Is the US Dollar Too Volatile?

[Hydrogen]

Today, it seems everywhere you look there are negative things being said about bitcoin volatility.

To break up the monotony of borish media sources endlessly discussing btc volatility as if they have nothing better to do than beat dead horses 24/7/365, let's change the subject to a more neglected topic, that of: fiat volatility.  

Behold exhibit A.



Image link: https://i.imgur.com/km3TFeR.jpg

This chart would appear to contradict what many say about the US dollar representing a stable value. The buying power of the US dollar appears to be declining significantly over time.

Example of the purchasing power of the US dollar declining: a 2 liter bottle of soda used to cost $1.00 in the united states, not long ago. Today it costs $2.00. If the paradigm shift from $1 to $2 occurs over a 10 year period, we might say that inflation is occurring @ a rate of 10% per year or the dollar is losing 10% of its value per year in contrast to purchasing food items like 2 liter bottles of soda. This precedent of diminishing fiat buying power could apply over our global economy.

So it is possible the purchasing power of the US dollar and other fiat currencies are diminishing significantly over time.

What are everyones thoughts on this?  

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[Eternu]

I am not an expert of economics, but even I can see that Dollar has lost its value significantly. I am not sure why, but from time to time we see economic crisis and dollar involved in it, maybe because Dollar is one of worlds most used currencies. America is one of economically strongest country, but I am not sure if its economic strength is real. I have heard that US is in debt a lot, that they owe China a lot of money. If they continue on that road of debt, Dollar would be ruined. With everything that America is involved with, its no wonder that Dollar is so volatile.

[palle11]

I expect dollar to actually be volatile because it is the most active  fiat, recognized and used for trade internationally. It dominates the exchanges just as bitcoin do. This is one reason. Dominating the market means multiple activities and maybe manipulation around the currency.

[Hydrogen]

America is one of economically strongest country, but I am not sure if its economic strength is real. I have heard that US is in debt a lot, that they owe China a lot of money. If they continue on that road of debt, Dollar would be ruined. With everything that America is involved with, its no wonder that Dollar is so volatile.

I don't know what to think about the economic relationship between the united states and china. I do wonder how much of china's recent economic success can be measured in china pirating patented american technology and media. China pirates everything from gaming consoles to CD's/DVD's, to technology and industrial processes which are copyrighted intellectual property which in theory should be protected under international law. China has even gone so far as to counterfeit ferraris, luxury automobiles, car parts and other brand name products.

Is it correct that china "loans" the USA money in terms of them buying US treasury bonds. I don't know if that qualifies as the united states owing china money. There could be a trade war brewing between the two nations. China recently has moved to drop the petro dollar and is seeking to denominate their oil transactions in their native currency, the yuan.

To be honest, american politicians normally bend over backwards for china. They have sold out their own country to the chinese for years. Its only recently that we're beginning to see a paradigm shift in the opposite direction, with the trade deficit between china and the USA reversing for the first time in decades.

[Za1n]

I don't really think anyone is claiming that the USD is not volatile when they talk about BTC's volatility, it is just that BTC's volatility is much more pronounced on a day-to-day level, versus the USD with its long-term volatility.

Using your 2-liter bottle of soda example, I am fairly confident that the price in USD had remained pretty constant at $2/bottle over the last 3 months. Where I live it is actually only about $1.59, but in any event the basic premise still holds, that with the exception of temporary sales, the price of soda remains pretty constant relative to USD on a day-to-day basis.

Now if we priced that 2-liter bottle of soda in BTC, we would have:

November 1, 2017 - BTC ~$6750, bottle soda = 0.00029629 BTC
December 1, 2017 - BTC ~$10,500, bottle soda = 0.00019047 BTC
December 17, 2017 - BTC ~ $20,000, bottle soda = 0.0001000 BTC
January 1, 2018 - BTC ~$13,700, bottle soda = 0.00014598 BTC
February 6, 2018 - BTC ~$6,400, bottle soda = 0.0003125 BTC* Used instead of 1st because it represents low point
March 1, 2018 - BTC ~$11,000, bottle soda - 0.00018181 BTC

So that is what is I call volatile!

If you were selling a used car for 1 BTC, on December 15th, 2017 you would have gotten $20k for it, assuming you cashed out that same day, and not even 2 months later on February 6, 2018 you would have only got $6,400 for the same car. Now if you paid me in cash instead, the $20,000 I got in December would be pretty much still be worth $20,000 today.

[yugyug]

America is one of economically strongest country, but I am not sure if its economic strength is real. I have heard that US is in debt a lot, that they owe China a lot of money. If they continue on that road of debt, Dollar would be ruined. With everything that America is involved with, its no wonder that Dollar is so volatile.

