Bitcoin Most Certainly Violates Mises Regression Theorem and This Fact Compels Clarification or Re‐Solution from the Mises Institute; And An Introduction to Szabonian Deconstruction - jalToorey/IdealMoney GitHub Wiki

Bitcoin and An Existential Question For The Misean School of Economics

Early in Bitcoin’s history, on the forum where the early bootstrapping development and philosophical discussions took place, one of the posters “xc” brought up the concept they referred to as ‘Mises regression theorem’ in a thread they entitled Bitcoin does NOT violate Mises' Regression Theorem.

“xc” put made the claim:

The entire purpose of the regression theorem was to help explain an apparent paradox of money: how does money have value as a medium of exchange if it is valued because it serves as a medium of exchange?

We say this as ‘made the claim’ not because we mean to scrutinize xc’s claim but because later we want to understand Mises and the regression theorem xc referred to and we mean to understand the concept in its' ‘steel manned’’ version (as opposed to a weak put together straw man version).

This will be the spirit of this essay and the nature of it. This essay has a dual function. We will attempt to explore and validate whether or not bitcoin does or does not in fact violate Mises regression theorem but specifically we will do this through a (fairly short) process of what we refer to as Szabonian deconstruction.

On Frameworks and Szabonian Distance Complexity

xc goes on to cite what he feels is a supportive explanation of his (xc’s) interpretation of Mises via Murray Rothbard, a student of Mises:

As Rothbard explains in Man, Economy, and State (p 270), "...a money price at the end of day X is determined by the marginal utilities of money and the good as they existed at the beginning of day X. But the marginal utility of money is based, as we have seen above, on a previously existing array of money prices. Money is demanded and considered useful because of its already existing money prices. Therefore, the price of a good on day X is determined by the marginal utility of the good on day X and the marginal utility of money on day X, which last in turn depends on the prices of goods on day X – 1. The economic analysis of money prices is therefore not circular. If prices today depend on the marginal utility of money today, the latter is dependent on money prices yesterday." [all emphasis added]

xc has bolded the last line and wrote [all emphasis added].

Already then we have seen xc proclaim their own understanding of bitcoin, as through the lens of how they understand Mises regression theorem, but more specifically through the eyes of how they (xc) interpret that Rothbard believes we are to interpret Mises.

This provides us useful content for a proper introduction to what we call Szabonian deconstruction.

Szabonian deconstruction is our construction or re-framing of something Nick Szabo wrote of:

Analyzing the deconstruction methodology of hermeneutics in terms of evolutionary epistimology is enlightening. We see that constructions are vaguely like "mutations", but far more sophisticated -- the constructions are introduced by people attempting to solve a problem, usually either of translation or application. An application is the "end use" of a traditional text, such the judge applying the law to a case, or a preacher writing a sermon based on a verse from Scripture. In construction the judge, in the process of resolving a novel case sets a precedent, and the preacher, in the process of applying a religious doctrine to a novel cotemporary moral problem, thereby change the very doctrine they apply.

Our example of xc gives us a good starting point for how we can use language to carefully highlight different ‘lenses’ from which a presenter is meaning to induce their viewership to view and consider something from and the exploration of Bitcoin’s potential violation of Mises regression theorem gives us a very good case study of the usefulness of Szabonian deconstruction.

Here I think it is also helpful if we refer to each source of explanation as ‘wrapping’ the phenomenon in question in an intentionally helpful ‘interface’. To deconstruct such an ‘interface’, to separate the presenter’s contribution, opinions, biases etc, from the source material that they (the presenter) referrers to (also called their ‘object’) then is in some way to unwrap it.

Objects, wrappers, wrapping, interfaces are computer science lingo. We are purposefully mixing computer science into the lexicon of this essay and purposefully being loose and informal while doing so as part of our inquiry and experiment.

An interface here loosely refers to a filter or translator which allows one to usefully view or interact with an idea, object, subject etc. Another useful metaphor for interface is a skin:

In video games, the term "skin" is similarly used to refer to an in-game character or cosmetic options for a player's character and other in-game items, which can range from different color schemes, to more elaborate designs and costumes.

In Szabo’s Introduction to Algorithmic Complexity theory he talks about measuring distance in regard to bodies of knowledge:

Distance, as the remoteness of two bodies of knowledge, was first recognized in the field of hermeneutics, the interpretation of traditional texts such as legal codes. To formalize this idea, consider two photographs represented as strings of bits. The Hamming distance is an unsatisfactory measure since a picture and its negative, quite similar to each other and each easily derived from the other, have a maximal Hamming distance. A more satisfactory measure is the information distance of Li and Vitanyi:

E(x,y) = max ( K(y|x),K(x|y) )

This distance measure accounts for any kind of similarity between objects. This distance also measures the shortest program that transforms x into y and y into x. The minimal amount of irreversibility required to transform string x into string y is given by

In regard to the Szabo’s measure of complexity through distance we can say that a wrapped object is more complex than the object it wraps and thus there is a measurement of distance implied. We can note this distance only implies order since we have no measurement of it (ie we don’t know how much more complex the wrapper of a wrapped object makes it).

