Topic: Is it good to have one currency across borders ? Friedman says No. - page 2. (Read 2907 times)
April 25, 2012, 08:55:04 AM
you are totally misreading friedman's point. it was related to governmental monetary policy in the real world at the time. in fact bitcoin is very much in line with his ideas about ideal monetary policy.
April 25, 2012, 07:07:00 AM
According to the theory of Milton Friedman, which I don't know how to dispute, and invite you to comment, the Bitcoin project, which is essentially aiming to be the only currency, to turn the world into a new Bitcoin-naiton, is not good because (a) it will not allow weaker countries to develop, and (b) will not protect strong countries from competition abroad.
Comments?
Comments?
This is not correct.
Gold once was the main world currency (dollar, pound, franc were only different measures of gold), and that was quite good actually. He's wrong when he claims that
Quote
But each individual country has been able to control the content of its own money. So while they were using the same commodity as currency, they were always in a position to determine what the terms of exchange were between their own currency and the other currencies.
Again, the currency was gold on both sides. You can't talk about "determining the exchange rate between gold and gold". Remember, the term "dollar" and the term "pound" was just two different units of gold mass, pretty much like kilogram and ounce.A "major World currency" is not a problem if it's apolitical and not controlled by any single entity, like gold or bitcoin.
A single central bank (which the euro has) is a whole different story. That would be horrible.
Plus, these premises (a) and (b) assume that inflating money is a good way to drive development. This is just false. Inflating the money supply does not increase wealth.
April 25, 2012, 06:23:38 AM
Dollars, Euros (perhaps gold as well) have been abstracted beyond the point of usefulness in the attempt to make them globally appealing. Bitcoin is just here to take money to the next stage of abstraction. There is no reason Bitcoin cannot be folded, spindled, and mutilated into derivatives. Bonds are the real currencies. Besides, Bitcoin can and will be localized when someone is clever enough to develop a blockchain tracing system to manage a closed loop of addresses.
April 25, 2012, 06:07:25 AM
I'm certainly not enough of an economist to go up against any of the Nobel prize winner types. However, it's worth bearing in mind the sesame street factor:
Sing along
Gresham's law; Friedman's comments above; and anything else a pre-bitcoin economist has said as an argument about bitcoin seems incredibly short sighted to me. It's like asking Isaac Newton what happens when an object travels at the speed of light (and it certainly wouldn't make Newton stupid; just as bitcoin doesn't make Friedman stupid). The world with bitcoin in it is different from the world without, and conclusions about what will happen based on what happened with non-cryptocurrencies in the past don't strike me as particularly relevant.
- Dollars
- Euros
- Gold
- Bitcoin
Sing along
Quote
One of these things is not like the others,
One of these things just doesn't belong,
Can you tell which thing is not like the others
By the time I finish my song?
One of these things just doesn't belong,
Can you tell which thing is not like the others
By the time I finish my song?
Gresham's law; Friedman's comments above; and anything else a pre-bitcoin economist has said as an argument about bitcoin seems incredibly short sighted to me. It's like asking Isaac Newton what happens when an object travels at the speed of light (and it certainly wouldn't make Newton stupid; just as bitcoin doesn't make Friedman stupid). The world with bitcoin in it is different from the world without, and conclusions about what will happen based on what happened with non-cryptocurrencies in the past don't strike me as particularly relevant.
April 25, 2012, 03:55:27 AM
Instead of use law-based rules to guide the society, the interest-based actions are more centralized (Ever heard about the democracy for interest rate?) Governments typically use monetary tool to adjust the economy of the country, although they will create inflation/deflation, but they do have certain maneuverability
When they start to use EURO, many governments lost the ability to adjust the economy according to their specific culture. Same happens with BTC, if a government adopt BTC, they will have no way to affect the economy using monetary policies, and that's the reason gold was abandoned as a currency
When they start to use EURO, many governments lost the ability to adjust the economy according to their specific culture. Same happens with BTC, if a government adopt BTC, they will have no way to affect the economy using monetary policies, and that's the reason gold was abandoned as a currency
April 25, 2012, 12:35:34 AM
A world without borders makes the argument irrelevant. It may take a while, but eventually there will be a relative normalisation of value around the world - at least within a recognisable range.
Bitcoin is a foundation, not the entirety. Local and regional currencies are still perfectly viable, even necessary.
One thing that I keep noticing is that most economists have never truly grappled with cryptocurrency systems. Would Friedman, Hayek, Mises, et al. have held fast if they were experiencing it first-hand? Also, economic theories seem to deal primarily with scarcity; I am not aware if they ever contemplated the monetary consequences of resource (over-) abundance.
Bitcoin is a foundation, not the entirety. Local and regional currencies are still perfectly viable, even necessary.
One thing that I keep noticing is that most economists have never truly grappled with cryptocurrency systems. Would Friedman, Hayek, Mises, et al. have held fast if they were experiencing it first-hand? Also, economic theories seem to deal primarily with scarcity; I am not aware if they ever contemplated the monetary consequences of resource (over-) abundance.
April 24, 2012, 10:45:15 PM
I'm so glad this wasn't Thomas Friedman.
I think Milton, though, is probably just expressing a preference for more local currencies over supra-national and global ones. And that makes sense. Personally I don't even tend to see Bitcoin as a global currency. I see it as an alternative to national currencies. And it may be more local, or less depending on how it is used.