I don't know what to think about the economic relationship between the united states and china. I do wonder how much of china's recent economic success can be measured in china pirating patented american technology and media. China pirates everything from gaming consoles to CD's/DVD's, to technology and industrial processes which are copyrighted intellectual property which in theory should be protected under international law. China has even gone so far as to counterfeit ferraris, luxury automobiles, car parts and other brand name products.

Is it correct that china "loans" the USA money in terms of them buying US treasury bonds. I don't know if that qualifies as the united states owing china money. There could be a trade war brewing between the two nations. China recently has moved to drop the petro dollar and is seeking to denominate their oil transactions in their native currency, the yuan.

To be honest, american politicians normally bend over backwards for china. They have sold out their own country to the chinese for years. Its only recently that we're beginning to see a paradigm shift in the opposite direction, with the trade deficit between china and the USA reversing for the first time in decades.

American government falls into Chinese traps through cheap labor, cheap tax and free trade that's what makes more attractive to rich American businessmen and corporation to put investment in China and sharing some of its technology not knowing that Chinese men would pirate their products sell them very cheap and make them very rich. So this is now the current situation China are dominating vs American economy. Speaking of US dollar volatility, i think USD is still dominant but the inflation rate is unstoppable.

[CryptoBry]

You are talking here of the power of inflation and how it is eating up the purchasing power of the dollar vis-a-vis the common products we are all purchasing almost everyday. Yes, in effect, you can say that it is also very volatile though this is not a very visible one unlike what we are seeing with Bitcoin which can move significantly up or down in minutes. What is happening with the American economy is a big testament of how the government and in extension the American people had been neglecting good economic policies and instead adopting non-sense policies that produced the kind of side-effects now biting the purse of the people.

[Eternu]

America is one of economically strongest country, but I am not sure if its economic strength is real. I have heard that US is in debt a lot, that they owe China a lot of money. If they continue on that road of debt, Dollar would be ruined. With everything that America is involved with, its no wonder that Dollar is so volatile.

I don't know what to think about the economic relationship between the united states and china. I do wonder how much of china's recent economic success can be measured in china pirating patented american technology and media. China pirates everything from gaming consoles to CD's/DVD's, to technology and industrial processes which are copyrighted intellectual property which in theory should be protected under international law. China has even gone so far as to counterfeit ferraris, luxury automobiles, car parts and other brand name products.

Is it correct that china "loans" the USA money in terms of them buying US treasury bonds. I don't know if that qualifies as the united states owing china money. There could be a trade war brewing between the two nations. China recently has moved to drop the petro dollar and is seeking to denominate their oil transactions in their native currency, the yuan.

To be honest, american politicians normally bend over backwards for china. They have sold out their own country to the chinese for years. Its only recently that we're beginning to see a paradigm shift in the opposite direction, with the trade deficit between china and the USA reversing for the first time in decades.

I have found this article where we can see debt of US, but I don't know if its valid info or not.
- https://www.thebalance.com/u-s-debt-to-china-how-much-does-it-own-3306355

As for piracy... well you are right when you say that it have impact on dollars strength. China have been producing copies of all kind of things, but honestly they are not as good as an original. Most of the people would go for the official thing instead of Chinese copy.
I guess all this is just part of economic war you speak of. But there are other reasons why China is rising and US dollar is getting weaker, but that is for other topic.

Its no wonder why dollar is so volatile. Dollar is one of strongest (or is it?) and most used currency in the world, many things have impact on it.

[Beerwizzard]

It seems like OP is a bit messed up with this question. Volatility is the frequency of the price changes. For example if today pair EUR/USD is at 1.2599, in some hours it turns to 1.2499 and tomorrow morning it is 1.2699 (I've ignored the smaller fluctuations to make a better example) then the currency is volatile (it changes frequently, to the both sides). The thing that you shwed on the chart is an inflation. It is pretty obvious that every currency devaluates with the time for many different reasons. The task of the governmental financial departments is to make the inflation low and stable to make economy grow. This is a standart and safe thing.

[hamade]

yes the US Dollar  also is Volatile but its volatility not every day vs Bitcoin
the bitcoin volatility every day and it is depends on the sell and buy
yes your words it is true

[jseverson]

Something being volatile basically means it's subject to wild, rapid changes. Inflation does play a part in changes in value, but its effect is more of a long term one so I don't think it qualifies as a factor to volatility.

What I can say for certain about the USD is that compared to Bitcoin, it's completely and absolutely stable. The chart says that USD value in 1910 was only about 20% off from 10 years prior, in a pretty steep drop by its own standards. Bitcoin, on the other hand, is more than 100,000% off from just around 8 years ago, and is more than 50% off from just four months ago. The USD does move quite a bit, but it's entirely incomparable with Bitcoin in this aspect.

