3 ms·

Without people to buy from, money is worthless.

immibis 1y ago
Sometimes it's fun to realize that if we all just decided dollars were worthless, they would be. There'd be nothing the government could do about it. Crypto ain't it, though. Even the better-scaling blockchains still don't scale very well. I've heard of a few different mesh-network currency projects, and I wonder if any of them could scale by essentially giving each user their own blockchain. However, in a mesh-network currency, you still have to find a conversion path with enough capacity, and pay a fee at each step, so maybe that's not it either.
- doubled112 1y ago
  I’ve tried saying this the other way around to people and I’ve only received blank stares. Maybe I should describe it like that. Money is only valuable because we decided it has value. It can’t really do anything for you except be spent. It isn’t like a log, which could be burned, or ground into paper, turned into a weapon, etc
  - deleted 1y ago
    [deleted]
- analog31 1y ago
  My viewpoint is that money is a technology, and people will choose whatever technology works for their use. A technology can be designed so that some favored uses are much more likely than others. For our government money, those uses are as a medium of exchange, temporary store of value, and tool of government economic policy. Also, some money transactions are delimited by regulations. People already choose that their government money is worthless, e.g., the people of Venezuela and Russia. They will risk prosecution to move their wealth into assets valued in dollars or euro's. Even in the dollar and euro zones, people use other technologies for storing and exchanging wealth. Most wealthy people don't store their wealth directly in dollars already. The value of government money is based on expectations about the future behavior of the government. This is at least a little better than being arbitrary or a collective delusion, in the short term. There are already ways to bet against it if you want.
- alex43578 1y ago
  To the point about dollars, there very much is something the government can do about it: taxes. If the government requires taxes to be paid in dollars, that sets a "floor" on the value of a dollar as a medium of exchange - for most people in the US living a "normal" life, you have to acquire some amount of dollars throughout the year, under penalty of jail/loss of property (property tax). Then, since you already have 300m+ consumers in a massive market using the currency, odds are you'll use it too. The only way you'd truly render dollars worthless is through government action or malfeasance; the fictional scenario where every person on earth not only agrees dollars are worthless, but also agrees to forfeit all property in the US, all employment in the US, and interests in any US financial holdings is quite a few steps beyond the point where "the people just decide to rebuke the dollar's lack of backing".
  - immibis 1y ago
    Doing this in an environment where nobody is using dollars will lead to guillotines. The dollar has to be useful for exchange first, and then they can demand tax to be paid in it.
    - imtringued 1y ago
      Uhm no? This is illogical. You just declared money worthless. Nobody is gonna bring out the guillotines if the government demands worthless paper. They'll happily give the worthless paper to the government.
      - immibis 1y ago
        How will they acquire the worthless paper?
    - alex43578 1y ago
      So this thought experiment isn't just that "everyone decides dollars are worthless" but also that the state is dissolved, along with all the property rights and the govt's monopoly on violence? That's more like saying "Dollars are worthless in a scenario like Fallout or The Road", rather than making any relevant point about government efforts to maintain fiat currency. In the original scenario of "people decide dollars are worthless... nothing the government can do", my point was that the government has a lot of levers to pull to backstop value, albeit at a far lower level than today's dollar.
- impossiblefork 1y ago
  No, they wouldn't. There'd still be debt in dollars, which would lead to people losing collateral etc. What you say is true of Bitcoin though, since there's so little debt denominated in Bitcoin.
- imtringued 1y ago
  I'm not sure what you mean by this. "if we all decided dollars were worthless" does a lot of heavy lifting Consider the following scenario: If everyone except one person decided that dollars were worthless then on day one everyone would think that the one person accepting money must be insanely stupid. That person now has all the worthless money. Turns out, money is created through contractual obligations that mandate the acceptance of money in equal amount to the created quantity. Everyone is now indebted to that person. People who can't fulfill their contractual obligations must go and declare insolvency. The person with all the money offers a single dollar for all the assets that this person owns, since that person owns all the money, there isn't a second dollar to go around to compete with him. After spending his first dollar, the economy now has one dollar representing the entire worth of the economy. The next insolvency will be auctioned off for two dollars, four dollars and so on. What I'm getting at here is that "if we all decided that dollars were worthless" implies the abandonment of the rule of law, which makes the statement significantly less interesting. You can do a lot of things in a failed state. Abandoning the currency is one of the least interesting ones.

