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“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but

“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” -Satoshi Nakamoto Feb. 2009 If this isn’t resonating with you after the past year, I don’t know. I was forced to watch my government bungle a pandemic in the worst possible way and then asked to pay for it for decades. No I don’t think I will. Bitcoin is a way for me to step outside that debt I did not want or deserve. https://fred.stlouisfed.org/series/M1 https://fred.stlouisfed.org/series/M1

neilwilson 6y ago
" Bitcoin is a way for me to step outside that debt I did not want or deserve" Try paying your taxes in Bitcoin. Then you'll find that it has nothing to do with trust and everything to do with avoiding having your assets stripped by the IRS. You want to live in a jurisdiction, then you pony up the tokens that jurisdiction demands. Or you lose your liberty and everything you own.
- sygma 6y ago
  > At the city level, [Miami mayor] Suarez’s ambitions are equally ambitious. He’s “looking at” ways to pay municipal employees a percentage of their salary in bitcoin and allow residents to use bitcoin and other cryptocurrencies for “payments and fees,” including taxes. https://www.coindesk.com/miami-mayor-previews-favorable-crypto-policy https://www.coindesk.com/miami-mayor-previews-favorable-cryp...
  - mywittyname 6y ago
    I bet people still earn $50,000 a year and pay $1,500 a year in property taxes; not 1.2 btc or whatever.
    - FabHK 6y ago
      Exactly. As long as things are still denominated in fiat (and they are...), payment with BTC is just a gimmick.
- speeder 6y ago
  What about when people DON'T want to live in a jurisdiction? So far even attempts are seastading failed due to traditional countries destroying them militarily (one italian attempt for example was just bombed until nothing remained, and an attempt the pacific resulted in nearby countries landing troops on the built islands and kicking people out)
  - SigmundA 6y ago
    Because thats whats happens when you don't have a government, either one will come in and become your government through force, or you become a government with enough force to prevent take over. Some entity (state) has to have the monopoly on violence to enforce laws or there are no enforceable laws.
    - mvc 6y ago
      Exactly! You can have "total liberty" to the extent that you can defend it. Since the cost of defending it against nation states (or frankly even against well-resourced pirates) is so high, most people group together and form their own nation state.
  - pionar 6y ago
    Do you have an example of this happening where people didn't settle on land/sea that was already claimed by another entity? Because that's still in someone's jurisdiction.
    - speeder 6y ago
      I think few people are willing to risk that. When there was some kind of micronation-mania some years ago, with multiple mainstream papers mentioning Sealand and that Australian farmer and whatnot, I went to check, and found out that the UN itself is quite dangerous, in fact is why being "UN recognized" as a country is so important (for example why Taiwan would want to be a country officially), the UN navigation laws state that everyone that is a member of the UN has several rights of navigation, and the US for example is one of the main enforcers of these (US warships patrol around the world to ensure "free passage"), but the way those rigths is written, imply that if you are NOT a member of the UN, any member can sink you without any penalty. Thus the only way to be anywhere on the sea while not being in the UN, is if you are ally of the US (Taiwan), because otherwise you are at risk of being shot at. I don't think China has yet the navy needed to counterbalance that.
- rglullis 6y ago
  > Try paying your taxes in Bitcoin. It's happening already: https://www.swissinfo.ch/eng/-crypto-valley--canton-to-accept-bitcoin-for-tax-payments/46010364 https://www.swissinfo.ch/eng/-crypto-valley--canton-to-accep... > You want to live in a jurisdiction, then you pony up the tokens that jurisdiction demands. It has less to do with paying the taxes in the currency used by the State and more with protecting your wealth at the same that you can keep yourself liquid. If you ever experienced hyperinflation you would understand. Growing up in the 80's in Brazil, I remember how every 5th of the month (when my dad and my mom would get paid) was very busy. - Pay school, bills as early as possible to try to get a discount. Prices were adjusted 20-25% every month and if you paid earlier you could get some 5-10% off. - Going to the supermarket to buy 3/4 shopping carts of groceries. - Fueling up the car. I remember the traffic(!!) caused by car lines backed at the gas stations, waiting to get fuel before the prices went up. - If we needed any clothes / school stuff, head to the mall. As soon everything was paid that month, my father would get whatever money was left in the bank and would buy US dollars. For him it was worth the 5-10% spread between the black market rate and the official rate because the alternative was to see all his melt away. He would still pay his taxes in local currency.
  - FabHK 6y ago
