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Regarding a country’s ability to manipulate their own currency or execute monetary policy which is mostly in the direction of printing more: the end game of cry

Regarding a country’s ability to manipulate their own currency or execute monetary policy which is mostly in the direction of printing more: the end game of crypto seems to take this option off the table for all governments in the long term. Why? Because assuming all other things being equal (convenience as medium of exchange etc.), an individual is always going to prefer holding currency that isn’t subject to inflation. An individual is never going to generously allow their government to erode X% of their liquid cash voluntarily. This future doesn’t require any crypto ‘dictating’ its money supply policy, it just requires at least one fixed supply crypto to exist in your country that is as convenient as existing cash / online payment to make governmental monetary policy useless. The problem for governments is: the genie is out of the bottle regarding fixed supply. Note that I’m not saying it’s good or bad that countries cannot effectively control money supply anymore but it seems inevitable they can’t in the long term.

RobertoG 7y ago
>>"Why? Well assuming all things being equal (convenience as medium of exchange etc.), an individual is always going to prefer holding currency that isn’t subject to inflation." And why should they spend a so wonderful asset? And what is the point of a currency that is always appreciating and nobody want to spend? >>"The problem for governments is: the genie is out of the bottle regarding fixed supply." Central banks don't target the quantity of money, they target the interest rate. The quantity of money is a function of the economic activity, as it should. The idea that people is going to change to private currencies is a joke. The only thing a government have to do, in order to create demand for its currency, is accept only its currency as payment for taxes.
- aserafini 7y ago
  > what is the point of a currency that is always appreciating and nobody want to spend Fixed supply doesn't mean it will always appreciate. It just seems like it today because the first fixed supply currency that can be transferred over the internet was only invented 10 years ago. It (or an equivalent, or a mix of equivalents) has to rise from 0 USD to X USD over time where X is "the value of global, fixed supply currency". When X is reached, it reverts to being the worst investment you can possibly make, useful only for buying higher yield assets or exchanging for food, shelter and stuff. > The only thing a government have to do, in order to create demand for its currency, is accept only its currency as payment for taxes. Just because I pay taxes in USD/EUR doesn't mean I can't store my cash in a fixed supply currency, and anyone who does this avoids inflation. And if everyone does this, government no longer controls the money supply.
  - RobertoG 7y ago
    >>"Fixed supply doesn't mean it will always appreciate." It seems to me that you believe that when the economy stay the same and the supply of money grows, money loss value. Then, the other side of the coin ;-) is that when the economy grows and the currency don't, it increases value. >>"[--] And if everyone does this, government no longer controls the money supply." Governments already don't control the money supply. If a bank gives a credit, it's creating money in the system. After giving a credit (and creating money in the process), it needs to increase its reserves. If the government don't give it enough reserves it have to go to the inter-bank market, that will create demand for reserves, and that increase the interest rate. If the government want to control the interest rate it can't control the quantity of money. >>"Just because I pay taxes in USD/EUR doesn't mean I can't store my cash in a fixed supply currency, " You can do it already, for instance, buying gold. Note that the price of gold also move up and down. You can lost money buying gold and it will be not different with any other asset.
  - camgunz 7y ago
    > Just because I pay taxes in USD/EUR doesn't mean I can't store my cash in a fixed supply currency, and anyone who does this avoids inflation. (Let's just use BTC and USD) Let's say yesterday milk was $2/gallon. But overnight, USD hyperinflated 50% and now it's $3/gallon. Yesterday, I invested 2 USD in BTC. Unless I can convince someone to give me 3 USD for my BTC, I can't buy a gallon of milk. No rational person will help you avoid inflation like this, because they'd be losing money. They would have to think that the BTC they get from you will appreciate. In other words, they have to speculate. So the only thing that you do by storing your cash in a fixed supply currency is speculate, and the only way you "avoid inflation" is if your speculation outpaces inflation. --This is exactly the same as every other investment.-- But there's a huge difference: speculating in BTC helps no one (actually, it almost certainly helps super awful criminals like drug cartels and human traffickers). Please don't do this. Please invest your money in businesses that need it, or in real estate to help build homes, or in any one of a million ways that actually fuel economic growth and have the potential to help a human being. > And if everyone does this, government no longer controls the money supply. Why do you think this is a good thing?
- rohit2412 7y ago
  Also, it is a joke that crypto will not have inflation. The government will always require taxes and utilities to be paid in their currency. So, every one will need to sell cryptos to fulfill those electricity bills and taxes. This sell pressure will carry on a inflation into cryptos.
  - aserafini 7y ago
