> in the future people hoard currency
People hoard(ed) currency in the past and present as well
People hoard(ed) currency in the past and present as well
So now we have 0.01% interest 'savings' accounts! They are just as liquid as our checking accounts.
The implications are big: with the current trend of concentrating wealth to only a small fraction of the population, at least all that money is not 'gone'. Even though the rich probably don't pay much taxes over it, their banks will invest it in other companies. If this bitcoin hoarding ever becomes a trend, the consequences for the economy will be disastrous.
What's not clear to me: is this just the keys stored underground and clients have access? or is this "cold storage"?
I'd speculate that more than 7% of the world's gold is locked up in bunkers, where it can be accounted for and borrowed against.
Nobody is shocked to know that gold is stored in vaults. Nobody is shouting that the folks buying overpriced coins from stupid mints are going to decimate the world economy with their irresponsible hoarding.
We're all just totally comfortable that, yeah... in a situation where a-bombs start dropping, gold would probably be a functional store of value.
But they'll want a bunch of a heavy yellow metal? At least the small piece of steel is easier to carry around.
These bitcoins were bought with cash, which is now sitting in the sellers "savings" account. The dollars did not disappear in thin air.
The important ideas of Keynes in a nutshell:
* Monetary velocity: wealth is a verb, not a noun. The wealth of nations is measured in their rate of transactions, not how much cash or idle assets they are hoarding.
* Idle vs. productive investment: if currency is deflationary people will store currency, a non-productive investment. If currency is inflationary people will invest it in productive activities.
I don't agree absolutely 100% with these, but I think Keynes was at least onto something especially with the first. The problem with the first is that velocity also includes transactions that don't actually do anything or that even "create" negative value. Gambling increases monetary velocity but doesn't accomplish anything and may actually destroy value. A real value-centric velocity statistic is impossible because value is a biological/humanistic concept and is non-computable. The main problem with the second is that if people are pessimistic about investments they will still hoard, but using things like real estate and gold. Another problem with the second point is that over-using this strategy to drive investment creates bubbles, as we have seen.
Finally I must point out that Keynes gets a ton of flak for stuff he did not advocate, like insane levels of public and private debt. Keynes would have been shocked and horrified at the levels of debt in our current system, and in fact his whole counter-cyclic government spending strategy was designed to prevent this.
Blame politicians and banks for the debt problem, not Keynes. Politicians invoke Keynes when they want to ratchet up spending during downturns but then they conveniently forget the other part-- namely that Keynes also advocated reducing government spending and repaying debt proportionally during times of abundance. Keynes basically argued that government could be used as ballast against economic oscillation.
Would you concede that the economic policies rooted in Keynes's ideas created an environment that allowed for the snowballing issues we have?
The issue that isn't present in your comment is top-down imposed order vs. bottom-up emergent order. To me, the former is degenerative, while the latter is sustainable.