Re: Ron Paul schools 'the Bernank' on inflation, 'real money', and preserving value:
All money must at all times be in someone's possession. There is no scientific way of distinguishing "hoarding" from other possession of money.
Sure there is, by its velocity. If you allow those with lots of money to control a significant portion of its velocity, they can control its value. Assuming the actual supply is stable, slow velocity will always cause deflation, high velocity will always cause inflation.
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Even if it worked this way, there is no reason to conclude that this would somehow benefit the perpetrators. They could just as well lose and make some Bitcoins speculators incredibly rich.
You aren't seeing the big picture, I'm afraid. The bitcoin speculators are probably already wealthy. The panic/crash scenario would work differently as it is currently a side currency, but if the stock market were denominated in bitcoins, the wealthy would stand to make a great deal. I'm not talking about the value of BTC crashing; on the contrary, it would rise assuming it was widely accepted.
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Even if this was correct, this only could have worked with legal tender. If JPM had crashed the pound rather than dollar, again there would be no effect. Like Soros when he shorted the pound in 1992. It made the BoE angry but there's no reason why US public or politicians should be affected by that.
I don't know where this legal tender argument has spawned from, but it is simply flat out wrong. Is gold legal tender?
Just because it is or isn't legal tender does not mean that lots of people can't lose money by the commodity being manipulated.
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Here is what Ludwig von Mises says:
Quote from: Ludwig von Mises
But in any case I must protest against the belief that it has to be a goal of monetary policy to make money neutral and that it is the duty of the economists to determine a method of doing so. I wish to emphasize that in a living and changing world, in a world of action, there is no room left for a neutral money. Money is non-neutral or it does not exist.
Here is what Mises also said, Human Action:
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The notions of inflation and deflation are not praxeological concepts. They were not created by economists, but by the mundane speech of the public and of politicians. They implied the popular fallacy that there is such a thing as neutral money or money of stable purchasing power and that sound money should be neutral and stable in purchasing power. From this point of view the term inflation was applied to signify cash-induced changes resulting in a drop in purchasing power, and the term deflation to signify cash-induced changes resulting in a rise in purchasing power.
However, those applying these terms are not aware of the fact that purchasing power never remains unchanged and that consequently there is always either inflation or deflation. They ignore these necessarily perpetual fluctuations as far as they are only small and inconspicuous, and reserve the use of the terms to big changes in purchasing power. Since the question at what point a change in purchasing power begins to deserve being called big depends on personal relevance judgments, it becomes manifest that inflation and deflation are terms lacking the categorial precision required for praxeological, economic, and catallactic concepts.
However, those applying these terms are not aware of the fact that purchasing power never remains unchanged and that consequently there is always either inflation or deflation. They ignore these necessarily perpetual fluctuations as far as they are only small and inconspicuous, and reserve the use of the terms to big changes in purchasing power. Since the question at what point a change in purchasing power begins to deserve being called big depends on personal relevance judgments, it becomes manifest that inflation and deflation are terms lacking the categorial precision required for praxeological, economic, and catallactic concepts.
He is stating that money can't be neutral in the sense that inflation and deflation don't exist as a function of money itself either. You say potato, I say Milton Friedman.