    Look, it's easy, regarding money supply ("ms"): well administered flexible ms > fixed ms > badly administered flexible ms. So, let central bankers do their job, unimpeded by politicians. Case in point: the USD your father bought were fiat with a flexible money supply, administered by the Fed.
    - rglullis 6y ago
      > well administered flexible ms > fixed ms > badly administered flexible ms The issue then becomes of how to have "well administered flexible money supply". Is it working in the US? EU? China? Turkey? Lebanon? Japan? Argentina? Brazil? Venezuela? Besides the financial elites, are people seeing their work turn into prosperity? Are people from lower income nowadays more capable of saving and investing, or is it becoming something available only for the rich? Even if we consider the rich countries: do we really want to live in a world where the majority of people depend on welfare and a perpetual money printer running to keep people consuming crap that no one really needs and enabling governments to fund armies to fight over resources across the globe? How sustainable is this? > So, let central bankers do their job, unimpeded by politicians. You might have trust in a bunch of technocrats, I don't. Alternatively, let people make experiments with different crypto currencies, different governance models, different technologies, different requirements and different values. Evolutionary processes are more reliable/less fragile than a rigid central-planning structure. Haven't we learned anything from the almost-century-long experiment called USSR? This is not to me saying "all flexible money supplies are crap, let's get rid of it." Only Bitcoin maxis would say something silly like that. What I am saying though is that Bitcoin was the first successful attempt at decentralized governance and that has a lot of value and (to some) is better than many of the existing central banks.
- nihonde 6y ago
  Sure, but what happens when that jurisdiction’s currency can no longer put food on the tables of its law enforcers?
afavour 6y ago
> I was forced to watch my government bungle a pandemic in the worst possible way and then asked to pay for it for decades. No I don’t think I will. That has very little to do with currency and everything to do with you not wanting to pay taxes. You may think that COVID response has been a catastrophic waste of money but if you'd lost your job would you have claimed the increased unemployment benefits? I suspect the vast majority of people would have. There's a lot to criticise in terms of government COVID response (and from your post you could be talking about any one of a number of governments!) but big government spending right now to stop even greater economic depression in the future is not some kind of wasteful accident, it's deliberate action to improve everyone's situation in the long term.
- gibbonsrcool 6y ago
  Why should one want to pay taxes on debt that was a result of stupidity?
  - skinnymuch 6y ago
    No one wants to pay taxes on half of what taxes are being spent on. Every one wants it spent on what they prefer. Your comment doesn’t change that.
- RhodoGSA 6y ago
  The government forcing me to lose my job by shutting everything down and then giving me a little boost in unemployment does not make me greatful. It makes me resentful that i am forced to rely on them.
  - afavour 6y ago
    I didn't ask if you'd be grateful, I asked if you'd take the expanded unemployment insurance. I suspect a lot of people were grumbling all the way to the direct deposit form but filled it out anyway. And it's not as if governments forced these shutdowns on a whim or because they felt like it. They were the result of scientific examination, and more importantly, the majority of voters were in favour of them (I think 8 out of 10 in the US in April?). In this case the government was just expressing the will of the people, whether it was your personal will or not.
jariel 6y ago
It's a very bad quote by someone who understood nothing about currency. A currency is literally 'trust' - it's a social contract. it's trust in the economic system where the currency prevails. If you don't trust it, you don't trust where it comes from. It's impossible to have a currency that is not use widely in some economy, and it's almost impossible to not have some management of that currency. For example, if any nation officially adopted BTC as their currency, as opposed to some fiat, they would be in for a difficult ride with a complete lack of any monetary policy. Nations that use the USD are actually leveraging the value of the US system. In general, the US system has more credibility than their own, so it's a benefit, and they are generally small. As a store of value it's monopoly money. The 'allure of not having to trust' people is a total myth, for any currency, even the hardest ones back by gold, land etc..
aseerdbnarng 6y ago
People dont use dollars because they choose to. They use dollars because they have to. The US government doesnt need to earn dollars to spend them. It simply has to require for us to earn dollars to pay it taxes to enforce the use of its currency.
- Majromax 6y ago
