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And if you owned all the dollar bills?

dragontamer 4y ago
Dollar bills are backed by the full faith and credit by the US Government. As long as the US Government decides those have value (IE: forces you to pay taxes denominated in bills), then anyone interacting with the government will value those bills. As a centralized currency, the power flows from the Government. If the US Government loses power, of course dollar bills lose value. But generally speaking, the trust in the dollar is one-and-the-same as trust in the US Government.
- throwup 4y ago
  It's a myth that taxes are what give currency value. Plenty of currencies needed to pay taxes throughout history have hyperinflated into nothing.
  - dragontamer 4y ago
    Its a myth that printing money causes currency to lose value. There are an infinite Dogecoins and yet the value goes up sometimes.
    - tromp 4y ago
      There are only a finite number ever. The amount of Doge is limited by time. Unlike fiat, it is disinflationary (yearly supply rate goes down toward 0).
      - dragontamer 4y ago
        There were only a finite number of German Marks in 1923, last time I checked. A very large number, but finite nonetheless.
    - plsbenice34 4y ago
      Doge inflation is only on the ballpark of 0.3% per year and will continue to decrease asymptotically toward 0%. It is a very sound policy imo
      - dragontamer 4y ago
        By what measure? DOGE is -53% over the last year, which means its _actually inflated_ by 212% vs the Dollar (or really like 233% in real terms, after accounting for the 9%+ inflation of USD). DOGE inflating by 233% in a single year is horrific policy.
        plsbenice34 4y ago
        The parent comment was obviously regarding total/circulating number of dogecoins. It erroneously made a hyperbolic claim there are infinite dogecoins. It is a common misconception even among cryptocurrency fans that the number of dogecoins increases at a high rate, because it doesn't have a hard max total supply number like bitcoin's 21 million. In a cryptocurrency context, inflation most often refers to the rate of newly printed units because the price volatility is just from market movements and has often little to do with the monetary policy
    - throwup 4y ago
      I'm not sure why you're trying to change the subject to money printing. But thanks for proving my point. You're right that dogecoins have value (for better or worse) and that value definitely doesn't come from any government.
      - dragontamer 4y ago
        Dogecoin has hyperinflated 210% this past year, while BTC has hyperinflated 340% this past year. As far as things with inflation, we should be discussing why Cryptocoins are so terrible at it.
        throwup 4y ago
        You've changed the subject again--I didn't mention inflation. Are you a bot or are you just parroting random talking points without reading? Since you brought it up, YoY returns are not really relevant for a long-term investor. If you're speculating/gambling on short-term volatility, then USD/VTSAX/BTC have done poorly--but I'm not much of a speculator. I'm very happy with my 10-year returns. As long as you keep wildly changing the subject (this applies to your next reply as well), I'll assume you have no counterpoints and agree with everything I say. I'm glad we can agree!
        dragontamer 4y ago
        > hyperinflated into nothing You literally said this. Honestly, I'm not sure what subject you want to discuss anymore. But you were the one to first bring up inflation. If you got something to say about my root post, feel free. But you're changing the subject more than I am: https://news.ycombinator.com/item?id=33789831 https://news.ycombinator.com/item?id=33789831
- mekster 4y ago
  How come people's only definition of value of currency is that it can pay taxes? Everything else's value is determined by the market and not the government, so how does Bitcoin have trouble finding value if the market thinks it has its utility, which is a storage of value without any third party intervention which is its unique capability that people can't seem to figure out after 10+ years of its existence.
  - dragontamer 4y ago
    Seashells and Rai stones have been used as stores of value without any third party intervention. The only thing a currency needs is widespread community coordination. US Government forces this through taxes and bonds/lending, so our system is largely built on top of the dollar and a centralized bank. Other systems can be made however you wish. But solving the coordination problem is the fundamental issue.
hcknwscommenter 4y ago
You could pay your taxes. And all the others who need to pay their taxes, would need to trade valuable things to you for the dollars they need to pay their taxes. Also, almost all world trade is ultimately settled in dollars. And so, if you want to buy oil/food/fertilizer/machine tools/etc. on the world market, you need those dollar bills again.
- thesz 4y ago
  The concentration of money in one hand means it is worthless for any other hand. You can't pay taxes with worthless money.
  - selectodude 4y ago
    It’s not worthless. The United States, which happens to be the largest economy in the world, requires taxes to be paid in dollars, regardless of how you’ve settled your transaction. If you and I trade a car for 40,000 chocolate bars, the IRS demands we figure out the dollar cost and pay them their due.
    - 9864250 4y ago
      If I owned all the dollars, the US would simply decide to start demanding taxes in something else because it could not use those dollars for anything. If it refused to switch to another currency, it would not be able to pay the people who would force me to pay taxes, so there would be no reason for me to pay taxes.
      - dragontamer 4y ago
        The US Debt is denominated in dollars. The USA has promised to pay its entire $24+ Trillion debt, in dollars.
        9864250 4y ago
        But that would not make any sense if one person held all the dollars. The creditors would have no use for dollars, and the US would need to switch to another currency in order to be able to pay its employees. They could print however many dollars they wanted, and could pay back the debt that way, but that would not solve the problem of the dollar no longer being useful as a currency. The government's employees would have no reason to accept the dollar because nobody else would accept it. The dollar is primarily valuable because it's used as a currency. If it stopped being used as a currency, its value would be zero. This is no different from Bitcoin.
howlin 4y ago
The US government accepts these for debts and issues debts denominated in these.
thesz 4y ago
Exactly. The same argument can be applied to dollars, to all dollars, not the bills only.
Eisenstein 4y ago
If I owned all the dollar bills the Fed would add twenty zeros to them by printing a boatload of money, making mine worth a lot less and the new dollars useful.
dougmwne 4y ago
Then you would hold a weird power over the worlds largest economy? It’s the official medium of exchange. The government could print more money, but you would be able to flood the market at any time, essentially being a second federal reserve. Everyone would depend on you for loans to be able to pay their taxes. Likely the US government would need to deprecate the dollar and move to a new currency, which would have incredible economic shocks. Doesn’t sound at all like owning all the bitcoin. I get your point, but they are really not the same.
deleted 4y ago
[deleted]
mode80 4y ago
You would have an immediate market for them since dollars are the only legal way to pay your taxes. Since everyone must do this, it creates a kind of Schelling point such that everyone defaults to using dollars for everything else also. If you produce something of value in return for Bitcoin, you must still acquire dollars to pay your taxes. If you refuse, men with guns will escort you to jail. That is what ultimately backs Buffet’s preferred currency.
kylehotchkiss 4y ago
You buy twitter and burn it down