    It won't have inflation caused by the underling supply being increased which is the largest component of inflation. But you’re correct to point out that inflation has other causes (eg. natural fluctuations in demand for goods and services) that will still exist in FixedSupplyCoin world.
sprafa 7y ago
Governments can easily ban and pursue anti-crypto measures to prevent anything such as money they can't control. Yannis Varoufakis said it best: the idea of apolitical money is a fiction and a dream. Money has always been associated to and controlled by governments. Bitcoin currently is actually heavily manipulated/moved by Tether which is controlled by Bitfinex.
- kobasa 7y ago
  Yes Tether moves Bitcoin because it's literally people in Asia who want to dump their fiat to buy Bitcoin. There is no grand conspiracy here, people tried to claim Tether were printing money out of thin air to drive up BTC but even the NYSAG had a look at their operation and found no such result.
- Lordarminius 7y ago
  >Yannis Varoufakis said it best.... Any links to support your last two assertions ? I'm interested in checking them out.
  - sprafa 7y ago
    I saw him in person in london and he was asked about Bitcoin. As the last sentence of his answer he said and I’m paraphrasing: “If you’re asking about the idea of apolitical money [in relation to Bitcoin] I think that’s a fantasy”. I’ll try and see if he ever said something similar in other settings but I remember connecting it to what I was reading around the same time which was David Graeber’s Debt: a History book where he presents a similar anthropological-historical argument.
    - Lordarminius 7y ago
      I was thinking in part about the bit where you claim bitcoin is manipulated by Tether/Bitfinex
      - Macross8299 7y ago
        There's a number of people who make this claim, some of them leaning towards more credible [0], some hysterical [1]. [0]: https://www.nytimes.com/2018/06/13/technology/bitcoin-price-manipulation.html https://www.nytimes.com/2018/06/13/technology/bitcoin-price-... [1]: https://medium.com/@bitfinexed https://medium.com/@bitfinexed
camgunz 7y ago
> assuming all other things being equal (convenience as medium of exchange etc.), an individual is always going to prefer holding currency that isn’t subject to inflation. An individual is never going to generously allow their government to erode X% of their liquid cash voluntarily. "All other things being equal" will never happen. Too many things change. For example, maybe the world economy is on the brink of depression (2008), in which people would prefer their governments do something about the crisis, despite the risk of inflation. Or maybe you're trying to manipulate your currency to gain a trade advantage. Etc. etc. It's just not a useful thing to consider. And although this is kind of anecdata, I'm perfectly happy for my (US) government to execute monetary policy that potentially devalues my savings and investments as long as it's justified. Hell I usually make it back with wage/benefit increases (although the same can't be said for most US workers) and interest on investments. > This future doesn’t require any crypto ‘dictating’ its money supply policy, it just requires at least one fixed supply crypto to exist in your country that is as convenient as existing cash / online payment to make governmental monetary policy useless. No one's saying what the future does or doesn't require. All I'm saying is that people who are extolling the virtues of a fixed currency should earnestly research why we moved off fixed currencies. There are a lot of really good reasons. No serious economist advocates for a return to a fixed supply of currency. > The problem for governments is: the genie is out of the bottle regarding fixed supply. This is comically untrue. It may be true in cryptocurrency circles, but it's absolutely not true in economic circles. It's an idea that's been widely considered and roundly dismissed as very bad. Its support in cryptocurrency circles is driven largely by libertarian ideology. > Note that I’m not saying it’s good or bad that countries cannot effectively control money supply anymore but it seems inevitable they can’t in the long term. On the contrary, countries that cannot effectively control money supply will continue to be at a disadvantage with countries that can. It's precisely because of its usefulness that countries will continue to employ it. What could possibly make you think otherwise?
- aserafini 7y ago
  > No serious economist advocates for a return to a fixed supply of currency. I am not advocating for its return or extolling its virtues or claiming the world will be better or worse with fixed supply currency. I'm simply stating that a rational individual or business will avoid an X% tax on their stored wealth if they can legally do so. I appreciate your anecdotal willingness to have your wealth devalued as a patriotic sentiment, but have to assume you are in a small global minority who would so if it can be avoided with the flick of a switch ('store my money in crypto') - consider countries where the tax is XX%, XXX%, XXXX% or even beyond (ie. Venezuela). Even X% is a rather large voluntary tax for US citizens with meagre savings. > This is comically untrue. It may be true in cryptocurrency circles, but it's absolutely not true in economic circles. It's true in the sense that fixed supply currencies exist today and usability will meet and eventually surpass 'traditional' currencies. The goodness or badness of the idea according to economists doesn't stop them existing today and won't stop them existing in the future. > On the contrary, countries that cannot effectively control money supply will continue to be at a disadvantage with countries that can. It's precisely because of its usefulness that countries will continue to employ it. What could possibly make you think otherwise? No government is going to voluntarily give up control of money supply but their mechanisms to do so are very limited in a world where every citizen and business stores their value in FixedSupplyCoin.

