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>As I said earlier, the government is fine with alternative currencies, despite the fact that it cannot print those currencies or manipulate their supply. That

by tsotha 13y ago

>As I said earlier, the government is fine with alternative currencies, despite the fact that it cannot print those currencies or manipulate their supply. That's not true. If you went to Vegas thirty years ago you would have been able to use casino chips anywhere in the city. You could use them to buy a burger or get your hair cut. That's no longer the case, because the Treasury Dept decided casino chips were being used as an alternate currency and started cracking down. Various people have tried, over the years, to launch a competitor to the dollar and each time they've been shut down by the government. The reason the government hasn't cracked down on bitcoins yet is there isn't enough business conducted in bitcoins for it to matter. It may also be they don't know exactly what to do, since there isn't a single person or group providing bitcoins. They may need new powers from Congress to do so, and you can be sure if ordinary people start using bitcoins that will happen. >It is partly because of the government's effectiveness at collecting taxes that businesses continue to use USD, even when alternatives are available. That makes no sense. >Even the majority of businesses that accept Bitcoin payments only do so via an exchange service/payment processor, because what they really want are payments in USD. Because only a handful of techies and mathematicians really understand bitcoins. They're leery of getting stuck with a bunch of worthless bits on a thumb drive when they thought they had something of value. But that kind of thing can change quickly - there isn't anything more backing the US dollar than there is backing bitcoins. >So really, the government has nothing to fear from Bitcoin. They know this, and anyone who thinks otherwise is somewhere on the spectrum of "delusional." I don't think you realize how money really works. Of course the government is not going to allow a currency it doesn't control supplant the dollar. If that happened the US government would go bankrupt.

betterunix 13y ago
">As I said earlier, the government is fine with alternative currencies, despite the fact that it cannot print those currencies or manipulate their supply. That's not true." Except that there are dozens of alternative currencies in use in the USA right now: https://en.wikipedia.org/wiki/List_of_community_currencies_in_the_United_States https://en.wikipedia.org/wiki/List_of_community_currencies_i... ">It is partly because of the government's effectiveness at collecting taxes that businesses continue to use USD, even when alternatives are available. That makes no sense." Well let's put it this way: what currency can you use to pay your taxes? Now, if you are a business that actually pays its taxes (as most do), what currency will you need to do business in? Even if a business wanted to use something other than USD, it would eventually have to trade whatever currency it used for USD when it came time to pay taxes. "But that kind of thing can change quickly - there isn't anything more backing the US dollar than there is backing bitcoins." USD is backed by the law: tax laws, debt laws, torts, fines, fees, etc. It is the currency the government deals in, and most businesses must deal with the government. That is the reason businesses accept Bitcoin payments via payment processors, ultimately getting USD. "Of course the government is not going to allow a currency it doesn't control supplant the dollar. If that happened the US government would go bankrupt." First of all, there is basically no chance of Bitcoin supplanting the US dollar, for the reasons outlined above. Try doing all your business in Bitcoin, and see what happens when the IRS comes around to ask why you did not pay any taxes. That being said, even if by some miracle Bitcoin supplanted the dollar, the government would not go bankrupt, it would just start using Bitcoin. The switch from the gold standard did not bankrupt the government; why would a switch from fiat currency to Bitcoin bankrupt the government? Despite the ramblings of certain libertarians and anarchists, this is not Zimbabwe, we are not bankrupt, and we are not expanding the money supply to avoid bankruptcy.
- tsotha 13y ago
  >Except that there are dozens of alternative currencies in use in the USA right now... Right. They're all little joke currencies that don't affect anything. "Aww, that's cute. Your town trades tickets redeemable for an hour of work." If any of them were adopted by a nontrivial number of people or if people started using bitcoins or euros or yen in significant quantities the government would definitely get involved in a very hostile fashion. >Well let's put it this way: what currency can you use to pay your taxes? Now, if you are a business that actually pays its taxes (as most do), what currency will you need to do business in? Doesn't matter. If people don't actually hold dollars and just change their bitcoins into dollars when they need to pay taxes the government doesn't gain anything by printing dollars. It just means every year when I go to pay my taxes I get many more dollars for my bitcoins than I did the previous year. >USD is backed by the law: tax laws, debt laws, torts, fines, fees, etc. Right. Nothing, in other words. The same was true for the Zimbabwe dollar until they gave up. It just means people will convert whatever they're holding into dollars when they need to deal with the government. >First of all, there is basically no chance of Bitcoin supplanting the US dollar, for the reasons outlined above. You haven't made your case for that at all. If the CPI goes back to what it was, say, in the Carter years (and it will), Bitcoins could supplant the dollar very quickly. The biggest obstacle to adoption is the fact that you can't hold a bitcoin in your hand. But if that mental block was overcome people could switch over very quickly. Personally, I doubt it will happen because people will be reluctant to trust a virtual currency, and a few rumors about a mathematical flaw in the algorithm is all it would take to shatter any built up trust. But it's not impossible. >That being said, even if by some miracle Bitcoin supplanted the dollar, the government would not go bankrupt, it would just start using Bitcoin. The switch from the gold standard did not bankrupt the government; why would a switch from fiat currency to Bitcoin bankrupt the government? The switch from the gold standard didn't bankrupt the government, but a switch to the gold standard certainly would. You realize, do you not, that QE is nothing more than a sophisticated way to print money? The government could not pay the interest on the debt without the fed creating money and using bond purchases to drive down treasury rates. >Despite the ramblings of certain libertarians and anarchists, this is not Zimbabwe, we are not bankrupt, and we are not expanding the money supply to avoid bankruptcy. This is just wrong (except the part about us not being Zimbabwe). That's exactly what we're doing. The only reason we're getting away with it is the monetary contraction that occurred when the housing bubble collapsed. But that contraction is pretty much over. Balancing the budget without printing money at this point would require politically impossible decisions.

