Yellen on Bitcoin: Fed Doesn’t Have Authority to Regulate It in Any Way

Re:Yellen on Bitcoin: Fed Doesn’t Have Authority to Regulate... by dragonwriter on Friday February 28, 2014 @12:32PM (#7320164)

> When you print an additional 2% of the money supply, you are essentially taking about 2% of the entire economy and assigning it to yourself.

There is no basis for the assumptions about demand for money vs. other goods that are necessary for this to be a justifiable claim.

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Re:Yellen on Bitcoin: Fed Doesn’t Have Authority to Regulate... by logfromblammo on Sunday March 02, 2014 @08:46PM (#7331609)

Assumption: The value of money is the aggregate value of market transactions divided by the product of the available quantity of money and its velocity.

Assumption: The money itself has zero intrinsic value. It is only worth what you can trade for it. Thanks to the previous assumption, that is a fraction of all goods and services on the market.

When you change the size of the money supply from 100 to 102, the 2 new notes increase in value from 0 to 1/102 of everything on the market, and all of the 100 old notes decrease from 1/100 to 1/102 of everything. The guy that prints the new notes gets 2/102 of everything for free. That value is not created; it is taken. Everyone who held any old note has their buying power reduced by 1.96%.

Is it justifiable? Yes. Is it a gross simplification because economics is a dismal, dismal science? Also yes.

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