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The USD is one of the most centralized currencies in the world. Just because everyone has some does not mean its decentralized. It is still minted and distribut

by jzoch 9y ago

The USD is one of the most centralized currencies in the world. Just because everyone has some does not mean its decentralized. It is still minted and distributed through centralized silos owned by the government, and policy enacted by the government ON the currency is still effective.

md2be 9y ago
And it’s the reason why we have such an incredible economy.
macawfish 9y ago
That comment was a reference to the fact that money itself operates on belief systems and motivations that are distributed and decentralized
JumpCrisscross 9y ago
> it is still minted and distributed through centralized silos owned by the government Money can be created by privately-owned banks, which adds a significant decentralized element to the mix. Cash settlement is also, if done physically, a totally de-centralised transaction mode.
erispoe 9y ago
In modern systems money can be created by banks lending money. That's an interesting property as money creation is tied to the course of the economy. However, this can lead to inflation if the amount of money created actually exceeds the growth in economic activity. In the gold standard model where the amount of money is completely uncorrelated with economic activity, you have inherent deflation. Deflation is a serious threat, as it pushed people to hold onto their currency (as the real value automatically rises) instead of spending or investing it. Bitcoin is really a digital gold standard. There is no way that a gold standard currency can support a growing economy efficiently.
- throwawayjava 9y ago
  > completely uncorrelated with economic activity It's always surprising to me when (not-already-on-the-top-f-the-world) software types see virtue in gold standards. The fact that our work -- moving bits around -- produces so much economic value is an epitome of everything that's wrong with a gold standard.
- UncleEntity 9y ago
  > Deflation is a serious threat, as it pushed people to hold onto their currency (as the real value automatically rises) instead of spending or investing it. Why would people not invest (or spend for that matter)? It's not like people wouldn't take deflation into account the same way they do with inflation today. If you loan out a dollar today and at the end of the loan its worth $1.03 then you simply adjust the interest rate to reflect this difference. Not like its some complicated formula that starts off with "thar be dragons." Same can also be said about spending. As a contemporary example why would anyone buy a computer today when they know that in the near future they can get a better model for less? The whole computer industry thrives in a price deflationary sector of the economy. Whenever someone is trying to push one economic theory over another the key question you need to ask is cui bono.
  - throwawayjava 9y ago
    > Why would people not invest (or spend for that matter)? People will still invest, but risk tolerance goes way down and ROI expectations go way up. Concretely, your business plan has to compete with "I can get an x% return by putting my money under my pillow", and x becomes very large in a highly deflationary economy. Place yourself in the shoes of a person seeking investment in a productive business, and the problems with a deflationary economy become obvious. Being good isn't enough. You have to be better than "sit on my ass and get rich doing nothing". In other words, the primary concern in a deflationary economy is discouraging value-producing economic activity. Also, all of this is wrt deflation in general. Notice that a fiat currency can easily be deflationary. The deflationary nature of gold standards is a major component of the criticism of gold standards, but there are also other reasons that people oppose gold standards. > Same can also be said about spending. As a contemporary example why would anyone buy a computer today when they know that in the near future they can get a better model for less? The whole computer industry thrives in a price deflationary sector of the economy. People still buy computers because having a computer today helps capture value that you can't capture by having a better computer tomorrow. For consumers, entertainment tonight. For businesses, automating processes today. > Whenever someone is trying to push one economic theory over another the key question you need to ask is cui bono. That's not quite fair. There are people motivated by truth and there are also people motivated by ideology.

by jzoch 9y ago

md2be 9y ago

And it’s the reason why we have such an incredible economy.

macawfish 9y ago

That comment was a reference to the fact that money itself operates on belief systems and motivations that are distributed and decentralized

JumpCrisscross 9y ago

> it is still minted and distributed through centralized silos owned by the government Money can be created by privately-owned banks, which adds a significant decentralized element to the mix. Cash settlement is also, if done physically, a totally de-centralised transaction mode.

erispoe 9y ago

In modern systems money can be created by banks lending money. That's an interesting property as money creation is tied to the course of the economy. However, this can lead to inflation if the amount of money created actually exceeds the growth in economic activity. In the gold standard model where the amount of money is completely uncorrelated with economic activity, you have inherent deflation. Deflation is a serious threat, as it pushed people to hold onto their currency (as the real value automatically rises) instead of spending or investing it. Bitcoin is really a digital gold standard. There is no way that a gold standard currency can support a growing economy efficiently.

throwawayjava 9y ago
> completely uncorrelated with economic activity It's always surprising to me when (not-already-on-the-top-f-the-world) software types see virtue in gold standards. The fact that our work -- moving bits around -- produces so much economic value is an epitome of everything that's wrong with a gold standard.
UncleEntity 9y ago
> Deflation is a serious threat, as it pushed people to hold onto their currency (as the real value automatically rises) instead of spending or investing it. Why would people not invest (or spend for that matter)? It's not like people wouldn't take deflation into account the same way they do with inflation today. If you loan out a dollar today and at the end of the loan its worth $1.03 then you simply adjust the interest rate to reflect this difference. Not like its some complicated formula that starts off with "thar be dragons." Same can also be said about spending. As a contemporary example why would anyone buy a computer today when they know that in the near future they can get a better model for less? The whole computer industry thrives in a price deflationary sector of the economy. Whenever someone is trying to push one economic theory over another the key question you need to ask is cui bono.
- throwawayjava 9y ago
  > Why would people not invest (or spend for that matter)? People will still invest, but risk tolerance goes way down and ROI expectations go way up. Concretely, your business plan has to compete with "I can get an x% return by putting my money under my pillow", and x becomes very large in a highly deflationary economy. Place yourself in the shoes of a person seeking investment in a productive business, and the problems with a deflationary economy become obvious. Being good isn't enough. You have to be better than "sit on my ass and get rich doing nothing". In other words, the primary concern in a deflationary economy is discouraging value-producing economic activity. Also, all of this is wrt deflation in general. Notice that a fiat currency can easily be deflationary. The deflationary nature of gold standards is a major component of the criticism of gold standards, but there are also other reasons that people oppose gold standards. > Same can also be said about spending. As a contemporary example why would anyone buy a computer today when they know that in the near future they can get a better model for less? The whole computer industry thrives in a price deflationary sector of the economy. People still buy computers because having a computer today helps capture value that you can't capture by having a better computer tomorrow. For consumers, entertainment tonight. For businesses, automating processes today. > Whenever someone is trying to push one economic theory over another the key question you need to ask is cui bono. That's not quite fair. There are people motivated by truth and there are also people motivated by ideology.