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I agree with what you are saying to an extent (it is just paper), however at a minimum the value of government backed money could possibly be expressed by the m
by aplummer 9y ago
I agree with what you are saying to an extent (it is just paper), however at a minimum the value of government backed money could possibly be expressed by the mobilisation of resources a government would rally to give it value.
Lets say everyone declares USD is worthless, the government could 1) sell things of value demanding explicitly USD in return. 2) Impede movement or other activities, use of public goods using force and demand a toll explicitly in USD. I.e. this much $ is worth 100km of highway travel. Like calculating the value of a person's life to the government in free health coverage countries based on where they draw the line on spending to keep them alive, I think the value is the inverse of the cost the government would go to to prop it up.
You could argue without money how would they be able to enforce, however enforcement of a government order has not always required money, and that's one hypothetical too deep for me.
- imaginenore 9y agoYou should look into Zimbabwean dollars, Russian ruble, Venezuelan bolivar history. No amount of government intervention will help to keep the value once the population loses faith in the currency. Even if you start giving away gold bars for each unit of currency, you will quickly end up with no gold bars and lots of worthless paper. If you restrict the supply of currency, people quickly invent their own money, which you don't control. EDIT: And people will happily pay for goods and tolls with worthless paper, but your demand to accept dollars and fix the prices has one outcome: empty shelves and lots of people in prison (because how else do you enforce dumb demands?). Both were tried in Venezuela and USSR with the same result.
- tim333 9y agoI think with Zim dollars and the like the problem is too much money chasing too few goods. Without that they would behave normally. I can't think of practical instances of restricting the currency supply leading to people inventing money getting far. Sometimes if the local currency is not taken abroad people will try using USD or similar instead but inventing some new money doesn't help much for that.
- maneesh 9y agobitcoin or creating a new token helps for that
- hiram112 9y agoI've heard it mentioned various times that a fiat currency's value in any organized society comes from its ability to pay off the controlling state (i.e. taxes). Whether it is dollars to the IRS, colored beads to the local chieftains, or copper coins to the Lord of the manor, it doesn't make a difference. The ability to 'pay off' the state in power, with legal permission and ability to use violence, gives that currency value.
- JoshuaDavid 9y agoSo by that token, the ability to pay off ransomware authors gives bitcoin value?
- aplummer 9y agoI think you're right in this case. The ransomware authors functioning similarly to the state. If i couldn't access my computer I would have to buy bitcoins with my other assets.
- aplummer 9y agoInteresting how this works once you go back to currency. This extortion money being "legally" worthless, being the proceeds of crime. (Illegally obviously worth the picture on the front.)