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Netherlands must ban cryptocurrencies immediately: CPB head

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161–170 of 211 posts

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#161
post #65

Earlier quoted context omitted.

Great, so there’s guaranteed to be enough demand for USD to pay tax obligations, which probably represents like 3% of its other sources of demand.

38% of US spending is by the government. In case you hadn't noticed they spend their money in US dollars.

That doesn’t even remotely imply that the USD would only crash to 38% of its current value if the only thing people used it for was paying US taxes. It would almost certainly go a lot lower. However, it’s hard to predict with any precision.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#162

Earlier quoted context omitted.

Fiat is backed by weapons. The same weapons that defend your house from other countries and force you to give up half your salary. My main criticism to cryptocurrencies is that they're mostly unbacked. The ones that are backed by Fiat have similar problems to Fiat currency (why would I need that?), the ones that are backed by physical assets are much more interesting - but they don't seem to be the mainstream ones, p…

> Fiat is backed by weapons. The same weapons that defend your house from other countries and force you to give up half your salary This is a very American view of fiat (and governmental role in general). It's a logic that only works if you're talking about the strongest military and associated country out of all alternatives, and at this point it falls apart. How do weapons protect the value of the Angolan kwanza or…

They don't need sizeable number of countries. Only one major one.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#163
post #84

> "Cryptocurrencies are essentially neither money nor a financial product, but an example of what Nobel laureate Robert Shiller calls a 'contagious narrative': a contagious story in which people believe because other people believe in it." Which is exactly what money is, to begin with.

And companies, states, ... What is a company? The contracts? Then it's just paper with ink. The buildings? It's just concrete. All of that don't exist naturally, it's a shared narrative. That these concepts can be enforced doesn't change that fact. That's not to say these concepts are not useful, civilization is built on them. The book Sapiens does a better job than me explaining that idea if you are interested.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#164
post #15

Earlier quoted context omitted.

Fiat is slightly different in that the government can guarantee a certain level of demand for it by requiring taxes to be paid in it. If you you don't like jail and have a tax liability in US, you can't think dollars are worthless.

FYI I can pay my taxes in crypto in Switzerland.

Does the state accept them directly or does a third-party do a currency conversion so the state is receiving the value in Swiss francs?

That's a key difference because it's only in the latter case that taxation creates demand.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#165
post #84

> "Cryptocurrencies are essentially neither money nor a financial product, but an example of what Nobel laureate Robert Shiller calls a 'contagious narrative': a contagious story in which people believe because other people believe in it." Which is exactly what money is, to begin with.

No, money has value because the government makes it law that debt is payable with it; that's what gives a government's currency legitimacy. If the government made a law that debt could be paid with bitcoin, it would no longer fit Shiller's description.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#166

Earlier quoted context omitted.

Fiat is backed by weapons. The same weapons that defend your house from other countries and force you to give up half your salary. My main criticism to cryptocurrencies is that they're mostly unbacked. The ones that are backed by Fiat have similar problems to Fiat currency (why would I need that?), the ones that are backed by physical assets are much more interesting - but they don't seem to be the mainstream ones, p…

> Fiat is backed by weapons. The same weapons that defend your house from other countries and force you to give up half your salary This is a very American view of fiat (and governmental role in general). It's a logic that only works if you're talking about the strongest military and associated country out of all alternatives, and at this point it falls apart. How do weapons protect the value of the Angolan kwanza or…

> Neither of these countries could do anything militarily if a sizeable number of countries did not support their value.

That kwanza exchange graph looks like it has nothing backing it.

If you doubt his point go look at Ukrainian hryvnia exchange rates graph, try to guess at which point Crimea thing happened.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#167
post #84

> "Cryptocurrencies are essentially neither money nor a financial product, but an example of what Nobel laureate Robert Shiller calls a 'contagious narrative': a contagious story in which people believe because other people believe in it." Which is exactly what money is, to begin with.

