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Author Topic: Let's compare USD and BTC  (Read 3663 times)
johnyj
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October 16, 2012, 01:31:06 AM
 #1

FED print money as will, but ultimately they try to achieve two goal: Price stability and low unemployment rate. It's very simple: If there are enough money out there, everyone will be easy to find a work, but if there are too much money out there, there will be inflation

BTC is fixed constant money supply, could it finally achieve these two goal? Or, it can achieve something that USD today are not able to achieve?

I think saving definitely is one of BTC's strength, but seems it can not help to improve the unemployment and price stability, it shines when the economy goes strong, but do not give much help when economy is weak

Any more idea?

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knight22
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October 16, 2012, 01:39:33 AM
 #2

FED print money as will, but ultimately they try to achieve two goal: Price stability and low unemployment rate. It's very simple: If there are enough money out there, everyone will be easy to find a work, but if there are too much money out there, there will be inflation

Not exactly, you should watch this thread:
https://bitcointalk.org/index.php?topic=118681.0


BTC is fixed constant money supply, could it finally achieve these two goal? Or, it can achieve something that USD today are not able to achieve?

I think saving definitely is one of BTC's strength, but seems it can not help to improve the unemployment and price stability, it shines when the economy goes strong, but do not give much help when economy is weak

Bitcoin price can and will get stability when it will be used in a larger scale.

hazek
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October 16, 2012, 01:48:15 AM
 #3

OP I think you are mainly trolling here and that's why I don't really see a point in trying to explain it to you. Basically I think that it will take the actual empirical end result of this experiment to shut people like you up that's why all we need to answer your questions is time.

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

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vokain
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October 16, 2012, 01:48:24 AM
 #4

Bitcoin price can and will get stability when it will be used in a larger scale.

More like 'if' mirite?Huh

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johnyj
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October 16, 2012, 01:48:59 AM
 #5

FED print money as will, but ultimately they try to achieve two goal: Price stability and low unemployment rate. It's very simple: If there are enough money out there, everyone will be easy to find a work, but if there are too much money out there, there will be inflation

Not exactly, you should watch this thread:
https://bitcointalk.org/index.php?topic=118681.0


BTC is fixed constant money supply, could it finally achieve these two goal? Or, it can achieve something that USD today are not able to achieve?

I think saving definitely is one of BTC's strength, but seems it can not help to improve the unemployment and price stability, it shines when the economy goes strong, but do not give much help when economy is weak

Bitcoin price can and will get stability when it will be used in a larger scale.

I do not see debt as a problem, it is just a conversion on the value of time, but the commercial banks take too much benefit from FED's money, that is a problem. The official lending rate from FED is almost 0, but the lending rate from banks are still very high

USD value basically quite stable (less than 10% variance in one year), but the amount of USD supply almost increased 4 times during recent years. In same situation, if the amount of BTC supply kept unchanged, then the value of BTC would have to increase by 400%


johnyj
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October 16, 2012, 01:51:02 AM
 #6

OP I think you are mainly trolling here and that's why I don't really see a point in trying to explain it to you. Basically I think that it will take the actual empirical end result of this experiment to shut people like you up that's why all we need to answer your questions is time.

Facts and reasoning, no personal attack please  Wink

knight22
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October 16, 2012, 01:54:44 AM
 #7

The official lending rate from FED is almost 0, but the lending rate from banks are still very high

The FED owns 60% of American's government debt.

zikeji
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October 16, 2012, 02:06:32 AM
 #8

The two are so different it isn't even worth debating about.
jking
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October 16, 2012, 03:40:34 AM
 #9

Well, for one, the US dollar is a liability. In the dollar's case, it's a liability of the Federal Reserve System. Euros are a liability of the ECB. Yen are liabilities of the Bank of Japan etc. You can actually see the liability-nature of the dollar by looking at the Fed's balance sheet:

http://www.federalreserve.gov/releases/h41/current/

Note that the Fed has got 1.136 trillion in outstanding currency liabilities.

Bitcoin, on the other hand, is not a liability of any institution.
johnyj
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October 16, 2012, 08:57:00 AM
 #10

Well, for one, the US dollar is a liability. In the dollar's case, it's a liability of the Federal Reserve System. Euros are a liability of the ECB. Yen are liabilities of the Bank of Japan etc. You can actually see the liability-nature of the dollar by looking at the Fed's balance sheet:

http://www.federalreserve.gov/releases/h41/current/

Note that the Fed has got 1.136 trillion in outstanding currency liabilities.

Bitcoin, on the other hand, is not a liability of any institution.

This is very true, FED owns those printed money, if they do not own it, they can not use it to buy bonds and claim the ownership of those things

But they own these money not for any personal reason, they use these money to adjust the money flow of the whole society: When there is a shortage of money, they create more by buying assets; when there is too much money, they get the money back to their account buy selling assets

Of course in this process, commercial banks and institutions always get the benefit, FED's money do not translate into each people's income directly, but first increase the income for banks and then banks' big customer and so on...



niko
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October 17, 2012, 03:54:38 AM
 #11

- I go to the farmers' market. They take dollars, not bitcoins.
- I go to work. They give me dollars, not bitcoins.

