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This is an issue of monetary policy. Bitcoin's monetary policy (the block difficulty) is at the center of the protocol and can't really be changed, whether or n

This is an issue of monetary policy. Bitcoin's monetary policy (the block difficulty) is at the center of the protocol and can't really be changed, whether or not you know how to code. This has the advantage of making it predictable, but the disadvantage of making it inflexible to changes in the economy. The US Dollar on the other hand is flexible to changing economic realities. The Mint can change the rate of production, and the Fed can change interest rates. We've seen this in the recent recession, where the Fed dramatically lowered interest rates in order to avoid a liquidity trap. There is the danger that the US Gov't might set the wrong monetary policy, either due to corruption or (more likely) incompetence. But to be worse than a fixed monetary policy, they essentially have to be choosing worse than random, which I doubt they'll do over the long run. > What are the economic assumptions for the USD? Who can I ask and how do I know they won't lie to me? The Fed can't really lie about the interest rate. I suppose the Mint could secretly hoard bills, but that would be a huge scandal and pretty quickly noticeable if they did it at a large enough scale to make a difference.

moe 12y ago
But to be worse than a fixed monetary policy, they essentially have to be choosing worse than random, which I doubt they'll do over the long run. I would argue that we're all collectively part of this experiment right now. We can't tell which is worse because afaik there hasn't been a competing system with a more rigid policy to compare to yet. The Fed can't really lie about the interest rate. Well, policy is not so much about what someone has done but more about what they will do.
- alexbecker 12y ago
  Both fair points. WRT the second the issue then becomes how well people think the Fed will manage monetary policy. I would still argue "better than not being able to manage it at all", but it is a tougher argument to make.

moe 12y ago

But to be worse than a fixed monetary policy, they essentially have to be choosing worse than random, which I doubt they'll do over the long run. I would argue that we're all collectively part of this experiment right now. We can't tell which is worse because afaik there hasn't been a competing system with a more rigid policy to compare to yet. The Fed can't really lie about the interest rate. Well, policy is not so much about what someone has done but more about what they will do.

alexbecker 12y ago
Both fair points. WRT the second the issue then becomes how well people think the Fed will manage monetary policy. I would still argue "better than not being able to manage it at all", but it is a tougher argument to make.