Goldilocks economy credit obama
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Is Le Bron James better off when his 30-point games are besmirched by a high number of turnovers? Would Tom Brady, Peyton Manning or Aaron Rodgers prefer to throw two touchdown passes and two interceptions, versus four touchdowns without any picks?Įconomic activity outside of sports is no different. Economists and politicians say that government consumption of capital taxed and borrowed away from us is “good for the economy.” But in an economy of individuals, and that’s the only kind, can any individual say his personal economy is made better off when politicians tax away his earnings so that they can be handed over to errant banks, overstretched homeowners, or failed carmakers? Just a question, and a worthy one since maintaining the health of the economy was floated as the reason to fleece the prudent in favor of the profligate in 2008.īack to Goldilocks, an economy of individuals mocks the obnoxious conceit that says the individual is elevated by tepid conditions, and harmed by abundance. Politicians sometimes disagree, they’ve been known to shackle success with higher taxes, suffocating regulations and debased money, but most wouldn’t say with a straight face that the economy is made better off if and when barriers are erected in front of the talented.Īllowing for a quick digression, readers might think about government spending in the same way. Then, taking the next step, this CNBC article connected bitcoin to El Salvador’s debt.An economy is once again comprised of individuals, and as such, the merely breathing comprehend that there really is no such thing as an individual achieving too much. This month I learned about El Salvador in their summary and the linked working paper. My sources and more: My monthly NBER Digest email always comes in handy. Indeed, as much as El Salvador has tried to give bitcoin its crucial characteristics, only a young male population (that did not need to be persuaded) was convinced. Then, seeing its value rise and fall, it was easy to question its current and future spending power. In El Salvador, mandating its acceptance implied that people really did not believe it was a medium of exchange. We tend not to believe a commodity is money unless it is a medium of exchange, a unit of value, and a store of value. I suspect though that it it all comes down to the characteristics of money. Some also did not trust bitcoin or the app, or technology, or did not own a phone. What happened? Our Bottom Line: Characteristics of MoneyĪsked why they did not use the new Chivo app, non-adopters said they preferred cash. Young, educated, relatively affluent men used it as their currency, not the average population.īelow, you can see how much bitcoin was unpopular: Instead, the consequences were unintended.
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Still though, one fifth of the individuals with the app have not yet spent all their bitcoin, most businesses refused to accept it, and, among the 60 percent of those that spent their app’s bitcoin, no new transactions followed the first free ones. It all began with an initial surge when 50 percent of all households downloaded the Chivo Wallet (digital) app and many spent the bonus it included. In addition, rather than charging a fee, the bitcoin ATM and dollar conversions were free. Mandating that businesses accept it, they made sure people could spend their $30 cryptocurrency windfall. Through a bonus worth $30 and a discount on gasoline bought with bitcoin, El Salvador created the incentive to use the new currency. Most crucially, it could increase financial inclusivity and perk up economic activity. In a country where the majority have no credit or debit cards, no bank accounts, and no mobile banking, a digital currency could transform all transactions. El Salvador’s Bitcoin UseĮl Salvador had some pretty good reasons for wanting bitcoin to be what people spent. But even with the right incentives, it did not quite work out as they expected. Almost a year ago, bitcoin became legal tender in El Salvador.