Fiat doesn’t work on a finite planet.
Citations needed.
this post was submitted on 27 Jul 2024
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Very true, I'll do some research and if I remember I'll give you some papers
Why would I assume the title is accurate? I've never heard this criticism of fiat currency before, since the whole point is that it doesn't rely on on scarcity but on the stability of the issuing body. Can you explain, or is that outside the scope of this thread?
The issue is those closer to the money printer get the biggest rewards (according to the US Fed's description of their stakeholders) so as they increase their supply of currency they can accumulate more goods, outpacing the rest of the classes which have to suffer through inflation, which debases their money, keeps wages low and goods prices increase
In an evenly distributed and fully observable currency supply which can rise and lower as needed, there is no inherent issue with fiat currencies as long as the issuing party is reputable and wages increase at the same pace (up or down) with all prices
Yes, that sounds better. I didn't mean to imply there are no problems with fiat currency, only that scarcity wasn't one I'd heard argued.
The title isn't accurate, so I can't assume it is.
Fiat currency works precisely because the planet is finite. What you're thinking of is a currency that's tied to a finite resource, like a gold standard. Fiat currency works precisely because monetary supply is able to be increased to keep pace with both the population and economic growth. Likewise, fiat currency can be removed from the economy when the economy shrinks (although this hasn't happened before).
Gold isn't finite, its supply increases every year and is the main reason for the stability in its prices. Obviously this can't continue forever, hence the finite resources on the planet
Two things you're assuming is fiat can be evenly distributed with population growth and at some point the issuing body will reduce excess supply, neither of these things are common practices and rarely happen
Gold is the definition of finite. There is only so much gold in the world--by which I mean the 3rd planet revolving around the sun in the solar system that we both reside in--and the only way to make more gold actually makes radioactive gold. THe fact that we haven't discovered every last atom of it doesn't make it any less finite.
Sure, theoretically it's "finite", but we do discover more every year, so to us, in 2024, it is not finite. Different infinities exist, yes
Different infinities of a particular finite resource do not exist though. Yes, we discover more every year, but that does not make it an infinite resource. If a country was dumb enough to link their monetary supply to a resource, and then their economic growth outstripped their domestic production of that resource, they would experience deflation, id est, the money you have now would be worth more tomorrow than it is today. Periods of deflation, while rare, always have a catastrophic effect on economies, because no one wants to spend money when the value of that money is increasing. People tend to hoard their money when that happens, which rapidly leads to recession and then depression.
So other than some good or a country's clout, what do you suggest is a better alternative for a store of value?
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Fiat can work fine on a finite planet, most money doesn't even take up physical space anymore, just bits in an account ledger database. Ideally in the future governments will make sure their currency is backed or based on labor time, and nothing is technologically preventing that, nor is crypto-currency required for it.
The issue here is according to the Fed, the stakeholders get a 6% return, which is supposed to outpace inflation. So if the ones closest to the money printer get more every year, while the rest lose money due to inflation eating it, it doesn't matter if it could theoretically work, it leads to an accumulation to the class system at the top while the lower classes must continually work forever since their savings are worth less every year
I can confirm, I've had two Fiats and neither worked properly
That's a bummer, I was hoping they were built better. Are they at least fun to drive?
The little 500s are hilarious to drive, and a nightmare to own
Really shit quality and always have been
Why?
What makes you think that "crypto has failed on it's goals"?
That's a good question, because as a scam it has worked wonderfully.
Not OP, but as someone who was at one point excited by the potential of crypto, the ecosystem has moved more and more towards what it claimed to stand against initially
It's supposed to be decentralized, but things like mining pools have lead to heavy amounts of centralization in block production. If we look at Bitcoin, for an example, we see that over 51% of block production is controlled by just two mining pools. That's not limited to just Proof of Work mining either. Proof of stake sees centralization in staking pools as well. That's only just looking at one aspect of the network
It has also not really been seen as a currency. People's view of it as an "investment" which have the opposite qualities you really want to see. People are encouraged to hold it and never let go, meaning they won't want to spend it which is adverse to its use as a currency. This has also lead to it being incorporated and dominated by the very financial systems it was initially supposed to move away from
I don't want to type out an essay, but I could keep going on in other ways that's not really lived up to its promises.
Well, this is a fair criticism... of Bitcoin :)
It's supposed to be decentralized, but things like mining pools have lead to heavy amounts of centralization in block production. If we look at Bitcoin, for an example, we see that over 51% of block production is controlled by just two mining pools. That's not limited to just Proof of Work mining either. Proof of stake sees centralization in staking pools as well. That's only just looking at one aspect of the network
Centralization of mining pools (and mining in general) is indeed a serious problem. In Monero we now have p2pool which is totally decentralized. For now it's just shy of having 10% of total hash power, so there is a long road ahead, but we are moving there. ASIC resistant RandomX also helps to ensure mining decentralization.
It has also not really been seen as a currency. People's view of it as an "investment" which have the opposite qualities you really want to see. People are encouraged to hold it and never let go, meaning they won't want to spend it which is adverse to its use as a currency. This has also lead to it being incorporated and dominated by the very financial systems it was initially supposed to move away from
I don't think this applies to Monero, which is more or less the only currency used in DNMs.
XMR is decentralized and its seen as a currency
Proof-of-work has inherent centralization pressures due to economy of scale. You get more profit per hash per second of mining power when you've got a bigger mining operation. That's not the case for proof-of-stake.
