6 ms·

What you are referring to as 'good money' , most people would call 'stupid money'. It's a stupid idea to run a country with a fixed amount of currency - as the

What you are referring to as 'good money' , most people would call 'stupid money'. It's a stupid idea to run a country with a fixed amount of currency - as the economy expands, more currency is needed - either that - or all prices of everything need to adjust because the 'stupid currency' is fixed. A 'well managed' currency is better than a fixed supply. Of course - the 'existential risk' is that some political cowboy will 'print money' for political reasons - this is the great problem that fiat always faces. But this can be avoided. Most major currencies are very well managed. Also - remember that they are backed by actual assets - so money is not coming out of nowhere. Almost all Euros are backed by some kind of quality asset. It's very rational to allow entities to 'trade' some kind of asset for currency at the central bank. This is actually more 'free market' than any kind of fixed currency. National currencies - irrespective of the quality of their governance, fixed or not - are extremely useful to everyone. They 'spend' that currency because it's what's used to buy stuff. Household expenditures: mortgage/rent, electricity, groceries, insurance, gas, car payments, cable/internet. Can you use BTC for any of that. Pragmatically - No. BTC is 'pragmatically worthless' to anyone - it has no reason to exist. BTC is very useful to money launderers, tax evaders, and other people doing illicit things, it's a great currency for the black market. But beyond that, it serves no purpose. It's not a currency and it's a terrible store of value as compared to any of real-estate, gold, most commodities, a 'basked of bonds of equities' or a 'basket of currencies'. It's a great intellectual exercise, and I think the 'paper value' of BTC will remain quite high for some time, but unless it sinks in as an actual currency of some economy (say, African nations where the currency is garbage), in the long-long-long run there's no reason for it to maintain it's value.

