I'm always bothered by this arguement because most of the same people in government who want to see a crackdown on Bitcoin also seem to want cash to be eliminated.
I've been asked to do consulting on one of these digital cash replacement projects. The requirements included all the stuff you'd expect, like strict ID requirements for every account, and the ability to freeze funds at will. But they also wanted things like the contents of receipts getting uploaded to government servers, to allow real-time tracking of not only who was paying who, but what the funds were supposed to be for. My contact wouldn't tell me what government it was supposed to be for. But they did admit it was a dictatorship. Obviously, this would have been a very effective tool for cracking down on dissent.
Frankly, I kinda suspect what was really going on was the company that reached out to me was pulling a scam on that dictatorship and had no real plan to actually deliver a working product. But it's still a good example of the panopticon that authoritarians want to replace cash with.
I could also easily carry more than $10k across a border. It's illegal without reporting it (exact number varies). But that's one type of payment.
I've carried $2k USD in just $20s in my pocket across international borders, and had it been in $100s that would be the limit. But if I want to transfer even one million dollars that 100 trips. Or 100 pockets if I ignore the law. I own cargo pants, but even they don't have 100 pockets. And a billion? That's a thousand people each with a hundred pockets full of cash.
What I was saying is that mere logistics makes it hard to move a billion in cash.
So there's a natural prevention of moving large amounts of cash. It's not impossible, but "making it hard" was done on purpose. So cryptocurrencies are not "clever" for "fixing a problem". They're actually removing the amelioration to the problem.
She noted that in general you target the criminal activity itself, not the currency used to fund it. But then she further noted that cash was just as big of a problem for them and harder for them to deal with. She said that crypto had the advantage that it at least left a trail, unlike cash. No one said criminal activity is easy. But it's not fair for you to conclude that therefore it's ridiculous because using cash is hard.
Which is another way of saying they want absolute control, which in this case is the absurd charade where "inflation" measures that they claim represent life on the ground exclude the essentials like education, healthcare, and housing.
I liked the take from the Mayor of Miami (from a podcast about cryptocurrency):
"they [governments] will have to borrow money like everybody else borrows money, they can't just print their own money. They have to borrow money at an interest rate. And if governments don't behave fiscally then they are going to have to borrow at worse and worse rates. They can't just invent their own interest rates and currency, which manipulates how markets work...
We in the city of miami, we're forced to balance our budget, we actually have a surplus, about $150 million in surplus and we have some of the lowest tax rates in the history of the city."
It's only wrong if it doesn't work -- but it does. Economists aren't 100% sure why, but it does.
The fact is while the debt has exploded, the total cost to service that debt has collapsed. The US is now paying less interest on its sovereign debt than before the COVID stimuli. Explain to me how it's stupid not to take advantage of this?
The reality is when you take on debt, the only thing that matters is what you choose to do with it. If you use it to generate economic activity - and hence revenue - that's a good investment. If you don't, that's a bad investment.
Now, you can "circumvent" this by investing your money like you're supposed to in literally anything.
The cost of debt has dropped would be a more accurate description. Well... just because you can take out more loans does not mean you should. The issue is really how long you can refinance the debt for, or can you outgrow the debt, otherwise you’ll be forced to inflate it away. The cost of financing will not be this low forever and it’s still a few hundred billion of interest each year. Still, we should spend money on infrastructure and cool tech while we can.
Yes, and that the only point of taxes is to reduce inflation, since the govt doesn't need taxes anyway since it can print money. Taxes don't even cover the cost of govt expenditures so it makes sense.
Broadly speaking the tools of monetary policy available to reduce inflation are:
(1) Increasing reserve rates for lending. This causes the circulating supply of currency to go down.
(2) Increasing interest rates for lending. This reduces the demand for borrowing, which is largely fractional reserve. This also causes the circulating supply of currency to go down.
(3) The Fed unwinding its balance sheet by selling bonds. They collect the cash and remove it from circulation. They can increase the circulating supply by buying bonds.
Taxation doesn't change inflation, to the best of my knowledge, as before and after taxation the same amount of money exists in the circulating supply. Taxation is fiscal policy.
The government doesn't print money per se, the government can borrow money by selling bonds. This just reallocates the existing money supply. The overwhelming majority of US government debt is held domestically by US persons. This doesn't change the money supply either, unless the Fed steps in.
> "Taxation doesn't change inflation, to the best of my knowledge, as before and after taxation the same amount of money exists in the circulating supply. Taxation is fiscal policy."
Fiscal policy affects inflation. You're thinking of inflation as "the money supply / total of all $", but that's only one definition or part of inflation. Generally, you would also describe inflation as the price of things you buy going up or down (CPI). Say you ratchet up the effective tax rate to 90%. Everyone's going to have a whole lot less money to buy extra things. Some things with fixed raw input cost still wouldn't budge much. However now that people's monthly incomes have gone from $5000 -> $1000, you're going to see houses, education, Pelotons, and other extra income sinks, have their prices fall precipitously.
