Government attempts to force everyone, at the point of a gun, to exclusively use tightly controlled, government manipulated "digital currency" will be a spectacular failure. Expect to see an explosion in bartering, the use of ad-hoc "currencies" (both physical and digital) and precious metals as this absurd scheme is rolled out.
Aside from the utter economic disaster that will result from central planners by the implementation of this scheme, just look at the situation in and around Nashville for the predictable disaster that will result from the first power or internet outage when legal, physical currency is eliminated. Without physical cash or a means of exchange it would be absolute chaos. This is perhaps the worst idea in history (which is choked with terrible ideas).
Important to note in the west especially government is not just the state but a coalition between state operators and corporate operators, either general(various industry) or specific(ex; defense or banking)
I would not trust a single representative to be sufficiently knowledgeable to draft or vote on legislation affecting cryptocurrency, nuclear submarines, automobile emissions standards, advertising standards, building safety codes, and so many other things.
Instead, the legislation is prompted by those who form interest groups, and the fine details put together either in writing the law or by the administrative officials from the relevant executive office.
These people get their expertise by having worked in those fields, or knowing others who do.
The alternatives are arguably worse- legislation written by people who genuinely have no idea what they are talking about (which does still happen too often) or government so tiny and limited in scope that it may as well be nothing more than a militia.
As you said it yourself, they can't know the perfect rules for everything - and the reason is that different laws (and their tradeoff when dealing with others) are best for different people.
Private courts and private insurances tending to their customers need could offer a society where different needs are met by different laws.
This has been proposed in The Machinery of Freedom.
Well governments have been forcing a single currency for millennia and it worked out fine. I get your premise here but this sounds like hyperbole of a high order that is spread by crypto-enthusiasts. There have always been black markets but the majority of people just want to be left alone they aren’t going to go out of their way to use an obscure, illegal, currency.
Governments usually have a single official currency authorized for paying taxes, but they rarely ban/criminalize foreign currencies from being used by the general public.
You aren’t talking about a foreign currency you are talking about alternative currencies that are definitely banned (why toy money has to say that it is not legal tender) with few exceptions.
>Well governments have been forcing a single currency for millennia and it worked out fine.
No government in history has mandated a fully digital currency that is susceptible to instant and total failure with any power outage or internet disruption. Frankly the headline about bitcoin is a distraction from this critically important issue.
I appreciate the theory, but I believe that this time really is different:
- Bitcoin is widespread enough that many average people (Coinbase says over 10mil Americans have an account) own some amount.
- There is enormous distrust in institutions and government, which is why crypto is popular in the first place. Banning it would be extremely difficult politically and drive many conspiracy theories and further erosion in trust.
- The Supreme Court, and courts in general, have been packed by Republicans and have enough libertarian-leaning and originalists that doubt the centralized state, I'm unsure if a ban would be upheld constitutionally.
- In 1934 people were simply less educated than they are today with the internet at their finger tips, and news spreads fast. I doubt the gold ban would be possible today given the legitimate outrage vs. 1934.
- Crypto is far easier to store and use surreptitiously than gold is, and on a massive scale. Furthermore, offshore exchanges are extremely popular and are accessible globally. I'm not sure you can ban Americans from using every crypto exchange except US-regulated ones.
The idea that the Fed would replace the USD with a decaying digital currency in order to disincentivize saving is pretty wild. People would be furious that their ability to save for retirement is being sabotaged in order to strong-arm them into higher levels of spending as a form of economic stimulus. People barely tolerate tax increases — imagine how angry they'd be if the government literally started taking money right out of their account purely as a way of manipulating their behaviour.
It’s exacerbated by stimulus spending. Money is printed and spent in areas meant to stimulate more spending. That devalues the dollar and diminishes the value of savings.
Inflation is slightly less upfront than a wealth tax on dollars that would involve you sending in a form every year. Generally speaking anything less than the most upfront option will result in large numbers of people not realizing what's going on.
Upfront? We've had inflation for the last 100 years, almost everyone knows what inflation is. And even if they don't know the term they are probably familiar with the concept that their grandfather could buy more with a nickel than you could today.
I really can't see how inflation is in any way dishonest. Not to mention the amount of money maid via taxes(1.5 trillion) absolutes dwarfs any revenue from seigniorage(65 billion).
Inflation is highly variable, and the body that can turn the most knobs (the Fed) doesn't have a good track record of predicting what the effect of that knob turning will do lately.
Also, when the government borrows money and the fed buys notes to keep borrowing rates low, that still produces inflation. The fed is sitting on about 4T$ in bonds as of now.
First, a large fraction of Americans can't even understand the rule of 3, much less how they are being milked by their own government via (among many, many other mechanisms) inflation.
