The Future of Money and Historical Perspective

Quote:

---

Originally Posted by Xmac

There is a substantial difference between loans in which valid consideration is exchanged and loans in which money itself is created.

---

The school (the buyer) is getting a loan from, horrors, a bank. A fairly large one even. That bank engages in fractional reserve banking, and is connected to...wait for it...the Federal Reserve system.

So I'm kind of thinking that there aren't baskets of smoked clams, or racks of repurposed graphics GPUs senselessly wasting electricity, backing the funds.

Quote:

---

Originally Posted by bae

The school (the buyer) is getting a loan from, horrors, a bank. A fairly large one even. That bank engages in fractional reserve banking, and is connected to...wait for it...the Federal Reserve system.

---

Incidentally, I'm as libertarian, free market as they come. It'd be nice to have one...a free market that is.

Quote:

---

So I'm kind of thinking that there aren't baskets of smoked clams, or racks of repurposed graphics GPUs senselessly wasting electricity, backing the funds.

---

Right, there's only one thing backing them...wait for it...belief

See how long THAT holds up as a store of value.



https://www.youtube.com/watch?v=afWqKcqntfs

Quote:

---

Originally Posted by Xmac

Right, there's only one thing backing them...wait for it...belief

---

I have this bill in my wallet...

https://lh5.googleusercontent.com/-i...Awesomized.jpg

I have living relatives who went through this:

http://blogs.telegraph.co.uk/finance...r-republic.jpg

And yet I'm accepting payment from the school in US dollars, not bitcoin... Dollars which I will likely put into a bank briefly, before reinvesting in Something Else. Horror.

Quote:

---

Originally Posted by bae

I have this bill in my wallet...

https://lh5.googleusercontent.com/-i...Awesomized.jpg

I have living relatives who went through this:

http://blogs.telegraph.co.uk/finance...r-republic.jpg

And yet I'm accepting payment from the school in US dollars, not bitcoin...

---

Not yet. You'll get your chance.

Quote:

---

Dollars which I will likely put into a bank briefly, before reinvesting in Something Else. Horror.

---

Good for you. It takes smart investing to stay ahead of a Ponzi scheme.

This is about the future of money, not old spending habits.

I don't understand how Bitcoin is superior to dollars. Neither has intristic value, both are only worth what someone will trade for them. The big difference is the dollar has the backing of the U.S. government at this time,that has a substantial military at its disposal.

Quote:

---

Originally Posted by Xmac

In the U.S., where vast wealth is made available to large corporations who have track records of stripping the earth of resources, there would no longer be loan creation from the top down, which is how it is made available now (e.g. from a Central bank to Citi to Shell), and no/less political cover via lobbyists who influence laws favoring such. This would create a level playing field for the competition: companies that offer sustainable energy and use renewable resources.

In Germany, and in other European countries, sustainable energy is flourishing. Oil companies here have a tight hold on policy and monopolize energy. In fact, they have so much control even before lower gas prices, shale and fracking companies were already losing money, i.e. for every dollar made on oil extraction, they spent 1.30, unsustainable financially and environmentally. But, they've been able to continue with financing through junk bonds, and heavy profiteering especially when oil was above $100 a barrel.

---

The reason renewable energy is big in Germany is because they have an overly generous government subsidy, the feed in tarriff system, that promotes it. And you picked an odd example-- the German economy is very reliant on financing from big banks.

Quote:

---

Originally Posted by dmc

I don't understand how Bitcoin is superior to dollars. Neither has intristic value, both are only worth what someone will trade for them. The big difference is the dollar has the backing of the U.S. government at this time,that has a substantial military at its disposal.

---

It's superiority is in its potential, velocity, open ledger and advanced security.

Presently, the military can attack countries that openly stop using the dollar. It is ineffective, however, for stopping individuals and companies from using Bitcoin, assuming the companies have state of the art security.

Silk Road, an underground website that was known for selling and buying anything, was shut down by government authorities and in just a few months, Silk Road 2.0 was launched. Then, that was shut down and 3.0 was up in a day...or two?

But that's not the end of it. Open Bazaar will make any interference impossible because it is an open source market place, which, being de-centralized makes it impossible to shut down.

So, the military won't play much of a role, if any, in enforcing the dollar or stopping Bitcoin.

Quote:

---

Originally Posted by Xmac

Presently, the military can attack countries that openly stop using the dollar.

---

Say what?

Quote:

---

Originally Posted by Yossarian

Say what?

---

My point is that they have the capacity to effect entities like countries and governments, not individuals.

If we had a stable amount of currency it probably wouldn't matter. As the economy grew the value of the currency would rise over time. Savers would be rewarded for saving, or if they wanted to take a risk to receive higher returns beyond the increasing value of the currency they could loan it to someone at interest. Banks that wanted deposits in order to be able to make loans would have to show themselves to be reasonably skilled at underwriting the risk of loans. Only viable projects would be able to receive funding. People wanting to borrow for riskier projects, like fracking enterprises that succeed or fail based on the whims of oil prices, would have to pay higher rates of interest. Instead we're in a situation currently where frackers were able to borrow money at only slightly higher rates than treasuries pay which, if oil prices remain low, is going to prove to have been foolishness that was encouraged by poor federal reserve policy. The soviet union proved that central planning is not an especially effective way of running an economy. I'll never understand why anyone thinks that a bunch of people at the federal reserve can do any better.