Yet that is what he did when he held out a friendly hand to the notion of fantasy currencies ben bernanke bitcoin stock price a letter to the Senate Committee on Homeland Security and Government Affairs. Understandably, this improbable endorsement from the guardian of the mighty dollar sent the value of the Bitcoin soaring. Ben bernanke bitcoin stock price recently, the Bitcoin was seen as a novel, experimental, somewhat piratical cyberspace Monopoly money that has proved useful in moving money around the world without the hampering and costly help of banks, which slow things down, waste days while the cash lingers in limbo, and take a hefty slice of every transaction.
Bernanke sees far beyond the illicit uses of virtual currencies as a means of paying for contraband ben bernanke bitcoin stock price shuffling hot money around without being traced.
He believes they could become an ingenious means whereby the globalized market in legitimate goods and services can work more efficiently without the dead hand of ben bernanke bitcoin stock price banks. The Fed chairman told the Senate Committee members, who are anxious that something outside the control of Congress will ben bernanke bitcoin stock price used as a currency for criminals and terrorists, to think before consigning Bitcoin and similar monetary confections to oblivion.
Competing private currencies have long been seen by free market economists as the holy grail. So long as the state governs the price of money through interest rates and insists that only one currency can be used in a geographical area, there is ben bernanke bitcoin stock price chance ben bernanke bitcoin stock price approaching a truly free market. We remain a long way from his ideal of a world where countries protected by patriotism and highly-defended borders are succeeded by competing commercial city-states fueled by a borderless ben bernanke bitcoin stock price free market in labor.
If private currencies like Bitcoin take off, economic history may trace a new era of world trading, both in goods and currencies, to the moment that Bernanke served final notice on the ben bernanke bitcoin stock price state-run currencies the dollar, the euro, and the pound sterling that their monopoly days are over. Ben bernanke bitcoin stock price sharp-tongued Hayek was never more acrid in his comments than when writing about the misuse by governments of their control of money and the money supply.
A Way to Stop Inflation. There is no reason whatever why people should not be free to make contracts, including ordinary purchases ben bernanke bitcoin stock price sales, in any kind of money they choose. He had in mind ben bernanke bitcoin stock price currencies competing with each other, so Americans might prefer to use the yen or the peseta ben bernanke bitcoin stock price they went to the store, rather than the dollar.
By such competition, Hayek believed currencies would be kept honest and would not devalue as they tended to do when governments used inflation to get themselves out of fiscal trouble. There have, of course, always been many alternatives to currencies. Now, ben bernanke bitcoin stock price people want to avoid the inflationary aspects of ben bernanke bitcoin stock price bank actions, such as quantitative easing, they invest in stocks, in the hope the market will retain or even add value to their savings.
Others prefer to buy gold, even though it, too, is a gamble and can fluctuate in price. Virtual currencies mark the death knell of such traditional safe havens and will dissolve, too, to that favorite fantasy of free market enthusiasts: With virtual currencies competing to maintain their value against each other as well as against the traditional currencies and precious metals such as gold and silver, the conventional ways of safely hoarding wealth may become redundant. There is, however, a profound hitch to this brave new world.
We have passed this way before. Governments, who currently have the sole legal right to print money, flood the market in their currency, which leads to devaluation, which in turn leads to inflation, which is what Hayek, a victim of the central European hyperinflation of the s, detested above all. The Confederate dollar was an example of a currency that collapsed as Robert E.
Before the Civil War there were a number of other competing currencies in America, all of which went by the board. When they collapsed they took with them the savings of Americans who misplaced their trust in them. If we are about to witness an explosion in competing currencies we can expect similar collapses and the human tragedies that will accompany them. Hayek looked at only the bright side, where ideal currencies kept pace with each other and goaded each other through healthy competition to maintain their value and keep inflation at bay.
But as we have seen from the events ofeven the best laid plans of bankers go awry. When things go wrong, banks desert their customers. And who picks up the pieces?
Why, the elected government, of course, for it alone is responsible for the welfare of its people. Only effective regulation can ensure that banks entrusted with our money will be there when we need to withdraw our cash. We have seen what happens when there is a lack of regulation: The same applies to virtual currencies.
Without a framework of rules, virtual currencies will leave their customers vulnerable. Caveat emptor is not a smart enough response to the prospect of currency collapses. He did not believe in laissez-faire, which is why absolutist free market advocates like Ayn Rand called him a compromiser and spat at him at parties.
He believed markets should be carefully regulated to ensure they worked efficiently and fairly. Virtual currencies will only ben bernanke bitcoin stock price on if they are thought to be honest and reliable.
And the only way of ensuring that is to treat them like conventional banks. As Ronald Reagan would put it: We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http: Five years ago, Webmoney was the least troublesome way for people outside Russia to buy online services inside Russia.
I would say that this is prima facie evidence that where virtual currencies try to compete with other payment systems, they pretty quickly turn out to be uncompetitive.
How did that work out for them? The article seems to miss the point that a viable alternative currency tends to make the political class more honest. The US Federal Reserve operates on the assumption that the world can recognize another reserve currency.
The dollar, imperfect as it is, still inspires much more confidence than the Euro ben bernanke bitcoin stock price Bitcoin. Bitcoin is probably ben bernanke bitcoin stock price because the Fed wants to associate private currencies with narcotics and child porn. If ben bernanke bitcoin stock price Euro did not exist today, the Fed would be far less responsible.
No one has explained how the US will handle its debt other then by inflating the currency. Other governments have followed that path since ancient times. Another alternative is a simple refusal to pay the debt: But inflation is simply a time-lapse default. Other governments have done that as well. Today, people can shift out of dollars easily and the Federal Government lacks the effective power to prevent them from doing so. Bitcoin is honest and reliable.
The mathematics of it are very clear and can be verified by anyone who bothers to walk through the cryptography techniques. Bitcoin itself does not need regulation. Existing laws still apply to bitcoin, when bitcoin is finally exchanged for a more conventional currency.
No one controls it. Treating Bitcoin like it is some kind of virtual bank is entirely inappropriate. It is a virtual commodity, not a currency. The trust with government money is you know who issued, what it can buy, how bad it can get. Rest is a ponzi scheme. Can you imagine the horror of a reserve currency that was so volatile? BTC is volatile because it has extremely poor liquidity. Another reason why it is not a candidate for the reserve currency of the entire world economy.
The brothers will have triumphed over the Facebook debacle permanently. Barter would attain greater trust than Bitcoin, unless we are all so disconnected from real life via digital devices et al, that we cannot discern the difference. As opposed to totalitarian governments and power systems where the community has no say, such as trans-national corporations…. Have we all forgotten the lessons of history already?
Is everybody still a Friedmanbot even after the collapse of the edifice built upon his ideology? The twisted politics of enforced economic pain. Posted by AlkalineState Report as abusive. Posted by lordbaltimore Report as abusive. Posted by Burns Report as abusive. Rest is a ponzi scheme Posted by daffa Report as abusive. On what planet does Bitcoin compete with the US dollar for reserve currency status?
This has to go down as one of the most misinformed things I have read this year. Posted by cheezwizard Report as abusive. As opposed to totalitarian governments and power systems where the community has no say, such as trans-national corporations… Have we all forgotten the lessons of history already?
Posted by Benny27 Report as abusive.
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