We should note a paragraph as simple and short as the previous has many pitfalls and thus caveats required. For this essay we simply need the loose concept of order. As we unwrap things we expect to call the object revealed as ‘simpler’ by some definition of complexity not given, or needed, in this essay.

Conversely if we wrap something in an explanation, we expect, especially if we made it more useful, that we added complexity.

We also don’t need, at this time, to define what is ‘useful’ in this context, but no doubt later in proceeding essays it will be conducive with ‘that which more people use’ etc.

Possible Agreeable Lexicon and Symbols

We mean to present a syntax to help the reader understand and keep track of where we are:

{xc{xc{Rothbard{Mises regression theorem}}}

(In the programmers lexicon the { } are often referred to as ‘curly braces’ and in many of my hobby projects I use JavaScript in which curly braces denote objects.)

Through Szabonian deconstruction, we unwrap from Mises regression theorem xc’s wrapper, which consists also of xc’s wrapper of Rotharbards wrapper (philosophically it's probably easy to argue we have also already in our inquiry implied our own added wrapper to xc’s view however its not necessary or helpful in this essay to go into such a point or any similar philosophically implied viewpoints in this regard).

On Satisfying the Mises Institutes Judgment of Mises Original Intention

Although we can claim a perfectly impartial (unwrapped) view we want to understand Mises regression theorem by Mises’ sincere intent of it. We want Mises, if he were here today, to approve of our application of his idea in regard to our inquiry into whether or not bitcoin violates the principle he explains.

xc and Rothbard may not have given or used a framework to view Mises regression theorem that mises would approve of and we so have to take great caution in how we tease out Mises intentions from his texts.

Here we have an appropriate dual functioning judge on the accuracy of finding but one that is only unbiased for sure in a certain sense.

That if the very proclaimed school of Mises’ work, ie the Mises Institute, that claims to follow his insights, can say that we have understood and applied Mises in a satisfactory manner, AND most especially if they agree that Bitcoin violates Mises regression theorem such that there is a revision or invalidation needed to resolve the truth of nature I think it can be confirmed at the very least that a useful Szabian Deconstruction has been made and (not necessarily dependent on that truth but truth nonetheless because of it) that a new construction needed.

Of course if the school happened to be nefarious or self-serving (before truth and reason), or had a difficulty facing that the truth of nature was such that something in their founding doctrine is obviously invalid they could just claim in this essay we have applied an invalid construction that Mises wouldn’t have approved of.

Here however truth and justice to reason do not go unguarded, because they have to convince all the impartial observers, the general audience I write to now, that our deconstruction was an unjust construction.

In Mises Own Words (But Translated Into English (But While He Was Alive and After he Revised))

Obviously we want to refer to Mises' own words however we must note that not only are we traversing the contexts of culture and time but Mises originally wrote the Theory of Money and Credit in German and it was translated into English. Although Mises was alive made later revisions such that it seems he was able to supervise the translation to the extent that he did.

In this essay we feel we make a case satisfactory to the general reader and the Mises institute, that the translation component doesn’t affect our ability to understand Mises regression theory.

As a side note we can illuminate more wrappers for practice since they have arisen for us as examples:

Theory of Credit but translated from German to English:

englishTranslation{theoryOfCredit}

A writing of Mises commenting on the translation of his work:

MisesJudgement{englishTranslation{theoryOfCredit}}

Wrapping Mises Regression Theorem With the Context of ‘the Want of Approval of Concordance and Utility From Our 3 Judges’ As A Shortcut

We know that we want to satisfy the general reader, Mises, and the Mises Institute with our understanding and application of Mises regression theorem and so we can use their approval as our short-cut.

How we know there is this shortcut is the author's efforts (observing others efforts) not presented in this essay. But it is our conjecture that we can start at a place that will satisfy most importantly, the present day authority on the subject, the Mises institute, by invoking and explaining this quote:

If all the exchange ratios of the past were erased from human memory, the process of market-price determination might certainly become more difficult, because everybody would have to construct a new scale of valuations for himself; but it would not become impossible. In fact, people the whole world over are engaged daily and hourly in the operation from which all prices result: the decision as to the relative significance enjoyed by specific quantities of goods as conditions for the satisfaction of wants.

Here it is our wrapper to suggest that Mises was previously building up an argument that he summarizes here which suggests that a market can rebuild its prices from scratch because he is later going to make a contrast to this point in regard to money. A wrapper we feel our 3 important judges would approve of (and find useful).

Later Mises begins to expound on the idea that the ‘objective exchange value of money’ or what the general reader might better understand as purchasing power (hopefully the Mises institute agrees with the comparison of phrases):

The objective exchange value of money is determined in the market where money is exchanged for commodities and commodities for money.