Second, this is a typical "boiling the frog" type of taxation, which is slow and spread over long periods of time (typically portions of whole lifetimes) and even people with enough brains to understand the problem don't really pay attention because it's never felt as an immediate pain.
The grandparent did not say that inflation is dishonest. He said that the political class is dishonest, because they do take money out of the taxpayer's pocket via inflation.
Presumably the grandparent sees this conduct as more dishonest than what was discussed earlier, because it does not require a accompanying public statement, which states explicitly that money is taken out of taxpayer's pockets.
It's not less honest, the federal reserve literally sets targets for inflation and publishes them. Everyone railing against fiat money while loving bitcoin have the exact same views as a government economist. The only difference is that the bitcoin/gold side keeps on trying to think of US Dollars as a store of value while the government and economists know it's a medium of exchange.
The fact that people keep money under mattresses is a failure of the educational system, not a failure of monetary policy.
> The only difference is that the bitcoin/gold side keeps on trying to think of US Dollars as a store of value while the government and economists know it's a medium of exchange.
It is dishonest. The liquidity is not being injected everywhere at once. Those who get to spend it first enjoy the full purchasing power at the expense of everybody else.
Also imagine a person keeping 3000$ for a rainy day. He can't buy stocks, because rainy day could come at a stock dip. Losing 23% of that money in 5 years (assuming 5% inflation). How is it a failure of an educational system, not monetary policy?
Then remember the double whammy of inflation and fixed tax brackets. Tax brackets do not increase with inflation. So eventually we'll all be in the highest bracket, the change is just so slow that no one really realizes what is happening.
You're referring to something called "demurrage", which is the fair way to disincentivize saving. What the government(s) would do, though, is inflate the currency (print more tokens of it) so that your balance feels to stay "intact" (but the value of it isn't).
By the way, this is what happens today with the USD (or any fiat currency). It doesn't need to be "digital" (it already is).
Only half of Americans have a 401k, and apparently only a little over half of that half use it. Savings accounts also give 0 interest, and most Americans aren’t dumping their earnings into equities. Most Americans can’t buy a home either, so no real estate investment. Wages are not correlating to inflation either, so that fact is particularly hilarious too.
So, case study, Uber/Lyft fucked drivers out of employee status, thus fucking the need to offer a retirement fund. Real piece of shit companies. Hopefully those people can store their money in a 0 interest rate Savings account, or get smart and dump their entire diddly squat income into AAPL for decades (you know lock up their capital and live frugally). This stuffs gonna come back on us if we’re doing this across industries.
There is no retirement, there is only social security realistically speaking for the majority.
It is what it is. Gotta love the new gig economy too, those people are truly fucked. Everyone’s going to work until they die basically. We see that current retirement age generation is fixated on social security/medicare (literal single issue voters, don’t touch their retirement cash flow), but I don’t think anyone in Gen X/Millennial/Z realizes just how much more obsessed they will all be about those two funds going forward. You’ll have three generations that will literally only care about that, just like their grandparents before them.
Oh, and it’s going to be three generations worth of old people that will need a massive fund to finance all of those social security checks because we fucked them out of realistically keeping up with inflation.
Wages are correlated with inflation, in fact wages push inflation, given that they're the largest cost for most businesses. It's relatively hard to imagine how you'd have widespread increase in price without increase in cost of labour.
As to your case study of a low wage worker, if he doesn't have any assets, inflation doesn't mean much. If he has debt, which he likely has, student debt say in the US, inflation is a good thing. The (correct) conventional wisdom is that debtors benefit from inflation and creditors don't.
And if you've got money in a pension fund like many Americans, or you have index funds, or you have anything else that broadly represents the economy, cash flowing into the economy rises prices but it also appreciates assets.
There really isn't any point to fear moderate inflation from the standpoint of a worker. If anything the opposite is true.
I agree with the fact that gig work is terrible and lots is wrong with economic insecurity, but steady inflation isn't an issue.
Wages are correlated with inflation, in fact wages push inflation, given that they're the largest cost for most businesses. It's relatively hard to imagine how you'd have widespread increase in price without increase in cost of labour.
I’m going to step away from the word correlation because I think it will lead us down a never ending path.
Wages are not keeping pace with inflation. I’m not saying it needs to be 1:1, but businesses have managed to stunt wage growth at a much lower multiple. That is one hell of a tax on people’s wealth.
So now the question is, is what I just said true? Year after year there’s tons of data and literature on how wages haven’t budged in relation to inflation. The public is constantly being shown these arguments similar to Climate change.
I think ultimately the government doesn’t care that your earning power is not keeping pace because it is thematically consistent with what monetary easing is trying to do. The whole point is to not let your money sit around and appreciate, the whole point is to have your money in fight-flight mode at all times to keep the economy from stagnating. There is nothing in that policy that has anything to do with increasing your earning power or raw appreciation of your current wealth.
