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US Digital Currency

blog.samaltman.com

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Re: US Digital Currency

#121

Post by Toine »

There are many _really_ naive statements in this post, and it honestly feels like it was written by someone who has no deep historical/economic knowledge. The most obvious :

"But I believe there exists a middle ground where the government can get a lot of what it wants, and cryptocurrency users can get a lot of what they want too."

The government wants a lot of control of a lot of things. It accepts giving some freedom to people, like the color of your hair, because there's no consequence (for now at least). However, on the list of the top 100 things it would NEVER, EVER, EVER give up control of, I think currency is in the top 3, probably n°2 after the military. Like I said in another comment, people generally vastly underestimate how powerful the control of currency is.

Crypto-enthusiats want 1 thing : getting rid of the government in the monetary system. Apart from the fact that it is, in itself, both a naive and dangerous dream, there's absolutely no way the government (more specifically the Fed) will ever give up even .1% of control over it.

Considering all of this, I have a REALLY hard time imagining a middle ground. Crypto-people will not get what they want.

Re: US Digital Currency

#122

Post by Toine »

foepys wrote: post #69
mavdi wrote: post #43

Earlier quoted context omitted.

You've only scratched the surface of cryptocurrencies and come here to make bold, completely untrue statements about their properties. Having a central actor, like a government, would solve a lot of scaling problem, as well as transaction history issues and also cost associated with making transactions.

> Having a central actor, like a government, would solve a lot of scaling problem, as well as transaction history issues and also cost associated with making transactions. Then why Bitcoin, Ethereum, etc. instead of USD? Why the need for a crypto currency if everything is already in place? In place with laws and regulations.

Exactly this.

The first line of the Bitcoin paper is : "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution".

The whole point of cryptocurrencies was to get rid of the third party in the first place...

Re: US Digital Currency

#123

Post by stale2002 »

Zarath wrote: post #34
stale2002 wrote: post #19

Earlier quoted context omitted.

> It's well-known that deflationary currencies do not work. Deflationary currencies have worked out fine for literally thousand of years. Inflationary currencies are a modern concept, with their own advantages AND disadvantages. I'm surprised this is such a sticking point for people, and that they think the system will literally collapse, when we have centuries of history proving otherwise. > It's also well-known tha…

Here's a thought experiment. Satoshi (who we'll pretend is Hal Finney) owns 10% of Bitcoin, we assume he's lost the keys. Bitcoin becomes a global, and universal currency as we slowly colonize the entire galaxy. Satoshi has been unfrozen from his cryogenic sleep, and remembers his keys. Satoshi now owns 10% of the entire economy of the galaxy. Seems ridiculous right? Satoshi contributed nothing for hundreds or thousa…

This is no different than of someone just happens to own a whole bunch of silver, and the price of silver goes up in the future.

Deflationary currencies are not a new thing.

Lots of things that have all the same properties as a currency already exist right now, and have existed for thousands of years.

There are already lots of limited supply things in the real world, and someone can already just buy a whole bunch of it, in hopes that the price will go up in the future.

And if you don't like the properties that a certain currency has, then you can feel free to use a different one.

Personally, though, I prefer using currencies that aren't guaranteed to decrease in value in the future (which is the definition of inflation).

Which is why most of my assets are not USD dollars, they are things like assets, stock, and other investments.

And, as for your specific example, I see no reason to believe that crypto will go up in value, over the LONG term, faster than investments. So in your hypothetical, Satoshi, IMO, would make less money than if he had invested it in an index fund.

Such is the power of compound investment.

You are also using a wired metric. Which is percentage value of dollars.

There are only 1.2 trillion dollars in circulation.

Do you have a problem with the fact that Jeff Bezos could own 10% of all USD in the world, if he wanted it?

We already live in your "ridiculous" world, sir.

Re: US Digital Currency

#124

Post by kenpomeroy »

fra wrote: post #114
nobrains wrote: post #90

Earlier quoted context omitted.

There are two problems with this control (QE) that the citizens are concerned about: 1. It reduces their cash savings by the ratio of the amount of new money injected to the total supply 2. It is unfair, as the first receipients of this new money get free money. (Inflation increases as that money flows through to everyone, however, the first receipients of this money don't get to face the inflation). The second issue…

Which cash savings? The median savings for a US family is ~$5000. What you're really saying is "it inconveniences the rich".

Inflation hurts the poor far more than the rich. Rich people invest their money rather than simply holding cash and losing value through inflation. Poor people have no choice but to keep their money in cash. Also, wage increases are often much slower than the rate of inflation.

Re: US Digital Currency

#125

Post by kenpomeroy »

skywhopper wrote: post #98

What I don't see in this article is any indication of why such a system is desirable or beneficial for the government or for the users. For cryptocurrency fans, maybe it's self-evident. But I'm not sure what benefits cryptocurrency provides for those groups that they can't find better elsewhere.

