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One point of comparison that's a hell of a point in favor of fiat currencies, is the that because fiat is just based on a really nebulous 'general consensus' rather than any sort of 'hard store of value', the same thing that's a bogeyman (of authorities deciding to cancel out all of your assets by executive decision) can work in reverse.

Most of our forms of fraud protection, like identity theft, bank robbery, etc, basically boil down to the government looking at you and going "boy, that's not fair what happened to you. Even though the closest thing we have to a hard store of value's been taken from you, we're just going to literally rewrite the books and set you back to the state where you had your money." It literally treats storage of money like a database restore.

The beauty of that is they can do that without losing anything (besides slightly inflating the system) - with hard currency (whether gold or BTC), they have to actually deplete their reserve of stored value.

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The most extreme example of this historically, was the national debt crisis britain had during the south sea bubble, where most of the country got wrapped up in a giant stock-buying scheme for a company that ended up having no value. This ponzi-scheme crashed, and it briefly looked like something like half the country was going to go bankrupt.

What was amazing about it was that the government realized they had absolute executive power, and just forcibly reset the economy. They just decreed that all of the debts related to it were cancelled, and dictated that individual assets which had been collateral for the debt (like people's houses) had to be returned to them. Many instances of "stores of currency value" got wiped out, but the important thing the government provided was a floor - you might have all the money you earned on south sea speculation deleted, but they guaranteed the average person didn't end up in poverty.

Thank you for sharing this. I think many people may not know/understand this aspect /feature of our existing banking system and the role of government.

Or they deliberately try to ignore the entire safety mechanism because it goes against their narrative that government control is bad, it collides with this libertarian spiel. All to keep the grift going.

When not understanding or misunderstanding things makes you more money (let’s you recruit new ‘suckers’) a honest discussion will start to become impossible.

It is really telling that the people who complain most bitterly about fiat currency fall into a few different camps, most of which want to destroy any kind of government social safety net. On the one hand we have the right-libertarians / "anarcho"-capitalists promoting bitcoin etc. On the other hand, elements of the wacko/fringe right in the US have been attacking "fiat" currency and Keynesian economics for decades, loudly calling for a return to the gold standard. By wacko right, I mean organizations like the John Birch Society, Liberty Lobby, and similar, and ideological descendants thereof.

These seemingly disparate camps -- fringe right and "anarcho"-capitalist -- share a fundamentally anti-democratic philosophy. For example, one of the seminal texts of "anarcho"-capitalism is Hans-Hermann Hoppe's _Democracy: the God that Failed_. If you look through my posting history, you'll find a quote from Tim May, an "anarcho"-capitalist and leader of the cypherpunk movement, wherein his anti-democratic sensibilities are on full display.

I'll end with a quote:

Begin quote. More than that; we can tell them that they will search the pages of history in vain to find a single instance where the common people of any land have ever declared themselves in favor of the gold standard. They can find where the holders of fixed investments have declared for a gold standard, but not where the masses have. End quote, from William Jennings Bryan's "Cross of Gold" speech.

I'm totally in favor of a cryptocurrency ban; we will not be crucified on a cross of bitcoin.

Thank you.

Your observation that cryptocurrencies are also embraced for nefarious - democracy undermining - purposes seems an additional aspect that justify a ban.

It’s just such a shit show, I hope the music stops soon, in order for a lot of people to lose their ‘faith’ in this ‘currency’. There is a finite supply of suckers.

>But I don't think I find it very convincing, or at least it's too exaggerated. Fighter jets and nukes primarily protect physical property and institutions, not cash.

Typically, the concept of "military force" like fighter jets, aircraft carriers, etc in criticism about fiat currency (especially $USD) is about connecting the dots to explain the strength of that currency.

E.g., USA gets Saudi Arabia to sell oil denominated in $USD and in exchange, Saudi Arabia monarchy gets "protection" from invasion by enemies like Iraq. This is one concept of the "petrodollar". This military protection requires fighter jets, etc. This makes $USD valuable to acquire by other foreign countries that want to buy oil. In contrast, Bitcoin doesn't need the expense of the military to decree that it's valuable; people just voluntarily agree to exchange it for value. (E.g. exchange 10000 bitcoins for 2 large pizzas.[1])

The (wasted?) energy for defending the $USD is more diffused among different institutions so it's harder to measure -- and thus harder to criticize. In any case, energy usage also includes the Treasury Dept's Secret Service anti-counterfeiting force running around the world to stop fake currency. The Bureau of Engraving that prints the sheets of paper currency. US Mint stamping coins. All the above require enormous energy expenditure as well. Then you have the energy costs of the Fed Reserve, member banks, etc all doing settlement with each other and the associated security systems to protect from hacking. Bitcoin doesn't need any of that. Does bitcoin use more or less energy than the collective sum of energy to maintain integrity of $USD? I have no idea. What's the best complete accounting of the carbon footprint for $USD?