So be it, the failure here is that if the average person’s money needs to be put to work, there has to be more vehicles available to the average person. When your typical business doesn’t even offer a 401k, when wages only grow at a 0.1-0.3x of inflation, you can’t reasonably expect someone to stow away the max 5k contribution yearly in an independent IRA. Your average worker is simply not able to do this, and this is the failure I’m mostly speaking to.
Lastly, the word pension is a vestige. I worked at a large Corp that had pensions once. When I got there, there policy changed so that anyone after around the late 2000s would not receive a pension, and they would stop adding to the pension fund for those that came before. Millennial/Z will never hear the word pension again, so it’s not a fair point to make.
The best current generations can do is save for a down payment on a house, and be locked financially to the mortgage payment. To have a fighting chance at this in these crazy housing markets, you need to make some sacrifices to hit that down payment. Nothing else about our system is going to help you, and all monetary policy is trying to outpace you at this point globally.
Two of the largest and most powerful Lobbyists are the United States are the Motion Picture Association (MPAA) and the Recording Industry Association of America® (RIAA.) They didn't like every pleb across the entire world stealing every movie and song ever created. They tried to ban bittorent. They failed. So too shall bitcoin succeed. Disclaimer: I'm biased.
At the crossroads of private currency and alcohol we have the Whisky Rebellion, when early Americans sought to avoid taxation by using liquor as currency.
Bitcoin has bigger problems than an attempted ban (which I don't see happening). I tried using it a few years ago. It was fiddly, slow, and the value was too volatile for me.
Bitcoin doesn't really work as a currency (at least without some layer 2 solution). It's most valuable currently as a store of value / hedge against institutions.
I stopped using torrents because my internet provider complained.
In Germany and several other European countries who are more socialist-leaning, fines are not unheard of.
We definitely lost the battle for provider level privacy and tracking and the government makes it easy to speed up the process for these giant multinationals.
Not to mention DMCA censoring things left and right (some in good faith, some in bad).
Moreover, if bitcoin were banned I would imagine it would still exist and be used (think any illegal payment people may need to send online), but it won't be considered a good investment asset, loosing most of its value.
Maybe that would be a success for bitcoin, it would be finally used as a coin.
One interesting statistic is that more people dropped below the poverty line in the united states this year than any other year recorded to date.
Much like occupy wallstreet didn't really kick off until well after the 2008 financial crises, the impact of what is happening now in the economy will not be clear for several more years
My deceased relatives explained it in a way the seemed a little worse than this. They actually didn't have things like money and food at times. I am typing this on computer which is a luxury they couldn't even imagine.
Already in September last year, the FED started to print a lot of money because of the colapsed repo market.
In the end of 2020, the FED printed so much USD, we have now 25% more USD than before the beginning of 2020.
> I bring this up to remind you of the government we are dealing with, and the actions they take when times are excessively difficult.
They are referring to an action take in 1933. Almost everyone involved in that decision is dead, from the voters to the president is dead.
> The Fed aims for inflation to try to reduce the debts of the government.
The Fed aims to keep the economy at full employment and inflation stable.
> the Fed however, has had great difficulty in stimulating economic inflation in recent years, in large part due to the naturally deflationary effects of technology and automation.
The Fed has had problems stimulating inflation and growth recently recently. This has nothing to do with technology and automation and everything to do with interest rates being so very low. (which is caused by a global savings glut, and an aging population) Also we had no problem with deflation in the 70's even though we were also automating jobs and advancing technology.
> Now that you understand your part in the economy from the perspective of central banks and economists.
This isn't even a strawman. This makes me thing that he's never actually read a mainstream economists. And that his only experience with mainstream economics, is other people ranting about mainstream economics.
But the biggest critique of all, is that even if his "theories" (which are all a somewhere between wrong and a stretch) are correct the conclusion doesn't follow. Imagine we're in a depression and a large chunk of the populace prefers bitcoins to dollars. This will cause them to spend dollars, keeping people from hoarding dollars, and keeping the velocity up. This only really becomes and issue if salaries become denominated in bitcoin. And there are a lot of reasons you don't want to pay someone a bitcoin salary, and a lot of reasons you don't want to be paid a bitcoin salary. With one of the biggest being the tax implications.
The only reason you wouldn't want to be paid in bitcoin is if you were worried about volatility, since Bitcoin can go down in the short term, by as much as 50%. There would be otherwise no additional concerns with getting paid in Bitcoin, as you would simply sell enough Bitcoin from your weekly paycheck to cover the taxes (same way that stock grants are handled).
You're right that volatility would be a large issue too.
But I also don't want to be the accountant that's trying to figure out the tax implications of a company that has 50 workers and 18000 line items denominated in bitcoin. Not to mention dealing with first in, first out accounting.
Taxes are easier to do now with automated tooling. You can also get VISA or MC debit cards that will automatically sell your crypto from say, your Coinbase account at point of purchase.
