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What if world decides to bypass USD as global currency and SEC cracks down?

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This space is full of hypotheticals and speculation, however, I would appreciate someone’s opinion on this scenario.

 

Say the world adopts XRP and facilitates all trade through Ripplenet essentially bypassing USD’s use as a medium of exchange through international trade. Meanwhile, the SEC cracksdown and for some reason deems the token as a security. Wouldn’t this have a huge negative effect on the US economy, basically shooting ourselves in the foot? Does anyone has a good understanding of the ramifications of this scenario?

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As I'm invested significantly into xrp, I want to watch Ripple's vision unfold in the most logarithmic fashion possible. Regulation is my greatest concern, as our government is heading for insolvenc, and it's hard to predict what they'll do in a crisis situation. This, for me, is the "black swan" event that I most fear. My hope is that Ripple, when wildly successful with xrp adoption and price, might somehow be able, if necessary,  to engineer a corporate, philanthropic bailout/assistance to the U.S. govt. It sounds far fetched, I know, but with over 50 billion in escrow, if the price of xrp were to skyrocket, that possibility might become a very powerful  'bargaining tool'

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18 minutes ago, WuWei said:

As I'm invested significantly into xrp, I want to watch Ripple's vision unfold in the most logarithmic fashion possible. Regulation is my greatest concern, as our government is heading for insolvenc, and it's hard to predict what they'll do in a crisis situation. This, for me, is the "black swan" event that I most fear. My hope is that Ripple, when wildly successful with xrp adoption and price, might somehow be able, if necessary,  to engineer a corporate, philanthropic bailout/assistance to the U.S. govt. It sounds far fetched, I know, but with over 50 billion in escrow, if the price of xrp were to skyrocket, that possibility might become a very powerful  'bargaining tool'

Not just the U.S. Government, WuWei! It'll be enough to save the world from the crisis they created. Ordo ab chao,

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But also, the SEC is limited to the U.S. government. War is the only thing that could erupt if it's on the agenda; especially if a sanctioned country is still trading freely. I don't think Trump wants a war, though.

Edited by Guest

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1 hour ago, WuWei said:

As I'm invested significantly into xrp, I want to watch Ripple's vision unfold in the most logarithmic fashion possible. Regulation is my greatest concern, as our government is heading for insolvenc, and it's hard to predict what they'll do in a crisis situation. This, for me, is the "black swan" event that I most fear. My hope is that Ripple, when wildly successful with xrp adoption and price, might somehow be able, if necessary,  to engineer a corporate, philanthropic bailout/assistance to the U.S. govt. It sounds far fetched, I know, but with over 50 billion in escrow, if the price of xrp were to skyrocket, that possibility might become a very powerful  'bargaining tool'

Governments with sovereign currencies cannot become insolvent. Period. Full stop.

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48 minutes ago, Wandering_Dog said:

Governments with sovereign currencies cannot become insolvent. Period. Full stop.

Yes they can. Just because you can print money does not mean that money will hold value. All new currency enters the economy as debt, not a credit. When currencies were back by Gold, they entered the economy as credits but this is not the case now.

In order for a currency-issuing country to avoid insolvency by doing so, the currency entering the economy in swap for sovereign debt must cause economic activity, and tax receipts as a result, to be greater than the cost of servicing the sovereign debt over a long period of time. 

If that occurs, the currency will maintain its value. If it does not and the currency-issuing economy exceeds the solvency threshold, which is the point at which more than 25% of tax receipts are required to service existing debt, the country becomes terminally insolvent. 
 
Once the threshold is exceeded, no changes of any kind can reverse the terminal insolvency trajectory. Changing taxing schemes, deregulation and increases or decreases in government spending are rendered mathematically inoperative as mechanisms for creating economic growth, and thus tax receipts that exceed debt service requirements. 

What Governments cannot do is become Bankrupt, that is different from becoming insolvent. (Unable to pay it's debt)

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1 hour ago, Wandering_Dog said:

Governments with sovereign currencies cannot become insolvent. Period. Full stop.

