Archive for the ‘economics’ Category

A good time to invest in bitcoin

Monday, December 4th, 2017

In 2013 I recommended investing in bitcoin.

Quite recently I recommended not investing in bitcoin, because my cleaning lady who has no idea what to do when her computer freezes up, is investing in bitcoin. When the widows and orphans start buying stocks, it is time to sell.

Lately I have heard tell of thought criminals opening bitcoin accounts, because they noticed “Nazis” getting their accounts blocked, and figured that come the terror, they would need some money that could not be blocked.

That, people getting bitcoin accounts for actual monetary use, is a mighty good reason to invest in bitcoin. Time was when these people would have purchased gold or uncut diamonds.

Total value of Bitcoin it is currently around two hundred billion. People hold gold for roughly the same purpose as they hold cryptocurrency. It is reasonable that the total value of all crypto currencies should be comparable to the total value of gold, which is at present ten trillion.

Some other crypto currency may, and quite likely will, replace bitcoin.

But at the present moment, Bitcoin is where it is at. The aggregate value of all the various cryptocurrencies out there is dominated by aggregate value of bitcoin.

Which gives room for Bitcoin to rise by a factor of fifty.

Throne, Altar, and freehold

Monday, November 27th, 2017

I have argued for Throne and Altar before:

Throne because a stationary bandit is better than a mobile bandit; Altar because we have to shut down open entry into the state religion: Harvard needs an Archbishop and a Grand Inquisitor to stop America’s officially unofficial state religion from holiness spiraling out of control into ever greater holiness.

But throne and altar has been tried, and has failed. How did it fail? The answer is, failed because of loss of freehold.

Freehold means that the peasant in his hovel possesses Kingly power under his hovel’s roof, which Kingly power the King has no right to mess with, even if the peasant abuses it.

That profits supposedly lead to increased investment and ensuing improvements in the standard of living assumes that investment is relatively frictionless. In practice, however, you need a thousand approvals from Washington, and the Washington bureaucracy has, Soviet style, strangled itself in its own red tape as a result of its efforts to manage everything and everyone, and is no longer issuing approvals in a timely manner.

The great centralization has been driven by the centralization of approvals. But this inevitably results in complexity getting out of control, because every decision has unintended consequences, which are dealt with by further ad hoc and often illegal decisions (as for example Obama taking legislative, budgetary, and judicial authority over Obamacare as Obamacare goes off the rails and starts driving into a ditch) which in turn have further unintended consequences, which leads to further centralization and further ad hoc decisions.

This this uncontrollable and unmanageable complexity led to the King losing control of his bureaucrats, hence the American and French Revolutions,

He [King George] has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our People, and eat out their substance.

But they did not abolish those New Offices, but instead created immensely more. So now the top bureaucrats are losing control, and you get anarcho tyranny.

Obviously a stationary bandit is better than a mobile bandit, and one might well conclude from this that the more absolute the King the better, that if he owns everything and everyone, he will have correct incentives. But the trouble with this solution is that no one rules alone. If he attempts to own everything and everyone, he claims more power than mortal man can exercise, and the power will slide through his fingers into the hands of a faceless horde of bureaucrats around the throne, who say “Yes your highness” while actually getting their own way, who endanger him and his heirs, and you get anarcho tyranny.

Too much power results in paralyzing complexity, resulting in insecure power. Hence anarcho tyranny.

So, he has to let some of this power be the personal property of people far from the throne – including the dangerously great aristocrats who gave King Louis XIV so much grief. When King Louis XIV disempowered the nobility of the sword, he found he had empowered the nobility of the robe, who devoured the monarchy. The further this power is from the throne, and the more it is the personal property of more numerous and less powerful individuals, the less dangerous it is for the throne. One great magnate, or half a dozen great magnates, is, as King Louis XIV found, a problem. A hundred or a million, not such a problem. The cure for the problems with aristocracy that King Louis XIV encountered was decentralization, but instead he chose centralization, which had fatal consequences for Louis XVI and his wife.

Instead of governors failing to pass laws of immediate and pressing importance, low level bureacrats are failing to give approvals of immediate and pressing importance, and senior bureaucrats are utterly neglecting to attend to them.

This is the crisis of socialism. In Venezuela socialism takes the form of rationing and price and wage control, here it takes the form of Human Resources and Accounting, which are tentacles of the state inserted into every corporation, and the mere owners of the business are powerless before them, because they armed with laws that no one can comply with, that everyone is guilty of breaking, as fathers and husbands are castrated by family law that defines being a husband and a father as domestic abuse. Thus those that provide the capital have no power, those responsible for making payroll have no power, those that are responsible for closing deals with customers have no power, those responsible for delivering product to customers have no power, because all of them are criminals before the power of human resources and accounting, just as all fathers and husbands are guilty of domestic abuse.

And the ensuing crisis of socialism is paralyzing Washington, as two centuries ago it paralyzed Kings.

The Sun King had troubles with powerful aristocrats dangerously far from the palace, the nobility of the sword. So he centralized all power and emasculated aristocrats, turning them into bureaucrats, the nobility of the Robe, but as his heir was to discover, he had created dangerously powerful bureaucrats dangerously close to the palace. That was the crisis of socialism then, and it still getting worse, hence the great centralization.

No one rules alone, thus when the King attempts to gather all power in his own hands, he finds he has in fact gathered all power into the hands of dangerous powerful people dangerously close the throne. To fix this problem, the official Church need to remind the people that the God who commanded obedience to Kings, also commanded that Kings, like other men, should refrain from coveting that which belongs to someone else.

Repeating: Freehold means that the peasant in his hovel possesses Kingly power under his hovel’s roof, which Kingly power the King has no right to mess with, even if the peasant abuses it. That power is not the King’s to interfere with, even if the peasant is arguably mistreating his wife and his children. If the lord stops that peasant from mistreating his wife and children, pretty soon King George the Fourth gets cuckolded, as he cuckolded others.

The government cripples the power of the patriarch which has the side benefit that King George the fourth can get away with cuckolding and humiliating some aristocrat by screwing that aristocrat’s wife, but the courts quietly take his power away from him without anyone quite noticing, and the next thing he knows he himself is humiliated by inability to divorce or control the slut Queen Caroline, which humiliation turns him into a shadow King without real power, and his government then pisses on him, as he pissed on the aristocrats on whose power he depended.