For cryptocurrency fans, it is quite obvious that such a system would not be desirable or beneficial at all. The entire purpose of cryptocurrency is to remove governmental control of money.

Re: US Digital Currency

#126

Post by kenpomeroy »

gwbas1c wrote: post #10

I think we'll get viable cryptocurrencies when the people designing them understand the basic and well-known economics of how money works; AND, when basic scalability problems are solved. It's well-known that deflationary currencies do not work. That is a severe problem that must be solved before cryptocurrency is viable. Limiting the total number of coins means that the currency is deflationary. Furthermore, our cur…

> It's well-known that deflationary currencies do not work.

This is laughable. Your definition of "work" includes a presumption that we all want the government to control and manipulate the economy without regard for the interests of the individual.

Ask any individual citizen whether they would prefer that their savings increased in value or decreased in value, and I suspect they'll have a different answer as to whether a deflationary currency "works" for their purposes.

Re: US Digital Currency

#127

Post by AnimalMuppet »

nobrains wrote: post #90
joejohnson wrote: post #87

Amazing that someone so naive could be given such a platform. Oh, silicon valley :) >> A tricky part of this would be how to balance letting the network have control over itself and letting the government have some special degree of input on ‘monetary policy’. It’s certainly ok for the government to have some, but I think the network needs to be mostly in charge (e.g., the government couldn’t be allowed to arbitraril…

There are two problems with this control (QE) that the citizens are concerned about: 1. It reduces their cash savings by the ratio of the amount of new money injected to the total supply 2. It is unfair, as the first receipients of this new money get free money. (Inflation increases as that money flows through to everyone, however, the first receipients of this money don't get to face the inflation). The second issue…

> It reduces their cash savings by the ratio of the amount of new money injected to the total supply

No. That is, it can, but it doesn't have to. Their cash savings are only affected if the value of money changes, not if the quantity of money changes. The Fed's mandate is for stable value, not stable quantity.

And if you're going to ask what the difference is: Velocity. There may be other things as well, but definitely velocity.

But even my argument here isn't needed to defend QE. QE injected 4 trillion dollars into the US economy. Why did the Fed do that? Because $4 trillion had just evaporated in the meltdown of 2008. That wasn't even changing the quantity of money, it was trying to prevent a change in the quantity of money.

Re: US Digital Currency

#128

Post by AnimalMuppet »

freeone3000 wrote: post #94
searine wrote: post #92

Earlier quoted context omitted.

Or you just peg USDC to the dollar so traditional monetary controls still apply. I don't know how exactly you'd do that but I'm sure you could figure out something clever. The advantage here is triple-ledger system, not the mining/anonymity features of other crypto. Having a pseudo-dollar cryptocoin creates a digital cash that is inherently traceable and avoids all the nasty bits of international money changing. It's…

Why peg it to the dollar? Most dollars aren't physical, so we could "simply" shift the dollar financial systems to this process.

So far, the dollar has had a much more stable value than any cryptocurrency. We'd like to keep that feature.

Re: US Digital Currency

#129

Post by AnimalMuppet »

simonpaul wrote: post #115

Apparently my views are too much for the moderators. On inflation, pretty much no one here actually knows the truth. Look up the federal discount window And then treasury bonds. Typically a bank can get interest free money and plow that into interest baring bonds backed by the government. They then get is free profit off the spread, this was a common back door method of 'liquidty injection' during the financial crisi…

> Typically a bank can get interest free money and plow that into interest baring bonds backed by the government. They then get is free profit off the spread, this was a common back door method of 'liquidty injection' during the financial crisis. Liquidity injection, literally a euphemism for giving away money, and who gets the money? Those closest to the federal spigot, and what happens when you have more money chasing fewer resources? Inflation.

Right, we noticed how high inflation was in 2008-9.

Wait...

> I'm truly sick of people who think they have economic knowledge try to explain away the real experience of the vast majority of people, such people and such experts are really just the well paid propagandists of the rich and powerful.

Sorry, not paid at all. I just think your interpretation of events does not conform to reality, and I happily say so for free.

Re: US Digital Currency

#130

Post by AnimalMuppet »

kenpomeroy wrote: post #126
gwbas1c wrote: post #10

I think we'll get viable cryptocurrencies when the people designing them understand the basic and well-known economics of how money works; AND, when basic scalability problems are solved. It's well-known that deflationary currencies do not work. That is a severe problem that must be solved before cryptocurrency is viable. Limiting the total number of coins means that the currency is deflationary. Furthermore, our cur…

> It's well-known that deflationary currencies do not work. This is laughable. Your definition of "work" includes a presumption that we all want the government to control and manipulate the economy without regard for the interests of the individual. Ask any individual citizen whether they would prefer that their savings increased in value or decreased in value, and I suspect they'll have a different answer as to whet…

Sure, if you change the question you can get some people to change the answer. But if you're going to be fair, be sure to also ask what they want to happen to the loans they owe money on.
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