My point was that you cannot demonstrate through praxeology that exchanges made in terms of gold, or any other medium for that matter, are proxies for dollar based exchanges absent of a fixed exchange rate. The fact that almost all economic calculation is done in terms of dollars only suggests that the white market is controlled by legal tender, but not that people don’t value or treat other commodities as money.
I’m going to expand on my previous post.
I am confused by your claims that if a good does not satisfy the regression theorem it can not be considered money. I’ll admit It’s been a while since I read ToMC, but I just had the chance to reread the first chapter of it.
From what I understand, the regression theorem was Mises’s way of marying nominal prices with Megner’s Origin of Money so that the existance of monetary pricing could be explained from a marginalist perspective. In other words, Mises was explaining why money and prices existed and was not constructing a historical requirement for good to be considered money.
In fact, it would seem that any good that provides a medium of indirect exchange among a group of people is money, regardless of that good’s historic nature. However, I would certainly agree that a longer/more tracable history of exchange rates makes holding and dealing in a specific money less uncertain.
Since both gold and bitcoins are used to fascillitate transactions among groups of people and they are exchanged with currencies on an open market (they are not fixed or indexed to any other currency) I do not see the logic in claiming that they are not independant forms of money.
I’m no economist though, so perhaps I’m simply misinterpreting Mises.
The issue here is that you need to stop and fundamentally think about what an exchange ratio is. How it links to praxeology and why its relevant to economic calculation.
The statement that Bitcoin is not money is equally useless as the statement that Bitcoin is not bread. It’s praxeologically irrelevant.
Throughout my life (which is not even that long), I used at least four different currencies for economic calculation, depending on where I lived and how the monetery system of that country changed. None of those currencies were gold or USD. Your objection has nothing to do with praxeology, it’s a normative statement.
This is not true. All Central Banking authorities and Federal Government’s do exchanges in Gold. This is the purpose of the XAU, and the AUZ.
One would think you guy’s would be aware of how Central Bank’s and Government’s do transactions.
A) This does not mean that economic calculation or the broad employment of general accounting is done with gold or has anything to do with gold.
B) Gold has less of an influence then you give credit for.
C) It’s arrogant when you tell people research something when your own statement reveals ignorance.
Economic calculaiton is not done in gold.
Money necessarily is always praxeological. This statement is incoherent as far as a response to my point. I think most of this stuff is just flying clear over your head.
Looks like bitcoin will have to be the coin of the distant future:
http://www.economicpolicyjournal.com/2011/06/report-500000-bitcoin-robbery.html
Report: $500,000 Bitcoin Robbery
Online theft is a fact of life nowadays, but yesterday a BitCoin user woke to find his haul of virtual currency had been plundered, reports PC World.
A user with the handle allinvain found 25,000 BitCoins had been stolen. If the thief were to cash-out he or she would net just about $500,000 at current BitCoin-US Dollar exchange rates.
PC World continues:
Although BitCoins are cryptographically protected and traded, the weak point is the user’s computer where the wallet.dat file is stored. This stores the cryptographic keys that unlocks the entire BitCoin account and provides the ability to transfer funds. It’s up to the user to protect this file and it appears somebody hacked into allinvain’s home PC to access the unencrypted file.
Frustratingly, the nature of the BitCoin network means allinvain knows the thief’s BitCoin ID, and is able to track him or her as they launder the money through various other accounts. However, the decentralized nature of the BitCoin network is designed to make tracing individuals in the real world impossible. Allinvain can do nothing more than hope somebody recognizes the thief’s BitCoin ID, or spots that they’re receiving some of allinvain’s stolen BitCoins
and nothing of value has been lost… 
And it is impossible for him to get them back unless thief will send him them back - tranasctions are one way with no chargeback.
EPJ:### Report: $500,000 Bitcoin Robbery
Online theft is a fact of life nowadays, but yesterday a BitCoin user woke to find his haul of virtual currency had been plundered, reports PC World.
A user with the handle allinvain found 25,000 BitCoins had been stolen. If the thief were to cash-out he or she would net just about $500,000 at current BitCoin-US Dollar exchange rates.
