Here me out. What if it was the only way to defund the US military? Would you be interested then? Why do we waste so much energy building killing machines? Why is there not a daily hackernews thread complaining about the energy consumption of the US military?
Because it’s a necessary to ensure you can buy and sell things when you want to.
If you think the US military or any military will go away because Bitcoin you’re delusional.
> Why is there not a daily hackernews thread complaining about the energy consumption of the US military?
People are willing to pay a high energy cost for safety. Bitcoin doesn’t provide me any safety and it doesn’t have the strongest military in the world claiming it’s worth anything.
If you think Bitcoin will topple governments be prepared for a long future of conflict and casualties. Maybe it will be worth it but I doubt it.
So all in all it’s a massive energy waste thought experiment.
Great, let's just let current trends continue for a few decades and we can live in a world where the most powerful military belongs to China. I'm sure we'll be much safer then.
I know the US military won't go away as long as USD is used as the world's currency. Getting off USD is a prerequisite to ending American imperialism, it's not the only thing that needs to be done by a long shot though.
Why do you think it is a prerequisite? Imperialism can certainly exist without having the reserve currency--consider the world situation on the outbreak of WWI, which was the height of imperialism and yet no country had a reserve currency (everyone being on the gold standard).
Taxes on USD are used to fund the military. I see long term value storage in Bitcoin with operational and privacy focused "cash" like crypto being pegged to BTC as a way to choke the input funds to the US military.
I'm saying it's much harder for the US government to collect taxes from crypto. It's much easier to work with a bank to directly pilfer your account than for them to force people to hand over their private keys. The latter doesn't scale nearly as well as the former.
I had originally figured that you believed that a government would forego its fiscal policies if a monetary crisis ensued, the general assumption for most aficionados of the gold standard (albeit one that is thoroughly disproven by history).
The way the government forces you to make good on your tax obligations is wage garnishment: they tell your employer not to pay you but pay the government instead because you're in arrears. In general, I think you overestimate the willingness of third parties to become criminals for your sake.
Sure, and it's even harder to collect taxes from cash transactions. The thing is that with or without Bitcoin you still need financial institutions, so I'm not sure your tax evasion plan is as brilliant as you think it is.
We can lessen those casualties by working hard to defund the military (which is a multi pronged endeavour).
For instance, I have no problem paying taxes for social services. I have a major ethical problem with my tax dollars being used to fund military action. Bitcoin is not the only piece of the crypto puzzle but if I could keep my assets out of the hands of the US government, I would do it for purely ethical reasons.
Ok, defund the US military now what? China or Russia has a stronger military and guess who is controlling our interests now.
What you’re proposing is that Bitcoin needs a massive shift in thought that overthrows all forms of militarized government. Possible? Maybe but highly unlikely without millions of people dying.
The new Bitcoin power would also need its own military to do this. So we’re back at square one or where we are today.
That is unless you think Bitcoin is also the answer to world peace which seems even more far fetched.
I do see the toppling of the US government having a domino effect on other powerful nations. If the systems are in place to end US imperialism, those same systems can be used by citizens of other oppressive regimes.
I said very clearly at the start that Bitcoin alone will not bring peace. It's one piece of the puzzle to get us off our current government. People are going to die either way, I'm just done using my money to pay for bombs to kill people that have nothing to do with me.
If that was the argument, I would ask in response: if it could do that, why would the combined vested interests of the US military-industrial lot allow Bitcoin to succeed? It’s not beyond the reach of governments to ban unwanted trade, and even though bans are not magic, even a half-arsed enforcement of such a ban is enough to prevent a currency becoming endemic.
> It’s not beyond the reach of governments to ban unwanted trade
Yeah, right, it worked so well for alcohol... It DOES (/s) work so well for drugs in the US right now...
And hey imagine whether it's easier or harder to ban something that doesn't take any physical space in your suitcase and can be transacted with only internet connection.
On the contrary, bitcoin mining operations can be sniffed out by their impossibly outlandish power requirements, like pot growers used to be.
Increasingly, mining operations have to make special arrangements with entire power grids to suck up their energy and basically just burn it in arbitrary calculation. The scale at which this operates, and the increase over time, are both what makes up a lot of the problem, and what makes it impossible to hide.