King George the third had real power. When he told the Prime Minister William Pitt the younger to take long walk off a short pier, the King got his way and William Pitt lost his job. But when King George the Fourth failed to divorce queen Caroline, in the process letting everyone know he was massively cuckolded, the power of Kings was no more. It was often said that it had been a very long time since a King refused assent to a parliamentary bill, but is just Whig history, Whigs rewriting history to claim that they have always been in power. The reason that it had been a very long time is because until the refusal of the divorce of queen Caroline, parliament would never dare pass a bill of which the King disapproved, though they would sometimes refuse to pass a bill the King wanted. Whigs have been in power in America from the American revolution to the present, and in England from the attempted divorce of Queen Caroline to the present. Dating Whig power to the Glorious Revolution is a Whig rewrite of history. After the Glorious Revolution, the new King did a number on those that had overthrown the old King, with the result that Locke and the Lockeans fled into exile, and that lesson was taken to heart. The Lockeans fled, and their power did not return until Parliament denied the divorce of Queen Caroline.

Charles the first lost his head, but George the Fourth lost his stature of a man, which was more devastating to the power of Kings. If he could not control his women, obviously could not control anyone.

Centralization leads to complexity, complexity leads to crisis, attempts to fix the crisis have, because of complexity, unintended consequences, which escalate into further crisis, leading to further centralization, Hence Soviet Russia, Hitler’s Germany, Venezuela, and now America.

This is the crisis of socialism, explained in “I pencil”, which makes the point that no one actually knows how to make a pencil, hence socialist production of pencils will fail.

In order to manage complexity, you need walls, so that one man can make decisions without having his decisions mucked up by another man’s decisions. Hence, private property and local authority, the authority of the father, the authority the business owner, the authority of the CEO. And, not so long ago, the authority of the local aristocrat, who tended to be a high officer in the local militia, a major employer and landowner, and related by blood or marriage to most of the other high officers in the local militia.

Ideally all the consequences of a decision should be contained within those walls. Of course they never are, but if you try to manage all the externalities, things very quickly slide of control. Every attempt to manage the externalities has unexpected consequences, and attempts to deal with the unexpected consequences have additional unexpected consequences, because trying to control matters that have externalities connects everything to everything else, resulting in a tangle beyond human comprehension.

This, the management of complexity, is the central problem of software engineering at the higher levels, and the higher level software engineers have found solutions, but in politics, the solutions collide with who/whom, since any solution to complexity always takes power away from someone, and gives it to someone else. Further, any solution to complexity is going to take power away from the man who is supposed to be dealing with it, and who is failing to deal with it – going to take power away from the courts, the bureaucracy, from accounting, and from Human Resources.

Abusive fathers exist, but they are rare, because of fatherly affection, and fatherly knowledge of the particular circumstances of his family. Abusive family courts are absolutely normal. And now the same crisis is replicating with accounting and human resources, manifesting in Washington as decisions being pushed up to higher and higher levels, with the highest levels being overwhelmed, as King George was overwhelmed, resulting in the American Revolution.

Even if we suppose that child support and the family court does a better job that fathers, which is not the case, the courts are a threat to the power of the throne, and the patriarch is not a threat to the power of the throne. Undermining the power of the patriarch undermines the power of the ruler, giving us mobile bandits in place of stationary bandits. The emperor is in charge of the nation only if the patriarch is in charge of his family. If the patriarch is not in charge of his family, power will slide into the hands of bureaucrats too numerous for the emperor to keep track of, and too close to the throne to be safe. If King George the Fourth had been able to give that filthy slut Queen Caroline a good whipping and lock her up in the palace, chances are England would still be ruled by Kings. It certainly would have been ruled by Kings a good deal longer than it was. And in a society where he could do that, chances are that he would have found it considerably more difficult to sleep with other men’s wives, short of employing the measures employed by King David.

If you give up on coherent, coordinated, centralized control, and resource constraints are not an issue, then you could break up your problems among many of these boss-pyramids, but which requires one to accept the risk of independent ‘fiefdoms’ which could conflict, and anyone at the top only having reactive instead of predictive / proactive ability to resolve problems before they manifest in big issues or crises.

In practice, this is how the United States Government actually copes with the issue. The easiest way to end a war is to surrender, and the easiest way to deal with an unmanageable design is by not managing it, and letting permanent civil servants who spend their lives accumulating institutional and organization capital stay spun-up on everything to the human limits, and given very wide berth when it comes to effective levels of discretion in policy. What management flows from the top is precisely the output of the triage of strategic political priorities.

Surrender was the death of the Czars.

Software engineering, at the higher levels, (not mere programming) is the science of managing immense complexity and detail: And the well known solution is loose coupling, minimize variables of global scope, and especially mutable variables of global scope. Otherwise large systems develop out of control complexity, which is what is happening now to the federal government. Socialism is tight coupling at global scope, as for example Obamacare, Sarbanes Oxley, and Human Resources.

Tight coupling at global scope makes it impossible to control the top bureaucracy, as well as making it impossible for the top bureaucracy to control the mid bureaucracy. The King and president become powerless, hence the recent overthrow of Kings and the looming overthrow of any president that declines to be a puppet, and the citizens are victimized by anarcho tyranny.

Translating the software solution to the political sphere, this is a program of King, Altar, and freehold. Legislators get to legislate, rather than one million anonymous judges and bureaucrats, or better, laws are few enough and simple enough that the King can himself alone legislate. Recollect that the American colonists complained about his inability to do so. They wanted more laws, and boy did they ever get them.

Altar should mean that scientists have to settle their disputes by evidence, rather than by incorporating them into the state religion, because only the archbishop gets to say what the state religion is, and if scientists and professors engage in theological innovation, the inquisition should go after them. Peer review is generating official truth by consensus, which is theology, not science. Theologians are dangerous the state and need to be kept under tight state control, because they are apt to discover that they are holier than those that presently have power. If scientists get into theology, the consequences should be dire. The state needs to treat peer review by scientists in quasi state jobs as treason and heresy. If the conclusions of peer review seem superficially politically neutral, the scientists should lose their quasi statal jobs. If the conclusions of peer review imply that the scientists are holy and those in political power need to be holier, as the conclusions of peer review tend to do, as for example with animal fat, pollution, and global warming, the scientists should lose their heads. Scientists should not meet behind closed doors and generate conclusions on the basis of consensus and secret and anonymous evidence. When they do so, it destroys science for politics and endangers the state. That which endangers the state leads to insecure governance, resulting in rulers behaving more like mobile bandits and less like stationary bandits.

