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Why Bitcoin Boomed During the Government Shutdown

Soulskill posted about 9 months ago | from the why-grasp-at-straws-when-you-can-mine-them dept.

Bitcoin 282

Daniel_Stuckey writes "Just two weeks after the Feds shuttered the Silk Road, the notorious online drug bazaar, Bitcoin prices have touched a five-month high — with a single Bitcoin fetching nearly $156 on Tokyo-based exchange Mt. Gox. Bitcoin's resiliency can no longer be denied, especially as the digital currency continued its ascendancy even against the backdrop of a U.S. government in utter disarray. At the 11th hour of the crisis, President Obama signed a bill that ended the partial government shutdown and, more importantly, raised the debt ceiling, an arbitrary limit on the amount of money the country can borrow that would have been surpassed today. If Congress had failed to reach a deal and the U.S. was unable to pay its bills, the results might have been catastrophic, eclipsing the bankruptcy of Lehman Brothers five years ago, the domino that could trigger the worst financial crisis since the Great Depression."

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Nobody cares about bitcoin (-1, Troll)

gapagos (1264716) | about 9 months ago | (#45160295)

Except people who have a reason to hide where their money goes. E.g. drug dealers and pirates.
Won't be long before many governments will require bitcoin ownership to be declared and be a source of suspicion of fraudulent activity.

Re: Nobody cares about bitcoin (4, Insightful)

Anonymous Coward | about 9 months ago | (#45160371)

Are you freaking kidding? Why is it that every half wit thinks that bitcoin is all about drug transactions and prostitution?

Re: Nobody cares about bitcoin (-1, Troll)

gapagos (1264716) | about 9 months ago | (#45160427)

Because, like I said, anonymous transactions do not benefit ANYONE, except those who wish to hide their transactions. Why would they want to hide their transaction? To hide the activities for which such transactions have taken place.
Example: Selling drugs. Buying drugs. Buying guns. Selling guns. Selling pirated software. Buying pirated software. And of course, reaping investments without paying income tax, aka TAX EVASION. As well as building up ponzi schemes, of course.

Re: Nobody cares about bitcoin (5, Insightful)

Anonymous Coward | about 9 months ago | (#45160477)

They aren't even anonymous transactions... if you convert bitcoins to cash, that's a major weakness.

And they have a great use: eliminating payment processing costs. Those costs are distributed among the people who run the mining software.

Re: Nobody cares about bitcoin (1)

Sarten-X (1102295) | about 9 months ago | (#45160601)

So as new coins become rarer with the diminishing rate, there will be fewer miners, and that means more validating workload dumped on the miners still running, increasing their costs as their expected profit diminishes, right?

I have not paid much attention to the implementation of Bitcoin, rather focusing on the economic implications. What happens as miners drop off the network?

Re: Nobody cares about bitcoin (3, Interesting)

MightyYar (622222) | about 9 months ago | (#45160637)

If people stop mining, then the currency stops being created... no matter - that will happen eventually anyway.. More likely, the price of bitcoins will continue to rise as usage does, and this will drive more people to mine. If usage does not increase, then who cares if they are mined or not?

Re: Nobody cares about bitcoin (2, Informative)

Anonymous Coward | about 9 months ago | (#45160817)

If people stop mining, each miner gets more per time interval. Which makes it very attractive to mine again. Its a self-regulating system.

Re: Nobody cares about bitcoin (1)

WaywardGeek (1480513) | about 9 months ago | (#45160647)

The algorithm compensates, and delivers bitcoins at a predicable rate, unlike the US government's payments. If miners drop out, those who remain split the spoils.

I sold all my coins and bought my wife a nice silicon-carbide necklace fashioned out of Cree's materials, for about $500. I don't feel good about the use bitcoins are being put to, even if I do support the freedom that untraceable electronic money represents.

Re: Nobody cares about bitcoin (4, Insightful)

Anonymous Coward | about 9 months ago | (#45160741)

sounds like your problem is with all forms of cash

Re: Nobody cares about bitcoin (1)

shentino (1139071) | about 9 months ago | (#45160951)

Part of the incentive for mining is also in earning transaction fees for confirming transactions.

Re: Nobody cares about bitcoin (4, Insightful)

cheater512 (783349) | about 9 months ago | (#45161139)

The difficulty parameter autoadjusts depending on the number of miners. Less miners = easier difficulty.
There should always be a new block every 10 mins (on average).

Also while the benefits of mining diminish, the 'fees' should increase with the use of bitcoin.
At some point the fees overtake the benefit of finding a new block.
Remember the fees get paid to the block finder.

Re: Nobody cares about bitcoin (1)

fredprado (2569351) | about 9 months ago | (#45160679)

Sure they do. They benefit all of us who want to keep our dealings private or not be hostage of what a credit card company thinks we should be able to buy and where, for example. Yes, you can do all sorts of illegal things with bitcoin, but guess what the preferred currency for doing illegal things in the world? It is the dollar.

Re: Nobody cares about bitcoin (1)

Ultra64 (318705) | about 9 months ago | (#45160699)

>Buying pirated software.

>Buying
>pirated software

ok

Re: Nobody cares about bitcoin (0)

Anonymous Coward | about 9 months ago | (#45160749)

Are you retarded?

