From: david.lloyd-jones@canrem.com (David Lloyd-Jones)
Date: Fri, 20 Jan 95 00:36:44 PST
To: cypherpunks@toad.com
Subject: RE: ELECTRONIC CASH ILLEG
Message-ID: <60.19099.6525.0C1CA93D@canrem.com>
MIME-Version: 1.0
Content-Type: text/plain


 Thomas Grant Edwards <tedwards@src.umd.edu> writes:
 
TS+Actually, the "backing" of a fiat currency is the need to have some 
  +around to pay your taxes, else you go to jail.  You are taxed on many 
  +types of income, even if they are not directly exchanged in the fiat 
  +currency.  Somehow you have to get some.

This is pretty much true, but does not logically justify your 
conclusion:

TS+This also means that higher taxes can make the currency more 
  >desirable, 
  +lower taxes less, higher government spending less, lower government 
  +spending more, etc.
  
This is only somewhat true.

The most important factor is that currencies are traded on a fairly 
free market.  This means supply and demand, not any firm intrinsic 
qualities of anything, dominate.  If a country is running a positive 
net balance, whether by trade, capital investment, or influx of rich 
refugees, there will be a demand for its funnypaper, and that 
paper's price, in other currencies will rise.  

The same will apply to currencies not attached to countries -- such as 
the NetCredit, which I am working to put into reticulation.  That's 
electronic for "circulation".  :-)
 
The hardest currencies, roughly in order, are those of Switzerland, 
Taiwan, and Japan.  Germany is no longer on the list because Kohl 
bought the second last election in the most expensive bit of bribery in 
the history of democratic politics: the couple of trillion dollars he 
spent by assigning par value to the OstMark.  Hong Kong is not on the 
list because of the huge outflows for the development of China, which 
tends to balance supply and demand at a lower/softer level than it 
would otherwise have.  The US is no longer on the list because Reagan 
booted the whole thing into the can.
 
                        Best,
 
                            -dlj.
 
 

 
                                     -dlj.

david.lloyd-jones@canrem.com

 * 1st 1.11 #3818 * Who won't do the arithmetic will live by stupid policies.