Decades ago when the Rupee was much more tightly controlled, a black market flourished for currency exchange. Since I was mostly visiting family I didn't spend much. At one point I did some traveling on my own and had plenty of rupees in my pocket.
In a foreigners' hotel lobby I ran into a kid who was eager to do a currency exchange. He was really good at it too: he had a reflexive response for any objection ("I have enough rupees" "But the bank will only give you 20 for a dollar -- I can give you 50").
Finally he asked, "Don't you have a exchange market for dollars in your country?" I answered "In my country dollars are just money" "Yes, same here, so you don't need to go to a bank to change them for rupees".
I replied, "In my country I go to the shop to buy a drink and give dollars to the shopkeeper. He gives me my change in dollars. There is no exchange rate into any other currency"
Finally he didn't have an immediate response. He looked a bit shocked that there might be a place where people simply transacted business in dollars. And why shouldn't be be surprised? He didn't live in such a place and in his experience all foreigners seemed to use these "dollar" things to buy or sell rupees.
Anyway that pause gave me a way to jump out of the conversation and make my escape.
In 1982, I went to Czechoslovakia (this was before the divorce and before the fall of the Wall), and walking around the streets of Prague, people constantly whispered to me, a visibly foreign person, "Change money? Change money?" Dollars or German marks were what they wanted, and I could have gotten a much better exchange rate than the official one, if that was what I wanted.
Now? The author's comment that most people use a cueva to handle the crypto for them, rather than managing it themselves, is a real-world datapoint. It means that cuevas are vulnerable to surveillance and control.
> The way I explain this to myself, it seems that the key characteristic that draws Argentinians to these relatively centralized cryptocurrencies is that the government doesn't control them, rather than being completely decentralized in a way that no one controls them.
The government doesn't control them now. What do you bet there are armies of programmers working for the government, figuring out how they can?
So if I lived there, I'd probably be using crypto, too, but I'd always be afraid it's going to vanish someday. Not by the government devaluing the peso, which Argentines are used to, but by some unforeseen technical snafu.
So I'd probably spread my bets around, having some US $100's, some bricks, and some of other coins, making sure not to have all my eggs in one basket.
>The government doesn't control them now. What do you bet there are armies of programmers working for the government, figuring out how they can?
Argentinean here. That probably won't happen... for many years, at last. Programmers from my country start working for foreigners for dollares/any other non-meme coin that is no the peso. Anyone with 3+ years experience stops working for locals if they have a good english level and stop considering job offers in pesos (100% anual inflation as of now). What I'm trying to say is, the government can try to do that but it'll have to manage with only mediocre devs or spend a lot of money which... they don't really have.
> Now? The author's comment that most people use a cueva to handle the crypto for them, rather than managing it themselves, is a real-world datapoint. It means that cuevas are vulnerable to surveillance and control.
Cuevas are operated or are buddies with those in power.
Here's the thing: there is not a single rational actor in Argentinian politics who likes currency controls. It is a gigantic pain in the ass and a huge inconvenience for personal finances and so anyone who likes real money will use cuevas.
At the same time those people know that the alternative at the present moment is unlikely to be for the best; liberating the exchange rate just leads to people stashing money overseas, hyperinflationary spirals, even more difficulty servicing debt. More importantly, the various exchange rates allow for industrial protectionism where necessary (by benefitting imports of industrial inputs), populism for convenience (subsizing certain middle class consumer goods) and greater taxation of highly productive industries.
At this point the risk of walking all this back is too great for any single politican, side hustles would be lost, and the future would be even more uncertain. No one wants to pay the price.Now? The author's comment that most people use a cueva to handle the crypto for them, rather than managing it themselves, is a real-world datapoint. It means that cuevas are vulnerable to surveillance and control.
It's basically a really crappy local Nash Equilibrium.