If you'd prefer a world where people value bitcoin BECAUSE due to its unpopularity and externalities, governments resort to drone striking such operations when discovered, all I can say is: well, that solves the energy wastage issue, as blown-up ASIC farms aren't good at burning energy anymore. Maybe it solves the constant devaluation against energy cost issue, too! But I think you're missing the point and looking at only the end product of the industry.
Mining doesn't have to happen in the same country where you use the coin though.
In order for this scenario to become a reality, many governments would have to collaborate to make mining infeasible. But they would be incentivized to not collaborate so they can instead tax their miners and get the profits for themselves.
I'd actually argue that it was more of a threat to the authority of the state than Bitcoin is today. The widespread disregard of Prohibition lead directly to its repeal. Defying the state in one aspect of your life leads to defiance in other aspects.
Basically we are talking about the world's reserve currency becoming a denationalized currency. To be "mainstream" the denationalized currency will need to be defended by the militaries of the Euro-zone, US, India, China, and Russia (likely one after the other in this order).
Only the US is incentivized to have USD be the world's reserve currency. Meanwhile, 7 BB people around the world prefer a denationalized reserve currency, countries will prefer to interact with each other with a less trackable currency (e.g. Iran and the current sanctions), and based on the usage of tax loopholes by every multi-national company (e.g. FB, Apple, Google) every business will prefer transacting in less trackable currency (especially with crypto-coin tumblers). This demand for a denationalized reserve currency will be supplied by some crypto-coin (maybe BTC, maybe something else). FWIW, I don't think having a "less trackable currency" is a "good thing", I'm just saying there are large organizations that benefit from it financially and therefore it will exist.
Frankly once the S&P companies purchase enough BTC (e.g. TSLA, Square, etc), a BTC 51% attack will need to be defended against by the US military to ensure national stability. If BTC (or any crypto-coin) can hit "too big to fail" in the US, the rest of the world's militaries will all build a defense strategy around BTC mining. As as consequence, cheaper energy will also be an investment into national security.
There are still more problems with BTC specifically, like "slow transactions" but as may here have said, we can either use a geographically sharded blockchain (e.g. BTC-California, BTC-USD, BTC-CAD, BTC-RUP), where each shard allows fast transactions, and slow reconciliation, or we will just leverage credit for fast transactions like we do today, with slow reconciliation between banks like we have today. I don't see "centralization" as a problem, because having bank accounts and credit are very useful as an individual (as individuals will likely only transact with credit cards like we do today).
Will BTC become "too big to fail" in the US? Unclear. Another crypto might get there first. However, there is no scenario where the world's reserve currency continues to be tied to a single nation.
> Only the US is incentivized to have USD be the world's reserve currency.
The US is merely the largest reserve currency and has been trying to reduce that role for well over a decade now - being a reserve currency merely means foreign crises lead to dollar flight which has knock-on effects on US trade. There's no real upside - demand for dollars is based on the stabiliy and size of the US economy, nothing more. EUR, JPY and GBP also operate as reserve currencies due to the strengths of their economies.
What need there is for an international reserve currency is filled by the IMF's SDR, an asset whose value is based on basket of USD, EUR, RMB, GBP and JPY:
Too late to what? Forcefully distribute it as it sees fit or else put you in prison or harm your family? If you keep using it in secret it will never be mainstream.
Physical force is the strongest currency on Earth. Arguing it’s not is arguing millions of people die for entertainment rather than shifts of power.
If Bitcoin is the revolutionary future millions will die on that hill to make it so.
If they haven't done it by now, then they don't currently see it as a threat.
Now let's say in a few years, that inflection point happens where crypto sees an exponential rate of adoption. Every other country begins to use it, some ban it, many others adopt it. At that point, if not using crypto will put the US at a disadvantage, they have no other choice but to adopt it as well.
A semi-related example is the way many companies "disrupt" the markets e.g. Uber/Airbnb wasn't a threat to many cities, until it was. At which point, the demand for Uber/Airbnb outweighed the government's ability to do anything about it.
It's not the best example since some cities have done things about it and Uber/Airbnb, being a company, is easier to target.
With crypto, its decentralized nature makes it much more difficult to control and attempting to ban it will raise issues around free speech.
That's not to say countries won't try and succeed in getting it banned, though in the case of the US, I don't think it's as cut and dry.