Recollect that the anti animal fat scientists, and global warming scientists, did not win the discussion by providing evidence and argument, but by having their beliefs officially incorporated into the official state religion.

The center needs to be stronger, much stronger, hence the neoreactionary demand for throne and altar, for a King, an Archbishop, and a Grand Inquisitor, but it can only be stronger if it abandons efforts to control more than a single man, or a small group of men, is capable of controlling. Freehold is the center giving up attempts to control stuff that it is unlikely to be able to successfully control – for example the family and accountancy.

If the King attempts to prevent the father, the businessman, the property owner, and suchlike from doing every bad thing that they might do, from doing all manner of bad things that a wise and good ruler should prevent and forbid, he finds he has not taken their power to himself, but rather granted power to a vast bureaucracy, dangerous to everyone, especially to himself, whose impossibly complicated activities make it impossible for him to control, impossible for anyone to control, impossible for the bureaucrats themselves to control. How many lives has the family court ruined with its ham fisted, brutal, unpredictable, and capricious exercise of power over people of whom they know nothing, and for whom they care nothing?

The ruler needs to accept that some of his subjects are entitled by right to do bad things, are privileged, have a property right, freehold, to do bad things, which he may not rightfully interfere with, that not every wrong has a proper political remedy, for if he starts interfering in matters complicated, numerous, and detailed, he finds he has empowered an incomprehensibly complicated and dangerous apparatus, dangerously close to the throne. Hence the family courts, the Khmer Rouge autogenocide, Obamacare, the Holodomor, Sarbanes-Oxley, and Venezuela.

Pol Pot had an entirely sound rationale for the Cambodian autogenocide. Most production in Cambodia was rice production on a flood plain. Thus one peasant’s ditching and diking to grow his crop tended to have a large externality on downstream peasants. Therefore, obviously all that ditching and diking needed to be done by a central plan. America’s finest academics agreed enthusiastically with this moderate agrarian reformer, and I still from time to time see this presented as an irrefutable killer argument against the authority and power of the private landowner to farm as he sees fit, by people unaware that they are paraphrasing an academic endorsement of Pol Pot. But somehow, strangely, this moderate agrarian reform by this moderate agrarian reformer did not turn out well. Nor has any other instance of socialism turned out well, though most are less disastrous than the Cambodian autogenocide, but people keep trying. The Cambodian autogenocide was exceptionally bad because bad planning combined with the left wing singularity. It was impermissible to notice that the plan was bad, therefore any bad outcomes had to be the result of treason and sabotage. And the search for traitors and sabotage ensued, while the total failure of the rice crop led to mass starvation that no one was allowed to notice. The same thing happens to some extent with every socialist intervention. Thus bad outcomes from child support and the family court system do not happen and at the same time also are the result of domestic abuse by husbands and fathers, requiring even stronger measures against abusers and deadbeat dads, which measures become ever stronger, as the ensuing outcomes become ever worse. These bad outcomes cannot possibly be the result of courts capriciously intervening in families of whom they know nothing and exercising powers over husbands and fathers that we would not accept them exercising over murderers. Similarly, any bad outcomes from Sarbanes Oxley are obviously the result of greedy businessmen engaged in fraud, money laundering, and tax evasion. If the government ever really got serious about making Sarbanes-Oxley work, most of the businessmen and their executives would be in jail, and, like Pol Pot’s plan to dramatically increase Cambodian rice production, it still would not work.

Power needs to be transferred back to patriarchs, even if some patriarchs abuse the power horrifyingly, for the family court and the ever growing collection of family services are doing a job that is increasingly horrifying in its evil and incompetence. And even if they were doing a fine job, their predecessors screwed King George and will screw whoever is nominally in power, with the result that we get ruled by mobile bandits rather than a stationary bandit.

The problem is that it seems to be increasingly impossible for key executive officers to delegate certain aspects of review and analysis. Even elite performers can only do so much in a day, and so, when divide and conquer fails to be a feasible approach, it creates a fundamental human bandwidth bottleneck with regards to scale and scope for any particular headquarters-level office.

The way this problem is coped with now in Washington seems to be, well, egregious delay. That is, the systems of prioritization and accountability for deadlines completely break down, and the senior officers end up constantly putting out the most immediate fires from the most senior and most angry counter-parties delivered outside the normal system conduits, and let everything else “for later”, that is, until they become anger-inducing fires too, or, hopefully, just go away (or are approved for inadequate ‘resolution’).

The end result being chaos and disorder: It’s easy to observe that high level staff are personally handling matters which ought to be below their pay grades

Yes, it would be great if everyone just got twice as much money and twice as many personnel, but the bottlenecks and key officer human-bandwidth limitations would still be there.

Been there, done that (in software engineering, not in running a country).

We have a saying in the software business: “Adding more people to a late project makes it later”

With the end result that the project with its newly bloated staff gets declared finished and pushed out the door in completely broken condition, like Obamacare and every Soviet four year plan.

We also know the solutions, which I have successfully applied.

Unfortunately, applying these solutions in politics, rather than code, runs directly into who/whom. Instead of saying “You cannot access these variables because they are out of your scope” and expect the compiler and source control to enforce that, you have to say “You have to respect Joe’s authority over his own domain, even though there are externalities so that what he does hurts other people”

To manage complexity, it has to be broken up into smaller bits, with walls between the bits, so that one man can plan and organize without his plans being fouled by another man’s plans (and it always is men, women are great at detail, but when the plans get larger, they get lost in detail). In software, these walls manifest as restrictions on one’s access to private variables, typically no access or read only access to immutable values, shared nothing message based multiprocessing, Google’s protobuffs, Git’s immutable versions, Rust’s temporal variable scope, and suchlike. Google’s protobuffs are a metaphorical door in a metaphorical wall with a metaphorical security man checking visitors in and out. When it comes to politics, rather than software, these walls manifest as actual walls, also as actual security men with actual clubs, stun guns, and actual guns, guard dogs trained to attack strangers on private property without waiting for human permission, not to mention walls in the less visible and physical form of power and privilege.

