How to Destroy or Save the US Dollar Mr President – Simon Paige
Mr President your comments last week about crypto currencies being based on nothing but thin air come close to providing the blueprint for the destruction of the US dollar, something I am sure you would wish to avoid.
When you say “nothing but thin air” you are going to the heart of ALL monetary value. Only people can create money. Yes, the Federal Reserve can print money but it is worthless unless people give it value. Think back to the wheelbarrow loads of German marks in hyper-inflating Germany in 1922. Or the legal tender in revolutionary France in 1879 that no one would use even on pain of death. If people decide a currency is worthless there is nothing a government can do.
The usual way a currency destructs is by government printing too much. The result is that people lose faith in its value. There are 590 dead currencies in the world. Many have gone this way.
Today people are waking up to the fact that they, not governments or their central banks, give money its value. This is the real process we are witnessing with Bitcoin — an enlightenment. Here is a piece of crypto-graphic code that people are realising they can imbued with value. As more people realise that they can create money, they question whether they need state-sponsored currency at all.
So when you say “nothing but thin air” you are describing the US dollar as well as crypto-currencies. That’s the challenge. If there is a better currency available, one for instance that does not require a central authority, people may choose to use this instead of the dollar. That means demise of the dollar by people simply not using it.
Is that absurd? Not really. Once people have a choice competition creates winners and losers. It is the American way.
You could ban Bitcoin in the same way Roosevelt in 1933 banned private ownership of gold with Executive Order 6102. But just as Roosevelt’s actions did nothing to diminish the value of gold, any ban of Bitcoin will achieve nothing except perhaps increase its value. Besides, stifling competition is un-American.
There is however another way. Embrace Bitcoin and the competition it and other digital currencies bring. Competition would be good for the dollar. It would provide the fiscal discipline that has been lacking since Nixon removed it from its peg to the value of gold in 1971. In the same way that competition between search engines spurred the development of Google, so competition in currency can give the dollar the impetus its needs to return to a stable means of exchange.
This is the one thing the world’s most enduring currencies have had in common — a stable value. People want stability so that they know they can buy the same goods in 5, 10 or 30 years’ time as today.
“’Money’ is a human ideal — a universal medium of trade, a unit of account, and a standard of value. Humans then search for the practical implementation that most closely fits this concept. If nothing better is available, beaver pelts, shells, cigarettes or whale’s teeth may be pressed into service. Inherent within the concept of money is the idea that it should be as stable in value as possible — that it should serve as a universal measure of the market values of all the other goods and services in an economy, in something of the fashion that meters and kilograms are standards of length and weight.” (Nathan Lewis Gold the Final Standard page 230.)
So Mr President rather than being a threat Bitcoin can be the US dollar’s salvation. Allow competition in currency.
Branton Kenton-Dau is founder of Saver Token, the world’s only stable money.
Published at Sun, 21 Jul 2019 03:09:41 +0000
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By antwerpenR on 2013-09-06 16:37:45