[1] https://bitcointalk.org/index.php?topic=137.0

Not just denominated, settled. They literally want USD for their oil instead of SAR (riyal). (Sure, SAR is pegged to USD.)

Here's a very thought provoking article about the "dollar system": https://phenomenalworld.org/analysis/the-class-politics-of-t...

Why would they want riyal for their oil? That would cause massive price action and destabilize their currency causing wild swings in the value of the riyal depending on the demand for oil. The last thing in the world an export economy wants is a currency that becomes stupidly expensive when people want it and worthless when people don’t. Settling in dollars allows for a stable riyal.

The riyal is pegged to the dollar.

But the point is that if you want the "maximum wealth" for your export stuff and you export a lot you obviously want to settle in your domestic currency, since that would lead to you being able to stock up on enormous amounts of foreign currency reserves. Just like China did.

Because if there's demand your your currency you can just print it.

Sure, this way they are stocking up on USD, but they can't print USD.

The destabilization on the other hand is also "exported" to the US. Eg, when oil demand drops, US Treasury rates increase coupled with the economic downturn, less tax revenue, more volatility, but this increase in uncertainty leads to people flocking to stable investments, which pushes rates back down a bit, plus it seems central banking is inseparably coupled to near-zero rates going forward.

(Of course the US economy is a lot bigger, they were the main buyers of oil anyway, so it made sense to just settle in USD, and initially the extra demand for USD was seen as a good thing, as it helped finance the US public spending via keeping bond yields - interest rates - low.)

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That said, I'm not fully sold on the linked article's arguments.

The "exorbitant privilege"? You mean the exorbitant privilege to create government debt to cancel out a savings glut? I've never understood this argument. I always heard how the USA is "riding" or "abusing" the US to achieve some nefarious goal when from my perspective it was always the inverse.

Since I lacked the necessary knowledge I tried to think about how the effects work from first principles and I always came to the same conclusion. When it helps it does nothing and when it hurts the downsides are grave and a strong economy is necessary to just be able to counteract the effects of the exorbitant burden. This is compared to the misguided idea that the dollar having the global reserve "status" as some benefit that helps the USA.

Global reserve status is basically equivalent to a partial currency union similar to the eurozone. There are two potential effects. Either your currency becomes stronger than the average currency in the currency union or your currency becomes weaker. Germany is "riding" the effect of a weaker euro to export goods and thus creates a savings glut in the nations it is exporting goods to. The reserve situation is that your currency becomes stronger than it should be. You get nations like Greece or Spain that are struggling with debt because additional savings can only exist if there is a debt somewhere to balance savings and investments.

Once I started reading up on the downsides [0] of having your currency be a major global reserve currency it pretty much confirmed everything and it made the situation completely hopeless. There are no good answers here. The hands of the USA are tied and the situation is pretty dire.

The USA obviously has a stronger currency than it would usually have. This means importing products from overseas becomes the obvious choice and domestic consumption is avoided. The weak demand causes unemployment and now you are at the ultimate economic dilemma. Do you create government debt to create investments for the savings glut or do you let people become unemployed so that domestic savings go down to make room for foreign savings? The only choice is to just do endless deficit spending thanks to the "exorbitant privilege". It's not really a choice.

[0] https://carnegieendowment.org/chinafinancialmarkets/56856

It is clear that if you want to be viewed as the demon whose vileness exceeds all other demons you just give everybody who wants something what they want reliably. After that nothing you do will fail to be evil. If you restrict them you are a tyrant. If you don't you enable all evils of the world. If you vanish from the world you destroyed all out of spite.

Whether it is hosting videoes or simply not guarding your currency from export like a jealous dragon.

The US Fed is starting to come around to this viewpoint too, and starting to address the employment mandate a lot more aggressively. I'm absolutely a layman compared to the complexity of the problem, so we shall see how this will work.