The guard dogs are not producing anything directly, so to the good progressive bureaucrat they look like a net loss of utility, inflicting harm on poor people to benefit rich people, but what they are doing is subdividing the problem of production and consumption into smaller and manageable pieces, making it possible to plan and organize.

The guard dogs are keeping the problem of social cooperation and collective action down to something human minds can manage.

When you restrict homeowners from shooting burglars, suddenly and strangely, your administrative apparatus grows out of control.

You take down Chesterton’s fence, and everything starts interacting with everything else, resulting in unmanageable complexity. One ad hoc solution to one problem causes a dozen other problems, and the ad hoc solutions to those problems cause several dozen more.

And you wind up shipping completely broken software, and Venezuela winds up starving the masses as a result of their efforts to guarantee the masses food.

To make complexity manageable, you need walls, metaphorical walls like Chesterton’s fence, which are apt to manifest as actual physical walls, which break big problems of organization into smaller problems of organization, problems small enough for the privileged man in possession (and it is always a man, and usually a white man) to comprehend and deal with. These metaphorical walls hurt people, and their purpose is not obvious. What is the harm in taking them down, in order to feed the hungry and heal the sick, rather than siccing savage guard dogs onto the hungry, the weak, and the frail?

Well, Venezuela shows you what the harm is.

If you want Ann Coulter to be able to buy health insurance, a doctor needs to be able to sic a savage guard dog onto an hiv positive gay drug addict with multiple stab wounds, who is seeking urgent medical care but has no money to pay for it because he blew all his money and assets on drugs: Because if you try to make sure the broke hiv positive gay drug addict with multiple stab wounds gets medical care, you wind up with a labyrinthine, complicated, and out of control bureaucracy telling the doctor whom to treat and how to treat him, and somehow, strangely, neither Ann Coulter nor the hiv positive drug addict gets actually useful medical care.

What we are today seeing in Washington is a generalization of what happened with Obamacare and Venezuela. Everything that is causing people to starve in Venezuela and be deprived of medical care in the USA was done to feed people in Venezuela and give them medical care in the USA.

And any attempt to back out of it is quite correctly and entirely accurately denounced as likely to cause people to starve in Venezuela and cause people to be deprived of medical care in the USA.

The reason for this seeming paradox is that urgent ad hoc measures to achieve highly desirable and beneficial ends cause tight coupling between components, tight coupling makes the system complex beyond human comprehension, resulting in unpredictable and unexpected outcomes, unintended consequences, resulting further urgent ad hoc measures.

In the case of Obamacare, the chaos and disorder is causing people to go without medical care, in the case of Venezuela, to go without food or basic medicine. And any attempt to restore order involves restoring privilege and authority at the expense of feeding people or giving them medical care.

For example, if you want people to have food in Venezuela, you have to stop worrying about the rights of hungry people, and start worrying about the rights of bakers, farmers, businessmen, and merchants. Similarly the problem of violence in American schools. Time to start worrying about the rights of fathers, the lack of strong men in education, and the excessive presence of young filthy sluts and disgracefully aging cat ladies in education. Fixing the problem involves removing state interventions that were intended to fix, and do in fact fix, entirely genuine and important problems – albeit these problems were in large part caused by earlier state interventions also intended to fix entirely genuine and important problems.

Decoupling in the social order, much like decoupling in software, involves privileges and restrictions. You have to restrict some parts of the code from doing things, in order that other parts of the code are able to do their stuff with predictable consequences, and in the social order these privileges tend to fall upon affluent white males, while the restrictions tend to fall upon women, especially single women, children, and NAMs. In Venezuela, the privileges will fall upon those least likely to be hungry, and the restrictions upon those most likely to be hungry. Which those most hungry will resent, failing to connect these measures with the counter intuitive outcome that when they are applied, the shops mysteriously and coincidentally have food on the shelves for a change.

Order means that people can reason about the consequences of their actions – which they cannot do if a large part of the consequences are how any one of ten thousand meddlesome bureaucrats might potentially respond.

This is the crisis of socialism. In Venezuela socialism takes the form of rationing and price and wage control, here it takes the form of Human Resources and Accounting, which are tentacles of the state inserted into every corporation, and the mere owners of the business are powerless before them, because they armed with laws that no one can comply with, that everyone is guilty of breaking, as fathers and husbands are castrated by family law that defines being a husband and a father as domestic abuse. Thus those that provide the capital have no power, those responsible for making payroll have no power, those that are responsible for closing deals with customers have no power, those responsible for delivering product to customers have no power, because all of them are criminals before the power of human resources and accounting, just as all fathers and husbands are guilty of domestic abuse.

And the ensuing crisis of socialism is paralyzing Washington, as two centuries ago it paralyzed Kings.

The Sun King had troubles with powerful aristocrats dangerously far from the palace, the nobility of the sword. So he centralized all power and emasculated aristocrats, turning them into bureaucrats, the nobility of the Robe, but as his heir was to discover, he had created dangerously powerful bureaucrats dangerously close to the palace. That was the crisis of socialism then, and it still getting worse, hence the great centralization.

Cannot delegate, because delegation assumes decoupling of the components. If Pharaoh allows the Israelites to not make bricks because straw has failed to arrive, then he is going to have to allow the intended recipients of the bricks to not build. Of course in due course the building falls down, but before it falls down Pharaoh has more urgent fires to fight.

It is spaghetti code – if you add more programmers to the team, they will subtract from the productivity of the other programmers, not add to their productivity. And if the lead engineer delegates, he will get less done, because of the ensuing fires he has to put out.

If you have ever tried to hit a late deadline by adding more people to the team, this should be entirely familiar to you.

The problem of spaghetti code, and the problem of parallel processing, is the same problem as socialism. If Pharaoh delegates the straw issue to Moses, he shortly thereafter finds the scroll of Ipuwer in his intray, detailing a dozen more crises each more serious than the one he delegated to Moses, because Moses broke a dozen other modules in the course of fixing the module he was assigned.

And, in trying to administer a state, rather than organize code, not only hard to structure it that way, but such structuring is bound to step on the toes of the low part of the high/low coalition, because that is the part that creates disorder and fails to create order. In the computer language Rust, you have restrictions on what you can do with variables that were created in a different context, which is mighty handy for the engineer who is responsible for that context. He knows the other engineer cannot screw his code. In the social order, the equivalent is denying fatherless children access to food and medical care. Which means the patriarch knows that his wife and her social worker cannot screw his family.

