4 ms·

> I trust my bank not to steal my money This is the literal stated intent of the Federal Reserve (your bank's bank) at a rate of 2% a year.

rd_police 5y ago
- nateabele 5y ago
  Excuse me?
cletus 5y ago
This comment belies such a fundamental misunderstanding of the modern financial system it's hard to know where to begin. Moderate inflation is a feature not a bug. It drives investment and increases the money supply. On the opposite side, major coins (including BTC and ETH) are massively deflationary, so much so that there's a day to celebrate the purchase of a pizza for $800 million [1]. We shouldn't even call them "currencies" because they're not. They're assets and hugely speculative ones at that. It's really just as well it's an asset because deflationary currencies aren't good for anyone. Ostensibly your money goes up in value over time but no one spends it so the economy just grinds to a halt. [1]: https://interestingengineering.com/bitcoin-pizza-day-celebrates-guy-who-spent-800-million-dollars-on-supreme-pies https://interestingengineering.com/bitcoin-pizza-day-celebra...
- nateabele 5y ago
  > Moderate inflation is a feature not a bug. It drives investment and increases the money supply. Hah! Indeed. By 'drives investment' do you mean massively inflated asset prices (you may have heard the term 'Everything Bubble') and wild speculation (i.e. crypto, VCs) such as hasn't been seen since the Roaring 20s? > We shouldn't even call them "currencies" because they're not. They're assets and hugely speculative ones at that. Quite. I was going to point out that there's a difference between 'currency' and 'money', but I can see you're busy trying to school me. Please continue. > It's really just as well it's an asset because deflationary currencies aren't good for anyone. Ostensibly your money goes up in value over time but no one spends it so the economy just grinds to a halt. Well, I'll take that over the USD dollar, which has collapsed in value by almost 99% since 1913 (when the Fed was created), and is about to collapse even further. All of your bullet points are perfectly in line with government and central bank propaganda—I mean, talking points. Overall, I would posit the complexity of our 'modern financial system' is a great way to obfuscate the truth about it—don't confuse knowledge of facts with understanding. Plenty of people smarter than you have both, and have come to the opposite conclusion[0]. [0] https://www.brainyquote.com/quotes/henry_ford_136294 https://www.brainyquote.com/quotes/henry_ford_136294
  - ryan_lane 5y ago
    You're pointing out a difference between currency and money, but then treating USD like it's an investment that's a massive loss since 1913, though the point of USD is meant to be a currency, and not a store of value. You're meant to use it at its current price, and it's intended to be worth less over time to encourage you to spend it. Investments, valued in USD, beat inflation, so it doesn't matter that the USD is inflationary.
    - nateabele 5y ago
      Amazing. Only on HN. Technically correct, yet completely disconnected from reality: Forget the propaganda about the financial system that we've all grown up with, blame it on user error, and utterly disregard anyone who doesn't derive their income from assets and has to buy groceries (i.e. most of the user base).
- disruptalot 5y ago
  > Moderate inflation is a feature not a bug. It drives investment and increases the money supply. It fundamentally isn't as simple as inflation good, no inflation bad. It's all fine and dandy until central banks lose control and inflation causes catastrophic issues. Not to mention that it's most definitely a bug for people that intend to save for basics like housing on smaller incomes that can't efficiently invest in assets. Inflation tends to benefit those closest to the money first, common assets second then everything else by which point a new cycle has already begun. BTC & ETH aren't deflationary as much as they are predictable in their money supply. You could say that they elongate the time preference of investments and that isn't only a bad thing.