You can invest in Bitcoin through an IRA. I believe most retirement funds are looking into adding Bitcoin as an investment option. Fidelity has talked a lot about this in recent months.
You have far less privacy in the regular banking sector.
FDIC deposits wouldn't make sense. Banks needed the FDIC system because they do fractionalized lending with limited reserves. Bitcoin cannot be lent out in this way. It's true you have to trust whatever exchange you store your coin in if you want convenience, but you can also quite easily store Bitcoin in a wallet that you control, and back it up with physical keys that you can store stamped on some titanium in a safety deposit box or wherever you like.
> Taxes are easier to do now with automated tooling. You can also get VISA or MC debit cards that will automatically sell your crypto from say, your Coinbase account at point of purchase.
That's a nightmare from a tax perspective. Every single one of those transactions is a taxable event. Imagine having a separate line on your taxes for each time you visit a fast food restaurant.
> You have far less privacy in the regular banking sector.
If I have your bitcoin wallet address I can see everything in it and everything you do with it. This is not true of banking.
> FDIC deposits wouldn't make sense. Banks needed the FDIC system because they do fractionalized lending with limited reserves. Bitcoin cannot be lent out in this way. It's true you have to trust whatever exchange you store your coin in if you want convenience, but you can also quite easily store Bitcoin in a wallet that you control, and back it up with physical keys that you can store stamped on some titanium in a safety deposit box or wherever you like.
With FDIC, I know if I deposit my money I can get it back. If the bank doesn't have it the government will cover it. If Coinbase loses my money, unless they have enough to cover it from other funds I'm hosed. There is no recourse. A wallet I control is even worse, now I'm entirely 100% responsible for the security of my wallet, and I'm not trained for that, nor do I have the resources to be truly effective.
There’s the usability. You loose the key, the coin is gone. You use some un-regulated exchange doing stupid things and your coin is gone. You try to pay somebody and the transaction takes forever.
Sure, well if you lose cash stored under your mattress in a house fire, or you leave a bag of money unattended on a sidewalk...or you do anything careless with things of value, you can and will lose those things of value. Bitcoin transactions take 10 minutes. That is a fully settled transaction in 10 minutes. When you Venmo somebody, it doesn't get fully settled until they actually withdraw to their account, which is at least a day.
The title is alarmist and IMO very, very unlikely (global economy, ban being practically unenforceable, crypto-native assets getting integrated in incumbent financial institutions etc).
That being said, the points raised and the concerns about harmful regulation is worth taking seriously.
More specifically, now with the digital assets "travel rule" ratified by the FATF (which is expected and on its way to result in legislation in most global jurisdications). A bit oversimplified: Any VASP (virtual asset service provider ~= private business holding, transmitting, issuing or exchanging digital assets on behalf of customers) are expected to request and verify information of wallet holders (the usual KYC/AML with name/passport/etc) for any ingoing and outgoing transfers. They are also expected to send this information onward to any other VASP they transfer to on behalf of users (e.g. if you transfer BTC from your Kraken account to a friends' Coinbase account, Kraken and Coinbase are on the hook to coordinate this information between each other).
In practice, forcing any business that touches digital assets to draconian regulation can be very effective in hampering adoption - IMO we've already seen a similar thing play out where tax requirements for both individuals and businesses coupled with regulatory uncertainty have made it an accounting nightmare to be fully compliant with retail payments in crypto.
I don't see an outright blanket ban on individuals holding or transacting Bitcoin. But overly restrictive and draconian regulation in some shape or form is very much likely.
A lot (most?) of main street traders never even transfer their coins out of the exchange so I'm not sure if increased KYC when transferring would even make much impact.
Indeed - which is why regulators are much more likely to push in that direction - make self-custody a regulatory minefield, denormalizing managing your own keys. And effectively reaching the same goal (complete oversight and control over funds and transactions).
I'm concerned if it continues in this direction, holding your own keys will be viewed as suspicious and seen as attempt to money laundering, further raising the barrier for people not to have their funds controlled and transactions monitored bu the incumbents.
"what most people say about X" is not possible to disprove or have an argument about and is questionable as motivation for regulation in the first place.
The financial elite are done taking everything of value from the little people. If they still want more, and they always do, they are going to have to go after their own kind.
If they want more, they'll have to fix the system for the little people so that the little people can be comfortable, not impoverished, and productive.
>If they want more, they'll have to fix the system for the little people so that the little people can be comfortable, not impoverished, and productive.
I hope not. It'll be so much more fun if they push things past the point of no return.
The article kind of lost me at times, but on the high level topic of (US) government regulation as an existential threat to crypto:
- The US government is very slow moving, and crypto is quickly gaining popularity amongst the voting public and institutional investors (with access to lobbyists). Once the gov't realizes that crypto is a threat and is able to position itself to form legislation, actually passing the legislation would piss off a lot of groups that the gov't is incentivized to make happy.
