Predictions for 2015

Yes, but what’s the economic value of this distributed ledger as opposed to another such ledger, or another such way of semi-anonymously exchanging funds over the Internet? EVE Online ISK is a far better store of value.

Greater adoption of bitcoin is working against its value: the more liquid it is, the less any given bitcoin is actually needed in circulation.

Perhaps in the same spirit
http://www.newyorker.com/news/john-cassidy/twelve-lessons-2015

regarding point 3
I would have thought 2 degrees of warming was already a lost cause.

Perhaps what you mean is that with a nominal 2 degrees of warming target (not a realistic one).

Niels Bohr might have said it, but the origin of “Prediction is very difficult, especially about the future” is actually unknown.

T.

One thing I am curious of, does the price of natural gas track that of petroleum?

Truth in advertising: I have the background to figure out bitcoin, but never thought it worth the effort to try. At the point I realized that alternative currencies are sleazes rich libertarians think about to avoid people (especially tax persons) knowing where their money is, I got bored. But I do like the title of this article:

Bitcoin revealed: a Ponzi scheme for redistributing wealth from one libertarian to another

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/14/bitcoin-is-revealed-a-ponzi-scheme-for-redistributing-wealth-from-one-libertarian-to-another/

I can tell right off, though, that there’s at least one problem with the article: if running a supercomputer doesn’t make enough bitcoins to pay for the time used in the computations, you have to stop doing said computations immediately. Also, my understanding is that mining new bitcoins never gets easier (whereas the article implies that if people stop mining bitcoins, it’ll be easier for newbies to come in at a later date: that’d only be true if computation gets a lot cheaper over the period people aren’t doing much mining.)

#1 Peak oil

While its possible that weak pricing will induce production cuts that put 2015 supply below 2014 levels, the notion that 2014 represents “peak” production is entirely at odds with all projections. Oil production is slated to grow to over 100 mb/day by 2018 based only on projects that are already fully developed or substantially developed.

I fully agree with the linked article that demand in the developed world has likely peaked, but developed world demand hasn’t been the marginal buyer for sometime. China, Latin America and India have been the marginal buyers and their demand is still rising at a mid-single digit growth rate (or higher).

IEA.org has all kinds of forecasts that can be sliced and diced however one likes for those who like data with their assertions, even a pretty generous read would challenge this prediction.

If the timing was 2020 however, I’d be far more prepared to agree.

Niels Bohr?

It was Yogi Berra – a different sort of scholar – I think.

I am still entirely unsure of what problem bitcoins are supposed to solve….

I am still entirely unsure of what problem bitcoins are supposed to solve….

The “not very bright libertarians who need a reason to believe they’re smarter than the rest of the sheeple” market was being underserved.

“In theory if you could create a non-governmental, untracable currency, it would be much easier to circumvent government regulation.”

Yes but currencies only have value within a state.

#23 MPAV

“In theory if you could create a non-governmental, untracable currency, it would be much easier to circumvent government regulation.”

Yes but currencies only have value within a state.

Currencies have value among everybody who will trade them.

So for example the story goes that when Croesus (or Midas, depending on your story) invented the gold coin, they traveled far outside his kingdom. Since he made a profit on every one that was not exchanged for gold….

Dollars were traded by the Russian mafia. They are traded in some nations that have inflation problems, sometimes voluntarily by the governments.

Bitcoins trade internationally among everybody in the world who buys into the belief in their value.

Since they are backed primarily by the people who use them, if a lot of people stopped believing in them that would make their value go down. Similarly, if somebody figures out a way to falsify them, to counterfeit large numbers of them, that would do it too.

The same is true of gold, of course. Gold would be a useful industrial metal, but the people who want to hoard it have driven its price way up. If most of them stopped believing in it, the price would fall considerably.

But it’s not true for national currencies. A national currency is backed by its nation’s tanks and machine guns, and by the dedication of its army and police. That makes them less arbitrary than gold or bitcoins.

“Currencies have value among everybody who will trade them.”
Sure. And the reason people will trade in currencies, in the modern world, is because governments back them. Try buying something in Confederate Dollars and see how far you get.

MPAVictoria, my understanding is Bitcoin solves problems for libertarians and criminals. The libertarian problems are invisible or incomprehensible to normal human beings. The criminal problems can be solved by well-established money laundering services instead of Bitcoin.
One of the best coders I know called it ‘Beanie Babies for ultra-libertarian math nerds’.
http://dtrace.org/blogs/bmc/

There are a lot of gas development projects in the pipeline that are too far along to cancel, so I agree with Trader Joe, peak production is most likely still ahead. My contacts in the gas industry believe the current low prices are purely a question of the Saudis pumping furiously to hurt the Russians and the US fracking industry. Personally I wonder if there has been some scheming between US and our friends the Saudi potentates, to bring down Putin.

#27 MPAV

And the reason people will trade in currencies, in the modern world, is because governments back them. Try buying something in Confederate Dollars and see how far you get.

As I understand it, Confederate dollars were never backed by anything from the first. The Confederacy did not collect taxes to back their dollars, they just printed more of them. It worked OK for 2 or 3 years because a lot of people believed in the confederacy. Then when the war went bad and people had lots of confederate dollars but nothing to buy with them, it stopped working.

Bitcoins have the problem that there is no way to control their rate of deflation. US dollars inflate at 2-5%/year. Bitcoins do not. So people who believe in them prefer to spend dollars and buy bitcoins. They are more a speculative inflation hedge than a currency.

If the time ever comes that people pay their mortgage etc with bitcoins, then bitcoins will have begone to achieve currency status.

I’m not certain why the bitterness towards bitcoins. It’s a tech-toy that brings people enjoyment the way that the 200-mile diet brings joy to a different set of people.

We all have our “I’m saving the planet” joys, most of which cost us money. Why begrudge other people theirs?

“We all have our “I’m saving the planet” joys, most of which cost us money. Why begrudge other people theirs?”

I guess because it just seems like such an obvious scam to me. But you are right, if someone gets joy out of it more power to them I guess.

“Don’t get me wrong, there are plenty of problems with bitcoin, but there are somethings it can do rather well and facilitate trade is one of them”
But Joe how does it facilitate trade better than Euros or Yen?
(Thank you for replying by the way. :-))

Im only joking MPA , my explanations are clearly idiotic ;)

“Don’t get me wrong, there are plenty of problems with bitcoin, but there are somethings it can do rather well and facilitate trade is one of them – although that’s not without cost of consequence.”

How does it do that better than dollars, pounds or Euros?

#36 MPAV

And I wouldn’t say I was bitter towards bitcoins, just confused by what seems like an obvious con.