Dollar bills are backed by the full faith and credit by the US Government. As long as the US Government decides those have value (IE: forces you to pay taxes denominated in bills), then anyone interacting with the government will value those bills. As a centralized currency, the power flows from the Government. If the US Government loses power, of course dollar bills lose value. But generally speaking, the trust in the dollar is one-and-the-same as trust in the US Government.

throwup 4y ago
It's a myth that taxes are what give currency value. Plenty of currencies needed to pay taxes throughout history have hyperinflated into nothing.
- dragontamer 4y ago
  Its a myth that printing money causes currency to lose value. There are an infinite Dogecoins and yet the value goes up sometimes.
  - tromp 4y ago
    There are only a finite number ever. The amount of Doge is limited by time. Unlike fiat, it is disinflationary (yearly supply rate goes down toward 0).
    - dragontamer 4y ago
      There were only a finite number of German Marks in 1923, last time I checked. A very large number, but finite nonetheless.
  - plsbenice34 4y ago
    Doge inflation is only on the ballpark of 0.3% per year and will continue to decrease asymptotically toward 0%. It is a very sound policy imo
    - dragontamer 4y ago
      By what measure? DOGE is -53% over the last year, which means its _actually inflated_ by 212% vs the Dollar (or really like 233% in real terms, after accounting for the 9%+ inflation of USD). DOGE inflating by 233% in a single year is horrific policy.
      - plsbenice34 4y ago
        The parent comment was obviously regarding total/circulating number of dogecoins. It erroneously made a hyperbolic claim there are infinite dogecoins. It is a common misconception even among cryptocurrency fans that the number of dogecoins increases at a high rate, because it doesn't have a hard max total supply number like bitcoin's 21 million. In a cryptocurrency context, inflation most often refers to the rate of newly printed units because the price volatility is just from market movements and has often little to do with the monetary policy
  - throwup 4y ago
    I'm not sure why you're trying to change the subject to money printing. But thanks for proving my point. You're right that dogecoins have value (for better or worse) and that value definitely doesn't come from any government.
    - dragontamer 4y ago
      Dogecoin has hyperinflated 210% this past year, while BTC has hyperinflated 340% this past year. As far as things with inflation, we should be discussing why Cryptocoins are so terrible at it.
      - throwup 4y ago
        You've changed the subject again--I didn't mention inflation. Are you a bot or are you just parroting random talking points without reading? Since you brought it up, YoY returns are not really relevant for a long-term investor. If you're speculating/gambling on short-term volatility, then USD/VTSAX/BTC have done poorly--but I'm not much of a speculator. I'm very happy with my 10-year returns. As long as you keep wildly changing the subject (this applies to your next reply as well), I'll assume you have no counterpoints and agree with everything I say. I'm glad we can agree!
        dragontamer 4y ago
        > hyperinflated into nothing You literally said this. Honestly, I'm not sure what subject you want to discuss anymore. But you were the one to first bring up inflation. If you got something to say about my root post, feel free. But you're changing the subject more than I am: https://news.ycombinator.com/item?id=33789831 https://news.ycombinator.com/item?id=33789831
mekster 4y ago
How come people's only definition of value of currency is that it can pay taxes? Everything else's value is determined by the market and not the government, so how does Bitcoin have trouble finding value if the market thinks it has its utility, which is a storage of value without any third party intervention which is its unique capability that people can't seem to figure out after 10+ years of its existence.
- dragontamer 4y ago
  Seashells and Rai stones have been used as stores of value without any third party intervention. The only thing a currency needs is widespread community coordination. US Government forces this through taxes and bonds/lending, so our system is largely built on top of the dollar and a centralized bank. Other systems can be made however you wish. But solving the coordination problem is the fundamental issue.

