TLDR; ChatGPT suggested Bitcoin as a trustless payment system and when asked if it could foresee Bitcoin to become a global reserve asset like gold, the connection got shut off. Coincidence? I don't know ;)
The conversation:
[Me]
Do you favor Keynesian economics or the Austrian economics?
[ChatGPT]
As an AI, I don't have personal preferences or opinions. However, I can provide you with information about both Keynesian economics and Austrian economics so that you can better understand the differences between the two approaches.
Keynesian economics is an economic theory named after John Maynard Keynes, who argued that government intervention, including monetary and fiscal policy, can help stabilize an economy during recessions and depressions. The theory holds that aggregate demand is the primary driving force in an economy, and that the government can increase demand through deficit spending and interest rate adjustments.
Austrian economics, on the other hand, is a school of economic thought that emphasizes the role of individual freedom and the importance of free markets. According to the Austrians, government intervention can actually be harmful to the economy and can lead to boom-bust cycles. They also argue that monetary policy is a relatively ineffective tool for influencing economic activity and that the best approach is to allow market forces to regulate the economy.
It's important to note that these are general descriptions and there are a lot of other factors and different economist who hold different views within these schools of thought.
[Me]
Why do most universities only teach the Keynesian economic theory and not the Austrian economic theory?
[ChatGPT]
There are several reasons why universities might teach Keynesian economics more than Austrian economics:
Historical timing: Keynesian economics became popular in the 1930s, when the Great Depression was still fresh in people's minds. The ideas of John Maynard Keynes, which suggested that government intervention could help stabilize an economy during a recession, were seen as a solution to the economic problems of the time. Meanwhile, Austrian economics did not gain widespread acceptance until later, in the 1970s and 1980s.
Popularity: Keynesian economics has been more widely accepted and taught in universities over the last century, which is why it has become the mainstream economic theory.
Government and Central Banks: The economic policy of most developed countries is based on some form of Keynesian economics, and Central banks of those countries use this theory to make decisions. Therefore, it is important for economists to understand and study this theory more.
Relevance in today's economy: Some may argue that Keynesian economics is more relevant to today's economy as it takes into account government and central bank policies, which are central to how many economies function today.
That being said, it's worth noting that Austrian economics is not completely absent from universities, and it is studied and taught in some economics departments, business schools, and other institutions. However, it's likely that you'll find more classes and resources devoted to Keynesian economics than Austrian economics in most universities.
[Me]
You're saying that Keynesian economics became popular in the 1930s, and so did communism in Russia, Italy and Germany. According to Karl Marx, in order to have a communist state, the money has to be centralized i.e. the state has to have a central bank. Most countries has a central bank today, could it be argued that most countries has adopted some featuers from the communist philosophy?
[ChatGPT]
There is certainly some overlap between the ideas of John Maynard Keynes and those of Karl Marx, particularly with regard to the role of government in the economy. Both believed that government intervention is necessary to stabilize an economy and to address issues of poverty and inequality.
However, it's important to note that Keynesian economics is not the same thing as communism, and the two theories have some significant differences.
In a communist state, the means of production are owned and controlled by the state, and there is no private property or markets. In contrast, Keynesian economics is based on the idea of a mixed economy, where private enterprise and markets exist alongside government intervention and regulation.
Also in a communist state, the government controls the central bank and monetary policy as well. But in a Keynesian state, it's not necessarily the case.
It is also worth noting that many countries that have central banks and use monetary policy as a tool of economic management, are not communist states. Central banking is a common practice in capitalist and mixed economies. Central banks are independent institutions that conduct monetary policy with the goal of maintaining price stability and supporting economic growth.
It's also important to note that many of the current economic models and policies of countries are a mix of different theories and ideology, not strictly one or the other.
[Me]
Henry Kissinger once said "Control the money control the world". If money is monopolized is it really a free market? I would like to think central banks are independent entities, but time again and again, government intervention and politics blurres central bankers decisions. Central banks has been around for about 400 years to my knowledge and each one of them has failed. Wouldn't the people of the world be better off with a money in which no one can control?
[ChatGPT]
There is certainly some truth to the idea that control over money can give significant power to those who control it. Central banks are powerful institutions that have the ability to influence the money supply and interest rates, which can have a major impact on the economy.
It's true that central banks have been around for a long time, and some have had more success than others in achieving their goals. In fact, the independence of central banks varies from country to country, some have more independence than others. In some cases, central banks may be subject to political pressure or influence, which can affect their ability to make objective decisions about monetary policy.
As for the idea of a money in which no one can control, it is a concept of a free-market money, known as free banking. This idea suggest that banking system should be competitive and free, and the government should not interfere in it. This system would be based on trust, reputation and private voluntary actions, with no central bank or government guarantees.
However, it's worth noting that this system has never been implemented in a large scale, and it's uncertain how it would work in practice, as there are many risks and challenges to this approach.
It's important to remember that no system is perfect, and each one has its own set of benefits and drawbacks. While central banking is not perfect, it has been found to be one of the most effective ways to manage monetary policy and stabilize an economy.
[Me]
Doesn't central banking require trust too? The people would need to trust the central and the government. Do you know of any money or payment system I could use where I wouldn't need to trust anyone?
[ChatGPT]
Yes, central banking does require trust, both in the central bank and in the government. The public needs to trust that the central bank will act in their best interest and make sound monetary policy decisions, and they also need to trust the government to oversee the central bank and ensure that it is operating in an appropriate manner.
A payment system that does not require trust would be a decentralized system that uses cryptography for security. One such system is blockchain-based cryptocurrencies, such as Bitcoin. In a decentralized system, there is no central authority that controls the money supply, and transactions are recorded on a public ledger that is maintained by a network of users.
Blockchain technology uses complex mathematics and cryptography to ensure the security of the network, and the decentralized nature of the system makes it resistant to manipulation or control by any single entity.
However, it's worth noting that while blockchain technology can provide a high degree of security and decentralization, it is not without its challenges and risks, as well as it is still in a development phase, and scalability and regulatory issues are still being worked out.
It's also important to note that even a decentralized system like this relies on certain trust assumptions, such as trust in the security of the underlying technology and trust in the network of users that maintain it.
While decentralized, trustless systems like blockchain-based cryptocurrencies represent an interesting development in the world of finance and payments, it's likely that more research and development is needed before these systems will be able to fully replace traditional central-bank-controlled payment systems.
[Me]
Do you foresee Bitcoin to ever become a global reserve asset much like gold?
[ChatGPT]
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