Bitcoin will only be "sound money" when I can pay my taxes in it. Or at least pay for my oil change. Sure it's artificially limited in quantity. Great! Doesn't make it money. It's a commodity like any other.
Sure, bitcoin maximalists love to point out that if you bought it a year ago, it's up XXX%. But what if I bought near its high value? Not so good a proposition then.
Do you not notice what’s been happening to it at an accelerated pace over the last 30 years?
I’m not arguing for bitcoin either way. But I implore you to take a hard look at your definition of real value in a system with inherent inflation that forces you to speculate in order to preserve any “real value.”
This ^^^
Right now, if you're willing to buy in decent quantity you can still get 90% constitutional silver at only $28.64/$1 face value.
Wow, also this!
Say inflation is 8.5%, and you're holding an ounce of gold, then that gold raises by 8.5% in kind, you are still losing value as now you have to pay taxes on the 8.5% gained even though you didn't really gain anything.
Gold is volatile in real terms [1]. If inflation is 8.5%, your gold might be worth 10% more, 100% more or 90% less.
[1] https://goldprice.org/inflation-adjusted-gold-price.html
If you had some perfect asset (not gold since the volatility distracts you) that increased in dollars exactly as much as inflation, then you would still lose value to taxation even though you only gained as much as inflation.
In the real world, yes, no perfect asset like that exists, so it's worse than that. You have to risk your earned value to keep your earned value over time.
TIPs [1] come damn close. The interest is subject to federal tax, but you're still coming out ahead.
[1] https://www.treasurydirect.gov/instit/annceresult/annceresul...
TBH I don't know too much about them, but from what I'm seeing they're something like 1-2% interest. Inflation is > 8% right now per the government's own numbers
https://www.bankrate.com/rates/interest-rates/treasury/
Am I mistaken? If so, I'd love to find a way to get guaranteed inflation beating returns.
That's a real yield. TIPs "adjust in price (principal amount) in order to maintain their real value" when inflation rises [1].
So if you buy a TIP for 100 that pays 2%, and inflation is 8%, the face value is adjusted to 108 and you get a 2.16 coupon. (Super simplified, to the point of being technically incorrect, but framework-wise fine.)
Why doesn't this happen? Two reasons, people have loss aversion so they prefer being lied to through the money illusion. They get to blame you when the truth is that they are at fault. If they preferred taking the loss they wouldn't have to find a scapegoat. The other reason is that inflation has an uneven impact on the economy. Some gain and some lose and many people want to be winners or at least for there to be the possibility of winning, even if it is a detriment to society overall.
Cash encompasses physical notes, bank deposits and Treasuries. On one end, we have a form optimized for transacting. On the other, for transporting value over time [1].
Bitcoin is less efficient than Visa or Mastercard. It's more volatile than a Treasury.
It always feels strange talking to people for whom the hoard of cash is the important bit. For many people it would be far more useful to stabilize house prices - which are affected by a completely different set of factors.
Today you get a loan (if you can) to start a business.
It used to be you saved to start a business. But today savings is literally penalized.
This debt based system makes you depend upon it. I wouldn't need a home loan (or at least not such a large one) if the government didn't subsidize loans and cause inflation.
You are mixing up money and land. Those are completely different topics. You need a land value tax for land. Your monthly payments are going to be limited by your salary. A higher interest rate means the bank takes a bigger cut. You're spending the same amount of money either way. A higher income would help you more.
>It used to be you saved to start a business. But today savings is literally penalized.
You are saying this, while savings are at an all time high. The money supply is growing significantly faster than inflation. If anything, we are pandering to savers way too much. What people don't seem to understand is that the rich save way way more than anyone else so increasing overall savings doesn't matter for the vast majority of people.
Also, let me tell you something. Let's say you visit your family and your parents make you food. Would it be reasonable to tell them that you want to make your own food? It makes no sense, your parents already made food. Just take it. Don't pile up more food that nobody wants.
It's the same with money. The rich have saved such an incredible amount of money, that there is literally no point in saving your own money.
When?
While we've just hit an 8% inflation spike that may not persist, the past 20 or so years have been uniquely low inflation.
Please describe how loans are "subsidized", other than various countries' first-time-buyer schemes? Is your explanation US-specific?
Even pensioners are still dependent on a young population that is earning/producing.
Wrong, as soon as governments needed to drop the gold standard they did it. Why wouldn't they do the same with the bitcoin standard?
This is such a weird belief. Is the claim that prior to the 20th century there were no wars of conquest or colonies? No kings and countries running up ruinous debt?
What surprises me is that people think that the problem is evil/incompetent governments mismanaging the currency. Wouldn't it be more productive to think of reasons why such mismanagement is inevitable instead of just sweeping it under the rug? Greece did austerity and it didn't work. If Greece hadn't done austerity, it could have gotten a few more years of 5% growth. Austerity ended up increasing indebtedness instead of reducing it by massively reducing the GDP of Greece.
It's only rational to "mismanage" your economy away from such a financial crisis. The real question should be, why is growth required every single year? Why can't we just stand still for a year and then pick up growth again?
In my opinion it is quite simple. Savings and debts must equal in the global economy. So if the government introduces a debt brake, the private sector must reduce the amount of savings it holds. If those savings are held as cash, the government can't do anything about it. It can't just recall the bank notes. So debt can't go down. If it does anyway, then the money that is currency circulating, moving around from person to person is saved as cash until the amount of money that is actively circulating shrinks so much that daily transactions can't be made. That is what recessions are. A sudden malfunction in the medium of exchange function of money.
To me you're saying nothing's money unless the government says it is.