Cons and noncons seem to grade into each other. People accept government money because everybody else does, but it can be just as much a con. A person could spend 20 years saving Reichsmarks, and then after1945 they were pretty much worthless. For a few years Germany ran mostly on a cigarette economy because they didn’t have a currency that worked.

Not to say bitcoins are definitely not a con, but government fiat currency can sometimes turn out to be a con. What can you do? You can invest in gold but that can be a con, plus somebody can steal it. Your cash in the bank can’t be stolen except by embezzlers and the government.

You can invest in real estate but you can’t be sure how much higher the government will tax it, they might take it away from you and pay you what they say it’s worth, leaving you to sue in government court for what you think it’s worth. In the 2008 crisis banks foreclosed loans on people who had paid off their loans, confiscating their houses.

You can gamble on the stock market.

Any method you use to try to store your wealth could turn into a con.

Maybe you’re just imprecise. But you do know that bitcoin is issued not for meaningless computations, but for cryptographic work guaranteeing the integrity of the distributed ledger?

Isn’t this problematic? My understanding is that there’s an absolute limit to the number of Bitcoins that will ever be created. At some point, there’s no incentive for doing these calculations, but you’ll still need the ledger.

J are you arguing that all of those things are equally likely to be a con? Because if they are not equally likely then wouldn’t it make sense to minimize your risk?

1. I think we’re probably close to Peak Oil Production as well, although the down slope on that will be a lot smoother and more gradual than expected. At a certain price point, it becomes profitable to start turning coal and other carbon into liquid fuels (including CO2 from the air, or from coal-fired power plants) with Fischer-Tropsch.

It’s also why I’m not convinced we’ll see people move away from hydrocarbon fuels unless they’re legally required to. If we can make it for decades or longer at a price point of $200/barrel, then we will – we’ll just drive more efficient, smaller cars or eat the cost of gasoline.

3. We’ll see. I don’t think we’ll see meaningful action on climate change until the mid-to-late 2020s, when the effects of it will be so undeniable that all but the most diehard reactionaries will be accepting it by then. At which point much of the world will be frantically trying to come up with policies to restrain further warming, much like how we waited until an ozone hole opened up over Antarctica before we got meaningful action on ozone-destroying chemicals.

“No, I don’t have any good way to bet how long any of those will last. It seems plausible to me that most government fiat currencies will outlast bitcoin, but you never really know.”

So you do think it is more likely that the US dollar will be a better store of value then the bitcoin? Or don’t you? Or is this more oh a “hey we never really know anything?” comment? In which case, I guess you are right. I mean aliens might come to earth tomorrow and demand that all economic transactions take place in Qwatlos. But is that the way to bet?

It’s a tribal thing, meant to signal your allegiance to a specific caste. It’s not about principle so much as having something to talk about at Oxbridge cocktail parties.

I’m not certain it’s any more tribal than my buying organic, experimenting with solar cells, patronizing farmer’s markets, etc.

Sure, I make gentle fun of my friends bitcoin experiments (and yes, the link between Libertarian and bitcoin is moderately strong) and they make fun of my proclivities. But if they started taking great joy at my misfortunes in my hobbies, they’d be jerks and I’d drop them. Similarly, if I did the same, I’d be the jerk.

To MPAVictoria’s comment, is marriage a long con?

After all, at best, either I’ll predecease my spouse, and abandon her, or she’ll abandon me.

Yet somehow both our worlds are much better off by us being married.

(Okay, mine always, her’s, most days?)

Sure fiat currency is a confidence game, but short of holing up in a cabin with guns and food, *everything* is a confidence game.

Living in misery simply so that bad shocks can’t ever happen is not my idea of a winning strategy.

I mean aliens might come to earth tomorrow and demand that all economic transactions take place in Qwatlos.

Where can I purchase Qwatlos? If I convert all my $$ now, I’ll be rich when the aliens arrive!

“But Joe how does it facilitate trade better than Euros or Yen?”

Lets go back to me buying the shirt you’re wearing for $50. I can mail you a check or cash, which has its drawbacks. I can provide you or someone else a credit card number, which aslo has its drawbacks in terms of security albeit different ones that mailing checks or cash – or you can agree to accept my 0.3 of a bitcoin (or whatever we agree upon) and with a few key strokes we’re all done and neither of us has ever exchanged any identifying information. I’m pretty sure yen and Euros can’t do that.

The advantages are even greater if, which I think is the case, what you really want is C$50 when all I got is these lousy U.S. dollars…that saves us one more exchange cost.

As noted above, I’m not saying using bitcoins is without issue. The currency clearly fluctuates too widely in value and the security issues have proved to be not nearly as robust as was originally thought to be the case.

That said, the volumes of transactions utilizing it are many, many times greater than anyone would have anticipated and I don’t think that can all be put down to being a ‘toy’ or novelty. There is clearly some natural demand for a scrip or non-government sponsored currency and whether bitcoin is the one that figures out how to make it work or some other version of it proves more effective its an innovation in global transactions that will continue to draw a certain number of adherents. I don’t think it ever becomes a major form of payment, but I’m not sure its worthless either – there is some value added, in some cases, that make it viable alternative.

#49 MPAV

So you do think it is more likely that the US dollar will be a better store of value then the bitcoin? Or don’t you?

Judging from history, the US dollar has not been a very good store of value at all. It was intentionally supposed to be that way in the 20th century, and sometimes before. It is supposed to inflate at a low predictable rate.

From the history so far, bitcoins have been a far better store of value. Depending on where you get your data, they suffered a big sudden price jump in 2011 and then rather slowly lost 3/4 of it, and another big price jump in 2011 and so far have lost about 2/3 of it. If you bought bitcoins just before the 2014 spike they’ll still be worth about twice what you paid for them. Dollars have inflated about 3% in that time. On the other had if you bought them in 2014 your value is down and you might not get it back until the next big spike.

Holding dollars is a reliable way to lose value, usually slowly but with occasional crises. So far the result of holding bitcoins is mixed but strongly positive. But either one could collapse suddenly. The USSR looked like they could grind along forever and suddenly they just fell apart. The USA might possibly do the same at any time.

“Holding dollars is a reliable way to lose value, usually slowly but with occasional crises. So far the result of holding bitcoins is mixed but strongly positive. But either one could collapse suddenly. The USSR looked like they could grind along forever and suddenly they just fell apart. The USA might possibly do the same at any time.”

So you do think that bitcoins are a better store of value over the long term then the US dollar? Or don’t you? I am confused.

Here’s my most confident prediction for 2015:

Many a CT thread— especially JQ threads, for whatever mysterious reason— will be driven into the ditch by J. Thomas and Brett Bellmore.