That being said, inflation vs. deflation is an entirely different issue.

[staywoke081]

yes the US Dollar  also is Volatile but its volatility not every day vs Bitcoin
the bitcoin volatility every day and it is depends on the sell and buy
yes your words it is true

Its not volatile at all. By defintion volatile means change rapidily and unexpected, you would never see that with the US dollar. Instead what happens is a over time they slowly bleed you out without knowing it, this is the opposite of volatile. Instead it was a stable draining of purchasing power.

[jaysabi]

Today, it seems everywhere you look there are negative things being said about bitcoin volatility.

To break up the monotony of borish media sources endlessly discussing btc volatility as if they have nothing better to do than beat dead horses 24/7/365, let's change the subject to a more neglected topic, that of: fiat volatility.  

Behold exhibit A.



Image link: https://i.imgur.com/km3TFeR.jpg

This chart would appear to contradict what many say about the US dollar representing a stable value. The buying power of the US dollar appears to be declining significantly over time.

Example of the purchasing power of the US dollar declining: a 2 liter bottle of soda used to cost $1.00 in the united states, not long ago. Today it costs $2.00. If the paradigm shift from $1 to $2 occurs over a 10 year period, we might say that inflation is occurring @ a rate of 10% per year or the dollar is losing 10% of its value per year in contrast to purchasing food items like 2 liter bottles of soda. This precedent of diminishing fiat buying power could apply over our global economy.

So it is possible the purchasing power of the US dollar and other fiat currencies are diminishing significantly over time.

What are everyones thoughts on this?  

Volatility means change in value over time, so you could say that a constantly falling value constitutes volatility, although in most senses people refer to volatility to mean rapid price changes over time and generally in both an up/down motion. So it's already a stretch to call the dollar volatile within the most accepted meaning of the term. More importantly though, you have to zoom out 100 years to make an argument that the dollar is not stable. Over years, the dollar is stable. Over decades, the dollar is fairly stable. In both cases, the stability is great enough allow long term planning and storage of value and for people to be reasonably certain what their stored value will be worth for long periods of time. By contrast, Bitcoin is not stable and it does not allow for long term safety of value. To even try to compare the two is to start with a ridiculous premise.

More to the point about the dollar, these charts always show devaluation over longer periods of time than anyone holds physical money, so it purports to show a loss of value that has never actually happened to anyone. If you had a physical dollar 100 years ago, it would be depreciated, yes. But, you didn't have a dollar 100 years ago because you weren't alive 100 years ago. And the people who were alive didn't hold value in cash currency for 100 years. In short, nobody has lost 95% of their stored value due to depreciation of the dollar.

More importantly, there is no such thing as perfect money. What we have in the USD is stable over long periods of time and due to the nature of value and an inability to reliably store it in this universe, that's the best you're ever going to get.

Remember, money itself isn't value. It's a representation of value, meaning it represents real things that are produced and consumed that people want/need in the present. This is the key point here: You cannot possibly store more value than what can ever be consumed in the present, so expecting a representation of value that was created 100 years ago to hold perfectly for goods that will no longer exist when it is to be spent is unreasonable. Money depreciates necessarily over time unless we can perfectly store all the value ever created, and we cannot, because we constantly destroy value by consuming goods or through depreciation of real assets over time, and likewise, money has to lose value over time for the same reason.

[clrpod]

FIAT currencies have a lot less volatility than cryptocurrencies, that's a given, but their inflationary nature works against them and the economies that they serve. A stable price currency would be much better for all involved but it's difficult to think about how this would work.

[Scallywag]

it becomes even more fun if you look at 100 years from now , the predictions for the purchasing power of 1 usd then are really bad. this is why i am excited about crypto , no artificial inlation only benefiting the rich.

[BCTBF]

All market prices will continue to fluctuate but with far-reaching differences between cryptocurrency and fiat markets. Therefore I am very fond of the rapidly moving movement of the cryptocurrency market, with it we can take advantage of the quick moments for trading and making a profit.

[amishmanish]

I don't know what to think about the economic relationship between the united states and china. I do wonder how much of china's recent economic success can be measured in china pirating patented american technology and media. China pirates everything from gaming consoles to CD's/DVD's, to technology and industrial processes which are copyrighted intellectual property which in theory should be protected under international law. China has even gone so far as to counterfeit ferraris, luxury automobiles, car parts and other brand name products.

The chinese like to take a lot of pride in their history and culture. They had to undergo subjugation during the modern times because of falling behind in the race for technology. With centralized leadership, they have given a whole new model of governance. A shrewd, whatever-works-goes model.
They stamped out dissenters mercilessly and now spread propaganda by making people chauvinize over South-China Sea, One-china policy etc. etc. They often raise issues with India just because they want to keep the "nationalism" issues burning. Despite it being clear that India poses no danger whatsoever to them. They are just too big.

