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There's a chicken and egg problem with cryptocurrency. If I want crypto, I need to go to an exchange and trade some fiat for it, which would imply that cryptocu

There's a chicken and egg problem with cryptocurrency. If I want crypto, I need to go to an exchange and trade some fiat for it, which would imply that cryptocurrency is inherently gold-backed like the USD. Then we have people claiming the USD is no longer backed by gold, and that the old concept of 'a dollar note is a receipt for a dollar of gold that you don't physically own'. Can someone please elaborate why I can't go to the federal reserve with a million bucks and trade it for gold?

throwaway3699 5y ago
USD is not backed by gold, mainly so the federal reserve can print money to control inflation. And, if necessary, indirectly tax the poor or financially illiterate by devaluing their savings.
- jasonwatkinspdx 5y ago
  Mild inflation generally aids the poor, as they have little to no savings and substantial debt. In the US the overwhelming majority of household's net worth is the equity in their home, which usually doesn't exceed the mortgage they still owe until rather late in life. A few people get lucky with hot real estate markets but to capture that you have to move into an undesirable cheaper area. Financial literacy is a different issue, but to be absolutely clear, the Fed is not in the business of exploiting the poor. That's a very cartoonish characterization.
  - vmception 5y ago
    I view the "inflation = stealth tax" to be hyperbole. Like, a comparison to something everyone hates for emphasis. But yes, inflation is not targeting any socioeconomic class, and its purpose is mainly to force people with a lot of money to not just park it somewhere and instead keep it moving in the economy. The bank's advertised rates sound like a cruel joke? Go invest it! That's the point, the central banks are playing a perpetual game of "inception" where they make all of your decisions to not put your money in a savings account to seem like your own original idea.
gregjor 5y ago
It’s not a “claim.” It’s legislation, meaning the law. The US stopped backing up dollars with gold decades ago. I don’t know of any country still on the gold standard, certainly no large economy. https://en.wikipedia.org/wiki/Gold_standard https://en.wikipedia.org/wiki/Gold_standard
vmception 5y ago
I guess the main problem here is why are you starting with the idea it can be traded for gold? It cant. The answer is because they said so. Just like you cant redeem it for state-hoarded lumber. See? A completely arbitrary example. “Why cant I go to the federal reserve with a million bucks and trade it for lumber?” You would ask “who told you that you could?” There was a time when the US dollar could be redeemed for gold. That stopped almost 100 years ago, and all those people that avoid discussing money in polite company turned out to grow up completely ignorant on money topics. That’s it. I’m not saying that as an insult, I am saying that multiple generations of people did each other a disservice and have outdated understandings of the concept. The US dollar is not backed by and cannot be redeemed for gold. It would be more productive to erase your concept of “backing” and “redeem for gold”, and start over from scratch, instead of trying to conform new understanding to those concepts.
bagels 5y ago
USD is fiat money, by changes in law, since 1973. No longer on the "good standard"
- deleted 5y ago
  [deleted]

throwaway3699 5y ago

USD is not backed by gold, mainly so the federal reserve can print money to control inflation. And, if necessary, indirectly tax the poor or financially illiterate by devaluing their savings.

jasonwatkinspdx 5y ago
Mild inflation generally aids the poor, as they have little to no savings and substantial debt. In the US the overwhelming majority of household's net worth is the equity in their home, which usually doesn't exceed the mortgage they still owe until rather late in life. A few people get lucky with hot real estate markets but to capture that you have to move into an undesirable cheaper area. Financial literacy is a different issue, but to be absolutely clear, the Fed is not in the business of exploiting the poor. That's a very cartoonish characterization.
- vmception 5y ago
  I view the "inflation = stealth tax" to be hyperbole. Like, a comparison to something everyone hates for emphasis. But yes, inflation is not targeting any socioeconomic class, and its purpose is mainly to force people with a lot of money to not just park it somewhere and instead keep it moving in the economy. The bank's advertised rates sound like a cruel joke? Go invest it! That's the point, the central banks are playing a perpetual game of "inception" where they make all of your decisions to not put your money in a savings account to seem like your own original idea.

gregjor 5y ago

It’s not a “claim.” It’s legislation, meaning the law. The US stopped backing up dollars with gold decades ago. I don’t know of any country still on the gold standard, certainly no large economy. https://en.wikipedia.org/wiki/Gold_standard https://en.wikipedia.org/wiki/Gold_standard

vmception 5y ago

I guess the main problem here is why are you starting with the idea it can be traded for gold? It cant. The answer is because they said so. Just like you cant redeem it for state-hoarded lumber. See? A completely arbitrary example. “Why cant I go to the federal reserve with a million bucks and trade it for lumber?” You would ask “who told you that you could?” There was a time when the US dollar could be redeemed for gold. That stopped almost 100 years ago, and all those people that avoid discussing money in polite company turned out to grow up completely ignorant on money topics. That’s it. I’m not saying that as an insult, I am saying that multiple generations of people did each other a disservice and have outdated understandings of the concept. The US dollar is not backed by and cannot be redeemed for gold. It would be more productive to erase your concept of “backing” and “redeem for gold”, and start over from scratch, instead of trying to conform new understanding to those concepts.

bagels 5y ago

USD is fiat money, by changes in law, since 1973. No longer on the "good standard"

deleted 5y ago
[deleted]