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I'm not convinced it's tax collection specifically that gives value to the dollar. If the US government collected some taxes in bitcoin it would still have to p
by OscarCunningham 4y ago
I'm not convinced it's tax collection specifically that gives value to the dollar. If the US government collected some taxes in bitcoin it would still have to pay its obligations on existing dollar-denominated bonds. So it would sell the bitcoin in exchange for dollars, thus creating demand for dollars.
I think that if people increasingly wanted to use cryptocurrency over dollars, the Fed would nevertheless be able to maintain the value of the dollar even as they got less common. Eventually the currency would disappear when the last dollar was traded to the Fed to pay off the last dollar-denominated bond, and I think dollars could maintain their value until that happened, even as the government started collecting taxes in other currencies.
- samus 4y agoYou ignore the other way more relevant use case: if I want to buy something at a store, the store is required to accept the nation's official currency. It might accept other currencies, but my guess is that it would be illegal to give customers any benefits or reactions if they use other currencies.
- ezymandias 4y agoNot so in the US: > Is it legal for a business in the United States to refuse cash as a form of payment? > There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise. https://www.federalreserve.gov/faqs/currency_12772.htm https://www.federalreserve.gov/faqs/currency_12772.htm
- wizofaus 4y agoHow on earth is their tax liability determined if they don't take payment in USD?
- overthrow 4y agoTaxes would be based on fair market value at the time of the transaction. There are policies around this already, otherwise the rich could avoid taxes by bartering with cars/watches/paintings.
- wizofaus 4y agoSounds like it's just making work for the IRS. I'm curious if the situation is the same in Australia. Can't find anything definitive online, though I've never heard of a business here taking payment in anything other than AUD (except at the airport, where many retailers will accept other common currencies). Is it similarly legal (in the US) to pay workers in "alternative" currency-substitutes?
- coldtea 4y agoThey still need to accept dollars, whether they are cash or credit card tied to dollars etc.
- deleted 4y ago[deleted]
- wholinator2 4y agoHow does one go about figuring out if their state has any such laws?
- boilerupnc 4y agoIn 2009, some Detroit businesses agreed to accept a local currency called a Detroit Cheers (aka Detroit Community Scrip) [0]. Per Wikipedia “ Modeled upon the local scrip that were used during the Great Depression, it was being used to restore local financial confidence following decades of economic decline. ” [0] https://en.m.wikipedia.org/wiki/Detroit_Community_Scrip https://en.m.wikipedia.org/wiki/Detroit_Community_Scrip
- imtringued 4y agoGermany has the Chiemgauer regional currency which is reasonably successful and the money velocity is higher because of the demurrage fee.
- jackcosgrove 4y agoDebt creation also gives value to the dollar. In 2020, which was an odd year which highlights the point, deficit spending came near to revenue from taxes. In the future as the workforce shrinks and liabilities increase I imagine deficit spending will regularly exceed tax revenues.
- kodyo 4y ago"Debt creation also gives value to the dollar" Only because enough people believe that's true, and then only because there are aircraft carriers that convince people in other countries that it's in their best interest to use them. Dollars are not worth anything.