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Comment by pm90 | Hacker News Reader

Agree with this. I like the libertarian and anti-government propaganda behind bitcoin, but I suspect few people understand the true benefits of a currency that doesn't fluctuate wildly. Federal institutions of stable democracies like the US, EU, India etc. strive to achieve this stability and its no easy feat. I'm not sure how a currency without a regulating institution would fare but the recent news around bitcoin, ethereum etc doesn't sound very encouraging (although I'm happy with both currencies existing simultaneously).

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> I suspect few people understand the true benefits of a currency that doesn't fluctuate wildly.

I suspect most people understand the true benefits of it. But most people in the US and (Western) Europe have enjoyed the benefits of very stable currencies (measured in decades). Compare this to countries like Argentina which saw 26.7% inflation just last year. See the price correction happen where your grocery store suddenly jumps up the prices on your food from $10 to $12 just to account for inflation. Then wait for your paychecks to catch up. Then your employer is stuck deciding if they have to let people go (may not be simple in some countries) or desperately seek other cost savings and methods of revenue increase. This leads, potentially, to further price increases on consumer goods, requiring further pay increases to be able to maintain basic consumption, leading to more pressure on employers, etc.

Deflation has its own downward spiral once it gets past a small percentage.

The 'solution' to bad currency policy is simply to use a currency that is well managed.

Some small Caribbean islands use USD exclusively.

After their national crises, Iceland almost switched to using Canadian dollars.

The 'black market' economy in Venezueala works on USD, as it does in many parts of the world.

So long as they are established currencies with widespread use and liquidity - we don't need bitcoin.

The most 'legit' currency in the world today is probably the Euro. It's the only currency backed by real assets. The reason for this is because no European country can fully trust the other. Ergo - hard currency.

Next would be Scandinavian countries, Canada, UK etc.

The Fed is not the most trusted entity, but due to the massive and widespread adoption of the USD, they have a kind of 'seignorage' and strategic backing (Oil prices etc.) - and so it's kind of 'de facto' a very good currency.

The Yen would be up there as well but the Bank of Japan has been doing crazy things to fight deflation and so it's risky for outsiders to own.

You don't need to start a new line for every sentence man. It makes things hard to read.

Sorry man.

You're right.

Kidding :).

The ECB has more credibility than the Fed? Can you please share some of whatever you just smoked?

"The ECB has more credibility than the Fed? Can you please share some of whatever you just smoked?"

Are you kidding?

The Euro is backed by assets.

The USD is backed by US Treasuries - i.e. the faith that the US government can repay it's bonds.

That alone makes Euros more 'solid' than USD.

In 2008, the Fed absorbed Trillions of dollars of worthless real-estate assets onto it's balance sheet at par value - so as to get the toxicity off banks balance sheets. One day (hopefully when those assets have recovered) the banks may have to take those assets back, but this remains to be seen. This might be the greatest incidence of financial fraud in the history of the world.

The ECB has much stricter policy because Euro states don't trust each other. Do you think that Germany will allow 'money printing' to give Greece cheap loans? Or Poland? Of course not. The only way that the Euro could work is if it's a fairly strict currency.

The Euro is a very strong currency. (back by assets)

The Dollar is a medium strong currency. (backed by a government, with some odd manipulations)

The RMB is a fantasy currency (worth whatever the CCP says it's worth).

What are these assets that you talk about? The Euro is not backed by Gold or any other physical asset; in fact, it seems to be even more nebulous than the USD.

"What are these assets that you talk about? The Euro is not backed by Gold or any other physical asset; in fact, it seems to be even more nebulous than the USD."

The Euro is backed by 'high quality' assets such as real estate.

When a bank wants Euros, they put up assets as collateral for it.

In recent years, there has been a lot of debate because of the 'lowering the quality' of such assets, which is kind of a form of QE.

You want the details? Here are the exact details of what you can exchange for credit if you are a bank in the Eurozone:

https://www.ecb.europa.eu/paym/coll/html/index.en.html

You didn't define what those assets are, you didn't acknowledge that central bank solvency works nothing like a regular corporation, you called QE "money printing" rather than an asset swap (showing your lack of practical knowledge even more), you redefined the meaning of fraud, and you act like the most powerful government in the world demanding its citizens pay a yearly sum in those same dollars isn't a form of backing. You fail to acknowledge the ECB serves the same mechanical function as the Fed, you fail to acknowledge that central banks are a slave to demographic forces and thus the supply/demand for capital (aka money) and try to follow a natural rate, and you fail to understand the most basic functioning of modern currencies in the most mechanical ways - ways that are openly explained by the same aforementioned central banks in white papers on their websites. You also act like their function as a lender of last resort in the event of runs on banks caused by maturity mismatches that tend to happen once every few generations isn't explicitly and historically one of the primary reasons for their continued existence - your "purge the system" rhetoric aside, society seems to be ok with the banking sector not getting wiped out when things like that happen, because most people aren't naive enough to think anything good comes from total economic collapse. In fact, the same country you seem to hold up as a bastion of responsibility ended up with a collapsed economy within living memory, but no, it all turned out for the better... Yeah, I wonder why Europeans ex-Germans are pretty sick of German economic logic. (Brexit.)

As for relative credibility, at least the Fed didn't try to raise rates in 2010/2011, causing a further recession and much of the ongoing troubles there. German arrogance and 19th century moralizing-economic thinking is actually one of the major forces holding the continent back, while the US continues to shine.

" You also act like their function as a lender of last resort in the event of runs on banks caused by maturity mismatches that tend to happen once every few generations isn't explicitly and historically one of the primary reasons for their continued existence - your "purge the system" rhetoric aside,"

Listen buddy - you have absolutely no idea what you are talking about, okay?

Not only that - you don't make any sense - and you don't have a grasp of language either.

"I act like" ?

"My purge system rhetoric" ?

Every statement in your comment is not only wrong - they make no sense.

The Euro is widely recognized as a stronger currency than the USD at least in the technical sense. There are more shenanigans at the Fed than at the ECB. This is not a secret.

Don't feed the troll.

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