We’re off to a good start.

On peak oil I agree with Trader Joe @15, disagree with someguy88@52. The time frame for the prediction is wrong due to investments over the past few years and also due to the fact that developing world demand will continue growing for a long while. It is now clear that at higher price points quite a lot of extra oil is available. It is unclear what kind of price trend would be necessary to continue to see increasing supply because there are counter trends between reduced availability of cheap oil and reduction in cost of equivalently difficult extraction techniques over time. Regardless, if alternative energy sources did not exist peak oil might be a long way off. Alternatives do exist however and I expect that the reduction in cost of these energy sources will race ahead of the price curve for oil required for continually increasing production, eventually pulling oil production down in 5-10 years from now. But even this is not 100% certain. Every technology as it scales has factors both pushing cost up and down. For processing capability or cellular connectivity, for example, almost all the factors push down. But for energy production, once you scale to the equivalent of a sizable percentage of world oil consumption, the net price pressure is upwards for pretty much any technology.

Ah thank you primedprimate. I must admit that I am far from an expert in this area. Your explanation is appreciated.

So if bitcoins are not even anonymous then what is the point Trader Joe?

Just to add: Goldbuggery is in the same category as fluoridation of water when it comes to nutbag tropes. The only purpose they serve is to define nutbaggery per se.

#61 MPAV

So you do think that bitcoins are a better store of value over the long term then the US dollar? Or don’t you? I am confused.

I know you are. Why don’t you ask me some other simple question like which stock in the stock market will get you the best return?

Ask me who will win the next us presidential election.

Which football team will come in first?

Barring some big exploit, bitcoins will be viable as long as sufficient people believe in them. Will people stop believing in them in 2015? I don’t know. Maybe.

They are different from cash in that there will be a limited number of them. So they can’t inflate from increased supply, they can only inflate by falling demand. That’s an advantage they have over dollars, for some purposes. But a fixed supply leaves the value exposed to changes in demand. That’s a disadvantage for some purposes.

Dollars are a bad store of value, but your losses will probably be limited. Unless the government collapses or something. If the USA gets a GOP president and GOP congress there’s no telling what will happen. How likely is that? It won’t happen in 2015, if that’s what you care about.

You want me to give you investment advice? Free? You can sign up for my confidential newsletter, but it will cost you. However, the results are guaranteed.

“Dollars are a bad store of value”

This morning it turned out that Swiss Francs were a good store of value. Too bad it wasn’t predicted.

The illusion of anonymity is powerful. Look at people posting offensive and even illegal material on internet message boards. They think they are truly anonymous, but their IP addresses etc. can indeed be traced by intelligence agencies or others who need to know. You could, I suppose, if you are an expert in cyber security find ways to hide your identity, but from what I understand, it is trivially easy to identify regular joes who make up 99.9% of internet users. So Bitcoins could function as an ‘anonymous’ currency for true experts but not for others.

One big benefit of Bitcoins is the elimination of transaction fees. Suppose you want to buy the shirt from Bangladesh using regular currency, you need to pay the transaction fees associated with changing currency from dollars to takas as well as all other kinds of fees imposed by Western Union (or other Bank/Financial institution) and US and Bangaldeshi governments. You may also be subjected to various kinds of capital controls imposed by these governments. Finally, you will need to pay a sales tax. With Bitcoins you can avoid paying the transaction fees (semi-legally), circumvent capital controls (illegally), and evade the sales tax (illegally) with some degree of ease since the IRS is not in the business of cyber-security. However, agencies like the NSA can crackdown on you if they really want.

Another side benefit of Bitcoin is that introduced the block chain system of distributed ledger maintenance which I think is an idea that may catch on in some other form like Wikipedia. This, in my opinion, is the most valuable contribution of Bitcoin.

Some libertarians and technically sophisticated modern-day goldbugs also tout another beneficial feature of Bitcoins: by setting an upper limit on the total number of Bitcoins to be released, a Bitcoin based system would free monetary policy from government control. But I think that a non-responsive monetary policy would be a recipe for economic disaster. Most economists are divided on whether to have discretionary or rule-based monetary policy, but even the majority who favor rules prefer rules like inflation-targeting, NGDP targeting, Taylor rules etc. and none of those discretionary or rule-based policies are compatible with a Bitcoin style currency.

#76 primedprimate

Some libertarians and technically sophisticated modern-day goldbugs also tout another beneficial feature of Bitcoins: by setting an upper limit on the total number of Bitcoins to be released, a Bitcoin based system would free monetary policy from government control. But I think that a non-responsive monetary policy would be a recipe for economic disaster.

So we probably could not tolerate an economy that used only bitcoins as currency.

Could they occupy a niche market? Use them only for the things they’re especially good at? Yes, but.

At the moment it looks like what gives them their value is use for special kinds of transactions. But when the value goes up, people want to hoard them. It would be predictable (but I haven’t seen it) that when the value goes down, people would want to spend them faster. So the very thing that makes them valuable for hoarding is damaged by hoarding. Quick changes in value would make them more of a bother to use for transactions and so less valuable on average.

I dunno. We’ve had thousands of years experience with coins, hundreds of years experience with paper money, and 5 years experience with Bitcoin. It’s a little early to be sure what will happen.

#78 JT

Quick changes in value would make them more of a bother to use for transactions and so less valuable on average.

I agree it might continue to work for niche markets, but even within those markets, I don’t think Bitcoins will work as a unit of account (one of the key features of ‘money’) at least until folks start to price items in Bitcoins, which I feel is very, very unlikely.

‘So if bitcoins are not even anonymous then what is the point Trader Joe?’

I guess to reverse the question if several billion dollars of transactions have been done in them, can their possibly be no point for all of them?

As someone noted upstrand, while its possible to crack the identity of a bitcoin user, its probably not something the average user is trying to do nor has the means to do. If I ask you to send the shirt to my P.O. Box or to the NY Midtown – Hilton care of Trader Joe…you still don’t know all that much about me do you apart from maybe what zipcode I might frequent? That covers the physical side of the trade, using bitcoin provides a similar anonymity to the financial stide of the trade.

Don’t forget the security bit too – neither of us has exchanged credit card or bank info with one another or a third party. Irrespective of whether we are dealing in something quasi-illicit or not, either of us might have an interest in completing our trade with an anonymous counterparty without such info involved.

The goal isn’t necessarily six sigma anonymity but its certainly far beyond highly hack-able bank/credit info.

@Zamfir, there is a transaction fee when you go from one form of currency to Bitcoin, but no transaction fee if all you’re using is Bitcoin.