It is our wrapper to suggest that Mises extends the marginal utility theory to point out and eventually re-solve an apparent problem of circularity that arises. First we present the quote and then we will summarize (thus the general reader can trust our summary to the judgment of the Mises institute as a computational shortcut to traversing the difficult wording of Mises’ work):

…the marginal-utility theory attempts to base the exchange value of goods on the degree of their utility to the individual, the degree of utility of money to the individual quite obviously depends on its exchange value, since money can have utility only if it has exchange value, and the degree of the utility is determined by the level of the exchange value. Money is valued subjectively according to the amount of consumable goods that can be obtained in exchange for it, or according to what other goods have to be given in order to obtain the money needed for making payments. The marginal utility of money to any individual, that is, the marginal utility derivable from the goods that can be obtained with the given quantity of money or that must be surrendered for the required money, presupposes a certain exchange value of the money; so the latter cannot be derived from the former.

Mises is responding to the observation that if:

Money is subject to the same universal laws as other market goods, and
Our want of money comes from the amount of market goods it buys,

But how does money attract our want for it if we don’t know the amount of goods it buys beforehand?

It is Mises Regression Theorem that addresses and re-solve this ‘apparent’ circularity:

Those who have realized the significance of historically transmitted values in the determination of the objective exchange value of money will not find great difficulty in escaping from this apparently circular argument.

To do this in his he puts forth the concept of the continuity of prices from the time when a money was a commodity to whenever the time of observation of them is:

Once an exchange ratio between money and commodities has been established in the market, it continues to exercise an influence beyond the period during which it is maintained; it provides the basis for the further valuation of money. Thus the past objective exchange value of money has a certain significance for its present and future valuation. The money prices of today are linked with those of yesterday and before, and with those of tomorrow and after.

He solidifies the idea that money works on a continuum of prices, necessary to regress the origin of it’s valuation to its nature as an otherwise useful, non-monetary, commodity:

To demand of a theory of the value of money that it should explain the exchange ratio between money and commodities solely with reference to the monetary function, and without the assistance of the element of historical continuity in the value of money, is to make demands of it that run quite contrary to its nature and its proper task.

On the Section of the Theory of Credit Entitled: ’The Necessity for a Value Independent of the Monetary Function before an Object can serve as Money’

We want to reference a section of Mises but the reference is long so here we present it block quote form:

The Theory of Money and Credit Part Two: The Value of Money > Chapter 8. The Determinants of the Objective Exchange-Value, or Purchasing Power, of Money > I. The Element of Continuity in the Objective Exchange-Value of Money > 2. The Necessity for a Value Independent of the Monetary Function before an Object can serve as Money

In this section Mises writes:

If the objective exchange value of money must always be linked with a preexisting market exchange ratio between money and other economic goods (since otherwise individuals would not be in a position to estimate the value of the money), it follows that an object cannot be used as money unless, at the moment when its use as money begins, it already possesses an objective exchange value based on some other use. This provides both a refutation of those theories which derive the origin of money from a general agreement to impute fictitious value to things intrinsically valueless4 and a confirmation of Menger's hypothesis concerning the origin of the use of money.

Notice the reasoning in parentheses which itself is almost a construction that helps us accurately frame Mises theorem.

On The Misean Wrapping of the Lockean Theory of the Intrinsic Value of Money

In that previous quote there is a citation attached that is a reference to Locke:

Thus Locke, Some Considerations of the Consequences of the Lowering of Interest and Raising the Value of Money, 2d ed. (London, 1696), p. 31.

He attaches this citation to the word ‘valueless’ in this sentence of the previous quote:

This provides both a refutation of those theories which derive the origin of money from a general agreement to impute fictitious value to things intrinsically valueless4 and a confirmation of Menger's hypothesis concerning the origin of the use of money.

Here, we can attempt to make a Szabonian deconstruction of Mises{Locke{money}} that our 3 judges would hopefully approve of. Although we are probably running into computational limits or in other words we might be worried that Locke will send us on more deconstruction efforts in order to understand his points to our 3 judges satisfaction (and also to Locke’s satisfaction and his schools’ satisfaction etc).

It seems maybe Mises is referring to this sentiment of Locke’s (we expected to be corrected by our judges otherwise):

....For Mankind, having consented to put an imaginary Value upon Gold and Silver by reason of their Durableness, Scarcity, and not being very liable to be Counterfeited, have made them by general consent the common Pledges, whereby Men are assured, in Exchange for them to receive equally valuable things to those they parted with for any quantity of these Metals. By which means it comes to pass, that the intrinsick Value regarded in these Metals made the common Barter, is nothing but the quantity which Men give or receive of them. For they having as Money no other Value, but as Pledges to procure, what one wants or desires; and they procuring what we want or desire, only by their quantity, 'tis evident, that the intrinsick Value of Silver and Gold used in Commerce is nothing but their quantity.