PC World continues:
Although BitCoins are cryptographically protected and traded, the weak point is the user’s computer where the wallet.dat file is stored. This stores the cryptographic keys that unlocks the entire BitCoin account and provides the ability to transfer funds. It’s up to the user to protect this file and it appears somebody hacked into allinvain’s home PC to access the unencrypted file.
Frustratingly, the nature of the BitCoin network means allinvain knows the thief’s BitCoin ID, and is able to track him or her as they launder the money through various other accounts. However, the decentralized nature of the BitCoin network is designed to make tracing individuals in the real world impossible. Allinvain can do nothing more than hope somebody recognizes the thief’s BitCoin ID, or spots that they’re receiving some of allinvain’s stolen BitCoins
Some may argue that an online bank account could be hacked by acquiring a person’s password, but the point is you can have dollars without an online bank account or any account at all.
That some kind of broad based money develops is possible, but it will be many years away. The pioneers will be tested in many different ways.
(htTomBernhardt)
A) You really just stated that eh? I’ll just ignore that statement for now. I can tell you that you are mistaken on how the valuation of good’s in the markets are considered. Any succesful Investor considered the price of PM’s into their evaluation of whether an investment is worth the risk. The rest are negated as being base trader’s that play with nothing but paper exsaperating the situation of Inflation even more so.
B) You’ve never worked on FOREX or through International exchanges have you? All major trade and debt’s can be settled in XAU, AUZ, and the various other precious metal’s. The GLOBEX and COMEX both take all of these as well as the physical shipment’s in gold. They are priced in the currency of the origin nation. This is how FOREX function’s. The PM’s are used as a base measuring stick, especially AU, as their value doesn’t change.
C) It’s even more arrogant to make statement’s that boldly without even being aware of the PM market on the larger scale. There are only three government’s on the planet that do their business strictly in Bond’s. That’s three out how many now? You shouldn’t assume someone doesn’t know anything while making blanket statement’s about their character. I may be a prick on this site, and may make many arrogant and bold statements. That doesn’t change the knowledge of the market’s that I have and can prove. It also doesn’t make me wish to interact with you in this fashion either. If anyone is arrogant in making statement’s, it’s generally the one making the original accusation by assuming knowledge without backing. That my dear sir, you should know already with that fancy coat of arm’s you have as an avatar. Then again I bet you follow the “Official Story” without looking at where the money is going, and who is actually doing the trading. The Fed has been a net buyer of gold for quite a while now, have you ever asked, “why”?
Economic calculation by whom exactly? You are making this statement as a collectivist, as if everyone used the same metric as the Federal Government, with their ridiculously foolish GDP. Anyone with two pence worth of money invested will measure the economy by the value of gold first, and net import’s and export’s second. The third measure is aggricultural output, which should be for obvious reason’s. Any other method, and you are playing right into the statist manipulation’s of the market.
If we are going to talk about the way the Federal Government act’s, than why is gold not discussed? Like I have stated previously, most of the people on this site like to claim to be Austrian Theory proponent’s, but they still often get caught up in speaking as Keynesians. Fix your own house before you try to burn mine down, your foundation need’s work. I do believe this is the second time I have pointed out the failing’s in your post’s.
Would you like me to further the rant on the degradation of the language by everyone on this site as well? Would that be arrogant of me to point out that the base skill’s of communication have been muttled by the enactment of improper usage of verbage and possessive? It’s like Libertarian’s adopting the idea of Morality without even understanding that Morality is the problem. How about the use of Latin grammar rules on a Germanic language that promotes this?
Never mind, as it doesn’t change the base point that this entire debate over electronic blip’s on a hard-drive is a waste of resources. More importantly, a waste of brain power that should be practicing to understand the difference between rational and irrational arguments. Either way, it’s your time to waste, and I’m off to make fiat to trade for silver.
Oh yeah /rant… for those that think this was my normal state of mind. Individual’s in the economy will never have freedom and liberty until they understand that the fiat is the chain and the state is the ball holding them back.
Money as defined by the regression theorem is an empirical phenomenon, not a praxeological one. It is based on several normative assumptions, for example: the non-existence of government, the non-existence of the digital, the non-existence of replicators and the stability and homogeneity of requirements for a medium of exchange. The first two conditions I mentioned are not fulfilled at the moment, the third one is, admittedly, science fiction but hypothetically thinkable, and the fourth one is just an unproven implicit assumption made after looking at historical developments.