Re: Nobody cares about bitcoin (1)

gapagos (1264716) | about 9 months ago | (#45161137)

Never been to Brazil, have you?
It's harder to find stores with legit software than stores with pirated software.
That pirated stuff is being sold with real brazilian money.

Re: Nobody cares about bitcoin (4, Insightful)

Drakonblayde (871676) | about 9 months ago | (#45161175)

Or maybe because what I buy is my business and my business alone? Without anonymity, it makes it trivial for people to track my purchases. If people can track my purchases, they can target me for their sales campaigns in order to try and manipulate me into giving them more money, Since I'm not terribly fond of being manipulated, nor am I terribly fond of junk mail or spam, I prefer my transactions to be as anonymous as possible.

But yeah, I guess you're right, it's all about the hookers and blow, Couldn't possibly be any other reason I don't want folks up in my business.

Re:Nobody cares about bitcoin (0)

Anonymous Coward | about 9 months ago | (#45160377)

Insightful? That's pathetic. This guy is just saying something similar to 'nothing to hide, nothing to fear,' which is a notoriously illogical argument that imbeciles use.

Re:Nobody cares about bitcoin (2)

infinitelink (963279) | about 9 months ago | (#45160389)

Your first statement is a rather unargumentative (i.e. no persuasiveness to it) comment. At least a few millions in America with millions in Europe and elsewhere nowadays care about currency devaluation and manipulation and that, if not formally declared then in substance that using fiat or legal currencies to store value means that they are slowly robbed. And I mean a few million ordinary people, while economists and businesspeople up-high care even more (short term at least). Plenty of people may care about it to attempt to hide money but given it's an open transactions system, using unmodified Bitcoin protocol is a bad idea for them. On the other hand, your second is quite good.

Re:Nobody cares about bitcoin (1)

fisted (2295862) | about 9 months ago | (#45160393)

yeah. also, think of the children!

Re:Nobody cares about bitcoin (0, Funny)

Anonymous Coward | about 9 months ago | (#45161013)

Nice username to go with that statement.

Re:Nobody cares about bitcoin (0)

Anonymous Coward | about 9 months ago | (#45160403)

OH well.. if we are in the simple business of making baseless assertions then let me make a contradictory one... i FEEL like you are wrong. Care to back your feelings up with anything that is actually worth refuting?

Re:Nobody cares about bitcoin (5, Funny)

grub (11606) | about 9 months ago | (#45160405)


I use BitCoin to make donations to various Linux projects. That way when I download all those Linux ISOs on BitTorrent, I really feel like I'm sticking it to The Man.

Re:Nobody cares about bitcoin (0)

Anonymous Coward | about 9 months ago | (#45160411)

You do not represent everyone's opinion. Bitcoin is booming right now. And the people who have their panties in a bunch are the ones still holding onto fiat thinking "the government will never inflate it that much".

Re:Nobody cares about bitcoin (-1)

Anonymous Coward | about 9 months ago | (#45160443)

+1

How long before big business realises the tax-benefits of bitcoins? The main point seem to be to derive society of taxes. If you do not want to pay taxes to live in a society then move away, you have no right to get the benefits.

We need paper-money to "come back in style", they give you a reasonable amount of anonymity with regards to how it is spent. - That and some social responsibillity of people wouldnt hurt either.

Re:Nobody cares about bitcoin (0)

Anonymous Coward | about 9 months ago | (#45160543)

Don't blame me. I voted for John Kerry!

This is proof? Really? (5, Interesting)

Anonymous Coward | about 9 months ago | (#45160329)

How many people honestly understand the relationship between currency prices and the government shutdown? Very very few I would guess.

Gold dropped when the goverment was down and bounced back after the deal was signed. Why? Gold is supposed to be a safe harbour.

Does the author of TFA see BTC as the opposite of gold, or does he see BTC as filling the same kind of role as gold?

Or is this simply a case of making using hindsight to construct an argument that fits a general argument that BTC is worth investing in?

Re:This is proof? Really? (5, Insightful)

felrom (2923513) | about 9 months ago | (#45160515)

Gold dropped because the market's built-in assumption that the Fed would keep printing money to finance the government's deficits forever was temporarily shaken by the possibility of maybe some sane fiscal policy showing its head for once. Then gold went back up when the deal was signed, signifying full steam ahead on printing and deficits. It made absolute sense.

But yeah, this article in particular is just a bad case of hindsight bias.

Re:This is proof? Really? (3, Interesting)

jwilloug (6402) | about 9 months ago | (#45160857)

But printing money was one of the possible outcomes of hitting the debt ceiling. Both the Fed and the Secretary of the Treasury have the legal authority to declare that they are covering the deficit by creating money rather than borrowing it, and they may well have done so. It wouldn't have been great monetary policy, but there is a reasonable argument that it's better than default.

Re:This is proof? Really? (1)

Bite The Pillow (3087109) | about 9 months ago | (#45161091)

I don't believe the possibility existed, or if it did the market was ignoring it. There was a dip and rebound 1 or 2 October, but 10 October is when it dropped. Republicans were clearly losing by then so it was not fear of fiscal responsibility.
I'm most curious about the drop at the beginning.