There has been significant growth of crypto as currency, particularly in the developing world with use of USD pegged stablecoins. It remains the only practical solution to make online transactions privately or when alternatives have been censored, potential pitfalls notwithstanding.
Centralized control is a threat, but it's one that is taken seriously, and by practical metrics crypto has been largely successful in defending its integrity here. Other related values measures worth looking at are credible neutrality, permissionlessness, and trustlessness, also basically areas it continues to succeed. You submit a valid transaction to a major blockchain, it's getting included, even if powerful people would rather it wasn't. Transactions that are illegal as per US sanctions are treated more or less equally to any other. Miners and stakers are not taking control of the money printer dial for their own enrichment. And there's reason to think this will continue, because in a lot of ways control is a liability, and giving it up is valuable; "CEO of Bitcoin" is not a sane title to aspire to because it would make you the responsible party and valid target for all sorts of legal threats and obligations, and just having it would destroy the value of what you control.
That said, as a means for the economic salvation of the median person like OP seems to be talking about, it was never going to do that on its own, no one who thinks honestly about it would promise that, and anyone who did is full of shit. It's just a new type of p2p money with some cool properties, that obviously isn't going to be enough to fix the mess that is the world's economic and political systems.
I don't agree with either of my statements, I'm just asking what people think of a new system. The current ones aren't working for most living things on the planet in their current form, and it would be nice to have new thoughts
Realize that all forms of currency are ultimately a grift to allow a class of violent weirdos to claim ownership over the fruits of our labor and that we could actually just share things with each other without commerce
I can see this point, but how else do we store our spent engery? I personally don't want to be working when I'm 90 and the current only option is I have enough saved up something-that-holds-value long enough that I can pay for food and taxes (assuming I can own land)
I understand the frustration, but we are sadly dealt these cards and must play or... And there isn't much another option
100%. We all play the game because if we don't we die. The metaphor you see all the time is that the reason were all swimming in this sea of capitalism is because if we don't we drown. Our participation is not representative of consent I don't really know what we do in the short and medium term but long term we need to kill capitalism
If that's the case, that is quite the bummer, since although there are 8+ billion of us, most of us don't want to die fighting capitalism since we at least get fed (or a majority does) and those who love capitalism tend to have large weapons that cause destruction beyond my comprehension
I had a shower thought recently about how life itself is such an amazing and odd experience, and that's why we put up with such terrible things, since the alternative is not great
Stockpile canned beans they will become the most valuable currency once the WW3 starts.
#NotAFinancialAdvice
Also, toilet paper?
You people in a 3rd world country who smear their poop all over themselves can just do whatever you want. But yeah in a post WW3 era I think water will also be way to expensive to clean your ass.
Good advice, thank you for sharing
Socialism. The problem here isn’t with currency, it’s with capitalism.
I have socialism at home and fiat is still an issue
Do you have socialism at home? Because if you’re in Europe, no, you don’t. Social safety nets under capitalism is not the same thing as abolishing private ownership of the means of production.
Do you have fiat money at home? Because if you’re in the Eurozone, no, you really don’t, because you don’t have monetary sovereignty. What you have is a cartel of European private banks running the show, as Yanis Varoufakis and Michael Hudson will tell you. Europe’s Transition From Social Democracy to Oligarchy
How is a lack of national monetary sovereignty relevant to whether or not a currency is a fiat currency? The euro isn't backed by anything, it's as much a fiat currency as any other.
It is fiat money, it’s just that it’s not theirs, meaning their country’s government. It’s the unelected, undemocratic private bank cartel that has control of it.
Most central banks are run by unelected civil servants appointed by the head of government or a similar position/body. By this logic, the US dollar, Japanese yen, Chinese renminbi, and British pound equally do not belong to those countries. The ECB is just subject to the heads of 27 governments instead of one.
In the case of the US, the Federal Reserve is our “central bank,” and it too is largely the cartel of US private banks. But it doesn’t create new money—bank loan-created money notwithstanding—the Treasury does. And the system is intentionally made more complicated & opaque than necessary so that almost no one understands how it all works. So in practical terms you’re somewhat correct. But the US government isn’t as under the neoliberal thumb of the private banks as Europe is, at least when it comes to printing money for the military-industrial complex. Why the [US] Government Has Infinite Money
Haven't you seen how every time this has been done it leads to dictators and coups and massive starvation?!
Yeah, it could be a faulty system or we just keep trying it in states that have enemies that don't want it to succeed. I'll have to do more research from more modern thinkers, because yeah capitalism isn't sustainable without heavy regulation since humans are human...
Has crypto failed?
Barter. Learn a tradable skill. Build a group of friends.
But also save money.
Good advice, thank you for sharing
As an aside, I've often wondered what would happen if everything was automatically adjusted for inflation.
So like cost of living inflates, but then income is adjusted and bank accounts are modified to be their true value before inflation.
Would this patch things up to be effectively 0 inflation? or (more likely) would this cause an absurd runaway effect?
The issue here is we actually don't know how much inflation there is because we can't measure the quantity of fiat, which is why there are dozens of "inflation measures" which just study different baskets
But yeah, if inflation could be measured correctly and everything automatically updated (wages, costs, etc) then I'm not seeing an issue logically. But at that point it's just a fixed supply of money and prices adjust up and down, irregardless of currency type. That sound reasonable?
Social revolution is the best retirement plan.
Gold and silver.
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