 8:16am in

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Economics

How efficient are different types of batteries/energy sources? A key metric is 'energy density'.

Taking a Crack at Neoliberalism

Published by Anonymous (not verified) on Thu, 09/11/2017 - 5:25am in

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Economics

Dani Rodrik:

Taking a Crack at Neoliberalism, by Dani Rodrik: ..my new piece “Rescuing Economics from Neoliberalism,” just out in the Boston Review. ... Here is the core of it:

That neoliberalism is a slippery, shifting concept, with no explicit lobby of defenders, does not mean that it is irrelevant or unreal. Who can deny that the world has experienced a decisive shift toward markets from the 1980s on? Or that center-left politicians—Democrats in the United States, Socialists and Social Democrats in Europe—enthusiastically adopted some of the central creeds of Thatcherism and Reaganism, such as deregulation, privatization, financial liberalization, and individual enterprise? Much of our contemporary policy discussion remains infused with norms and principles supposedly grounded in homo economicus.

But the looseness of the term neoliberalism also means that criticism of it often misses the mark. There is nothing wrong with markets, private entrepreneurship, or incentives—when deployed appropriately. Their creative use lies behind the most significant economic achievements of our time. As we heap scorn on neoliberalism, we risk throwing out some of neoliberalism’s useful ideas.

The real trouble is that mainstream economics shades too easily into ideology, constraining the choices that we appear to have and providing cookie-cutter solutions. A proper understanding of the economics that lies behind neoliberalism would allow us to identify—and to reject—ideology when it masquerades as economic science. Most importantly it would help us develop the institutional imagination we badly need to redesign capitalism for the twenty-first century.

For the full piece, go here.

Launch of ‘Elinor Ostrom’s Rules for Radicals’ by Derek Wall – 1st December

Published by Anonymous (not verified) on Thu, 09/11/2017 - 1:12am in

Book launch:

Elinor Ostrom’s Rules for Radicals: Cooperative Alternatives Beyond Markets & States by Derek Wall

7pm, Friday 1st December
Word Bookshop
314 New Cross Road
London, SE14 6AF

About the book

Elinor Ostrom was the first woman to win the Nobel Prize for Economics. Her theorising of the commons has been celebrated as groundbreaking and opening the way for non-capitalist economic alternatives, yet, many radicals know little about her. This book redresses this, revealing the indispensability of her work for green politics, left economics and radical democracy.

Ostrom has often been viewed as a conservative or managerial thinker; but Derek Wall’s analysis of her work reveals a how it is invaluable for developing a left political programme in the twenty-first century. Central to Ostrom’s work was the move ‘beyond panaceas’; transforming institutions to widen participation, promote diversity and favour cooperation over competition. She regularly challenged academia as individualist, narrow and elitist and promoted a radical take on education, based on participation. Her investigations into how we share finite resources has radical implications for the Green movement and her rubric for a functioning collective ownership is highly relevant in order in achieving radical social change.

About Derek Wall

Derek Wall is the author of numerous books including Elinor Ostrom’s Rules for Radicals (Pluto, 2017), Economics After Capitalism (Pluto, 2015), The Rise of the Green Left (Pluto, 2010) and The Sustainable Economics of Elinor Ostrom (Routledge, 2014). He teaches Political Economy at Goldsmiths College, University of London and was International Co-ordinator of the Green Party of England and Wales.

The post Launch of ‘Elinor Ostrom’s Rules for Radicals’ by Derek Wall – 1st December appeared first on Political Economy Research Centre.

Bitcoin Is a Bad Way to Do Something Necessary

Published by Anonymous (not verified) on Wed, 08/11/2017 - 11:25pm in

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Economics

I don’t write about crypto-currency often because its proponents are fanatical. (You’d be fanatical too if you combined rabid self interest that might make you a multi-millionaire with a social engineering project you thought was utopian.)

