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This is true, but the end of your post implies that recessions have become rarer and less pronounced in a fiat system. They haven't. In other words, sure, centr

by Nashhhh 13y ago

This is true, but the end of your post implies that recessions have become rarer and less pronounced in a fiat system. They haven't. In other words, sure, central banks "flooded the markets with capital and blunted the impact of the crisis and avoided panic", but what system was in place that allowed the manic colossal 1995-2008 housing bubble to take place? Did it not have anything to do with central banking policies, say, I dunno, incredibly low interest rates for a decade? The interesting part about your post is that it is in response to OP asking if people would be willing to buy BTC at any price (to which you responded no). But you gave the perfect example of mass psychology encouraging people to hoard an asset they believe to be safe: in this case, in 2008, it was the USD. Despite 'printing' (yes, I get it, it's not literally printing) massive amounts of USD, the world ate it up because the USD it the world's reserve currency and they (correctly) assumed that if the US is in trouble, every one else's currencies were in waaaaay worse shape. Thus the insatiable demand for something that was becoming 5x less scarce. Now, if Bitcoin ever reaches that level of belief in its capacity as a store of value (for example, based on the fact that for the first time ever you have a currency/scrip/asset/commodity whose entire supply is predetermined, fixed and immutable politically, could you not conceive that it might to have buyers flock to it? (not asking if it's probable, only if it's possible; I'd agree that at this stage this isn't the case)

Spooky23 13y ago
I think bitcoin is like any other commodity. People may indeed flock to it, but the relative stability of the current system is what makes it great -- can can predict with some level of certainty what $1 will be worth in say 10 years. That's important because it makes longer term capitalization of things like homes possible. If the world was still using gold or BTC as currency, lending would be like it was in the gold era as well -- things like 30 year mortgages that make homes affordable would not exist. As far as crises go, 2008 was a painful market contraction, but not a panic. Contrast an event like the Panic of 1907, when banks collapsed and many people lost life savings, mostly due to a shortage of short term cash. The nation averted disaster becuase JP Morgan happened to be in town and had enough money and clout to intervene. In 2008, the Fed pumped money into the markets to allow banks to stay solvent. FDIC made depositors at the few failed banks whole. Thanks to the corrupt perversion of the banking regulations, the "too big to fail" banks required even more extraordinary aid. People were hurt and lost money -- but they did so because their assets lost value, not because their bank went out of business. Our monetary system isn't perfect by far. But it's much better than the old style gold standards that BTC is reminiscent of.
- Nashhhh 13y ago
  Your examples are not examples of the problem with gold standards, but the rather the problem with fractional reserve banking, which is virtually non-existent with BTC (I disagree with Bitcoin proponents that say FRB isn't possible with BTC-- it'll simply be market based and potentially auditable through the blockchain). My point with 2008 is that it was a problem created by banks/government, which, whether corrupt or whatever, is essentially centrally planned. So I meant to say that while the current system was "saved" by the central planning, you must couple it with the fact it was caused by it, too (or, caused by a failure of it, if you'd prefer).

by Nashhhh 13y ago

Spooky23 13y ago

I think bitcoin is like any other commodity. People may indeed flock to it, but the relative stability of the current system is what makes it great -- can can predict with some level of certainty what $1 will be worth in say 10 years. That's important because it makes longer term capitalization of things like homes possible. If the world was still using gold or BTC as currency, lending would be like it was in the gold era as well -- things like 30 year mortgages that make homes affordable would not exist. As far as crises go, 2008 was a painful market contraction, but not a panic. Contrast an event like the Panic of 1907, when banks collapsed and many people lost life savings, mostly due to a shortage of short term cash. The nation averted disaster becuase JP Morgan happened to be in town and had enough money and clout to intervene. In 2008, the Fed pumped money into the markets to allow banks to stay solvent. FDIC made depositors at the few failed banks whole. Thanks to the corrupt perversion of the banking regulations, the "too big to fail" banks required even more extraordinary aid. People were hurt and lost money -- but they did so because their assets lost value, not because their bank went out of business. Our monetary system isn't perfect by far. But it's much better than the old style gold standards that BTC is reminiscent of.

Nashhhh 13y ago
Your examples are not examples of the problem with gold standards, but the rather the problem with fractional reserve banking, which is virtually non-existent with BTC (I disagree with Bitcoin proponents that say FRB isn't possible with BTC-- it'll simply be market based and potentially auditable through the blockchain). My point with 2008 is that it was a problem created by banks/government, which, whether corrupt or whatever, is essentially centrally planned. So I meant to say that while the current system was "saved" by the central planning, you must couple it with the fact it was caused by it, too (or, caused by a failure of it, if you'd prefer).