Ha! This brings memories. Growing up in Bulgaria, I was 6 years old in 1982, and I was begging my grandma's coworkers (he was their manager) to give me a dollar. Some of their husbands would drive trucks (T.I.R.) and would get ahold of foreign currency, but it was impossible to do so. In fact, the government has set up special shops called CORECOM - https://en.wikipedia.org/wiki/Corecom where you can "exchange" your "dirty" foreign currency for stuff not possible to buy anywhere else.
I wanted my $1 dollar to get a Kinder Surprise Egg (that, and empty cans out of coca cola, or pez were great for a kid to have).
Then regime fell, and in early 1990's all "corecom" eggs were now for sale everywhere... They were no longer that valueable :)
(From the wikipedia article, it looks like The Czechoslovakian's version was called Tuzex - https://en.wikipedia.org/wiki/Tuzex - lol - what names, someone should make a game with these names)
> It means that cuevas are vulnerable to surveillance and control.
Oh but the "change money" people were no less vulnerable to surveillance and control - the communist solution to this very communist problem that they posed was to use them as a source of intelligence.
> For example, crypto enthusiasts often imagine a world where individuals control their own wallets directly — storing the cryptographic code on their local computers or phones, not using a third party, like MetaMask.
MetaMask is a local self-managed wallet though, not a third party in the sense that the MetaMask service company manages your keys.
Why does the author think they should be able to get USD out of an ATM in a non-US country? Does this happen in any country?
I can't think of any country I've been to other than the US which let me withdrawal USD from an ATM.
When telling friends about some of the benefits of Crypto, I often use Argentina as an example, but this one comment regarding ATM -> USD I think is hurting the credibility of this author.
> I can't think of any country I've been to other than the US which let me withdrawal USD from an ATM.
Have you been to Argentina or even anywhere in Latin America? You can't just visit a country like, say, Sweden and use Swedish Kronas or Korea and use Korean Wons and from there extrapolate that in $country you just use $local_country_currency and it's as simple as that.
In countries where the local currency is unstable, transacting in USD in some manner is just a fact of life. Eg People in Costa Rica who work for US corporations may just get paid partially in USD, as well as in Colóns.
More to the point is that the reason the expectation is there, is that Argentinians used to be able to visit the ATM and pull out USD until currency controls were enacted, and that the surprise is that even US citizens can't pull out USD.
Here in Brazil, I've seen a couple of ATMs from a major bank which allow you to directly get USD out of them. I searched just now and found a list of these ATMs: https://www.bb.com.br/pbb/pagina-inicial/voce/produtos-e-ser... (other banks might have them too, but the ones I've personally seen are on this list).
You could trivially cash out thousands of dollars in ATMs of many banks, both foreign and domestic, in a certain "world's enemy No.1" country before Feb 24.
Am I the only one puzzled by the 100% average inflation over the last century figure? That's 2^100, which would mean a single peso in 1922 had the purchasing power of 1.26 * 10^30 ARS today, or roughly a trillion times the total value of the world's assets.
The peso was revalued several times, so divide by 10^13 (if you held a 1922 peso m$n through the revaluations, it would only get you 10^-13 pesos convertible today). 100% is still an exaggeration though.
I am so sick of this strange take on decentralization that, because some people happen to use an exchange to store their money, somehow that means decentralization is worthless. :/ E-mail is decentralized even if most people don't host their own e-mail servers and even if most people use the same third-party host, and it simply wouldn't be the same product or anywhere near as powerful or valuable to its users if it were fully centralized on exactly one provider.
The reality is that there are a number of exchanges--I don't even have access to Binance in the US! (I can use Binance.US, but that's an entirely separate product from a technically separate company)... I have been mostly using Kraken recently, but I used to use Coinbase--that are all able to cater to different markets under different regulatory schemes and yet can interoperate because of the decentralized blockchain protocol, and that's why the tokens stored on Binance have value in the first place.
So, no: I assure you that these people value "decentralization" even if they are using a custodial wallet of some kind, in the same way that I hope we can all agree that the people who use e-mail or telephone numbers or domain names all value decentralization even if almost no one runs their own fully vertical stacks of servers, carriers, and registrars, because without that decentralization you would be trapped into a walled garden and forced to deal with a single jurisdiction: that you even can use Binance and interoperate with Coinbase is decentralization at work.