Re:This is proof? Really? (1)

niftydude (1745144) | about 9 months ago | (#45160835)

Or is this simply a case of making using hindsight to construct an argument that fits a general argument that BTC is worth investing in?

Economics. The science of explaining tomorrow why the predictions you made yesterday didn't come true today.

Re:This is proof? Really? (4, Interesting)

Bite The Pillow (3087109) | about 9 months ago | (#45161023)

That is disingenuous at best. Gold peaked at 1900 in 2011 during the housing and financial crises from 400 in 2003. It has been on the way down since then, making a spike unlikely. It took a 3% dip from 10 October and came back to where it was.

All signs point to gold markets knowing this would be a temporary crisis that would not maintain price levels past its resolution. Bitcoin, on the other hand, does not seem to be valued by market savvy investors. Knee jerk irrational fools more like, so it follows the panic more closely.

I'm no economist or fund manager, so I'm probably wrong.

Re:This is proof? Really? (0)

Anonymous Coward | about 9 months ago | (#45161095)

Gold dropped when the goverment was down and bounced back after the deal was signed. Why? Gold is supposed to be a safe harbour.

There are 2 reasons why gold will go up (or down):

1. Gold only goes up if it becomes more less available or rare(hoarding, pirates burying it, locked up in industrial/personnel use, etc)
2. Gold goes up when the ratio of gold to dollars changes. The more dollars available compared to the amount of results in the price ratio goes up. (gold "costs" more).
 

So why did the price of gold go down, when the gov't "shut down" and bounce back when it started back up went back up. Easy, for two weeks the gov't stopped printing money and a bunch of people made a bet that it would drag on for some time, hence even less new money being dumped into the system which would "devalue" gold in terms of dollars, though the buying power of gold would remain about the same (due to new gold production being very low)

Gold is an excellent safe haven in the sense that if you have 1kg of gold about $40,000K and civilization collapsed tomorrow you would still have 1kg of gold. If you had that in hard currency all you would have is 40,000 pieces of paper. Though 40,000 pieces of paper would be very valueable as toilet paper. Hmmmmm maybe gold isn't as good of a safe haven as I thought. I need to stock up on US currency.

Conversly though if we ever get an asteroid mining program together and harvested just one of the medium sized asteroids. There would be enough gold for every man, woman, and child on earth to have 3-4 or tons each and then the value of gold would be on par with say the price of an equal weight of say drinkable water..
.

China (5, Insightful)

Wonko the Sane (25252) | about 9 months ago | (#45160331)

The recent price of Bitcoin has far more to do with explosive adoption in China than anything happening in the United States.

Re:China (4, Insightful)

JohnA (131062) | about 9 months ago | (#45160343)

Exactly. When Baidu added it as a supported payment method, the game changed.

Re:China (1)

Seumas (6865) | about 9 months ago | (#45160349)

Shush! Someone is busy trying to push their political bias, on the back of Bitcoin. Stop interrupting them!

Re:China (4, Insightful)

Wonko the Sane (25252) | about 9 months ago | (#45160395)

I just love how quickly and how extensively Bitcoin is growing outside the United States, especially because the trolls who insist that the US will just shut it down someday are going to keep saying that well beyond the point at which it would matter to the Bitcoin economy if the US completely stopped existing.

Re:China (1)

gizmo2199 (458329) | about 9 months ago | (#45160565)

Gee, I wonder why? I'm sure billionaire oligarchs, and corrupt CCP members have no use for a new money laundering mechanism? (not to mention drug cartels and warlords)

Re:China (2, Interesting)

Anonymous Coward | about 9 months ago | (#45160933)

Do you mean those that used to use dollars? So what changes? They are still oligarchs, drug dealers etc. but they are not using dollars and all those dollars go home and cause inflation upon their arrival. So this is about the US government not making as much from drug dealings?

Re:China (3, Insightful)

shentino (1139071) | about 9 months ago | (#45160971)

Just because your biased doesn't mean your wrong.

Re:China (1)

Anonymous Coward | about 9 months ago | (#45160555)

So.... Anyone else suspect that the Chinese are the ones behind the Tea Party?

Re:China (1)

Paola Mcneil (2869547) | about 9 months ago | (#45160707)

I wouldn't be too confident with my dollars during a US government shutdown.

Re:China (0)

Anonymous Coward | about 9 months ago | (#45160913)

Are you trying to imply that there is a world beyond American shores?

Re:China (1)

Wonko the Sane (25252) | about 9 months ago | (#45160967)

Are you trying to imply that there is a world beyond American shores?

Shocking, right?

Not to worry (1, Offtopic)

OhANameWhatName (2688401) | about 9 months ago | (#45160337)

the domino that could trigger the worst financial crisis since the Great Depression

Since the US is so outrageously in debt and has no way to reduce it without selling the rest of the government assets, there's going to be plenty more opportunities for a global financial catastrophy. Then the knights in shining globalization armour will have the opportunity to save us all from terrible governmental mis-management, handing world power over to a single central body with another currency not backed by anything real or stable. Much in the same way as bitcoin isn't backed by anything real or stable, just demand.

This demand will continue to fluctuate wildly based on the extraction of gold deposits, the bribery of 13 lower house members of the United States congress and ancient religious predictions about the four horsemen of the apocolypse.

