Canadian Fiscal Policy

[LightingGuy]

Our Central Bank does pretty well compared to others but obviously we have our own problems here. It got me thinking about what direction we are headed in, and the more I look into it, the more clear it seems that we are headed away from fiat currencies and back to currencies that are backed by assets.

Gold used to be that asset, but I believe that Bitcoin is going to become that asset. It does everything gold does, but better. It's easier to store, transport, and divide. The rate at which supply increases is hard capped.

In my opinion CBDCs won't work. By the time they finally get the pilot rolled out, Bitcoin will have continued to advance. There are many problems with Bitcoin still, but it is advancing rapidly and constantly getting better. And getting a CBDC to work for 38M people is going to take many many years. And they haven't even addressed what would happen to private banks.

And Bitcoin solves what CBDCs can't: decentralization and lack of control by any central entity. This means that you thevuser are in full control (for better or worse).

I don't think that Bitcoin itself can be used as a day to day currency for regular transactions, at least not in its current form. There are a few issues:

- Since Bitcoin is hard capped at 21 million units it would make issuing loans and credit a lot harder, which would be bad for productivity. There are advantages to banks being able to type money into existence, and as long as that money is being used for productive purposes, doesn't lead to price inflation (although it still would lead to asset inflation).

- The Bitcoin network is secure, but individuals can still get hacked, and when that happens there's no 1-800 number to call. People who are more savvy will know how to keep their BTC secure, but that would be asking a lot from the average non-investor.

- Volatility, at least right now. However this has already gotten much better. The current crash is the smallest yet in terms of percentages. As the network gets larger it will become more stable.

But, Bitcoin solves too many problems to ignore, and the longer governments pretend it doesn't the worse they'll be. In my opinion, the central bank would be smart to start buying Bitcoin now and start building up a reserve. It will never be as cheap as it is now again.

Based on its current form, I think the most likely outcome is that Bitcoin becomes the new global reserve currency, replacing the US dollar. I see this happening for a number of reasons:

- everyone knows fiat currency is flawed. We have been on a productivity decline since 1971 when the USD stopped being backed by gold (all other currencies are loosely pegged to the USD). That's also when assets like real estate and stocks stopped being correlated with income growth. Many of the issues we are facing today (inflation, unaffordability, inequality) can be traced to our switching to fiat currencies.

- Numerous foreign currencies are in the process of failing right now, and when that happens they're going to have to replace it with something. In the past that would've been the USD, but they've also now seen that the US is able and willing to seize nations reserves. There's less trust in the US and China, and smaller foreign countries, I believe, are going to choose Bitcoin instead.

[MonctonRad]

Originally Posted by LightingGuy

smaller foreign countries, I believe, are going to choose Bitcoin instead.

[Truenorth00]

Originally Posted by MonctonRad

Imagine having this douchebro as your hero:



https://en.m.wikipedia.org/wiki/Nayib_Bukele

[biguc]

Originally Posted by LightingGuy

Our Central Bank

That's monetary policy.

[Truenorth00]

Originally Posted by biguc

That's monetary policy.

Lol ...

[LightingGuy]

Originally Posted by biguc

That's monetary policy.

Yes you're right, if someone could please fix the title it'd be appreciated.

[LightingGuy]

Originally Posted by MonctonRad

You can laugh, but it's already happening. 44 central bankers from developing countries around the world visited El Salvador to learn about their experiment in May. Central African Republic also made it legal tender. You can debate whether or not it will work, but I'm not wrong about small countries looking towards Bitcoin as an alternative so they don't have to rely on Western currencies.

[MonctonRad]

Would you hang your hat on a "currency" which is virtual, has no intrinsic value and without any state backing of any form? A currency which has lost about 70% of it's value in the last two months????

I wouldn't. El Salvador and the Central African Republic might. Hell, maybe they could even convince Vanuatu, Kiribati or Transnistria. Even PP likes bitcoin (which is why my traditional Conservative support is wavering).