Article says “$40 billion in net shipments of U.S. currency”[0] total over many years (mostly $100 notes from article) yet Argentina only imports $5B[1] to $6B[2] billion of goods from the USA per year!
That is one very very sweet deal for the USA. Especially considering the USA dollar inflation depreciates the value of the physical bills over time.
Edit: $5B looks like hex and makes me double double the B billion making the text unreadable, however I am guessing too many readers here don’t like the metric 5G$, which I would otherwise prefer to use. I guess I could write the billion in full, but then this footnote would be pointless.
The benefit to the United States from the dollar serving as the world's reserve currency is enormous, and poorly understood. Congress has been foolishly pursuing fiscal policies that put it at risk.
I know some US startups that hire Argentinians (Scale AI, etc) and pay them in USD-T or USD-C. Not sure if they pay any taxes in the US, but they certainly don't pay the income tax or take the currency conversion haircut in Argentina. Pretty good deal.
Still, these people want USD, not really a crypto. I figure some lost their shirts in UST.
How is Argentina supposed to pay for public services, teachers, doctors, education, roads, etc if the conception is that a "Pretty good deal" means the country does not get any tax money through competent, employed individuals who are supposed to be the one supporting those costs ?
This is quite common in countries that have regulated exchange rates. From some I've visited, Angola and Iran even had websites with the black market rate, while in Turkmenistan I had to rely on public wisdom.
Indeed. It's actually happening in Vietnam right now. The official exchange rate is ~23,000 VND per USD, but you can get up to 24,000 VND per USD on the unofficial market.
It's interesting, because Vietnam does have currency controls, but has so much USD flowing in through exports (and remittence) that it has the foreign currency reserves to keep the VND in a very narrow band (similar to what Singapore does).
It hasn't always done a great job in the past, but for the past decade or so it's keep it's currency pegged quite closely to the USD.
But over the past few months with the USD strengthening considerably, you start to see a much bigger gap in the official vs. unofficial exchange rates.
> Argentinians have also learned to not trust banks, even with accounts denominated in other currencies. In 2001-2002, the government enacted something called "el corralito", shutting Argentinians' access to their bank accounts for almost a year. When they could finally extract money again, they found that (a) their USD deposits had to be exchanged for pesos and (b) pesos had lost 2/3 of their value.
That couldn't possibly happen in the West. Its only those silly Argentinians that have to worry about this sort of stuff... right?
I always considered Argentina part of "the west" - it's in the western hemisphere and the common language is Spanish, along with other cultural connections to Spain. What definition are you using?
Argentina is the poster child for what happens when a country's leaders insist on "a strong currency" above all else. In Argentina's case, by pegging to the US dollar.
If the Argentinian peso had been floating for the last six decades, Argentina's trade deficit and inflation problems would be distant memories.
The difficulty is that politically you can't get there from here any more. A sudden shock like floating the currency would seriously impoverish the politically connected elite, for a while.
How to understand central banking and the fiat currency system:
All money is a coin created by a national government. USD is America Coin, Sterling is UK coin, Yen is Japan coin, etc.
Within the boundaries of the nation, everyone uses the national coin.
All goods and services are produced somewhere. If produced and consumed in the same nation, the same coin is used.
Things get interesting with international trade. All countries cannot produce every single last thing they want. So they have to purchase from other countries. And the other countries require the use of their own coin when buying their goods and services.
Exporters get paid in their nation’s coin, which becomes an important source of foreign currency for the central bank / government. More exports = more conversion into the nation’s coin = more forex. If a car exporter sells cars, the central bank will facilitate payment to them in local coin, but the central bank will take and store the forex.
Things get very interesting (and corrupt) with imports. In any given nation, there is only so much forex. If you try to acquire more forex (like USD) by printing more local coin and then trading it for USD, you will get inflation. So countries with well managed central banks try and avoid this. So who can use the limited USD to import what they want becomes subject to political will. Often politically favored firms get access to the USD to buy the goods and materials they need, which they then sell locally. If there simply isn’t any more USD to buy stuff, competitors can’t enter to be an importer.