But more and more, I am inclined to agree with a judgement my friend made years ago: While Bitcoin does something important (creates a peer-to-peer payment network) it does it in a terrible way.

This averages out to a shocking 215 kilowatt-hours (KWh) of juice used by miners for each Bitcoin transaction (there are currently about 300,000 transactions per day). As the average American household consumes 901 KWh per month, each Bitcoin transfer represents enough energy to run a comfortable house, and everything in it, for nearly a week. On a larger scale, De Vries’ index shows that bitcoin miners worldwide could be using enough electricity to at any given time to power about 2.26 million American homes.

This is crazy. Looked at from this point of view, Bitcoin is terrible: Its actual transaction costs are far higher than those for any other form of money of which I am aware.

Bitcoin was also a libertarian project. Libertarians hate inflationary money, so Bitcoin was made deliberately deflationary. There are a limited amount of bitcoins which can be created. There is a strong first mover advantage even without the fact that bitcoin is acting more like stock in a company than money.

Deflationary money is reactionary. It rewards people for being first, not for being productive. It encourages people not to spend and not to invest in something other than money, which is bad for economies. Moderate inflation, contra-gold bugs and Austrians, is a good thing, as it devalues effort from the past. It’s great that you did something wonderful 40 years ago, but what you do today should matter more.

It shouldn’t matter completely more, I’m not saying that retired people shouldn’t be able to eat and pay rent, but it should discount and discount more and more over time.

People who won the past shouldn’t control the future for all that long. People who are winning the present should, if anyone should.

This piece will likely have people screaming in the comments, but just because Bitcoin is not government money does not mean it gets a pass from general economic principles.

And none of this is to say that blockchains are not an important innovation, or that Bitcoin isn’t important, won’t make its early movers lots of money, and so on. Just that its embedded economic assumptions and power requirements won’t produce maximum welfare.

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ISAs are not tax avoidance

Published by Anonymous (not verified) on Wed, 08/11/2017 - 6:50pm in

It would seem that the tax abuse industry has found a new line to defend its behaviour. I encountered this when speaking on the Jeremy Vine show yesterday, and it has been commonplace elsewhere. It is to claim that the use of ISAs is tax avoidance.

This is absurd. ISAs are Individual Savings Accounts. They are a mechanism available to any UK based taxpayer. Using them a person can save a set limit per annum in a designated account. The income and gain from those savings are then tax free.

Let me be clear, I think the £2 plus billion this costs the UK government a year is wasted money. Those well enough off to save do not need tax incentive to do so. ISAs are benefits for the middle classes. But that’s not the point. The point is that by saving in this way a person is being tax compliant.

I define tax compliance is seeking to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.

In the case of ISAs, the economic substance is that money is placed in the UK in an account which is legally designated as tax free because the government wants to boost savings. The whole arrangement is above board. A national insurance number has to be given to open the account to make sure the scheme is not abused. Tax compliance is built in.

There is not a hint of comparison that can be made between this and setting up a series of aircraft leasing companies to buy a plane that it is then claimed is leased back to the owner with VAT reclaimed on the say to save millions on the purchase cost. That is an artificial structure set up in a place where the plane will hardly ever go with the sole intention of subverting the intention of tax law. The transaction is recorded in the wrong place and the economic form does not match what is reported. That is tax avoidance.

I will not say those who claim ISAs are tax avoidance are lying. I will say they are being disingenuous. I would add that I doubt that they even know what that means. They live in a world where misrepresentation of the reality of contractual arrangements for tax purposes is so commonplace that telling what is real and what really is avoidance or not is probably quite hard for them to do. But that does not mean anyone else needs to be confused by their claims.

If someone is doing precisely what the law intends and allows for and seeks to encourage then they are not tax avoiding.

When they are doing something that the law never intended to happen and get a tax advantage from it then they are tax avoiding.

It’s not hard to spot the difference. Unless, it seems, you sell tax abuse.

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