8 ms·

It's fine for currencies with responsible governance. In some countries like Venezuela, cryptocoins would be useful. But oppressive regimes with currency cont

by tcbawo 8y ago

It's fine for currencies with responsible governance. In some countries like Venezuela, cryptocoins would be useful. But oppressive regimes with currency controls are also likely to control access to the internet and/or block chain networks. So, in practice does it make up for an irresponsible central bank? Hard to say.

aeternus 8y ago
Short of cutting off all access to the internet, it is very difficult to block access. Someone could always set up some kind of tunnel via an allowed site / channel.
pdonis 8y ago
> It's fine for currencies with responsible governance. I'm not sure there are any. Certainly not if "responsible governance" means "not printing money whenever the central bank feels like it".
- jfz 8y ago
  As long as the central bank is full of thoughtful economists, I trust them to print money when they "feel like it" will be good for the economy.
  - stickfigure 8y ago
    How do you ensure that the central bank stays full of thoughtful economists, across spans of decades or centuries? While a few countries seem to be doing ok, the overall track record of central banks around the world seems to be pretty poor.
  - pitaj 8y ago
    A central bank can really only do two things: adjust the amount of money it prints, and adjust the amount of debt it buys. With only two variables to adjust, even thoughtful economists can make mistakes.
  - pdonis 8y ago
    > As long as the central bank is full of thoughtful economists, I trust them to print money when they "feel like it" will be good for the economy. Then your trust should be severely eroded by the events of the past decade or so in the US, since the Fed is full of "thoughtful economists" who utterly failed to predict the crash of 2008, even though their policies helped to cause it, and utterly failed to predict that printing massive amounts of money from 2009-2014 would not stimulate economic activity.
    - dragonwriter 8y ago
      > and utterly failed to predict that printing massive amounts of money from 2009-2014 would not stimulate economic activity. No, they didn't. Both the people at the Fed and mainstream economists outside have always pointed out that monetary stimulus is an extremely limited tool. They may have failed to predict that Congress would be completely asleep at the wheel and neglect fiscal stimulus, but then even had they predicted that there is little they can do about it.
      - pdonis 8y ago
        > Both the people at the Fed and mainstream economists outside have always pointed out that monetary stimulus is an extremely limited tool. That's true, but it's also true that Bernanke and other Fed leaders were predicting that the economy was going to improve over the next few years even in 2008, when the crash was already starting. Even a limited tool can't be used properly if you don't have predictive ability.
api 8y ago
My problem is with how new money is distributed. It's given to banks to lend at interest rates higher than they borrow it from the fed. I'd love to borrow money at nearly 0% interest and then turn around and lend it at 5% or even 15% interest. That'd be awesome. How people can not see this as an elitist plutocratic system is beyond me. Of course the systems it replaced were also elitist and plutocratic and so far cryptocurrency appears to be turning out that way as well, so this remains an unsolved problem.
- nradov 8y ago
  You're free to start your own bank (or credit union). All you need to do is fill out the paperwork and find some investors to put in the initial capital. Then you can offer loans at 1% interest or whatever. See how well that works.
  - api 8y ago
    It would work out very badly. I lack the background or connections to obtain a bailout, and my bank would be too small to be "too big to fail."
    - nradov 8y ago
      You missed the point. I don't support bank bailouts. But if you manage your bank effectively then you won't need a bailout. You complained about high interest rates for loans. But the main reason that so many banks needed bailouts in the first place is that the interest rates they charged were too low and so they couldn't absorb all the defaults.
      - api 8y ago
        I wasn't complaining about loan interest but about how new money is allocated. It's allocated top down in a way that benefits a politically and economically connected aristocracy.
- pishpash 8y ago
  That's not how it works. The 5% or 15% is the cost of risk over the risk free rate that they are getting it at. If there is sufficient interbank competition this is a market determined rate. A central bank injects the money via the banking system because they cannot give it to arbitrary winners and losers, they are not in a position to price granular risk, and that is the normal function of a working banking system.
XorNot 8y ago
In countries like Venezuela people don't want cryptocurrencies, they want US dollars.

