That’s pretty much the definition of a Ponzi scheme.
You don't understand.
That is exactly how the federal reserve works. Our current monetization strategy is a big Ponzi Scheme. That is why inflation happens every year.
Bitcoin completely automates the banks so they are no longer needed.
sj_zero@lotide.fbxl.net 2 years ago
Although I can relate to what you're saying, you're mistaken. The monetary system is the opposite of a ponzi scheme because the asset doesn't go up in value, and in fact it's considered a failure by the central banks if the asset goes up in value.
But here's the thing: If the borders closed tomorrow, and all external buyers were cut out of the equation, people would still need to get paid; they'd still need to buy milk and eggs and pay their mortgages; they'd still need to pay their taxes and any fines; and right now that's all done with dollars, so there's a demand for dollars whether or not more people buy into it as an investment or not.
The reason people buy the dollar isn't because the dollar will go up, it's because you can buy a lot of stuff from either the US or around the world using dollars. For that reason alone, it specifically isn't a ponzi scheme.
Now, that doesn't mean that the current system is good. I believe that the bubbles inflated by the fed and QE infinity are the root cause of many ponzi schemes and absurd bubbles in otherwise legitimate assets because as the value of the dollar drops like a rock, people are fighting desperately to find any way to conserve their capital and help it grow and traditionally safe methods of doing that like bonds are basically a loss with negative real rates for decades. It's also inflating legitimate markets in ways that will have massively negative long-term consequences. Look at some housing markets in the US and around the world -- You're looking at dumpy single family homes in bad areas of some cities being more valuable than some professionals entire career's wages.
I think we're on the verge of a sea change in how the central banks regulate currency. Interest rates from the central bank to the front-line customer will rise for the first time in decades. I suspect bonds will become profitable to buy. Money will flow out of risk assets into safe assets for that reason alone. It's going to have a massive effect in ways we don't understand yet. I think a lot of the Internet economy is as big as it is because their actual products are loss leaders meant to advertise the stock. Things we think of as "of course the Internet has taken that over" may suddenly significantly go up in price, and brick and mortar may find itself more competitive.
The idea that banks would no longer be needed if the currency changes sort of misses a key point: Banks existed in the US for hundreds of years when it had sound money backed by gold and silver. Even if we assumed that the entire world went crypto, banks would still exist. Investments would still need a broker, some people would want a safer way to store their bitcoins than on a computer in their house, people would still need to take out loans for houses and vehicles and the like. The storage and distribution of money is almost a trivial part of the bank's purpose at this point.
masterofballs@wolfballs.com 2 years ago
My friend, with respect you have shown you do not understand how the federal reserve works. And that is normal most people don't. It comes down to your first assertion that you base the rest of your argument on.
You have to understand the history of the federal reserve to really understand what it is today.
Originally the U.S. Dollar was backed by gold. Anyone in the entire world could own U.S Dollars and then convert it to gold with the U.S government. Because of this every country wanted to hold U.S dollars. It became the world currency that all currencies were compared to.
The official excuse for getting rid of it was volatility. That is not true at all. It's a well known lie to protect the bankers who mostly profit off it. They are not even part of the government.
Certain governments and groups started to own large amounts of us dollars and us loans that they could convert to the nations gold at any time. It became a national threat. Lets say China buys up most of the dollars, they could then go exchange it for all the gold and then they become the worlds currency.
So The president of the time said no more gold exchanges. Effectively people could buy us Depts but could not exchange it for gold. The us would print more money to pay back the interest. The gold was rounded up protected and probably given out to terrible people.
That is when inflation started to really ramp up.
So this is how it works now.
The U.S. doesn't want to point blank print money. They instead run it through the reserve. To hide the ponzi scheme but it is one.
The U.S says, we need more money. China or anyone says ok, we will give you money and you pay us back at like 5% interest.
The U.S government prints money to pay them back. Just prints it. Out of no where. This causes inflation. China or whoever then has this extra money. If they keep it in their own currency inflation caused by the U.S dollar that all currencies are compared to will eat the money up. (Remember the U.S is the worlds currency because a long time ago it exchanged for gold. Today that isn't the case its just the worlds standard)
So what do they do? They take the same printed dollars and buy more U.S debt. Causing even more inflation.
So the dollar assets do go up in value. The same dept they bought keeps building up with interest, time ect.
All that dept cannot be repaid without causing inflation. So inflation will continue forever.
Bitcoin has a limited number of mining cycles. infinite Inflation is impossible. The value of a bitcoin should only go up and not down over time as more people want it and there are fewer and fewer bitcoins to mine. That was by design.
Bitcoin is becoming the new gold standard. Just like the value of gold always goes up because it is a limited thing. Bitcoin goes up.
Right now bitcoin is much safer than the dollar. You can exchange in other coins with smaller network fees and then exchange those back to bitcoin.
sj_zero@lotide.fbxl.net 2 years ago
I don't know what makes you think based on my post that I don't know this history of the dollar or the federal reserve.
BTW, even if we assume arguendo that crypto is the future, that doesn't mean that bitcoin is the future. In 1999, google didn't exist, apple was nearly bankrupt, facebook didn't exist, netflix was mailing people DVDs, amazon only sold books. Today, most of the top tech stocks of that time don't even exist anymore.
masterofballs@wolfballs.com 2 years ago
Because you said the U.S dollar is not a ponzi scheme. I don't know anyone who understands the federal reserve that would make that claim.
I agree that bitcoin might not be the future coin but I personally would not use a government issued crypto if I had any other choice.
Bitcoin is terrible for anon transactions. I would prefer anonymous coins more and ones with cheaper network fees.