Right, but I think (OP correct me if I’m wrong) he means a total breakdown of our monetary system. How it happens isn’t the point right now. The question is can XRP be used to fix the problem.

I don’t know if the U.S. could experience hyperinflation to the point where things “break,” but others have. Maybe one of our experts can weigh in.

Edited by Deeznutz

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1 hour ago, BrownBear said:

Yes they can. Just because you can print money does not mean that money will hold value. All new currency enters the economy as debt, not a credit. When currencies were back by Gold, they entered the economy as credits but this is not the case now.

 

Inflation =/= insolvency

When L > A, you are insolvent. 

When P(t) - P(t-1) > 0, you witness inflation. 

Your statement regarding the gold standard is incorrect. Pegging fiat to the USD to gold did not cause money created by commercial banks to somehow not have both liability and asset components, nor were reserves created by central banks asset only. 

Currency, ie cash, issued by a CB is both an asset and a liability, as are commercial bank deposits. Terminology is extremely important to define or you will talk in circles. Because money is debt, it is by definition also an asset. If money is 'credited' to an account it is still both an asset and a liability, by accounting definition. 

Gold is a commodity. Money is not a commodity. Using a commodity to settle a monetary transaction does not mean that other monies, A and L components, do not exist. Feel free to drop a source if you've got one. 

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8 hours ago, utawwjizz said:

This space is full of hypotheticals and speculation, however, I would appreciate someone’s opinion on this scenario.

 

Say the world adopts XRP and facilitates all trade through Ripplenet essentially bypassing USD’s use as a medium of exchange through international trade. Meanwhile, the SEC cracksdown and for some reason deems the token as a security. Wouldn’t this have a huge negative effect on the US economy, basically shooting ourselves in the foot? Does anyone has a good understanding of the ramifications of this scenario?

The world will not adopt XRP as long as there is no regulatory frame for digital currencies, it's as simple as that my friend.

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I think there are too many competing agendas across all the countries of the world for one currency. Someone will always think that it is not in their best interest and oppose the adoption. IMO It may happen in the future, but not any time soon

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7 hours ago, Wandering_Dog said:

Inflation =/= insolvency

When L > A, you are insolvent. 

When P(t) - P(t-1) > 0, you witness inflation. 

 

Do you even know what insolvency means? Just because the debt may be reduced on past borrowings, the costs to provide those services increase and thus your new debt is simply larger than before. Welcome to hyperinflation and the fall of nations 101. Do you think countries like Venezuela can pay back their debts now and fix their economy because they have hyper inflation?

I'm sorry, but I'm going to have to call you out on this one. You seem to have a need to double down on a position you know next to nothing about.

Edited by BrownBear

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11 minutes ago, BrownBear said:

Just because the debt may be reduced on past borrowings, the costs to provide those services increase and thus your new debt is simply larger than before. Welcome to hyperinflation and the fall of nations 101. 

Debt IS money. When you say reduce gov debt, you are saying reduce the money supply, reduce private savings. These things are equivalent, by accounting definition. 

Do everyone a favor, go to google.scholar.com and type in: hyperinflation. Set the dates to 2008 to today, and just start reading. 

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Just now, Wandering_Dog said:

Debt IS money. When you say reduce gov debt, you are saying reduce the money supply, reduce private savings. These things are equivalent, by accounting definition. 

Do everyone a favor, go to google.scholar.com and type in: hyperinflation. Set the dates to 2008 to today, and just start reading. 

YOU'RE saying those things, not me. I am ONLY talking about a Government not being able to service it's debt thus being insolvent. Like Russia in 1998, Pakistan in 1999, Argentina 2001, Uruguay 2003 etc. Countries can go insolvent, countries have been going insolvent for hundreds of years. But you seem to think Insolvency means something different than the inability to pay it's debts.

I'm sorry, but there is no point even having a discussion with you if you refuse to acknowledge simple facts because you have this myth in your head that Governments can just print more money and avoid defaulting.

Ivory Coast, Moldova, Nicaragua, Grenada, the Dominican Republic, the Seychelles and Cyprus have all gone insolvent at one point in the last 20 odd years. Your narrative just doesn't fit the facts of the world.

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