Re:Not to worry (1)

Copid (137416) | about 9 months ago | (#45160491)

Since the US is so outrageously in debt and has no way to reduce it without selling the rest of the government assets, there's going to be plenty more opportunities for a global financial catastrophy.

Our debt to GDP ratio has been higher in the past and we brought it back in line without a major crisis. Japan has gone substantially higher without any signs of collapse. These issues can be handled by thinking long term and making long term adjustments.

Re: Not to worry (0)

Anonymous Coward | about 9 months ago | (#45160581)

Higher only ONCE in the past. Do you really think we can pay it down now?

Re:Not to worry (0)

Anonymous Coward | about 9 months ago | (#45160619)

But today we do not have a rapidly expanding population/workforce and half the developed world does not need rebuilding.

  As a further black mark, the "normal" GPD growth rate has been moved down a few notches due to over regulation. Look back in history, Argentina had a much higher standard of living then the US. The mis/over management and socialism of Argentina resulted in just a sightly lower normal gdp growth rate. Compounded over a hundred years, it makes all the difference.

Re:Not to worry (1)

Copid (137416) | about 9 months ago | (#45161039)

But today we do not have a rapidly expanding population/workforce and half the developed world does not need rebuilding.

Rebuilding the developed world isn't really a good recipe for success. The correct way to look at it marcoeconomically is, "our trading partners were in ruins." There's a common myth that having Europe sitting as a smoking pile of wreckage was good for us. Most economists would disagree.

As a further black mark, the "normal" GPD growth rate has been moved down a few notches due to over regulation. . .The mis/over management and socialism of Argentina resulted in just a sightly lower normal gdp growth rate.

Yep. Overregulation. That's the ticket. It's not like it could be much more complex than that.

Re:Not to worry (1)

houstonbofh (602064) | about 9 months ago | (#45160873)

These issues can be handled by thinking long term and making long term adjustments.

You do realise that you are talking about the US, right? Where "long term" is next quarter or next election...

Re:Not to worry (1)

AK Marc (707885) | about 9 months ago | (#45160577)

Since the US is so outrageously in debt and has no way to reduce it without selling the rest of the government assets,

Balancing the budget is easy. Dump the military, nationalize all medicine into a single payer system, and you are done. That'll cut the budget in half. Raise capital gains taxes to earned income levels, and eliminate 99% of income tax deductions. Income will increase, spending will decrease, and the budget will have an instant surplus. The debt will be paid off in 10-20 years. If you want to pinch pennies, reform patents, and the NSA/CIA/FBI to minimalistic levels to defend life and liberty, but not property of those with means to enforce it themselves (megacorps don't need $10,000,000,000 of government effort going after grandmas with insecure WiFi).

Once the debt is paid off, that'll cut the budget in half again (all the interest paid). So, once that's done, cut taxes for everyone by 75%.

More services, 1/4 the taxes, balanced budget. 20 years. Guaranteed. Where do I run for office?

Re:Not to worry (0)

Anonymous Coward | about 9 months ago | (#45160809)

Where do I run for office?

Land of Oz.

Re:Not to worry (1)

AHuxley (892839) | about 9 months ago | (#45160669)

Re" "globalization armour will have the opportunity to save us all from terrible governmental mis-management"
Think of the optics:
UN doctors treating US patients in huge deteriorating teaching hospitals for free.
UN teachers educating US students in deteriorating sandstone universities for free.
UN food aid bringing measured organic diets to US civilians in huge deteriorating cities for free.
UN engineers remapping the US coastline with protected nature sanctuaries to ensure none of the local population is flooded out ever again.
UN scientists remapping the US with protected nature sanctuaries. No more of that damaging walking, fishing, hunting ever again.
UN experts fixing roads, utilities been fully funded, building power stations and having real filtered water again via community collection points.
UN troops retraining US police with free AK weapons systems and fashionable light blue uniforms.
No more heavy belts, just an AK, torch, zip ties and radio to carry. The radio calls in the pretty white Hind helicopter when law enforcement support is needed.
Examining magistrates to help with the reformed legal system. Did the US gov have a file on you? Friendly UN archivists and historians will help you find and decipher yours..
Mexican and Canadian companies been lured back into the US with the assurances of a new stable UN backed currency, a more wage friendly and well reeducated local population.
Fast low cost optical internet of all as a human right and for job creation. Free for education and telemedicine needs.

Re:Not to worry (4, Insightful)

Shompol (1690084) | about 9 months ago | (#45160677)

Much in the same way as bitcoin isn't backed by anything real or stable, just demand.

What is backed by "real and stable"? US currency? Nop, it gets devalued pretty fast. Gold? Real Estate? (How much Real Estate do you put in your wallet when going grocery shopping?)

Humans used to use all sort of currency, from sea shells to alcohol to pretty pieces of paper we have today. None of them backed by anything, just convenience. Maybe bitcoin is the next "it"

Derp (3, Insightful)

girlintraining (1395911) | about 9 months ago | (#45160367)

If Congress had failed to reach a deal and the U.S. was unable to pay its bills, the results might have been catastrophic, eclipsing the bankruptcy of Lehman Brothers five years ago, the domino that could trigger the worst financial crisis since the Great Depression."

