Posted on 04/07/2014 7:28:18 AM PDT by Errant
Last week, St. Louis Fed Director of Research David Andolfatto released a presentation on Bitcoin, becoming one of the most prominent central bank officials to study the cryptocurrency.
We caught up with Andolfatto to ask him about why he put this deck together, where he thinks Bitcoin is going, and whether he personally has anything invested in it.
Business Insider: What was the genesis for this presentation?
David Andolfatto: Its genesis was a blog post I'd started, addressing arguments that gold bugs frequently put forth, that gold is superior money. Of course, Bitcoin was in the news I read about the algorithm that fixes the supply of bitcoins at least at some limit. It struck me that despite their tremendous disparity in physical properties, they share the quality that they have a relatively fixed supply which is why gold and bitcoin make lousy money.
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I really don’t know squat sh!t about Bitcoin except I’m leary of it just because I don’t trust anybody.
But if some dipwad from the Fed is scared of it, something tells me that they have no authority, means or idea how to control it like they do by pumping fake money into stock market MBS’s and buying T-bills (debt) using air-printed money (as in thin air).
While I would argue that is why they would make great money. In its hundred years of existence the Fed has destroyed 96% of the value of the dollar and it is one of the most restrained central banks in the world - others are even worse. The natural rate of inflation is very slightly negative. As productivity increases the price of manufactured goods should become cheaper every year. Even a 0% inflation rate is the result of someone figuratively clipping the coins.
If people had a strong faith in the dollar (and other currencies), as well as a convictions that the people who produce that currency were concerned about the welfare of ordinary people, then bitcoin would only be a curiosity. That trust is gone, and isn’t going to be coming back any time soon.
Trust is in short supply nowadays. And while trust plays a part in crypto currency use as well, it’s not nearly to the degree of dependence which fiat is for its value. Fiat’s issuance is controlled by only a handful and while it enjoys a long history, that history unfortunately has never seen a fiat currency which eventually didn’t become worthless.
Eventually, the Weimar Phenomenon.
Agree. And now trapped by out of control government spending.
I disagree with this issue. Bitcoin is just one of many different crypto currencies now available. Each with its merits and eventual quantities and value that the free market will set, and not some central bank.
The major fault with crypto is loss of a communication between individual computers. If that happens (i.e., the internet goes down worldwide), we'll have more problems than trying to figuring out another way to spend bitcoin.
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