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    El Salvador abandons Bitcoin as legal tender

    (ticotimes.net)
    927 points smallerfish | 12 comments | 04 Feb 25 00:00 UTC | HN request time: 0.639s | source | bottom
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    ggm ◴[04 Feb 25 00:12 UTC] No.42925329[source]▶
    Speculative asset class fails as non-speculative legal tender class.

    If king for the day with a sovereign wealth fund I wouldn't forbid investment choices like this on risk grounds, I mean you need risk assets as well as boring ones, right? But I have problems with the moral quality: it's like state investing in the casino business. Monaco? works fine. Anywhere else? It's got problems.

    Like a lot of people, I probably fall into severe errors which would be bread and butter for "bad economics" reddit groups but truly, I can't see how this wasn't forseen and expected. It was about WHEN, not IF.

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    Terr_ ◴[04 Feb 25 00:51 UTC] No.42925821[source]▶
    > sovereign wealth fund

    That reminds me of Hong Kong, where I used to live and which maintains a large sovereign wealth fund to ensure its currency is pegged to the US dollar.

    While various US think tanks ranked it well on their checklists of "economic freedom", they tended to gloss over the rest of the recipe that made it work. Not just the huge sovereign wealth fund, but also how half the housing is government-run or subsidized and you don't really own land, you just rent it for a very long term from the government.

    replies(5): >>42925952 #>>42926080 #>>42927182 #>>42928209 #>>42928306 #
    jaggederest ◴[04 Feb 25 01:03 UTC] No.42925952[source]▶
    > you don't really own land, you just rent it for a very long term from the government.

    This is probably economically a good idea, absent something like georgist land taxes. It eliminates some or all of the incentive to speculate in land, which is of course the whole problem El Salvador ran into with bitcoin as currency.

    replies(2): >>42925984 #>>42926474 #
    1. ggm ◴[04 Feb 25 01:06 UTC] No.42925984[source]▶
    It hasn't entirely stopped rents in HK being untenably high, for many people. It has rent controls, but the system permits some very untenable outcomes which if left unchecked would re-create Kowloon Walled City.

    So whilst politically I agree, practically I am unsure there is no land speculation: A waterfront view remains valuable in and of itself, no matter what.

    replies(7): >>42926153 #>>42926159 #>>42926166 #>>42926191 #>>42926405 #>>42926448 #>>42927166 #
    2. ty6853 ◴[04 Feb 25 01:21 UTC] No.42926153[source]▶
    Kowloon Walled City ended because it was attacked by the state, rather than through market forces.

    Many of those people are now likely in worse shape effectively renting a cage sized bed, but now paying the governments cut on top of whatever black market shenanigans goes on in both the slum housing and kowloon.

    replies(1): >>42926386 #
    3. jaggederest ◴[04 Feb 25 01:22 UTC] No.42926159[source]▶
    Right, obviously HK is a bit of a special case. Land in Manhattan would, I'm 100% certain, remain incredibly expensive.

    The cool thing about leases is that you can change the cost of the lease periodically, which ensures that the value of the land does not accrue purely to the person occupying it.

    replies(1): >>42927334 #
    4. 3vidence ◴[04 Feb 25 01:22 UTC] No.42926166[source]▶
    Forgive my ignorance but with just so many people and so much money and so little area, isn't high rents inevitable?

    I contrast that to places like the USA and Canada that have huge amounts of area but policies that encourage inefficient land usage.

    5. abdullahkhalids ◴[04 Feb 25 01:24 UTC] No.42926191[source]▶
    There is no problem with property values or rent values being high because they are the result of demand for living in a high quality area. There isn't a problem either with these prices varying over time as the attractiveness of the area changes.

    The problems are wholly on the supply side, where either

    - there are bad laws that lead to any of the following, or - developers legally or illegally cooperate to suppress supply

    - landlords cooperate to push up rents or reduce quality.

    - investors use land or housing units as speculative assets

    - normal people want to use their primary residence as a way to build wealth, so politically support measure that artificially inflate their property values. Individually, this is not a problem, but when everyone does it, the system breaks.

    The goal is to design a system where all of the above doesn't happen. A very big task.

    P.S. I don't know anything about HK.

    6. kiba ◴[04 Feb 25 01:43 UTC] No.42926386[source]▶
    Kowloon Walled City was neither a dystopia nor a utopia. It works and was able to maintain itself, but it could have been done better if it was actually supported by the government.
    replies(1): >>42927203 #
    7. andreareina ◴[04 Feb 25 01:45 UTC] No.42926405[source]▶
    Or in Singapore
    replies(1): >>42926598 #
    8. shipp02 ◴[04 Feb 25 01:48 UTC] No.42926448[source]▶
    Land in HK is weird. The lease thing is true but there are massive national parks that have nothing built at all.

    The buildings that do exist are ~50 stories even though that's not optimal because of the typhoon situation. So constructive cost is high because government does not release enough land for development.

    The rents are high because someone wants it that way. It's not a land scarcity problem IMO.

    Also the government and the upcoming merge with China is strange in itself.

    9. ty6853 ◴[04 Feb 25 02:02 UTC] No.42926598[source]▶
    Singapore relies on the fact like 20 or 30% of their tax paying population is ineligible for public housing due to not being a PR nor citizen.
    10. ◴[04 Feb 25 02:55 UTC] No.42927166[source]▶
    11. gsf_emergency ◴[04 Feb 25 02:59 UTC] No.42927203{3}[source]▶
    That's "just" a bug-feature of common law systems

    >The Kowloon Walled City was exempt and remained under the control of Qing China.

    https://www.thecollector.com/kowloon-walled-city-lawlessness...

    https://en.wikipedia.org/wiki/999-year_lease https://en.wikipedia.org/wiki/999-year_leases_in_Hong_Kong#V...

    12. FabHK ◴[04 Feb 25 03:13 UTC] No.42927334[source]▶
    > obviously HK is a bit of a special case

    Reminds me of the old macro economist joke: There are 4 types of economies, developed economy, developing economy, Japan, and Argentina. Maybe HK should be added to that joke...