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0 pointsGroxx12y ago0 comments

The USD is backed by the material value of everything USA, at a minimum. It's practically impossible for the USD to go to absolute zero, there's still some gold in the reserves and oil and mining to be done at absolute worst.

Obviously our debts exceed this, but that's a different issue. Say everyone cashed in at once - they'd get a percentage of our debts, not zero, since there's still material value.

You can't "undo" Bitcoin's power -> money exchange, though. There's no gold sitting in vaults providing some real, physical insurance. If I lift this brick, I've done work (but nobody cares) but even that has intrinsic value as it can be "redeemed" by lowering it, powering something. Bitcoin is different.

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5 comments · 2 top-level

maxerickson12y ago· 2 in thread

If the U.S. government fell, any bodies of power that arose in the aftermath would be quite likely to repudiate the debts of the old government. So no, the dollar isn't quite backed by the material value of everything in the U.S.

It is backed by the stability of the U.S. government though.

GroxxOP12y ago

True, though it won't fall in an instant, so there's some warning. And other governments seem likely to hold at least some power over any brand-new government, so it's still unlikely/impossible that they'll get nothing back from the debts.

JackFr12y ago

There are also examples of post-fiat currencies. Immediately following the toppling of Saddam Hussein there was still economic activity denominated in the old Iraqi currency, most probably on the assumption that it would be convertible at some rate with whatever came next.

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XorNot12y ago· 1 in thread

US Debts do not exceed the value of everything in the US.

They barely exceed 1 year's economic productivity from the US (~15.58 trillion USD).

And since the US is not going to stop being a country any time soon (and such a thing would be a calamity which makes national debt completely irrelevant anyway) it has a very long-term ability to make repayments.

And this is ignoring the fact that each year the US basically reinvests heavily, since GDP grows while the debt does not (necessarily). For example, current GDP growth of 2.2% means the US GDP increases by ~$344 billion per year. Conversely the value of all US debt per year decreases due to inflation - currently about 1.2% meaning the US debt effectively decreases by about $188 billion USD per year.

This is all somewhat beside the point, but it pains me to see people proposing the US has debts exceeding its capital and productive value as an entire country.

GroxxOP12y ago

One year's worth of productivity does not mean it's redeemable. I'm not sure what the immediate material assets of the USA are, but it's substantially less than the USA is worth, yes.

And anyway, I'm talking absolute worst value, not any sane measure.

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5 comments · 2 top-level

maxerickson12y ago· 2 in thread

It is backed by the stability of the U.S. government though.

GroxxOP12y ago

JackFr12y ago

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XorNot12y ago· 1 in thread

US Debts do not exceed the value of everything in the US.

They barely exceed 1 year's economic productivity from the US (~15.58 trillion USD).

This is all somewhat beside the point, but it pains me to see people proposing the US has debts exceeding its capital and productive value as an entire country.

GroxxOP12y ago

One year's worth of productivity does not mean it's redeemable. I'm not sure what the immediate material assets of the USA are, but it's substantially less than the USA is worth, yes.

And anyway, I'm talking absolute worst value, not any sane measure.

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