To restate my Bangladesh tiger-skin shirt example, if I were to buy the shirt using Western Union, I would have to pay the spread on the currency exchange rate (the number of takas I can buy for a dollar is different from the number of takas needed to buy a dollar) as well as Western Union’s fees.

With Bitcoin, if I don’t intend to convert it to a currency (just use it to buy products for consumption directly or use it while selling products I make/own directly), I don’t suffer from the exchange rate spread and I don’t need to pay Western Union’s fees either.

@TraderJoe, I agree there is much more privacy with Bitcoin than other forms of payment. However, if the aim of the traders is anonymity from the authorities rather than from each other, it is hard to find anything as effective as US $ bills.

@Zamfir, also there is actually much less risk for transaction fraud using Bitcoin due to the distributed ledger system.

But please don’t categorize me among supporters of Bitcoin, at least as it currently exists.

So … Seychelles should institute an extremely cheap international transfer protocol of their rupee. If I want to send my dollars to a gal in Cologne who wants deutschmarks, we just go to the Seychellois website, I buy rupees at the current rate, they transfer these rupees to Cologne, she sells them for deutchmarks, one of us pays the transfer fee. Nobody (almost) bothers to hold rupees and it doesn’t matter what the current value of the rupee is as long as the three exchange rates add up.

That is the lasting value of Bitcoins for everyone beyond those that invest in them.

@pp, that would only work if bitcoins were a fairly complete economic sector. Where you could earn bitcoin wages in most professions, and shops could buy most of their supplies in bitcoins. At which point all the political power plays of monetary policy and exchange rates would apply. The eurozone on global scale.

That’s what boggles me about bitcoins. People suggest it has an advantage as a decentralized, efficient alternative to PayPal. Wikipaypal. Which sounds attractive, if it could fulfill that moderatambitious goal within the existing

@primedprimate. There is absolutely a transaction fee for transferring Bitcoins from one account to another. The setting of that fee is a constant debate. Ultimately, the people desiring the transfer have to offer some amount of value to have the transfer rapidly added to the block chain – unless one of the participants is a miner who does it for free.

It always sounds like I’m talking about an online game …

My previous postings here should establish that I’m not an ultra-libertarian or an attendee of Georgetown cocktail parties. Math nerd, perhaps. I have never bought Bitcoins or bought equipment specifically dedicated to their production. I did however hear about it early enough, and start mining on a lark, that I once accumulated hundreds of them using nothing more than $10 of electricity on an ordinary desktop computer I already owned. It helps that I live in a region where abundant hydropower makes electricity cheap. If I had sold at the Bitcoin peak I could have bought a house in Seattle. But if I knew when prices of things were going to peak I’d be a lot richer than that by now.

I think that Bitcoin is a lousy store of value. Just look at the chaotic fluctuations in exchange rate vs. USD or commodities over the past few years.

I think that Bitcoin is useful as a medium of exchange for a couple of cases:

1) Buying, selling, or donating in contravention of government desires. Most but not all of this activity is illegal. I’ve never bought scheduled drugs online but I used Bitcoin to donate to Wikileaks after “legitimate” businesses abandoned serving them under government pressure. I used Paypal to donate to them back before they attracted notoriety and US government wrath, but that’s no longer an option. The protocol itself only has pseudonymity but connecting to the network through TOR and using mixing services provides pretty good anonymity. Since I never did anything illegal via Bitcoin I never added a mixing service on top of TOR.

2) International money transfers for amounts under a few thousand dollars, depending on the source and destination countries. I used Bitcoin to send money to individuals I wanted to help in Poland and the Czech Republic a few years ago. At the time I did the transactions, Western Union was slower and fees were higher for the same-size transactions than the overhead from Bitcoin protocol fees and exchange fees converting to/from local currencies.

In both of these use cases you want to minimize the amount of time funds are actually held as Bitcoin. If both participants are already registered with exchanges the in-flight time for holding Bitcoin can be as low as a couple of hours. Since its creation Bitcoin has been more volatile than any currency issued by a national government. It looks like it could continue to support payment systems for a couple of niche use cases, at least until all major economies outlaw Bitcoin exchanges or until a fatal technical flaw is found in the protocol.

some consider Wikipedia to be more reliable than governmental websites or websites run by private corporations

You, or rather they haven’t met my then 12 y.o. nephew, who had a nice run for several weeks on Wikipedia editing entries about a particular kind of animal that has long fascinated him (before being banned for life for vandalism!). You may respond that Wikipedia resolved that situation nicely, to which my rejoinder is “Not before some of my nephews ‘facts’ were included in a memoir reviewed in the NYTimes.”

I’m being deliberately vague to protect the guilty. My sister remains quite chagrined by the whole affair and in retelling it mentioned that she tried to explain the notion of the social contract to her son. My adult son cracked up and told her that the social contract is an alien concept to teenage boys in pretty much every conceivable way (3rd person, 2nd person and first person). Much family hilarity has ensued from this escapade.

“a niche product for people fighting the man.”

That could be their motto!

Fiat currency is pretty much 100% likely to be a con. The only real question is when any particular fiat currency will transform from a long-term con to a short term con. During the long term con phase, fiat currencies are actually useful, though more so to the currency issuer than everybody else.

What? Fiat currency keeps me out of jail every April up here in Seattle. That’s pretty useful.

@Adam Hammond: Yes, indeed – I was wrong in my previous comment(s) on this point. There are transaction fees needed to incentivize ledger entry by miners unless the miners are participating in the transaction themselves. However these tend to be less than the transaction fees for credit cards etc.

On another note, I agree with everyone above who thinks that a niche market could exist for Bitcoins where the value of each Bitcoin is low enough to compensate for its volatility and low-usability equilibrium.

I am more optimistic about the prospects for the block chain technology but I am unable to predict how exactly it will be useful.

@Collin Street
I came to the same conclusion based on not knowing anything except how the technology is supposed to work (read the white paper). A coin that carries with it an encrypted history of where its been. Seems like a spook/forensic accountant’s dream.

My reasoning is that 2014 supply can’t be sustained at prices below, say, $75, and (given a downward underlying trend in the developed world), 2014 demand won’t be reached again at prices above $75.

Just curious – why do you say $75? Just an impression from reports, or something else?

2014 was a lackluster-to-dreadful year for operators of coal-fired power plants and coal mines, at least in China, Poland, Germany, the UK, USA, and Australia. Have seaborne coal prices bottomed out? Will we see a rebound in 2015, or more mine closures, plant closures, and bankruptcies? In the USA there’s about 12 gigawatts of coal capacity scheduled for permanent shutdown in the next couple of years. There’s another ~40 gigawatts scheduled to shut down if the EPA’s mercury emission standards survive court review. If coal stays really cheap, part of the benefits from plant shutdowns will be reversed by remaining plants operating at higher capacity factors.

