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Bitcoin and the U.S. Fiscal Reckoning

nationalaffairs.com

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Re: Bitcoin and the U.S. Fiscal Reckoning

#21

Post by throwdecro »

wyager wrote: post #20
unyttigfjelltol wrote: post #15

>Third, bitcoin is more secure than gold. A single bitcoin address carried on a USB thumb drive could theoretically hold as much value as the U.S. Treasury holds in gold bars — without the need for costly militarized facilities like Fort Knox to keep it safe. BTC does not eliminate the need for security. The USB in question would need military grade security, and the exclusivity of the claim of its holder over the le…

> The USB in question would need military grade security Which is widely available and effectively free. > BTC is a fiat currency whose scarcity is determined by the actions of some random computer programmers who, for now, aren't leveraging that power for their own personal benefit Statements like this are a sure sign of not actually understanding how Bitcoin works. There is no person or cartel in the world who coul…

> Which is widely available and effectively free

What? Who is going to fight off people trying to obtain or destroy that USB drive to increase the value of their own holdings (i.e. speed up deflation by reducing available bitcoin), or extract the passcode from its owner, for free?

EDIT: I realize this is the plot of Goldfinger, but the author did invoke Fort Knox, and the strategy of destroying stores of value to increase the worth of your own stash makes sense.

Re: Bitcoin and the U.S. Fiscal Reckoning

#22

Post by lifty »

TekMol wrote: post #19

Every time I read about inflation, it is only attributed to governments via the central banks. I wonder how it works with the private banks. Say some entrepreneur goes to their bank and borrows $100k. They try to build a business, pay rent, employees, SAAS license costs, advertising and ... goes bankrupt. So the $100k never comes back to the bank. Did this create $100k?

I think yes. The money will remain in circulation forever.

Re: Bitcoin and the U.S. Fiscal Reckoning

#23

Post by adventured »

jw1224 wrote: post #7
liuliu wrote: post #6

Earlier quoted context omitted.

The United States is a democracy. Having large swarth of people owning cryptocurrencies making it possible for 1. no outright government bans or criminal investigations, 2. potential government buyout.

Are you suggesting the US government would buy-out Bitcoin? I can’t see that happening, by any stretch of the imagination…

They're going to more heavily regulate it over time. That's how they're going to deal with Bitcoin. The goal will be to keep it at the margin (compared to other assets, other investments), along with gold ownership. They can and will easily accomplish that outcome (which also doesn't prevent Bitcoin from gradually becoming a multi trillion dollar entity given the scale of the global economy).

There's likely to be no need for the US Government to worry about, for example, confiscating Bitcoin as FDR's administration did with gold. Today Bitcoin is comparable to Facebook's market cap. Back in FDR's day the scale of US gold holdings in relation to the US economy and its asset base was radically greater than these entities are today (today gold holdings in the US are trivial compared to the US stock market or housing market). For that type of confiscation event to happen Bitcoin would have to become a super giant asset vs global currencies, which will only occur if the US Dollar, Euro and Yen collapse or something close to it. If that happens, all manner of confiscations will be on the table, a lot of very, very bad things will be occurring.

Re: Bitcoin and the U.S. Fiscal Reckoning

#24

Post by night862 »

JavaBatman wrote: post #3

> In other words, governments with fiat currencies — including the United States — have the power to expand the quantity of those currencies. If they choose to do so, they risk inflating the prices of necessities like food, gas, and housing. > In recent months, consumers have experienced higher price inflation than they have seen in decades. A major reason for the increases is that central bankers around the world —…

Word on the street is fed "printing money" = "inflation like Venezuela." I've had these conversations dozens of times this year. I'm not extra smart, but somehow almost everybody misses your point about demand.

There is also the matter of where the money the fed "prints" ends up. Its not handing out singles, they're using other instruments like buying paper. I'm not educated enough to recount exactly what the mechanisms are.

If you allow me to contrive that essentially the fed is buying stock dips for example, the funds they are creating to do so doesn't end up as you mentioned buying loafs of bread and driving up demand, it ends up in the dragon's horde of large corporations and the beneficiaries of the windfall.

So the ultra-wealthy, corporations, large institutional funds (Stanford?) and/or corporate stakeholders see their paper balances of stocks increase, and along with the fabulous credit that having lots of assets brings you, they are free to leverage these assets to consolidate other assets such as real estate, stocks (and buybacks), maybe (but probably not given the yeilds) bonds and maybe a yacht or three.

Corporations, institutions, and ultra-wealthy wouldn't suddenly be able to afford to pay off their credit cards or buy extra calculators or yogurt, that is covered nicely in the first 100k/yr.

The rest is fiefdoms and trust funds for generational transmission. Probably lobbyists too.

Gotta add about 401k/retirement plans: That money is more or less a stipend for end-of-life, how much could that really balance the scale given the facts about the business cycle?