hcknwscommenter 4y ago

You could pay your taxes. And all the others who need to pay their taxes, would need to trade valuable things to you for the dollars they need to pay their taxes. Also, almost all world trade is ultimately settled in dollars. And so, if you want to buy oil/food/fertilizer/machine tools/etc. on the world market, you need those dollar bills again.

thesz 4y ago
The concentration of money in one hand means it is worthless for any other hand. You can't pay taxes with worthless money.
- selectodude 4y ago
  It’s not worthless. The United States, which happens to be the largest economy in the world, requires taxes to be paid in dollars, regardless of how you’ve settled your transaction. If you and I trade a car for 40,000 chocolate bars, the IRS demands we figure out the dollar cost and pay them their due.
  - 9864250 4y ago
    If I owned all the dollars, the US would simply decide to start demanding taxes in something else because it could not use those dollars for anything. If it refused to switch to another currency, it would not be able to pay the people who would force me to pay taxes, so there would be no reason for me to pay taxes.
    - dragontamer 4y ago
      The US Debt is denominated in dollars. The USA has promised to pay its entire $24+ Trillion debt, in dollars.
      - 9864250 4y ago
        But that would not make any sense if one person held all the dollars. The creditors would have no use for dollars, and the US would need to switch to another currency in order to be able to pay its employees. They could print however many dollars they wanted, and could pay back the debt that way, but that would not solve the problem of the dollar no longer being useful as a currency. The government's employees would have no reason to accept the dollar because nobody else would accept it. The dollar is primarily valuable because it's used as a currency. If it stopped being used as a currency, its value would be zero. This is no different from Bitcoin.

howlin 4y ago

The US government accepts these for debts and issues debts denominated in these.

thesz 4y ago

Exactly. The same argument can be applied to dollars, to all dollars, not the bills only.

Eisenstein 4y ago

If I owned all the dollar bills the Fed would add twenty zeros to them by printing a boatload of money, making mine worth a lot less and the new dollars useful.

dougmwne 4y ago

Then you would hold a weird power over the worlds largest economy? It’s the official medium of exchange. The government could print more money, but you would be able to flood the market at any time, essentially being a second federal reserve. Everyone would depend on you for loans to be able to pay their taxes. Likely the US government would need to deprecate the dollar and move to a new currency, which would have incredible economic shocks. Doesn’t sound at all like owning all the bitcoin. I get your point, but they are really not the same.

deleted 4y ago

[deleted]

mode80 4y ago

You would have an immediate market for them since dollars are the only legal way to pay your taxes. Since everyone must do this, it creates a kind of Schelling point such that everyone defaults to using dollars for everything else also. If you produce something of value in return for Bitcoin, you must still acquire dollars to pay your taxes. If you refuse, men with guns will escort you to jail. That is what ultimately backs Buffet’s preferred currency.

kylehotchkiss 4y ago

You buy twitter and burn it down