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Comment by matheusmoreira | Hacker News Reader

USD is backed by nothing. This isn't some random statement, it literally says so on the US treasury website.

https://www.treasury.gov/resource-center/faqs/Currency/Pages...

> Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything

Fundamentally it's not really any better than cryptocurrencies. We can't easily transact with cryptocurrencies due to cultural reasons. We have coins right now that can be used to transact with complete privacy. People don't do it because culture is slow to change.

Worst case for cryptocurrencies is the whole Tether thing implodes. Not sure it ever will but hey, if the US government will bail out banks when they screw everything up, why not Tether as well?

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You cannot pay US taxes with anything other than US dollars.

No matter what you have - the Mona Lisa, gold bars, the hope diamond - they will not accept it. You must sell it to buy dollars.

That is not a coincidence - it is the entire point … and it means there will always be buyers for dollars and they will always have value.

If you want to use a decentralized finance app on ethereum, must pay transaction fees in ETH. That seems like the same level of backing to me

Yes but I don't have to use a defi on ETH or even use ETH at all. I can ignore ETH.

You can't ignore the IRS - you will have to pay taxes. Those taxes must be paid in US dollars.

> dollars [...] will always have value

The US dollar has lost

- ~30% of its value in the last 10 years

- ~84% of its value in the last 50 years

- ~97% of its value since 1900

(Value here refers to purchasing power)

Reason for this is that the US dollar is continually being inflated by the US government, precisely because it has no robust backing.

I never said the USD didn't have value. I said the value of the USD is not backed by anything. The government and banks are free to inflate the USD as much as they want. It's like an unconditional tax on everyone.

Like all currencies before it, its value will diminish over time. When the US ceases to exist, its value will finally become zero. Precisely because tax payments were the only thing keeping it relevant.

USD is backed by the U.S. military force, via a slippery slope: you can only pay taxes in USD, and if the taxes you owe are large enough and you refuse to pay, the U.S. government will send increasingly larger forces to claim those taxes.

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