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An even more interesting idea is treasury bonds with high coupons that would sell for above par, allowing more spending without increasing the debt by the full

by ikeboy 7y ago

An even more interesting idea is treasury bonds with high coupons that would sell for above par, allowing more spending without increasing the debt by the full amount. See https://www.bloomberg.com/opinion/articles/2013-10-02/mint-the-premium-bonds- https://www.bloomberg.com/opinion/articles/2013-10-02/mint-t...

api 7y ago
All these hacks just illustrate the fact that money is a social construct. It's funny to watch the block chainers come to this realization too. "Bitcoin is hard money! Finally we have an 'objective' currency!" ... then someone forks the chain and makes a new coin. Now there is twice the "money" in circulation, with holders on the old chain now also holding some other coin in the forked chain. But what about gold? Why is it that we find a certain non-reactive yellow metal so valuable? Answer: because we have implicitly agreed to do so. If we all decided gold was worthless as money its value would collapse to something more on par with its value in terms of its industrial uses. Right now it trades far above that because we like to stockpile it in warehouses and use it as a large-scale "store of value" to back currencies and stuff.
- 0x8BADF00D 7y ago
  > If we all decided gold was worthless as money its value would collapse to something more on par with its value in terms of its industrial uses. If that were the case, then the price of gold would drop. Demand would decrease and the price would fall. In fact, this happened during the last financial crisis, because of a strong dollar and deflationary pressure. In terms of dollars, gold will always do very well, though. Here’s why. The thing central bankers (they’re really central planners) don’t understand is that markets are forces of nature. You cannot tame this force of nature anymore than you can stop a hurricane. The fiat currency scheme will eventually collapse, because it produces distortions in the market. The key piece of evidence is when the Fed had to print 85 billion dollars last week because the overnight repo rate skyrocketed to something like 10%. The interest rate is a proxy for credit risk. What that tells you is the house of cards is about to collapse, because the market will not allow distortions like negative interest rates or negative yielding debt. It is simply illogical. As a creditor I will not lend someone money and agree to receive less than I originally lent out. Additionally, the real interest rate is probably around 10-15%, and the Fed will continue to need to print money, which will depreciate the dollar (money itself follows supply and demand. Increase supply and what happens to price?). All of this is very good news for gold.
  - brewmarche 7y ago
    An interest rate is not only a proxy for credit risk but also is driven by demand and supply. If like here many banks request overnight money then the interest rate goes up (interest rates are just prices for money in the future quoted differently -- high price to the lender = low interest rate). The same market forces apply to the good "money redeemable in n days".
- f1ying_1otus 7y ago
  We agree things are value because of the properties they possess. I feel like you are dismissing that. It's not just that we "decide", based on nothing that something has value. Gold is used in electronics and jewelry. It's properties enable it to be used for such things, therefore there is value. Sure, crypto hard forks happen and more value is created. However, it's based on the rules that govern the coins. It's based on the fact that digital "objects" that are governed by these sets of rules. Those are properties. Bitcoin is most definitely hard money and the rules(properties) that govern the chain are deemed most likely to benefit the largest group of people, therefore it's the coin worth the most. Hard money to the max.

by ikeboy 7y ago

api 7y ago

All these hacks just illustrate the fact that money is a social construct. It's funny to watch the block chainers come to this realization too. "Bitcoin is hard money! Finally we have an 'objective' currency!" ... then someone forks the chain and makes a new coin. Now there is twice the "money" in circulation, with holders on the old chain now also holding some other coin in the forked chain. But what about gold? Why is it that we find a certain non-reactive yellow metal so valuable? Answer: because we have implicitly agreed to do so. If we all decided gold was worthless as money its value would collapse to something more on par with its value in terms of its industrial uses. Right now it trades far above that because we like to stockpile it in warehouses and use it as a large-scale "store of value" to back currencies and stuff.

0x8BADF00D 7y ago
> If we all decided gold was worthless as money its value would collapse to something more on par with its value in terms of its industrial uses. If that were the case, then the price of gold would drop. Demand would decrease and the price would fall. In fact, this happened during the last financial crisis, because of a strong dollar and deflationary pressure. In terms of dollars, gold will always do very well, though. Here’s why. The thing central bankers (they’re really central planners) don’t understand is that markets are forces of nature. You cannot tame this force of nature anymore than you can stop a hurricane. The fiat currency scheme will eventually collapse, because it produces distortions in the market. The key piece of evidence is when the Fed had to print 85 billion dollars last week because the overnight repo rate skyrocketed to something like 10%. The interest rate is a proxy for credit risk. What that tells you is the house of cards is about to collapse, because the market will not allow distortions like negative interest rates or negative yielding debt. It is simply illogical. As a creditor I will not lend someone money and agree to receive less than I originally lent out. Additionally, the real interest rate is probably around 10-15%, and the Fed will continue to need to print money, which will depreciate the dollar (money itself follows supply and demand. Increase supply and what happens to price?). All of this is very good news for gold.
- brewmarche 7y ago
  An interest rate is not only a proxy for credit risk but also is driven by demand and supply. If like here many banks request overnight money then the interest rate goes up (interest rates are just prices for money in the future quoted differently -- high price to the lender = low interest rate). The same market forces apply to the good "money redeemable in n days".
f1ying_1otus 7y ago
We agree things are value because of the properties they possess. I feel like you are dismissing that. It's not just that we "decide", based on nothing that something has value. Gold is used in electronics and jewelry. It's properties enable it to be used for such things, therefore there is value. Sure, crypto hard forks happen and more value is created. However, it's based on the rules that govern the coins. It's based on the fact that digital "objects" that are governed by these sets of rules. Those are properties. Bitcoin is most definitely hard money and the rules(properties) that govern the chain are deemed most likely to benefit the largest group of people, therefore it's the coin worth the most. Hard money to the max.