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Why this is ridiculous and in need of some very basic economics lessons: 1. Hopefully the words "Monetary Policy" and "Fiscal Policy" ring a bell. The abilit
by colemorrison 13y ago
Why this is ridiculous and in need of some very basic economics lessons:
1. Hopefully the words "Monetary Policy" and "Fiscal Policy" ring a bell. The ability to control market fluctuations, let alone wield some level of political power as a government, lies heavily within a government's ability to utilize its money supply. Not all regulation/rule is evil - what would a programming language be without regulation/rules? Additionally, the great depression was more than proof at the need for some level of market regulation (John Keynes).
2. Basing money on a fixed supply, IE FUCKING ENERGY (since it can't be created or destroyed), would imply that there is a fixed amount of wealth. That's called Mercantilism and it was disbanded by Adam Smith... and 1000s of other economists/governments/times/etc
3. Bitcoin and friends decrease the transaction costs of money exchange (government regulation, forex, taxes). Money creates liquidity for the value you've created, and Bitcoin and friends makes that value more liquid -in certain ways- but it does not replace money.
4. Stability. Knowing that there is an entity that will back their currency, filled with fail safes, etc. encourages proliferation of that currency. It's why most investments (forex wies) are done in US dollars. Thing such as bitcoin, do not have that type of security. (FDIC anyone?)
5. Decentralization of currency often leads to destabilization of currency. If anyone can make it (and yes, it is far more likely someone will create a bitcoin instead of forging a US dollar), then the value in and of itself will drop.
6. "But WallStreet and all the finance people are up in a yipyap about it!" That's because it's an investment - many people play the forex (foreign exchange market) because there is much profit to be made from arbitrating currencies.
7. Inflation is needed - Milton Friedman has this at about 4% or so a year to keep up (check on that). Why? Try playing monopoly with 4 players with the set of cash they give you. Then try it with 10. There's not enough money to represent the players, therefore you need more. Inflation isn't always bad.
- oleganza 13y agoSince you advocate inflation, is it okay to distribute new money among everyone proportionally to their balances? If so, isn't it equivalent to mere change in denomination? (By the way, all bitcoins are divisible to 2000 trillion units.)
- DavidSJ 13y agoPrice rigidity means the costs of goods does not adapt immediately to fluctuations in money supply (e.g. employment & rent contracts take time to be renegotiated, price changes take time to ripple through the supply chain, etc.), so it's not equivalent.
- Groxx 13y agoSo, if our economy were to be immediately influenced by inflation efforts (say wages and costs automatically tracked it to the day)... then what? Though that's kind of crazy, it's far from a possibility. And, given the increasingly-global nature of business, anything like online sales could easily track this to the minute by watching exchange rates. It's definitely not there yet, but it almost seems inevitable given time.
- DennisP 13y agoThe people in charge of monetary policy completely missed the looming 2007 crash. Steve Keen's recent book details why, argues that it was speculative debt that fueled both the Great Depression and our recent troubles, and offers some solutions. The fact that energy is fundamentally conserved has little to do with the amount of energy available to the economy in usable form. There's nothing about bitcoin or energy-backed currency that would prevent someone from insuring it. Hayek published a book in 1977 arguing that a decentralized system of competitive currencies would lead to natural price stability without centralized intervention.