I have some hope that the terrible market conditions for coal miners will continue to worsen or prevail a year longer, so as to send panicked investors stampeding herd-like away from coal and staying away for the next few years, above and beyond the retreat justified by recent “long term market fundamentals.” In other words I hope recent predictions of fossil assets becoming stranded by CO2 limits might come to pass as a self-fulfilling prophecy among investors, at least for coal, even if there isn’t a global legal framework to force it.

What surprises me — a little — is that oil from frakking in the Bakken shale formation is considered tight oil. I’d been under the impression that while it wasn’t as cheap to produce as Middle East Oil, it would require way less investment than deeper Gulf of Mexico oil production, or production from Canadian tar sands.

Mmmm…. So it now appears that oil from frakking was overhyped not only in terms of how safe it is to recover, but also in terms of its price of production. (I suppose I should have gotten some idea when people started talking about 50,000 wells in the North Dakota/Montana area once full production was reached, and noting in the fine print that the the production life-spans of individual wells were expected to be relatively short.)

Profitable only above $75 a barrel — that seems to me to be a real game-changer, and also makes a lot of the early hype about the U.S. becoming the new Saudia Arabia look even less honest than we suspected. Maybe JQ is right. If secular stagnation and suppressed aggregate demand are to be the new normal, investments in sustainable energy may begin to look more viable again. In any case, the fat lady hasn’t sung just yet.

Speaking of bitcoin and criminal activity; Anyone heard of cryptowall? Malware that encrypts all your data holding it hostage for a set ransom to be paid by bitcoin. Comes complete with a handy countdown clock on the display of your captured computer. Nice recent story in the NYT; “How My Mom Got Hacked”
BTW I’d like to predict 11 named Atlantic tropical systems with 5 major Hurricanes and 4 storms making landfall.

I see a lot of sneering at libertarians as argument to reject bitcoin here. This does not surprise me, I’ve seen plenty of it from people who ought to know better, but come on guys and girls. That libertarians like bitcoin for dumb reasons doesn’t mean you shouldn’t try to understand it. Waldman has, you can too.

Bitcoin is not untraceable. This is a myth both libertarian lovers and anti-libertarian haters believe. Bitcoin is in fact perfectly traceable, that being the point of a ledger. What is difficult is assigning human identities to the accounts in the ledger, but that isn’t anything unusual. Money laundering in bitcoin is very similar to money laundering in the conventional economy, once governments manage to wrap their heads around the technology it’ll probably be harder than with cash.

And David J. Littleboy, numbers in a ledger don’t need an intrinsic value. They just need a meaning. If I transfer three points to you, it’s inherently neat to be able to document that sort of thing in a distributed manner, whatever the points mean in the big picture. The thing sidechains and similar projects do, is precisely to attach various more specific meanings to the entries in the ledger.

MPAVictoria: You’re uncertain what problem bitcoin is supposed to solve. Are you comfortable then, that the electronic payments infrastructure is almost entirely in the hands of two closely entangled private companies? Who have been known to deny services for political reasons? Everyday services are not a small deal, as the unbanked can tell you. Is Bitcoin the perfect VISA-killer? No. But the technology at the heart of it, the blockchain, probably is part of the solution.

If you’re pissed off about two private companies denying service for political reasons, (And I am, too, won’t have anything to do with PayPal.) how about federal regulators forcing banks to shut off service to perfectly legal businesses, for political reasons?

Again, my prediction: This is the year Operation Choke Point explodes. Stops being a minor scandal, and becomes a major court case: The administration is using regulatory threats to force banks to cut off financial services to perfectly legal businesses, because the administration doesn’t LIKE those businesses, not for any valid legal reason.

The rug is going to get snatched off this pile this year, that’s my prediction.

And my one comment today, JQ.

“You’re uncertain what problem bitcoin is supposed to solve. Are you comfortable then, that the electronic payments infrastructure is almost entirely in the hands of two closely entangled private companies? ”

Good point! But why not set up a new electronic payment service as opposed to a new type of “currency”?

“Dollars are a bad store of value”

I really like that. It’s like that other old saying: dollars are the worst store of value – except for all the others. There IS no real way to store value in the long run. The closest you can come to actually storing value is by hoarding cans of food, which gives you the certainty that years from now you will have at least that food (unless of course you already ate it or somebody stole it). Other than that there is no investment imaginable that is guaranteed to still have value when you need it decades in the future. There just isn’t. A lot of bad economic thinking comes from not getting this point, especially when it comes to retirement provision. While state organized pension systems like Social Security are always subject to political tinkering, for the vast majority of people such pensions are a far more reliable source of retirement provision than personal savings.

“dollars are the worst store of value – except for all the others”

Arguably (I’m pretty sure), well-raised children are a better store of value.

I’m not so sure. The market for children is too volatile.

@124
I’ve not reached the point where they are storing value so much as the point where they are consuming dollars and producing eye-rolls.

#122 TM

“Dollars are a bad store of value”

I really like that. It’s like that other old saying: dollars are the worst store of value – except for all the others. There IS no real way to store value in the long run.

Yes! Agreed!

The closest you can come to actually storing value is by hoarding cans of food, which gives you the certainty that years from now you will have at least that food (unless of course you already ate it or somebody stole it).

Canned goods depreciate. After 5 or 6 years it just isn’t as good any more. Canned tomatoes are especially bad. If there’s one spot near the seam where the enamel has a tiny hole, the entire contents will be contaminated with iron rust etc. It might even corrode all the way through and leak, and spoil.

Other than that there is no investment imaginable that is guaranteed to still have value when you need it decades in the future. There just isn’t.

Agreed. On average the value of land goes up. They mostly aren’t making any more of it. (And if the oceans rise there will be less.) While dollars are mostly guaranteed to inflate, the rate will probably be slow. But there is no guarantee that your particular land will increase in value. Even if you have prime land in a prospering city and you’re sure it will increase in value, all it takes is one terrorist incident that spreads radioactivity on it, and its value will stay low until people forget. Or the government might eminent-domain it and give it to somebody else to develop. Or raise the taxes until you can’t afford to keep it. Or zone it residential, rent-controlled.

There are no safe investments, no, not one. If you believe in efficient markets then you might believe that genius investors will look for bargains and bid up the prices on everything that is underpriced, and find ways to sell short or otherwise drop the prices on everything that’s overpriced, and so you get what you pay for. But my observation is that if you don’t do sufficient due diligence yourself, you will find that the bad deals you get are a part of the slow process of making markets more efficient. Markets are surprisingly efficient at separating fools from their money, but they can’t get you until you actually make a transaction. If you stay in cash you’re guaranteed a loss, but it might be a slow loss.