addHocker 9y ago
> all prices of everything need to adjust because the 'stupid currency' is fixed. Thats a price system like at the gas station, right? Sounds good to me.
- alexasmyths 9y ago
  You're right, prices to change. But 'monetary policy' is a very valuable instrument, in fact, necessary in many occasions, such as deep recession, economic shock, or war.
dreit1 9y ago
When will the bitcoin haters finally realize that bitcoin is terrible for illicit transactions. The transactions is recorded forever...on a public ledger...and any money in or out of your address is traceable
- emodendroket 9y ago
  Anonymity is about the only selling point for BTC transactions that I could ever see the appeal of from a buyer's perspective.
  - dreit1 9y ago
    Most interesting aspect to me is the deflationary aspect. Savers in today's society get punished. If you don't want to buy lot's of stuff and instead want to achieve financial freedom, then Bitcoin can be a viable alternative. Additionally I work abroad, once I realized how much is was going to cost me to send my salary back home using the traditional banking system, I quickly became a bitcoin enthusiast
    - alexasmyths 9y ago
      "Savers in today's society get punished" No. You can earn the same as inflation in a risk-free investment. You can earn more by taking a small amount of risk. Savers are not punished for anything.
      - dreit1 9y ago
        ? If you leave your money as USD in a bank account, you will not earn the same as inflation as interest. I consider this punishment. A pure deflationary currency should exist to counterbalance inflationary fiat.
    - emodendroket 9y ago
      A deflationary currency seems pretty terrible for business operations or for any major purchases (car, house, etc.) though. If it's just an asset to hold on to that's less of a concern but the volatility of Bitcoin would make me nervous.
Synaesthesia 9y ago
Actually most money out there is not backed by any assets at all, it’s all paper money, and yes it’s managed but it only has value because of communal faith. Same as bitcoin.
- alexasmyths 9y ago
  This is false. Euros are backed by specific classes of assets, and USD is backed by US government debt, and since 2008 a lot of real estate (which was under water for a long time, but coming above water over time). The US does not just 'print money' and inject it into the economy. The Fed takes US Gov debt out of the market at market prices, and replaces them with USD of the same value - or the reverse of that. At least at the 'central bank' level. Now - when it comes to the notion of 'fractional reserve banking' - that's another issue entirely.
  - Synaesthesia 9y ago
    Fractional reserve is how most countries banks operate. Yes they just “print money” actually they create it electronically, that’s how the government got the money for quantitative easing. The reserve bank has control over the money supply. They can create more or less, and thereby regulate the inflation rate of a country.
    - alexasmyths 9y ago
      You're misrepresenting money creation. It's not arbitrary. The government is trading money they create, for some type of asset - in the case of QE, it could be government bonds, or other things. i.e. taking bonds 'off the market' and putting currency 'on the market'. Some day it will will reverse. Ergo - that currency is 'backed by' an asset, i.e. government bonds, or other securities. Obviously they have to 'create it' somehow in order for it to exist, but it's only created in exchange for assets, which are held by the central bank. 'Money printing' or 'arbitrary money creation' is when governments/central banks create money out of thin air for whatever purpose. When a government 'prints money' to pay of debt to some other country - that's just 'printing money out of thin air' - the newly minted currency is not 'backed' by anything. This will cause hyperinflation as the value of each 'dollar' is backed by less and less, worth less and less, i.e. failure. At some point, the Fed will release those QE assets back into the market, and take dollars out of circulation - i.e. it's monetary policy, not just printing willy nilly.
nawitus 9y ago
>It's a stupid idea to run a country with a fixed amount of currency - as the economy expands, more currency is needed - either that - or all prices of everything need to adjust because the 'stupid currency' is fixed. All prices are already being adjusted all the time - what is the problem?
- alexasmyths 9y ago
  To be more specific - the lack of monetary policy. Greece and Spain right now do not have their own currency. Their monetary policy is dictated by greater powers - like Germany. The Euro is a 'strong currency' - it's the only way a currency union can work. There are very strict rules for how money is created. When an economy crashes or sinks, sometimes governments want to print some easy money to 'stimulate' the economy, and a weaker currency will help exports. Also - one 'price' that will not change easily is wages. Powerful, government sector unions will never accept a pay cut. Neither will private citizens really. But in reality - 'the nations workers' simply are not as productive - and 'everyone needs to take a pay cut'. Not gonna happen. Instead of 'pay cuts' companies and govs just 'hire less' hurting the economy even more. Welcome 'monetary policy'. It's a tricky game, but they can inflate away debt, and push wages down a little bit, vis-a-vis other nations - to reflect the new condition of the economy. Also - war, and existential shock. Monetary policy tools are important then for nations to survive sometimes. It's a risky thing, and prone to mismanagement and certainly when politicians get their grubby hands on the Central Bank - it usually runs amok. This is the 'historical' reason a lot of people like 'Gold standards' and 'hard money' - because some tin-pot dictator can't dilute their cash. But intelligently managed currency has elasticity - which helps smooth over bumps. Is the short answer.
ObeyTheGuts 9y ago
so what i should use if not bitcoin to buy online??? im jomeless and banks dont let me use them???
markatkinson 9y ago
So you seem to make some really valuable points about how money is not just printed out of thin air, and is actually backed by bonds etc. However I think what you need to understand with Bitcoin is that it isn't a finished product or in its final state. That is one of its strengths. People are constantly working to improve it. It is literally always under development by the community that uses it. Eventually improvements will be made to improve transaction times, transaction anonymity, efficiency etc... But even without those improvements Bitcoin is being adopted quite seriously by some significant institutions as a means of facilitating transactions. One of the largest retailers in South Africa (where I happen to live), is experimenting with accepting Bitcoin at the till. So I suppose I am not here to preach the gospel that Bitcoin is the future and is perfect, but I would be careful of declaring absolutes like 'unless it sinks in as an actual currency of some economy ... there's no reason for it to maintain it's value.' Mainly because most people that make those predictions (re. Bitcoin) have had to eat their own words.
127 9y ago
Nothing prevents the seller to automatically change the price to what is the real value of the product. Bitcoin exists electronically, prices can also exist electronically. Yes, before the internet and computers, changing the price of a product is a huge overhead. Today, it doesn't necessarily have to be.
gaius 9y ago
The ultimate value of a currency is: people with military control of an area require taxes and will accept taxes in their currency. It is legitimised by force. Everything else flows from this. If a major government starts accepting your tax bill in BTC then it is real, and not before.
- whiskers08xmt 9y ago
  I wonder if Bitcoin is the perfect currency for the globalized world. I need currency to pay taxes to the state I currently live in, but if I'm a global citizen, not planning to be a permanent residence of any specific country, then doing my banking in a currency that can be easily moved, and can't be seized, is very valuable. Is the Fiat alternative keeping CHF in a Swiss bank account?
yosito 9y ago
You have a lot of opinions about Bitcoin, but no understanding of how it works. It's deflationary by nature, meaning that it doesn't behave like a fixed amount of printed currency. The value of it is backed by tangible work. And it's not anonymous.

