4 ms·

A very weak argument. In many places around the world, several currencies exist and are used simultaneously. It's only a problem for the weak currency, which

by brc 14y ago

A very weak argument. In many places around the world, several currencies exist and are used simultaneously. It's only a problem for the weak currency, which according to Greshams Law, everyone tries to get rid of, while hoarding the stronger currency. The reason the government doesn't want competition in the currency business is because they like to weaken their currency. The government currency would be discarded quickly, while the competing currency would be hoarded.

bitops 14y ago
> In many places around the world, several currencies exist and are used simultaneously. You need to back this argument up with a good reference. [EDIT: multiple currencies in the same country. Argentina is a beautiful country but it has had some severe issues over the years. You need to have one currency before you can do things like local currencies. URVs in Brazil were a genius way of pulling this off.]
- iand 14y ago
  30 seconds on google would have turned up this for you https://en.wikipedia.org/wiki/List_of_circulating_currencies#List_of_circulating_currencies_by_country https://en.wikipedia.org/wiki/List_of_circulating_currencies...
  - bitops 14y ago
    Okay, yes - technically speaking, there are countries out there who have more than one official currency. But with every single listing of a country that has more than one currency, there is a political reason why (see Ecuador) and it has real implications for the society to use a currency that you don't control.
    - iand 14y ago
      You use the phrase "technically speaking" pejoratively as though there is some special set of rules that make these countries multi-currency. There isn't. It's very plainly correct that many countries in the world use multiple currencies. I assume one of the implications you refer to is that the people have a choice of currencies and hence protection against government sponsored inflation.
- benreesman 14y ago
  Second hand, but friends who have recently returned from Argentina described it in precisely these terms. Your mileage may vary (haven't been myself).
- mseebach 14y ago
  So there's cause and effect: Are countries unstable because they have multiple currencies, or are people using multiple currencies because the country is unstable. You seem (correct me if I'm wrong) to be arguing for the former, "gold bugs" will generally argue the latter.
  - bitops 14y ago
    No, you're right, I am saying it is destabilizing for a country to have more than one currency. It does weird things to culture. Look at why Europe is so messed up right now - they adopted a single currency without a real government to match. Much as I might not like her, Margaret Thatcher was right when she said that "single currency is a federal Europe through the back door". It's either that or big trouble down the line. I see you're from Denmark, so think of Legoland (in Billund, I assume you've been - it's silly!). Yes, they take all kinds of currency there, but it's very isolated and localized. At a broader national level, there is just the (sic) kroner. I've never once paid with US dollars at a pølsevogn in Copenhagen. :) The full argument is quite long, but at heart, yes - I believe that the gold standard was a bad idea and remains a bad idea. Going back to it will not solve any of our current economic problems, it's a waste of time. Thanks for sticking with the conversation btw! It was fun. :)
    - mseebach 14y ago
      You can actually usually pay with euros in most establishments catering to tourists, including pølsevogne. Like most casual cash transactions in Denmark, it's unlikely to go on the books, though. Also, I'm not arguing for (or against, for that matter) the gold standard, just that if people feel they're better off transacting in a different currency than the single, nationally sanctioned one, they should be able to do so without incurring a forceful response by the government. For the record, I don't think that freedom extends to producing coins that are easily mistaken for those belonging to a different currency. > Thanks for sticking with the conversation btw! It was fun. :) Likewise, although I would still appreciate a response to http://news.ycombinator.com/item?id=4697030 http://news.ycombinator.com/item?id=4697030
    - icebraining 14y ago
- brc 14y ago