128 “consuming dollars and producing eye-rolls”

Ha-ha, I like that. Fair enough. I should’ve said: traditionally that was the way to store value. These days, in many parts of the world you probably won’t be able to store much this way. Although, I’ve met someone recently, the guy belongs to some, what sounds like, Christian cult, and he and his wife have 10 children. I talked to the oldest (university student): very polite and respectful, no eye-rolls. So, still possible, if uncommon.

@123
Precisely and it’s actually worse than that. Nature has recently stated how much oil/gas/coal etc. has to be left in the ground if we are to have a chance to beat this thing.

To quote Monbiot:

“To deliver a 50% probability (which is not exactly reassuring) of no more than 2° of warming this century, the world would have to leave two-thirds of its fossil fuel reserves unexploited.

I should point out that reserves are just a small fraction of resources (which means all the minerals in the Earth’s crust). The reserve is that proportion of a mineral resource which has been discovered, quantified and is viable to exploit in current conditions: in other words that’s good to go.

The Nature paper estimates that a third of the world’s oil reserves, half its gas reserves and 80% of its coal reserves must be left untouched to avert extremely dangerous levels of global warming. Two degrees is dangerous enough; at present we are on course for around five by the time the century ends, with no obvious end in sight beyond 2100.

The only sensible response to such findings, which some of us have been advocating for years, is a global agreement to leave these unburnable fossil fuels in the ground. But it’s not just that no such agreement exists, no such agreement has ever been mooted.”

Monbiot continues: ‘Researching Don’t Even Think About It, which I see as the most important book published on climate change in the past few years, George Marshall discovered that there has not been a single proposal, debate or even position paper on limiting fossil fuel production put forward during international climate negotiations.

“From the very outset fossil fuel production lay outside the frame of the discussions and, as with other forms of socially constructed silence, the social norms among the negotiators and policy specialists kept it that way.”’

Therefore, all, without exception, climate change agreements, proposals, meetings etc, up until now have proposed (let alone accomplished) literally nothing that will have any major impact on AGW.

In other words, to put it bluntly, the idea that we are going to meet the 2 degrees limit is absolutely and precisely zero. We are going to zoom past it and into a new world, and relatively quickly, too.

http://www.nature.com/nature/journal/v517/n7533/full/nature14016.html

http://www.monbiot.com/2015/01/09/produce-more-consume-less/

At risk of introducing actual economics into this discussion of “storing value”, I would point out that what people do is hold a portfolio against uncertainty. Institutions can increase the power of individual people to assemble or make practical use of a portfolio.

The usefulness of a currency as a store of value is incidental to the competence of a system of institutions: banks, a payments system, a marketable national debt, insurance, financial markets, and so on.

The usefulness of a financial system as a tool of exploitation, control and extraction should not be overlooked, because there is an on-going political contest over whether the system of monetary and financial institutions should serve one purpose or the other. Doing one function well undermines the other.

Paranoia, which underwrites so much goldbuggery and bitcoin enthusiasm as well as apocalyptic anticipation, may be stupid, but it is not wrong: “they” really are out to get the rest of us.

What is harder for me to understand is the reluctance on the left to demand acknowledgement of this state of affairs from the center and from the technicians.

Part of the problem may simply be that any workable financial system, whether it works well for good or ill is too complicated to be popularly understood, even by educated people. Any slogans expressing even minimal idealism become prescriptions for impractical simplicity or transparency. One of bitcoin’s virtues may be the difficulty of understanding it.

John @131: Thanks! I noticed that the estimates for the marginal cost of production in shale were a couple of years old. Goldman published a research note last week which, while not necessarily predicting differently than you re production in 2015, indicated lower estimates for the marginal cost of production, and drawing some interesting, hedged, conclusions.

There’s a very good article in FT’s Alphaville on the subject.

From Goldman’s note:

To keep all capital sidelined and curtail investment in shale until the market has rebalanced, we believe prices need to stay lower for longer. As short cycle shale production is a 12 month investment proposition, producers typically hedge out 9 to 12 months. As a result, fresh E&P capital primarily focuses on the 12 to 24 month strip in making investment decisions.

As a result, the market anchor is shifting to this ‘one-year-ahead’ swap which creates the level of investment to balance future physical markets. It is therefore this forward price that needs to remain below full-cycle costs to curtail investment, not the spot price. Due to significant evidence of cost deflation and efficiency gains, we are lowering our estimates for the marginal cost of production to $65/bbl and $70/bbl for WTI and Brent from $80/bbl and $90/bbl, respectively. These are our new ‘normal’ price forecasts. As a result, we forecast that the one-year-ahead WTI swap needs to remain below the $65/bbl marginal cost, near $55/bbl for the next year to sideline capital and keep investment low enough to allow for a physical rebalancing of the market.

WRT 21: Didn’t Jesus Christ say it?

I’m betting on Qwatlos. Starting now. (50)

Here is an example of Brett’s “proof.”

From the web site he links to comes a quote:

“I opened a new account at Chase about 2 weeks ago. Today I received a letter stating they were closing my account. No explanation. We used to sell firearms and held a Federal Firearms License, but we gave that up a couple months ago due to overregulation. We have always operated completely legally and legitimately.”

Laughable.

When discussing the breakeven cost of producing the next barrel of oil, we need to recognize that many of the inputs are priced by the market. So stuff like drill pipe can become much more expensive during an oil boom than during a downturn. Ditto for drill rigs. Ditto for human experts. So the marginal cost during the height of the boom is likely to be substantially higher than the marginal cost during a slowdown.

There ought to be a Latin term for “Pretending one small fragment of the evidence for something is the only evidence for something.” Got a feeling I’m going to be seeing it a lot more often, now that I’m limited to one comment a day on Quiggin’s posts, as the tactic works better when you can count on not having it immediately pointed out.

Congressional testimony, recording of a bank employee telling somebody that’s why their account got canceled, FDIC documents. (That’s where the list of targets came from.) None of it matters, because you could identify one solitary piece of evidence you thought was, in isolation, inadequate. And because I couldn’t comment for 24 hours, you could pretend it was the only evidence, without fear of immediate contradiction.

Let me try to focus your attention a bit: There’s no particular reason why, after the 2016 elections, abortion providers couldn’t be “choked”. Since the tactic doesn’t rely on any issues with the legal status of the business, the fact that the courts won’t let abortion be outlawed wouldn’t provide a bit of protection.

Please tell me this isn’t yet another abuse you can’t be bothered by, because it’s being perpetrated by an ally, against enemies, and you can’t imagine the tables ever turning.