Someone's been watching too much "news". The results wouldn't be catastrophic. They'd be annoying. Like everything else the government has done over the past decade. Catastrophic is the entire government collapses, food shortages and water become scarce, and people start killing one another in open anarchy.

Words. They mean shit, Slashdot. Choose them carefully.

Re:Derp (3, Insightful)

dyingtolive (1393037) | about 9 months ago | (#45160399)

Catastrophic to most people these days is not being able to afford their daily $8 Starbucks coffee.

The problem isn't that they're using the wrong words, it's that their worlds are too small for the proper order of magnitude for the word. Like a six year old.

Re:Derp (2, Insightful)

Anonymous Coward | about 9 months ago | (#45160409)

Yeah, man, credit ratings aren't real, they're made up, just like words. And risk, even sudden changes of it in a fundamental part of the world economy like t-bills, that's, like, made up, too.

Not like equating 'catastrophe' with 'anarchy', that's completely honest and not hyperbole at all.

Re:Derp (1)

TheResilientFarter (3216187) | about 9 months ago | (#45161017)

The U.S. has $3 trillion in revenues and $500 billion in debt payments. We couldn't find room for that? Do you follow the logic of "we have to borrow money to be able to continue paying our deb"?

Re:Derp (2)

Trailer Trash (60756) | about 9 months ago | (#45160419)

It wouldn't have even been annoying unless someone - say, some jerk petty enough to put barricades around open air monuments - would have tried to stop payments on debt service. We had easily enough money coming in to cover the debt service, so it would have only been a problem had someone purposely done that to harm the US.

Re:Derp (4, Insightful)

artor3 (1344997) | about 9 months ago | (#45160469)

Go on thinking that, Pollyanna, if it helps you sleep at night.

The shutdown wasn't really a big deal, sure, but if the US had defaulted on its debt, that would have been catastrophic.

We owe around $16 trillion right now. But it's really not a big deal, because we pay negative interest on it (relative to inflation). Countries are eager to keep investing in the US, and the high demand lets us pay very low interest. If US debt were seen as unsafe, we would need to pay MUCH higher interest in order to attract investors. We obviously wouldn't be able to pay the higher interest, since this scenario is based on the assumption that Congress refuses to even repay the principle. So we would have to start paying out $16 trillion without replacement investments coming in.

Goodbye, Medicare. Goodbye, Social Security. Goodbye, foodstamps and welfare and section 8. Hello, social upheaval. Hello, desperation-induced crime wave. Hello, Great Depression.

That's your idea of "annoying"? I'd say "catastrophic" is a far more apt description.

Re:Derp (1)

Anonymous Coward | about 9 months ago | (#45160521)

except there was nothing requiring the US to default on debts... there was (and is) plenty of money to make the minimum payment on our debt even if we couldn't borrow more; there just isn't enough coming in to make the minimum payment AND continue spending as we are now. If that wasn't the case (ie: we can't make the minimum payment without borrowing more) we would already be so far down the screwed path that it wouldn't matter anyway.

Re:Derp (3, Informative)

Copid (137416) | about 9 months ago | (#45160579)

You seem to think three things:

1) That the Treasury has the power to pick and choose who gets paid.
2) That the payments are made all at the same time so we don't have cashflow issues for different payment dates.
3) That telling people other than bondholders, "Yes, we agreed to pay you, but we're not going to," is something other than a default and that the credit markets would see this as A-OK.

I don't think that any of these things are true, and even if some are, it seems pretty unlikely that all of them are true.

Re:Derp (2)

felrom (2923513) | about 9 months ago | (#45160559)

The point was that the US was at 0% risk of defaulting on its debt.

You might as well write a long post about the potential ills of earth being invaded by married bachelors; it had an equal chance of happening.

Re:Derp (0)

Anonymous Coward | about 9 months ago | (#45160591)

Does it bother you that the treasury department and most of the economics establishment disagrees with you?

Do you take the same damn-the-experts opinion with regard to global warming, for example?

Your point has been addressed by people far wiser than I, I suggest you browse around and read up.

Re:Derp (0)

Anonymous Coward | about 9 months ago | (#45160627)

> The point was that the US was at 0% risk of defaulting on its debt.

Since the deciding factor on what is keeping interest rates low is confidence from Non-US sources in the form of US bond demand, do you think the US controls that?
You're amusingly backwards in your understanding of what the crisis is.

Re:Derp (0)

Anonymous Coward | about 9 months ago | (#45160723)

Hahahaha. Yeah, if you don't pay your bills then all the people who expected you to pull imaginary money from thin air would be very disappointed.

The rest of us will keep growing food, making shelter, you know... REAL SHIT.

Re:Derp (1)

fredprado (2569351) | about 9 months ago | (#45160733)

As long as something extremely catastrophic does not happen, like US being hit by a giant meteor, or nuclear war, the chances of the US government to default on its debt is exactly zero. The debt is mainly in dollars, a currency controlled by the US government and a currency it can produce at will. Sure it generates inflation, but guess what, inflation makes actually lowers the debt.

Re:Derp (1, Insightful)

Anonymous Coward | about 9 months ago | (#45160881)

> Sure it generates inflation, but guess what, inflation makes actually lowers the debt.