  But people do choose to use US Dollars. Emerging economies facing currency problems frequently become "dollarized" on a de facto or de jure basis precisely because the currency is so liquid (internationally) and so stable. Inside its borders the US Dollar also derives value from chartalism, but the currency clearly has other sources of de facto value.
  - aseerdbnarng 6y ago
    Very true. The importance of dollars has if anything been highlighted in 2020 exactly because its supply can be expanded by the fed when the world demands it. Adam Tooze has a wonderful piece on this topic https://foreignpolicy.com/2021/01/15/rise-fall-united-states-financial-empire-dollar-global-currency/ https://foreignpolicy.com/2021/01/15/rise-fall-united-states....
  - notahacker 6y ago
    The main source for value is that every USD is guaranteed to be able to settle 1USD worth of debt, and a lot of debt is denominated in USD. This pretty much guarantees a stream of people needing USD over any future time horizon (further factors like certain types of debt discharge reducing M1 and Fed intervention in the lending market) including internationally, with or without US federal taxes on top of that. Its status as an asset ultimately depends on it being someone else's repayment obligation. BTC doesn't have that (there's some BTC-denominated debt, but it's relatively thin and/or unenforceable) and so future demand is based on fickle wants rather than established needs. I'd be more inclined to trust the long term value of cryptocurrency if it was issued as repayable debt, but I'm not sure how you begin to achieve that in a decentralised, anonymous and enforceable way.
colinmorelli 6y ago
Correct me if I'm wrong, but hasn't the history of Bitcoin also exposed issues with not having a central bank? Theft that can't be reversed, digital wallets that can't be unlocked, value that can't be insured, etc. Currency fundamentally requires trust - at the very least it requires trust that the asset you are receiving is roughly equivalent in worth to the asset you're giving as part of the transaction. In the case of centralized banks, you have to trust the bank to help ensure the value of the currency. In the case of bitcoin, you have to trust the network, its participants, the exchanges, etc. Knowing that your transaction itself is secure is only a part of the actual, practical issue. You also have to be confident you can then use that asset to purchase an item of equivalent worth in the near term future. Trust doesn't stop, it simply moves. Centralized banks have made mistakes most certainly. They have also been around for hundreds of years. Bitcoin has perhaps fewer disappointments (although certainly not zero). It has also been around for a tiny fraction of that. How much of the extra confidence in Bitcoin is purely attributed to its otherwise relatively limited history as a store or exchange of value? I won't opine on which one is "better" (if such a description even makes sense). However, it does seem at times that people rail against central banks while turning a convenient blind eye to the challenges of decentralized banks. Is it the case that only decentralized banking problems can be solved, and centralized banking problems cannot?
- bushbaba 6y ago
  > it requires trust that the asset you are receiving is roughly equivalent in worth to the asset you're giving Checkout uniswap. Which is a decentralized exchange which the smart contract ensuring you get X asset for Y btc.
  - colinmorelli 6y ago
    Sure, but again, this is only part of the problem. I also need to have confidence that I can do something with the BTC before its value wildly fluctuates. And either way, again, it still requires trust (in this case, trust in uniswap and its network). My point is not to say that the problem can't be solved on a technical level. It's that it still requires trust. That problem doesn't get eliminated, it simply moves.
npalli 6y ago
A senior economist from FRED explained why there is the surge in M1. Basically a reclassification of parts of M2 in M1. Definitely not -- OMG end of Dollar, money printer going brrrr :-) https://fredblog.stlouisfed.org/2021/01/whats-behind-the-recent-surge-in-the-m1-money-supply/ https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...
- tedd4u 6y ago
  Came here to say just that. Still, M2 itself has also grown 20+% in one year. https://fred.stlouisfed.org/series/M2 https://fred.stlouisfed.org/series/M2 Yet consumer price indexes do not appear to have been greatly affected https://fred.stlouisfed.org/series/CPILFESL https://fred.stlouisfed.org/series/CPILFESL The dollar has however lost ~9% to the euro https://fred.stlouisfed.org/series/DEXUSEU https://fred.stlouisfed.org/series/DEXUSEU
twox2 6y ago
How exactly does bitcoin liberate you from the shit that went down in the last year, besides the fact that luck, manipulation, and celebrity shilling propelled it to new heights. Not to mention that your taxes will be astronomical, and it's easy for the federal government to regulate it into oblivion. As for me, I loved the original promise of bitcoin. A decentralized peer-to-peer electronic cash. It's not that though, and it never will be. There are lots of fascinating blockchain projects though, and we have bitcoin to thank for that.
- FabHK 6y ago