I mean all that US Govt needs to do to crash the price 90% is, accuse ... not even that, only hint, that Tesla’s BTC holdings might be tainted by drugs/terrorism financing/money laundering. Game over.
But what if it's not a conscious forfeit of power. The power is taken out from underneath them and by the time they realize it, they have no recourse. Other than threatening all countries that use the currency, which I don't see happening.
You’re saying all militarized countries on Earth will come to a point where Bitcoin is prominent and they will forfeit their power over their citizens without any fight?
You’re proposing Bitcoin will bring world peace without conflict?
They have no recourse because the box has opened, and the new economy is up and running. Barring your citizens from participating would put your whole country at a disadvantage.
Also, I don't think I agree with the notion that adopting crypto would result in a country forfeiting their power over the citizens. There are plenty of ways to integrate crypto into existing governments while still maintaining control.
I'm not claiming this will happen, more of contemplating on how a global decentralized currency can take over.
As far as bringing world peace, I don't think a decentralized currency would do any such thing. It's probably one of the required steps towards it, but one of many.
For example, if the rest of the world adopts BTC as the world's reserve currency, the USA would HAVE TO purchase crazy amounts of BTC, and defend against a 51% attack by investing into mining.
Meanwhile, the USA could try to preempt this future, but only the USA is incentivized to have USD be the world's reserve currency. As such the USA would need to threaten every other country in the world to stop using BTC, but its not clear if that causes BTC adoption to drop, or the Streisand Effect to kick in.
And ofcourse, "mutually assured destruction" stops any large country from employing too large a threat against any other large country.
Would any nation allow itself to be in a position where a coalition of the willing could perform a 51% attack on their currency? Because if not, only one country could use BTC or anything with the same mining algorithm.
If we are talking about a coordinated aggressive action to cripple the economy of a non-superpower nation, like today it requires a superpower to protect it.
If we are talking about a coordinated aggressive action to cripple the economy of a superpower nation, you're basically triggering "mutually assured destruction". As such its most productive to assume that doesn't occur.
Given what governments worldwide have done with currencies in the past, I think you’re underestimating their capacity and how much they care about the functioning of their currency.
If you’ll excuse my admittedly also-naïve wargaming of their responses:
“Dear ISPs, this is the government. That stuff you do to block piracy and illegal porn? Do that for bitcoin.”
“Dear Banks, this is the government. Purchase of bitcoin is now a federal offence. Tell us if anyone tries to exchange them for money.”
“Dear The Power Company, this is a government order. Turn off power to these properties who are engaged in illegal Bitcoin mining.”
“Dear everyone, this is the government. Your taxes can only be paid in dollars, not in bitcoin.”
(Not that I would say such things will never happen, only that I expect America to become irrelevant on the world stage before it happens; and even in the most extreme USSR-mimicking scenario that is not something I expect before 2041).
As I mentioned in my reply above, I think the way it can work is if it grows exponentially, and the US government doesn't respond in time at which point not using crypto will put the US at a disadvantage. Crypto has the unique ability to spread across borders with ease, no other currency has had this ability. So I think it's a pretty unique scenario in that case.
Another scenario is if it grows slowly amongst the countries that have unstable currencies. Slowly it takes over the USD as the world currency. At a certain point, the US would have to allow it to participate in that economy.
Nations with bad currencies and mismanaged economies sometimes switch to the USD.
Such nations collectively switching to a different currency like the Euro or the Yuan is way more plausible than switching to Bitcoin; and not only do none of the USA, the Eurozone, nor China have economic policies compatible with giving up direct control of inflation, the usefulness of a shared single currency isn’t enough to outweigh the political costs for the UK to use the Euro (famously), or South Korea to use the Yuan, or Canada to use USD.
Money in the scale of governments isn’t like money on the scale of individuals. For governments, money isn’t even like it is for the richest individuals, different as it is between the rich and normal people.
I don't follow. Why would a country's citizens choose to use a different country's currency rather than a denationalized currency? i.e. couple their monetary policy to the world market, rather than to a single country's market. Given they just experienced one countries economy create poor monetary policy, why trust a single entity rather than diversify by trusting the group decision of many decentralized entities?
And why wouldn't a government whose citizens do not trust the government's currency, not incentivize its citizens to use a denationalized currency instead of funding potential threats?
e.g. The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties, rather than decided by a single foreign entity with potentially malicious intent.
