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Kiester Has Money Explained to Him|
Max Kiester has disgraced himself yet again. He hosted David Blanchflower on his show. Blanchflower is an inflationist every bit as much as Paul Krugman who Kiester derides. Yet Krugman's comment that the USD is backed by guns is correct. Because paper fiat money has no intrinsic value, legal tender laws have to be used to force the sheeple to accept it in cancellation of a debt.
Much better is James Turk, who also appeared on the Schwing-Schwing Show and pointed out that self-regulated money such as gold and BitCoin were better. Kiester appeared to need Turk to explain how BitCoin could have value and Kiester was clearly grasping at straws to find such intrinsic value. Perhaps his cousin, Rump, could spin the straw into gold.
However, to help Kiester, BitCoin's value is not because the numbers are "precious" as Kiester proposed, but because the BitCoin system, which is basically a ledger of transactions has utility. In other words, it is better to think of BitCoin as a service currency rather than a commodity currency. Like software for a web browser, BitCoin's value is in the service it provides and people are willing to pay money for a web browser. The problem is not that BitCoin doesn't have any value like paper money, but that its exchange rate is difficult to gauge. This is why Gary North is wrong to call it a Ponzi scheme. At $800 per BitCoin, its price, to me, seems too high and it's probably in a bubble. As Turk correctly noted, there are too many alternatives to BitCoin. Why transfer your money using BitCoin with a risk of a collapse in its exchange rate when you can transfer money using LiteCoin which can be exchanged for BitCoins or fiat paper currencies and which has far less potential for a fall in its exchange rate? Kiester is definitely wrong to claim BitCoin is a good store of value.