I think you can only really fairly compare the energy use to the physical infrastructure of the $USD (and/or other currencies) because the defense of the Petrodollar also defends general energy usage which all industries and organizations benefit from. Oil is used for plastics in medicine, computers, cars, fuel, fertilizer, you name it. The defense of the Petrodollar would be a defense of all of those things. From an energy standpoint can you fairly proportion out what energy is used to defend the $USD by industry or in a more succinct way?

The fact that Nvidia can create chips for GPUs, and Amazon can package them up and deliver them and all your other computer parts to your front door is also subsidized by the Petrodollar. Everything is!

If the U.S. just stopped defending the Petrodollar, it's not like the $USD just goes away or ceases to be valuable. The fighter jets don't disappear or stop being made.

It's also slowly becoming outdated. The U.S. is a net exporter of energy and the shale revolution has made the Middle East just a bit less important.

Anyway - I don't think it's a great exercise to compare Bitcoin energy usage to the "energy usage" of the $USD exactly because it's so difficult to really measure. You also have to think forward a little bit - as cryptocurrencies proliferate more companies will arise around new technologies, custodianship, etc. so when we talk about some abstract number of people in an office now supporting the $USD, we have no idea what the future number of people supporting the cryptocurrency networks will be in the future - it might actually create more jobs and more energy usage.

I see one real advantage to Cryptocurrency: protection against government misuse of monetary policy.

But aside from that, it's still up in the air for me to see how things go. The $USD is a pretty good currency (mostly holds value in the short term, accepted everywhere, highly liquid), but it isn't a phenomenal store of value. All of these fiat currencies and cryptocurrencies are going to be competing in an arena and it's going to be interesting to watch.

As well as protecting against government misuse of monetary policy it can be used to prevent the govt from using monetary policy for effective good. It strips money from being subject to democratic process altogether, which logically will lead to inequality. It's a libertarian/anarchists dream.

I honestly don't understand your comment. You're comparing two completely different things. Bitcoin mining protects the currency.

Meanwhile you talk about the USA securing its access to oil by using a potent "weapon" called the US dollar, delivered by the US military. The dollar isn't what's being protected, what's being protected is the entire economic system of the USA that is dependent on oil. If it was really about the dollar then the USA could protect it within its own borders. The US dollar is already strong enough as it is.

Comparing these completely different things makes no sense. There is no Bitcoin nation.

> The dollar isn't what's being protected, what's being protected is the entire economic system of the USA that is dependent on oil.

The two are inextricably linked. You could not run an economy of this size without a currency to underpin trading value and denominating debt. So defending the strength of the economy is defending the strength of the currency the economy is denominated in.

> Fighter jets and nukes primarily protect physical property and institutions, not cash.

This is basically it. I don't know how bitcoin advocates expect property rights (in fact, any right) to be upheld in the absence of a coercive state. They have become so removed from reality that they don't see the most obvious things.

> This is basically it. I don't know how bitcoin advocates expect property rights (in fact, any right) to be upheld in the absence of a coercive state. They have become so removed from reality that they don't see the most obvious things.

Errr something something blockchain?

Solves what physical property ? Requires trusting a third party. Worse.

The same way that their super-secret-extra-long password protects them from someone with a wrench. It doesn't.

However, it does make money laundering, speculative kiting, and paying for illegal services easier. Those are arguably the opposite or orthogonal to property rights, but they are useful to the those with money and power.

I'm expecting that someday, my defense budget will be part of my Amazon Prime fees.

Do you think that it is only through a coercive State that I can have the right to food or housing? Put another way, do you believe the only way to ensure others have things is by coercion?

I totally admit that a State is needed to ensure safety. There’s always a boogie man. Not sure if that’s true for all rights though. What do you think?

Fear of retaliation probably yes.

To build a factory to perfectly counterfeit US dollar bills costs a few million dollars. It's certainly within technical abilities of Russia or North Korea. The only thing that stops them building such factory is American nukes.

Nukes very much did not prevent North Korea from counterfeiting US dollar bills: http://news.bbc.co.uk/2/hi/programmes/panorama/3819345.stm

The paper dollar still trades on par with electronic dollar, which is the evidence that the breach has not occured.

Exactly. As long as people need land and die when shot, there will be militaries.

It's a reasonable world view. Our currency is backed by "Trust". Trust in what? A system that is reinforced by all of those things, for stability's sake.

> The primary purpose of banks is to lend

This is really not the case anymore in the 21st century, especially with interest rates where they are now.