81–90 of 116 posts
What is the price of tulip bulbs in the Netherlands these days? What have been the ups and downs in that commodity over the years?
I've posted that on HN because Bitcoin is not just some commodity, but a useful technology that allows you to do many interesting things besides payments. See http://blog.oleganza.com/post/42262765318/direct-use-value-o...
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When you have a growing economy but a fixed money supply, money will appreciate. When this happens, people will prefer to keep money rather than spend it, and you get deflation-induced recessions/depressions. See the latter part of the 19th century in the US for repeated examples of this.
It should be noted that other countries at the time had similar currency restrictions yet they didn't have the bank runs and depressions that the US had. Economists like Eugene White believe there were other, possibly even more influential, factors in those panics, like the branching restrictions, which made banks more fragile. http://www.econtalk.org/archives/2012/04/eugene_white_on.htm...
Really?
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We are no longer on the gold standard because the gold was confiscated under threat of 10 years in prison. Please explain how holding a piece of metal under mattress destroys someone else's wealth, so you can come to a person and extract gold by force. http://2012patriot.files.wordpress.com/2011/06/executive_ord...
We're no longer on the gold standard because it lead to hoarding and economic inflexibility. It doesn't destroy wealth, however when gold is your currency and people hoard gold (for any reason be it economic instability or as an investment in the future price increases) the economy loses that amount of circulating money and moving money is what makes an economy work, not stagnant saved money. So by signing that execu…
I make everybody else that is using the US Dollar standard richer if I hoard gold. It means they can buy more real goods with their dollar. This principle is demonstrated in the 'printing' of dollars, in which increased supply devalues the dollar and makes it possible to purchase less real goods (whether you're talking houses, real estate, gold, silver, platinum, or oil as a baseline).
The same concept is demonstrated in the adoption of bitcoin. Finite supply means anybody holding bitcoins will benefit as demand goes up. Anybody holding a dollar bill would benefit from my gold hoarding.
Ask China how awesome it is to have an appreciating currency while the rest of the world foolishly destroys their currencies: China gets to buy more foreign goods every year with their same yuan notes, while the rest of the world can buy less and less (China can also more easily begin purchasing their own goods, which means less need to export; and they can more easily buy foreign natural resources, as the yuan gains against eg the dollar (since commodities are priced in dollars)).
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People will want to have it as an asset, not as a usable currency. Appreciating currencies are disastrous for any economy stuck with them, which is why we're no longer on the gold standard.
The gold standard worked in the US for about 170 years, which is part of why the US became the wealthiest nation in history: it had an extraordinarily trusted currency (green back = good as gold). Gold was worth $19 to $35 for 100+ years, and it worked, America had no problem growing dramatically. The US economy also had no problem growing fast during the 1990s, when the US Dollar was strong and had appreciated extre…
As far as I can tell, there are 10.86m Bitcoins in existence at the current market rate $40.05. [1] That means there are almost $430m in "circulation".
According to the federal reserve 1.17trillion USD currency is in circulation. [2]
USD: $1,170,000,000.00
BTC: $0,000,430,000.00
0.0367%
Not a perfect comparison, I realize that. It is more of a rough estimate.
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People will want to have it as an asset, not as a usable currency. Appreciating currencies are disastrous for any economy stuck with them, which is why we're no longer on the gold standard.
The gold standard worked in the US for about 170 years, which is part of why the US became the wealthiest nation in history: it had an extraordinarily trusted currency (green back = good as gold). Gold was worth $19 to $35 for 100+ years, and it worked, America had no problem growing dramatically. The US economy also had no problem growing fast during the 1990s, when the US Dollar was strong and had appreciated extre…
Real world calling. China pegs the Yuan at 6.22 Y / $1. It's appreciated by something like 3 cents over the last decade.
How do they do this? They continually buy dollars with Yuan. Increase the supply of Yuan, decrease the supply of dollars. They can't stop, or the Yuan appreciates, devaluing the dollars they already hold and, more importantly, hurting their exports.
This is why you're seeing the federal government borrow money for 0.1% interest, and why there's been almost-zero inflation despite deficts and quantitative easing.
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Do you say, if some people think you and your friends cannot play with certain non-harmful objects (e.g. gold bricks), it is morally alright to force you to go to prison or kill you if you try to protect yourself?
The bricks themselves are not harmful however stockpiling the primary medium of exchange is very harmful. A better metaphor is water in a desert, except instead of being consumed it's passed from one person to another without loss and actually increases when it's transferred. The item itself isn't harmful but hoarding it is extremely harmful.
It reduces supply, which boosts the value of every other outstanding dollar. I boost everybody else's current purchasing power by increasing the real value of the dollar bill in their pocket by reducing the availability of gold, since the true measure of a bill is what goods it can purchase.
Not to mention, markets take note of the true availability of gold. Hoarding gold doesn't mean it is destroyed, and the market knows that in general estimation, because the market knows in general estimate how much gold is mined / stored / sold / etc. IE that gold can and will come onto the market, whether today or when I die, and the market prices accordingly.
Any currency backed by a gold standard when I hoard, will benefit over any nations not on a gold standard or specifically with a depreciating currency. I can buy more and more and more of their exports for the same dollar.
If it ever becomes successful, we will marvel that individuals could ever afford a bitcoin. 21 million is a tiny number for a currency when compared to $40 trillion in global currency ($6000 per person). ~$1.25 billion spend on Cyber Monday ~$8 billion are traded for oil every day ~$150 billion NYSE daily If bitcoin became the trusted currency for any of these activities what would it be worth? If bitcoin became the…
This is the fundamental characteristic of bitcoin that puzzles me. Most currencies are inflationary, which in low doses is a good thing: it disincentivizes keeping the money under the mattress, maintaining a healthy flow of currency. Bitcoin is by design deflationary: it's value increases over time. Deflation is destructive to the economy, so if bitcoin is deflationary by design, it can't ever be a primary currency,…
Thank you for this. I constantly try to explain this to bitcoin fanatics and they don't get it.
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Exactly, and I'd like to point out that you having to explain this goes to show we aren't teaching economics properly (or at all) in school. The school systems focus on make sure our children are well rounded in every way except financially.
In regards to the concept above: even if kids take macro, they'll remember this concept for about 6 months ....and it's gone. This is like lamenting that kids don't know enough about Chaucer or don't understand that evolution only applies to populations, not to individuals. These kinds of small details will be forgotten intentionally by most people within months of learning them. Quite frankly: I don't care if kids c…