Talk:Currency competition

What's wrong with currency competition ?

This discussion was moved here from RationalWiki:Saloon Bar.

I don't understand what is the problem with currency competition. The page on Liberty Dollar doesn't seem to consider it as a good idea, but I think it can allow to avoid inflation. Diacelium (talk) 15:07, 5 January 2017 (UTC)

In the space of two sentences & a headline, you've made 1 spelling error, 1 grammar error, and no coherent argument. This is not a good start. Bongolian (talk) 20:51, 5 January 2017 (UTC)

I'm writing this on a phone with a French autocorrect. Sorry for grammar mistakes. If there is competition in currency, it means that there will be many currencies used, and that currencies will change very often, making it hard to get inflation. Diacelium (talk) 22:11, 5 January 2017 (UTC)

(A) Why did the EU consolidate into the Euro if multiple currencies isn't such a bad idea? (B) Cash alternatives, like barter clubs use, are viewed as possible tax avoidance schenes by the iRS and frowned on. nobs 09:12, 6 January 2017 (UTC)

When the Euro was created, there were already national currencies, there was no currency competition. Different currencies can still be taxed and regulated. Diacelium (talk) 09:38, 6 January 2017 (UTC)

Let's get specific here. Is this an alternative with a floating exchange rate, or it simply a one-for-one extension of dollar denominsted assets, like checking accounts or travelers checks? nobs 13:47, 6 January 2017 (UTC)

I don't think currency competition is the main source of controlling inflation. Look at the Zimbabwe dollar (hyperinflation), for example. They have currency competition with their neighbors and the world. Many other examples like this exist. The main source of inflation is increasing production of currency without increasing demand. Goldbuggery (or investment in coins or artwork or the like) is actually a form of hoarding of non-productive capital. Bitcoin was designed to have no inflation due to increasing scarcity of currency. Investment in precious metal coins often have a scam factor built in (as the Liberty Dollar did), insofar as if you bought actual raw precious metals it would be significantly cheaper than the coins. The Liberty Dollar being new and not antique (like say a gold double eagle coin), all the more so. Moderate inflation is actually a good thing because it discourages hoarding of non-productive capital and encourage investment in productive capital. Bongolian (talk) 20:10, 6 January 2017 (UTC)

When Zimbabwe abandoned it's currency, there was a greater economic growth and prices dropped. Diacelium (talk) 11:08, 7 January 2017 (UTC)

In a free country, individuals are not required to conduct transactions in the national currency. They are free to barter or exchange using whatever medium they agree upon. There are laws however, mandating taxes owed to government be paid in the national currency.

Like all commodities, a competing currency's value fluctuates daily (based on supply/demand factors) in relation to the national currency (say dollars for instance). Let's suppose a person received $10,000 in taxable income, paid in a competing currency, on April 1st. Let's further suppose the value of the competing currency rises 25% by the end of the tax year, December 31st. Which figure does the individual report as taxable income, $10,000 or $12,500? The record-keeping, conversion costs, and exchange rate fees are a nightmare (unless you're a professional in the field of currency conversion).

Ultimately, the question of competing currencies is a tax matter. The risk of penalty assessment for false reporting and mistakes compounds the loss of value to inflation. nobs 12:44, 7 January 2017 (UTC)

Concepts like 'legal tender' impose what James C. Scott calls 'legibility' on the subjects of governments. Legibility means that the bureaucrats can figure out what's going on at a glance, because all transactions are in a shared denomination that the bureaucrats understand. "Competing currencies" threaten to complicate the bureaucrats' lives, require them to juggle factors, and raise the prospect that the value of a currency unit may be different at the time it was earned and the time it was taxed. "Legibility" is one of the reasons why things such as time zones are morally wrong, and why every town and hamlet needs to use a system of weights and measures utterly unlike its neighbors'. - Smerdis of Tlön, ^{LOAD "*", 8, 1.} 17:57, 7 January 2017 (UTC)

┌────────────────────────────────────────────────────────────────────────────────────────────────────┘The Zimbabwe example is somewhat of a poor example or needs a little clarification. The Zimbabe national currency wasn't in competition with other currencies when the government stopped issueing it. As a universally accepted fact, people will always gravitate toward the medium they have the most confidence in will retain its value. The only things that have universally beat the dollar are gold, silver, and the Swiss Franck - all of which are in short supply and too costly for most people. Being there are trillions of dollars in several denominations available globally, and accessible to the most wretched of Third World peons, the dollar enjoys more confidence than any other medium. All the Zimbabwe episode teaches is that people inside and outside Zimbabwe don't trust the lying-motherfuckin' thieves running the government, and the government itself knows it, and was forced to admit people's fears were justified. Once the currency was pulled, there was no competition against it. People sought alternatives. nobs 14:21, 11 January 2017 (UTC)