White House Is Mulling a Ban on Bitcoin Mining

[NoahA]

Thank you, NoahA, for a thoughtful comment and your views on what ought to be the respective role of the individual and the government. In your remarks I find much to agree with, but also a few places where I might disagree. I don't have time right now to respond in detail, but I would just say we should consider not only what seems perhaps like a lack of justification, inequity, or failure of some government policy, but also consider what the consequences would be of not doing what the government is doing. For example, if you don't think it is right for government to help poor mothers who made bad decisions when they got pregnant, consider what would be the consequences if the government did not help them? Answering that question may change your mind, or lead to suggesting a better alternative policy than doing nothing. Most of these thorny issues have nuances that may not be immediately obvious.

Obviously it's very complex. The best solution is don't have a baby if you can't afford it, but clearly this doesn't solve the current problem.

Now do I think it's better to support a struggling mother rather than give a Tesla buyer a $5k credit for a vehicle purchase? Absolutely. But the government cannot go spending money it doesn't have. There is just no end in sight though to government programs.

It honestly doesn't matter what I suggest because there is zero chance of my opinion making a difference. But the first step is a realistic account of revenue and spending, followed by allocating scare resources to those areas that need it most or can do the most with it. Perhaps single women will have to pool their resources, and this can lead to a tremendous savings. Not unlike college kids living in a dorm or having multiple roommates. The future is I think going to be about making sacrifices and living within your means.

 

[piezoe]

Obviously it's very complex. The best solution is don't have a baby if you can't afford it, but clearly this doesn't solve the current problem.

Now do I think it's better to support a struggling mother rather than give a Tesla buyer a $5k credit for a vehicle purchase? Absolutely. But the government cannot go spending money it doesn't have. There is just no end in sight though to government programs.

It honestly doesn't matter what I suggest because there is zero chance of my opinion making a difference. But the first step is a realistic account of revenue and spending, followed by allocating scare resources to those areas that need it most or can do the most with it. Perhaps single women will have to pool their resources, and this can lead to a tremendous savings. Not unlike college kids living in a dorm or having multiple roommates. The future is I think going to be about making sacrifices and living within your means.

It's good to remember that Government finances have practically nothing in common with our individual private finances. Some politicians insist that the Government should have the same constraints on its spending as we have. This makes intuitive good sense to us; yet it is wrong.

The reasons our politicians oppose Government spending on this or that may be attributed to logical argument , ideology, a genuine ignorance of how government finances work, or even corrupt intent, but seldom does the often heard, "we can't afford it" make sense to one who correctly understands Government financing.

 

[NoahA]

It's good to remember that Government finances have practically nothing in common with our individual private finances. Some politicians insist that the Government should have the same constraints on its spending as we have. This makes intuitive good sense to us; yet it is wrong.

The reasons our politicians oppose Government spending on this or that may be attributed to logical argument , ideology, a genuine ignorance of how government finances work, or even corrupt intent, but seldom does the often heard, "we can't afford it" make sense to one who correctly understands Government financing.

I disagree. Thank god the government doesn't distribute food or energy. They clearly can't print that up. All they wanna do is control the money because they know that no matter how much they fuck up, they can always print more. The government is like a woman, totally delusional in areas that matter most.

 

[KateNickolson]

Hi! If this happens, such a move would strike at the very heart of the crypto-asset economy, as the health-check mechanism to protect the network and blockchain transactions is at the core of bitcoin's existence here.
Nevertheless, the OSTP report had no immediate impact on the value of BTC. The largest digital asset has risen 10 percent in the last 24 hours. Cryptocurrency miners such as Marathon Digital and Riot Blockchain were also resilient amid improved investor sentiment toward cryptocurrencies and other risk-sensitive assets.

 

[Sprout]

It's good to remember that Government finances have practically nothing in common with our individual private finances. Some politicians insist that the Government should have the same constraints on its spending as we have. This makes intuitive good sense to us; yet it is wrong.

The reasons our politicians oppose Government spending on this or that may be attributed to logical argument , ideology, a genuine ignorance of how government finances work, or even corrupt intent, but seldom does the often heard, "we can't afford it" make sense to one who correctly understands Government financing.

How would one go about "correctly" understanding government financing?

Doesn't paying interest on increasing government debt have the same effect as paying interest on personal finances?