As the most important good in the entire world - oil - is traded almost exclusively in USD, every country has an everlasting and unquenching thirst for USD. This gives the US enormous power, as it can print more money with way less risk of inflation than other countries can. It also lets the US get ever cheaper goods and services from abroad with such demand for a good that takes a mouse click to produce (USD).
Bitcoin (and other cryptos if they can be successful) is extremely dangerous to this model because it is not controlled by any government. It is exactly like the old gold system, except way better because you don’t need to protect the gold with soldiers and vaults, move it with huge ships, and so on. It’s gold on the internet.
If goods start being priced in Bitcoin directly, it will be akin to the old global system of everything being priced in gold.
But in general, think of fiat money like coins and central banks as a single centralized validator node that has sole authority to mint new coins.
> the most important good in the entire world - oil - is traded almost exclusively in USD
This isn’t true and hasn’t been for decades. Oil is just a special case of the far larger American import wallet, the real underpinning—together with its capital markets’ strength [1]—of U.S. dollar hegemony.
Being able to print money easily is an essential feature of a successful national currency. It gives the power to central banks/government to react to event by adapting the supply of money to the economy. Bitcoin takes that away.
If we take the COVID example, most countries significantly supported their economy by printing truckloads of money to allow companies to pay their employees despite their activities basically disappearing overnight. Some even gave that money directly to the population (eg: stimulus checks). This was only possible because money is a mouse click away, all we needed to decide is how much we wanted to print, since printing money has consequences. The only question was the balance, not the capacity.
Remove that ability altogether, and COVID would have been an absolute bloodbath. Without any help from government/central banks, unemployment rate would have skyrocketed. More people on welfare and limited supply of money would also have meant that the benefits would have had to be lowered/dropped. A dire perspective compared to the relative "calm" we had if you consider that the economy almost stopped for two years straight.
It's easy to bash on central banks and governments, but they serve an essential purposed in piloting the economy, slowing things down when they turn crazy, and supporting them in times of need. They aren't perfect - of course - but the alternative of having no one the driver seat is absolutely terrifying and will lead to catastrophic situations that were the default few decades ago.
It appears you didn't read the article. Argentinians literally don't care about Bitcoin or Ethereum or any other cryptocurrency of the week. They only care about USD and that means they hold USDT or TRON and they often hold them on Binance.
Bitcoin is as much of a danger as gold, in other words not much.
Gold is easily outperformed by the S&P 500 in both volatility and returns. Is it a threat to the USD? No, people investing in stocks is good for the US. But people don't get crazy ideas like pricing everything with in S&P shares.
Argentina has trade deficit problems. Black markets and cryptocurrencies don’t fix these problems just push the burdens of them onto other people who can’t as easily get around the legal currency framework.
This article is pro-cryptocurrency but they fail to see that in some spans of time (recently) Bitcoin or other cryptocurrencies lost more value than Argentine Peso.
[+] [-] gumby|3 years ago|reply
In a foreigners' hotel lobby I ran into a kid who was eager to do a currency exchange. He was really good at it too: he had a reflexive response for any objection ("I have enough rupees" "But the bank will only give you 20 for a dollar -- I can give you 50").
Finally he asked, "Don't you have a exchange market for dollars in your country?" I answered "In my country dollars are just money" "Yes, same here, so you don't need to go to a bank to change them for rupees".
I replied, "In my country I go to the shop to buy a drink and give dollars to the shopkeeper. He gives me my change in dollars. There is no exchange rate into any other currency"
Finally he didn't have an immediate response. He looked a bit shocked that there might be a place where people simply transacted business in dollars. And why shouldn't be be surprised? He didn't live in such a place and in his experience all foreigners seemed to use these "dollar" things to buy or sell rupees.
Anyway that pause gave me a way to jump out of the conversation and make my escape.