  Many places have more than one official currency. Many more have more than one unofficial currency. The USD is unofficially used as a currency in many, many countries around the world, as an adjunct to the local currency. In the days before the Euro, it was quite common for places to accept multiple currencies in the one location, especially in border areas or smaller countries with lower floats. It's not such a big deal. Just about every international traveller works in two currencies by converting the 'away' currency into their 'home' currency in their head with each purchase. I have actually been offered the opportunity to pay with my home currency on visa POS machines while travelling. There are undoubtedly efficiencies to having a central currency, but when the central government is systematically destroying the unit of value, inefficiency of multiple currencies is a very small price to pay for being able to escape that. That's why Zimbabwe has the highest number of currencies on the list that was linked above [Edit: position is relative, the list that ianb linked]
hristov 14y ago
If that was the case, than the last thing this person would want to do is make his currency similar to a dollar. Because the US dollar is the weaker currency you see. Why would he then call his currency the liberty dollar, use dollar signs on it, use designs similar to US coinage, etc. Why would he want to be so similar to the weak currency? The truth is that the US dollar is the strong currency and his one the weak; and he basically made money by having his coins confused for US dollars. By the way, there are alternative money (such as bitcoin) that are actually honest about being an alternative. The government has not gone after bitcoin yet.
- brc 14y ago
  I agree that this guys competing currency is odd. It seems to be more of a political statement to me, than a genuine currency. If he had called it something else and convinced people to use it, then I wouldn't see the problem. If he had just minted gold and silver coins with a stamped weight on them, then they would stand a chance of being actively traded. But then maybe he knew they would be hoarded. To be honest, I don't know the ambitions of an aging hippie with links to the 'bunker' movement. From what I have read on this case (and I haven't read much) the coins do actually contain precious metals as a backstop to their value. Not so the US currency - although I hear the nickel now has a higher metal content than the face value.
jonasvp 14y ago
This is a misunderstanding of Gresham's law which only applies for multiple currencies that are nominally of the same value. Meaning, if there is a $1 silver coin and $1 gold coin, everybody would be hoarding the gold coin and "getting rid of" the silver coin. Also, a currency is not something you hoard, it's something you "get rid of" by giving it to someone else in return for goods and services. In your example, the "weak" currency would become the standard medium of exchange, while the "strong" currency would for all practical purposes disappear from circulation.
- brc 14y ago
  No, Greshams law says nothing about things nominally of the same value. It just states that bad money drives out the good money - meaning that for anything that is falling in value, it will be discarded. For anything that is falling slower, or not falling, it will be hoarded. Currency is definitely something you hoard. It's called savings, and plenty of people still do it.
  - jonasvp 14y ago
    https://en.wikipedia.org/wiki/Gresham%27s_law https://en.wikipedia.org/wiki/Gresham%27s_law "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation." Or in other words (from the same article): "Bad money drives out good if their exchange rate is set by law."
fauigerzigerk 14y ago
I think the logistics argument is better than it sounds. It's not just the logistics of payment. It's also about contracts, contract law, clearing processes, the cost of managing risk, hedging, fighting fraud, and ultimately the transparency of the entire system. Even where there is complete freedom of choice like in commodities markets, one currency is usually chosen and then used by everyone. Otherwise things would simply get too complicated, too costly and too risky. The argument that governments force a single legal currency onto everyone so they can more easily expropriate us through devaluation doesn't hold water at all. After all, everyone is free to use whatever they like as a store of value and trade it.