- Crypto is technological progress, and banning it would push innovation out of the US and into countries that decide not to regulate
- Banning crypto is an authoritarian act, and is basically an admission by the gov't that it prioritizes tight gripped control over our liberties (not that this point is actually all that unlikely...)
I'm biased, but Occam's Razor applied to the above points makes me feel like the banning of crypto is unlikely... Am I missing something?
The article started with a good example but the conclusion is off. By the logic being used the Fed would need to ban the purchase of gold, bonds and many other assets to prevent saving.
REVOLUTION is the very real possibility if/when "negative interest rates" or "stealing citizens money" starts.
Citizens had all trust DESTROYED by the economic elites in 2008. A massive number of Wall Street and finance companies showed how corrupt and how much damage they cause real citizens. Trust is GONE.
Citizens will view that their money is being stolen. All of this is about draining more money from workers and transferring it to companies and the wealthiest 1%. Slavery is when the powerful financially steal workers earned money, against their permission, in an unjust way. In a way that is a system of theft is from poor workers over to the wealthy.
That leads to revolt. Every time "negative interest" goes through your brain, force yourself to replace it with "stealing that causes revolt". It gives you a chance to wake up to see how workers will view it.
This is obviously the way. Sovereigns will assert their control on any monetary asset. They have, they do and they will.
It is not that far of a leap to consider a timeline where all wallet addresses are simply registered and crypto assets lose their fungible quality. Assets in registered wallets will simply not be relayed to unregistered wallets. That simple. There will be an international wallet address clearing house. Hey Coinbase, want to keep your license to operate? Comply. Paypal? Comply.
You know this is coming. If you don't know, look up all the rules dedicated to banking and securities. Or simply remain blissfully unaware. They won't ban the technology. That's too pedestrian and 1934.. err 84. They'll simply control how you can use it.
The question is how does the crypto asset community rally to head this inevitability off at the pass.
BitTorrent and Bitcoin both use a peer-to-peer model to distribute the data and find concensus, if they can't stop movie pirating how would they stop bitcoin? A bitcoin transaction is just data.
Yes the onramp and offramp might become illegal in some countries, I am not sure what exactly would happen to the price then but some historical examples are alcohol prohibition, the drug war, and gold in the US during the 20th century. The price might actually skyrocket if they make it illegal...
>It is not that far of a leap to consider a timeline where all wallet addresses are simply registered and crypto assets lose their fungible quality. Assets
Monero, ZCash, Grim, Beam are specifically designed to thwart that scenario. The day what you describe actually happens, they will replace Bitcoin.
> Assets in registered wallets will simply not be relayed to unregistered wallets.
I find this hard to believe. I think it's more likely that the gov't would treat crypto like fiat, and make it law to report any income in crypto. It's not like you don't have to pay income on any salary you receive as cash, and cash is even moreso untrackable than crypto.
This is what happens when you go spend too much time on a topic and start believing every remote possibility to bring life to your conclusion. So many unlikely things have to happen for this to work - US $ cash completely phased out, everyone moving to digital currency, fed/cbdc setting rules such as savings cap to discourage spending, fed trying to track every possible transaction etc. I mean come on. This is the USA. People aren't even willing to be tracked if they are COVID infected - let alone widespread payment tracking in general. And savings cap? Good luck with that. He needs to talk to more people to get a diverse perspective on alternate modes in which fed can work - vs. believing his own conspiracy theories.
IDK, reading stuff like below makes me discard the whole article:
> Saving money, whether in or outside of a bank, does NOT contribute to growth
Literally next line
> Taking out loans and new debt contributes to economic growth.
Where does the money for a load come from though? Does the author not see the connection there (making him kind of unfit to explain complex economic mechanisms), or just dishonestly ignores this part to support his thesis (which makes him unfit to waste my time)?
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[ 2.6 ms ] story [ 120 ms ] threadAside from the utter economic disaster that will result from central planners by the implementation of this scheme, just look at the situation in and around Nashville for the predictable disaster that will result from the first power or internet outage when legal, physical currency is eliminated. Without physical cash or a means of exchange it would be absolute chaos. This is perhaps the worst idea in history (which is choked with terrible ideas).
Instead, the legislation is prompted by those who form interest groups, and the fine details put together either in writing the law or by the administrative officials from the relevant executive office.
These people get their expertise by having worked in those fields, or knowing others who do.
The alternatives are arguably worse- legislation written by people who genuinely have no idea what they are talking about (which does still happen too often) or government so tiny and limited in scope that it may as well be nothing more than a militia.
As you said it yourself, they can't know the perfect rules for everything - and the reason is that different laws (and their tradeoff when dealing with others) are best for different people.