  > There are lots of fascinating blockchain projects though Do you have a list? Here [1] is a 2018 article from The Register titled "Blockchain study finds 0.00% success rate and vendors don't call back when asked for evidence", and here [2] is a 2021 article titled "IBM Blockchain Is a Shell of Its Former Self After Revenue Misses, Job Cuts: Sources" saying that > “There is not really going to be a blockchain team any longer,” said a person familiar with the situation. > Expectations for enterprise blockchain were too high, they said, adding that IBM “didn’t really manage to execute, despite doing a lot of announcements.” [1] https://www.theregister.com/2018/11/30/blockchain_study_finds_0_per_cent_success_rate/ https://www.theregister.com/2018/11/30/blockchain_study_find... [2] https://www.coindesk.com/ibm-blockchain-revenue-misses-job-cuts-sources https://www.coindesk.com/ibm-blockchain-revenue-misses-job-c...
  - twox2 6y ago
    For me personally, I find a lot of the DeFi and NFT stuff fascinating. Most of it is happening on Ethereum. I'm not too familiar with the institutional side of blockchain, but I really like opensea and the many uniswap clones.
jcranmer 6y ago
If you look at the history of the gold standard, this comment doesn't really make all that much sense. The gold standard attracts a lot of people because of the naïve view that the government can't debase gold like it can fiat. However, that view is naïve: the gold standard doesn't prevent debasement, it just means that the government has to make a choice between maintaining the gold standard or pursuing the fiscal policy. (And the moment of decision can be delayed a surprisingly long amount of time.) Yet, historically, when forced to make the choice, governments have almost always chosen continuation of fiscal policy over the gold standard. Many times (e.g., the early 1930s), governments chose the gold standard only for things to get even worse and instead opt for fiscal policy. In the long run, every country has ultimately abandoned the gold standard.
- vp8989 6y ago
  "Yet, historically, when forced to make the choice, governments have almost always chosen continuation of fiscal policy over the gold standard. Many times (e.g., the early 1930s), governments chose the gold standard only for things to get even worse and instead opt for fiscal policy. In the long run, every country has ultimately abandoned the gold standard." This. There's a lot of very very smart people who are totally lost among the trees on the technicalities of Bitcoin who don't get this 1 simple aspect. It's never happening.
- andreaorru 6y ago
  https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
trimbo 6y ago
Not an economist, but IMO this might be the most effective emergency monetary policy ever enacted. Massive amounts of money printed with very little effect on average things people need to pay for. The inflation occurred, but it occurred in things like... Bitcoin. Alternatively, if Bitcoin was our currency, we'd be in a deep depression because it'd impossible to increase the money supply and people would hoard. The government would have had to confiscate Bitcoin, like was done with gold in the 30s. I have been skeptical of the MMT people but now wonder if they might be right. One way or the other, the policy will be taught in economics books.
- tootahe45 6y ago
  Maybe things are different in America than they are here in NZ, but I don't think it's only the price of BTC rising. Having house prices rise 20% in a single year definitely screwed me over here.
notyourwork 6y ago
You should also rescind your right to streets and other public services. You don’t get to pick and choose which part of your countries debt you get to keep and which you can avoid.
- aww_dang 6y ago
  You can pick and choose, but the state employs men with guns for these occasions.
helen___keller 6y ago
> If this isn’t resonating with you after the past year, I don’t know. On the contrary, it's made me more firm in my position: fiat is better than bitcoin because fiat is responsive to the demands of democracy, while bitcoin is responsive only to a protocol written in the late aughts. There's a lot of issues with American democracy, but it's still democracy. I can vote, and theoretically any root problems can be fixed with constitutional amendments. The only way to do something similar with bitcoin is a hard fork, which just proliferates additional coins like bitcoin cash. If global democracy fails and is replaced with authoritarianism I'd be all on board with crypto, but until then I'm happy with a currency where I'm a part of the decision making process, even if it's just a tiny little part.
- charcircuit 6y ago
  It sounds like you would be interested in DAOs in the cryptocurrency space. Governance tokens are issued out and you can use them to vote on proposals.
  - IfOnlyYouKnew 6y ago
    That's a democracy where your voting power correlates with wealth, also known as feudalism. No thx
    - d10r 6y ago
      That's indeed true for many DAO designs. I often wonder if those proposing such designs don't understand that or if they just don't care. It is however not inherent to DAOs. If you add identity, a lot of alternatives open up. Check out e.g. quadratic voting or daostack.io.