by tsotha 13y ago

betterunix 13y ago

">As I said earlier, the government is fine with alternative currencies, despite the fact that it cannot print those currencies or manipulate their supply. That's not true." Except that there are dozens of alternative currencies in use in the USA right now: https://en.wikipedia.org/wiki/List_of_community_currencies_in_the_United_States https://en.wikipedia.org/wiki/List_of_community_currencies_i... ">It is partly because of the government's effectiveness at collecting taxes that businesses continue to use USD, even when alternatives are available. That makes no sense." Well let's put it this way: what currency can you use to pay your taxes? Now, if you are a business that actually pays its taxes (as most do), what currency will you need to do business in? Even if a business wanted to use something other than USD, it would eventually have to trade whatever currency it used for USD when it came time to pay taxes. "But that kind of thing can change quickly - there isn't anything more backing the US dollar than there is backing bitcoins." USD is backed by the law: tax laws, debt laws, torts, fines, fees, etc. It is the currency the government deals in, and most businesses must deal with the government. That is the reason businesses accept Bitcoin payments via payment processors, ultimately getting USD. "Of course the government is not going to allow a currency it doesn't control supplant the dollar. If that happened the US government would go bankrupt." First of all, there is basically no chance of Bitcoin supplanting the US dollar, for the reasons outlined above. Try doing all your business in Bitcoin, and see what happens when the IRS comes around to ask why you did not pay any taxes. That being said, even if by some miracle Bitcoin supplanted the dollar, the government would not go bankrupt, it would just start using Bitcoin. The switch from the gold standard did not bankrupt the government; why would a switch from fiat currency to Bitcoin bankrupt the government? Despite the ramblings of certain libertarians and anarchists, this is not Zimbabwe, we are not bankrupt, and we are not expanding the money supply to avoid bankruptcy.

tsotha 13y ago
>Except that there are dozens of alternative currencies in use in the USA right now... Right. They're all little joke currencies that don't affect anything. "Aww, that's cute. Your town trades tickets redeemable for an hour of work." If any of them were adopted by a nontrivial number of people or if people started using bitcoins or euros or yen in significant quantities the government would definitely get involved in a very hostile fashion. >Well let's put it this way: what currency can you use to pay your taxes? Now, if you are a business that actually pays its taxes (as most do), what currency will you need to do business in? Doesn't matter. If people don't actually hold dollars and just change their bitcoins into dollars when they need to pay taxes the government doesn't gain anything by printing dollars. It just means every year when I go to pay my taxes I get many more dollars for my bitcoins than I did the previous year. >USD is backed by the law: tax laws, debt laws, torts, fines, fees, etc. Right. Nothing, in other words. The same was true for the Zimbabwe dollar until they gave up. It just means people will convert whatever they're holding into dollars when they need to deal with the government. >First of all, there is basically no chance of Bitcoin supplanting the US dollar, for the reasons outlined above. You haven't made your case for that at all. If the CPI goes back to what it was, say, in the Carter years (and it will), Bitcoins could supplant the dollar very quickly. The biggest obstacle to adoption is the fact that you can't hold a bitcoin in your hand. But if that mental block was overcome people could switch over very quickly. Personally, I doubt it will happen because people will be reluctant to trust a virtual currency, and a few rumors about a mathematical flaw in the algorithm is all it would take to shatter any built up trust. But it's not impossible. >That being said, even if by some miracle Bitcoin supplanted the dollar, the government would not go bankrupt, it would just start using Bitcoin. The switch from the gold standard did not bankrupt the government; why would a switch from fiat currency to Bitcoin bankrupt the government? The switch from the gold standard didn't bankrupt the government, but a switch to the gold standard certainly would. You realize, do you not, that QE is nothing more than a sophisticated way to print money? The government could not pay the interest on the debt without the fed creating money and using bond purchases to drive down treasury rates. >Despite the ramblings of certain libertarians and anarchists, this is not Zimbabwe, we are not bankrupt, and we are not expanding the money supply to avoid bankruptcy. This is just wrong (except the part about us not being Zimbabwe). That's exactly what we're doing. The only reason we're getting away with it is the monetary contraction that occurred when the housing bubble collapsed. But that contraction is pretty much over. Balancing the budget without printing money at this point would require politically impossible decisions.