They have shamelessly copied and reverse-engineered most western technologies. They have invested heavily in their millitary and are now well on their way to establish the silk-route lead supremacy of the old world.
They are motivated by clear selfish interests and the Chinese government acts like a selfish, shrewd individual. Normal democracies like USA, India on the other hand have to spend much more time in managing internal differences and trying to arrive at a consensus.

In terms of consensus, Chinese are like single-majority PoS while our democracies are like fairly decentralized PoW.

Despite all the platitudes offered by China regarding having no intentions to replace America, it's only a matter of time before they make the moves.  

[clrpod]

I don't know what to think about the economic relationship between the united states and china. I do wonder how much of china's recent economic success can be measured in china pirating patented american technology and media. China pirates everything from gaming consoles to CD's/DVD's, to technology and industrial processes which are copyrighted intellectual property which in theory should be protected under international law. China has even gone so far as to counterfeit ferraris, luxury automobiles, car parts and other brand name products.

The chinese like to take a lot of pride in their history and culture. They had to undergo subjugation during the modern times because of falling behind in the race for technology. With centralized leadership, they have given a whole new model of governance. A shrewd, whatever-works-goes model.
They stamped out dissenters mercilessly and now spread propaganda by making people chauvinize over South-China Sea, One-china policy etc. etc. They often raise issues with India just because they want to keep the "nationalism" issues burning. Despite it being clear that India poses no danger whatsoever to them. They are just too big.

They have shamelessly copied and reverse-engineered most western technologies. They have invested heavily in their millitary and are now well on their way to establish the silk-route lead supremacy of the old world.
They are motivated by clear selfish interests and the Chinese government acts like a selfish, shrewd individual. Normal democracies like USA, India on the other hand have to spend much more time in managing internal differences and trying to arrive at a consensus.

In terms of consensus, Chinese are like single-majority PoS while our democracies are like fairly decentralized PoW.

Despite all the platitudes offered by China regarding having no intentions to replace America, it's only a matter of time before they make the moves.  

It seems that China and the US are constantly at war with one another when it comes to politics and trade but the truth of it is that they each need one another. The US needs to be able to import many things from China for its continued success and China needs to export to the US. I see that it will continue like that for some time, until perhaps China feels that they can generate enough in sales nationally or from exports to other countries that they can play hard ball a little more so with the US. It reminds me almost of a larger bigger and a hungrier smaller brother. USA being the big brother who right now can win all the fights but once the little brother grows up it won't be the same story.

[player514]

Today, it seems everywhere you look there are negative things being said about bitcoin volatility.

To break up the monotony of borish media sources endlessly discussing btc volatility as if they have nothing better to do than beat dead horses 24/7/365, let's change the subject to a more neglected topic, that of: fiat volatility.  

Behold exhibit A.



Image link: https://i.imgur.com/km3TFeR.jpg

This chart would appear to contradict what many say about the US dollar representing a stable value. The buying power of the US dollar appears to be declining significantly over time.

Example of the purchasing power of the US dollar declining: a 2 liter bottle of soda used to cost $1.00 in the united states, not long ago. Today it costs $2.00. If the paradigm shift from $1 to $2 occurs over a 10 year period, we might say that inflation is occurring @ a rate of 10% per year or the dollar is losing 10% of its value per year in contrast to purchasing food items like 2 liter bottles of soda. This precedent of diminishing fiat buying power could apply over our global economy.

So it is possible the purchasing power of the US dollar and other fiat currencies are diminishing significantly over time.

What are everyones thoughts on this?  

I think volatility is not necessarily a bad or a good thing, and I think volatility is determined moreso by spikes in value in a short amount of time. Because of this, I don't think the graph you posted is pertinent to the idea of volatility, but from the graph I do see the purchasing power of the USD going down. I don't think the USD purchasing power is volatile, but I do see that it has gone down steadily over time. However, with bitcoin, you'll see spikes that either go up or down, but they happen in a much shorter amount of time. Thus, bitcoin is still more volatile than the USD, but I don't think that's in particular a bad thing.

[BillCoin]

I expect dollar to actually be volatile because it is the most active  fiat, recognized and used for trade internationally. It dominates the exchanges just as bitcoin do. This is one reason. Dominating the market means multiple activities and maybe manipulation around the currency.

Dollar won't be so volatile because it's being controlled by the USA.
It's a centralized currency and if the currency drops, usa can just increase the interest rate, or if the currency goes higher, US can just print more cash or decrease the interest rate.
They can control the currency and they prevent it from being to volatility so the economy will stay stable.
Volatility currency isn't good for the economy in the long term.