neilwilson 6y ago

" Bitcoin is a way for me to step outside that debt I did not want or deserve" Try paying your taxes in Bitcoin. Then you'll find that it has nothing to do with trust and everything to do with avoiding having your assets stripped by the IRS. You want to live in a jurisdiction, then you pony up the tokens that jurisdiction demands. Or you lose your liberty and everything you own.

sygma 6y ago
> At the city level, [Miami mayor] Suarez’s ambitions are equally ambitious. He’s “looking at” ways to pay municipal employees a percentage of their salary in bitcoin and allow residents to use bitcoin and other cryptocurrencies for “payments and fees,” including taxes. https://www.coindesk.com/miami-mayor-previews-favorable-crypto-policy https://www.coindesk.com/miami-mayor-previews-favorable-cryp...
- mywittyname 6y ago
  I bet people still earn $50,000 a year and pay $1,500 a year in property taxes; not 1.2 btc or whatever.
  - FabHK 6y ago
    Exactly. As long as things are still denominated in fiat (and they are...), payment with BTC is just a gimmick.
speeder 6y ago
What about when people DON'T want to live in a jurisdiction? So far even attempts are seastading failed due to traditional countries destroying them militarily (one italian attempt for example was just bombed until nothing remained, and an attempt the pacific resulted in nearby countries landing troops on the built islands and kicking people out)
- SigmundA 6y ago
  Because thats whats happens when you don't have a government, either one will come in and become your government through force, or you become a government with enough force to prevent take over. Some entity (state) has to have the monopoly on violence to enforce laws or there are no enforceable laws.
  - mvc 6y ago
    Exactly! You can have "total liberty" to the extent that you can defend it. Since the cost of defending it against nation states (or frankly even against well-resourced pirates) is so high, most people group together and form their own nation state.
- pionar 6y ago
  Do you have an example of this happening where people didn't settle on land/sea that was already claimed by another entity? Because that's still in someone's jurisdiction.
  - speeder 6y ago
    I think few people are willing to risk that. When there was some kind of micronation-mania some years ago, with multiple mainstream papers mentioning Sealand and that Australian farmer and whatnot, I went to check, and found out that the UN itself is quite dangerous, in fact is why being "UN recognized" as a country is so important (for example why Taiwan would want to be a country officially), the UN navigation laws state that everyone that is a member of the UN has several rights of navigation, and the US for example is one of the main enforcers of these (US warships patrol around the world to ensure "free passage"), but the way those rigths is written, imply that if you are NOT a member of the UN, any member can sink you without any penalty. Thus the only way to be anywhere on the sea while not being in the UN, is if you are ally of the US (Taiwan), because otherwise you are at risk of being shot at. I don't think China has yet the navy needed to counterbalance that.
rglullis 6y ago
> Try paying your taxes in Bitcoin. It's happening already: https://www.swissinfo.ch/eng/-crypto-valley--canton-to-accept-bitcoin-for-tax-payments/46010364 https://www.swissinfo.ch/eng/-crypto-valley--canton-to-accep... > You want to live in a jurisdiction, then you pony up the tokens that jurisdiction demands. It has less to do with paying the taxes in the currency used by the State and more with protecting your wealth at the same that you can keep yourself liquid. If you ever experienced hyperinflation you would understand. Growing up in the 80's in Brazil, I remember how every 5th of the month (when my dad and my mom would get paid) was very busy. - Pay school, bills as early as possible to try to get a discount. Prices were adjusted 20-25% every month and if you paid earlier you could get some 5-10% off. - Going to the supermarket to buy 3/4 shopping carts of groceries. - Fueling up the car. I remember the traffic(!!) caused by car lines backed at the gas stations, waiting to get fuel before the prices went up. - If we needed any clothes / school stuff, head to the mall. As soon everything was paid that month, my father would get whatever money was left in the bank and would buy US dollars. For him it was worth the 5-10% spread between the black market rate and the official rate because the alternative was to see all his melt away. He would still pay his taxes in local currency.
- FabHK 6y ago
  Look, it's easy, regarding money supply ("ms"): well administered flexible ms > fixed ms > badly administered flexible ms. So, let central bankers do their job, unimpeded by politicians. Case in point: the USD your father bought were fiat with a flexible money supply, administered by the Fed.
  - rglullis 6y ago
    > well administered flexible ms > fixed ms > badly administered flexible ms The issue then becomes of how to have "well administered flexible money supply". Is it working in the US? EU? China? Turkey? Lebanon? Japan? Argentina? Brazil? Venezuela? Besides the financial elites, are people seeing their work turn into prosperity? Are people from lower income nowadays more capable of saving and investing, or is it becoming something available only for the rich? Even if we consider the rich countries: do we really want to live in a world where the majority of people depend on welfare and a perpetual money printer running to keep people consuming crap that no one really needs and enabling governments to fund armies to fight over resources across the globe? How sustainable is this? > So, let central bankers do their job, unimpeded by politicians. You might have trust in a bunch of technocrats, I don't. Alternatively, let people make experiments with different crypto currencies, different governance models, different technologies, different requirements and different values. Evolutionary processes are more reliable/less fragile than a rigid central-planning structure. Haven't we learned anything from the almost-century-long experiment called USSR? This is not to me saying "all flexible money supplies are crap, let's get rid of it." Only Bitcoin maxis would say something silly like that. What I am saying though is that Bitcoin was the first successful attempt at decentralized governance and that has a lot of value and (to some) is better than many of the existing central banks.
nihonde 6y ago
Sure, but what happens when that jurisdiction’s currency can no longer put food on the tables of its law enforcers?

