The eternal "trade-off between freedom and security? The Cyber-Intelligence Sharing Protection Act (CISPA) would push information-sharing between business and government – to prevent “catastrophic attack on our nation’s vital networks.” The feds could access personal and private communications. Supported by Facebook and Microsoft, the bill is fiercely opposed by Google and the Electronic Frontier Foundation. EFF claims provisions are far too vague, using threat of cyber-crimes to distract from infringements on free speech. The sad thing? Our privacy defenders are clueless how to handle this. Concept-blind. They rail against inevitable things while failing to use leverage to demand real concessions. The kind that might actually defend freedom. See also: https://www.eff.org/deeplinks/2012/04/eff-opposes-cispa-hackers-and-founders-panelAnd: http://anewdomain.net/2012/04/16/cispa-infographic-what-is-it-and-how-is-it-like-sopa-infographic/
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- No, we actually agree. The money in my savings account circulates by being loaned out. That's how I earn interest on it. But I don't want the value of that savings to be debased by legalized counterfeiting. No hoarding is involved here.Apr 24, 2012
- Phil, not everyone can tell that the weight changed. Can you easily tell which coins you have are different weights from others with the same face value? Most people don't carry scales and touchstones, but if you go to an open currency market, they'll need to.
This is the part where you lose me, because I could swear you just described currently existing international currency markets, where the dollar is doing quite well. So it looks like you're just proposing to extend that market to the state, city, or family level, which takes the standardization (all dollars have the same value, as you said) and discards it.
Perry, if there's no inflation, the fact that you earn interest is getting something from nothing. The bank or government (via FDIC) is taking on risk so you don't. Even if that safety net weren't there, then you're not really saving money as much as you're having the bank act as your agent in loaning it out (proxy investment). So long as everyone saves and borrows mor or less evenly, things can stay balanced.
But if there are people who tend to get more interest than they pay out, then over time they will get more and more dollars, leaving fewer actually in the economy, things start grinding to a halt (in markets that use that currency), and people have to move to another currency that is actually available. Ergo, the market encourages hoarding.Apr 24, 2012
- — If it works internationally, why would there be a problem with it domestically?
You're also neglecting a few points that your own argument opens up. To start with, the US dollar was strong largely because the US has had the world's largest economy since the end of World War 2. (It staggered badly in the 1920s-1930s, and before that in the 1860s-1870s. Who'd have thought it...?) It has continued to be ... well, not strong, but holding its own with the US economy stalled, principally because it is the world's reserve currency and because everyone else was hit by the same banking crisis - some nations worse than the US. (The Icelanders fired their government over it and are jointly writing a new Icelandic Constitution.) As long as the US dollar remained the world's reserve, it bolstered the US economy, and as long as the US economy dominated the world, the US dollar remained the reserve currency of choice. Now, with the US economy staggering and being threatened by China's, there are growing calls to diversify beyond the dollar or even change to a different reserve currency. The US will not dominate the world's economy for much longer; China now has the second largest economy in the world, more than two thirds that of the US, and is the worlds fifth fastest growing economy. Meanwhile the US economy is stalled and going nowhere, and the Fed is printing dollars and calling it "quantitative easing" (which is no more than a ten-dollar phrase for "diluting the dollar").
So, sure, don't count the US dollar out yet; but it's far from unassailable, and we're managing it very poorly. It takes two 2010 dollars to equal the actual buying power of one 1990 dollar. $3.30 to equal one 1980 dollar. $6.60 for a 1970 dollar, $11 to equal one 1950 dollar. Would you say it's held its value well?
As to the weight detection issue, when you're talking about a currency issued in billion-dollar quantities in an internet-connected world, you don't need everyone to have a currency scale. (Though in mediaeval times, when debasing the coinage was common, many merchants did.) It only takes one person to notice, and then a few others to check the report and confirm it, and the secret is out.Apr 24, 2012
- Why not smaller scales? You answered in the very next sentence: with scale comes power. Divide the dollar market into 50 state markets and every state has to set up an equivalent to the Fed. Plus, the states do not have the "does not default" history the US does, so it's highly unlikely any of them will be considered a reserve currency. So either we're back in the Middle Ages with a lot, or the world shifts to the next largest economy's currency... the yuan? Yen? I'm not sure. Probably not the Euro, given its issues.
The 1860's to 1870's, that would be the Civil War and the Gilded Age, and the 20s-30s, when we were on the gold standard. Both times with notoriously little regulation. Iceland has actually done a great job recovering from the crisis since they didn't nationalize their 1%'s debts like Ireland did.
China isn't a threat to the dollar because it's pegged to the dollar. If it became a free-floating currency, China would take the brunt of it as their labor would no longer be such a sweet deal. Hence China needs the dollar to stay stable. China also does not have the infrastructure to grow like we do. We'd be even better off if we invested in our infrastructure, but a certain right-wing party is too busy telling everyone the government has to liquidate itself.
Quantitative easing is needed because short-term bond rates are up against the zero lower bound. Yep, the world is perfectly willing to loan the US money for close to 0% interest for up to about 10 years, and has been willing to do this for four years now. We're never going to get a better deal, so of course we're not taking it. Any sane entity would refinance everything they could. Oh, wait, that's what the Fed is doing by buying up high-interest 10-years...
Your numbers are indicative of a 3-4% inflation rate, which is quite good. Having paid attention to this since the 80's, I haven't seen it as a real problem (unlike the late 70's/early 80's when it was), and there are straightforward, simple ways to deal with it. Namely, invest your money in something that pays better than inflation. Problem solved. It's a lot like dealing with so-called "savings time": just adjust your clock and be done with it.
To your final point: a Chinese-scale media control could break that feedback loop and destabilize the system. Within China, at least.
All in all, even in these messed-up times, I think the dollar is doing fine and should be left alone.Apr 24, 2012
- There is no "has to" there. You're over-extending the analogy again.
....Oh, the heck with it. I could answer your individual points (some to agree, like Iceland; others to refute), but your mind is clearly made up, so I'm not going to argue the issue further.Apr 25, 2012
- I wasn't asking for you help making up my mind. I wanted to see your side of it. You laid it out clearly. Thanks! It was nice to talk to someone who had a lot more to work with than "we should go back to the gold standard".Apr 25, 2012