Thank you for all you have done, your blog is amazing.
I have a question (well many but will only ask one). Will electronic money fully displace all currencies or will we go with a 2 tier system one for domestic and one for international?
Thank you very much,
rms
ANSWER: Of course there will be a two-tier system. Some less developed countries will most likely retain some form of paper currency. Whether the developed country will is highly debatable since their objective is not to create some new monetary system, which may be forced on them, but to collect taxes and the objective there is to eliminate physical currency.
Unfortunately, way too many people think that money should not be debased. The first coinage in gold was debased pictured above. Some try to argue that somehow bitcoin prevents debasement. The value of bitcoin has risen and fallen. How do you get a bitcoin? You use money. So what if everyone swapped dollars for bitcoins? Wouldn’t bitcoins then merely be the same as the dollar? Increasing the supply will only result in the same process.
You cannot create any form of money that RETAINS its value and prevents debasement no matter what it is or represents. The very first coinage was in Lydia was debased because of war. There has NEVER been a single currency since the dawn of time that has never suffered debasement and that includes gold. Eliminating debasement would be total communism for you are talking about the elimination of the business cycle which is what Marx advocated.
As soon as you try to create a currency that cannot be debased, that means your house cannot rise in value for that amounts to the decline in purchasing power of the currency (DEBASEMENT). Likewise, wages cannot be increased nor taxes or anything. This idea that money should not be debased comes from Marx. Sorry, but such philosophies are anti-human nature. Get use to living with the business cycle instead of fighting it. Forget the idea that money should have some magical property of retaining value constantly. That is totally unrealistic. The business cycle is all about the rise and fall in the purchasing power of money. It declines in a boom and rises (deflation) during depressions and recessions. Bitcoin rises and falls and that is not controlled by government. This is a natural cycle between boom and bust that does not matter what you use as money for it is the swings in confidence inherent within human nature.