The experience of this author this essay calls for a deconstruction of Locke’s use of the word ‘quantity’ and here we can take an interesting shortcut by feeling that chatGTP (4 turbo) will satisfy the 5 judges (our 3 and including Locke if he could judge and anyone from his school of thinking or familiar with his work that is sincere etc). Firstly, of the preceding paragraph chatGTP explains (ie chatGTP{Locke{money}}):

…Locke delves into the reason behind the value attributed to gold and silver. He points out that mankind has agreed to assign an "imaginary value" to these metals due to their durability, scarcity, and resistance to counterfeiting. This general consensus has made gold and silver the common pledges in trade, assuring individuals that they can exchange these metals for items of equal value. The intrinsic value of these metals in commerce, according to Locke, is not derived from any inherent quality but solely from their quantity.

Then we ask chatGTP, ‘what is the definition of quantity in this sense?’:

…the term "quantity" refers to the physical amount or volume of these metals. When Locke mentions that the intrinsic value of silver and gold used in commerce is nothing but their quantity, he means that the value of these metals as money is determined by how much of them there is, not by any inherent quality or characteristic.

This concept is significant in the history of economic thought. It reflects an early understanding that the value of money, especially in the form of precious metals, is a function of its scarcity and the demand for it, rather than any intrinsic utility or use-value those metals might have.

ChatGPT{Lock{quantityTheoryofMoney}} refers to acknowledging that the amount of the units or medium of a money affects its purchasing power.

From a certain context, or with a certain wrapper, it might make sense to observe the nature of money or a money medium with the lexicon that suggests ‘that which is money has no use-value’.

Fortunately for us such a venture is not useful for our inquiry but it further exemplifies our framework and properly invites the Locheans along with the Miseans to make relevant fatal complaints to our inquiry.

On The Misean Wrapping of Menger and the Origins of Money

In the previous quote from Mises he finishes by declaring it to be:

…a confirmation of Menger's hypothesis concerning the origin of the use of money

In regard to Mengers Origin of Money and our now apparent need to traverse it we are able take a computation shortcut in the form of a citation from the works:

It is not impossible for media of exchange, serving as they do the commonweal in the most emphatic sense of the word, to be instituted also by way of legislation, like other social institutions. But this is neither the only, nor the primary mode in which money has taken its origin.

From referencing Menger’s framework it seems that at least the general observer would be easily convinced that the origins of money are not at all confined to arising from its origin as a commodity. It might be argued too that Menger doesn’t mean to argue, at least from the view of the above quote, that money came from a medium that was first a commodity.

However, It seems that Mises meant to say that Menger was suggesting that ‘money’ first arose from something that was a commodity with a previously established market price.

Thus the 3 judges (admittedly we can only really consult Mises as a judge through examining his work) then need to opine on whether this is a fair representation of what Mises implied of Menger and whether not Menger’s argument supports this representation.

Our Wrapped Representation of Mises Regression Theorem Or The Satisfactory Representation of It

The logic behind the theorem is very well and succinctly captured in this paragraph (an assertion statement is to be judged):

If the objective exchange value of money must always be linked with a preexisting market exchange ratio between money and other economic goods (since otherwise individuals would not be in a position to estimate the value of the money), it follows that an object cannot be used as money unless, at the moment when its use as money begins, it already possesses an objective exchange value based on some other use.

Mises feels its self supported that the objective exchange value of money must always be linked with a preexisting market exchange ratio between money and other goods because otherwise individuals would not be in a position to estimate the value of the money

He deduces an object cannot be used as money, unless it already has such a value. It seems fair to say then that Mises believed this framework logically asserts:

The Necessity for a Value Independent of the Monetary Function before an Object can serve as Money.

Reductio Ad Absurdum and Mises Regression Theorem

It seems then, barring proper contention on the previous observation and deconstructions, we can continue on in our inquiry from a "reductio ad absurdum" framework. If we find Bitcoin to in fact be a money, and that it did not at one time previously have a commodity based market value then Mises’ regression theorem is invalid in the form we are viewing it in (the question of what could be done about this highlights the purpose of building up this exploration).

Of course it COULD be said that Bitcoin isn’t a money, either isn’t yet, and never will be. Then there would be perhaps an inquiry or deconstruction needed into Mises’ definition of money. It would be a nice shortcut if the Misean school simply agreed that Bitcoin is in fact money and that by their account Mises would approve of this wrapper or extension of his work.

If the Austrian or Misesean school tries to argue Bitcoin isn’t money it would be a strange declaration however since they are the school that makes the very strong assertion that government declared money is barely money at all and certainly not the requirement for it. Furthermore there is no chance of the learned Misean saying that money is only that which the government declares it to be because it is well known it is part of the foundational argument of the school of thought that this isn’t true.