RobertoG 7y ago

>>"Why? Well assuming all things being equal (convenience as medium of exchange etc.), an individual is always going to prefer holding currency that isn’t subject to inflation." And why should they spend a so wonderful asset? And what is the point of a currency that is always appreciating and nobody want to spend? >>"The problem for governments is: the genie is out of the bottle regarding fixed supply." Central banks don't target the quantity of money, they target the interest rate. The quantity of money is a function of the economic activity, as it should. The idea that people is going to change to private currencies is a joke. The only thing a government have to do, in order to create demand for its currency, is accept only its currency as payment for taxes.

aserafini 7y ago
> what is the point of a currency that is always appreciating and nobody want to spend Fixed supply doesn't mean it will always appreciate. It just seems like it today because the first fixed supply currency that can be transferred over the internet was only invented 10 years ago. It (or an equivalent, or a mix of equivalents) has to rise from 0 USD to X USD over time where X is "the value of global, fixed supply currency". When X is reached, it reverts to being the worst investment you can possibly make, useful only for buying higher yield assets or exchanging for food, shelter and stuff. > The only thing a government have to do, in order to create demand for its currency, is accept only its currency as payment for taxes. Just because I pay taxes in USD/EUR doesn't mean I can't store my cash in a fixed supply currency, and anyone who does this avoids inflation. And if everyone does this, government no longer controls the money supply.
- RobertoG 7y ago
  >>"Fixed supply doesn't mean it will always appreciate." It seems to me that you believe that when the economy stay the same and the supply of money grows, money loss value. Then, the other side of the coin ;-) is that when the economy grows and the currency don't, it increases value. >>"[--] And if everyone does this, government no longer controls the money supply." Governments already don't control the money supply. If a bank gives a credit, it's creating money in the system. After giving a credit (and creating money in the process), it needs to increase its reserves. If the government don't give it enough reserves it have to go to the inter-bank market, that will create demand for reserves, and that increase the interest rate. If the government want to control the interest rate it can't control the quantity of money. >>"Just because I pay taxes in USD/EUR doesn't mean I can't store my cash in a fixed supply currency, " You can do it already, for instance, buying gold. Note that the price of gold also move up and down. You can lost money buying gold and it will be not different with any other asset.
- camgunz 7y ago
  > Just because I pay taxes in USD/EUR doesn't mean I can't store my cash in a fixed supply currency, and anyone who does this avoids inflation. (Let's just use BTC and USD) Let's say yesterday milk was $2/gallon. But overnight, USD hyperinflated 50% and now it's $3/gallon. Yesterday, I invested 2 USD in BTC. Unless I can convince someone to give me 3 USD for my BTC, I can't buy a gallon of milk. No rational person will help you avoid inflation like this, because they'd be losing money. They would have to think that the BTC they get from you will appreciate. In other words, they have to speculate. So the only thing that you do by storing your cash in a fixed supply currency is speculate, and the only way you "avoid inflation" is if your speculation outpaces inflation. --This is exactly the same as every other investment.-- But there's a huge difference: speculating in BTC helps no one (actually, it almost certainly helps super awful criminals like drug cartels and human traffickers). Please don't do this. Please invest your money in businesses that need it, or in real estate to help build homes, or in any one of a million ways that actually fuel economic growth and have the potential to help a human being. > And if everyone does this, government no longer controls the money supply. Why do you think this is a good thing?
rohit2412 7y ago
Also, it is a joke that crypto will not have inflation. The government will always require taxes and utilities to be paid in their currency. So, every one will need to sell cryptos to fulfill those electricity bills and taxes. This sell pressure will carry on a inflation into cryptos.
- aserafini 7y ago
  It won't have inflation caused by the underling supply being increased which is the largest component of inflation. But you’re correct to point out that inflation has other causes (eg. natural fluctuations in demand for goods and services) that will still exist in FixedSupplyCoin world.

sprafa 7y ago

Governments can easily ban and pursue anti-crypto measures to prevent anything such as money they can't control. Yannis Varoufakis said it best: the idea of apolitical money is a fiction and a dream. Money has always been associated to and controlled by governments. Bitcoin currently is actually heavily manipulated/moved by Tether which is controlled by Bitfinex.