We see collapse of decision making in the federal bureaucracy, with everything being pushed up to the highest level when someone sufficiently powerful gets sufficiently angry, and everything else sitting in the too hard queue and not getting done. The federal government is becoming severely dysfunctional, as it takes on responsibility for everything everywhere in the entire world and attempts to regulate every person’s every action.

The initial seed of Silicon Valley was Shockley. Every transistor everywhere in the world is built by an engineer who learned it from an engineer who learned from an engineer who learned it from Shockley. Hence Fairchild and fairchildren. That is why they call it Silicon Valley, because the fairchildren worked in silicon.

But as those engineers spread over the world, the underlying natural technological force was decentralization, not centralization. From 1980 onwards, Silicon Valley was no longer running on Shockley and the fairchildren, but running on the Silicon Valley exemption, that Silicon Valley was allowed to practice meritocracy that was being suppressed in the rest of America.

Then, quite recently, the Silicon Valley exemption began to evaporate. Today, Silicon Valley runs on Sarbanes Oxley. Due to Sarbanes Oxley, the only way to cash out your startup is to sell it to Google or suchlike. Hence the great centralization.

Sarbanes Oxley makes every accounting department into a tentacle of the state, hence centralization. Which has the unfortunate side effect of abolishing actual accounting in favor of bureaucratic ass sniffing.

The Silicon Valley network is not a network of people who can optimize Google’s ad revenue by 0.0001%

The Silicon Valley network is a network of venture capitalists who can sell startups to Google and suchlike. Which means that their business is making startup economic activities Sarbanes Oxley legal. The business of Silicon Valley used to be silicon. Today, however, the business of Silicon Valley is making startups Human Resources and Sarbanes Oxley compliant.

Kings fell from a little bit of socialism, and democracy is falling because it inexorably leads to even more socialism.

The state must be one, but society must be many. You need many independent actors to operate the economy, but the state must be one actor, and must restrict itself to things where only one actor can operate.

Further, in matters where that actor can operate in a geographically limited scope, the state needs to grant local power, even if it is likely to mean local oppression (King, God, and Freehold)

The presidency has grasped such immense power that it is paralyzed and impotent, powerless because far too powerful.

How to do cryptocurrency right

Sunday, October 8th, 2017

Proof of work tends to be inherently slow, has inherently high transaction costs, and the miner’s interests are not identical with those holding currency as a store of value and those using currency as a medium of exchange.

Proof of stake is nontrival to get right. It is a form of the infamously difficult to understand (and infamously difficult to program correctly) Paxos protocol. The Paxos protocol has the great advantage over the proof of work in that after an unpredictable and possibly large time, it announces a definite result, whereas with the bitcoin proof of work protocol, no result is ever final, it just becomes exponentially probable.

Ignore the carping that proof of stake is inherently flawed. Any implementation of proof of stake that is easy to understand is likely inherently flawed, that being the infamous nature of Paxos.

Bitcoin was genuinely decentralized from the beginning, and over time became more centralized. Big exchanges and a small number of big miners are on the path to inadvertently turning it into another branch of the oppressive and corrupt government fiat money system.

The new altcoin offering are for the most part not genuinely decentralized. They have a plan for becoming genuinely decentralized some time in the future, but the will and ability to carry the plan through has not been demonstrated.

Assume that, instead of everyone being a peer, we have few dozen or so peers, the peers distributed among several nuclear armed jurisdictions, and each peer has a hundred million or so clients, and each peer stores the entire blockchain forever.

OK, we are talking rather large peers. A terabyte of storage, a hundred dollars worth, will keep one of them going for a week. Say two terabytes for redundancy. I don’t think cost of storage is going to be a significant problem.

Scaling, however, is the hard problem. Making enormous amounts of storage actually useful and effective is the problem. The amount of storage per client is absolutely insignificant. The amount of bandwidth per client is absolutely insignificant. Having a useful connection between enormous numbers of clients and enormous amounts of storage via enormous amounts of bandwidth is the hard part.

Prompt response is another problem. It inherently takes time, and potentially large and unpredictable time, to reach consensus on the blockchain.

We can, however, have fast trust base responses followed by consensus: Since the peers are pretty big, you can trust a peer for your payment during the short time it takes for consensus to settle.

The way this would work is that every client is hosted by a peer. If his host should crash, or turn evil, he can move to another peer, though during the move he will not be able to make fast transactions. When he makes a payment, the peer hosting him testifies that this is not a double spend, and the payment is instantly flagged to the recipient as cleared – but it does not get flagged as settled, and the recipient cannot spend the payment, until it gets incorporated into the blockchain consensus, about twenty minutes later. Since the peers are big and long lived, you can trust them with your money for half an hour or so, and if you don’t want to trust them,, or you don’t trust some of them, you just wait for the transaction to be incorporated into the consensus.

A bad time to invest in Bitcoin

Sunday, October 8th, 2017

Back in 2013 I urged people to invest in Bitcoin.

Yesterday someone asked my cleaning lady to invest in Bitcoin.

Now if someone had asked her to accept payment in Bitcoin, or send payment in Bitcoin, then this would be compelling evidence that one should invest in Bitcoin.

But when cleaning ladies are asked to invest in Bitcoin, not a good investment.

When Bitcoin began, everyone was a miner, and everyone was a peer, everyone stored the entire blockchain. Which was great, but did not scale. And now people are struggling with half assed ideas about how to get it to scale.  Bitcoin can no longer deliver on its original promises, has not figured out what new promises to make, and many of the new promises are unworkable, or are scams, or are likely to turn into scams.

Cryptocurrency

Monday, September 25th, 2017

Our financial system is corrupt and oppressive. Cryptocurrencies represent an opportunity to route around that system, and make lots of money doing so.

Cryptocurrency is real, and presents the opportunity to make enormous amounts of money. Also, cryptocurrency scams are real, and present the opportunity to lose enormous amounts of money. Like the dot-com bubble in the 90s, you can add the concept of blockchain to just about anything and have a ‘business’ worth millions, no matter how idiotic the original idea. The vast majority of initial coin offerings are investments in businesses that are not providing anyone with any value, have no real customers and no obvious prospect of ever having any real customers.

