Cryptocurrency in simple details.

[BrianSoddingBoru4]

I'm not sure what it has to do with Hitler but the value of just about anything is relative to the people doing the trading.  One farmer might trade a cow for a dozen chickens but another might not budge for 50 chickens and yet another farmer might offer his wife.

^^^^^ Yes you are, you answered your own question. "Just about anything is relative to the people doing the trading", which was my point. But that also applies to ideology, religion, politics, and economics. The "exchange" in all contexts is a way of socializing and forming group order. All are forms of competition over control and resources. 

The only argument is what does humanity want, or are willing to tolerate to survive. 

But for cruelty and brutality to exist, the currency is blind loyalty. Hitler's "currency" was falsely playing victim and offering himself up as a cure.

‘Artificial’ and ‘arbitrary’ mean entirely different things.

And if you could stop bringing up Hitler when the topic has nothing to do with Hitler, that would be great.

Boru

[Pat Mustard]

In this topic I want to explain in a nutshell what "cryptocurrency" is, and why is this this new currency has value more precious than gold itself, so let's begin.

Funny joke. In reality crypto doesn't even raise to being a fiat currency. Because cryptocurrencies have nothing backing them apart from scams and lies.

Of course, anybody who knows anything about how currencies and economies work will tell you that the only way to run an economy is to have a currency that can expand in line with economic growth and anybody who knows anything about fiscal security will tell you the best way to back a currency is with the full faith and credit of a nation. The only type of currency that does that is fiat (properly managed). No other currency type comes close.

[HappySkeptic]

I think I'll go invent my own joke cryptocurrency. I'll just pick a popular meme to name it after, mine 10% of the coins early, flood social media with bots, and get ready for retirement!

[Pat Mustard]

This confidence is eroding quickly due to the ridiculous growth in the money supply (M2). Many commentators are predicting the end of the USD as the world's reserve currency by the end of the decade. I believe that is a reasonable time frame.

Without the "ridiculous growth in money supply" there wouldn't be a world economy larger than what we had c. 1850. As multiple nations found out in the 1880's, 1890's, 1900's, 1910's, 1920's, 1930's and 1940's commodity backed currencies were not in any way, shape or form capable of being useful in an industrial global economy.

Oh and the US dollar between 1948 and 1974 wasn't backed by gold, it's movements in value were constrained by mechanisms set up by the Bretton Woods agreement to have the worlds currencies move in tandem based on worldwide economic factors.

[Spongebob]

^^^^^ Yes you are, you answered your own question. "Just about anything is relative to the people doing the trading", which was my point. But that also applies to ideology, religion, politics, and economics. The "exchange" in all contexts is a way of socializing and forming group order. All are forms of competition over control and resources. 

The only argument is what does humanity want, or are willing to tolerate to survive. 

But for cruelty and brutality to exist, the currency is blind loyalty. Hitler's "currency" was falsely playing victim and offering himself up as a cure.

‘Artificial’ and ‘arbitrary’ mean entirely different things.

And if you could stop bringing up Hitler when the topic has nothing to do with Hitler, that would be great.

Boru

Yeah I think "artificial" is probably not the best word.  The value people place in money is real, it just isn't a truly concrete thing.  It can change with circumstances.

I'm still not sure what to make of crypto.  There are some voices in economics that support it but a lot deem it a scam or at best a bubble.  I'm leaning that way myself but it has stuck around for a while now and in some cases seems to be gaining acceptance.  It's volatility is a real problem, though.

[Pat Mustard]

It's about 2 things - trust, and the government's ability to change the money supply to avoid economic shocks.

Gold is best for trust, but it doesn't allow governments any economic control.

Gold isn't any good for trust*. It's just a shiny metal with little intrinsic use or value. The successful currencies are those that have a strong economy and proper tax base backing them up.

* For example, gold destroyed the Spanish empire, because Spaniards lost trust in its value very quickly once the American gold mines got up and running. Gold also destroyed the western economies after the Wall Street crash because people began to realise that a country that had a commodity backed currency couldn't control the value of that currency.