Moreover if Bitcoin isn’t a money, that you CAN buy things with it, and that it has a well established exchange price in every market would then mean it must have a COMMODITY (ie non-monetary) based market valuation. It would still be up to the Misean, defending the regression theorem, to show that such a valuation is not a money based valuation but a commodity based one. The job to satisfy the inquiry of whether or not Bitcoin breaks the Mises regression theorem would be the same: find a non monetary use-case else it seems likely the part of the judge that is the general audience would admit even Mises would have to repent.

How well would the argument sit with the general audience that Bitcoin simply MUST have a non-monetary use case but that no one can show what it is and it seems easier to argue that it doesn’t? How did such a use case create a market value for market participants if no one knows what that use case was?

At the root and heart of Misean theory, based in praxeology a word we will explore later, you cannot prove that Bitcoin is a money, simply because ‘it has a price and that the Miseans can’t come up with a non-money based use case’. However, we also suggest it would be really hard to convince an impartial observer that Bitcoin isn’t money by the Misean schools definition, if they spent any amount of time with Mises’ works (hint we mean to begin to Szabonian deconstruct money in a proceeding essay and include an inquiry into the Misean definition of it).

Although such effort is not likely to be expended, it's not necessary anyways.

If Bitcoin IS a money by the Misean definition and If the Misean school were to bend truth to save face and judge and declare Bitcoin was not a money, they would shoot themselves in the foot, especially if they feel their school is superior in the face of nature.

In this sense it seems predictable that wisdom will not let youth do such a thing.

Then our Reductio Ad Absurdum reduces to showing that Bitcoin had no non-monetary commodity value before it became a money.

When Did Bitcoin Get a Price? (When) Did Bitcoin Become Money?

On May 18th 2010 user Laszlo posted an open trade of bitcoin for pizza:

I'll pay 10,000 bitcoins for a couple of pizzas.. like maybe 2 large ones so I have some left over for the next day. I like having left over pizza to nibble on later. You can make the pizza yourself and bring it to my house or order it for me from a delivery place, but what I'm aiming for is getting food delivered in exchange for bitcoins where I don't have to order or prepare it myself, kind of like ordering a 'breakfast platter' at a hotel or something, they just bring you something to eat and you're happy!

I like things like onions, peppers, sausage, mushrooms, tomatoes, pepperoni, etc.. just standard stuff no weird fish topping or anything like that. I also like regular cheese pizzas which may be cheaper to prepare or otherwise acquire.

If you're interested please let me know and we can work out a deal.

Thanks, Laszlo

There are few things to note. Firstly the offer is open to bargain with, although, it's certain that Laszlo has some idea in his mind about the value of his bitcoin. This suggests that there can’t be said to be an established price to bitcoin in any significant sense which would be confirmable by the sentiments from that time and now.

Going back to our encapsulation of Mises regression theorem we want to observe this in regard to the bolded:

If the objective exchange value of money must always be linked with a preexisting market exchange ratio between money and other economic goods (since otherwise individuals would not be in a position to estimate the value of the money)

Laszlo’s famous transaction wasn’t the first Bitcoin transaction in exchange for something of value and it's not for us to reason that this was the moment it became a money (there is no doubt this wouldn’t be perfectly palatable for the general audience, the Mises Institute, nor Mises) but it's hard to agree with the idea that Laslzo, if he didn’t have the exchange value of Bitcoin in this scenario, wasn’t in a position to estimate the value of his money. He certainly posted the range of his own estimate in a time when there was no real established price for bitcoin.

How does the general reader feel about the implied assertion by Mises that Laslo wasn’t able to estimate the value of his Bitcoin without a previous valuation for it? How does that resolve with Mises stating:

…it follows that an object cannot be used as money unless, at the moment when its use as money begins, it already possesses an objective exchange value based on some other use.

Furthermore can the general reader be convinced it's otherwise a game of semantics to suggest that when Laszlo paid for his pizzas he wasn’t using bitcoin as a money?

There are many explanations and contentions that the Misesean might reach for but for the general readers sake and for brevity in regard to the dual nature of this essay we shall compress them later into their own section.

The Charge That The Misean School Must Respond To

In order to extend Szabo’s concept of deconstruction and the formalization of the measurement of the value of complexity it is helpful to reduce our inquiry into the effects of the existence of Bitcoin on the assertions of the Misean school of economic thought and specifically with regard to the regression theorem we put forth the following:

Mises put forth a theorem we refer to as Mises regression theorem that says in effect a money medium must have had a previous non-money nature to it.
A medium considered as money by the Misean definition that exists must necessarily have a non-monetary based origin to its valuation or it breaks the regression theorem.
Bitcoin doesn’t have a non-monetary based market value.
Bitcoin breaks mises regression theorem calling for necessary re-solution (a word we intend to expound on in another essay) from the Misean school of thought.