The successful altcoin will be genuinely decentralized, as bitcoin was designed to be, originally was, and to some extent still is. Most of the altcoins, possibly all of them except the Bitcoins and Ethereum, are furtively centralized.

It will use, or at least offer the option, of Zooko type wallet names, as Bitcoin and Ethereum do.

It will be scalable to enormous numbers of transactions with low transaction costs, as Steemit and Ripple are, but Bitcoin and Ethereum are not.

It will support sidechains, and exchanges will be sidechained.

It will be a blogging and tweeting platform, as Steemit is, and will be a decentralized blogging and tweeting platform, as Steemit is not.

Every website reporting on the altcoin boom and the initial coin offering boom has an incentive to not look too closely at the claimed numbers. Looks to me that only Bitcoin and Steemit.com have substantial numbers of real users making real arms length transactions. Maybe Ethereum and Ripple also. The rest are unlikely to have any significant number of real, arms length, users. The white papers don’t tell you the qualifications of the people running the operation, or what they are going to do, what milestones they hope to reach.

The crypto coin business is full of scammers, and there is no social pressure against scammers, no one wants to look too closely, because a close look would depress the market. There is no real business plan, no very specific or detailed idea of how the coin offering service is going to be of value, how it is going to get from where it is now, to where it is going to usefully be. It is very hard to find out how many real users a crypto currency has, and how much stuff is available denominated in that crypto currency.

Most of the alt currencies are just me-too copies of bitcoin, not adding any substantial value, and/or they cannot scale, and they are deceptive about how centralized and how vulnerable to state attack they are. Nearly all of them are furtively centralized, as Bitcoin never was. They all claim to be decentralized, but when you read the white paper, as with Waves, or observe actual practice, as with Steemit, they are usually completely centralized, and thus completely vulnerable to state pressure, and quite likely state seizure as an unregulated financial product, thus offer no real advantage over conventional financial products. When you buy an initial coin offering, you are usually buying shares, usually non voting shares, in a business with no assets and no income and no clear plan to get where they will have assets and income, as in the dot com boom.

The numbers show that Bitcoin is number one, ethereum number two, ripple number four, and steemit.com number eighteen, but my wild assed guess is that Bitcoin is number one, steemit number two, ethereum number three. I have absolutely no idea where ripple stands. No one is providing data that would enable us to estimate real, arms length users.

Bitcoin exchanges are banks, and banks naturally become fractional reserve institutions. Bitcoin exchanges are furtively and secretly investing customer deposits, without reporting the resulting term transformation.

Genuinely free market banks, and bitcoin exchanges are genuinely free market banks, have a financial incentive to engage in term transformation – borrow short, lend long. Which is great for everyone until a rainy day comes, rains on everyone, and everyone withdraws their deposits all at the same time, and suddenly all those long term loans cannot be liquidated except at a loss, whereupon the banks exchanges turn to the state, and so begin the transition from a backed currency to a state currency, ceasing to be free market banks.

The trouble with fractional reserve is that free market banks, banks trading in a backed, rather than state, currency, tend to deny, understate and misrepresent the term transformation risk, making them slowly, and often unintentionally, drift into becoming scams. If the reserve fraction is visible to customers, then we could rely on caveat emptor. Right now, however, every bitcoin exchange is drifting into becoming a scam.

We need, and we could easily have but do not have, a system where the amount of bitcoins owed to customers by an exchange is knowable and provable, and the amount of bitcoins owned by an exchange is knowable and provable, so that the reserve fraction is visible, whereupon the exchange would have to provide information about the extent and nature of its term transformation, or else would likely lose customers, or at least would lose large, long term customers. This would involve the decentralized cryptocurrency making each exchange a sidechain operating a centralized cryptocurrency backed by the decentralized cryptocurrency. Which would also help mightily with scaling.

Bitcoin and ethereum is truly decentralized, in that it is a protocol that any entity can use, and that in practice lots of entities do use. If the government grabs some hosts, or some hosts do bad things, they can just be ignored, and the system continues elsewhere. They also use Zooko type identities, which in practice means your wallet name looks like line noise. This is outstandingly user hostile, and a reason so many people use exchanges, but it provides the core of resistance to state power.

Unfortunately, Bitcoin and Ethereum face scaling limits. Maybe ethereum will fix its scaling limits. Bitcoin does not seem to be fixing them. This makes Bitcoin and Ethereum transactions inherently expensive, which is likely to prevent them from replacing the corrupt and oppressive US government controlled financial system.

Steemit.com has a far superior design which does not result in scaling limits – although we have yet to see how its witness election system will perform at scale – as the system scales, money holders have less incentive to vote, less incentive to vote responsibly, and voting will inherently cost more.

Steemit.com is also highly centralized. The altcoin that will win will be the one needs to be scalable all the way to Visa and Mastercard levels, and needs to be visibly decentralized, visibly resistant to state seizure, and needs to have a mechanism that makes the fractional reserves of exchanges visible to exchange users.

Bitcoin was genuinely decentralized from the beginning, and over time became more centralized. Big exchanges and a small number of big miners are on the path to inadvertently turning it into another branch of the oppressive and corrupt government fiat money system.

The new altcoin offering are for the most part not genuinely decentralized. They have a plan for becoming genuinely decentralized some time in the future, but the will and ability to carry the plan through has not been demonstrated.

I like the steemit design. The witness system is scalable, the witness election system has problems which may be fixable, or may be inherent.

But I have a suspicion that investing in steemit is only going to profit whoever owns steemit.com, not the owners of steemit currency.

According to Steemit documentation, it looks like a well designed cryptocurrency that deserves to replace Bitcoin, because it is more scalable, more user friendly, and more immediately usable.

Well, that is what it looks like. Except its front end is the steemit.com website, and any one website can easily be seized by the feds. If actually decentralized, it should be a bunch of websites using a common crypto currency and a common identity system,

Remember usenet: A common protocol, and an internal name system. The particular host through which you accessed it did not matter all that much, because all hosts had to behave much the same. Steemit should be something like usenet with money, and it is not.

The way usenet worked, anyone (meaning anyone’s computer and his client program) could join as a client by having an agreement with a host, and anyone (meaning anyone’s powerful and well connected computer system) could join as a host by having an agreement with a few existing members.

A successful altcoin needs to be a blogging platform like Steemit, but it also needs to be a federation, like Usenet or Mastodon. Many of the blogs will be offering goods or services for cryptocurrency.

