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It solves the problem of not having to rely on a central bank to maintain the value of currency. It may seem unnecessary in the US, but pretty damn useful in co
by deafcalculus 8y ago
It solves the problem of not having to rely on a central bank to maintain the value of currency. It may seem unnecessary in the US, but pretty damn useful in countries like Zimbabwe where the privilege to print money has been abused. The opposite problem of deflation (a la Japan) seems more likely to hit the US. As population declines (and with it the demand for housing), it'll become necessary to destroy money with negative interest rates to reach the target inflation, boost investment, and check unemployment. But that's damn difficult with currency notes. And there'll be political opposition to any effort to target higher inflation or fiscal policy that has the government borrowing and spending more. The behaviour of UK and EZ governments and their austerity policies (especially towards Greece) do not inspire much confidence. An alternative currency might start looking attractive when that happens. Bitcoin is even more deflationary and won't help. But some other cryptocurrency could.
It's also a matter of principle. There are some who don't like the idea of central bank monopoly. A competing currency could be beneficial even if the only thing it accomplishes is keeping central bankers more vigilant and honest.
- dustingetz 8y ago...is hypothesized to solve. Do we know of any actual economist who endorses cryptocurrency as a soln to central banks? I listen to macro voices. They pointed out that wealth is so sharply concentrated in bitcoin that if all the cash in the world was replaced by crypto equivalent, it would instantly mint an oligarchy of cryptokings with nationstate levels of resources and it would cause a world war. Obviously the current world order would resist that.
- deafcalculus 8y agoNope! Most cryptocurrencies are even more deflationary and are designed to benefit the protocol designers and early investors. That doesn't mean we should stop trying! I haven't seen any good arguments for why a cryptocurrency cannot possibly work. Once the dot-com phase of crypto ends, there may be more serious efforts to make a currency that's actually useful. I'd argue that people in Greece could use one right now if there was a sane way to bootstrap the process.
- dustingetz 8y agoI agree that innovation is good and cryptocurrency is innovative. Jack Rasmus (economist) wrote a great book "Looting Greece" of which I read the first 10%. Rasmus argues that Greece has been subjected by the EU to financial imperialism and colonial-like wealth extraction. In essence it has been conquered. I don't see how cryptocurrency is useful in preventing a group of elites from conquering another. In practice, it only changes who the elites are. https://www.amazon.com/Looting-Greece-Financial-Imperialism-Emerges/dp/0986085340 https://www.amazon.com/Looting-Greece-Financial-Imperialism-...