In my community there's a whole ecosystem of people trading goods and services in Bitcoin, silver, and Monero.
Governments have always had the ability to dictate who is a citizen and who isn't. Someone born in Angola is not protected by or subject to the US Constitution.
> To me your saying nothing's money unless the government says it is.
Now you're learning! Granted in a democracy the people have a say in what governments do, so if you convince enough people that using bitcoin as a medium of exchange is a good idea then it may eventually be so. Good luck!
Here's what happens right now if you try to pay your taxes in Bitcoin and refuse to convert to dollars:
1. The IRS warns you and charges you back-taxes for the delay
2. If you still refuse to pay after a certain period of time, they audit you and garnish any accounts they have access to until your taxes/back taxes are paid
3. If you have no IRS-accessible accounts, men with guns show up and seize your property, including but not limited to your Bitcoin, to make up the difference.
And for extra points you may get charged with Tax Evasion, which can send you to jail. This entire process may take decades, but it happens.
Sounds like pretty crappy money to me if that's the result of trying to use it at any significant scale.
> In my community there's a whole ecosystem of people trading goods and services in Bitcoin, silver, and Monero.
Great. You and I could also arrange to barter bars of extruded aluminum for goods and services. That doesn't make extruded aluminum money, or at least not "sound money". Note however that in the US those transactions are taxed just like any other, with the amount of tax determined by their value IN DOLLARS. If you're not reporting those transactions you're theoretically subject to the previously mentioned series of events.
Now the IRS can't see literally everything, so you can get away with it to a point. But if Bitcoin/crypto eventually reached the scale where a significant number of economic transactions are transacted in it, one of two things will happen:
1. Enough voters/lobbyists will be convinced of its viability that political changes are made to accept it as currency (unlikely, given the traits of bitcoin)
2. An epic tax-evasion crackdown that will make the conviction of Al Capone look like a Cub Scout picnic.
One can dream
> 2. An epic tax-evasion crackdown that will make the conviction of Al Capone look like a Cub Scout picnic.
Monero FTW.
Your response to governments dictating who's a person:
> Governments have always had the ability to dictate who is a citizen and who isn't.
You're saying a non-citizen isn't a person? I find all your viewpoints defeatist. Maybe that or you still side with governments worldwide? If so, fine, but I don't.
> Granted in a democracy the people have a say in what governments do
Do they though? In America, from a purely signals and systems perspective, my choice comes down to red or blue (1 or 0) on a number of representatives and measures I do get to vote on--that's ignoring possibly corrupt voting.
In the myriad of complicated laws that are passed, and even wars that are fought, I don't get more say than a binary choice on abstractions (representatives)? In what way is that government ruled by the people!?
Monero makes things more difficult, not impossible. If the government decides to outlaw Monero then by definition it will only be used by outlaws, and so long as the majority of the population doesn't see trading in Monero as worth the risk, it will remain limited in scope.
> You're saying a non-citizen isn't a person? I find all your viewpoints defeatist. Maybe that or you still side with governments worldwide? If so, fine, but I don't.
All right, you define what a "person" is and how it's relevant to this discussion. For all practical matters a random person in Angola might as well not exist to the US government, unless the US government decides they're important enough to warrant attention.
I fail to see how the government not being able to deny my being a biological human is relevant here. And actually theoretically they could deny it and refuse to treat me as a person, it just wouldn't change the laws of physics. The Khmer Rouge in Cambodia were notorious for telling people they couldn't be starving because "we're all equal, so if we're not all starving how can you be starving?"
I also wouldn't call my views "defeatist", I'm just presenting uncomfortable truths that I've yet to hear a coherent strategy for tackling. Which can be summed up as: "How do you plan to handle the men with guns, and the authority to use them, who don't agree with you?"
> Do they though? In America, from a purely signals and systems perspective, my choice comes down to red or blue (1 or 0) on a number of representatives and measures I do get to vote on--that's ignoring possibly corrupt voting.
> In the myriad of complicated laws that are passed, and even wars that are fought, I don't get more say than a binary choice on abstractions (representatives)? In what way is that government ruled by the people!?
I'm not saying the system is not corrupt or that it's perfectly representative. No system is either. But changes do generally follow the will of the populace in the long term on issues that affect a given population as a whole. Just look at Marijuana legalization, or the fact that we did withdraw (albeit with criminal incompetence) from Afghanistan. Now whether those changes are objectively positive or negative is another story, the whole process is full of half-measures, short-term thinking, corruption and unsatisfying messes. And citizens don't have perfect power as they would in a direct democracy (for good reason, lots of issues there). But we've yet to figure out anything better than some variety of democracy, and I don't see how crypto solves any of these problems unless you think the government has already collapsed beyond the ability to enforce laws on crypto users (it hasn't, at least in the US).
You can either try to reform the system or replace it. Either way you need a solid plan for what comes after that accounts for the known variables, and I've yet to hear a "crypto will replace the dollar" argument that does so, from even a cursory reading of history.
I appreciate your well thought out response. Thanks for the discourse.
> All right, you define what a "person"
I was only originally using this to say that the government can't tell me what money is in the same way it can't say I'm not a person.
That said, you're correct the government will likely try to destroy private currency that is out of their control.
> Either way you need a solid plan for what comes after that accounts for the known variables
I agree. This is where I spend my time in the crypto-sphere.
Here's a fun resource on agorism:
https://www.libertarianism.org/columns/black-market-activism...
Maybe it's a bit over optimistic. Either way, crypto and agorism is my current plan, and you're probably right in that I should shore up this plan.
Bitcoin was actually the answer to the government having shut down all attempts at alternative digital money prior, but for sure it's not perfect.
Cheers,
reedjosh