[Spongebob]

Gold isn't any good for trust*.  It's just a shiny metal with little intrinsic use or value.  The successful currencies are those that have a strong economy and proper tax base backing them up.

* For example, gold destroyed the Spanish empire, because Spaniards lost trust in its value very quickly once the American gold mines got up and running.  Gold also destroyed the western economies after the Wall Street crash because people began to realise that a country that had a commodity backed currency couldn't control the value of that currency.

But you have to understand why the Spanish lost trust in gold (and silver).  It was because so much of the precious metal was mined/produced cheaply in the Americas and then flooded the market back home.  That is precisely the same thing as any country overprinting money, creating hyper inflation.  This isn't because money is made of gold or tin or dried leaves, it's all about demand and supply.  For that matter, inflation can occur in countries with strong economies and a strong tax base.  It happened here in the US in the 80's.

And I think you are oversimplifying the causes of the great depression.  There were numerous conditions that contributed and terrible FED monetary policies are now considered a significant factor.

[Spongebob]

I want to say something that's a little off topic for this thread regarding US dollars. Despite the relative good living standard that Americans have enjoyed over the last few decades, we've experienced a good deal of inflation that has gone largely unnoticed except for where wages are concerned. Average inflation year over year has been very low for around 30 years, however, that little bit adds up. Because we've shifted so much production of durable goods and non-durable goods to countries paying poverty wages and we've automated to much production, we've been able to keep some buying power. Yet things that can't be outsourced, like homes and college degrees, have soared in price. So a $4/hr job in 1965 would buy way more than a $10/hr job today even though some of those things seem relatively cheap. There's another thread where someone mentioned how it's cheaper to buy a new washer/dryer than to fix a broken one. That's true because of cheap overseas labor (and automation) even though the US dollar has eroded significantly over the years.

So, I said all this only as a tangent to inflation and fiat money. Our economy is global whether we acknowledge it or not. And the US dollar is the primary currency because of the relative strength of the US economy, but it is not impervious to outside forces. How a non-government based currency could work as a primary currency for the world, I'm not sure and it remains to be seen.

[HappySkeptic]

I want to say something that's a little off topic for this thread regarding US dollars.  Despite the relative good living standard that Americans have enjoyed over the last few decades, we've experienced a good deal of inflation that has gone largely unnoticed except for where wages are concerned.  Average inflation year over year has been very low for around 30 years, however, that little bit adds up.  Because we've shifted so much production of durable goods and non-durable goods to countries paying poverty wages and we've automated to much production, we've been able to keep some buying power.  Yet things that can't be outsourced, like homes and college degrees, have soared in price.  So a $4/hr job in 1965 would buy way more than a $10/hr job today even though some of those things seem relatively cheap.  There's another thread where someone mentioned how it's cheaper to buy a new washer/dryer than to fix a broken one.  That's true because of cheap overseas labor (and automation) even though the US dollar has eroded significantly over the years.

Perhaps you meant $100/hr instead of $10/hr ?

My parents bought a house for $8,000 in 1962 (or so) on a salary of $4000/yr.  It would be worth $400,000 today.  That is 50 times, when the salary has only gone up around 25x.  So, its a 2-1 difference.

[Spongebob]

Perhaps you meant $100/hr instead of $10/hr ?

My parents bought a house for $8,000 in 1962 (or so) on a salary of $4000/yr.  It would be worth $400,000 today.  That is 50 times, when the salary has only gone up around 25x.  So, its a 2-1 difference.

Yes, you got my point better than I presented it.  A very basic skilled job, like a mechanic or a painter, could earn enough 60 years ago to do all the things that a really good white collar job will get you now.  My father was a line worker in a furniture factory for years and we did just fine.  I got a college degree and a job with a fortune 500 company and still live at about the same standard of living.  And that's with my wife working as well.  We were fortunate that our children were smart and hardworking enough to earn good scholarships for college.  Tuition when I went to college was $1,200/semester.  Today at that same school its $25,000.  And that was a state school.