  - cletus 5y ago
    > It's all fine and dandy until central banks lose control and inflation causes catastrophic issues. Genuinely curious: what issues are you specifically referring to? > BTC & ETH aren't deflationary as much as they are predictable in their money supply. See this is another crypto myth. So yes Bitcoin is limited to ~21M coins theoretically but we don't actually know what the limit is because wallets have gotten lost and will continue to be lost. Second, a lot of crypto people don't seem to understand the impact of derivatives to effectively increase the supply and thus bring about all the problems crypto advocates say crypto doesn't have. I mean look at GameStop. There are a fixed number of shares on the market (buybacks and issuing new shares notwithstanding). Yet derivatives created a situation where there simply weren't enough outstanding shares to cover short interest. Taken to its extreme this would mean those shares would have infinite value. What really undid the subprime mortgage market (other than the fraudulent ratings for which no one went to jail and they absolutely should have) was all the derivatives on top of actual mortgages. I forget the exact number but it was something like a factor of 10-20 (meaning $10-20 in derivatives for each $1 of a mortgage). The exact same thing can (and will) happen to crypto. That's why fixed supply is a myth.
    - disruptalot 5y ago
      > Genuinely curious: what issues are you specifically referring to? When central bank/governments lose control or get greedy you end up with hyperinflation. Should I go into examples of how hyperinflation has been catastrophic? > we don't actually know what the limit is because wallets have gotten lost and will continue to be lost. We know the limit but we don't know how much is being circulated. Central bank money is the opposite, you know roughly how much is being circulated (if you're government is nice to you) and there is no limit. > The impact of derivatives to effectively increase the supply Derivates don't increase the money supply itself, they play tricks using the underlying asset. If you hold the Bitcoin asset yourself, someone playing with derivatives means very little to you. Though if you have your balance on an exchange, that's on you. On the other hand, in the current system, you have no access to the underlying asset. You don't own 0.00001% of the central bank. In other words, everything you are using _is_ a derivative. Even something as simple as keeping your money in the bank means you are using a derivative. That being the option of the bank to hold no reserves for the money you deposited.
yokoprime 5y ago
What the hell are you talking about? If I keep my money in a bank account i get a tiny percent interest. If have my crypto sitting in an exchange, i get nothing. Likewise moving my crypto around shaves off value each time in gas fees and whatnot.
- MitPitt 5y ago
  So don't have it sitting in an exchange? Try to educate oneself a little on DeFi? Also there are blockchain with gas fees that cost fractions of a penny.
- TAKEMYMONEY 5y ago
  Which savings accounts offer interest rates that can compete with crypto exchanges? Or wallet staking? Chase, BoA and Wells Fargo savings accounts in the US pay 0.01% APY. Ally is down to 0.5% APY. There is a crypto exchange offering 1.01% APY on BTC, a difference of 10,000% compared to Chase (and much higher APYs on other tokens). Not shilling, I moved everything from Ally to a money market account elsewhere, I'd genuinely like to know where you're seeing a relevant amount of interest.
immibis 5y ago
2% inflation is not stealing. 2% inflation is time decay. Use it or lose it. Your claims on future productivity cannot last forever, that over-encumbers the future. (I recognize we live in a system where savings are required, but I don't think it's optimal) 1000% inflation, now that's stealing.