[+] [-] AlbertCory|3 years ago|reply
Now? The author's comment that most people use a cueva to handle the crypto for them, rather than managing it themselves, is a real-world datapoint. It means that cuevas are vulnerable to surveillance and control.
> The way I explain this to myself, it seems that the key characteristic that draws Argentinians to these relatively centralized cryptocurrencies is that the government doesn't control them, rather than being completely decentralized in a way that no one controls them.
The government doesn't control them now. What do you bet there are armies of programmers working for the government, figuring out how they can?
So if I lived there, I'd probably be using crypto, too, but I'd always be afraid it's going to vanish someday. Not by the government devaluing the peso, which Argentines are used to, but by some unforeseen technical snafu.
So I'd probably spread my bets around, having some US $100's, some bricks, and some of other coins, making sure not to have all my eggs in one basket.
[+] [-] lezojeda|3 years ago|reply
Argentinean here. That probably won't happen... for many years, at last. Programmers from my country start working for foreigners for dollares/any other non-meme coin that is no the peso. Anyone with 3+ years experience stops working for locals if they have a good english level and stop considering job offers in pesos (100% anual inflation as of now). What I'm trying to say is, the government can try to do that but it'll have to manage with only mediocre devs or spend a lot of money which... they don't really have.
[+] [-] Daishiman|3 years ago|reply
Cuevas are operated or are buddies with those in power.
Here's the thing: there is not a single rational actor in Argentinian politics who likes currency controls. It is a gigantic pain in the ass and a huge inconvenience for personal finances and so anyone who likes real money will use cuevas.
At the same time those people know that the alternative at the present moment is unlikely to be for the best; liberating the exchange rate just leads to people stashing money overseas, hyperinflationary spirals, even more difficulty servicing debt. More importantly, the various exchange rates allow for industrial protectionism where necessary (by benefitting imports of industrial inputs), populism for convenience (subsizing certain middle class consumer goods) and greater taxation of highly productive industries.
At this point the risk of walking all this back is too great for any single politican, side hustles would be lost, and the future would be even more uncertain. No one wants to pay the price.Now? The author's comment that most people use a cueva to handle the crypto for them, rather than managing it themselves, is a real-world datapoint. It means that cuevas are vulnerable to surveillance and control.
It's basically a really crappy local Nash Equilibrium.
[+] [-] malkia|3 years ago|reply
I wanted my $1 dollar to get a Kinder Surprise Egg (that, and empty cans out of coca cola, or pez were great for a kid to have).
Then regime fell, and in early 1990's all "corecom" eggs were now for sale everywhere... They were no longer that valueable :)
(From the wikipedia article, it looks like The Czechoslovakian's version was called Tuzex - https://en.wikipedia.org/wiki/Tuzex - lol - what names, someone should make a game with these names)
[+] [-] Tade0|3 years ago|reply
Oh but the "change money" people were no less vulnerable to surveillance and control - the communist solution to this very communist problem that they posed was to use them as a source of intelligence.
[+] [-] gillesjacobs|3 years ago|reply
MetaMask is a local self-managed wallet though, not a third party in the sense that the MetaMask service company manages your keys.
[+] [-] rvz|3 years ago|reply
[+] [-] pedalpete|3 years ago|reply
I can't think of any country I've been to other than the US which let me withdrawal USD from an ATM.
When telling friends about some of the benefits of Crypto, I often use Argentina as an example, but this one comment regarding ATM -> USD I think is hurting the credibility of this author.
[+] [-] fragmede|3 years ago|reply
Have you been to Argentina or even anywhere in Latin America? You can't just visit a country like, say, Sweden and use Swedish Kronas or Korea and use Korean Wons and from there extrapolate that in $country you just use $local_country_currency and it's as simple as that.
In countries where the local currency is unstable, transacting in USD in some manner is just a fact of life. Eg People in Costa Rica who work for US corporations may just get paid partially in USD, as well as in Colóns.
More to the point is that the reason the expectation is there, is that Argentinians used to be able to visit the ATM and pull out USD until currency controls were enacted, and that the surprise is that even US citizens can't pull out USD.