addHocker 9y ago

> all prices of everything need to adjust because the 'stupid currency' is fixed. Thats a price system like at the gas station, right? Sounds good to me.

alexasmyths 9y ago
You're right, prices to change. But 'monetary policy' is a very valuable instrument, in fact, necessary in many occasions, such as deep recession, economic shock, or war.

dreit1 9y ago

When will the bitcoin haters finally realize that bitcoin is terrible for illicit transactions. The transactions is recorded forever...on a public ledger...and any money in or out of your address is traceable

emodendroket 9y ago
Anonymity is about the only selling point for BTC transactions that I could ever see the appeal of from a buyer's perspective.
- dreit1 9y ago
  Most interesting aspect to me is the deflationary aspect. Savers in today's society get punished. If you don't want to buy lot's of stuff and instead want to achieve financial freedom, then Bitcoin can be a viable alternative. Additionally I work abroad, once I realized how much is was going to cost me to send my salary back home using the traditional banking system, I quickly became a bitcoin enthusiast
  - alexasmyths 9y ago
    "Savers in today's society get punished" No. You can earn the same as inflation in a risk-free investment. You can earn more by taking a small amount of risk. Savers are not punished for anything.
    - dreit1 9y ago
      ? If you leave your money as USD in a bank account, you will not earn the same as inflation as interest. I consider this punishment. A pure deflationary currency should exist to counterbalance inflationary fiat.
  - emodendroket 9y ago
    A deflationary currency seems pretty terrible for business operations or for any major purchases (car, house, etc.) though. If it's just an asset to hold on to that's less of a concern but the volatility of Bitcoin would make me nervous.

Synaesthesia 9y ago

Actually most money out there is not backed by any assets at all, it’s all paper money, and yes it’s managed but it only has value because of communal faith. Same as bitcoin.

alexasmyths 9y ago
This is false. Euros are backed by specific classes of assets, and USD is backed by US government debt, and since 2008 a lot of real estate (which was under water for a long time, but coming above water over time). The US does not just 'print money' and inject it into the economy. The Fed takes US Gov debt out of the market at market prices, and replaces them with USD of the same value - or the reverse of that. At least at the 'central bank' level. Now - when it comes to the notion of 'fractional reserve banking' - that's another issue entirely.
- Synaesthesia 9y ago
  Fractional reserve is how most countries banks operate. Yes they just “print money” actually they create it electronically, that’s how the government got the money for quantitative easing. The reserve bank has control over the money supply. They can create more or less, and thereby regulate the inflation rate of a country.
  - alexasmyths 9y ago
    You're misrepresenting money creation. It's not arbitrary. The government is trading money they create, for some type of asset - in the case of QE, it could be government bonds, or other things. i.e. taking bonds 'off the market' and putting currency 'on the market'. Some day it will will reverse. Ergo - that currency is 'backed by' an asset, i.e. government bonds, or other securities. Obviously they have to 'create it' somehow in order for it to exist, but it's only created in exchange for assets, which are held by the central bank. 'Money printing' or 'arbitrary money creation' is when governments/central banks create money out of thin air for whatever purpose. When a government 'prints money' to pay of debt to some other country - that's just 'printing money out of thin air' - the newly minted currency is not 'backed' by anything. This will cause hyperinflation as the value of each 'dollar' is backed by less and less, worth less and less, i.e. failure. At some point, the Fed will release those QE assets back into the market, and take dollars out of circulation - i.e. it's monetary policy, not just printing willy nilly.