Re-visiting The Propriety of Action

This charge to be defended ignites an interesting experiment to observe as the Misean school struggles to re-solve the apparent discordance that the general reader will no doubt see. If left unresolved, then the general reader cannot sympathize with the school and its uselessness, as opposed to a general usefulness, will cause it to fall out of favor and history.

Left undefended Bitcoin will have defeated it.

Szabonian Construction And Ways to Defend the Miseans School Versus the Existence of Bitcoin and the Apparent Discordance with Mises Regression Theorem and Observable Nature

Szabo got the idea of construction/deconstruction we are referring to from objects he wrapped. Our phrase “Szabonian construction” is our wrapper or our interpretation, evolution, and useful application of his ideas in this regard.

The ‘Szabonian’ aspect speaks to how the construction of our inquiry, or how the presentation of the argument of this essay, aligns with Szabo’s work. But in this essay this is more done by example rather than explaining how or why the examples are relevant.

Szabo gives us an explanation and some ideas for re-solving discordance of objects:

Analyzing the deconstruction methodology of hermeneutics in terms of evolutionary epistimology is enlightening. We see that constructions are vaguely like "mutations", but far more sophisticated -- the constructions are introduced by people attempting to solve a problem, usually either of translation or application. An application is the "end use" of a traditional text, such the judge applying the law to a case, or a preacher writing a sermon based on a verse from Scripture. In construction the judge, in the process of resolving a novel case sets a precedent, and the preacher, in the process of applying a religious doctrine to a novel cotemporary moral problem, thereby change the very doctrine they apply.

Thus, the Darwinian process of selection between traditions is accompanied by a Lamarckian process of accumulation and distortion of tradition in the process of solving specific problems. We might expect some constructions to advance a political ideology, or to be biased by the sexist or racist psychology of the translator or applicator, as some of Derrida's followers would have it. However, these kinds of constructions can be subsumed under two additional constructions suggested by the evolutionary methodology: synthesis and biomotivation.

Synthetic construction consists of one or more of:

the development of a new element that synthesizes traditions

the synthesis of texts or parts of texts into new texts

new texts which incorporate such syntheses

Satoshi’s Opinion on The Necessity for a Value Independent of the Monetary Function before an Object can serve as Money

Obviously Satoshi’s authority and opinion should have no bearing on reason but it's interesting and specific to note that Satoshi did not agree with Mises regression theorem by the interpretation and implication that a money must necessarily have had a non-monetary market value before it became a money:

As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties:

boring grey in colour

not a good conductor of electricity

not particularly strong, but not ductile or easily malleable either

not useful for any practical or ornamental purpose

and one special, magical property:

can be transported over a communications channel

If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.

Maybe it could get an initial value circularly as you've suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some) Maybe collectors, any random reason could spark it.

I think the traditional qualifications for money were written with the assumption that there are so many competing objects in the world that are scarce, an object with the automatic bootstrap of intrinsic value will surely win out over those without intrinsic value. But if there were nothing in the world with intrinsic value that could be used as money, only scarce but no intrinsic value, I think people would still take up something.

(I'm using the word scarce here to only mean limited potential supply)

Perhaps too judges can take note how under the scrutiny of the leadup arguments of this essay it appear even more so (than to the otherwise average and impartial reader that hadn’t traversed this essay) of Satoshi’s sentiments that Satoshi was in fact PROPERLY speaking to the question and problem of whether or not Bitcoin satisfies or breaks the intention of mises regression theorem explanation.

He gave a very good and clear answer that he believes a medium with no non-monetary usefulness can become money, and at least by the way he explains (ie as a szabonian collectible).

Previous Attempts to Construct Re-solutions of Bitcoin and Mises Regression Theorem

Now we can begin to use our wrapper framework to compress previous inquiries into whether or not Bitcoin violates Mises Regression theorem and judge whether or not they are valid and useful wrappers.

First we look at the account of Jefrey Tucker and again our framework provides us with some shortcuts to the computation. Tucker says of the inquiry of whether or not Bitcoin violates Mises regression theorem:

At first glance, bitcoin would seem to be an exception. You can’t use a bitcoin for anything other than money. It can’t be worn as jewelry. You can’t make a machine out of it. You can’t wear it, eat it, or even decorate with it. Its value is only realized as a unit that facilitates indirect exchange. And yet, bitcoin already is money. It’s used every day. You can see the exchanges in real time. It’s not a myth. It’s the real deal.

Tucker certainly is responding to the inquiry. He also frames it similar to how we feel that Mises would approve of as well as the Misean school and the general reader.

Then by our theory (not that we mean to posit something but rather we will look for this construction) sincerity, if he had it, would lead him to need to re-solve the situation with a construction and he does in fact attempt do such a thing:

How can we resolve this problem? In my own mind, I toyed with the issue for more than a year. It puzzled me. I wondered if Mises’s insight applied only in a predigital age. I followed the speculations online that the value of bitcoin would be zero but for the national currencies into which is converted. Perhaps the demand for bitcoin overcame the demands of Mises’s scenario because of a desperate need for something other than the dollar.