[+] [-] santimt|3 years ago|reply
[+] [-] cesarb|3 years ago|reply
[+] [-] odiroot|3 years ago|reply
[+] [-] gspetr|3 years ago|reply
[+] [-] ulfw|3 years ago|reply
You can get USD out of Citibank ATMs in Hong Kong (and many many others too, I just happen to use Citi last week).
[+] [-] Scoundreller|3 years ago|reply
I’d guess “dollarized” non-US countries definitely do too.
[+] [-] neither_color|3 years ago|reply
[+] [-] kilroy123|3 years ago|reply
[+] [-] kingofpandora|3 years ago|reply
[+] [-] danielfoster|3 years ago|reply
[+] [-] dalmo3|3 years ago|reply
[+] [-] scatters|3 years ago|reply
[+] [-] tehlike|3 years ago|reply
[+] [-] saurik|3 years ago|reply
The reality is that there are a number of exchanges--I don't even have access to Binance in the US! (I can use Binance.US, but that's an entirely separate product from a technically separate company)... I have been mostly using Kraken recently, but I used to use Coinbase--that are all able to cater to different markets under different regulatory schemes and yet can interoperate because of the decentralized blockchain protocol, and that's why the tokens stored on Binance have value in the first place.
So, no: I assure you that these people value "decentralization" even if they are using a custodial wallet of some kind, in the same way that I hope we can all agree that the people who use e-mail or telephone numbers or domain names all value decentralization even if almost no one runs their own fully vertical stacks of servers, carriers, and registrars, because without that decentralization you would be trapped into a walled garden and forced to deal with a single jurisdiction: that you even can use Binance and interoperate with Coinbase is decentralization at work.
[+] [-] robocat|3 years ago|reply
That is one very very sweet deal for the USA. Especially considering the USA dollar inflation depreciates the value of the physical bills over time.
[0] 1993 https://www.federalreserve.gov/pubs/ifdp/1993/460/ifdp460.pd...
[1] https://oec.world/en/profile/country/arg
[2] https://wits.worldbank.org/CountryProfile/en/Country/ARG/Yea...
Edit: $5B looks like hex and makes me double double the B billion making the text unreadable, however I am guessing too many readers here don’t like the metric 5G$, which I would otherwise prefer to use. I guess I could write the billion in full, but then this footnote would be pointless.
[+] [-] mobilefriendly|3 years ago|reply
[+] [-] setgree|3 years ago|reply
[+] [-] hahaxdxd123|3 years ago|reply
Still, these people want USD, not really a crypto. I figure some lost their shirts in UST.
[+] [-] IMTDb|3 years ago|reply
[+] [-] philliphaydon|3 years ago|reply
When in the country currency exchange places will exchange based on the quality of the notes you give them.
If your note has a little crease, fold, discolouration. Expect it to be devalued. A lot.
[+] [-] mrg2k8|3 years ago|reply
[+] [-] refurb|3 years ago|reply
It's interesting, because Vietnam does have currency controls, but has so much USD flowing in through exports (and remittence) that it has the foreign currency reserves to keep the VND in a very narrow band (similar to what Singapore does).
It hasn't always done a great job in the past, but for the past decade or so it's keep it's currency pegged quite closely to the USD.
But over the past few months with the USD strengthening considerably, you start to see a much bigger gap in the official vs. unofficial exchange rates.
[+] [-] verisimi|3 years ago|reply
That couldn't possibly happen in the West. Its only those silly Argentinians that have to worry about this sort of stuff... right?
[+] [-] tomjakubowski|3 years ago|reply
[+] [-] rhodorhoades|3 years ago|reply
[+] [-] tuatoru|3 years ago|reply
If the Argentinian peso had been floating for the last six decades, Argentina's trade deficit and inflation problems would be distant memories.
The difficulty is that politically you can't get there from here any more. A sudden shock like floating the currency would seriously impoverish the politically connected elite, for a while.
[+] [-] seibelj|3 years ago|reply
All money is a coin created by a national government. USD is America Coin, Sterling is UK coin, Yen is Japan coin, etc.