Then one could be more sure that success of the federation currency would benefit owners of the currency, rather than owners of a single central website.

Needs to be Mastodon with the ability to support a blog like post, and like Steemit, and unlike Mastodon, to send and receive money. Steemit.com is wordpress.com with the ability to send and receive money.

Bitcoin has a decentralized name system, rooted in Zooko style names that are not human intelligible. Its resistance to state power comes partly from the fact that there are several miners and anyone can be a miner, and partly from its decentralized name system.

Steemit has a communication and blogging system. But if I hold steemit currency, steemit.com connects that to my phone number, which the government connects to my true name. All that handy dandy data that the government would like all in one place that you can serve a warrant on or mount a raid on. Or just sell for profit.

Need a decentralized communication, identity, name, and blogging system, unlike Steemit.com’s centralized communication and blogging system, and a name system that is resistant to government intervention and control, like Bitcoin’s name system. Thus the blogs offering goods and services for crypto currency will be resistant to regulation or seizure by the state. When a ruler meddles as much as our state does, he gives dangerously great power to those dangerously close to him. The regulatory state inevitably drifts into anarcho tyranny, or, like Venezuela, into violent and chaotic anarchy.

But we also want human readable names. How can we square Zooko’s triangle? (As Aaron Schwarz famously asked, and then infamously gave a very stupid answer.) I will give my answer as to how a crypto currency can square Zooko’s triangle in a following post. (The answer being, much as namecoin does it.)

Holiness and corporate performance.

Friday, September 1st, 2017

Notoriously, corporations that are Social Justice converged behave in ways that are not only evil, but self destructive, leading to loss of shareholder value.

It is difficult to objectively assess social justice convergence, but we can expect it to have a pretty good correlation with the company’s business model – a green energy company is going to be full of social justice warriors, and receive lots of investment from fund managers who are trying to earn brownie points from the government, rather than brownie points from investors, whereas a gun company is probably trying to make good money by making good guns.

“Watts Up With That” recently did a ten year comparison of such companies, and found that over ten years, holiness investing lost nearly all your money, while sinfulness investing doubled your money.

Twelve years ago, holiness investing consisted largely in investing in providing mortgages for single women, Hispanics, and blacks. And all that money disappeared also.

However, while holiness investing is terrible for investors, it works extremely well for management, as for example Jon Corzine, the world’s most regulated and regulating financier, who without informing his customers proceeded to use their funds to rescue Greece.

Jon Corzine’s customers were eventually paid back by burning JP Morgan, illustrating that when you do business with progs, someone gets burned. The short of it was that various financial entities who were improperly paid with money belonging to Jon Corzine’s customers had to give it back, so that they are out of the money, they got burned, yet somehow Jon Corzine is still smelling of roses.

Corporations that go left tend to disappear or get hollowed out, unless they have some kind of state protected monopoly.

No enemies to the right

Saturday, August 26th, 2017

No enemies to the left has been working great for the left, and no enemies to the right has been working great for us.

If you declare someone to your right your enemy, you wind up dancing to a tune called by leftists.

Supreme Dark Lord Vox Day recently criticized Spencer and the Nazis as fake right – criticized them not for being too far right, but for being too far left, for being socialist. He did not criticize from the left, but from the right. He is correctly maintaining a position of no enemies to the right. You can argue that his criticism was too harsh, that he was cutting off communication, but his action was not an example of enemies to the right. Socialism is leftist, and Nazis are leftists who have been left behind by the rest of the left as the rest have continued to move further left.

People who want to smash or steal stuff belonging to Jews are mistaken. That never makes us rich, it makes us poor.

Non Jews should be removed from state and quasi state power in Israel, and Jews should be removed from state and quasi state power in the US. But if you go smashing up a Jewish pawnshop or a Jewish distillery, you are allowing covetousness and envy to distract you and make you do stupid things. Taking or smashing other people’s stuff is a bad idea. Land and women can be usefully and effectively stolen, but the trouble with socialism is that more complicated forms of wealth tend to get messed up in the transition. Jews in exile tend to specialize in precisely those forms of wealth that are not usefully confiscatable.

Peak Oil

Friday, July 21st, 2017

If you discover more than ten years of reserves, politicians are apt to take it away from you.

So for the last hundred years or so, the world has only had ten years worth of proven oil reserves left and has been about to run out in ten years or so. In fact the world has only had about ten years of anything left for the past hundred years or so.

King Hubbert created a composite, mega-decline curve that predicted U.S. crude oil production would peak in the 1965-70 time period. But, of course, it did not decline. So his prediction was retroactively relabelled “Lower 48 states Oil Production”. Which retrodiction was true – for a while. Retrodictions always are. See global warming for example.

Well, for some time US oil production in the lower 48 states has been increasing. So it was re-relabelled “Lower 48 states conventional oil Production” The new story was that fracking has intolerable environmental and financial costs, so is not a practical replacement for old type oil production.

When Trump stopped the government from funding and organizing people to protest fracking, the intolerable environmental costs mysteriously vanished in a puff of smoke, and when Trump made it easier to get permission to frack, so did a large part the economic costs, with the result that US frackers are now giving the Saudis a hard time.

For a given technology, and a given price, a given oilfield or group of oilfields does indeed follow a Hubberd Curve, and you can use the curve to estimate what the real reserves are. (They are usually enormously greater than the official reserves.)

Although science has been stagnating since Harvard got the upper hand over the Royal Society, technology that makes money continues to advance. We have a problem with new blue sky technologies. No one in the west is developing new technologies any more, just polishing up existing profitable technologies. We are not getting any replacement for chip patterning using one hundred and ninety three nanometer excimer laser lithography, just ever more minute improvements in excimer laser lithography, with the result that Moore’s law has run out of puff. People keep talking about ten nanometer, but it is just not going anywhere. They keep saying they will use both one ninety and ten. If ten was working, would not use one ninety. If they were talking ninety nanometer, rather than ten, then I would be impressed. If someone could make money out of supersonic jets, we would get better and better supersonics, but instead, planes are slowing down, not speeding up. But people could make money out of drilling and stimulating oil fields, so drilling and oilfield stimulation got better and better, and continues to improve.

Physical resources are effectively infinite, in that physical limits to growth are unlikely to be a significant problem in the reasonably foreseeable future. The problem is social decay.

