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I agree with you that there's no such thing as objective value. But my feeling is that there is still something important that differentiates "real" currencies

by trgv 9y ago

I agree with you that there's no such thing as objective value. But my feeling is that there is still something important that differentiates "real" currencies (fiat or not) from bitcoin/gold/etc. Namely, there is a government backing the "real" currencies. Dollars are "guaranteed" to have value because they are "legal tender," ie you can pay your taxes and buy things with them. As long as the US government has power, that will continue to be the case. I can definitely see btc being a viable currency in situations where a government's power is limited but, for stable countries, it seems more like a commodity, and that's definitely (at least it seems to me) how people are treating it.

sbenitoj 9y ago
Have to pick a bone here: dollars do not have value because they are "legal tender" -- see Zimbabwe hyperinflation [0]. Zimbabweans stopped valuing their national currency years before Zimbabwe recognized any other currencies as legal tender. Dollars (and all fiat for that matter) have value because once upon a time paper money was tied to a specific weight of gold / silver stored in a bank vault. Over the past 100-ish years that link was slowly eroded until the point where there was no backing whatsoever. Inertia is the only thing keeping fiat currencies going, and it's not going to last forever now that alternatives (like cryptocurrency) exist and governments can't shut them down (like they did with the Liberty Dollar [1]). After a couple more financial crises in the West and bank bailouts I suspect ALL governments will have limited power in this domain, people aren't going to let their savings be inflated into oblivion for the rest of eternity. [0] https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe [1] https://en.wikipedia.org/wiki/Liberty_dollar_(private_currency) https://en.wikipedia.org/wiki/Liberty_dollar_(private_curren...
- trgv 9y ago
  The point that I meant to get across was that dollars have value as long as the government has power. You're right that it doesn't matter what the government says. Rather what matters is whether or not the government can back up what it says. If you don't pay your taxes, you will be jailed. How do you pay your taxes? Well that's up the government, and they went with dollars. I don't agree with your explanation of why dollars have value. You seem to have a bone to pick with every fiat currency, which I think is very silly.
  - sbenitoj 9y ago
    Not sure why I'm getting downvotes on this, but you're right that I have an issue with every fiat currency, they're antithetical to a free society. No fiat currencies would exist in a world without coercion, people would not voluntarily use a currency which is debased every year by design.

by trgv 9y ago

sbenitoj 9y ago

Have to pick a bone here: dollars do not have value because they are "legal tender" -- see Zimbabwe hyperinflation [0]. Zimbabweans stopped valuing their national currency years before Zimbabwe recognized any other currencies as legal tender. Dollars (and all fiat for that matter) have value because once upon a time paper money was tied to a specific weight of gold / silver stored in a bank vault. Over the past 100-ish years that link was slowly eroded until the point where there was no backing whatsoever. Inertia is the only thing keeping fiat currencies going, and it's not going to last forever now that alternatives (like cryptocurrency) exist and governments can't shut them down (like they did with the Liberty Dollar [1]). After a couple more financial crises in the West and bank bailouts I suspect ALL governments will have limited power in this domain, people aren't going to let their savings be inflated into oblivion for the rest of eternity. [0] https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe [1] https://en.wikipedia.org/wiki/Liberty_dollar_(private_currency) https://en.wikipedia.org/wiki/Liberty_dollar_(private_curren...

trgv 9y ago
The point that I meant to get across was that dollars have value as long as the government has power. You're right that it doesn't matter what the government says. Rather what matters is whether or not the government can back up what it says. If you don't pay your taxes, you will be jailed. How do you pay your taxes? Well that's up the government, and they went with dollars. I don't agree with your explanation of why dollars have value. You seem to have a bone to pick with every fiat currency, which I think is very silly.
- sbenitoj 9y ago
  Not sure why I'm getting downvotes on this, but you're right that I have an issue with every fiat currency, they're antithetical to a free society. No fiat currencies would exist in a world without coercion, people would not voluntarily use a currency which is debased every year by design.