Aaa… this will take too long to do justice to the topic, but politically speaking, the Euro is supernational and the UK collectively hates it, that sort of attitude is part of the problem. “Loss of sovereignty” is how they felt about it, how many discussed it.
> The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties
Why would those parties have Venezuelan interests in mind rather than their own? One of the arguments against the Eurozone (I’m not qualified to judge it on quality, but it is given as an argument) is that Northern Europe “should” have different inflation to Southern Europe to help boost the local economies. Can’t do that with a single currency, they say, and that would apply more the wider that zone spreads. A single global economy — fiat, digital, or metallurgical — would never be able to resolve it.
> “Loss of sovereignty” is how they felt about it, how many discussed it.
Yup! I agree, there will be many holdout countries. However, even the UK uses the USD as the world's reserve currency.
> Why would those parties have Venezuelan interests in mind rather than their own?
Venezuela was fucked because a handful of people are performing bad monetary policy. While the interests of each mining operation would be their own interests, in aggregate, the interests of all BTC mining is a globally averaged monetary policy. Unaffected by corruption, or stupidity (whichever you think is a more apt description of Venezuela's current monetary problem).
I don't know what a globally averaged monetary policy will look like (or who it'll benefit the most), but I can say that for any population currently living with a monetary policy below the average (i.e. because of corruption or stupidity), it'll be an improvement and they will adopt a denationalized currency to get it.
> The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties, rather than decided by a single foreign entity with potentially malicious intent.
No, the Venezuelan government has tried to create its own cryptocurrency called the Petro in order to have control of it.
Of course they did! They want control. Meanwhile, the population doesn't trust its government and wants a non-Venezuelan controlled currency.
Legitimizing crypto currencies by creating one, without increasing trust in the government just results in more of the Venezuelan people buying a denationalized crypto.
> It’s possible that, as Jiménez suggested, Venezuela’s peer-to-peer bitcoin activity wouldn’t be where it is today without crypto-friendly initiatives from the government itself. It’s also possible that bitcoin adoption in Venezuela may be driven by the sheer rate of Venezuela’s hyperinflation, which outpaces other crisis economies. [0]
In practice, we need to get our emissions down in the next few decades (if it's not already too late). I think retooling our energy economy is already an incredibly ambitious project, and I'm not sure we'll be able to achieve it in the designated timeframe. I certainly don't imagine us doing that and deprecating the US military in favor of Bitcoin, even if you accept the very, very bold idea that the former serves the same functions with the same efficacy as the latter. In other words, even if I was convinced that Bitcoin could replace the US military, I would still argue that we should stop Bitcoin mining until we solve the energy crisis and then take our time with a slow, thoughtful transition from military hegemony to crypto.
That is true only to the extent that proof of work has already been performed. You have to stake something of value or POS doesn’t work. Staking a POW coin to “mine” a new POS coin works. So does burning a POW coin to convert it to a new POS coin that can be staked for more. But, you can’t bootstrap a POS coin without leveraging proven investment from previously burned work.
At this point Bitcoin and Eth have about a trillion USD of built up burned work. Is that enough to prime the pump for a POS-based world economy? I dunno. Probably?
That's true. So, where are those currencies in the market capitalization charts and news articles?
Remember; the last time Bitcoin tried to change its mining algorithm, the democracy voted for a split. Ethereum has said they're moving from Proof of Work to Stake; I'm not surprised, given the Ethereum developers seem to abhor Work in all of its forms, including making progress on Ethereum itself, so we'll see if that actually happens in a few decades.
PoS is a theory right now, with some minor market traction, but nothing to the degree of BTC or ETH. Don't levy it as a promise which absolves the environmental sins of cryptocurrency, when its so obviously unlikely to do so. Bitcoin is the zeitgeist; its actively destroying the planet; its not moving to PoS.
Ethereum's PoS has been running in production for three months, and has about $5 billion staked. So far it's running perfectly.
They still have to migrate the rest of the network to it, but that's a relatively easy task. Once you have consensus, adding more data to reach consensus on is basically just adding a hash value to each block.
Why do we "waste" so much energy building killing machines? How long do you think the USA would last as a nation if all the armies suddenly went to zero and we became complete pacifists? How long before an invasion?