Not a dog barked

Tuesday, July 4th, 2017

Remember all those mighty and entirely spontaneous protests demanding that the Obama regime do what it quite obviously wanted to do and was quite obviously looking for justifications for doing, protests demanding that the government block every form of energy production in every white country, which obstructions have made the US into an energy importer for sixty years or so.

And, of course, with deep reluctance the Obama regime would invariably yield to the justified and entirely spontaneous and genuine rage of the mighty masses. </sarcasm>

Overnight (well, over the first one hundred and fifty days of the Trump regime), the US has become an energy exporter. Trump would repeal a regulation by executive order, and the next day coal miners would be digging coal, repeal another regulation, and the next day drillers would be pumping oil. One day he makes an executive order, the next day Americans in flyover country are back to work. The next day after that he makes another executive order, and the day after that, more Americans in flyover country are back to work.

You did not hear of this.

Probably because the mighty and justifiable enraged masses strangely failed to spontaneously show up to spontaneously demonstrate their might and spontaneous justified rage. They were always demanding that Obama shut down energy, but somehow, when Trump turns the energy policy of every previous Democratic and cuckservative president for the last sixty years arse over tit, no protests happen.

Funny thing that.

By the way did you know that there is overwhelming support for impeaching Trump? It must be true, I read it in the newspapers. </sarcasm>

Leftism has been a mass movement under both Democratic and cuckservative presidents, been a mass movement since nineteen sixty three. But Donald Trump gets elected, and suddenly and quietly it just is not a mass movement any more. Funny thing that.

Yes, the permanent government is giving Trump a hard time. Trump has not won yet, and maybe the permanent government will win. We are, or recently were, right on the edge of the special counsel impeaching Trump without bothering with that old fashioned two thirds vote in the senate. But Trump has cut off the permanent government at the knees, in that the mighty and justifiably enraged masses are no longer spontaneously demanding whatever the permanent government wants them to spontaneously demand this morning and no longer spontaneously enraged about whatever the permanent government wants them to be spontaneously enrage about this morning.

Reagan talked about defunding the left, Trump has actually made a start on defunding the left. Obviously there is a lot more defunding to be done, but suddenly leftists that do not yet have social justice warrior jobs are no longer expecting that they will get social justice warrior jobs in the very near future as a quid pro quo for the latest protest. That funding for the left has stopped its endless and open ended increase and has actually decreased, even if only by a little, has resulted in leftism as a mass movement vanishing in a puff of smoke.

This has resulted in an intense search for other sources of social justice warrior funding. Thus for example, we see complaints that venture capitalists that control large amounts of other people’s money should be subject to destruction at whim without evidence by social justice warriors. Cheryl tell us: “This is where it has to be fixed – the fact the burden of proof always falls on the person reporting the incident.”

“Fixing” this, of course, will have the effect that Silicon Valley venture capital will wind up funding social justice, rather than technical advance, which we already see happening with Uber, Airbnb, and Apple. Uber and Airbnb are committing social justice suicide. Apple has such deep pockets that it will likely survive, but probably not Airbnb and Uber.

Airbnb is trying to prevent Filipinos and Chinese from being racist. Would have more success preventing water from being wet.

Their power base in Silicon valley derives from appointments made by the Obama regime. Thus for example Cheryl, who is currently shaking down the management of Silicon Valley venture capital firms with sexual harassment allegations for which there is a curious lack of evidence, worked for a Malaysian startup fund funded by the Obama administration and the Malaysian govt. Not a tech person, not a startup person, a political commissar. In the course of accusing a venture capitalist of inappropriate sexual behavior, she depicted herself as engaging in behavior that I find entirely inappropriate in a woman – for example this evil venture capitalist somehow caused her to be alone with him, and, while alone with him in a private flat with a nice bed, somehow caused her to consume very large amounts of scotch. Pretty sure that if sex did not ensue, it is because he fought her off.

The bitcoin crisis

Thursday, June 29th, 2017

There can only be one.

There can only be one money, at the root of all others. Money is a measure of value, a store of value, and a medium of exchange, and you want to uses the same medium of exchange and measure of value as everyone else.

At the very beginning, I said the trouble with bitcoin, as originally designed, is that it does not scale. Everyone, to be a peer, to be an equal participant, has to store and process everyone else’s transactions, thus the cost of each transaction increases with the number of peers. I estimate the current cost of a transaction to be about a thousand dollars, most of which is carried by people speculating in bitcoin, hoping that as the USG empire collapses, bitcoin, rather than gold, will replace the dollar.

Bitcoin is reaching, indeed has substantially exceeded, its inherent limits. For it to become the one, it has to get away from a system where everyone processes everyone’s transactions, and stores everyone’s transactions.

The sidechain proposal is a way of getting away from that without a hard fork, so that your transactions are not seen by everyone, merely by enough people, and not stored by everyone forever, but only by a very small number of people forever.

Altcoins are hard fork proposals, which if they fix the scaling problem could become the one. At present the total value of altcoins is roughly equal to the total value of bitcoins.

At present, the true cost of bitcoin transactions is so outrageously high it cannot possibly become the one. It must die, and everyone invested in bitcoins will lose all their money, unless the sidechain proposal provides a forkless path to a world in which the true cost of bitcoin transactions is reduced to something reasonable.

But the interest in crypto currencies is so very great, the amount of money invested in crypto currencies is so very great, that one shall succeed. The amount of serious money invested is so very great that it looks overwhelmingly likely that as the USG empire falls, crypto currency, rather than gold, will replace the US$.

And that one shall be one that allows low, rather than hidden, transaction costs. Likely an altcoin rather than bitcoin, because the weight of special interests in bitcoin makes it hard to get to there from here.

But the wise investor should invest in gold, should invest in bitcoin in the hope that the scaling problems can be fixed without a hard fork, and should invest in an altcoin that has solved the scaling problem. And the last time I took a good look, none of them had actually solved the scaling problem, though many of them were hoping to solve it, claiming they had solved it, or had plans for eventually solving it.

The sidechain proposal has been kicked around for three years, and bitcoin’s transaction cost has been getting rapidly worse all this time.

Anyone who invests in bitcoin, is investing hoping that scaling can be fixed, for if scaling is not fixed, bitcoin will surely die. The current true cost of bitcoin transactions is absolutely unsustainable.