Tags: Ponzi Scheme

Erik Voorhees Responds to Peter Schiff’s Bitcoin Criticism in an Open Letter (This is Excellent)

Last week, Peter Schiff put out a video titled: Bitcoin vs. Gold, which quite frankly was horrible and one of the worst videos he has ever done. It added nothing the the debate that everyone involved in Bitcoin isn’t already completely cognizant of, but even beyond that, it framed the debate around Bitcoin in a totally unproductive and useless way. The reason I say this is because the debate is not Bitcoin vs. Gold, the debate is Bitcoin vs. Fiat Money. Gold is a store of value that has survived as such for thousands of years and and has also served as money for a decent part of human history. Gold will never be worth zero, Bitcoin could certainly trade back to near zero some day. We all know this.

So the key point from my end is, Bitcoin is not competing as a store of value versus gold, it is competing as a currency versus fiat money, and on that count it is superior in an extraordinary number of ways. His video was so awful that I challenged him to a debate on his radio show on Bitcoin via Twitter.


He never responded to me, but fortunately he did have Erik Voorhees on his show to discuss the topic. While I have not listened to the show because apparently you need to be a subscriber to Schiff’s radio show to hear it, Erik Voorhees wrote a follow up open letter to Schiff afterwards. All I can say is that this is one of the most eloquent, incisive and thoughtful articles in support of Bitcoin I have ever read.

I have republished the entire thing from Reddit below (emphasis added by me):

An Open Letter to Peter Schiff A follow-up to the discussion on the Peter Schiff Show, December 2, 2013 (this has been emailed to Peter just now)

Dear Peter,

It was a privilege and an honor to be a guest on your radio show today. I’ve been a fan of yours for more than five years; you were one of the reasons I discovered Austrian economics (and, in turn, Bitcoin), and your eloquent explanation of consumption vs. production in an economy has guided my outlook of the world ever since. So thank you sincerely for what you’ve taught me, and for the opportunity to appear on your show. It was a really special moment for me.

While we had some valuable discussion today, I felt a follow-up was appropriate to better articulate my points. You’re right to be highly skeptical of such a new technology and monetary system, but please take the time to ensure your skepticism doesn’t blind you from what I humbly suggest is one of the most important tools for human freedom ever conceived.

The Fundamentals

First, Bitcoin must always be considered as two things: the payment network (Bitcoin) and the currency units (bitcoins). Condemnations of the latter can often be resolved with an understanding of the former. Satoshi should have named them differently to avoid this initial confusion.

When you suggest that bitcoins have “zero intrinsic value,” you are only considering the currency unit itself and ignoring the payment network. While I prefer the term “utility” over “intrinsic value” (because all value is subjective to the valuer), I may indeed admit that bitcoins, as currency units all by themselves, have no fundamental utility and are completely uninteresting. But – and this absolutely critical – the payment network has vast utility.

In fact, this network is probably one of the most valuable and consequential technologies currently on the planet. Some of us realized this a few years ago. Others are realizing it now. Many more will realize it in the future. The Bitcoin network is, fundamentally, a ledger of title controlled by no man. Ponder that for a moment. The transmission of value and ownership has thus just been severed from the State, not by impotent voting, but by the technological achievement of man.

Now, during the show, you agreed that perhaps this payment network has utility. So, if the network (Bitcoin) has utility, and only one currency is accepted on this network (bitcoins), and those bitcoins are scarce, then should not those units themselves command a market price? Who knows what that price should be, but there should be a price, no?

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Picture of the Day: The Power of the People

The image below couldn’t be more true.  The ruling class are nothing more than a bunch of ponzi scheme running, Wizard of Oz con men.  Great job to whoever created this.


In Liberty,

The Creature from Larry Summers’ Stomach

Thanks for this WilliamBanzai7.

In Liberty,

China to Boost the Global Economy? Nope it’s also a Total Ponzi

I fully get that people’s hopes on China being some powerhouse to the global economy have pretty much been dashed, but I have been calling bull on this meme for years.  Why?  The Chinese economy is just as much a ponzi of fraud, corruption and fiat money as the U.S. economy is.  The only difference is they are smart enough to be buying the gold that the imbeciles in the West are selling to them.  Down the road, when the West has no gold and is broke don’t blame those that bought it.  Blame our inept “leadership” for not having done the same.

Key quotes from the NY Times article:

TAIHE, CHINA — The Chinese investment vehicle known as Golden Elephant No. 38 promises buyers a return of 7.2 percent per year. That is more than double the rate offered on savings accounts in China.

Absent from the product’s prospectus is any indication of the asset underpinning Golden Elephant: a near-empty housing project in the rural town of Taihe at the end of a dirt path amid rice fields in one of the poorest provinces in China.

“Some banks have been using new proceeds to cover losses from previous products in the pool,” said David Cui, a strategist at Bank of America Merrill Lynch, referring to new wealth management products. “In our view, this is not fundamentally different from a Ponzi scheme,” a fraud in which early investors are repaid with money collected from later clients instead of proceeds from investments. “The music may stop at a certain point if and when” the assets the wealth management products are based on stop expanding.

In a review of more than 50 wealth management and trust loan products, with the aim of tracking where investors’ money in the products ends up, all but two failed to explain or even display the underlying assets behind the products.

The China Banking Regulatory Commission, which oversees banking products, said more than 20,000 wealth management products were in circulation, compared with a few hundred just five years ago.

Full article here.