Sometimes it's fun to realize that if we all just decided dollars were worthless, they would be. There'd be nothing the government could do about it. Crypto ain't it, though. Even the better-scaling blockchains still don't scale very well. I've heard of a few different mesh-network currency projects, and I wonder if any of them could scale by essentially giving each user their own blockchain. However, in a mesh-network currency, you still have to find a conversion path with enough capacity, and pay a fee at each step, so maybe that's not it either.

doubled112 1y ago
I’ve tried saying this the other way around to people and I’ve only received blank stares. Maybe I should describe it like that. Money is only valuable because we decided it has value. It can’t really do anything for you except be spent. It isn’t like a log, which could be burned, or ground into paper, turned into a weapon, etc
- deleted 1y ago
  [deleted]
analog31 1y ago
My viewpoint is that money is a technology, and people will choose whatever technology works for their use. A technology can be designed so that some favored uses are much more likely than others. For our government money, those uses are as a medium of exchange, temporary store of value, and tool of government economic policy. Also, some money transactions are delimited by regulations. People already choose that their government money is worthless, e.g., the people of Venezuela and Russia. They will risk prosecution to move their wealth into assets valued in dollars or euro's. Even in the dollar and euro zones, people use other technologies for storing and exchanging wealth. Most wealthy people don't store their wealth directly in dollars already. The value of government money is based on expectations about the future behavior of the government. This is at least a little better than being arbitrary or a collective delusion, in the short term. There are already ways to bet against it if you want.
alex43578 1y ago
To the point about dollars, there very much is something the government can do about it: taxes. If the government requires taxes to be paid in dollars, that sets a "floor" on the value of a dollar as a medium of exchange - for most people in the US living a "normal" life, you have to acquire some amount of dollars throughout the year, under penalty of jail/loss of property (property tax). Then, since you already have 300m+ consumers in a massive market using the currency, odds are you'll use it too. The only way you'd truly render dollars worthless is through government action or malfeasance; the fictional scenario where every person on earth not only agrees dollars are worthless, but also agrees to forfeit all property in the US, all employment in the US, and interests in any US financial holdings is quite a few steps beyond the point where "the people just decide to rebuke the dollar's lack of backing".
- immibis 1y ago
  Doing this in an environment where nobody is using dollars will lead to guillotines. The dollar has to be useful for exchange first, and then they can demand tax to be paid in it.
  - imtringued 1y ago
    Uhm no? This is illogical. You just declared money worthless. Nobody is gonna bring out the guillotines if the government demands worthless paper. They'll happily give the worthless paper to the government.
    - immibis 1y ago
      How will they acquire the worthless paper?
  - alex43578 1y ago
    So this thought experiment isn't just that "everyone decides dollars are worthless" but also that the state is dissolved, along with all the property rights and the govt's monopoly on violence? That's more like saying "Dollars are worthless in a scenario like Fallout or The Road", rather than making any relevant point about government efforts to maintain fiat currency. In the original scenario of "people decide dollars are worthless... nothing the government can do", my point was that the government has a lot of levers to pull to backstop value, albeit at a far lower level than today's dollar.
impossiblefork 1y ago
No, they wouldn't. There'd still be debt in dollars, which would lead to people losing collateral etc. What you say is true of Bitcoin though, since there's so little debt denominated in Bitcoin.
imtringued 1y ago
I'm not sure what you mean by this. "if we all decided dollars were worthless" does a lot of heavy lifting Consider the following scenario: If everyone except one person decided that dollars were worthless then on day one everyone would think that the one person accepting money must be insanely stupid. That person now has all the worthless money. Turns out, money is created through contractual obligations that mandate the acceptance of money in equal amount to the created quantity. Everyone is now indebted to that person. People who can't fulfill their contractual obligations must go and declare insolvency. The person with all the money offers a single dollar for all the assets that this person owns, since that person owns all the money, there isn't a second dollar to go around to compete with him. After spending his first dollar, the economy now has one dollar representing the entire worth of the economy. The next insolvency will be auctioned off for two dollars, four dollars and so on. What I'm getting at here is that "if we all decided that dollars were worthless" implies the abandonment of the rule of law, which makes the statement significantly less interesting. You can do a lot of things in a failed state. Abandoning the currency is one of the least interesting ones.