Whenever I think of Bitcoin, I can’t help to think of the Liberty Dollar, a paper-based alternative currency that the Fed shut down in 2009 after about an 11 year run.
Bitcoin has a unique value proposition in currency.
It carries cachet among techies (and maybe druggies) and is in limited supply. The former gives it collectible value. The latter gives it purpose for citizens of countries with bureaucrats who have inked their money presses. It feels better heading to the store with currency that may not lose half its value before you get there.
If allowed to continue, I think Bitcoin has the potential of spawning an evolution in alternative currency experiments that may find all different sorts of niches for value propositions and, more importantly, reduce the power the Fed has to mess up the economy.
There already is a Bitcoin cousin, Litecoin. I wouldn’t be surprised to see the likes of Starbucks, Walmart, Amazon.com and Google test the waters. Why just supply a wallet when you can also supply the currency?
From Thomas Sowell’s recent column:
When people in Washington start creating fancy new phrases, instead of using plain English, you know they are doing something they don’t want us to understand.
It was an act of war when we started bombing Libya. But the administration chose to call it “kinetic military action.” When the Federal Reserve System started creating hundreds of billions of dollars out of thin air, they called it “quantitative easing” of the money supply.
When that didn’t work, they created more money and called it “quantitative easing 2” or “QE2,” instead of saying: “We are going to print more dollars– and hope it works this time.” But there is already plenty of money sitting around idle in banks and businesses.
The policies of this administration make it risky to lend money, with Washington politicians coming up with one reason after another why borrowers shouldn’t have to pay it back when it is due, or perhaps not pay it all back at all. That’s called “loan modification” or various other fancy names for welching on debts. Is it surprising that lenders have become reluctant to lend?
Private businesses have amassed record amounts of cash, which they could use to hire more people– if this administration were not generating vast amounts of uncertainty about what the costs are going to be for ObamaCare, among other unpredictable employer costs, from a government heedless or hostile toward business.
As a result, it is often cheaper or less risky for employers to work the existing employees overtime, or to hire temporary workers, who are not eligible for employee benefits. But lack of money is not the problem.