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creativex
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October 17, 2012, 02:42:41 PM
 #12

- I go to the farmers' market. They take dollars, not bitcoins.
- I go to work. They give me dollars, not bitcoins.

Is that because they choose to, or because a government authority figure will put a gun in their face if they do not exclusive deal in FRNs?

niko
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October 17, 2012, 02:52:32 PM
 #13

- I go to the farmers' market. They take dollars, not bitcoins.
- I go to work. They give me dollars, not bitcoins.

Is that because they choose to, or because a government authority figure will put a gun in their face if they do not exclusive deal in FRNs?
I'd say neither. It's simply because Bitcoin is still extremely obscure - most people haven't heard about it, and even if they did, they haven't learned the technical aspects, or they got misinformed. Government is people, too.
Anyhow, the title of the thread was about differences  between dollar and bitcoin, and my post was answering that question from practical perspective.

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bitcoinbear
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October 17, 2012, 04:50:44 PM
 #14

Well, for one, the US dollar is a liability. In the dollar's case, it's a liability of the Federal Reserve System. Euros are a liability of the ECB. Yen are liabilities of the Bank of Japan etc. You can actually see the liability-nature of the dollar by looking at the Fed's balance sheet:

http://www.federalreserve.gov/releases/h41/current/

Note that the Fed has got 1.136 trillion in outstanding currency liabilities.

Bitcoin, on the other hand, is not a liability of any institution.

So USD is a liability, but BTC is an asset. USD represents the future value that will be imparted to it, which is uncertain. BTC represents the past value that was put into it, which is certain since it is already past.

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justusranvier
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October 17, 2012, 08:36:24 PM
 #15

So USD is a liability, but BTC is an asset. USD represents the future value that will be imparted to it, which is uncertain. BTC represents the past value that was put into it, which is certain since it is already past.
No, neither one is an asset.

Both are claims on future production, which may or may not occur, and which may or may not be honored.

The difference is that USD can be arbitrarily diluted and BTC can not.
jking
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October 18, 2012, 02:50:26 AM
 #16

As long as the USD and BTC have some positive value, they are both assets. You can put them on the asset side of your balance sheet, so to say.

The difference is that while you may hold BTC on the asset side of your balance sheet, this BTC doesn't appear on the liability side of anyone else's balance sheet. When you hold USD on the asset side of your balance sheet, a corresponding entry appears on the liability side of someone else's balance sheet.

Specifically, if you hold paper USD, it appears on the liability side of the Fed's balance sheet. If you hold a USD bank deposit, it appears on the liability side of a private bank's balance sheet.
niko
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October 19, 2012, 12:18:50 AM
 #17

As long as the USD and BTC have some positive value, they are both assets. You can put them on the asset side of your balance sheet, so to say.

The difference is that while you may hold BTC on the asset side of your balance sheet, this BTC doesn't appear on the liability side of anyone else's balance sheet. When you hold USD on the asset side of your balance sheet, a corresponding entry appears on the liability side of someone else's balance sheet.

Specifically, if you hold paper USD, it appears on the liability side of the Fed's balance sheet. If you hold a USD bank deposit, it appears on the liability side of a private bank's balance sheet.
Good point. Are most of world's government currencies today like USD in this way? Any important exceptions?

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October 19, 2012, 12:32:22 AM
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Specifically, if you hold paper USD, it appears on the liability side of the Fed's balance sheet. If you hold a USD bank deposit, it appears on the liability side of a private bank's balance sheet.
Good point. Are most of world's government currencies today like USD in this way? Any important exceptions?

I think they more or less all are, yes. There are a few places like Switzerland where a partial gold backing of the central bank's paper is required; I recall the Swiss People's Party proposing that the required ratio be shortened from 1:6 to 1:5, in other words, the Swiss National Bank would have to hold reserves in physical gold equal in value to one fifth of the market price of issued francs.

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October 19, 2012, 01:33:59 AM
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Specifically, if you hold paper USD, it appears on the liability side of the Fed's balance sheet. If you hold a USD bank deposit, it appears on the liability side of a private bank's balance sheet.
Good point. Are most of world's government currencies today like USD in this way? Any important exceptions?

I think they more or less all are, yes. There are a few places like Switzerland where a partial gold backing of the central bank's paper is required; I recall the Swiss People's Party proposing that the required ratio be shortened from 1:6 to 1:5, in other words, the Swiss National Bank would have to hold reserves in physical gold equal in value to one fifth of the market price of issued francs.
That's the problem with government currencies. Even if they promise to restrict the quantity via backing they can break that promise at any time, and the holder has no recourse.
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October 19, 2012, 10:13:55 PM
 #20

To be more clear, how could BTC reduce the unemployment?

IMO, if enough money flow into BTC market, it will create many mining business and BTC investment companies, just like mortgage backed securities, there will be many people find work around it, the price rise continuously, and finally FED has to tighten the monetary policy to stop it from building a bubble




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