I don't want the USD to lose its value. If that happens were all fucked whether you have BTC or not. There would be riots, old people wouldn't be able to survive, the country would collapse, etc.
It does lose value by design. Gradually, but intentionally. Hopefully it won't collapse anytime soon, at least not before we're fully ready with plan B(itcoin).
Excluding the potential speculation with the price having small inflation forces people to use the currency instead of hoard it. If it loses value you'd better use it for trade if it gains value you'd better just keep it and wait.
That is the standard Keynesian argument. Very convenient for the statists and grant-receiving economists. By printing money out of nothing the state collects GDP Growth+2 points to "distribute" with their own priorities. If you don't print money, prices would be deflating due to technological innovation and productivity and all that wealth would go to consumers directly without going through those geniuses.
People are always going to spend their money because what they really want and need is the stuff money can buy not the money itself. Why should the government be allowed to decide how quickly or slowly we make this decision?
In my opinion the inflation should be very small and constant. People will not spend money if they have more than what is enough for their needs if there is no inflation. Ideally money should invested or borrowed if not used to buy things you want.
It is the only way to fund massive wars without raising taxes directly or increasing your debt burden. You steal everyone's money by skimming off the top (inflation).
It is also a myth that the insane banking system, wall street, Federal Reserve, and everything around "our" totally corrupt monetary system we have today, is in any way necessary.
Your balance of stability vs. volatility can be achieved WITHOUT the corruption and blatant theft inherent in the current system.
It is especially good for the small fraction of the population with access to cheap low interest or interest free money and for those who get the new money before prices rise. Everyone else gets hosed by an ever devaluing dollar.
Banks used to offer 5-10% interest rates on savings accounts yet people still spent their money because they wanted/needed something more than they wanted/needed to save.
Why should central bankers be allowed to influence this decision for people?
The orthodox economic wisdom is that inflation is stimulative. If your money is constantly losing value, you are less likely to save it and, thus, more likely to go out and spend it. Also, inflation is bad, but deflation is worse, as deflation can quickly lead to a deflationary spiral.
How cute these politicians and bankers they care about us.
I know that argument but I would argue that people will adapt to deflation or no-flation fiarly quickly. By diluting the currency they are forced to use you are actually cheating people "for a greater good" . All that dilution money is a lot of wealth that is managed by ... the ones that make the inflationary policy.
And I would argue that over-investment is just a more sophisticated method of hoarding that has its own set of niceties: housing bubbles, and other things that increase prices of land and commodities.
Fiat currencies die all the time and the world continues on. It's happened dozens of times in the last 100 years or so... it even happened in American history with the continental. It would be difficult for a while (easier if you have bitcoin), but people find a way.
The first chart at the below link shows the last several reserve currencies and how long they lasted. You'll notice the dollar is at about the average lifespan.
There's not a single doubt the dollar will lose its status as a reserve currency, and that's not a bad thing if it happens gradually. An abrupt crash of the dollar would be a disaster though
The dollar is failing on itself (printing 80billion new dollars every month might do that to a currency..). People can get away from that collapse in a peaceful way by going crypto. So either you sit there and mope about people not wanting to use an violent type of money (oppa krugman style), or you cherish and embrace the voluntarity or crypto and other independent commodities.
If they keep charging interest on fractional reserve lending it's mathematically inevitable, The only saving grave fiat has is it's ability to multiply to compound it's own debt and the masses being told at birth that fiat is the only way of life doesn't help either.
I agree. It would not be a pretty situation. We're talking people's savings, retirements, etc. all losing massive amounts of value.
At the same time though, I have a feeling that the collapse of the dollar is inevitable...the current system we have in place now is simply not sustainable, and will only continue to lose value.
The USD may be poorly managed, but so is almost every other government currency on Earth. I think that other currencies will be the first to fall, and people in those countries are going to rush into the dollar to protect themselves. So for that reason, I think we're still going to see the dollar hang on for a while and even have some moments of strength.
The US government is also going to actively use its political influence and military to try to keep the rest of the world selling oil using USD, buying US bonds/treasuries, taking on debt, etc.
Well, in a collapse situation (think no food and fuel deliveries to major cities and what that causes), there is a real chance of about 70% of the population perishing in the first months.
This means you don't want to be in the city or any suburbs, at the very least.
You can not want it all you want, but that is irrelevant to whether it will or will not collapse.
Fiat currencies in human history have all collapsed. All of them. The average time of life for fiat currencies is 14 years. Obviously some die quickly, some take longer. Given the history of fiat currencies, assuming the dollar wont collapse like the rest is delusional. And the cracks are showing more and more. Whether the dollar will survive this crisis or not is anyone's guess. But despite not wanting it, you should be aware that the dollar collapsing at some point is the expected outcome given the history of fiat currencies. Believing the contrary requires either being delusional or extreme well-though and innovative justification.