Re: Bitcoin and the U.S. Fiscal Reckoning

#25

Post by unicornmama »

jw1224 wrote: post #13
DantesKite wrote: post #2

To those with hopes and dreams in Bitcoin I suggest reading Nassim Taleb’s black paper. It does a great job outlining every major problem and (while in its current version and even a few iterations from now) it won’t succeed as a currency.

> it won’t succeed as a currency Whilst I can appreciate why people think it might not succeed as a mainstream consumer currency — do you recognise how successful it is becoming as an asset , like gold? Worth a read: https://www.lynalden.com/gold-and-bitcoin/

Gold has been valued for millennia. Regardless of what anyone thinks the price of gold should be, most will agree it’s not zero. Gold has uses for jewelry that cannot be substituted with any another metal.

Bitcoin has no use other than to sell or loan to someone else; or to pay taxes levied by criminals.

Re: Bitcoin and the U.S. Fiscal Reckoning

#26

Post by night862 »

throwdecro wrote: post #21
wyager wrote: post #20

Earlier quoted context omitted.

> The USB in question would need military grade security Which is widely available and effectively free. > BTC is a fiat currency whose scarcity is determined by the actions of some random computer programmers who, for now, aren't leveraging that power for their own personal benefit Statements like this are a sure sign of not actually understanding how Bitcoin works. There is no person or cartel in the world who coul…

> Which is widely available and effectively free What? Who is going to fight off people trying to obtain or destroy that USB drive to increase the value of their own holdings (i.e. speed up deflation by reducing available bitcoin), or extract the passcode from its owner, for free? EDIT: I realize this is the plot of Goldfinger, but the author did invoke Fort Knox, and the strategy of destroying stores of value to inc…

Who does it now?

I don't see how it follows that if bitcoin is useful that somehow militaries or rule of law can't exist.

Re: Bitcoin and the U.S. Fiscal Reckoning

#27

Post by missinfo »

JavaBatman wrote: post #3

> In other words, governments with fiat currencies — including the United States — have the power to expand the quantity of those currencies. If they choose to do so, they risk inflating the prices of necessities like food, gas, and housing. > In recent months, consumers have experienced higher price inflation than they have seen in decades. A major reason for the increases is that central bankers around the world —…

I think it's both a supply and demand issue. A much greater supply of dollars = more buying power, plus people working from home increased demand of certain items like lumber and computer chips. On top of shortages of everything for the reasons you describe.

That will get worked out, but here's why it looks to me inflation is here to stay:

1. Wages are going up in order to solve labor shortages. Higher wages = higher cost of goods = higher prices. And wages are sticky. Workers now getting paid $25/hr probably aren't going back to $15.

2. The just in time supply chain is being re-evaluated. We need resiliency, but it's less efficient and more expensive. Higher COGS.

3. The Fed seems likely to keep increasing the supply of dollars and don't want to raise interest rates much.

Re: Bitcoin and the U.S. Fiscal Reckoning

#28

Post by throwdecro »

night862 wrote: post #26
throwdecro wrote: post #21

Earlier quoted context omitted.

> Which is widely available and effectively free What? Who is going to fight off people trying to obtain or destroy that USB drive to increase the value of their own holdings (i.e. speed up deflation by reducing available bitcoin), or extract the passcode from its owner, for free? EDIT: I realize this is the plot of Goldfinger, but the author did invoke Fort Knox, and the strategy of destroying stores of value to inc…

Who does it now? I don't see how it follows that if bitcoin is useful that somehow militaries or rule of law can't exist.

> Who does it now?

France sent a warship to escort its gold from the US to France. Wasn't free, probably wasn't cheap.

Re: Bitcoin and the U.S. Fiscal Reckoning

#29

Post by night862 »

throwdecro wrote: post #28
night862 wrote: post #26

Earlier quoted context omitted.

Who does it now? I don't see how it follows that if bitcoin is useful that somehow militaries or rule of law can't exist.

> Who does it now? France sent a warship to escort its gold from the US to France. Wasn't free, probably wasn't cheap.

Luckily you don't need a ship to transport bitcoin, you could use a telephone or TLS 1.3

Edit: or just keep your private key (which is best practice)

Re: Bitcoin and the U.S. Fiscal Reckoning

#30

Post by wyager »

throwdecro wrote: post #21
wyager wrote: post #20

Earlier quoted context omitted.

> The USB in question would need military grade security Which is widely available and effectively free. > BTC is a fiat currency whose scarcity is determined by the actions of some random computer programmers who, for now, aren't leveraging that power for their own personal benefit Statements like this are a sure sign of not actually understanding how Bitcoin works. There is no person or cartel in the world who coul…

> Which is widely available and effectively free What? Who is going to fight off people trying to obtain or destroy that USB drive to increase the value of their own holdings (i.e. speed up deflation by reducing available bitcoin), or extract the passcode from its owner, for free? EDIT: I realize this is the plot of Goldfinger, but the author did invoke Fort Knox, and the strategy of destroying stores of value to inc…

Conveniently, USB drives can be backed up.
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