kobasa 7y ago
Yes Tether moves Bitcoin because it's literally people in Asia who want to dump their fiat to buy Bitcoin. There is no grand conspiracy here, people tried to claim Tether were printing money out of thin air to drive up BTC but even the NYSAG had a look at their operation and found no such result.
Lordarminius 7y ago
>Yannis Varoufakis said it best.... Any links to support your last two assertions ? I'm interested in checking them out.
- sprafa 7y ago
  I saw him in person in london and he was asked about Bitcoin. As the last sentence of his answer he said and I’m paraphrasing: “If you’re asking about the idea of apolitical money [in relation to Bitcoin] I think that’s a fantasy”. I’ll try and see if he ever said something similar in other settings but I remember connecting it to what I was reading around the same time which was David Graeber’s Debt: a History book where he presents a similar anthropological-historical argument.
  - Lordarminius 7y ago
    I was thinking in part about the bit where you claim bitcoin is manipulated by Tether/Bitfinex
    - Macross8299 7y ago
      There's a number of people who make this claim, some of them leaning towards more credible [0], some hysterical [1]. [0]: https://www.nytimes.com/2018/06/13/technology/bitcoin-price-manipulation.html https://www.nytimes.com/2018/06/13/technology/bitcoin-price-... [1]: https://medium.com/@bitfinexed https://medium.com/@bitfinexed

camgunz 7y ago

> assuming all other things being equal (convenience as medium of exchange etc.), an individual is always going to prefer holding currency that isn’t subject to inflation. An individual is never going to generously allow their government to erode X% of their liquid cash voluntarily. "All other things being equal" will never happen. Too many things change. For example, maybe the world economy is on the brink of depression (2008), in which people would prefer their governments do something about the crisis, despite the risk of inflation. Or maybe you're trying to manipulate your currency to gain a trade advantage. Etc. etc. It's just not a useful thing to consider. And although this is kind of anecdata, I'm perfectly happy for my (US) government to execute monetary policy that potentially devalues my savings and investments as long as it's justified. Hell I usually make it back with wage/benefit increases (although the same can't be said for most US workers) and interest on investments. > This future doesn’t require any crypto ‘dictating’ its money supply policy, it just requires at least one fixed supply crypto to exist in your country that is as convenient as existing cash / online payment to make governmental monetary policy useless. No one's saying what the future does or doesn't require. All I'm saying is that people who are extolling the virtues of a fixed currency should earnestly research why we moved off fixed currencies. There are a lot of really good reasons. No serious economist advocates for a return to a fixed supply of currency. > The problem for governments is: the genie is out of the bottle regarding fixed supply. This is comically untrue. It may be true in cryptocurrency circles, but it's absolutely not true in economic circles. It's an idea that's been widely considered and roundly dismissed as very bad. Its support in cryptocurrency circles is driven largely by libertarian ideology. > Note that I’m not saying it’s good or bad that countries cannot effectively control money supply anymore but it seems inevitable they can’t in the long term. On the contrary, countries that cannot effectively control money supply will continue to be at a disadvantage with countries that can. It's precisely because of its usefulness that countries will continue to employ it. What could possibly make you think otherwise?

aserafini 7y ago
> No serious economist advocates for a return to a fixed supply of currency. I am not advocating for its return or extolling its virtues or claiming the world will be better or worse with fixed supply currency. I'm simply stating that a rational individual or business will avoid an X% tax on their stored wealth if they can legally do so. I appreciate your anecdotal willingness to have your wealth devalued as a patriotic sentiment, but have to assume you are in a small global minority who would so if it can be avoided with the flick of a switch ('store my money in crypto') - consider countries where the tax is XX%, XXX%, XXXX% or even beyond (ie. Venezuela). Even X% is a rather large voluntary tax for US citizens with meagre savings. > This is comically untrue. It may be true in cryptocurrency circles, but it's absolutely not true in economic circles. It's true in the sense that fixed supply currencies exist today and usability will meet and eventually surpass 'traditional' currencies. The goodness or badness of the idea according to economists doesn't stop them existing today and won't stop them existing in the future. > On the contrary, countries that cannot effectively control money supply will continue to be at a disadvantage with countries that can. It's precisely because of its usefulness that countries will continue to employ it. What could possibly make you think otherwise? No government is going to voluntarily give up control of money supply but their mechanisms to do so are very limited in a world where every citizen and business stores their value in FixedSupplyCoin.