Understand the implications of Bitcoin's downfall in El Salvador. Learn about the failed economic bet and its impact on the country's financial stability.
If El Salvador had its own currency, they could tax and spend that instead. But no, they use US Dollars.
This is a legit criticism. It’s absolutely wild that these colonized states are completely monetarily subservient to empire. I think they go with bitcoin instead of their own currency, because bitcoin is much harder to destroy/manipulate.
Bitcoin is not different from the USD fiscal policy space wise. You use USD (which you obtain from trade, remitances, loans and capital inflows) to buy Bitcoin or use the same USD to buy ASICs to mine Bitcoin with. In the end you hope to sell it to someone else to get more USD than you started with.
Even if it’s not for conversion then would the population like to use a system where there is no physical cash form of bitcoin (El Salvador has large informal economy) fully dependent on internet, electricity and a smartphone. Would the Government make budget denominated in bitcoin? How will all the pricing be done? Why should El Salvador go through all these complications instead of adopting its own currency where it’ll have more fiscal space?
Bitcoin was never widely used in El Salvador outside small transfer payments which would’ve been converted to Dollars pretty quick anyways.
Having your own currency gives you power to manipulate exchange rate and employ domestic resources instead of having to borrow continously from the IMF.
Not saying that a sovereign currency alone is enough. Countries may not be able to enforce taxes enough or try pegging rates to the Dollar to prevent pass-through inflation and balance of payments issues. But it is a necessity.
This is a legit criticism. It’s absolutely wild that these colonized states are completely monetarily subservient to empire. I think they go with bitcoin instead of their own currency, because bitcoin is much harder to destroy/manipulate.
Bitcoin is not different from the USD fiscal policy space wise. You use USD (which you obtain from trade, remitances, loans and capital inflows) to buy Bitcoin or use the same USD to buy ASICs to mine Bitcoin with. In the end you hope to sell it to someone else to get more USD than you started with.
Even if it’s not for conversion then would the population like to use a system where there is no physical cash form of bitcoin (El Salvador has large informal economy) fully dependent on internet, electricity and a smartphone. Would the Government make budget denominated in bitcoin? How will all the pricing be done? Why should El Salvador go through all these complications instead of adopting its own currency where it’ll have more fiscal space?
Bitcoin was never widely used in El Salvador outside small transfer payments which would’ve been converted to Dollars pretty quick anyways.
Having your own currency gives you power to manipulate exchange rate and employ domestic resources instead of having to borrow continously from the IMF.
Not saying that a sovereign currency alone is enough. Countries may not be able to enforce taxes enough or try pegging rates to the Dollar to prevent pass-through inflation and balance of payments issues. But it is a necessity.