Brett,

I merely point out that those who are criticizing teh program are relying on very flimsy evidence of wrongdoing. Do the items you mention exist? Are there lists? Yes. Has there been testimony? Well, yes, but by who?

Have you ever considered the alternative explanation – that some types of businesses have a history of using their bank relationships, or allowing them to be used, for fraudulent purposes and therefore deserve closer scrutiny? Are you familiar with the Four Oaks case?

Do you think bank tellers actually know much about what the examiners have told management?

Do you think managers are 100% truthful to customers? Suppose the FDIC tells a bank it needs to monitor certain businesses more closely than others, for good reason, and the bank decides it’s not worth the trouble. What do you think they will tell the customer?

Please contrast your approach to right-wing allegations about Operation Chokepoint – you’ll swallow anything – to your approach to the issue of Obama’s birthplace.

“A restaurant can’t deny you service because of who you are, but a bank can deny service to anybody with no explanation or a quick lie? That’s wrong.”

It’s definitely wrong and it’s good news that the EU has adopted a directive guaranteeing a right to a bank account for all citizens (http://europa.eu/rapid/press-release_STATEMENT-14-237_en.htm). In the US, this would be unthinkable due to the anti-regulation ideology espoused by BB himself. I do not doubt that abuses of state power in this area happen (terrorism watch-lists and the like) although the wild claims espoused above certainly invite skepticism. But unless I am very mistaken, BB’s own view is that banks should be free to arbitrarily deny services to anybody. It’s a contradiction he needs to come to terms with.

J Thomas @ 153

You outline a remarkably sensible proposal to reform the system of identity and payments we use. Remarkable because it ought to be obvious that we need to do this, and it would solve a number of increasingly costly problems. And, remarkable, too, because no one has to get a Ph.D. in philosophy to step behind a Rawlsian veil of ignorance in order to sketch reasonable and fair principals for the rules of such a system: that it should be universal, etc.

Politically, it is almost unimaginable, and that’s what’s wrong with our politics. Even the soi disant leftists are sure that Brett Bellmore is exaggerating the hazards and there’s nothing to worry about because . . . I don’t know, Obama is black, or something. It is all a conspiracy — torture, detention without due process, no-fly lists, militarized police, seizure of property without due process, the end of net neutrality, TBTF financial institutions, universal surveillance, . . .

I get that that there’s pretty much nothing any of us can really do about any of this, but do we have to be suckers for the propaganda, too? Do we have to deny it, just because Brett Bellmore is right?

Is that why the banks are shutting the accounts? Or is it because regulators have told them that they don’t like this business? Remember, bank regulators have enormous power: what might look like a suggestion to you or me is really mandatory to a bank, and they know it.

This isn’t about lucrative accounts. It’s about the regulator calling up a bank and saying some customers are risky, meaning the regulator might take action if you serve them. But the regulator isn’t going to ever say that last part: they don’t need to, just as a mafia don never needs to say what he wants to happen to someone who is a problem.

If some banks don’t want to serve you, you used to be able to find another. Thanks to increased regulatory burdens in the US, banks are getting bigger, not smaller, and many local banks are merging. There are now four different regulators of banks, with overlapping mandates. Combining them would be too simple and sensible for the US Congress.

My prediction: additional felonies get added to the US Code. Increased regulation, with more overlapping regulators (already a major problem in banking), less accountability for members of the political class when something goes wrong or they commit a crime, and more prosecutorial overreach in general.

You do realize Bruce that Brett would oppose to his dying breath the (very sensible! I have long supported a postal banking system that is similar in concept) policies outlined by J?

#157 Bernard Yomtov

… a bank can deny you service if your account is insufficiently lucrative.

I am not interested in the legitimate reasons banks may have to deny you service. I’m interested in seeing that everybody can have a bank account if they are not in a prison or mental institution and of course provided they have some money.

I don’t care whether banks deny service because they predict they won’t make enough profit on it, or because the government has coerced them not to, or what. I want everybody who has income to have a bank account and a debit card. If a court says you have committed fraud and they freeze your assets, OK. If they say you are incompetent to manage your own affairs and they appoint an administrator to manage your account for you, OK. But only the courts have the right to deny you the basic financial services that US citizens depend on. It is absurd to require that you pay your rent or mortgage payments in cash.

So if for any reason the banks cannot be held responsible to provide those services, someone else should provide them. There is no particular reason that banks should be allowed to do that, but I don’t mind them competing in that market provided they can compete with government services provided free which have security by NSA.

J Thomas,

I think postal banking or the like is a fine idea.

= = = Brett appears to be angry about a government operation called “Operation Chokepoint,” which he initially mentioned in this thread at 118. His belief is that the government is nefariously using banking regulations to shut down businesses it doesn’t like, and I think he is particularly concerned about gun dealers. = = =

About 6 months ago there were several thoroughly documented instances of people in the p – – – industry having their credit accounts shut down, bank accounts frozen, and other financial confiscations directed at them. These were people and businesses operating in conformance with California law and in compliance with 18 USC 2257, so presumptively in compliance with relevant Supreme Court rulings. Rumor at the time was that the Treasury Dept had ordered a “crackdown” on this industry and was attempting to pick off both targeted individuals and the two credit card processors that will take that type of account. Not sure where that ended up as the industry appears to be operating for the moment (or so a friend tells me), but it is not inconceivable that such actions could be going on.

Have never heard anything about licensed gun dealers being affected though, and in my state the screams would be loud enough to heard in Berkley if such a thing were to be tried.

It is absurd to require that you pay your rent or mortgage payments in cash.

Oh, if only that were an option! No apartment I ever rented allowed rent to be paid with cash or credit cards. Only checks and direct debit were allowed. If you didn’t have a bank account of your own you would have to pay a third party to produce a cashier’s check you could use to pay the rent.

The extreme difficulty of living a middle-class or better life on cash alone is why I’m not concerned about Bitcoin fulfilling the libertarian dream of starving government of tax, by the way. Most of life’s major expenses leave a trail of records. If you rent or buy an apartment, house, condo, or car it leaves records. You leave records for tuition, medical insurance, auto insurance, doctor’s visits, prescription drugs, utilities. Most of these things leave double records, with the place you’re paying and with a bank, because only a minority of middle-class spending can be handled cash-only.

“I’ll earn and spend in Bitcoin and cash, and never pay income taxes” only works if you’re willing to live like a working poor person on the edge of homelessness, or an undocumented migrant worker, overpaying for most things and leaving behind middle class niceties like “being able to report fraud to the police.” Yeah, that’ll really teach Uncle Sam a lesson.

