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Yes, but when demand for the currency leads to a prices increasing,such as from an attempted corner, then you do not destroy price stability because the person
by impossiblefork 2y ago
Yes, but when demand for the currency leads to a prices increasing,such as from an attempted corner, then you do not destroy price stability because the person operating the corner is buying the cash with something.
The money-printing used to break a corner can in principle be small and you can even have an inflation target of zero and still print money to break such corners.
What I want to emphasize with this though, is the source of a currency's value. The collateral of the debt of the loans denominated in it and the social and economic consequences to individuals of defaulting on loans in it. That is the end-source of demand for a currency, and that guaranteed demand is so great that it makes attempting to corner the market in the currency make sense.
If you cornered the market in bitcoin, there's no one who would have to buy even one. That shows how little bitcoin is worth, i.e. zero.
- csomar 2y agoWhat you are saying, if I understood you correctly, is that money is a method of accounting. If all money is borrowed, then money is literally worth 0, which what a unit in an accounting system is worth. If this makes sense to you, then it'll make sense why Bitcoin is worth something. There is a circular demand to it even without debt. I'll not argue to the legitimacy of that demands (scams, phishing, laundering, etc...) but it is demand and it creates a baseline value (beyond the boom/busts it cycles through).
- impossiblefork 2y agoNo, absolutely not. Money has value because of the loans. It is not without value because of the loans. Because there are denominated loans in dollars people who have those loans have to get dollars to avoid losing their houses etc., and therefore dollars have value. Because there's very little in loans denominated in Bitcoin, bitcoin has no value.