Private courts and private insurances tending to their customers need could offer a society where different needs are met by different laws. This has been proposed in The Machinery of Freedom.
No government in history has mandated a fully digital currency that is susceptible to instant and total failure with any power outage or internet disruption. Frankly the headline about bitcoin is a distraction from this critically important issue.
- Bitcoin is widespread enough that many average people (Coinbase says over 10mil Americans have an account) own some amount.
- There is enormous distrust in institutions and government, which is why crypto is popular in the first place. Banning it would be extremely difficult politically and drive many conspiracy theories and further erosion in trust.
- The Supreme Court, and courts in general, have been packed by Republicans and have enough libertarian-leaning and originalists that doubt the centralized state, I'm unsure if a ban would be upheld constitutionally.
- In 1934 people were simply less educated than they are today with the internet at their finger tips, and news spreads fast. I doubt the gold ban would be possible today given the legitimate outrage vs. 1934.
- Crypto is far easier to store and use surreptitiously than gold is, and on a massive scale. Furthermore, offshore exchanges are extremely popular and are accessible globally. I'm not sure you can ban Americans from using every crypto exchange except US-regulated ones.
It’s exacerbated by stimulus spending. Money is printed and spent in areas meant to stimulate more spending. That devalues the dollar and diminishes the value of savings.
I really can't see how inflation is in any way dishonest. Not to mention the amount of money maid via taxes(1.5 trillion) absolutes dwarfs any revenue from seigniorage(65 billion).
https://economics.stackexchange.com/questions/16075/usa-seig....
Also, when the government borrows money and the fed buys notes to keep borrowing rates low, that still produces inflation. The fed is sitting on about 4T$ in bonds as of now.
Assuming interest rates aren't 0 or near 0 that's true. But recently inflation has been consistently lower than historical norms.
You don't get a vote. You get increased prices and reduced purchasing power whether you like it or not.
Second, this is a typical "boiling the frog" type of taxation, which is slow and spread over long periods of time (typically portions of whole lifetimes) and even people with enough brains to understand the problem don't really pay attention because it's never felt as an immediate pain.
Presumably the grandparent sees this conduct as more dishonest than what was discussed earlier, because it does not require a accompanying public statement, which states explicitly that money is taken out of taxpayer's pockets.
The fact that people keep money under mattresses is a failure of the educational system, not a failure of monetary policy.
Think about that for a minute
Both. In the end, everything is a commodity
— Apologies to Baudrillard
Also imagine a person keeping 3000$ for a rainy day. He can't buy stocks, because rainy day could come at a stock dip. Losing 23% of that money in 5 years (assuming 5% inflation). How is it a failure of an educational system, not monetary policy?
By the way, this is what happens today with the USD (or any fiat currency). It doesn't need to be "digital" (it already is).
Unless your retirement savings is literal cash stuffed under your mattress I have trouble imagining how inflation sabotages it
So, case study, Uber/Lyft fucked drivers out of employee status, thus fucking the need to offer a retirement fund. Real piece of shit companies. Hopefully those people can store their money in a 0 interest rate Savings account, or get smart and dump their entire diddly squat income into AAPL for decades (you know lock up their capital and live frugally). This stuffs gonna come back on us if we’re doing this across industries.
There is no retirement, there is only social security realistically speaking for the majority.
It is what it is. Gotta love the new gig economy too, those people are truly fucked. Everyone’s going to work until they die basically. We see that current retirement age generation is fixated on social security/medicare (literal single issue voters, don’t touch their retirement cash flow), but I don’t think anyone in Gen X/Millennial/Z realizes just how much more obsessed they will all be about those two funds going forward. You’ll have three generations that will literally only care about that, just like their grandparents before them.
Oh, and it’s going to be three generations worth of old people that will need a massive fund to finance all of those social security checks because we fucked them out of realistically keeping up with inflation.
As to your case study of a low wage worker, if he doesn't have any assets, inflation doesn't mean much. If he has debt, which he likely has, student debt say in the US, inflation is a good thing. The (correct) conventional wisdom is that debtors benefit from inflation and creditors don't.
And if you've got money in a pension fund like many Americans, or you have index funds, or you have anything else that broadly represents the economy, cash flowing into the economy rises prices but it also appreciates assets.
There really isn't any point to fear moderate inflation from the standpoint of a worker. If anything the opposite is true.
I agree with the fact that gig work is terrible and lots is wrong with economic insecurity, but steady inflation isn't an issue.
I’m going to step away from the word correlation because I think it will lead us down a never ending path.
Wages are not keeping pace with inflation. I’m not saying it needs to be 1:1, but businesses have managed to stunt wage growth at a much lower multiple. That is one hell of a tax on people’s wealth.
So now the question is, is what I just said true? Year after year there’s tons of data and literature on how wages haven’t budged in relation to inflation. The public is constantly being shown these arguments similar to Climate change.
