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Stablecoins are dangerous because they have the potential to change the current selection effects on the elite. For one thing, stablecoins subvert the ability o

Stablecoins are dangerous because they have the potential to change the current selection effects on the elite. For one thing, stablecoins subvert the ability of the Federal Reserve to print money and give it to their friends at Goldman Sachs et al --- normally this is supposed to result in their friends have a larger fraction of money than they previously had. You start with 1 dollar, David at Goldman Sachs starts with 1 dollar, you each have 50% of the wealth in the "nation." David and his friends start printing themselves money, soon they have 99 dollars and you have 1, and you can't compete because they'll lock you up with violence for being a "counterfeiter." That's how inflation works. When there's stablecoin, you just put your dollar in stablecoin before they print the money, the dollar inflates, stablecoin goes up proportionately, you spend the stablecoin and things remain fair. This obviously curtails the ability of the ruling class to reproduce itself. More than that, if the pool of people getting billions through stablecoins is more random than the pool of people who got rich on the dollar, then the ruling class will change to be more representative of the population as a whole. This could cause massive cultural changes, consequently.

ethbr0 5y ago
It seems like there's another side to this story you're not mentioning... I think I read about it in history of the 19th and 20th centuries?
- bmcahren 5y ago
  https://en.wikipedia.org/wiki/Gold_Reserve_Act#:~:text=A%20year%20earlier%2C%20in%201933,some%20jewelry%20and%20collector's%20coins.&text=By%201975%20Americans%20could%20again%20freely%20own%20and%20trade%20gold https://en.wikipedia.org/wiki/Gold_Reserve_Act#:~:text=A%20y....
  - ethbr0 5y ago
    1837 - https://en.m.wikipedia.org/wiki/Panic_of_1837 https://en.m.wikipedia.org/wiki/Panic_of_1837 1873 - https://en.m.wikipedia.org/wiki/Long_Depression https://en.m.wikipedia.org/wiki/Long_Depression 1910 - https://en.m.wikipedia.org/wiki/Panic_of_1910%E2%80%931911 https://en.m.wikipedia.org/wiki/Panic_of_1910%E2%80%931911 1929 - https://en.m.wikipedia.org/wiki/Great_Depression https://en.m.wikipedia.org/wiki/Great_Depression Monetary consistency sounds good, until it doesn't.
paulgb 5y ago
Leaving aside the dubious idea that the Federal Reserve can give their friends the ability to print money, stablecoins don't subvert any party's ability to print money if they are pegged to that money. If you can print USD, and I have a stablecoin pegged to $1 USD, you can just print $1 USD and buy my stablecoin on the open market.
- JuliusBranson 5y ago
  >Leaving aside the dubious idea that the Federal Reserve can give their friends the ability to print money You didn't read my comment correctly.
  - tux1968 5y ago
    What is the mechanism that ensures bitcoin inflates proportionally to the dollar?
    - dboreham 5y ago
      Perhaps inflation in the price of electricity, denominated in USD? But when people say inflation in the context of cryptocurrency they usually mean "deflation".
    - moolcool 5y ago
      (not an economist) If most bitcoins are bought with USD, all else remaining equal, wouldn't this automatically happen?
      - deleted 5y ago
        [deleted]
      - tux1968 5y ago
        I'm not an economist either... but the buying power of your bitcoin goes down if people demand more of it for a given product. If USD prices rise, the bitcoin price will rise too, meaning your bitcoin wealth is affected by inflation, and you're not protected from the Fed printing money.
betwixthewires 5y ago
> When there's stablecoin, you just put your dollar in bitcoin before they print the money, the dollar inflates, bitcoin goes up proportionately, you spend the bitcoin and things remain fair. Alright, exactly where do stablecoins come into play in this scenario?
ineptech 5y ago
> That's how inflation works. May I recommend https://www.lynalden.com/quantitative-easing-mmt-inflation/ https://www.lynalden.com/quantitative-easing-mmt-inflation/
user-the-name 5y ago
> When there's stablecoin, you just put your dollar in stablecoin before they print the money, the dollar inflates, stablecoin goes up proportionately, you spend the stablecoin and things remain fair. This makes absolutely no sense whatsoever.
dragonwriter 5y ago
> When there's stablecoin, you just put your dollar in stablecoin before they print the money, the dollar inflates, stablecoin goes up proportionately, Printing fiat makes stablecoins denominated in the currency lose real value, not gain in it. (Stablecoins denominated in a different currency would gain nominal value in the printed currency, the same way direct holdings in the alternative currency would.) So, no, to the extent easy money policy makes people rich fairly directly, holders of stablecoins denominated in the currency would not be among the beneficiaries.
- JuliusBranson 5y ago
  >Printing fiat makes stablecoins denominated in the currency lose real value, not gain in it. What's the case for this statement? In general, I don't expect to commodities to change value just because some currency was redistributed.
  - spfzero 5y ago
    The case for it is the denominator increasing.
  - actually_a_dog 5y ago
    The commodity in this case is just a proxy for USD or other currency.
  - dragonwriter 5y ago
    Printing currency makes that currency (and consequently, anything pegged to it) lose value compared to not doing so, because increasing supply decreases market clearing value.
  - ivalm 5y ago
    Stablecoin is not a commodity, it is literally a token pegged to the value of a given fiat (such as dollar) or a basket of several fist currencies.
remote-dev 5y ago
> stablecoins subvert the ability of the Federal Reserve to print money and give it to their friends at Goldman Sachs et al ... and now the owners of the stablecoin can print money and give it to friends of the stablecoin. I don't see how stablecoins are any better than the Federal Reserve. If anything they are strictly worse. The owners of the stablecoin are semi-anonymous and have no governing body. I get that "no governing body" might be a good thing in some people's minds, and I think the OP highlights exactly who those people are.

