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Comment by kaliali | Hacker News Reader

Pick one:

Hyperinflation, seizure of citizen assets, stagnant/declining business growth, or cryptocurrency

Actually the Fed is well positioned to deal with a drop in demand for USD: it can make trillions of dollars disappear by adjusting its balance sheet.

The recent money creation has given them a lot of flexibility going forward. They now have a huge reserve that can be used to fight inflation without having to raise interest rates sharply.

If adding trillions of dollars in reserves (QE) are not inflationary because they don't act in the real economy, taking that trillions of dollars of reserves of the system is not going to be deflationary neither.

Yes, all other things being equal, but that's the point isn't it? QE in a deflationary environment and QT in an inflationary one.

QE was very much inflationary and cancelled out the deflationary environment. QT will do the same thing in the other direction.

QE per se is not inflationary, the only thing that does is to increase the number of reserves in the system reducing the interest rate (cheaper lending) but that doesn't have really effect if nobody is borrowing.

Fiscal policy is the level that you want to use for increasing/decreasing inflation. Somebody have to spend more in the economy if you want to see inflation.

Cryptocurrency might not be seizable, but it's also not spendable if the gov says so.

Just try bartering for something with cocaine to see what I mean.

I know what you're saying, but that's not a great example. In the right crowd, cocaine is very fungible. So to your point, if gov makes crypto illegal will it still be difficult to use in black markets? Idk

Can you buy a house with cocaine? A car? Stuff from amazon?

What if the person you sell cocaine to for dollars to spend on Amazon reports you?

What if you get an IRS audit, how do you justify the funds used to buy the house?

Yes, you'll be able to use crypto on black markets, but that is hardly covering all your needs.

It is already legal to buy a house with Bitcoin and there are several on the market sold with Bitcoin. Unless you're snorting some right now, I'm not sure what cocaine has to do with it.

>Can you buy a house with cocaine? A car? Stuff from amazon?

A drug dealer certainly could.

Government can't stop people from spending money and moving somewhere they can use cryptocurrency.

Try using a deflationary currency for daily exchanges and see how it works out. Coins issued on top of a smart contract blockchain are a different story because they can be inflationary. The way it's goin, Ether will soon be just for gas. Crypto's real strength might just be the fact that we can issue tokens on chains that follow either a fixed inflation or adjusted for growth, essentially achieving what modern economic theory recommends, bur backed by code and thus not affected by corruption.

I don't see why we can't have any combination of those

Oh, just be sure the "markets and policymakers are prepared for such a transition". /s

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