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Why can't the government buy its own debts and cancel them? (beehaw.org)

submitted 9 months ago by [email protected] to c/[email protected]

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Or does the government already do this? If so, can anyone explain like I'm five?

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[–] [email protected] 1 points 9 months ago* (last edited 9 months ago) (1 children)

Nowadays (post-gold standard) crypto is more similar to gold than to fiat; you can't eat either, but the value of crypto and gold comes from whatever people freely want to pay for them, unlike fiat's value which gets enforced through taxes and armies.

Gold is also fungible, and doesn't get consumed during normal use, just like most popular crypto projects (although some are neither, and explicitly "burning" crypto makes it unrecoverable).

fractional reserve banking can be done with those others but not really with crypto.

You'd think that... but crypto ETFs say otherwise. You can also look into Sam Bankman-Fried, an extreme case of "fractional reserve" (aka: scam).

General rule: not your keys, not your crypto... and you better have the holder of "not your crypto" thoroughly audited on a regular basis.

[–] [email protected] 5 points 9 months ago* (last edited 9 months ago) (1 children)

Gold value was also enforced by armies and taxes. It has uses nowadays that it did not use to have. Used to be gold was only useful as a decoration or as a coating that wouldn’t tarnish. The actual value was that you had to pay taxes in it.

Crypto has no value, less value than fiat even, because I can’t buy groceries with it, nor can I pay taxes with it.

Also, you can’t fractional reserve crypto unless you’re using a second crypto currency backed by a first.

[–] [email protected] 1 points 9 months ago* (last edited 9 months ago)

Gold value was also enforced by armies and taxes

The history of gold, and other metals like silver or copper, is quite interesting. They started by having an intrinsic value, then some governments tried diluting it, failed and they went back to intrinsic, then finally the Venetians managed to apply inflation to it, ultimately the gold standard was abandoned by the US in the 1970s... and anyone trying to reinstate it (Saddam, Gaddafi) got on the wrong side of US's army.

Crypto has no value

It has the value of whatever people assign to it. You definitely can find places to buy groceries with it, or anything else; there are even credit cards in crypto that will convert to whatever the seller wants.

you can’t fractional reserve crypto unless you’re using a second crypto currency backed by a first

Or an ETF. There are plenty of banks offering to "sell you crypto"... except you can't transfer that "crypto" out of the bank. There is no way to know whether they even have any of it.