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Disregard new accounts that claim the sky will be falling. The debt will always be going up and there will always be inflation. That's how fiat currencies work.

Disregard new accounts that claim the sky will be falling. The debt will always be going up and there will always be inflation. That's how fiat currencies work. Research the federal reserve and it's stated objectives to understand why.

scottiebarnes 5y ago
If the way fiat currencies work is constant devaluation in the name of increased short term spending, then it makes the currency utterly terrible to invest and save in in the long term. If this is how its supposed to work, then your money is a toxic asset which should be handed off as quickly as possible to someone else. And so if no one actually wants this asset, then it makes it valueless.
- dragonwriter 5y ago
  > then it makes the currency utterly terrible to invest and save in in the long term. That's why it's called “current-sy” (only slightly joking) It's for current use as a medium of exchange. For investment/savings, you go to productive assets. That's the whole point. Mixing those functions doesn't help anything.
  - scottiebarnes 5y ago
    No, money is supposed to be good at storing value as well. That's why gold evolved as the world currency over the last 8000 years, and that's why central banks still hoard it in bunkers. You can't easily devalue it by creating more of it. You're failing to understand that treasury bond markets have an important function in the macro economy; ideally, a safe way to save and store value with low risk. And they are larger than stock markets.
    - ericmay 5y ago
      > No, money is supposed to be good at storing value as well. I think you’re confusing wealth/assets with mediums of exchange. Gold for example is a pretty decent store of value but a nightmare for exchange. Want to buy a pack of gum? Why don’t you shave a tenth of a gram off right here on the counter so I can measure it.. etc. You can see how crappy that is. USD however have never been great stores of value but are great currency because they’re so liquid. Everybody accepts dollars. It’s easy to trade and convert to other assets. How much is that pack of gum? Oh it’s a dollar. Ok here you go. And that’s that. The name of the game has always been converting dollars to productive assets. Along comes Bitcoin and cryptocurrency and now crypto currencies in general have features. Bitcoin sucks as a currency for buying stuff but is great at storing deflationary value (or so it seems). Monero sucks as a currency compared to the dollar but has privacy features. Etc.
      - scottiebarnes 5y ago
        3 functions of money: 1) Store of value 2) Unit of account 3) Medium of exchange Go ahead and design a money that you intend to have last forever (because good design/engineering stands the test of time, right?) Tell me which tradeoffs you make.
        dragonwriter 5y ago
        For #1, I want increase in value over time, but don't care much about volatitlity or ease of exchange. For #2, I want low volatility (both in value and it's first derivative). For #3, I want low volatitlity in value and logistical ease of exchange. So, for #1, I want a different thing than for #2 & #3, for which I might want the same thing, since the needs are, though not identical, at least overlapping. Productive investments serve #1 well, so I’d leave it to them, and leave the design of money to balance #2 & #3.
        scottiebarnes 5y ago
        Congratulations, you created the Argentine Peso. You ended up in a debt crisis and had to hyperinflate your currency.
        dragonwriter 5y ago
        > Congratulations, you created the Argentine Peso I’m pretty sure I didn't invent anything, you just picked a random currency that meets neither your implicit goals not my explicit ones, because it's convenient for a pre-canned argument you wanted to make.
        scottiebarnes 5y ago
        And you didn't design anything either. You basically said you wanted a super fast car that's super light and has a huge gas tank and is cheap.
    - imtringued 5y ago
      Storing value in the bodies of other people without their consent is an absurd concept. Unemployed bodies starve and must be subsidized.
    - colinmhayes 5y ago
      good store of value just means its value is predictable. Fiat currency actually make money a much better store of value, because monetary policy can be used to control inflation. Using intrinsically valuable goods as currency is horrible for store of value because people will always be worried that a new use or way to produce the good will be found.
      - scottiebarnes 5y ago
        Store of value means value is not easily eroded. Fiat money is not a good store of value because it is the easiest to erode (central bank changes a digit in a database, and new money exists). Tell me which country's fiat currency you'd be willing to hold for 100 years, and how much buying power you expect it to retain.
        colinmhayes 5y ago
        Fiat money isn't supposed to be held for long periods of time. That's literally the point. The government is incentivizing you to invest/consume it, otherwise we're in a liquidity trap. It's just supposed to allow people to to make transactions and be confident that the thing they are selling won't be worth 20% more tomorrow.
        scottiebarnes 5y ago
        > It's just supposed to allow people to to make transactions and be confident that the thing they are selling won't be worth 20% more tomorrow. Huh. I'm pretty sure the things people are buying costs 7.5% more compared to last year. Those stupid people shouldn't have been holding money for a year, they should have bought that stuff a year ago.
        colinmhayes 5y ago
        I mean yea, you shouldn't be holding cash for a year. Put it in short term bonds if you want it liquid.
tharne 5y ago
The only problem with that is that inflation is a like a fire. When it's very small it can serve you, but once it gets bigger and you lose control of it you're f*ked.
LoveGracePeace 5y ago
imtringued 5y ago
There will always be inflation (temporary and permanently via mining) and debt goes up with a gold standard too. That's actually a general property of permanent money.
- colinmhayes 5y ago
  Depends on your definition of inflation. If you're just talking about money supply, sure. If you're talking about prices, no. It is entirely conceivable that consumption increases faster than the speed at which we can mine, which would probably set off a deflationary spiral as wall st starts to hoard cash.

