Oddbean

I still don't get this obsession in Bitcoin circles with fiat beaing bad, particularly when we have bitcoin. Fiat is simply a tool and it's working as designed. The only issue I'm seeing is lack of knowledge of general public about the downside of using fiat as savings mechanism but apart from that - it satisfies the needs assigned to it.

Utopian thinking is appealing and cute but one thing is known for sure, there is no way to build an advancing and growing society without fiat. So I wouldn't be so sure and so categorical. It satisfies the goals set for the growing world economies, don't you think?

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.

I've literally never seen anyone use the word "cute" when NOT referring to a child or an animal, if they are NOT trying to be condescending. So that's off-putting right off the bat, but everything else in your comments suggests that you simply don't know what the word fiat means. Fiat means 'by arbitrary decree'. That means that fiat currency is currency because someone says it is. Generally no problem so far, if everyone agrees to use that currency to represent value. But in the USD and the fiat I'm aware of, that decree declares 'this is the money available for you to use, it necessarily WILL be worth less tomorrow. If all goes as WELL as it possibly can, you will have 8% less value next year. If WE need more value, we can just produce MORE of this currency, making your saved currency worth MUCH less, so WE can extract that value from you without doing anything but 'printing' more of this currency". COULD there be better fiat? Absolutely. Create a fiat that can't be inflated, that can't be devalued by creating more. If government created a fiat currency that COULD NOT be 'printed' at will they would make it useful as a medium of exchange without making it damaging to the wealth and value that those who work for it posses But they don't. Because then THEY would have to do something for the money THEY want too. And that's the basics of the system we have: They offer a currency that WE have to work or trade for, but they can just create at will for themselves. That is inherently unjust for those who have to work for it. All that said, if 'government not stealing value from you every day for work you already did' is now "utopian thinking" then yes, I think you'll find MANY 'utopists' holding bitcoin.

Yes, you are right about fiat and the principles at work. That is exactly its function, to have an ability to be devalued at a certain rate per day/month/year and that is ok. It's designed to do that. I don't understand how that's an offensive revelation for many. I mean, I get it, it can be offensive if fiat is treated as a store of value and the only monetary tool available to you, but there are many other tools available to people, bitcoin being the best in history, available to every human in the world. Again, use fiat as a medium of exchange, use Bitcoin as a store of value. These two systems coexist perfectly fine.

No it's not designed to LOSE value, it doesn't just go away. It is designed make YOU to lose value and MOVE that value to those who control it. It has been that way for at least a hundred years. Would it be 'offensive' if I had slaves? How about if I only made them work for 10% of the year? I'm only extracting 10% of their value from them, and doing nothing to gain it except 'possessing' them... But stealing their value and life energy is INHERENTLY EVIL, and thus offensive. Fiat makes slaves of everyone, and has done so for a century. There is FINALLY something that they can NOT control, which on a long enough time frame easily overcomes that, but it is still just and right to take offense at, and decry their evil system.

You're looking at it from a perspective of a victim. Fiat is designed to lose purchasing power while assets serve the purpose of preserving the wealthy. I honestly don't understand why it's so difficult to understand. Target inflation of 2% is a target of devaluation, nobody is hiding it. Instead, you choose to present it as some sort of conspiracy and a class war aka the Marxists worldview. You are free to use assets to protect yourself, you are not only limited to fiat.

If you're going to ignore the entire point of what I'm saying it's clear you don't want to understand the problem and I have wasted my time patiently explaining it to you. It's REALLY simple: Those who control the (fiat) money are CONSTANTLY and INCENSANTLY stealing from EVERYONE else. And that is wrong. #Done