No sane individual or self respecting country would ever do this though.

Bitcoin is going to go the way of NFTs, and, the sooner the better.

[MolsonExport]

Lakelocker is back.

[acottawa]

Originally Posted by MolsonExport

Lakelocker is back.

Possibly having recently awoken from a coma and nobody told him about the bitcoin crash.

[LightingGuy]

Originally Posted by MonctonRad

Would you hang your hat on a "currency" which is virtual, has no intrinsic value and without any state backing of any form? A currency which has lost about 70% of it's value in the last two months????

I wouldn't. El Salvador and the Central African Republic might. Hell, maybe they could even convince Vanuatu, Kiribati or Transnistria. Even PP likes bitcoin (which is why my traditional Conservative support is wavering).

No sane individual or self respecting country would ever do this though.

Bitcoin is going to go the way of NFTs, and, the sooner the better.

Like I said it's not ready in its current form, but a 70% crash is mild and an improvement. Right now the market cap is still comparatively small compared to larger established asset classes, so any large transaction is going to cause massive price swings. Right now a lot of the speculators who bought at the beginning of the pandemic are cashing out, hence the crash. All new technologies go through this in the beginning. This is similar to the internet in 95 when nobody knew how it would transform society and all the legacy formats laughed.

You're wrong about Bitcoin not having intrinsic value. You can also say that about all currencies, and gold. The value in Bitcoin is in the problems that it solves:
1. It's immune to manipulation from central authorities - the only way to change how it works is through consensus of its users
2. It can't be inflated - it's capped at 21M BTC
3. It can't be seized - the only way to access it is to know someone's secret pass key
4. It can be sent to anyone anywhere in the world in a matter of seconds, and it costs almost nothing to do this (via the Lightning network)
5. It is the most secure network in the world (again individuals can be hacked, but the network is almost impossible to hack)
6. It's a completely transparent ledger

You can already use Bitcoin to convert foreign currency for much cheaper and faster than through traditional FOREX markets.

El Salvador and CAR are doing this as experiemnts, partially because they've run out of options. Ultimately I don't think they will be successful right away, but the world is going to learn massively from their experiments and it will result in the technology improving dramatically and help solve many of the remaining problems.

I don't think Bitcoin itself will be the currency we end up using, but I do think that at some point in the next 15 years the entire world will be using currencies that are some derivative of Bitcoin. I wouldn't want Canada to make that jump quite yet with the CDN, the technology isn't ready for that. But it would be completely idiotic for the government to not start buying Bitcoin and keeping it as reserves. It will never be this cheap again. It's volatile as hell, but every time it crashes, the bottom is still higher than the previous bottom. The trend is still logarithmic.

[biguc]

I actually got curious about how El Salvador is doing with Bitcoin crashing. Apparently they're working with an NFT peddler called Astro Babies (as if we needed another reminder that this shit is all just Beanie Babies) to release their own crypto token. Sounds like the kind of thing a totally legit country like El Salvador would do.

[biguc]

Originally Posted by LightingGuy

The value in Bitcoin is in the problems that it solves:
.

I recently got a chance to ask a blockchain developer about crypto. He said it's a bad use case.

[MolsonExport]

In other news, Nicaragua is making used pizza boxes legal tender. There is no electricity needed to mine this currency, as it already exists. Arriba.

Cameroon is going back to bottle caps.

You may laugh, but each has more intrinsic value than Bitcoin. No matter what Lakelocker says.

[acottawa]

Originally Posted by biguc

I actually got curious about how El Salvador is doing with Bitcoin crashing. Apparently they're working with an NFT peddler called Astro Babies (as if we needed another reminder that this shit is all just Beanie Babies) to release their own crypto token. Sounds like the kind of thing a totally legit country like El Salvador would do.

They lost 50 million, which is probably a lot for El Salvador.