That's not the point. The point is, it hypocritical to complain about bitcoin energy consumption without also complaining about the energy, material and human deaths consumption caused by for example US military, which is in essense what is required for something like a USD as a reserve currency to function.
If Bitcoin becomes the reserve currency, the theory goes that the US would not need to involve itself in as many petrodollar wars as it does today, thus resulting in a smaller military.
I don't think anyone seriously thinks Bitcoin will replace militaries completely.
Wouldn't the US become more desperate to hold onto its influence in oil producing regions and do so with violence? don't see why "wow, everybody is starting to use BTC rather than USD for oil transactions" would lead to "guess we don't need this aircraft carrier" instead of "time for some coups to install governments who will do what we want and not switch to BTC".
The petrodollar is basically a conspiracy theory - you can use dollars to buy oil priced in Euros the same way you can use Bitcoin to buy drugs priced in dollars. Iraq pricing oil in Euros would just mean they sold most of it to countries using the Euro.
The importance of the role of the dollar as a reserve currency is also just an urban myth:
If bitcoin causes the value of fiat currency to fall enough, the government will not be able to print money to fund wars. A war will require overtly billing the people for it or raising taxes. So it will be less likely the people will consent to start a war.
Without commenting on the "funding wars" part. The US leverages inflation as a taxation strategy (and doesn't really admit it).
Most lay-persons don't understand it as a tax and therefore do not complain about it until they cannot afford things (housing, food, etc), and at which point the government distracts by bundling (hiding?) the inflation problem with the stagnant wage / income equality problem.
Eventually (every 2 decades) minimum wage in increased to catch up to inflation. Basically the inflationary tax strategy results in the US budget getting 2 decades of "extra taxes" (burdened by the lower middle class and the working classes[1]), then a reset, and then repeat.
[1] Note inflation as a tax strategy is actually a negative tax on low-interest debt holders like businesses, and home owners. It is also has a net-neutral effect on the investing class, because assets inflate proportionally. Meanwhile, credit card debt and other high-interest loans are not reduced as much (i.e. X% inflation of 19% credit card interest is a lot lower than, X% inflation of 2.5% mortgage interest).
Okay, the claim is that the US government raises funds by generating inflation, that is clear. The details are the problem. Say the US government issues a bond, some bank buys it, and eventually they sell it to the Federal Reserve. The US government has the same debt, and it seems to me that the only thing that has changed is that the bank now has cash where before it had a bond. How does this 1) create inflation and 2) is leveraged by the US government as a taxation strategy? That's what I'm asking.
MMT[0] is relatively new in our lives, I find it hard to understand myself, let alone try to explain it.
> Say the US government issues a bond, some bank buys it, and eventually they sell it to the Federal Reserve. The US government has the same debt, and it seems to me that the only thing that has changed is that the bank now has cash where before it had a bond.
This is mischaracterizing the situation. It actually is: 1. A bank buys a newly issued bond; 2. The government spends that bond money on the private sector. 3. The Fed buys the bond by changing the values in its database (i.e. "printing money").
The best I can do to explain MMT is this:
1. The government spends as much as it wants and collects as much debt as it wants.
2. The government plays a game of chicken with the private sector (including other countries).
2.1. As long as everyone plays along, its a ponzi scheme that spirals upwards until it hits a ceiling (hyper inflation).
3. Meanwhile, until it hits the ceiling, it creates "manageable inflation" and/or deflates the rest of the world's assets.
3.1. As long as the rest of the world plays along (which it does), the extra cash funds innovation (i.e. the private sector) and improves quality of life world wide (i.e. better pharmaceuticals, cheaper computing, etc).
3.2. Meanwhile, in the US the "manageable inflation" is paid for by the poorest.
My personal thought: the world's interconnected market is so complex, that no one understands cause and effect (including the people making the rules). Currently, there is an emergent property of that complexity that the US, Japan, etc can "print infinite money" and some large group of people somewhere are left holding the bag worse-off for the US' decision, but no one really knows who this group is nor how much those people got fucked. Even the impacted individuals don't realize they are impacted because individually its a small impact, and innovation keeps improving their lives enough to not complain.
Hopefully a denationalized crypto (i.e. no ability for a single nation to print money) will help us simplify all of this to be understandable again.