Within the boundaries of the nation, everyone uses the national coin.
All goods and services are produced somewhere. If produced and consumed in the same nation, the same coin is used.
Things get interesting with international trade. All countries cannot produce every single last thing they want. So they have to purchase from other countries. And the other countries require the use of their own coin when buying their goods and services.
Exporters get paid in their nation’s coin, which becomes an important source of foreign currency for the central bank / government. More exports = more conversion into the nation’s coin = more forex. If a car exporter sells cars, the central bank will facilitate payment to them in local coin, but the central bank will take and store the forex.
Things get very interesting (and corrupt) with imports. In any given nation, there is only so much forex. If you try to acquire more forex (like USD) by printing more local coin and then trading it for USD, you will get inflation. So countries with well managed central banks try and avoid this. So who can use the limited USD to import what they want becomes subject to political will. Often politically favored firms get access to the USD to buy the goods and materials they need, which they then sell locally. If there simply isn’t any more USD to buy stuff, competitors can’t enter to be an importer.
As the most important good in the entire world - oil - is traded almost exclusively in USD, every country has an everlasting and unquenching thirst for USD. This gives the US enormous power, as it can print more money with way less risk of inflation than other countries can. It also lets the US get ever cheaper goods and services from abroad with such demand for a good that takes a mouse click to produce (USD).
Bitcoin (and other cryptos if they can be successful) is extremely dangerous to this model because it is not controlled by any government. It is exactly like the old gold system, except way better because you don’t need to protect the gold with soldiers and vaults, move it with huge ships, and so on. It’s gold on the internet.
If goods start being priced in Bitcoin directly, it will be akin to the old global system of everything being priced in gold.
But in general, think of fiat money like coins and central banks as a single centralized validator node that has sole authority to mint new coins.
[+] [-] JumpCrisscross|3 years ago|reply
This isn’t true and hasn’t been for decades. Oil is just a special case of the far larger American import wallet, the real underpinning—together with its capital markets’ strength [1]—of U.S. dollar hegemony.
[1] https://www.bloomberg.com/opinion/articles/2022-03-16/saudi-...
[+] [-] IMTDb|3 years ago|reply
If we take the COVID example, most countries significantly supported their economy by printing truckloads of money to allow companies to pay their employees despite their activities basically disappearing overnight. Some even gave that money directly to the population (eg: stimulus checks). This was only possible because money is a mouse click away, all we needed to decide is how much we wanted to print, since printing money has consequences. The only question was the balance, not the capacity.
Remove that ability altogether, and COVID would have been an absolute bloodbath. Without any help from government/central banks, unemployment rate would have skyrocketed. More people on welfare and limited supply of money would also have meant that the benefits would have had to be lowered/dropped. A dire perspective compared to the relative "calm" we had if you consider that the economy almost stopped for two years straight.
It's easy to bash on central banks and governments, but they serve an essential purposed in piloting the economy, slowing things down when they turn crazy, and supporting them in times of need. They aren't perfect - of course - but the alternative of having no one the driver seat is absolutely terrifying and will lead to catastrophic situations that were the default few decades ago.
[+] [-] imtringued|3 years ago|reply
Bitcoin is as much of a danger as gold, in other words not much.
Read this article https://dankradfeist.de/ethereum/2021/09/27/store-of-value-f...
Gold is easily outperformed by the S&P 500 in both volatility and returns. Is it a threat to the USD? No, people investing in stocks is good for the US. But people don't get crazy ideas like pricing everything with in S&P shares.
[+] [-] coretx|3 years ago|reply
[+] [-] colechristensen|3 years ago|reply
[+] [-] k__|3 years ago|reply
Their own currency is unusable, and the government limits how much dollar they buy.
[+] [-] msoad|3 years ago|reply
Again, cryptocurrencies are not solving anything.
[+] [-] valcron1000|3 years ago|reply
[+] [-] k__|3 years ago|reply
[+] [-] rvz|3 years ago|reply