4 ms·

>It’s literally the only valid use case for it. Use case: a currency with better inflation characteristics than even gold.

sdinsn 8y ago
Gold isn't a currency, and price fluctuations are TERRIBLE for currency.
- DINKDINK 8y ago
  Price fluctuations are normal for markets. No one expects the exchange rate between food and oil to be constant, why expect it to be constant between a money and food? If you need down-side risk insurance, by a put option. When letting a government have a monopoly of the risk management of a money, you are essentially buying a collar (long stock + long put + short call) trade which is expensive for people who don't need that exposure.
  - spookthesunset 8y ago
    > why expect it to be constant between a money and food? Because sometimes all I want to do is buy a bigmac with some cash and not worry about put options or hedging risk in currency fluctuations? Why expect the government to keep a predictable exchange rate between money and food? Because then I don't have to worry about that and neither does anybody else. That adds incredible value to an economy.
    - DINKDINK 8y ago
      >all I want to do is buy a bigmac with some cash and not worry about put options or hedging risk in currency fluctuations Who says you have to perform the hedge? Just contract with a firm to provide that service. Having the state grant a monopoly to banks to perform that service makes about as much economic sense as saying the management of any good should be given a monopoly by the state. >I don't have to worry about that and neither does anybody else. If you don't factor in inflation to your economic calculations, you'll go out of business. It's not an option. People who run companies or manage substantial finances have to constantly be taxed by hedging inflation. Price inflation of housing is a perfect example.
      - sdinsn 8y ago
        ...Are you seriously implying that every person should contract with a firm in order to buy food?
  - sdinsn 8y ago
    Large price fluctuations*, you know what I meant.
empath75 8y ago
And worse stability.

sdinsn 8y ago

Gold isn't a currency, and price fluctuations are TERRIBLE for currency.

DINKDINK 8y ago
Price fluctuations are normal for markets. No one expects the exchange rate between food and oil to be constant, why expect it to be constant between a money and food? If you need down-side risk insurance, by a put option. When letting a government have a monopoly of the risk management of a money, you are essentially buying a collar (long stock + long put + short call) trade which is expensive for people who don't need that exposure.
- spookthesunset 8y ago
  > why expect it to be constant between a money and food? Because sometimes all I want to do is buy a bigmac with some cash and not worry about put options or hedging risk in currency fluctuations? Why expect the government to keep a predictable exchange rate between money and food? Because then I don't have to worry about that and neither does anybody else. That adds incredible value to an economy.
  - DINKDINK 8y ago
    >all I want to do is buy a bigmac with some cash and not worry about put options or hedging risk in currency fluctuations Who says you have to perform the hedge? Just contract with a firm to provide that service. Having the state grant a monopoly to banks to perform that service makes about as much economic sense as saying the management of any good should be given a monopoly by the state. >I don't have to worry about that and neither does anybody else. If you don't factor in inflation to your economic calculations, you'll go out of business. It's not an option. People who run companies or manage substantial finances have to constantly be taxed by hedging inflation. Price inflation of housing is a perfect example.
    - sdinsn 8y ago
      ...Are you seriously implying that every person should contract with a firm in order to buy food?
- sdinsn 8y ago
  Large price fluctuations*, you know what I meant.

empath75 8y ago

And worse stability.