afavour 6y ago

> I was forced to watch my government bungle a pandemic in the worst possible way and then asked to pay for it for decades. No I don’t think I will. That has very little to do with currency and everything to do with you not wanting to pay taxes. You may think that COVID response has been a catastrophic waste of money but if you'd lost your job would you have claimed the increased unemployment benefits? I suspect the vast majority of people would have. There's a lot to criticise in terms of government COVID response (and from your post you could be talking about any one of a number of governments!) but big government spending right now to stop even greater economic depression in the future is not some kind of wasteful accident, it's deliberate action to improve everyone's situation in the long term.

gibbonsrcool 6y ago
Why should one want to pay taxes on debt that was a result of stupidity?
- skinnymuch 6y ago
  No one wants to pay taxes on half of what taxes are being spent on. Every one wants it spent on what they prefer. Your comment doesn’t change that.
RhodoGSA 6y ago
The government forcing me to lose my job by shutting everything down and then giving me a little boost in unemployment does not make me greatful. It makes me resentful that i am forced to rely on them.
- afavour 6y ago
  I didn't ask if you'd be grateful, I asked if you'd take the expanded unemployment insurance. I suspect a lot of people were grumbling all the way to the direct deposit form but filled it out anyway. And it's not as if governments forced these shutdowns on a whim or because they felt like it. They were the result of scientific examination, and more importantly, the majority of voters were in favour of them (I think 8 out of 10 in the US in April?). In this case the government was just expressing the will of the people, whether it was your personal will or not.

jariel 6y ago

It's a very bad quote by someone who understood nothing about currency. A currency is literally 'trust' - it's a social contract. it's trust in the economic system where the currency prevails. If you don't trust it, you don't trust where it comes from. It's impossible to have a currency that is not use widely in some economy, and it's almost impossible to not have some management of that currency. For example, if any nation officially adopted BTC as their currency, as opposed to some fiat, they would be in for a difficult ride with a complete lack of any monetary policy. Nations that use the USD are actually leveraging the value of the US system. In general, the US system has more credibility than their own, so it's a benefit, and they are generally small. As a store of value it's monopoly money. The 'allure of not having to trust' people is a total myth, for any currency, even the hardest ones back by gold, land etc..

aseerdbnarng 6y ago

People dont use dollars because they choose to. They use dollars because they have to. The US government doesnt need to earn dollars to spend them. It simply has to require for us to earn dollars to pay it taxes to enforce the use of its currency.