The point of taxes is to create demand for the currency in the population. The government can then promise to pay people in its own currency so that it can provision itself with staff, goods and services.
that's the point. if money is backed by something with a max-supply (like gold or some cryptocurrency) or if there were a law limiting the max money supply then eventually they will have exhausted their reserves if they aren't careful, and will need to borrow. The american dollar is not backed by anything but the "full faith and credit of the american govt"
Even cryptocurrency projects like Brave browser's BAT has a max supply, so Brave will have to buy BAT back from the market (at the market rate) if it wants more.
His point is that a government is more fiscally responsible when it has maintain real reserves, where there is a risk of depletion. The federal reserve is a misnomer, since it doesn't have meaningful reserves (like gold). It just prints.
So here's the thing...there was a long period of time where empires were on the gold standard. Spain during the early American colonial period was one such empire.
Spain did really well out of it's brutality in the New World - plundering the Inca and Aztec empires yielded a wealth of gold, and the big find in the salvage industry today is still "spanish gold" because just so much of it sank to the bottom of the ocean.
But now a question: did the Spanish economy boom from this influx of gold they had (through a substantial expenditure of resources), suddenly acquired?
Spain actually experienced massive inflation and then an economic crisis as the government suddenly found itself, bizarrely, bankrupt. Gold wasn't worth remotely what it was before, because gold is not actual productivity - the conquest of the new world was a conquest of gold, at the cost of real resources - food, men, timber, arms etc. But it didn't yield anything that was actually worth trading for other then just more gold. So prices skyrocketed, and suddenly the Spanish empire was raising taxes - despite in theory having "made money" because it couldn't afford to pay for its own upkeep.
What does this have to do with the concept of loans? Quite a lot. Because the exact same factors would apply to a government with a wealth of productivity which was forced to seek loans from a market: demand for currency drives the value of currency up, but the same thing happens - farmers, workers, everyone else winds up poorer because the value of their labor is being reduced relative to the value of currency. So currency holders get richer, but everyone else with bills and day to day living expenses are getting poorer.
yes, just because a nation is on a gold standard doesn't mean they can't have devaluation of currency, like when spain dumped a bunch of gold into the market from south america.
Cryptocurrency wouldn't have this problem, since it has a hardcoded limit, unlike gold or USD.
A government which has to "seek loans" for crypto by definition must be trading in something which is not crypto internally. Because a government can't directly trade it's own citizens productivity (hence taxes), and can't mint new crypto to repay such loans in response to productivity.
So in such a scenario there are only two options: increase taxes on citizens for crypto they hold (while in the meantime being unable to pay for services upkeep - and thus probably inventing a form of fiat anyway to stay afloat), or devalue it's own currency to pay escalating loan rates to crypto holders to buy more crypto for those transactions in which people will not accept fiat.
Of course since taxes can only meaningfully be levied in the crypto-world on income, since you can control businesses to some extent but not holdings, the effect is the same: the compensation for your labor goes down, or you're fired (because the value of your output has gone down faster then wages), or most likely, you are inefficiently taxed at a much higher rate then is necessary to ensure the government is never stuck with the risk of a crypto shortfall which would suddenly put their ability to supply payment for services into almost immediate default.
> We in the city of miami, we're forced to balance our budget
This is true, but not without some moral hazard. Miami can keep building on land that will be swamp within the lifetime of the building because federal taxpayers and inflation are there to bail them out.
If I was a politician and in charge, I'd ban both in a heartbeat. Even though banning "cash" would be practically impossible, because people would then just replace it with barter, or favors or bottle caps.
But if it were to come to that, I'd replace it with some sort of digital currency that is "private" but accessible to the government within rules and reason of course.
It hasn't necessarily been out front-and-center in the mainstream media, but it's definitely something getting talked about in mainstream financial circles routinely. Here's a bit of a partisan source from a quick google search, but it's got a lot of links and citations you can follow up on and I believe it is basically correct in its facts, even if you disagree with the conclusions drawn from them: https://www.newswars.com/cashless-society-democrats-propose-...
It's up to the "trial balloon floated in Congress" point. The trial balloon has so far always been shot down, but it's really only a matter of time. If the government could just push a button and have access to literally every single transaction that occurs, they would certainly do it. They wouldn't even blink.
Also, I want to say, I'm just linking one example. You can follow up with search terms similar to the ones used in that article, and probably find even more mainstream sources discussing it. It's a topic in the air in financial circles.
I'm always bothered by this arguement because most of the same people in government who want to see a crackdown on Bitcoin also seem to want cash to be eliminated.
I've been asked to do consulting on one of these digital cash replacement projects. The requirements included all the stuff you'd expect, like strict ID requirements for every account, and the ability to freeze funds at will. But they also wanted things like the contents of receipts getting uploaded to government servers, to allow real-time tracking of not only who was paying who, but what the funds were supposed to be for. My contact wouldn't tell me what government it was supposed to be for. But they did admit it was a dictatorship. Obviously, this would have been a very effective tool for cracking down on dissent.
Frankly, I kinda suspect what was really going on was the company that reached out to me was pulling a scam on that dictatorship and had no real plan to actually deliver a working product. But it's still a good example of the panopticon that authoritarians want to replace cash with.