rd_police 5y ago

nateabele 5y ago
Excuse me?

cletus 5y ago

This comment belies such a fundamental misunderstanding of the modern financial system it's hard to know where to begin. Moderate inflation is a feature not a bug. It drives investment and increases the money supply. On the opposite side, major coins (including BTC and ETH) are massively deflationary, so much so that there's a day to celebrate the purchase of a pizza for $800 million [1]. We shouldn't even call them "currencies" because they're not. They're assets and hugely speculative ones at that. It's really just as well it's an asset because deflationary currencies aren't good for anyone. Ostensibly your money goes up in value over time but no one spends it so the economy just grinds to a halt. [1]: https://interestingengineering.com/bitcoin-pizza-day-celebrates-guy-who-spent-800-million-dollars-on-supreme-pies https://interestingengineering.com/bitcoin-pizza-day-celebra...

nateabele 5y ago
> Moderate inflation is a feature not a bug. It drives investment and increases the money supply. Hah! Indeed. By 'drives investment' do you mean massively inflated asset prices (you may have heard the term 'Everything Bubble') and wild speculation (i.e. crypto, VCs) such as hasn't been seen since the Roaring 20s? > We shouldn't even call them "currencies" because they're not. They're assets and hugely speculative ones at that. Quite. I was going to point out that there's a difference between 'currency' and 'money', but I can see you're busy trying to school me. Please continue. > It's really just as well it's an asset because deflationary currencies aren't good for anyone. Ostensibly your money goes up in value over time but no one spends it so the economy just grinds to a halt. Well, I'll take that over the USD dollar, which has collapsed in value by almost 99% since 1913 (when the Fed was created), and is about to collapse even further. All of your bullet points are perfectly in line with government and central bank propaganda—I mean, talking points. Overall, I would posit the complexity of our 'modern financial system' is a great way to obfuscate the truth about it—don't confuse knowledge of facts with understanding. Plenty of people smarter than you have both, and have come to the opposite conclusion[0]. [0] https://www.brainyquote.com/quotes/henry_ford_136294 https://www.brainyquote.com/quotes/henry_ford_136294
- ryan_lane 5y ago
  You're pointing out a difference between currency and money, but then treating USD like it's an investment that's a massive loss since 1913, though the point of USD is meant to be a currency, and not a store of value. You're meant to use it at its current price, and it's intended to be worth less over time to encourage you to spend it. Investments, valued in USD, beat inflation, so it doesn't matter that the USD is inflationary.
  - nateabele 5y ago
    Amazing. Only on HN. Technically correct, yet completely disconnected from reality: Forget the propaganda about the financial system that we've all grown up with, blame it on user error, and utterly disregard anyone who doesn't derive their income from assets and has to buy groceries (i.e. most of the user base).
disruptalot 5y ago
> Moderate inflation is a feature not a bug. It drives investment and increases the money supply. It fundamentally isn't as simple as inflation good, no inflation bad. It's all fine and dandy until central banks lose control and inflation causes catastrophic issues. Not to mention that it's most definitely a bug for people that intend to save for basics like housing on smaller incomes that can't efficiently invest in assets. Inflation tends to benefit those closest to the money first, common assets second then everything else by which point a new cycle has already begun. BTC & ETH aren't deflationary as much as they are predictable in their money supply. You could say that they elongate the time preference of investments and that isn't only a bad thing.
- cletus 5y ago
  > It's all fine and dandy until central banks lose control and inflation causes catastrophic issues. Genuinely curious: what issues are you specifically referring to? > BTC & ETH aren't deflationary as much as they are predictable in their money supply. See this is another crypto myth. So yes Bitcoin is limited to ~21M coins theoretically but we don't actually know what the limit is because wallets have gotten lost and will continue to be lost. Second, a lot of crypto people don't seem to understand the impact of derivatives to effectively increase the supply and thus bring about all the problems crypto advocates say crypto doesn't have. I mean look at GameStop. There are a fixed number of shares on the market (buybacks and issuing new shares notwithstanding). Yet derivatives created a situation where there simply weren't enough outstanding shares to cover short interest. Taken to its extreme this would mean those shares would have infinite value. What really undid the subprime mortgage market (other than the fraudulent ratings for which no one went to jail and they absolutely should have) was all the derivatives on top of actual mortgages. I forget the exact number but it was something like a factor of 10-20 (meaning $10-20 in derivatives for each $1 of a mortgage). The exact same thing can (and will) happen to crypto. That's why fixed supply is a myth.
  - disruptalot 5y ago
    > Genuinely curious: what issues are you specifically referring to? When central bank/governments lose control or get greedy you end up with hyperinflation. Should I go into examples of how hyperinflation has been catastrophic? > we don't actually know what the limit is because wallets have gotten lost and will continue to be lost. We know the limit but we don't know how much is being circulated. Central bank money is the opposite, you know roughly how much is being circulated (if you're government is nice to you) and there is no limit. > The impact of derivatives to effectively increase the supply Derivates don't increase the money supply itself, they play tricks using the underlying asset. If you hold the Bitcoin asset yourself, someone playing with derivatives means very little to you. Though if you have your balance on an exchange, that's on you. On the other hand, in the current system, you have no access to the underlying asset. You don't own 0.00001% of the central bank. In other words, everything you are using _is_ a derivative. Even something as simple as keeping your money in the bank means you are using a derivative. That being the option of the bank to hold no reserves for the money you deposited.

yokoprime 5y ago

What the hell are you talking about? If I keep my money in a bank account i get a tiny percent interest. If have my crypto sitting in an exchange, i get nothing. Likewise moving my crypto around shaves off value each time in gas fees and whatnot.

MitPitt 5y ago
So don't have it sitting in an exchange? Try to educate oneself a little on DeFi? Also there are blockchain with gas fees that cost fractions of a penny.
TAKEMYMONEY 5y ago
Which savings accounts offer interest rates that can compete with crypto exchanges? Or wallet staking? Chase, BoA and Wells Fargo savings accounts in the US pay 0.01% APY. Ally is down to 0.5% APY. There is a crypto exchange offering 1.01% APY on BTC, a difference of 10,000% compared to Chase (and much higher APYs on other tokens). Not shilling, I moved everything from Ally to a money market account elsewhere, I'd genuinely like to know where you're seeing a relevant amount of interest.

immibis 5y ago

2% inflation is not stealing. 2% inflation is time decay. Use it or lose it. Your claims on future productivity cannot last forever, that over-encumbers the future. (I recognize we live in a system where savings are required, but I don't think it's optimal) 1000% inflation, now that's stealing.