Comment by g5095 | Hacker News Reader

Comment by g5095 | Hacker News Reader

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I work for one of the most well known, fully decentralised, opensource crypto currencies. I'm therefore quite familiar with our objectives (to take over the world, mwhaha) .. but no seriously:

1. Govts can (and should) regulate -exchanges- who are setting the exchange rate at the same time as offering to be the bank for poorly educated crypto holders, so they can use folks money to buy low and sell high.

2. Govts (already) make it a legal obligation to declare and pay tax, crypto is no different than dealing in cash.

People who break the laws of their country should be tried under those laws, ie: tax evasion.. this isn't new to crypto.

What the RBI are saying is they object to crypto removing their ability to.. (see point 1.) control the supply. When they talk about managing the economy, what they mean is 'their ability to print money'. Furthermore they argue their ability to make up the rules as they go is enshrined and justified by the notion that 'that's how it's always been done'.. well welcome to technological advancement? Crypto is FAR from perfect right now but it is based on a premise that a truly fair and un-cheatable system is possible, and that has govts terrified.

I don't care if governments print money. Contrary to popular wisdom, 2-3% inflation per year is intended by central banks, because to have less that that reduces investment in venture capital and reduces the incentive to start buisnesses/do productive things with your money.

They don't print money to "cheat" or because they want more money, that would be stupid - the overall amount minted in most countries is barely above the replacement rate for currency lost/destroyed/missing. If they were doing it to profit, the amount printed is just a drop in the ocean comapred to the amount made through tax, so it would be a stupid idea.

Governments control the money supply specifically to control the inflation rate, which is a lever they can move to respond to market conditions, keeping it low when the economy is growing, and raising it during recessions to incentivise investment. When governments can't do that, recessions hit MUCH harder, see: greece, portugal, ireland, and many other countries in the eurozone who weren't able to use monetary policy and were hit by devastating recessions as a result.

In any case, you "work" for an open source currency? I presume some money is earmarked from the transaction cost to pay developers?

Seems like they aren’t doing a very good job since inflation is currently 3-4x the target.

Do you think thats because the central bank maliciously printed a couple million dollars (hilariously low compared to the trillions of dollars the government handles) or because the world went through a pandemic, a recession and one of the largest demographic changes in the last 50 years?

Hint: across all countries in europe, the average inflation rate was also well above target.

I think they printed way too much money as it is obvious by your own benchmark. Another data point that shows that stimulus was too high is that people straight up stop working (check the subscriber growth in r/antiwork for example). I don’t get your point about “a couple million dollars”, the stimulus was in the order of 10 trillion dollars

What do you mean "as is obvious by my benchmark"? The "stimulus" is unrelated to the central bank's printing. In 2020, the fed printed 146 billion dollars (a particularly low year!). In 2021, they printed between 340 billion and 430 billion(unsure why the number is uncertain still but there you go). In 2022, they estimate they will print between 310-360 billion dollars worth of currency. Thats in an entire year.

You may note this number is less than 4% of the 10 trillion earmarked for the stimulus, and was raised primarily to increase inflation intentionally during the coronavirus to stimulate investment in the economy. It's also less than it has been at many points in the past.

None of these numbers are unusual or unprecedented. In 2014, the fed printed $300 billion dollars worth of notes. In 2013, they printed 472 billion.

What is done with the money that is printed? It is not part of the federal government's spending. It is used to buy bonds and other securities from banks as part of quantitive easing. The federal reserve is not instructed by the government. Board members are appointed by congress yes, but keep their jobs for 14 years. Right now, the board consists of 3 republicans and 1 democrat. The chair is a republican.

You're welcome to take a look at the Federal reserve currency print order archive here: https://www.federalreserve.gov/paymentsystems/currency_print...

>because to have less that that reduces investment in venture capital and reduces the incentive to start buisnesses/do productive things with your money.

Seems like we came up with this solution after creating the problem.

Dude…

Venezuela, for example?

Love it when this gets dragged out. Nevermind the hundreds(?) of other countries that have nearly a century of mostly-stable economic activity under non-gold-backed fiat currency.

This is like saying that all pilots are actually trying to crash airplanes because some airplanes have crashed in the past.

No the point is that there are major losers in the current paradigm.

Here are 19 other countries with double-digit inflation right now:

https://www.statista.com/statistics/268225/countries-with-th...

My speculation is that, on a long enough timeframe, every country eventually becomes a loser when they are using government-controlled currencies. Corruption is inevitable..

Literally the rest of the earth manages to get along just fine. If you're suggesting a bank controlled by a single idiot centralised dictator has the potential to fail, I can point to many thousands of rug pulls on the supposedly "immune" blockchain.

> Literally the rest of the earth manages to get along just fine.

This is absolute bullshit.

Literally your little bubble in your mind manages to get along just fine.

?

The economy

Exists.

It's right there - I can go to the store and buy things with my money. Don't be ridiculous.

https://en.m.wikipedia.org/wiki/List_of_countries_by_inflati...

https://www.statista.com/statistics/268225/countries-with-th...

Damn pesky facts. Always messing up the way you Feel!

Nothing in those links contradicts what I'm saying.

Unfortunately, I suspect this will continue. There is undoubtedly a place for Crypto, but I would advise those who believe it will replace 'fiat' to take a course in economics or learn the role of the federal reserve and why it was created in the US.

Political views aside, many believe economic policy to be a key pillar of a government and anything threatening this power will be squashed at all costs in countries where this pillar exists.

Where this pillar exists being the key here, which is why we are seeing national adoption in countries that lack it. Despite this, an outright ban is indeed lazy and removes a country from the global Crypto economy.

Just take a walk in one of the popular neighborhoods in Istanbul and ask who Jerome Powell is to one of the random people there. They will tell you. Federal Reserve was created for some reason in the past. But, I think we might need something better now.

My argument is not premised on if Crypto creates a superior monetary system or not, but rather any government seeking to protect its most guarded powers will squash it.

I think RBI governor did not consider many scenarios, he says "ban is unlikely to be effective is a superficial argument", i believe banning would be ineffective because that will at any rate see a flight of untraceable capital to safer havens. Those who have made impressive gains wont sit there hoping to get crashed and burnt. If the government is after taxes they have to legalize it, if they are after power to arbitrarily exercise monetary easing well tough luck technology trumps bad actors and arbitrary systems.

It's not just about controlling the supply. India has foreign exchange regulations to keep the country's economy stable. This includes regulating both the inflow (Investments from foreign firms) and the outflow (remittances and more) of foreign exchange.

Crypto (by design) bypasses all these controls. Even large crypto exchanges cannot abide by them: https://www.theblockcrypto.com/post/108178/india-law-enforce...

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