As time has passed—and I read the work of Konrad Graf, Peter Surda, and Daniel Krawisz—finally the resolution came. I will cut to the chase and reveal it: Bitcoin is both a payment system and a money.

He wraps bitcoin in the interface of a payment system, giving it a pre-money non-monetary usefulness for the market to value.

It's hard to see how Mises himself would approve of the idea however that medium could be a payment system that has no other usefulness and yet is not a money. This would seem to erase the distinction that Mises carefully and painstakingly made between a market good or commodity and a money.

What a strange re-solution to admit there is the issue and then to solve it by saying there is not the issue Mises might say and we should be inclined to think the Misean school would agree.

Nonetheless we see an attempt to resolve the apparent violation.

Deconstructing Attempts to Construct Re-solutions of Bitcoin and Mises Regression Theorem

Daniel Krawisz, mentioned by Tucker, addressed this inquiry and also made observations on the others that Tucker mentioned. Krawisz frames the regression theorem in a familiar way:

To recap, the regression theorem says that:

To become a medium of exchange, a thing must be demanded for other reasons. Among a set of competing media of exchanges, one tends to emerge as money.

Krawisz’s wrapper gives us a nice shortcut:

An explanation suggested by Graf is that bitcoins were originally demanded because of an appreciation of Bitcoin's engineering.

The correct approach, I think, was hinted at by Šurda, who obliquely says, "According to my opinion, the rational expectations of the potential utility of Bitcoin for the potential buyers exceeded the price demanded by the producers, and trade emerged".10 Bitcoins would have had value to the person with the right entrepreneurial mindset.

A suspicion that Bitcoin might one day be a big deal explains everything about its original demand.

This explains how an appreciation of Bitcoin's engineering could lead someone to want the coins themselves. Once it was known that bitcoin could be sold, even for a pittance, new possibilities opened up.

Since Krawisz begins the essay by declaring ‘Bitcoin is not and never has been money’ it is then it must be that he’s explaining the birth of Bitcoin’s pre-money market price.

Although he doesn’t really re-solve the regression theorem he shortcuts us from having to look at Surda and Graf.

Deconstructing Laura Davidson’s Deconstructing Attempts to Construct Re-solutions of Bitcoin and Mises Regression Theorem

Laura Davidson gives us her wrapper to a familiar explanation of the issue in the abstract of her writing “Bitcoin, the Regression Theorem, and the Emergence of a New Medium of Exchange”:

A recent controversy has brewed over whether or not the emergence of bitcoin, as a new medium of exchange, is in accordance with Mises’s regression theorem. The main question in the debate seems to be, is bitcoin valued in direct use? The present paper contends that with respect to the regression theorem, this issue has no bearing on bitcoin’s genesis, because it is relevant only when a new medium of exchange arises out of a pure barter economy. The debate is therefore predicated on a misinterpretation of the theorem. However, the issue of bitcoin’s direct-use value, if it has one, does have relevance in assessing the likelihood it will become a generally-accepted medium of exchange—i.e., money.

More specifically Davidson contends:

…this issue has no bearing on bitcoin’s genesis, because it is relevant only when a new medium of exchange arises out of a pure barter economy.

Without first going into the reasoning of Davidson we can say (and expect the general reader to follow) we take issue with this assertion for reason and examples such as Mises exact English wording:

If the objective exchange value of money must always be linked with a preexisting market exchange ratio between money and other economic goods (since otherwise individuals would not be in a position to estimate the value of the money), it follows that an object cannot be used as money unless, at the moment when its use as money begins…

And this comes from a section entitled:

The Necessity for a Value Independent of the Monetary Function before an Object can serve as Money

As well as this statement:

Before an economic good begins to function as money it must already possess exchange value based on some other cause than its monetary function.

Perhaps there is room to argue that in some areas of his writing Mises didn’t mean to assert ANY and ALL money must have a non-monetary origin based market valuation, but rather for just the initial origins of it in general.

Nonetheless he does stop to specifically make this point about what he calls fiat and credit money:

This link with a preexisting exchange value is necessary not only for commodity money, but equally for credit money and fiat money.5 No fiat money could ever come into existence if it did not satisfy this condition.

The condition being that, ‘at the moment when its use as money begins, it already possesses an objective exchange value based on some other use.’

Davidson claims, ‘the debate is therefore predicated on a misinterpretation of the theorem’ and we can note that at the time of the writing she doesn’t believe that Bitcoin is money:

However, the issue of bitcoin’s direct-use value, if it has one, does have relevance in assessing the likelihood it will become a generally-accepted medium of exchange—i.e., money.