The people we borrow from and pay back with inflated currency (meaning their debt is being depreciated) notice that they bought 50$ and can only buy 25$ with it. At some point (this 0% risk you pulled out of your ass) that is within sight, causes the market to flee that currency. You end up with Zimbabwe dollars. Inflated to a million dollars in a single bill to buy a box of popcorn. What is wrong with your brain that you think you can see over the economic forces? Your "understanding" has no bearing on reality.

Re:Derp (3, Funny)

houstonbofh (602064) | about 9 months ago | (#45160855)

Goodbye, Medicare. Goodbye, Social Security. Goodbye, foodstamps and welfare and section 8. Hello, social upheaval. Hello, desperation-induced crime wave. Hello, Great Depression.

Of course a lot of the good science fiction starts right after that point, so I say BRING IT! :)

Re:Derp (0)

girlintraining (1395911) | about 9 months ago | (#45161141)

The shutdown wasn't really a big deal, sure, but if the US had defaulted on its debt, that would have been catastrophic.

No, it was a big deal. But it wasn't catastrophic, and neither would us defaulting. Because all that means is our credit rating would be downgraded and so we'd have to borrow at a somewhat higher rate. Would this be a problem? Yes. Would it lead to the death of America? No. Catastrophic means unrecoverable to most people. It means a one way trip to fucking doomsday. This isn't that.

But go on thinking that, tin foil hat man, if it helps you stay awake at night. -_- It would not trigger another great depression. It wouldn't be the end of life as we know it. None of these things would happen. And it's not me saying that, it's the Federal Reserve [yahoo.com] saying that. The very people who oversee the debt.

Their take on it? "Failure of the government to pay its bills could undermine world confidence in the U.S. dollar, and in the extreme could cause a global financial panic." (emphasis mine). Am I saying the default wouldn't be a crisis? No. But to call it catastrophic is just tin foil hat brigade.

Re:Derp (1)

ArbitraryName (3391191) | about 9 months ago | (#45160917)

Known troll, nothing to see here.

Crisis not solved, made worse (-1)

KiloByte (825081) | about 9 months ago | (#45160379)

So they made the mistake of raising the debt ceiling yet again, after removing safeguards made the last time. Seriously, it's time to put it into the US constitution, like a number of countries have done. Come on, if even my parliamentcritters in Poland somehow managed to make it a part of the constitution, it's not a lost cause for the US. Hopefully.

When the last raising of the ceiling led to a credit rating downgrade, some public figures pretending to be serious went as far as calling for arrest of S&P officers because the rating downgrade was "treason" and hostile propaganda. According to that "worst case" scenario, the public debt would go from 62% in 2010 to 78% in 2013. Instead of that 78%, it is around 104%...

Re:Crisis not solved, made worse (4, Informative)

Copid (137416) | about 9 months ago | (#45160465)

When the last raising of the ceiling led to a credit rating downgrade...

Correction. Threatening not to raise the debt ceiling lead to a credit rating downgrade. Explicitly saying in public that you're thinking about not honoring your financial obligations does that.

Re:Crisis not solved, made worse (0)

Anonymous Coward | about 9 months ago | (#45160567)

> Threatening not to raise the debt ceiling lead to a credit rating downgrade

[insert face palm here] Borrowing more money does not help your credit. The last time the US's credit was downgraded, it was because they did another huge round of borrowing.

Re:Crisis not solved, made worse (5, Informative)

artor3 (1344997) | about 9 months ago | (#45160481)

You liar. The credit rating downgrade wasn't because we raised the ceiling, it was because the Republicans threatened not to.

The ratings agency EXPLICITLY SAID SO:

The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

Re:Crisis not solved, made worse (4, Interesting)

roman_mir (125474) | about 9 months ago | (#45160593)

No, you are the liar. The agencies that downgraded the US debt (and it is JUNK today, anybody who doesn't understand it has his or her head up their own asshole) were sued by the US gov't.

Of-course they were supposed to downgrade it to junk, the only agency that really downgraded the US bonds (Egan Jones) was stripped of their license to rate US debt. The sequester (cut to the spending) was the condition, the promise, under which the US gov't wouldn't be downgraded further (and eventually the worthless 'rating' agencies brought the US debt rating up again after getting scared of the feds and the SEC, etc.).

The Chinese don't want the US debt to grow, they just don't want the threat of not being paid what they are owed, so that's nonsense and that's why Chinese rating agencies downgraded US debt now, after the so called 'ceiling' was raised again.

The real crisis in USA is the debt, not the fake ceiling. The ceiling would have actually put a lid on ability of USA to continue running this enormous, biggest in history of the world ponzi scam, made up of the US bonds, dollars (the SS and Medicare are second in size ponzi scams after the bonds and the dollars).

USA is bankrupt, it can't pay its debts.

USA did NOT have to default on its creditors, 2300BILLION USD are collected per year by the feds, less than 300BILLION USD need to be paid out as the interest.

Obama, other politicians, the MSM all came out and told the bond holders: you are the low men on the totem pole, we won't pay you if we can't borrow more from you even though we collect almost 10 times the money in taxes that we need to pay you.