scottiebarnes 5y ago

If the way fiat currencies work is constant devaluation in the name of increased short term spending, then it makes the currency utterly terrible to invest and save in in the long term. If this is how its supposed to work, then your money is a toxic asset which should be handed off as quickly as possible to someone else. And so if no one actually wants this asset, then it makes it valueless.

dragonwriter 5y ago
> then it makes the currency utterly terrible to invest and save in in the long term. That's why it's called “current-sy” (only slightly joking) It's for current use as a medium of exchange. For investment/savings, you go to productive assets. That's the whole point. Mixing those functions doesn't help anything.
- scottiebarnes 5y ago
  No, money is supposed to be good at storing value as well. That's why gold evolved as the world currency over the last 8000 years, and that's why central banks still hoard it in bunkers. You can't easily devalue it by creating more of it. You're failing to understand that treasury bond markets have an important function in the macro economy; ideally, a safe way to save and store value with low risk. And they are larger than stock markets.
  - ericmay 5y ago
    > No, money is supposed to be good at storing value as well. I think you’re confusing wealth/assets with mediums of exchange. Gold for example is a pretty decent store of value but a nightmare for exchange. Want to buy a pack of gum? Why don’t you shave a tenth of a gram off right here on the counter so I can measure it.. etc. You can see how crappy that is. USD however have never been great stores of value but are great currency because they’re so liquid. Everybody accepts dollars. It’s easy to trade and convert to other assets. How much is that pack of gum? Oh it’s a dollar. Ok here you go. And that’s that. The name of the game has always been converting dollars to productive assets. Along comes Bitcoin and cryptocurrency and now crypto currencies in general have features. Bitcoin sucks as a currency for buying stuff but is great at storing deflationary value (or so it seems). Monero sucks as a currency compared to the dollar but has privacy features. Etc.
    - scottiebarnes 5y ago
      3 functions of money: 1) Store of value 2) Unit of account 3) Medium of exchange Go ahead and design a money that you intend to have last forever (because good design/engineering stands the test of time, right?) Tell me which tradeoffs you make.
      - dragonwriter 5y ago
        For #1, I want increase in value over time, but don't care much about volatitlity or ease of exchange. For #2, I want low volatility (both in value and it's first derivative). For #3, I want low volatitlity in value and logistical ease of exchange. So, for #1, I want a different thing than for #2 & #3, for which I might want the same thing, since the needs are, though not identical, at least overlapping. Productive investments serve #1 well, so I’d leave it to them, and leave the design of money to balance #2 & #3.
        scottiebarnes 5y ago
        Congratulations, you created the Argentine Peso. You ended up in a debt crisis and had to hyperinflate your currency.
        dragonwriter 5y ago
        > Congratulations, you created the Argentine Peso I’m pretty sure I didn't invent anything, you just picked a random currency that meets neither your implicit goals not my explicit ones, because it's convenient for a pre-canned argument you wanted to make.
        scottiebarnes 5y ago
        And you didn't design anything either. You basically said you wanted a super fast car that's super light and has a huge gas tank and is cheap.
  - imtringued 5y ago
    Storing value in the bodies of other people without their consent is an absurd concept. Unemployed bodies starve and must be subsidized.
  - colinmhayes 5y ago
    good store of value just means its value is predictable. Fiat currency actually make money a much better store of value, because monetary policy can be used to control inflation. Using intrinsically valuable goods as currency is horrible for store of value because people will always be worried that a new use or way to produce the good will be found.
    - scottiebarnes 5y ago
      Store of value means value is not easily eroded. Fiat money is not a good store of value because it is the easiest to erode (central bank changes a digit in a database, and new money exists). Tell me which country's fiat currency you'd be willing to hold for 100 years, and how much buying power you expect it to retain.
      - colinmhayes 5y ago
        Fiat money isn't supposed to be held for long periods of time. That's literally the point. The government is incentivizing you to invest/consume it, otherwise we're in a liquidity trap. It's just supposed to allow people to to make transactions and be confident that the thing they are selling won't be worth 20% more tomorrow.
        scottiebarnes 5y ago
        > It's just supposed to allow people to to make transactions and be confident that the thing they are selling won't be worth 20% more tomorrow. Huh. I'm pretty sure the things people are buying costs 7.5% more compared to last year. Those stupid people shouldn't have been holding money for a year, they should have bought that stuff a year ago.
        colinmhayes 5y ago
        I mean yea, you shouldn't be holding cash for a year. Put it in short term bonds if you want it liquid.

tharne 5y ago

The only problem with that is that inflation is a like a fire. When it's very small it can serve you, but once it gets bigger and you lose control of it you're f*ked.

LoveGracePeace 5y ago

imtringued 5y ago

There will always be inflation (temporary and permanently via mining) and debt goes up with a gold standard too. That's actually a general property of permanent money.

colinmhayes 5y ago
Depends on your definition of inflation. If you're just talking about money supply, sure. If you're talking about prices, no. It is entirely conceivable that consumption increases faster than the speed at which we can mine, which would probably set off a deflationary spiral as wall st starts to hoard cash.