[MonctonRad]

Originally Posted by LightingGuy

You're wrong about Bitcoin not having intrinsic value. You can also say that about all currencies, and gold. The value in Bitcoin is in the problems that it solves:
1. It's immune to manipulation from central authorities - the only way to change how it works is through consensus of its users
2. It can't be inflated - it's capped at 21M BTC
3. It can't be seized - the only way to access it is to know someone's secret pass key
4. It can be sent to anyone anywhere in the world in a matter of seconds, and it costs almost nothing to do this (via the Lightning network)
5. It is the most secure network in the world (again individuals can be hacked, but the network is almost impossible to hack)
6. It's a completely transparent ledger

1. It's immune to stabilization from central authorities (fixed it for you).
3. It can't be seized - the only way to access it is to know someone's secret pass key (great for Russian oligarchs and international drug dealers).
4. It can be sent to anyone anywhere in the world in a matter of seconds, (great for money launderers and international criminal organizations).

Bitcoin is a scam. Bitcoin is a pyramid scheme with no redeeming features whatsoever. It exists above the law and in contempt of the law. Bitcoin needs to be beaten into the ground and urinated on.

[LightingGuy]

Originally Posted by biguc

I actually got curious about how El Salvador is doing with Bitcoin crashing. Apparently they're working with an NFT peddler called Astro Babies (as if we needed another reminder that this shit is all just Beanie Babies) to release their own crypto token. Sounds like the kind of thing a totally legit country like El Salvador would do.

I agree that El Salvador isn't exactly trustworthy. But I also think that the technology is going to improve as a result of it.

Originally Posted by biguc

I recently got a chance to ask a blockchain developer about crypto. He said it's a bad use case.

That's a legitimate view point that I would need to think more about. Blockchain is here to stay though - there are so many other applications for it that aren't even related to finance.

Even NFTs, laughable as the whole bubble was, do have a future of some form in the digital verification of physical assets. ie. Every physical asset will be tied to a digital signature. To prove that the asset is real and not counterfeit you would also need to provide that you own the NFT associated with it. It's just an example.

[Nashe]

I mined enough crypto to pay for the video card I bought that I used to mine crypto.

Now I play video games with that video card.

Most successful investment I ever made. I haven't checked my coin wallet in months.

[Truenorth00]

The CEO of Binance moving to Dubai should tell you where this party is going ...

[LightingGuy]

Originally Posted by MonctonRad

1. It's immune to stabilization from central authorities (fixed it for you).
3. It can't be seized - the only way to access it is to know someone's secret pass key (great for Russian oligarchs and international drug dealers).
4. It can be sent to anyone anywhere in the world in a matter of seconds, (great for money launderers and international criminal organizations).

Bitcoin is a scam. Bitcoin is a pyramid scheme with no redeeming features whatsoever. It exists above the law and in contempt of the law. Bitcoin needs to be beaten into the ground and urinated on.

1. Gold backed currencies before central banks existed were more stable than what we have now. As bitcoin matures (or potentially gets replaced by a better version of it), not having to rely on a central bank for stabilization would do the world a huge favour.

3. Sure but that is a small minority of transactions. It's a tool just like any other. A hammer can be used to build a house or it can be used for violence. This is no different. Pointing to a small sample of immoral things and ignoring all the benefits of a technology is ignorance. The foicus needs to be on how to take advantage of the benefits of the technology and minimize the bad side effects.

4. That's an incredibly shallow argument. Waiting for money sucks. It's also great for immigrants who need to send money back to their home countries and are getting screwed each time they have to send wire transfers. And for people that do international business and don't want o get screwed by a exchange rate fluctuation while they wait for their funds to become accessible. But criminals will also be able to use it, just like they're able to use cash right now. Every new tool comes with new side-problems that need to be addressed - that's what the focus needs to be on, how to minimize harm caused by these side-effects.

If it was possible to stop bitcoin, it would've been done by now. It's been 13 years and the network has only gotten stronger and more secure. The only reason most central banks are developing CBDCs now are because they know their currencies will be replaced by blockchain-based currencies if they don't.