219 sats \ 1 reply \ @badabing 16 Jan \ on: Why did ALL countries abandon gold & silver money to use fiat currency? econ
As a gold country, you can't compete with fiat countries. I feel there's serious difficulties when you can't print but another can. Your currency and economy gets too expensive for outsiders/people that import from you, so you become an isolated and very expensive country. People start buying your currency purely as an investment/savings tech (like Bitcoin). There's serious risks of getting outcompeted on everything you produce. This is probably why the Swiss abandoned the gold standard, to not lose their competitive edge completely.
Similarly, in a war, a country on a gold standard will most likely lose against a country on a fiat standard that can tax people more easily through printing and inflation. The gold standard country can only raise taxes, which is much more difficult to get done.
It's probably a race to the bottom in a globalized and competitive world. Who can screw his citizens the most and become the cheapest producer?
This probably means that a full Bitcoin standard is a challenging concept for a country/economy in a globalized world. But there's probably some nuances to that, so hope more people can chime in.
Great answer. Similar to how if other companies are manufacturing all their products in China, you can't really compete with them if you are manufacturing in an expensive Western country. It's a race to the bottom.
And with fiat money printing causing inflation, companies can no longer afford to manufacture in Western countries. They just don't have a choice if they wish to remain profitable. Eventually almost everything becomes "Made in China." Probably the same with printing-and-spending governments: they can't compete using sound, honest money when everyone else isn't.
reply