nawitus 9y ago

>It's a stupid idea to run a country with a fixed amount of currency - as the economy expands, more currency is needed - either that - or all prices of everything need to adjust because the 'stupid currency' is fixed. All prices are already being adjusted all the time - what is the problem?

alexasmyths 9y ago
To be more specific - the lack of monetary policy. Greece and Spain right now do not have their own currency. Their monetary policy is dictated by greater powers - like Germany. The Euro is a 'strong currency' - it's the only way a currency union can work. There are very strict rules for how money is created. When an economy crashes or sinks, sometimes governments want to print some easy money to 'stimulate' the economy, and a weaker currency will help exports. Also - one 'price' that will not change easily is wages. Powerful, government sector unions will never accept a pay cut. Neither will private citizens really. But in reality - 'the nations workers' simply are not as productive - and 'everyone needs to take a pay cut'. Not gonna happen. Instead of 'pay cuts' companies and govs just 'hire less' hurting the economy even more. Welcome 'monetary policy'. It's a tricky game, but they can inflate away debt, and push wages down a little bit, vis-a-vis other nations - to reflect the new condition of the economy. Also - war, and existential shock. Monetary policy tools are important then for nations to survive sometimes. It's a risky thing, and prone to mismanagement and certainly when politicians get their grubby hands on the Central Bank - it usually runs amok. This is the 'historical' reason a lot of people like 'Gold standards' and 'hard money' - because some tin-pot dictator can't dilute their cash. But intelligently managed currency has elasticity - which helps smooth over bumps. Is the short answer.

ObeyTheGuts 9y ago

so what i should use if not bitcoin to buy online??? im jomeless and banks dont let me use them???

markatkinson 9y ago

So you seem to make some really valuable points about how money is not just printed out of thin air, and is actually backed by bonds etc. However I think what you need to understand with Bitcoin is that it isn't a finished product or in its final state. That is one of its strengths. People are constantly working to improve it. It is literally always under development by the community that uses it. Eventually improvements will be made to improve transaction times, transaction anonymity, efficiency etc... But even without those improvements Bitcoin is being adopted quite seriously by some significant institutions as a means of facilitating transactions. One of the largest retailers in South Africa (where I happen to live), is experimenting with accepting Bitcoin at the till. So I suppose I am not here to preach the gospel that Bitcoin is the future and is perfect, but I would be careful of declaring absolutes like 'unless it sinks in as an actual currency of some economy ... there's no reason for it to maintain it's value.' Mainly because most people that make those predictions (re. Bitcoin) have had to eat their own words.

127 9y ago

Nothing prevents the seller to automatically change the price to what is the real value of the product. Bitcoin exists electronically, prices can also exist electronically. Yes, before the internet and computers, changing the price of a product is a huge overhead. Today, it doesn't necessarily have to be.

gaius 9y ago

The ultimate value of a currency is: people with military control of an area require taxes and will accept taxes in their currency. It is legitimised by force. Everything else flows from this. If a major government starts accepting your tax bill in BTC then it is real, and not before.

whiskers08xmt 9y ago
I wonder if Bitcoin is the perfect currency for the globalized world. I need currency to pay taxes to the state I currently live in, but if I'm a global citizen, not planning to be a permanent residence of any specific country, then doing my banking in a currency that can be easily moved, and can't be seized, is very valuable. Is the Fiat alternative keeping CHF in a Swiss bank account?

yosito 9y ago

You have a lot of opinions about Bitcoin, but no understanding of how it works. It's deflationary by nature, meaning that it doesn't behave like a fixed amount of printed currency. The value of it is backed by tangible work. And it's not anonymous.