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Comment by reedjosh | Hacker News Reader

As I said, it precludes the means of financing wars. If US citizens had to pay for the costs of hegemony directly, people would actually push back. Instead we get ever inflating and impossible to afford housing and a declining standard of living without understanding why.

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I don't think there's anything that would preclude the us government from selling bitcoin treasury bonds (accepting bitcoin with the promise to pay more back at a later date, basically). Even if the block chain didn't support it, the contract (bond) can still exist off-chain.

If it took off, and non technical people became more engaged in the space, I really don't see a reason to assume that traditional banks wouldn't accept bitcoin deposits and offer off-chain loans (re-creating the fractional reserve system we have today as well). Unless there was some law preventing it.

I think those two tools together would enable the US government to take on increasing debt loads in bitcoin, and to inflate the currency pool in one of the ways it's able to do with the dollar (the reserve ratio). So I'm sure they'll figure it out.

Wars and debt happened before fiat money. In fact, all of the biggest wars were without fiat money.

I was under the impression WW1 & WW2 were fought under fiat monetary regimes in most of the countries involved?

I will try to do some reading.

So far it would seem the US Civil war started on hard money and turned to fiat.

> Demands for money in the Civil War rapidly exceeded the availability of specie (gold and silver) and the capacities of the private banking system. The governments in both the North and the South began to print their own currencies as a temporary wartime expedient. In the Union, competing currencies were eventually curtailed by a 10% tax on privately printed notes. Many of the former note-issuing businesses successfully liquidated or amalgamated and others were converted into “national banks” under the National Banking Act of 1863.

http://numismatics.org/a-history-of-american-currency/

Clearly that's just one case, but it will take me a while to gather further evidence.

Edit:

Seems federal reserve bills were in use through both World Wars while silver certificates dwindled out of existence as they were exchanged for silver.

> Following the financial panic of 1907, the Federal Reserve banking system was established to provide a safety “buffer” between the government and the economy. A new Federal Reserve Bank Note currency was able to be sustained through the Great Depression of the 1930s while most other forms of American currency were abandoned

So from a United States Centric view, fiat took us through some large wars.

I'll check on some other countries, but at this point I think it's fair to ask you to provide some evidence to back your statement.

> In fact, all of the biggest wars were without fiat money

I was more thinking of pre-20 century wars. However, it is true that world wars caused countries to shift away from gold. After wwi many countries did return (british pound, german mark), but after wwii they had a more permanent switch.

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