Anybody in their sane mind would see this as a direct threat against their assets (US bonds or dollars) if they have any and would immediately start unloading, but then again, this was obvious for a couple of decades now what is going on, specifically after the real default in 1971, when Nixon defaulted on the gold dollar.

The real story of-course is that USA is bankrupt, US bonds are junk, USA will never pay any of its debts and would rather cause massive inflation (maybe even hyper inflation) and the credit agencies are bought and paid for not to report that truth.

GS came out with a recommendation to dump the gold to its muppets^C^C^C^C^C 'investors'. Somebody was dumping large quantities of gold on the market of a few days straight, in an attempt to move the price down, most likely trying to weed out the weak hands so that they could buy much more back at lower prices.

Anyway, enjoy your Marxist/Keynesian ideology, certainly the only thing it will bring you will be a total economic and societal collapse, maybe that's your cup of tea of-course but you desire it so much, you should get to experience it.

Re:Crisis not solved, made worse (2)

Wonko the Sane (25252) | about 9 months ago | (#45161005)

USA did NOT have to default on its creditors, 2300BILLION USD are collected per year by the feds, less than 300BILLION USD need to be paid out as the interest.

Obama, other politicians, the MSM all came out and told the bond holders: you are the low men on the totem pole, we won't pay you if we can't borrow more from you even though we collect almost 10 times the money in taxes that we need to pay you.

Anybody in their sane mind would see this as a direct threat against their assets (US bonds or dollars) if they have any and would immediately start unloading, but then again, this was obvious for a couple of decades now what is going on, specifically after the real default in 1971, when Nixon defaulted on the gold dollar.

Apparently you got downmodded for speaking the truth.

Re:Crisis not solved, made worse (1)

rhodium_mir (2876919) | about 9 months ago | (#45161019)

In summary, the United States' debt is junk. Also, they have plenty of money to make the payments. Thank you, Roman--you make a compelling argument and in no way sound like a crazy person.

Re:Crisis not solved, made worse (0)

Anonymous Coward | about 9 months ago | (#45161083)

Go stuff a fucking gold bar up your ass already. Get that through your tiny fucking brain: no one takes your voodoo Austrian economic crap seriously. No one. It's not real. It's not valid. So just sit there and let some people capable of abstract thought do the thinking.

Re:Crisis not solved, made worse (1)

RoccamOccam (953524) | about 9 months ago | (#45161051)

In 1995, Republicans were almost able to pass a Balanced-Budget Amendment (which would have needed ratification by the states). After passing in the House, it fell one vote short of the two-thirds needed. Senate Republicans voted for it 52-1. Democrats voted against it 33-14. Of course.

implications of default (0)

Anonymous Coward | about 9 months ago | (#45160381)

Smart people -> Is the summary impaling the fate of the world rests on the USA forever borrowing money that it can never hope to pay back?

typo (0)

Anonymous Coward | about 9 months ago | (#45160407)

I meant 'implying'! Sorry.

Re:implications of default (0)

Anonymous Coward | about 9 months ago | (#45160487)

There was a surplus about ten years ago, doomsaying is idiotic, the US needs to raise gdp growth, raise taxes and decrease spending, until they do so they need to raise the debt ceiling, remember that the debt ceiling is only agreeing to pay for what you've already bought.

Wouldn't have been catastrophic (-1)

Anonymous Coward | about 9 months ago | (#45160423)

This "zomg horrible things will happen, KEEP SPENDING MONEY" mindset is tired, old, and wrong.

As long as we let fear of the unknown drive policy, we have no path out of this mess. None.

If nothing had happened, the budget would have been balanced. Only the debt payments must be made; everything else - including all entitlements - are not true debts, not true obligations of the government. They can be taken away just as easily as they were granted, and granting things which trivial understanding of exponents guarantees to be unsustainable should be grounds for immediate automatic ejection from office.

The US Federal government takes in on the order of 10 times as much money as is required to pay interest on the national debt, every month. This would not have been a crazy, sky-is-falling catastrophe. The only result would have been:

An immediate balanced budget. Not paying down debt at all, just not adding to it. Can we live within our means? If so, then this would have been a non-issue.

It appears instead of forcing fiscal responsibility, we have opted to continue blindly flooring the gas all the way up until we impact that immovable concrete barrier. And just like in the analogy, the outcome is not in question - it's only getting messier.

Buckle your seatbelts.

Banks Tried to Shut it down (4, Insightful)

Deliveranc3 (629997) | about 9 months ago | (#45160495)

Banks made transferring out of MTGOX impossible, MTGOX refunded my $. They are about 8 weeks behind processing withdraws.

Bad news, banks and government attacking at same time interfered with each other.

Also, they had this guy, he sold drugs... lots of drugs... but did they bust him? Nope, they did an elaborate sting to bag him for something REALLY REALLY evil... (I hate drugs btw) Why? So he wouldn't be a martyr for free wealth exchange.

Also the whole BTC aren't totally anonymous thing is a good to know.

Correlation doesn't imply causality (0)

Anonymous Coward | about 9 months ago | (#45160531)

The mere observation that the bitcoin rose relatively to the dollar in a time of fiscal turmoil in the United States is not enough to establish a causal relationship of the type hinted at in the parent.

