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0 pointsimpossiblefork1y ago0 comments

Ordinary currencies have value due to the enormous debt in it.

If people fail to obtain units of the currency, they default on obligations that have much greater value than the value of the all the cash in the currency. Thus in an ordinary currency the incentive isn't to ignore it, or to sell, but to hoard it so that people can't obtain the money to pay their loans in order to create a crisis so that they can obtain a large fraction of the value of collateral.

This is prevented by central banks. If you try to execute this corner, you will drive up prices, so they will start printing money.

So Bitcoin and Ethereum, both remain memes. Fiat currencies have non-mem value due to the debt.

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csomar1y ago

Most people don't realize that governments can't just "print" currencies and the few that do (ie: Turkey, Argentina, etc...) have chronic hyperinflation. The US went a bit loose with supply and it already came back biting and still to this day struggling with the higher interest.

The government does constantly devalue the currency, though. It does it at an imperceptible pace to not scare the chickens and make business viable. But that's the most they can collect from this system. Anything more and they blow the whole monetary system away.

impossibleforkOP1y ago

Yes, but when demand for the currency leads to a prices increasing,such as from an attempted corner, then you do not destroy price stability because the person operating the corner is buying the cash with something.

The money-printing used to break a corner can in principle be small and you can even have an inflation target of zero and still print money to break such corners.

What I want to emphasize with this though, is the source of a currency's value. The collateral of the debt of the loans denominated in it and the social and economic consequences to individuals of defaulting on loans in it. That is the end-source of demand for a currency, and that guaranteed demand is so great that it makes attempting to corner the market in the currency make sense.

If you cornered the market in bitcoin, there's no one who would have to buy even one. That shows how little bitcoin is worth, i.e. zero.

csomar1y ago

What you are saying, if I understood you correctly, is that money is a method of accounting. If all money is borrowed, then money is literally worth 0, which what a unit in an accounting system is worth.

If this makes sense to you, then it'll make sense why Bitcoin is worth something. There is a circular demand to it even without debt. I'll not argue to the legitimacy of that demands (scams, phishing, laundering, etc...) but it is demand and it creates a baseline value (beyond the boom/busts it cycles through).

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0 pointsimpossiblefork1y ago0 comments

Ordinary currencies have value due to the enormous debt in it.

This is prevented by central banks. If you try to execute this corner, you will drive up prices, so they will start printing money.

So Bitcoin and Ethereum, both remain memes. Fiat currencies have non-mem value due to the debt.

0 comments

csomar1y ago

impossibleforkOP1y ago

The money-printing used to break a corner can in principle be small and you can even have an inflation target of zero and still print money to break such corners.

If you cornered the market in bitcoin, there's no one who would have to buy even one. That shows how little bitcoin is worth, i.e. zero.

csomar1y ago

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