4 ms·

> The fact that crypto coins in a free market tend towards increasing volatility makes them not very good as a medium of account to negotiate contracts and cond

by lwb 7y ago

> The fact that crypto coins in a free market tend towards increasing volatility makes them not very good as a medium of account to negotiate contracts and conduct business. Crypto volatility is not solely or even primarily because of the coins' deflationary natures. In fact some cryptos ("shitcoins") are not deflationary at all, and have their value regularly inflated by a central authority. Note that my comment said Bitcoin specifically and not crypto in general. The ultimate deflationary currency, gold, is not volatile at all, which leads me to believe that crypto volatility is because of external factors like market manipulation, shady ICOs, etc. > It's indirectly, a huge subsidy to people shutting down projects, laying off people and hoarding government paper instead. As a counterpoint, consider how an inflationary currency causes income equality. Poor people typically hold their net worth in cash whereas the rich have the ability to invest in income generating assets. An inflationary currency ensures that the poor remain poor, because their primary asset is being constantly depleted.

BenoitEssiambre 7y ago
Gold is very volatile (sure not as much as cryptocoins) and this is for the best as gold volatility prevents it from hurting the macro-economy. You think poor people get a better deal getting a few bucks a year of returns on the little savings that they have while being forced to indirectly fund a much larger subsidy on rich people's wealth, a subsidy that is given specifically to the those who get out of the private markets in favor of holding government paper, that close down businesses and lay these poor people off?
- lwb 7y ago
  I won't be responding to follow ups to this conversation as it doesn't feel very fruitful but there's a couple things in your comment that just don't follow for me. How is an asset that holds its value a subsidy? How are poor people indirectly funding that subsidy by holding an asset that doesn't inflate? Really seems like you're projecting qualities onto something that just aren't there. Plus there are other factors in wealth inequality besides cash holdings -- wages (minimum or otherwise) that don't keep up with inflation being the most notable.
  - BenoitEssiambre 7y ago
    >How is an asset that holds its value a subsidy If it is stabilized by a government to hold its value while marginal assets on the private markets only offers negative returns (adjusted for risk and liquidity), the government stabilized asset is effectively a forced subsidy. It's a subsidy to those who hold the subsidized asset from those who don't hold any (though long term it's a bit unpredictable who exactly ends up footing the bill, it depends on whether it happens through inflation or taxes or price distortions etc.). What is super destructive about this type of subsidy is that it displaces private investment. The world shifts from people owning real shit, such as factories, inventories, business infrastructure, machinery, houses, cars, etc. to collectively holding government manipulated tokens. While for an individual, holding the tokens is more advantageous, for the aggregate it's super destructive as it becomes a negative sum game. Tokens are just IOUs. They don't have intrinsic value. When everyone wealth is in the form of a promise that everyone else owes them something, no one really has anything. More here:https://medium.com/@b.essiambre/the-world-deserves-a-pay-raise-302f25efd82a?source=friends_link&sk=cb180b2cf186b263b6c6c70ad29bc36e https://medium.com/@b.essiambre/the-world-deserves-a-pay-rai...

by lwb 7y ago

BenoitEssiambre 7y ago

Gold is very volatile (sure not as much as cryptocoins) and this is for the best as gold volatility prevents it from hurting the macro-economy. You think poor people get a better deal getting a few bucks a year of returns on the little savings that they have while being forced to indirectly fund a much larger subsidy on rich people's wealth, a subsidy that is given specifically to the those who get out of the private markets in favor of holding government paper, that close down businesses and lay these poor people off?

lwb 7y ago
I won't be responding to follow ups to this conversation as it doesn't feel very fruitful but there's a couple things in your comment that just don't follow for me. How is an asset that holds its value a subsidy? How are poor people indirectly funding that subsidy by holding an asset that doesn't inflate? Really seems like you're projecting qualities onto something that just aren't there. Plus there are other factors in wealth inequality besides cash holdings -- wages (minimum or otherwise) that don't keep up with inflation being the most notable.
- BenoitEssiambre 7y ago
  >How is an asset that holds its value a subsidy If it is stabilized by a government to hold its value while marginal assets on the private markets only offers negative returns (adjusted for risk and liquidity), the government stabilized asset is effectively a forced subsidy. It's a subsidy to those who hold the subsidized asset from those who don't hold any (though long term it's a bit unpredictable who exactly ends up footing the bill, it depends on whether it happens through inflation or taxes or price distortions etc.). What is super destructive about this type of subsidy is that it displaces private investment. The world shifts from people owning real shit, such as factories, inventories, business infrastructure, machinery, houses, cars, etc. to collectively holding government manipulated tokens. While for an individual, holding the tokens is more advantageous, for the aggregate it's super destructive as it becomes a negative sum game. Tokens are just IOUs. They don't have intrinsic value. When everyone wealth is in the form of a promise that everyone else owes them something, no one really has anything. More here:https://medium.com/@b.essiambre/the-world-deserves-a-pay-raise-302f25efd82a?source=friends_link&sk=cb180b2cf186b263b6c6c70ad29bc36e https://medium.com/@b.essiambre/the-world-deserves-a-pay-rai...