I think Milton, though, is probably just expressing a preference for more local currencies over supra-national and global ones. And that makes sense. Personally I don't even tend to see Bitcoin as a global currency. I see it as an alternative to national currencies. And it may be more local, or less depending on how it is used.
April 24, 2012, 06:10:14 PM
Bitcoin neither aims to be the only currency in the world, nor could it achive such an aim. You are confused. Bitcoin is an idea, it doesn't have goals. Anyone who is part of this community on the hopes that bitcoin will destroy competing currencies doesn't understand the nature of exchange or the rise of natural money. Friedman was refering to the idea that a currency union such as the Euro could exist worldwide, presumedly without a gold standard, and such a monolithic currency union would need to be enforced by governments (because left alone, the "little people" will develop their own alternative methods of exchange). Bitcoin has no enforcement wing, and thus cannot become a monolithic currency union, even if some governments might choose to use it as their official currency in some strange and distant future.
April 24, 2012, 06:03:02 PM
Germany is doing poorly? I thought they were the ones who were going to bail everyone else out...
Interview is from 2003.
April 24, 2012, 04:52:46 PM
Germany is doing poorly? I thought they were the ones who were going to bail everyone else out...
April 24, 2012, 04:47:27 PM
http://rightwingnews.com/interviews/friedman.php
Also,
According to the theory of Milton Friedman, which I don't know how to dispute, and invite you to comment, the Bitcoin project, which is essentially aiming to be the only currency, to turn the world into a new Bitcoin-naiton, is not good because (a) it will not allow weaker countries to develop, and (b) will not protect strong countries from competition abroad.
Comments?
Quote
John Hawkins: Switching directions again, Europe has been moving towards a single currency. Do you think that's a wise move for all the states, some of them, or none of them? Why so?
Milton Friedman: We're in the midst of a wonderful natural experiment. You have a really different arrangement with the euro than we've ever had historically. We've had many cases in which a number of countries have used the same currency. That's when they've used gold or silver as money. But each individual country has been able to control the content of its own money. So while they were using the same commodity as currency, they were always in a position to determine what the terms of exchange were between their own currency and the other currencies.
But the euro is a very different arrangement. For the first time in history, we have essentially an independent central bank for a considerable number of distinct political entities. I, in advance, was very negative about it and have been very negative & pessimistic about it. We'll see how the Europe plan does on the one hand and on the other, how the other countries of the world, the UK, the United States, Japan, which are linked together by flexible exchange rates, we'll see how they do.
So we'll have a really nice, natural experiment just as before the Soviet Union dissolved, we had a natural experiment comparing socialism and capitalism.
...
I believe the Euroland is going to run into big difficulties. That's because the different countries have different languages, limited mobility among them, and they're effected differently by external events.
Right now for example, Ireland and Spain are doing very well, but on the other hand Germany and France are doing very poorly. The question is; "Is the same monetary policy appropriate for all of them?" Germany and France on one hand and Ireland and Spain on the other: it's very dubious that it is. That's why you're having increasing difficulties within the Euroland group. As you probably know Sweden, which had not joined the European Monetary Union, voted down doing so and will keep its own currency.
Milton Friedman: We're in the midst of a wonderful natural experiment. You have a really different arrangement with the euro than we've ever had historically. We've had many cases in which a number of countries have used the same currency. That's when they've used gold or silver as money. But each individual country has been able to control the content of its own money. So while they were using the same commodity as currency, they were always in a position to determine what the terms of exchange were between their own currency and the other currencies.
But the euro is a very different arrangement. For the first time in history, we have essentially an independent central bank for a considerable number of distinct political entities. I, in advance, was very negative about it and have been very negative & pessimistic about it. We'll see how the Europe plan does on the one hand and on the other, how the other countries of the world, the UK, the United States, Japan, which are linked together by flexible exchange rates, we'll see how they do.
So we'll have a really nice, natural experiment just as before the Soviet Union dissolved, we had a natural experiment comparing socialism and capitalism.
...
I believe the Euroland is going to run into big difficulties. That's because the different countries have different languages, limited mobility among them, and they're effected differently by external events.
Right now for example, Ireland and Spain are doing very well, but on the other hand Germany and France are doing very poorly. The question is; "Is the same monetary policy appropriate for all of them?" Germany and France on one hand and Ireland and Spain on the other: it's very dubious that it is. That's why you're having increasing difficulties within the Euroland group. As you probably know Sweden, which had not joined the European Monetary Union, voted down doing so and will keep its own currency.
Also,
Quote
John Hawkins: Let me ask you about this -- what do you say to people who claim that free trade will eventually lead to high unemployment in the US as large numbers of jobs move to cheaper labor markets overseas?
Milton Friedman: Well, they only consider half of the problem. If you move jobs overseas, it creates incomes and dollars overseas. What do they do with that dollar income? Sooner or later it will be used to purchase US goods and that produces jobs in the United States.
Milton Friedman: Well, they only consider half of the problem. If you move jobs overseas, it creates incomes and dollars overseas. What do they do with that dollar income? Sooner or later it will be used to purchase US goods and that produces jobs in the United States.
According to the theory of Milton Friedman, which I don't know how to dispute, and invite you to comment, the Bitcoin project, which is essentially aiming to be the only currency, to turn the world into a new Bitcoin-naiton, is not good because (a) it will not allow weaker countries to develop, and (b) will not protect strong countries from competition abroad.
Comments?
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