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Comment by minimax | Hacker News Reader

Sorry steveklabnik, I would have replied sooner but got stuck on a long phone call.

I'm not angry. I thought the post was worthy of a reasonably harsh takedown comment (sidenote: HN loves harsh takedown comments) because of its hubris. "Ho hum. We SF computer guys have got this shit all figured out. Paper currencies are bullshit because x, y, z. Also U.S.A. will bomb you if you don't agree." It's so completely fallacious and it ignores the decades experience that have got us to where we are.

I'm a tech person as I'm sure all of you are, but I think we are doing ourselves a disservice when we show up in other fields as arrogant outsiders proclaiming truth without understanding any of the details. I follow you on twitter and I think you understand this in terms of employment gender and discrimination issues but maybe not so much in terms of macroeconomic topics. That's all.

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It's all good. I enjoy your other comments on HN, i've upvoted many of them. I probably should have been working today rather than writing blog posts, oh well.

I do not think paper currencies are bullshit. I really really hate it when people say 'fiat' as a derogatory term. I also agree that SF techies running into other people's fields is terrible. However, economics is a field that I have actually attempted to educate myself on. This post was written with my 'junior economist' hat on, not my 'software dev' hat.

I think that you undervalue the role of imperialism with regards to the purchasing power of USD, but really, that whole thing is a sidenote anyway.

I still am unclear as to what your actual objection is. My assertion is that Dogecoin is just as legitimate of a currency as every other currency, as long as enough people believe in it as a medium of exchange, and that as long as the BTC <-> USD exchanges hold up, that it provides legitimacy (and liquidity) for all other cryptocurrencies. That's basically it. Oh, and that lack of consumer protection, like the FDIC insurance you mention, will harm people until we take cryptocurrency seriously and regulate it like we do other financial instruments.

I think that you undervalue the role of imperialism with regards to the purchasing power of USD

Point me to a historical example of the US government saying "Use dollars or else!" and I'll change my tune. I think foreigners use dollars because dollars are actually a really great currency relative to the local alternative ... or bartering (3 goats for 1 iPhone sort of thing).

My objection to your argument is that USD is better than alternative cryptocurrencies because the Federal Reserve does a good job of managing the stability of the value of the currency, and that's a social good for everyone. If your latte costs 3 dogecoins today and 6 dogecoins tomorrow you can be like "lol. so latte. much coins." That's funny for you and that's great. But if a bushel of wheat doubles or triples in price overnight because it's priced in some weird volatile currency, people will starve. And that's not funny.

I moved to Chicago recently and I work on the technology behind some of the commodities markets here. I guess that has sort of forced me to think more about these kinds of things. If you are in Chicago hit me up and we can bullshit face to face (over coffee that's probably better than whatever you have in SF. Zing!)

Basically, I agree with Greenspan, before he recanted:

> Without elaborating, he writes, "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil."

http://www.washingtonpost.com/wp-dyn/content/article/2007/09...

Every so often, OPEC threatens to switch over to the Euro...

But really, I don't think modern imperialism works via direct threat. That was the style of the 1700s. You won't find a direct statement to 'use the dollar or else,' you'll just find lots of wars and economic sanctions.

I don't think cryptocurrencies are 'better' than USD. I agree that the Fed is good for basically everyone, or at least, I don't think abolishing the Fed is a good idea. I agree that the volatility of DOGE makes it bad for anything but playing around at this point, and BTC dropping 50% in a day means that it's also nothing more than a speculative commodity at this point.

I've been thinking about this more because I moved here to work for a payments company, so ha! I actually know someone in Chicago who's working in commodities market stuff, IIRC... I always thought I'd live in Chicago before SFO. I'll certainly tweet if I'm ever there, and feel free to go take the blue line to Forest Park and put some flowers on Emma Goldman's grave for me ;) (I bet the coffee is better there, luckily, I don't really have a taste for good coffee, it's all just about the chemicals for me.)

I think you are overlooking some serious changes to the way the Fed regulates the money supply in the last five years. They are printing over 85 billion dollars every month. The stock market is soaring... why? because the government is artificially controlling interest rates which makes the value of your dollars go down fast- so people are forced not to save their money in a bank account but instead put their money "into" the economy- wealthy people are putting it into hard assets, and people that don't have as much are dumping money into the stock market as a hedge that their savings is loosing value every day. The result is a market that looks like it is doing great but is quiet volatile itself.

I agree that we should be very careful to just suddenly start running around yelling "the sky is falling" but I have heard an economist at the Fed (during a banking townhall) say "We are in totally uncharted territory" referring to how they will pull back all of the liquidity they have pumped into the market.

As for your comment about the US government saying "Use US Dollars or else..." that may not be the way that it looks on the surface but the US Government is very heavy handed in how other countries are allowed to control their own currencies, how multilateral trade deals are written in terms that force other countries to give up control over their own monetary policy.

You are correct that individuals around the world views the US dollar as stable and prefer to keep at least some portion of their wealth in US backed treasuries- but I would caution anyone from thinking that this is a foregone conclusion.

The fed uses a few people to try and hit multiple targets all at the same time... they have to deal with a bureaucracy that favors age and longevity, they have political pressures (see the Greenspan article above), and they have to make certain that their decisions keep their institution (coincidentally not a gov't institution but a private company)alive. The Fed is first and foremost a US-centric org. Whereas cryptocurrencies use the global market to find their level- whatever people agree is the price is the price... set number of bitcoins, completely liquid, and can cross borders without blinking... making trade easier than has ever been imagined before.

You can only pay your taxes in Federal Reserve Notes (which are neither Federal, not backed by any reserve, and not notes).

THAT is why the income tax and US fiat currency were put into law at almost exactly the same time. Same as in ancient China and many other empires and countries - people can be forced to use fiat if they go to jail for not paying their taxes. Thus they have to work to get fiat.

Your statement about the Federal Reserve is laughable... I suggest some remedial learning, perhaps Ron Paul, or even just Zerohedge.com.

I don't understand how you could read Steve's post as saying 'we have got this shit figured out' and 'proclaiming truth'. It's just someone's take on (crypto)currency; no reason to get all huffy about mistakes, let alone about disagreements.

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