I think ultimately the government doesn’t care that your earning power is not keeping pace because it is thematically consistent with what monetary easing is trying to do. The whole point is to not let your money sit around and appreciate, the whole point is to have your money in fight-flight mode at all times to keep the economy from stagnating. There is nothing in that policy that has anything to do with increasing your earning power or raw appreciation of your current wealth.
So be it, the failure here is that if the average person’s money needs to be put to work, there has to be more vehicles available to the average person. When your typical business doesn’t even offer a 401k, when wages only grow at a 0.1-0.3x of inflation, you can’t reasonably expect someone to stow away the max 5k contribution yearly in an independent IRA. Your average worker is simply not able to do this, and this is the failure I’m mostly speaking to.
Lastly, the word pension is a vestige. I worked at a large Corp that had pensions once. When I got there, there policy changed so that anyone after around the late 2000s would not receive a pension, and they would stop adding to the pension fund for those that came before. Millennial/Z will never hear the word pension again, so it’s not a fair point to make.
The best current generations can do is save for a down payment on a house, and be locked financially to the mortgage payment. To have a fighting chance at this in these crazy housing markets, you need to make some sacrifices to hit that down payment. Nothing else about our system is going to help you, and all monetary policy is trying to outpace you at this point globally.
It was crushed.
We definitely lost the battle for provider level privacy and tracking and the government makes it easy to speed up the process for these giant multinationals.
Not to mention DMCA censoring things left and right (some in good faith, some in bad).
Moreover, if bitcoin were banned I would imagine it would still exist and be used (think any illegal payment people may need to send online), but it won't be considered a good investment asset, loosing most of its value.
Maybe that would be a success for bitcoin, it would be finally used as a coin.
Much like occupy wallstreet didn't really kick off until well after the 2008 financial crises, the impact of what is happening now in the economy will not be clear for several more years
https://www.reuters.com/article/us-usa-fed-repo-tools-explai...
They are referring to an action take in 1933. Almost everyone involved in that decision is dead, from the voters to the president is dead.
> The Fed aims for inflation to try to reduce the debts of the government.
The Fed aims to keep the economy at full employment and inflation stable.
> the Fed however, has had great difficulty in stimulating economic inflation in recent years, in large part due to the naturally deflationary effects of technology and automation.
The Fed has had problems stimulating inflation and growth recently recently. This has nothing to do with technology and automation and everything to do with interest rates being so very low. (which is caused by a global savings glut, and an aging population) Also we had no problem with deflation in the 70's even though we were also automating jobs and advancing technology.
> Now that you understand your part in the economy from the perspective of central banks and economists.
This isn't even a strawman. This makes me thing that he's never actually read a mainstream economists. And that his only experience with mainstream economics, is other people ranting about mainstream economics.
But the biggest critique of all, is that even if his "theories" (which are all a somewhere between wrong and a stretch) are correct the conclusion doesn't follow. Imagine we're in a depression and a large chunk of the populace prefers bitcoins to dollars. This will cause them to spend dollars, keeping people from hoarding dollars, and keeping the velocity up. This only really becomes and issue if salaries become denominated in bitcoin. And there are a lot of reasons you don't want to pay someone a bitcoin salary, and a lot of reasons you don't want to be paid a bitcoin salary. With one of the biggest being the tax implications.
But I also don't want to be the accountant that's trying to figure out the tax implications of a company that has 50 workers and 18000 line items denominated in bitcoin. Not to mention dealing with first in, first out accounting.
* Taxes are significantly more complicated
* No 401K
* Volatility
* Lack of privacy
* Need to convert to USD to pay my bills
You can invest in Bitcoin through an IRA. I believe most retirement funds are looking into adding Bitcoin as an investment option. Fidelity has talked a lot about this in recent months.
You have far less privacy in the regular banking sector.
FDIC deposits wouldn't make sense. Banks needed the FDIC system because they do fractionalized lending with limited reserves. Bitcoin cannot be lent out in this way. It's true you have to trust whatever exchange you store your coin in if you want convenience, but you can also quite easily store Bitcoin in a wallet that you control, and back it up with physical keys that you can store stamped on some titanium in a safety deposit box or wherever you like.
That's a nightmare from a tax perspective. Every single one of those transactions is a taxable event. Imagine having a separate line on your taxes for each time you visit a fast food restaurant.
> You have far less privacy in the regular banking sector.
If I have your bitcoin wallet address I can see everything in it and everything you do with it. This is not true of banking.
> FDIC deposits wouldn't make sense. Banks needed the FDIC system because they do fractionalized lending with limited reserves. Bitcoin cannot be lent out in this way. It's true you have to trust whatever exchange you store your coin in if you want convenience, but you can also quite easily store Bitcoin in a wallet that you control, and back it up with physical keys that you can store stamped on some titanium in a safety deposit box or wherever you like.