Majromax 6y ago
But people do choose to use US Dollars. Emerging economies facing currency problems frequently become "dollarized" on a de facto or de jure basis precisely because the currency is so liquid (internationally) and so stable. Inside its borders the US Dollar also derives value from chartalism, but the currency clearly has other sources of de facto value.
- aseerdbnarng 6y ago
  Very true. The importance of dollars has if anything been highlighted in 2020 exactly because its supply can be expanded by the fed when the world demands it. Adam Tooze has a wonderful piece on this topic https://foreignpolicy.com/2021/01/15/rise-fall-united-states-financial-empire-dollar-global-currency/ https://foreignpolicy.com/2021/01/15/rise-fall-united-states....
- notahacker 6y ago
  The main source for value is that every USD is guaranteed to be able to settle 1USD worth of debt, and a lot of debt is denominated in USD. This pretty much guarantees a stream of people needing USD over any future time horizon (further factors like certain types of debt discharge reducing M1 and Fed intervention in the lending market) including internationally, with or without US federal taxes on top of that. Its status as an asset ultimately depends on it being someone else's repayment obligation. BTC doesn't have that (there's some BTC-denominated debt, but it's relatively thin and/or unenforceable) and so future demand is based on fickle wants rather than established needs. I'd be more inclined to trust the long term value of cryptocurrency if it was issued as repayable debt, but I'm not sure how you begin to achieve that in a decentralised, anonymous and enforceable way.

colinmorelli 6y ago

Correct me if I'm wrong, but hasn't the history of Bitcoin also exposed issues with not having a central bank? Theft that can't be reversed, digital wallets that can't be unlocked, value that can't be insured, etc. Currency fundamentally requires trust - at the very least it requires trust that the asset you are receiving is roughly equivalent in worth to the asset you're giving as part of the transaction. In the case of centralized banks, you have to trust the bank to help ensure the value of the currency. In the case of bitcoin, you have to trust the network, its participants, the exchanges, etc. Knowing that your transaction itself is secure is only a part of the actual, practical issue. You also have to be confident you can then use that asset to purchase an item of equivalent worth in the near term future. Trust doesn't stop, it simply moves. Centralized banks have made mistakes most certainly. They have also been around for hundreds of years. Bitcoin has perhaps fewer disappointments (although certainly not zero). It has also been around for a tiny fraction of that. How much of the extra confidence in Bitcoin is purely attributed to its otherwise relatively limited history as a store or exchange of value? I won't opine on which one is "better" (if such a description even makes sense). However, it does seem at times that people rail against central banks while turning a convenient blind eye to the challenges of decentralized banks. Is it the case that only decentralized banking problems can be solved, and centralized banking problems cannot?

bushbaba 6y ago
> it requires trust that the asset you are receiving is roughly equivalent in worth to the asset you're giving Checkout uniswap. Which is a decentralized exchange which the smart contract ensuring you get X asset for Y btc.
- colinmorelli 6y ago
  Sure, but again, this is only part of the problem. I also need to have confidence that I can do something with the BTC before its value wildly fluctuates. And either way, again, it still requires trust (in this case, trust in uniswap and its network). My point is not to say that the problem can't be solved on a technical level. It's that it still requires trust. That problem doesn't get eliminated, it simply moves.

npalli 6y ago

A senior economist from FRED explained why there is the surge in M1. Basically a reclassification of parts of M2 in M1. Definitely not -- OMG end of Dollar, money printer going brrrr :-) https://fredblog.stlouisfed.org/2021/01/whats-behind-the-recent-surge-in-the-m1-money-supply/ https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...

tedd4u 6y ago
Came here to say just that. Still, M2 itself has also grown 20+% in one year. https://fred.stlouisfed.org/series/M2 https://fred.stlouisfed.org/series/M2 Yet consumer price indexes do not appear to have been greatly affected https://fred.stlouisfed.org/series/CPILFESL https://fred.stlouisfed.org/series/CPILFESL The dollar has however lost ~9% to the euro https://fred.stlouisfed.org/series/DEXUSEU https://fred.stlouisfed.org/series/DEXUSEU

twox2 6y ago

How exactly does bitcoin liberate you from the shit that went down in the last year, besides the fact that luck, manipulation, and celebrity shilling propelled it to new heights. Not to mention that your taxes will be astronomical, and it's easy for the federal government to regulate it into oblivion. As for me, I loved the original promise of bitcoin. A decentralized peer-to-peer electronic cash. It's not that though, and it never will be. There are lots of fascinating blockchain projects though, and we have bitcoin to thank for that.

