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> The former is a significant part of the reason for the latter. Obviously there's a feedback loop where people are paid in a currency and then people have tha

> The former is a significant part of the reason for the latter. Obviously there's a feedback loop where people are paid in a currency and then people have that currency so retailers accept that currency and then they pay their employees with that currency, etc. But I don't think anyone has recently sat down to think about which currency they're going to use on a daily basis and selected that currency because it's the currency they have to pay their taxes in once a year. People use it because they have it, businesses accept it because that's what people have. Why? It's not because of taxes... It's because nearly every modern country has a central bank or a "pseudo-central bank" (like the federal reserve) that issues the trade currency for that country. That central bank issues that currency because they want to control the economy (as Krugman mentions). It's not because they want to receive that currency to pay taxes -- accepting it as the payment method for taxes is a consequence of issuing that currency, not the reason for it. > but if a large share of the non-speculative trade is on the dark web, Krugman’s statement you criticize remains correct. Well sure, but there's no evidence of that and an article about usage of bitcoin on the dark web is not a useful source for such an argument -- in fact, using it in that manner discrets the author entirely.

dragonwriter 9y ago
> That central bank issues that currency because they want to control the economy (as Krugman mentions). No, they issue it because that's what the government charters them to do. They enact particular monetary policy to control the economy, which only works because the currency is dominant in trade, which it is because the government systematically favors it (it's true that taxation isn't the whole story here, though, there's also legal tender status, the government issuing public benefits in the currency, minimum wage laws and other laws that are keyed off official currency and which are much harder to comply with if you use some other currency that floats against it, etc., etc., etc.)

dragonwriter 9y ago

> That central bank issues that currency because they want to control the economy (as Krugman mentions). No, they issue it because that's what the government charters them to do. They enact particular monetary policy to control the economy, which only works because the currency is dominant in trade, which it is because the government systematically favors it (it's true that taxation isn't the whole story here, though, there's also legal tender status, the government issuing public benefits in the currency, minimum wage laws and other laws that are keyed off official currency and which are much harder to comply with if you use some other currency that floats against it, etc., etc., etc.)