by tcbawo 8y ago

aeternus 8y ago

Short of cutting off all access to the internet, it is very difficult to block access. Someone could always set up some kind of tunnel via an allowed site / channel.

pdonis 8y ago

> It's fine for currencies with responsible governance. I'm not sure there are any. Certainly not if "responsible governance" means "not printing money whenever the central bank feels like it".

jfz 8y ago
As long as the central bank is full of thoughtful economists, I trust them to print money when they "feel like it" will be good for the economy.
- stickfigure 8y ago
  How do you ensure that the central bank stays full of thoughtful economists, across spans of decades or centuries? While a few countries seem to be doing ok, the overall track record of central banks around the world seems to be pretty poor.
- pitaj 8y ago
  A central bank can really only do two things: adjust the amount of money it prints, and adjust the amount of debt it buys. With only two variables to adjust, even thoughtful economists can make mistakes.
- pdonis 8y ago
  > As long as the central bank is full of thoughtful economists, I trust them to print money when they "feel like it" will be good for the economy. Then your trust should be severely eroded by the events of the past decade or so in the US, since the Fed is full of "thoughtful economists" who utterly failed to predict the crash of 2008, even though their policies helped to cause it, and utterly failed to predict that printing massive amounts of money from 2009-2014 would not stimulate economic activity.
  - dragonwriter 8y ago
    > and utterly failed to predict that printing massive amounts of money from 2009-2014 would not stimulate economic activity. No, they didn't. Both the people at the Fed and mainstream economists outside have always pointed out that monetary stimulus is an extremely limited tool. They may have failed to predict that Congress would be completely asleep at the wheel and neglect fiscal stimulus, but then even had they predicted that there is little they can do about it.
    - pdonis 8y ago
      > Both the people at the Fed and mainstream economists outside have always pointed out that monetary stimulus is an extremely limited tool. That's true, but it's also true that Bernanke and other Fed leaders were predicting that the economy was going to improve over the next few years even in 2008, when the crash was already starting. Even a limited tool can't be used properly if you don't have predictive ability.

api 8y ago

My problem is with how new money is distributed. It's given to banks to lend at interest rates higher than they borrow it from the fed. I'd love to borrow money at nearly 0% interest and then turn around and lend it at 5% or even 15% interest. That'd be awesome. How people can not see this as an elitist plutocratic system is beyond me. Of course the systems it replaced were also elitist and plutocratic and so far cryptocurrency appears to be turning out that way as well, so this remains an unsolved problem.

nradov 8y ago
You're free to start your own bank (or credit union). All you need to do is fill out the paperwork and find some investors to put in the initial capital. Then you can offer loans at 1% interest or whatever. See how well that works.
- api 8y ago
  It would work out very badly. I lack the background or connections to obtain a bailout, and my bank would be too small to be "too big to fail."
  - nradov 8y ago
    You missed the point. I don't support bank bailouts. But if you manage your bank effectively then you won't need a bailout. You complained about high interest rates for loans. But the main reason that so many banks needed bailouts in the first place is that the interest rates they charged were too low and so they couldn't absorb all the defaults.
    - api 8y ago
      I wasn't complaining about loan interest but about how new money is allocated. It's allocated top down in a way that benefits a politically and economically connected aristocracy.
pishpash 8y ago
That's not how it works. The 5% or 15% is the cost of risk over the risk free rate that they are getting it at. If there is sufficient interbank competition this is a market determined rate. A central bank injects the money via the banking system because they cannot give it to arbitrary winners and losers, they are not in a position to price granular risk, and that is the normal function of a working banking system.

XorNot 8y ago

In countries like Venezuela people don't want cryptocurrencies, they want US dollars.