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> How do you think the dollar keeps its value? Base demand for dollars is created due to taxation. As the money supply is managed via fractional reserve lendin
by arcticbull 5y ago
> How do you think the dollar keeps its value?
Base demand for dollars is created due to taxation. As the money supply is managed via fractional reserve lending, each new dollar that enters circulation is backed by the demand for repayment of that loan. When someone borrows money from a bank, the bank enters a negative balance in its ledger and the borrower gets a positive balance in their account. This is how money is created. As the loan is repaid, the money is destroyed.
Dollars are fully backed by demand for dollars. It's really quite elegant.
> Do you understand that the reason it has value is because it’s backed by the US military, which provides peace and stability for industry to consume a vast amount of energy to produce goods that get shipped around using fossil fuel?
This is utterly irrelevant. The US military existed for hundreds of years on hard money. World wars were fought on hard money.
> Have you calculated the total energy expenditure of the entire US financial system, direct and indirect, and then compare it to proof-of-work calculations?
Sure, and as a percentage of transaction count, transaction value, or basically any other metric it utterly pales in comparison. [1]
> Don’t just parrot what the current-day zeitgeist told you to think.
Ditto the crypto echo chamber.
[1] https://digiconomist.net/bitcoin-energy-consumption/ https://digiconomist.net/bitcoin-energy-consumption/
- monological 5y agoYou’re talking about borrowing and lending money, which becomes a moot point, when a foreign country invades your country and burns everything down. That doesn’t happen because we have the military and nukes that act as deterrents. That in turn props up the dollar and allows it to have the value it does.
- arcticbull 5y agoAnd we’d still have them on a pocket lint standard. Self defense is uncorrelated.
- dnautics 5y ago"Base demand" I get that this is working econ theory, but is that even meaningful? Do you honestly think people hold dollars because "someone can use it to.pay taxes"?
- arcticbull 5y agoYes, because if you dont pay taxes you go to prison. Not going to prison is in high demand!
- dnautics 5y agoso, when the US had no income tax, this was not even the case for the median american. Yet the dollar still had value!
- arcticbull 5y agoMy list of big demand drivers isn’t exhaustive and applies more to the current system than to the gold standard system of the past you’re referring to. Under fiat, the top marginal tax rate was over 80-90% for much of the time.
- sudosysgen 5y agoThe US dollar was backed by gold at that time. That's where it had it's value.
- nightski 5y agoTechnically you don't go to prison. You go to prison for lying about what you owe or cheating. But if you don't pay you generally settle with the IRS and get put on a payment plan or something similar. I know people who have been through this process.
- dnautics 5y agoThere's also plenty of people who (legally) dont pay taxes.
- arcticbull 5y agoSure because some people don’t owe taxes.
- 5y ago