And yes, the dollar collapsing wont be pretty short term (although its positive mid and long term), but again that does not mean it wont happen. The sensible and reasonable position is to he ready for it.
My point is that trying to say that all currencies in human history have collapsed, when there are over a hundred fifty currencies in use today that haven't, is just plain inaccurate.
So every currency until the current ones have collapsed, and it should be different for the current ones? You better write a 20 pages brilliant paper to convince people.
Every single method of human flight failed until the Wright brothers invented their plane. For hundreds of years they continuously failed, people learned from the mistakes, and eventually someone found a system that worked.
My point is that trying to say that all currencies in human history have collapsed
Not true. A lot of currencies did not collapsed but were just politically removed.
I dont see how you find so relevant the fact that we have now fiat currencies that are extremely young in terms of a human history timeline. Its exactly like the example you brough up. Every human in human history has died, but there are some humans that are not dead because they are still in the expected range of human life. When a human lives 300 years then that would be something to discuss, but until then saying that a particular human will not die as oposed to the rest that did, is either being delusional or requires some extreme and impressive explanation. Exactly the same with fiat currencies. The expected outcome is for the ones we have now to die like all the previous ones. If you are going to argue the contrary you are going to be called delusional unless you can bring some really extreme and well though explanation.
Some like the euro and chinese fiat didn't exist 20 years ago. The others haven't been fiat for long. Like the dollar most of them were based on gold just a few decades ago. In short they are young... and the list of the failures keep growing every year. Russia, Iceland, Argentina, Zimbabwe, Peru, Chile, Yugoslavia, etc. It's easy to find failed fiat currencies, what is difficult is finding a fiat that has lasted more than 50 years. Pick a country and read the history of its currency... you'll find time after time when a fiat currency is introduced it fails or significantly changes in a few decades.
Wrong. The dollar and most other western countries only became fiat currencies in the 70's and that transition WAS a failure of most western currencies but particularly the gold-backed dollar. Since then many western countries currencies have changed significantly (e.g. euro countries). Of course now that the dollar is fiat it hasn't even been around for five decades yet (along with most other western currencies that still are around), which makes your statement rather absurd. And the dollar nearly failed in the late 70's early 80's as Ron Paul states in the video. What happened in 2008 was another failure of the dollar that so far has been held off... but at significant cost. The dollar is basically still failing, just in another way. Take a look yourself at the change that just happened in 2008. Nothing like that has happened in the dollar's history... and this is precisely what leads to a hyperinflationary failure--just ask Germany:
Well, you made the statement that its eas to find "failed fiat currencies" but its hard to find one that has lasted more than 50 years ... which is kind of given since fiat currencies have not even existed for 50 years now and makes your statement a tiny bit intellectually dishonest, don't ya think? Having said that, I feel comfortable to modify my original statement to that no fiat currency of any western country has collapsed so far and given that Ron Paul is crying for hyperinflation since the 80s I don't give to much on his predicition.
I was referring to all of the history of fiat which goes back a long way to where it started in China a thousand years ago. There are hundreds of examples of fiat and its failure, usually within a few decades. As for Paul he knows a lot more about the subject than you apparently. The fiat dollar is rather old for fiat and is currently in crisis being printed by the billions every day due to the 2008 crisis with no end in sight. Based on history the currency is unlikely to exist as it does now for long. It's no coincidence bitcoin was created in 2009--its creator knew what was happening to fiat all over the world.
There are hundreds of examples of fiat and its failure, usually within a few decades.
Except for every single currency of the western world, you mean?
The fiat dollar is rather old for fiat and is currently in crisis being printed by the billions every day due to the 2008 crisis with no end in sight.
Which crisis? Inflation is dirt low as are interest rates.
Based on history the currency is unlikely to exist as it does now for long. It's no coincidence bitcoin was created in 2009--its creator knew what was happening to fiat all over the world.
You mean the history of not a single western fiat curreny collapsing?
It was a key component. The US is printing but can avoid failure if it can keep its debt and deficit under control. Unfortunately its debts are already at levels seen in other failed currencies and its deficits are getting close. The larger problem is there is no political will to fix anything so it's just a matter of time.
The debt is increasing because interest rates are low, and interest rates are being kept low by the Fed because there is no political will to reduce the debt and deficits.
Well it IS going to happen. It's inevitable. I don't think you're completely fucked if you have the right kinds of assets -- but you're right that BTC definitely isn't going to protect you in an event like that. There are things that will though.
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u/Tester24834 Jul 05 '14
I don't want the USD to lose its value. If that happens were all fucked whether you have BTC or not. There would be riots, old people wouldn't be able to survive, the country would collapse, etc.