FabHK 6y ago
> There are lots of fascinating blockchain projects though Do you have a list? Here [1] is a 2018 article from The Register titled "Blockchain study finds 0.00% success rate and vendors don't call back when asked for evidence", and here [2] is a 2021 article titled "IBM Blockchain Is a Shell of Its Former Self After Revenue Misses, Job Cuts: Sources" saying that > “There is not really going to be a blockchain team any longer,” said a person familiar with the situation. > Expectations for enterprise blockchain were too high, they said, adding that IBM “didn’t really manage to execute, despite doing a lot of announcements.” [1] https://www.theregister.com/2018/11/30/blockchain_study_finds_0_per_cent_success_rate/ https://www.theregister.com/2018/11/30/blockchain_study_find... [2] https://www.coindesk.com/ibm-blockchain-revenue-misses-job-cuts-sources https://www.coindesk.com/ibm-blockchain-revenue-misses-job-c...
- twox2 6y ago
  For me personally, I find a lot of the DeFi and NFT stuff fascinating. Most of it is happening on Ethereum. I'm not too familiar with the institutional side of blockchain, but I really like opensea and the many uniswap clones.

jcranmer 6y ago

If you look at the history of the gold standard, this comment doesn't really make all that much sense. The gold standard attracts a lot of people because of the naïve view that the government can't debase gold like it can fiat. However, that view is naïve: the gold standard doesn't prevent debasement, it just means that the government has to make a choice between maintaining the gold standard or pursuing the fiscal policy. (And the moment of decision can be delayed a surprisingly long amount of time.) Yet, historically, when forced to make the choice, governments have almost always chosen continuation of fiscal policy over the gold standard. Many times (e.g., the early 1930s), governments chose the gold standard only for things to get even worse and instead opt for fiscal policy. In the long run, every country has ultimately abandoned the gold standard.

vp8989 6y ago
"Yet, historically, when forced to make the choice, governments have almost always chosen continuation of fiscal policy over the gold standard. Many times (e.g., the early 1930s), governments chose the gold standard only for things to get even worse and instead opt for fiscal policy. In the long run, every country has ultimately abandoned the gold standard." This. There's a lot of very very smart people who are totally lost among the trees on the technicalities of Bitcoin who don't get this 1 simple aspect. It's never happening.
andreaorru 6y ago
https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/

trimbo 6y ago

Not an economist, but IMO this might be the most effective emergency monetary policy ever enacted. Massive amounts of money printed with very little effect on average things people need to pay for. The inflation occurred, but it occurred in things like... Bitcoin. Alternatively, if Bitcoin was our currency, we'd be in a deep depression because it'd impossible to increase the money supply and people would hoard. The government would have had to confiscate Bitcoin, like was done with gold in the 30s. I have been skeptical of the MMT people but now wonder if they might be right. One way or the other, the policy will be taught in economics books.

tootahe45 6y ago
Maybe things are different in America than they are here in NZ, but I don't think it's only the price of BTC rising. Having house prices rise 20% in a single year definitely screwed me over here.

notyourwork 6y ago

You should also rescind your right to streets and other public services. You don’t get to pick and choose which part of your countries debt you get to keep and which you can avoid.

aww_dang 6y ago
You can pick and choose, but the state employs men with guns for these occasions.

helen___keller 6y ago

> If this isn’t resonating with you after the past year, I don’t know. On the contrary, it's made me more firm in my position: fiat is better than bitcoin because fiat is responsive to the demands of democracy, while bitcoin is responsive only to a protocol written in the late aughts. There's a lot of issues with American democracy, but it's still democracy. I can vote, and theoretically any root problems can be fixed with constitutional amendments. The only way to do something similar with bitcoin is a hard fork, which just proliferates additional coins like bitcoin cash. If global democracy fails and is replaced with authoritarianism I'd be all on board with crypto, but until then I'm happy with a currency where I'm a part of the decision making process, even if it's just a tiny little part.

charcircuit 6y ago
It sounds like you would be interested in DAOs in the cryptocurrency space. Governance tokens are issued out and you can use them to vote on proposals.
- IfOnlyYouKnew 6y ago
  That's a democracy where your voting power correlates with wealth, also known as feudalism. No thx
  - d10r 6y ago
    That's indeed true for many DAO designs. I often wonder if those proposing such designs don't understand that or if they just don't care. It is however not inherent to DAOs. If you add identity, a lot of alternatives open up. Check out e.g. quadratic voting or daostack.io.