Like the stop sign bubble. Those stop signs dont actually stop cars, they just work because of the contagious narrative

In high school my friend's dad used to tell new drivers that the stop signs with the white borders around them were optional.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#168
post #141
post #6

There's plenty of valid criticisms against crypto, I feel like they've picked some of the weakest ones. > cryptocurrencies are used because people think they will one day replace traditional money Maybe a tiny minority, sounds like a strawman. > a contagious story in which people believe because other people believe in it Isn't fiat the same? Money only has value because people believe it has value / will have value…

You also have to keep in mind the context here. The Netherlands is a country that keeps its citizens under a tax slavery, that will make sure 80 to 85 % of all income you earn over the course of your lifetime will be taken away. Taken away in progressive income taxes, property taxes, inheritance taxes, pension taxes etc... Despite the massive levels of taxation citizen benefits are nowhere near the levels of Nordic c…

> The Netherlands is a country that keeps its citizens under a tax slavery, that will make sure 80 to 85 % of all income you earn over the course of your lifetime will be taken away.

This is flamebait and wrong. Their tax rates range from 37% to 49% which is not far off the United States 40% or so for combined local, state, and federal taxes and add the cost of healthcare (which is included in those Dutch taxes, at half the total cost as the US system).

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#169
post #96

Earlier quoted context omitted.

Like the stop sign bubble. Those stop signs dont actually stop cars, they just work because of the contagious narrative

well, there's also the force of law behind stop signs.

And money.

Re: Netherlands must ban cryptocurrencies immediately: CPB head

#170
post #35

Earlier quoted context omitted.

While in Switzerland we do have some weapons, it is not like Swiss franc is backed by our army, which is purely defensive. And, in fact, here you can pay municipal and cantonal taxes with cryptocurrencies.

I think the parent is talking about chartalism ( https://en.wikipedia.org/wiki/Chartalism ), which is essentially the idea that fiat currencies derive their value from the fact that taxes must be paid in them. A sort of "just so" story about this would go something like (with much credit to David Graeber): "Way back when, some Assyrian king got the great idea to, instead of giving their soldiers food and drink, give…

> the Somali shilling

Pump the breaks. Have you read the Wikipedia page about the Somali Shilling?

https://en.wikipedia.org/wiki/Somali_shilling

> Following the breakdown in central authority that accompanied the civil war beginning in the early 1990s, the value of the Somali shilling plunged. The Central Bank of Somalia, the nation's monetary authority, also shut down operations. Rival producers of the local currency, including autonomous regional entities such as the Puntland territory, subsequently emerged. These currencies included the Na shilling, which failed to gain widespread acceptance, and the Balweyn I and II, forgeries of pre-1991 bank notes. Competition for seigniorage drove the value down to about $0.04 per ShSo (1000) note, approximately the commodity cost. Consumers also refused to accept bills larger than the 1991 denominations, which helped to stop devaluation from spiraling further upwards. The pre-1991 notes and subsequent forgeries were treated as the same currency. It took large bundles to make cash purchases, and the United States dollar was often used for larger transactions.

Essentially, it's not like the economy of Somalia remained at a status quo when central banks and government went absent. The civil war of the 1990's essentially ripped the nation apart in autonomous region, local economies, black markets,... with many different competing currencies, forgeries of the Shilling and little to no rule of law depending on where you were.

As of late, this is changing as power is centralized again and instilled in a legitimate government:

> In the late 2000s, Somalia's newly established Transitional Federal Government revived the defunct Central Bank of Somalia. The monetary authority assumed the task of both formulating and implementing monetary policy.[6] Owing to a lack of confidence in the Somali shilling, the U.S. dollar was widely accepted as a medium of exchange alongside the Somali shilling. Dollarization notwithstanding, the large issuance of the Somali shilling increasingly fueled price hikes, especially for low-value transactions. The new Central Bank of Somalia expects this inflationary environment to come to an end as soon as the Central Bank assumes full control of monetary policy and replaces the presently circulating currency introduced by the private sector.

> With a significant improvement in local security, Somali expatriates began returning to the country for investment opportunities. Coupled with modest foreign investment, the inflow of funds helped the Somali shilling increase considerably in value. By March 2014, the currency had appreciated by almost 60% against the U.S. dollar over the previous 12 months. The Somali shilling was the strongest among the 175 global currencies traded by Bloomberg, rising close to 50 percentage points higher than the next most robust global currency over the same period.

Also, the acceptance of a currency in a community is backed by the fact that you can take a dispute to a court of law which carries the legitimacy to enforce the rule of law. That is, if you are indebted and you want to repay a debt using legal tender, you have the assurance that the debt will be extinguished at least in the eyes of an authority. Or, more to the point, there's assurance that the authority will protect you from creditors seeking further satisfaction from you.

https://en.wikipedia.org/wiki/Legal_tender

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