Unless all four conditions are met, the existence of money cannot be deductively reasoned. And without deduction there is no praxeology.
What on earth do a few investors influencing factors have to do with economic calculation as a whole? Does a house wife use gold when taking inventory and budgeting the households supplies?
Your just making an unsubstantiated anecdotal claim here. Why are you even bothering?
As a very active investor in PM’s this statement makes me Lul.
You are not addressing economic calculation, you are not addressing praxeology, you are not addressing exchage ratio’s. I have no idea how the reasoning in your head is tangled together.
Either you don’t know what praxeology is, or you don’t know the regression theorem. I don’t know which. 
Filc,
I have provided a list of contradictions and unfound assumptions in what I perceive to be your position. Your only reaction is to proclaim that you are nevertheless correct. You can’t expect to be taken seriously with this approach.
Either you don’t know what praxeology is, or you don’t know the regression theorem. I don’t know which.
Yeah, my mind boggled at that line of Peter’s as well. Sounds like an ignorant college student trying to BS his way through something, or a marxist trying to snow somebody.
I’ll tell you what I think he means.
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Praxeology is a purely logical mental operation. If A then B.
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A and B are letters of the alphabet, not physical objects of reality [=empirical phenomena].
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The regression theorem talks about money, which is an empirical phenom.
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Therefore the regression theorem is not praxeology.
Do I have to point out the flaw?
Note to Peter: If I have misunderstood, please enlighten me.
In that case, maybe you can address my points and correct me where I’m wrong.
You’re pretty close actually.
For a more understandable example, let’s take human action. We have an assumption: humans act. From this, we can derive certain conclusions. If, hypothetically, humans did not act, it would not be possible to deduct those conclusions. While human action has a basis in empirical phenomena, for our purposes we define it through its economic features (the use of scarce resources to achieve goals).
There is no equivalent analogy in money. The emergence of money requires assumptions which are either currently not met or simply unfounded (see my previous posts). Furthermore, what would be the conclusion of the regression theorem? Only that there would be a small number of dominant media of exchange. It does not mean that they would have universal acceptance, that other media of exchange are “fraud”, that it would provide the lowest price inflation or that it makes economic calculation possible. In general those things that are presented as a reason to favour it. While it is possible that some of these conclusions would be partially valid, that is only true relative to those other commodities that it pushed out.
The only deductive conclusion I was able to find that it completely correct is that with commodity money (as defined by the regression theorem) and in the absence of FRB, there would be no monetary inflation (which is true by definition). This conclusion is quite useful, but the price inflation with Bitcoin will be lower once the mining speed of Bitcoins sinks below the mining speed of gold. For people who are sensitive to price inflation rather than monetary inflation as such, Bitcoin would be a better alternative from this perspective.
To summarise: Bitcoin is not money? Then don’t call it that. That’s the end of the line of deduction.
In that case, maybe you can address my points and correct me where I’m wrong.
I did, in the continuation of that same post. The part you conceded was “pretty close actually.”
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I guess you don’t see that part as exposing any flaws in your understanding of what praxeology is. Which means we are so far apart I see no point continuing that line of discussion.
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Moving on to another topic, you seem to be saying basically that who cares what some dust gathering textbook defines as money? Mises never saw a computer in his life, and so all he has to say about money does not apply to digital money, which did not exist in his times.
Not only that, who cares what a modern textbook or academic ivory tower professor defines as money? Like Alexander cutting the Gordian knot, bit coin will be what people buy and sell with in the future no matter how twisted and convoluted the offical definition of money is. What counts is the real world, and in the real world, bitcoin will triumph.
If I have summarized your position accurately, then the guys have refuted you, it seems to me. They are trying to get across the idea that we can actually predict what will be used in the future to buy and sell, hundreds of years before the event. And we are able to predict because we know [and can prove] what features a thing has to have to be commonly accepted as a medium of exchange [=what you buy and sell with]. They are quoting Mises’ regression theorem as evidence that a medium of exchange will not be accepted unless it fulfills a certain requirement which they say bitcoin lacks.
And I think they nailed it.
If you wish to disagree, 'twould help if you too summarize their position before disagreeing with it, to make sure we are all on the same page.