But, when the price rises, those mined bitcoins have just replaced more dollars than previously, displacing dollars thus having less demand for that equivalent amount.
But the biggest thing that could hurt the federal reserve is if people not only switched to bitcoins for their every day purchases...but they also essentially send their federal reserve notes back to the federal reserve by paying off their debts. If the federal reserve is sitting there with a bunch of dollars with very little demand they will have to resort to practically giving it away in the hopes that people will use it. Interest rates would go negative, the spiral of dollar value to bitcoins would begin.
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and then asked one of them to produce a Roman coin that would be suitable for paying Caesar's tax. One of them showed him a Roman coin, and he asked them whose name and inscription were on it. They answered, "Caesar's," and he responded:"Render therefore unto Caesar the things which are Caesar's;
Who's name is on the dollar? The Federal Reserve....Render therefore unto the Federal Reserve the things which are the Federal Reserve's.