For the relevant context of the definition of money she provides what she wraps as Mises’s wrapping Menger:

Menger (2009, p. 11) defines money as the “universal medium of exchange,” meaning it must be accepted by everyone, while Mises (1998, p. 398) more reasonably maintains it must be “generally-accepted and commonly-used,” leaving some room for the possibility that not everyone need be willing to accept it. But no matter which definitional version one chooses, it seems fairly clear that bitcoin has not yet reached the threshold of either of them.

Here we find what Davidson claims to be her deconstruction of others constructions of she parses:

It is important to emphasize that what Mises refers to in this passage is the origin of a new money—de novo—i.e. from a pure state of barter, where there are no existing money prices. To that end, the second part of the regression theorem only explains the genesis of a new money where none existed before.

Davidson continues:

After The Theory of Money and Credit was published, a number of economists criticized Mises on the grounds that the theory failed to explain how entirely new paper currencies can replace existing fiat monetary regimes.

But these criticisms of Mises were misplaced, because they were founded on a misinterpretation of the regression theorem. That theorem does not contend that a new or subsequent money must arise out of a state of barter. Nor does it attempt to explain why new monies that have not arisen from barter replace existing ones. It merely implies that in order for the new money to be used in economic calculation, there must be an existing price system in place upon which the new money can be superimposed, which was clearly the case with the Rentenmark.

The Conclusion of Our Dual Purpose Essay

It is for the general audience and the Mises institute to decide whether or not Davidson has made a proper deconstruction or rather has wrapped Mises original intention of the regression theorem in her own interface.

But now we have laid grounds to consider a comparison and relevance to the system or school of Misean thought with the concepts of godel consistency and completeness.

In the situation Bitcoin has put the Misean school in it is as if they (the school supporters) had asserted their consistency and ran into a contradiction that although started in nature ended up allegedly and apparently corrupting the consistency of the system itself. In such a scenario we would expect to see humans in real time ‘defend their gods’ so to speak. We can think of such responses in regard to Szabo’s possible synthetic (ie merging ideas) based responses:

Synthetic construction consists of one or more of:

the development of a new element that synthesizes traditions

the synthesis of texts or parts of texts into new texts

new texts which incorporate such syntheses

Whereas Davidson might argue she made a proper Szbonian deconstruction, our argument is that she has rather made an interpretation Mises wouldn’t so readily go along with and the Misean school also won’t find definitive consensus on. Our deconstruction suggests that Davidsons deconstruction is a disguised construction.

She has added something to re-solve the issue.

But this is more for the judges to decide.

The dual nature of this essay, or the second useful aspect of it (other than pointing out any reasonable objective inquiry into Mises’ regression theorem and the relevant points he makes would conclude the respective school needs to make a clarifying revision in the face of Bitcoin-whatever that revision clarification might be.), is to point out that humans should have a curious nature and thus history of attempting to find salvation of their religions or systems of thought by adding axioms that otherwise proved them undeniably inconsistent.

That is to say, that by Szabo’s account which we have not explained here, we should expect to find useful deconstructions out of the assumption that humans probably did this constantly throughout humanity and DESPITE the fact that we later proved it to be incapable of making an inconsistent system consistent.

In fact, the Austrian school is in complete disarray because of it. Ask them.

A Concluding Note On Praxeology the Foundation of the Misean School

Mises Theory of Human Action explains that his school of thought is an extension of praxeology which he defines here:

Praxeology is a theoretical and systematic, not a historical, science. Its scope is human action as such, irrespective of all environmental, accidental, and individual circumstances of the concrete acts. Its cognition is purely formal and general without reference to the material content and the particular features of the actual case. It aims at knowledge valid for all instances in which the conditions exactly correspond to those implied in its assumptions and inferences. Its statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification or falsification on the ground of experience and facts. They are both logically and temporally antecedent to any comprehension of historical facts. They are a necessary requirement of any intellectual grasp of historical events. Without them we should not be able to see in the course of events anything else than kaleidoscopic change and chaotic muddle.

The theorems attained by correct praxeological reasoning are not only perfectly certain and incontestable, like the correct mathematical theorems. They refer, moreover with the full rigidity of their apodictic certainty and incontestability to the reality of action as it appears in life and history. Praxeology conveys exact and precise knowledge of real things.

In a sense it can be viewed as if it’s a system that evolved to state its own consistency. We find that interesting, however, in sincere defense Mises means to say he means to expound on a system based on logic, such that if done correctly, no empirical observations could disprove it.

If this is still unpalatable just consider the caution that witnessing a phenomenon is only proof so far as a magician can fool an audience. Mises system means to caution against this, or against making historically based deductions and assert them as economic laws.

For this it's interesting to consider and very important that Mises would perhaps point out that if the regression theorem has been invalidated it's not because of the existence of Bitcoin-you don’t invalidate reason with empirical evidence. But yet we can see how in this context it's still important we have it as an apparent natural counter-example.