The fact that you don't understand monetary theory, doesn't mean economists can't figure it out. Maybe this is why developed nations haven't experienced hyperinflation in almost 100 years. And telling people that they should stop what they're doing for the sole reason that you don't understand the ramifications of their actions seems a little arrogant. I guess we also should get rid of money altogether, production and saving, in order to simplify the economy so you can finally understand it.
From what I can read, no one knows how it works, people just know that it works.
Without a simpler design how can I know I’m not being harmed? I think this is one question that will help drive people to adopt a denationalized currency.
Do I know how works what? The monetary system? The economy? The idea that a simpler design will help people like you avoid getting scammed is hilarious considering that you have already fallen for the biggest and most blatant scam of all which is bitcoin. Central banks are not there to rip you off, they have other concerns. And the wholesale adoption of bitcoin as unlikely as it is would definitely harm you in a way that you can't even imagine. Do some research on the gold standard, the problems it had and the reasons it was abandoned.
:( its become clear to me you're not having this conversation in good faith. I apologize that I wasted your time.
FWIW, I do not own any BTC or other crypto coins.
P.S. I highly recommend you research MMT. I think you'll find that no-one (including the most experienced economists) understands the details of how the emergent property works, they only understand that it works.
Re-reading you comments, I think you might be confused with regards to what MMT is. MMT is a novel monetary theory, it's definitely not the standard monetary theory, and it's not widely accepted by economists. The standard theory of money is the Quantity Theory of Money, which has been re-discovered many times since the ancient times. Why you think MMT is important in this discussion, I don't know.
> Why you think MMT is important in this discussion, I don't know.
Because over the last decade the US has been quietly transitioning to the MMT mental model. MMT is how we got out of the 2008 recession and also how we are funding both the pandemic stimulus packages (in 2020 and again in 2021).
The inflation we previously discussed in this thread is, in my understanding, a direct consequence of MMT.
What is the MMT mental model? It seems to me that you're under the impression that MMT is some kind of monetary policy, when it is not. Monetary policy along with fiscal policy are the two major counter-cyclical policies used by governments since the 1930s. MMT is an economic theory, and is much more recent than that.
MMT is actively being leveraged for fiscal/monetary policy in the US, and has been since 2008 (by both Democrat and Republican POTUS and Congress).
> "Congress has been showing us — in practice if not in its rhetoric – exactly how M.M.T. works: It committed trillions of dollars this spring that in the conventional economic sense it did not ‘have.’ It didn’t raise taxes or borrow from China to come up with dollars to support our ailing economy. Instead, lawmakers simply voted to pass spending bills, which effectively ordered up trillions of dollars from the government’s bank, the Federal Reserve. In reality, that’s how all government spending is paid for." [0]
> When President Trump signed the $2 trillion CARES Act into law, the federal government sold bonds to fund the new spending, expanding the government debt. However, the largest purchaser of those bonds was the Fed. ... As a currency issuer, the federal government can create more money to buy Treasuries and pay off its debts, making an involuntary default impossible. Under the Fed’s jurisdiction, it could purchase all U.S. Treasuries tomorrow and retire the entire U.S. federal debt, something Japan has already done with nearly half of its debt. ... Is the Fed’s financing of the debt created by the CARES Act fueling inflation? Not quite. The annual U.S. inflation rate currently stands at around one percent, half of the Fed’s two percent target. In fact, over the past decade, the Fed has struggled to increase the U.S. inflation rate. There actually is not enough spending (aggregate demand) in the U.S. economy to hit the Fed’s inflation goal. [2]
> Modern Monetary Theory (MMT) is alive and well in the United States. While MMT is derided by mainstream economists, the federal government is practicing MMT. From running massive federal government deficits, to the operations of the Federal Open Market Committee (FOMC) by the Federal Reserve Bank, the United States is practicing a policy of MMT that is currently underpinning the economy of the United States. ... The U.S. Federal Reserve (Fed) began its own form of quantitative easing (QE1) on November 25, 2008 by purchasing $600 billion in agency mortgage-backed securities (MBS) and agency debt. [3]
> While MMT may seem like a purely theoretical construct, it should be recognized that many governments, including the U.S. government, are effectively already putting MMT into practice. [4]
If you're still not convinced that the US is actively applying MMT in practice thats ok, lets wait and find out more. Meanwhile, thanks for catalyzing my motivation to research all of this! :)
Okay... I still don't know what it means to "apply MMT". I already told you that monetary policy has been used by governments since the 1930s long before MMT was invented. But, anyway, what is your point? Do you think that QE was a mistake? What do you suggest would have been an appropriate monetary policy during the 2008 financial crisis?