J, you have suggested what would be a not unreasonable response to banks, of their own will, denying people service. If we had a reasonably non-corrupt civil service, that scrupulously avoided political abuse, it might be a grand idea. As a response to the government itself pressuring banks to deny somebody service, it epicly misses the point. On a Wrong-Way Corrigan scale.

Let us suppose that, two years hence, during the first months of the Scott Walker administration, the FDIC issues a revised choke list. It looks something like this:

Labor unions.
Secular humanist organizations.
Community organizers
Anybody remotely associated with Al Sharpton
Abortionists
La Raza
…

Now, it *could* theoretically be possible that these categories of account holders have an insanely high rate of fraudulent transactions, justifying regulatory action against a bank offered them an account. But I’m pretty darned confident none of you would be content with the theoretical possibility. You’d demand evidence that this actually the case. Evidence by the truck load.

If any of you actually feel like following the link I provided, (Thanks, Cranky, for doing that.) you will find that Operation Choke Point has been investigated, (Yes, I know, Issa, and for most of you that ends your curiosity if you had any.) and it has been determined that, while the FDIC put a lot of work into determining how to implement the list of businesses to be “choked”, and PR, and things like that, the list itself seems to have sprang forth from the head of Zeus, a remarkable case of emaculate conception. There was no evidentiary record concerning from whence it came, and no discussion recorded on the subject of, “Hey, do we really have any basis for including these businesses on this list?”

The list just appeared out of nowhere, and it was taken for granted they were justified in shutting those businesses down, and didn’t need to prove they had a good reason.

But it’s not the Scott Walker administration, so the businesses the government wants to deny banking services today are not ones you particularly like, so you’re cool with it.

Didn’t really expect any other response from most of you, frankly. But I’m going to keep providing oportunities to prove me wrong, so long as I’m permitted.

Anyway, it’s a prediction thread, and that’s my prediction: The lid gets blown off Operation Choke Point this year.

Oh, and I see my comment 434 on the Charlie Hebdo thread has emerged from moderation. Regrettably, it emerged from it in the direction of the memory hole. For future reference, it would be nice to know WHY.

Chalk one up for Brett Bellmore. In the absence of fierce political pushback, extrajudicial tools like this — and the asset seizure scams employed so creatively as funding devices by police departments all over the country — are only going to get worse. We’re bringing the war home on a grand scale now. First we use our influence over the international settlements system to put the screws to Iran and Russia, then decide that what works for Iran will also do nicely for Wikipedia, and what works for Wikipedia might also be a fine way to fuck over anybody we’d like to discourage but can’t use existing law and most court precedents to get at. Equal protection of the law? I’m sure Justice Scalia will be along any minute now to help you with that….

Well, Brett seems to have sold everyone. But I’ll still make a point or two:

1. The “President Walker” list Brett provides as a scare consists entirely of organizations conservatives plainly dislike for political or ideological reasons.

2. The actual list he cites at 133 contains a great many entries with no particular ideological bent.

3. The Treasury and DOJ claim that many of these businesses are likely to engage in fraud and deserve close monitoring by the banks. Surely even Brett will agree that that’s true of some of the items. It might possibly be true of many others, if only we had the data. It’s worth reading this. for a somewhat more balanced view.

The Justice Department has been waging a campaign to cut off scammers’ access to the financial system for the past year. Through “Operation Choke Point,” prosecutors are investigating whether third-party processors that route payments for merchants through banks are ignoring signs of fraud to rake in fees from transactions.

Authorities have publicly said they are focusing on “high risk” activities — potentially predatory activities like payday lending, as-seen-on-TV retailers and Internet gambling. Those categories, according regulators, have high rates of returns for unauthorized debit transactions, an indication of fraud.

Is this the absolute best approach to fraud? Who knows. Is it an effort to shut down political opponents? No.

J Thomas,
A very large amount of question begging going on in your explanation I’m afraid. Such a system would require clear and unbreakable understanding that we as a society would agree on what is legal explicitly via the legislature and open honest court cases, and no extra-legally punish those who engage in activities we don’t like. When USAG John Ashcroft decides to go after legal adult entertainment businesses that his religion and personal morals disapprove of and orders the Post Office to shut down & seize the bank accounts of people earning their living in that way, what happens?

You can say, we will have agreed not to do that, but we’ve seen with the illegal spying/lying to Congress situation that the very powerful have arrogated to themselves the ability to declare certain areas of the Constitution ms statutory law “inoperative”. Hard to see how government-managed universal banking could work under those conditions.

Bernard: “1. The “President Walker” list Brett provides as a scare consists entirely of organizations conservatives plainly dislike for political or ideological reasons.

2. The actual list he cites at 133 contains a great many entries with no particular ideological bent.”

The no particular ideological bent entries were under the ellipsis in my list. ;) Of course President Walker would mix justifiable chokes with unjustifiable ones, just as this administration has done.

What the FDIC seems to have done is created a list that contained facially legitimate entries, mixed with ideologically determined entries. Mixed actual criminal enterprises with lines of work that are explicitly protected by the Constitution. I’ve no doubt a good case could be made for not providing banking services to Ponzi scammers, for instance. Though I’d prefer that the banking service cut off be post conviction, I’m really down on extra-judicial punishments. Where’s the adversarial process in a regulator pressuring your bank to cancel your checking account? How do you go about getting acquitted?

I find Operation Choke Point to be rather dubious in general, even in regards to the lines of business there might be legitimate concern about. It isn’t the job of banks to police the morals of their customers, and the government should not go after illegal enterprises indirectly. What’s next, the USDA threatening grocery stores if they sell groceries to scammers? And, like I said above, the lack of adversarial process or possibility of challenging the action is more than troubling, it’s outrageous. But, you’re not outraged, are you?

Isn’t this just another incarnation of the “No Fly List”? But maybe you’re cool with that, too.

My President Walker list was to point out to you that, were the shoe on the other foot, you wouldn’t assume the evidence to justify the list was out there, somewhere. You’d demand the evidence. Well, my side has been demanding the evidence, legally binding demands through Congress, and so far the FDIC has failed to produce any. I think it’s because there isn’t any. They just included ammunition sales and firearms dealers on the list because Congress won’t pass gun control laws, and the administration was looking for another way to attack gun ownership. Included producers of racist literature on the list because they don’t like racists, and who really needs that 1st amendment junk?

Now, you’ll doubtless say there could be evidence showing that gun dealers’ bank accounts really are high risk. But if there were such evidence, don’t you think the FDIC would have produced it, in response to Congressional subpoenas? As they are legally obligated to do?

Yup, just another No Fly List, and you like the choice of victims.