ethbr0 5y ago

It seems like there's another side to this story you're not mentioning... I think I read about it in history of the 19th and 20th centuries?

bmcahren 5y ago
https://en.wikipedia.org/wiki/Gold_Reserve_Act#:~:text=A%20year%20earlier%2C%20in%201933,some%20jewelry%20and%20collector's%20coins.&text=By%201975%20Americans%20could%20again%20freely%20own%20and%20trade%20gold https://en.wikipedia.org/wiki/Gold_Reserve_Act#:~:text=A%20y....
- ethbr0 5y ago
  1837 - https://en.m.wikipedia.org/wiki/Panic_of_1837 https://en.m.wikipedia.org/wiki/Panic_of_1837 1873 - https://en.m.wikipedia.org/wiki/Long_Depression https://en.m.wikipedia.org/wiki/Long_Depression 1910 - https://en.m.wikipedia.org/wiki/Panic_of_1910%E2%80%931911 https://en.m.wikipedia.org/wiki/Panic_of_1910%E2%80%931911 1929 - https://en.m.wikipedia.org/wiki/Great_Depression https://en.m.wikipedia.org/wiki/Great_Depression Monetary consistency sounds good, until it doesn't.

paulgb 5y ago

Leaving aside the dubious idea that the Federal Reserve can give their friends the ability to print money, stablecoins don't subvert any party's ability to print money if they are pegged to that money. If you can print USD, and I have a stablecoin pegged to $1 USD, you can just print $1 USD and buy my stablecoin on the open market.

JuliusBranson 5y ago
>Leaving aside the dubious idea that the Federal Reserve can give their friends the ability to print money You didn't read my comment correctly.
- tux1968 5y ago
  What is the mechanism that ensures bitcoin inflates proportionally to the dollar?
  - dboreham 5y ago
    Perhaps inflation in the price of electricity, denominated in USD? But when people say inflation in the context of cryptocurrency they usually mean "deflation".
  - moolcool 5y ago
    (not an economist) If most bitcoins are bought with USD, all else remaining equal, wouldn't this automatically happen?
    - deleted 5y ago
      [deleted]
    - tux1968 5y ago
      I'm not an economist either... but the buying power of your bitcoin goes down if people demand more of it for a given product. If USD prices rise, the bitcoin price will rise too, meaning your bitcoin wealth is affected by inflation, and you're not protected from the Fed printing money.

betwixthewires 5y ago

> When there's stablecoin, you just put your dollar in bitcoin before they print the money, the dollar inflates, bitcoin goes up proportionately, you spend the bitcoin and things remain fair. Alright, exactly where do stablecoins come into play in this scenario?

ineptech 5y ago

> That's how inflation works. May I recommend https://www.lynalden.com/quantitative-easing-mmt-inflation/ https://www.lynalden.com/quantitative-easing-mmt-inflation/

user-the-name 5y ago

> When there's stablecoin, you just put your dollar in stablecoin before they print the money, the dollar inflates, stablecoin goes up proportionately, you spend the stablecoin and things remain fair. This makes absolutely no sense whatsoever.

dragonwriter 5y ago

> When there's stablecoin, you just put your dollar in stablecoin before they print the money, the dollar inflates, stablecoin goes up proportionately, Printing fiat makes stablecoins denominated in the currency lose real value, not gain in it. (Stablecoins denominated in a different currency would gain nominal value in the printed currency, the same way direct holdings in the alternative currency would.) So, no, to the extent easy money policy makes people rich fairly directly, holders of stablecoins denominated in the currency would not be among the beneficiaries.

JuliusBranson 5y ago
>Printing fiat makes stablecoins denominated in the currency lose real value, not gain in it. What's the case for this statement? In general, I don't expect to commodities to change value just because some currency was redistributed.
- spfzero 5y ago
  The case for it is the denominator increasing.
- actually_a_dog 5y ago
  The commodity in this case is just a proxy for USD or other currency.
- dragonwriter 5y ago
  Printing currency makes that currency (and consequently, anything pegged to it) lose value compared to not doing so, because increasing supply decreases market clearing value.
- ivalm 5y ago
  Stablecoin is not a commodity, it is literally a token pegged to the value of a given fiat (such as dollar) or a basket of several fist currencies.

remote-dev 5y ago

> stablecoins subvert the ability of the Federal Reserve to print money and give it to their friends at Goldman Sachs et al ... and now the owners of the stablecoin can print money and give it to friends of the stablecoin. I don't see how stablecoins are any better than the Federal Reserve. If anything they are strictly worse. The owners of the stablecoin are semi-anonymous and have no governing body. I get that "no governing body" might be a good thing in some people's minds, and I think the OP highlights exactly who those people are.