Oddbean

This is an absurd statement, imo. Printing money literally does **nothing** for the economy and axiomatically cannot. You have conflated digital payments with the idea of fiat, which aren’t related at all. Fiat is simply the side effect of digital payments without genuine digital money. In place of real money, we got authority as a bandaid with a huge set of unintended consequences. I think you have made a very fundamental error between payments and money. Fiat has literally nothing at all to do with technological progress or economic growth. To the contrary, it has done nothing but stifle it rather remarkably.

And if you think the basics of money are “utopian thinking” then I’d argue you have brought in a bunch of silly things that you believe and projected them on me. Nobody said anything about utopia.

Great debate. 2 knowledgable people arguing their points well, and respectfuly. I am seeing both sides here. What about a one-off printing of a 35 trillion dollar coin to pay off, and net out the national debt? Genuine question -- and "road to zimbabwe" is not an answer. FWIW I do think historical counterfeiting laws were on the right track. Debase the currency, debase the nation.

Perhaps I should have explained my words in a better way; my message was rather short. I love how MS describes Bitcoin in terms of thermodynamics. It really is a well-sealed system that leaks very little (if any, thanks to the ability to abstract the physical principle in the digital world) and for this, I would argue that there is nothing better in the world for wealth preservation than Bitcoin. It solves so many problems that we were not able to solve throughout history. But using the same analogy, I would like to point out that a thermodynamically sealed asset cannot be used in a system prone to constant entropy as a basis of a monetary system. Consider the fact that the world population has been growing since its inception; we discover and dig out new sources of energy that directly affect our progress, and we have a constant inflow of energy from the Sun. Our physical world has energy flowing in and out at all times, non-stop, forever. While Bitcoin is great for preserving wealth, it would not work to support the ever-growing economy, considering the factors mentioned above. And then, you have to ask yourself questions like: - Given the latest hurricane devastation, how would a government react if there was a Bitcoin standard only? Would they issue bonds denominated in Bitcoin? In a deflationary environment? How would the bonds be paid out? - In case of a foreign attack, what would a country do to protect its borders and citizens, given a limited and scarce monetary unit when an attacker might have more of the asset? The rich win at all times? - Imagine you work for a company and it’s your 10th year in that company. What would a raise look like in a Bitcoin-based economy? Clearly, you cannot give raises anymore because your salary should actually be getting smaller in Bitcoin denomination, given its deflationary nature and limited amount. How would you reward the employee for the longevity and determination? Reward the employee by offering something else? So, like back to the barter? A lot of these questions don’t have a clear answer, that is until you introduce fiat into the equation. I’m all for using Bitcoin as a backing asset, but even then, it is not sustainable, given the ever-increasing inflows of energy in civilization. Use fiat as a medium of exchange and a reward token for labor, and preserve wealth in Bitcoin. The issue, like I stated before, is a lack of understanding that a national currency is simply a tool with a particular designated utility, not a panacea.

P.S. The reason why I call it utopian thinking is that, despite being relatively young, I’m also old enough to understand that the world is an incredibly complex system that requires constant tweaking and adjusting for all possible reasons. Reductionist thinking, such as “Bitcoin solves it,” is a clear sign that the person is either disregarding the complexity or thinking in black and white terms, which is often a symptom of believing in a utopia. I didn’t mean any offense, of course. I would just like to bring to everyone’s attention that there are no solutions, only trade-offs.