Given inflation didn't run rampant, I don't know if there was a better strategy.
However, the continued liberal application of QE 1. Could hit a hyper inflation ceiling (hurting the poorest). 2. Weakens USD compared to other currencies (as we have seen through 2020. Hurting every entity that holds cash i.e. typically the poorest). 3. Reduces the ability for the US to apply QE in the future. Hurting our ability to tackle the next crisis, which will predominantly hurt the poorest.
All of this to say, a portion of the lost trust in the USD is being put into crypto to hedge for the medium term, and (for better or worse) to create a long term denationalized currency where no handful of politicians can choose to use QE rather than making good fiscal policy decisions quickly.
So when the next economic crisis comes you would rather have central banks not interfere with the crisis at all. Just let the crisis solve itself. Is that what you're saying? Also, you seem to think that taking monetary policy away from central banks will lead somehow to governments making good fiscal policy decisions, whatever that is. Where do you get that from? The gold standard never stopped governments from going bankrupt. Monetary policy in the hands of incompetent authorities can be disastrous, but this is no reason to get rid of it. Otherwise we should also get rid of many things, including laws and government.
I'm not making a judgement about its merits, it might end up horrible.
All I'm saying is, there is a trend towards denationalized currency as a hedge against bad monetary policy. Based on this trend something like BTC will likely become the new gold standard used for slow transactions (i.e. reconciliation) between governments and large corporations.
Will it be BTC? I don't know. Will it be a good thing? I don't know.
I do know, the trend suggests a particular future, and trying to root out the motivations suggest the trend will continue.
People who believe removing power from central banks is a good way of avoiding bad monetary policy are a tiny minority of lunatics. This will never be the motivation behind a widespread adoption of a bitcoin by governments, corporations and the general public.
By your definition from earlier in the thread, any entity that buys BTC is a lunatic, so I'm not sure you'll have much to learn from this :P
But, if you are willing to acknowledge both Square and Tesla are run by very intelligent people, these are quotes about their motivations:
> However, when fiat currency has negative real interest, only a fool wouldn’t look elsewhere. [0]
> Square believes that cryptocurrency ... provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose. [1]
Based on my research into the motivations for BTC (or any crypto), these quotes are not unique. The majority of the root motivations seem to be 1. "to hedge against bad monetary policy" and 2. "to create a global monetary system" i.e. create a single global monetary policy.
Meanwhile, if enough S&P companies follow Square and Tesla the US government will find BTC is "too big to fail" and adopt it wholly. But I'm not convinced other S&P companies will follow. Lets see.
The anti-government, anti-bank ideology behind the creation of bitcoin and other crypto-currencies is indeed a bizarre political cult whose adherents are definitely lunatics. That doesn't mean everybody who owns bitcoin is necessarily a lunatic. What is true though is that, generally speaking, proponents of bitcoin don't seem to really grasp basic economic concepts. For example, what does it mean for a fiat currency to have "negative real interest" rate? Currencies don't "have" real interest rates. Real interest rates are not set by governments nor central banks, but by the market, and they are independent from currency (that's what "real", as opposed to nominal, means). At least Musk is decent enough to admit he doesn't know what he's talking about, which is good. Bitcoin is a non-income generating asset, which means the only way it can produce a positive return is if it increases in price, and it can only increase in price if the demand for it grows. Therefore I'd be a little sceptic about opinions put forth by people who are invested in bitcoin, as they have a strong financial interest in promoting bitcoin in order to make its price rise, as this is the only way they can safeguard their investment. If I were you, I'd look elsewhere for opinions on this matter.
Why would we need to do that, Trump lost and the good guy won. Surely the good guy who is friends with the guy who won the peace prize wouldn't be out there starting wars. No way. Our fair and independent media would tell us if that was the case surely. If not them it's not like views against that administration are removed from social media, no way.
Because it’s a necessary to ensure you can buy and sell things when you want to.