 

[Frederick Foresight]

If this happens, such a move would strike at the very heart of the crypto-asset economy, as the health-check mechanism to protect the network and blockchain transactions is at the core of bitcoin's existence.
Nevertheless, the OSTP report had no immediate impact on the value of BTC. The largest digital asset has risen 10 percent in the last 24 hours. Cryptocurrency miners such as Marathon Digital and Riot Blockchain were also resilient amid improved investor sentiment toward cryptocurrencies and other risk-sensitive assets.

If this happens, such a move would strike at the very heart of the crypto-asset economy, as the health-check mechanism to protect the network and blockchain transactions is at the core of bitcoin's existence.
Nevertheless, the OSTP report had no immediate impact on the value of BTC. The largest digital asset has risen 10 percent in the last 24 hours. Cryptocurrency miners such as Marathon Digital and Riot Blockchain were also resilient amid improved investor sentiment toward cryptocurrencies and other risk-sensitive assets.

Broken record?

 

[Pekelo]

amid improved investor sentiment toward cryptocurrencies and other risk-sensitive assets.

That is bullshit. Or we should see huge buying coming in.

Investors are finally getting the picture that crypto is NOT a hedge and moves with the general market.

 

[gwb-trading]

The White House is also calling for more crypto regulation...

The White House calls for more regulations as cryptocurrencies grow more popular
NPR - https://tinyurl.com/bd6266jd

President Biden's administration is pushing for more regulations on digital assets such as cryptocurrencies, and it's advocating for tougher oversight at a time when the popularity of virtual money continues to grow.

In a series of new reports released Friday that lay out recommendations, the White House pointed to the volatility of virtual currencies and a recent slump that has led to trouble across the crypto landscape.

"Digital assets pose meaningful risks for consumers, investors, and businesses," the Biden administration said, noting there are "frequent instances of operational failures, market manipulation, frauds, thefts, and scams."

U.S. regulators, along with their global counterparts, have long been wary of cryptocurrencies, even as they have acknowledged the potential of virtual currencies, saying, "Digital assets present potential opportunities to reinforce U.S. leadership in the global financial system and remain at the technological frontier."

This year, cryptocurrencies TerraUSD and Luna collapsed as part of a broader rout, and today, bitcoin's value is about a third of what it was last November.

Among other directives, the new reports call on financial regulators to crack down on unlawful practices and to "address current and emergent risks."

Congress is looking at new regulations
In recent years, the Securities and Exchange Commission has brought enforcement actions against crypto companies. The White House wants that to continue.

"The reports encourage regulators, as they deem appropriate, to scale up investigations into digital asset market misconduct, redouble their enforcement efforts, and strengthen interagency coordination," said national security adviser Jake Sullivan and Brian Deese, director of the National Economic Council, in a statement.

The administration also suggests that the Consumer Financial Protection Bureau and the Federal Trade Commission "redouble their efforts to monitor consumer complaints and to enforce against unfair, deceptive, or abusive practices."

At the same time, the administration has urged Congress to give regulators more concrete guidance.

That is starting to happen. In June, Sen. Kirsten Gillibrand, D-N.Y., and Sen. Cynthia Lummis, R-Wyo., introduced a proposal to create a regulatory framework for digital assets.

The reports out on Friday stem from an executive order that Biden signed in March to ensure the "responsible development of digital assets." It was intended to streamline the federal government's approach to digital assets.

 

[piezoe]

Doesn't paying interest on increasing government debt have the same effect as paying interest on personal finances?

No it doesn't. Today the government just "prints" enough additional money to cover interest on its outstanding securities if it does not have enough revenue to cover the entirety of its expenditures. The Government always prints, i.e., "money finances" its deficit spending. You and me can not print the interest we owe on our personal debt. Today the U.S. government has no debt, despite regularly issuing debt instruments that give the appearance of borrowing. These debt instruments (Treasury securities) serve important purposes other than that of borrowing. It is standard practice in the U.S. for the Treasury to issue securities matching the amount of the deficit, and this naturally gives the appearance of borrowing. In truth, the deficits have already been funded by the "printing" of new money before Treasury securities are auctioned. The money, regardless of form, that passes between the Government and the Private sector is "outside money". This is outside money we are discussing here. There is also "inside money" which is created when banks make loans and disappears when the loans are paid off. We are not talking about inside money here.

U.S. "outside money" can take different forms among which are, for example , coin, reserve notes, Treasury securities, or a notation in a spreadsheet. All outside money in the private sector is a government liability and a private sector asset. Money first arrives in the private sector by having been spent into the private sector. Once money is in the private sector it can be exchanged for different forms. For example Bank Reserves can be exchanged for Treasury Securities and vice versa.