With FDIC, I know if I deposit my money I can get it back. If the bank doesn't have it the government will cover it. If Coinbase loses my money, unless they have enough to cover it from other funds I'm hosed. There is no recourse. A wallet I control is even worse, now I'm entirely 100% responsible for the security of my wallet, and I'm not trained for that, nor do I have the resources to be truly effective.
That being said, the points raised and the concerns about harmful regulation is worth taking seriously.
More specifically, now with the digital assets "travel rule" ratified by the FATF (which is expected and on its way to result in legislation in most global jurisdications). A bit oversimplified: Any VASP (virtual asset service provider ~= private business holding, transmitting, issuing or exchanging digital assets on behalf of customers) are expected to request and verify information of wallet holders (the usual KYC/AML with name/passport/etc) for any ingoing and outgoing transfers. They are also expected to send this information onward to any other VASP they transfer to on behalf of users (e.g. if you transfer BTC from your Kraken account to a friends' Coinbase account, Kraken and Coinbase are on the hook to coordinate this information between each other).
In practice, forcing any business that touches digital assets to draconian regulation can be very effective in hampering adoption - IMO we've already seen a similar thing play out where tax requirements for both individuals and businesses coupled with regulatory uncertainty have made it an accounting nightmare to be fully compliant with retail payments in crypto.
I don't see an outright blanket ban on individuals holding or transacting Bitcoin. But overly restrictive and draconian regulation in some shape or form is very much likely.
I'm concerned if it continues in this direction, holding your own keys will be viewed as suspicious and seen as attempt to money laundering, further raising the barrier for people not to have their funds controlled and transactions monitored bu the incumbents.
That was before chain analyzer services. Nowdays I would say stay with greenbacks for laundering money.
I hope not. It'll be so much more fun if they push things past the point of no return.
- The US government is very slow moving, and crypto is quickly gaining popularity amongst the voting public and institutional investors (with access to lobbyists). Once the gov't realizes that crypto is a threat and is able to position itself to form legislation, actually passing the legislation would piss off a lot of groups that the gov't is incentivized to make happy.
- Crypto is technological progress, and banning it would push innovation out of the US and into countries that decide not to regulate
- Banning crypto is an authoritarian act, and is basically an admission by the gov't that it prioritizes tight gripped control over our liberties (not that this point is actually all that unlikely...)
I'm biased, but Occam's Razor applied to the above points makes me feel like the banning of crypto is unlikely... Am I missing something?
Citizens had all trust DESTROYED by the economic elites in 2008. A massive number of Wall Street and finance companies showed how corrupt and how much damage they cause real citizens. Trust is GONE.
Citizens will view that their money is being stolen. All of this is about draining more money from workers and transferring it to companies and the wealthiest 1%. Slavery is when the powerful financially steal workers earned money, against their permission, in an unjust way. In a way that is a system of theft is from poor workers over to the wealthy.
That leads to revolt. Every time "negative interest" goes through your brain, force yourself to replace it with "stealing that causes revolt". It gives you a chance to wake up to see how workers will view it.
It is not that far of a leap to consider a timeline where all wallet addresses are simply registered and crypto assets lose their fungible quality. Assets in registered wallets will simply not be relayed to unregistered wallets. That simple. There will be an international wallet address clearing house. Hey Coinbase, want to keep your license to operate? Comply. Paypal? Comply.
You know this is coming. If you don't know, look up all the rules dedicated to banking and securities. Or simply remain blissfully unaware. They won't ban the technology. That's too pedestrian and 1934.. err 84. They'll simply control how you can use it.
The question is how does the crypto asset community rally to head this inevitability off at the pass.
Yes the onramp and offramp might become illegal in some countries, I am not sure what exactly would happen to the price then but some historical examples are alcohol prohibition, the drug war, and gold in the US during the 20th century. The price might actually skyrocket if they make it illegal...
Monero, ZCash, Grim, Beam are specifically designed to thwart that scenario. The day what you describe actually happens, they will replace Bitcoin.
It’s already beginning.
I find this hard to believe. I think it's more likely that the gov't would treat crypto like fiat, and make it law to report any income in crypto. It's not like you don't have to pay income on any salary you receive as cash, and cash is even moreso untrackable than crypto.
https://www.fincen.gov/sites/default/files/shared/Notice-Vir...
Unfortunately institutions exist to maximise control, and the horror of a CBDC just gets worse the more you think about it.
> Saving money, whether in or outside of a bank, does NOT contribute to growth
Literally next line
> Taking out loans and new debt contributes to economic growth.
Where does the money for a load come from though? Does the author not see the connection there (making him kind of unfit to explain complex economic mechanisms), or just dishonestly ignores this part to support his thesis (which makes him unfit to waste my time)?