Besides, I find your "safe haven" theory questionable because bitcoins are still quite volatile. I simply don't see them as the conservative store of value during a crisis and think something like gold would be more suitable.

Do hitmen take Bitcoin? (0)

Anonymous Coward | about 9 months ago | (#45160557)

How many Bitcoin would it take to put a hit on Ted Cruz and his idiot cronies? Perhaps someone should take up a collection.

Re:Do hitmen take Bitcoin? (0)

Anonymous Coward | about 9 months ago | (#45160661)

I say we just feed him some Green Eggs and Ham.

Re:Do hitmen take Bitcoin? (0)

Anonymous Coward | about 9 months ago | (#45160921)

Won't work. I was Gold Crew on a boomer, and after awhile the eggs were green - we still ate 'em and lived to tell the tale.

modl doWn (-1, Offtopic)

Anonymous Coward | about 9 months ago | (#45160597)

BitTorrent) Second, Distro is done Here fastest-growing GAY Usenet posts. milestones, tellIng is dying and its you loved that *BSD is dying It is want them there.

Default Only If We Chose To (3, Informative)

geoffrobinson (109879) | about 9 months ago | (#45160621)

The U.S. Government gets somewhere between $200 billion and $225 billion a month in tax payments. I forget the exact figure, but let's say debt payments are around $50 billion a month.

We would only default if we chose to pay our debt with the lowest priority.

Re:Default Only If We Chose To (2)

bill_mcgonigle (4333) | about 9 months ago | (#45160831)

We would only default if we chose to pay our debt with the lowest priority.

Right, spending cuts could have covered the difference, if credit worthiness was the top priority. Oh, but that's an unmentionable inside the beltway.

Re:Default Only If We Chose To (0)

Anonymous Coward | about 9 months ago | (#45160909)

> I forget the exact figure, but let's say debt payments are around $50 billion a month.

This number is currently not being released publicly after it was shown to be somewhere in the 300billion a month range. The recent "50 billion" is for government services and not counting budgetary needs outside of that...like entitlements and loans which are not technically part of the government expenditures. They are the responsibility of the government to the Fed as a proxy. Most of the 30+ here were taught this would happen from our high school sociology teachers. I'm going to bet you're younger than that.

bogus one sided claim (1, Insightful)

frovingslosh (582462) | about 9 months ago | (#45160645)

If Congress had failed to reach a deal and the U.S. was unable to pay its bills, the results might have been catastrophic ...

While I realize that most /. synopses are just cut and pasted from the referenced article, it would nice if we could avoid clipping one-sided political hype at the same time. While a default might have been bad, there are many who believe that letting a man destroy the value of the dollar and the country by unchecked borrowing is even worse. This latest surrender by the Republicans tells him that there is really no limit to what he can spend. He can even borrow money from China and give it to China as "foreign aid".

V-Neck Drivel (0, Troll)

xdor (1218206) | about 9 months ago | (#45160727)

Marxist cake-eaters logging mock-panic to cement allegiance to their socialist mafia. Hark nerdary! Bow before your propagandist masters!

Honeypot? (2)

ridgecritter (934252) | about 9 months ago | (#45160775)

I thought this was an interesting take on Bitcoin:

http://ianso.blogspot.com/2013/10/bitcoin-as-law-enforcementnatsec.html [blogspot.com]

Re:Honeypot? (0)

Anonymous Coward | about 9 months ago | (#45160959)

Here's where you stop reading:

"1) Bitcoin was almost certainly a team effort. The design has been peer-reviewed and is found to be remarkably secure, complete and well-rounded[1]. I argue that this suggests that a peer-review or quality control process has already been applied. If one individual cryptographer had written Bitcoin, it would contain far more idiosyncracies than it does, not just in the cryptosystem design but also in the C++ code itself."

Now... go get a copy of the 0.1 bitcoin client - the one that Satoshi wrote - and take a look at the code. It's hideous. Really bad.

Re:Honeypot? (1)

Wonko the Sane (25252) | about 9 months ago | (#45161049)

Here's where you stop reading:

"1) Bitcoin was almost certainly a team effort. The design has been peer-reviewed and is found to be remarkably secure, complete and well-rounded[1]. I argue that this suggests that a peer-review or quality control process has already been applied. If one individual cryptographer had written Bitcoin, it would contain far more idiosyncracies than it does, not just in the cryptosystem design but also in the C++ code itself."

Now... go get a copy of the 0.1 bitcoin client - the one that Satoshi wrote - and take a look at the code. It's hideous. Really bad.

I've seen other articles where people consider Bitcoin evidence of some kind of post-singularity intelligence at work.

It's clueless n00bs who didn't notice Bitcoin until 2013, and are apparently so narcissistic that since they weren't paying attention during 2009-2012 they assume nothing of importance happened then, so Bitcoin must have been dropped in our laps in its present form by some kind of omniscient cyber-god.

Re:Honeypot? (1)

Pseudonym Authority (1591027) | about 9 months ago | (#45161149)

A codebase can change a lot in five years, ya no?

Off topic summary? (1)

duke_cheetah2003 (862933) | about 9 months ago | (#45161151)

Why the heck is this summary about 1/3rd's about bitcoin, and 2/3rd yet another reposting of the government shutdown conclusion?

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