Real Government borrowing versus what I'll call "Ersatz" borrowing, since there is no official "word" for it, can be distinguished according to changes in the Government's liability to the private sector. In real borrowing, without printing and with the government using revenue and/or spending cuts to pay its debt and interest, there results a net decrease in the government's liability to the private sector equivalent to the principal and interest. In ersatz borrowing, however, the government private sector liability increases by the principle and interest.

Real borrowing is what the U.S. did to pay for WWI. The government raised revenue and cut spending after the war to pay off it's war debt. A bad recession resulted of course because of the money removed from the private sector. In other words there was too large a decrease in Government liability.

Obviously, when the government mistakenly tries to operate as though it were a person using the principles of sound personal finance, big problems can occur. The government is the source of the money we use for commerce. If the government foolishly tries to pay of a debt by raising revenue or cutting spending the way an individual might have to, it can starve the private sector economy of the money it needs. Typically, a recession,or worse, will result.

You and I can not print money! We depend on the Government to print enough outside money for the needs of our economy but not so much that we can not conveniently control the amount of transactional outside money in the economy by issuing Treasuries. And we don't want to run the risk of letting Bond servicing costs become an unmanageable fraction of our non-discretionary budget. At the same time we depend on our Federal Reserve to wisely regulate interest rates so that we have neither too much nor too little inside money in the economy. Too little inside money can result in recession; too much in inflation.

 

[Sprout]

No it doesn't. Today the government just "prints" enough additional money to cover interest on its outstanding securities if it does not have enough revenue to cover the entirety of its expenditures. The Government always prints, i.e., "money finances" its deficit spending. You and me can not print the interest we owe on our personal debt. Today the U.S. government has no debt, despite regularly issuing debt instruments that give the appearance of borrowing. These debt instruments (Treasury securities) serve important purposes other than that of borrowing. It is standard practice in the U.S. for the Treasury to issue securities matching the amount of the deficit, and this naturally gives the appearance of borrowing. In truth, the deficits have already been funded by the "printing" of new money before Treasury securities are auctioned. The money, regardless of form, that passes between the Government and the Private sector is "outside money". This is outside money we are discussing here. There is also "inside money" which is created when banks make loans and disappears when the loans are paid off. We are not talking about inside money here.

U.S. "outside money" can take different forms among which are, for example , coin, reserve notes, Treasury securities, or a notation in a spreadsheet. All outside money in the private sector is a government liability and a private sector asset. Money first arrives in the private sector by having been spent into the private sector. Once money is in the private sector it can be exchanged for different forms. For example Bank Reserves can be exchanged for Treasury Securities and vice versa.

Real Government borrowing versus what I'll call "Ersatz" borrowing, since there is no official "word" for it, can be distinguished according to changes in the Government's liability to the private sector. In real borrowing, without printing and with the government using revenue and/or spending cuts to pay its debt and interest, there results a net decrease in the government's liability to the private sector equivalent to the principal and interest. In ersatz borrowing, however, the government private sector liability increases by the principle and interest.

Real borrowing is what the U.S. did to pay for WWI. The government raised revenue and cut spending after the war to pay off it's war debt. A bad recession resulted of course because of the money removed from the private sector. In other words there was too large a decrease in Government liability.

Obviously, when the government mistakenly tries to operate as though it were a person using the principles of sound personal finance, big problems can occur. The government is the source of the money we use for commerce. If the government foolishly tries to pay of a debt by raising revenue or cutting spending the way an individual might have to, it can starve the private sector economy of the money it needs. Typically, a recession,or worse, will result.

You and I can not print money! We depend on the Government to print enough outside money for the needs of our economy but not so much that we can not conveniently control the amount of transactional outside money in the economy by issuing Treasuries. And we don't want to run the risk of letting Bond servicing costs become an unmanageable fraction of our non-discretionary budget. At the same time we depend on our Federal Reserve to wisely regulate interest rates so that we have neither too much nor too little inside money in the economy. Too little inside money can result in recession; too much in inflation.

Is this the basis of MMT?

A google search brought up these four types of money;
commercial money
fiduciary money
fiat money
commodity money

Is what you describe as "inside money", fiat and fiduciary money and commercial and commodity as "outside money"?

Are there other keywords for me to use to dig deeper into other references and resources?

I appreciate you taking the time for your prior post and am interested in learning more of this perspective.