by brc 14y ago

bitops 14y ago

> In many places around the world, several currencies exist and are used simultaneously. You need to back this argument up with a good reference. [EDIT: multiple currencies in the same country. Argentina is a beautiful country but it has had some severe issues over the years. You need to have one currency before you can do things like local currencies. URVs in Brazil were a genius way of pulling this off.]

iand 14y ago
30 seconds on google would have turned up this for you https://en.wikipedia.org/wiki/List_of_circulating_currencies#List_of_circulating_currencies_by_country https://en.wikipedia.org/wiki/List_of_circulating_currencies...
- bitops 14y ago
  Okay, yes - technically speaking, there are countries out there who have more than one official currency. But with every single listing of a country that has more than one currency, there is a political reason why (see Ecuador) and it has real implications for the society to use a currency that you don't control.
  - iand 14y ago
    You use the phrase "technically speaking" pejoratively as though there is some special set of rules that make these countries multi-currency. There isn't. It's very plainly correct that many countries in the world use multiple currencies. I assume one of the implications you refer to is that the people have a choice of currencies and hence protection against government sponsored inflation.
benreesman 14y ago
Second hand, but friends who have recently returned from Argentina described it in precisely these terms. Your mileage may vary (haven't been myself).
mseebach 14y ago
So there's cause and effect: Are countries unstable because they have multiple currencies, or are people using multiple currencies because the country is unstable. You seem (correct me if I'm wrong) to be arguing for the former, "gold bugs" will generally argue the latter.
- bitops 14y ago
  No, you're right, I am saying it is destabilizing for a country to have more than one currency. It does weird things to culture. Look at why Europe is so messed up right now - they adopted a single currency without a real government to match. Much as I might not like her, Margaret Thatcher was right when she said that "single currency is a federal Europe through the back door". It's either that or big trouble down the line. I see you're from Denmark, so think of Legoland (in Billund, I assume you've been - it's silly!). Yes, they take all kinds of currency there, but it's very isolated and localized. At a broader national level, there is just the (sic) kroner. I've never once paid with US dollars at a pølsevogn in Copenhagen. :) The full argument is quite long, but at heart, yes - I believe that the gold standard was a bad idea and remains a bad idea. Going back to it will not solve any of our current economic problems, it's a waste of time. Thanks for sticking with the conversation btw! It was fun. :)
  - mseebach 14y ago
    You can actually usually pay with euros in most establishments catering to tourists, including pølsevogne. Like most casual cash transactions in Denmark, it's unlikely to go on the books, though. Also, I'm not arguing for (or against, for that matter) the gold standard, just that if people feel they're better off transacting in a different currency than the single, nationally sanctioned one, they should be able to do so without incurring a forceful response by the government. For the record, I don't think that freedom extends to producing coins that are easily mistaken for those belonging to a different currency. > Thanks for sticking with the conversation btw! It was fun. :) Likewise, although I would still appreciate a response to http://news.ycombinator.com/item?id=4697030 http://news.ycombinator.com/item?id=4697030
  - icebraining 14y ago
brc 14y ago
Many places have more than one official currency. Many more have more than one unofficial currency. The USD is unofficially used as a currency in many, many countries around the world, as an adjunct to the local currency. In the days before the Euro, it was quite common for places to accept multiple currencies in the one location, especially in border areas or smaller countries with lower floats. It's not such a big deal. Just about every international traveller works in two currencies by converting the 'away' currency into their 'home' currency in their head with each purchase. I have actually been offered the opportunity to pay with my home currency on visa POS machines while travelling. There are undoubtedly efficiencies to having a central currency, but when the central government is systematically destroying the unit of value, inefficiency of multiple currencies is a very small price to pay for being able to escape that. That's why Zimbabwe has the highest number of currencies on the list that was linked above [Edit: position is relative, the list that ianb linked]

hristov 14y ago

If that was the case, than the last thing this person would want to do is make his currency similar to a dollar. Because the US dollar is the weaker currency you see. Why would he then call his currency the liberty dollar, use dollar signs on it, use designs similar to US coinage, etc. Why would he want to be so similar to the weak currency? The truth is that the US dollar is the strong currency and his one the weak; and he basically made money by having his coins confused for US dollars. By the way, there are alternative money (such as bitcoin) that are actually honest about being an alternative. The government has not gone after bitcoin yet.

brc 14y ago
I agree that this guys competing currency is odd. It seems to be more of a political statement to me, than a genuine currency. If he had called it something else and convinced people to use it, then I wouldn't see the problem. If he had just minted gold and silver coins with a stamped weight on them, then they would stand a chance of being actively traded. But then maybe he knew they would be hoarded. To be honest, I don't know the ambitions of an aging hippie with links to the 'bunker' movement. From what I have read on this case (and I haven't read much) the coins do actually contain precious metals as a backstop to their value. Not so the US currency - although I hear the nickel now has a higher metal content than the face value.

jonasvp 14y ago

This is a misunderstanding of Gresham's law which only applies for multiple currencies that are nominally of the same value. Meaning, if there is a $1 silver coin and $1 gold coin, everybody would be hoarding the gold coin and "getting rid of" the silver coin. Also, a currency is not something you hoard, it's something you "get rid of" by giving it to someone else in return for goods and services. In your example, the "weak" currency would become the standard medium of exchange, while the "strong" currency would for all practical purposes disappear from circulation.

brc 14y ago
No, Greshams law says nothing about things nominally of the same value. It just states that bad money drives out the good money - meaning that for anything that is falling in value, it will be discarded. For anything that is falling slower, or not falling, it will be hoarded. Currency is definitely something you hoard. It's called savings, and plenty of people still do it.
- jonasvp 14y ago
  https://en.wikipedia.org/wiki/Gresham%27s_law https://en.wikipedia.org/wiki/Gresham%27s_law "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation." Or in other words (from the same article): "Bad money drives out good if their exchange rate is set by law."

fauigerzigerk 14y ago

I think the logistics argument is better than it sounds. It's not just the logistics of payment. It's also about contracts, contract law, clearing processes, the cost of managing risk, hedging, fighting fraud, and ultimately the transparency of the entire system. Even where there is complete freedom of choice like in commodities markets, one currency is usually chosen and then used by everyone. Otherwise things would simply get too complicated, too costly and too risky. The argument that governments force a single legal currency onto everyone so they can more easily expropriate us through devaluation doesn't hold water at all. After all, everyone is free to use whatever they like as a store of value and trade it.