What does cryptocurrency mean for governments?
Government's tax citizens and businesses in their currency. Earnings (even earnings in cryptocurrencies) are taxable income.
"The real question is what does FT mean by ""Eurozone Bond"". There is no central European government to issue bonds. What they seem to be quoting is the rate for German Bunds. Germany has a strong economy with a manageable debt load, which means it is a safe Euro denominated investment. Bunds are in high demand across the Eurozone, which drives their price up, and their yield down. Greek 10yr bonds, which are Euro denominated, are yielding over 8%." "Why does the yield go up if the country is economically unstable? The yield will rise when instability increases because the risk of default increases.  If the case of Greece, the instability of government finances resulted in a 50% ""haircut"" for bond holders in 2011.  In other words, bond holders suffered a 50% write down in the nominal value of their bonds.  This means that holding these bonds until maturity will mean they will only receive half of the original nominal value of the bond, and that is assuming no further write downs occur. Why does selling a bond drive up the yield? Significant selling of bonds means that sellers are worried about future prospects.  Sellers will outnumber buyers, so sellers will have to reduce their offer price in order to attract new buyers. So if you think Greece is not going to default as it's highly likely a country would completely default, wouldn't it make sense to hold onto the bonds? If you think that it is highly unlikely that Greece will default and the prices and yields are attractive, then Greek bonds may look like an attractive investment. However, keep in mind the fate of bond holders in 2011.  They were attracted to Greek bonds by the price and yield, but they suffered a 50% haircut." How is Bitcoin silly at all? I don't understand.  Not all cryptocurrency supporters are against regulation. I want regulated cryptocurrencies.  The people who are going to lose here are the ones who invested in 'bad' ICOs. This isn't the first time ICOs have contributed to the fall of the crypto market. Months ago the crowds were screaming the end of crypto with the crash in June. Looking at it now it seems very small. Even with 20% loss the last few days we are still above our previous crash.  And what do you mean the west? We are not the only people developing, contributing, investing, and using crypto. Let's not forget Estonia, Mauritius, Denmark, South Korea... and there's more. "So ""Operation Twist"" is actually a pretty simple concept. Here's the break down: The Fed sells short-term treasury bonds that it already holds on its books. Short-term treasury bonds refer to - bonds that mature in less than three years. Then: Uses that money to buy long term treasury bonds. Long-term treasury bonds refer to -  bonds that mature in six to 30 years The reason: The fed buys these longer-term treasuries to lower longer-term interest rates and encourage more borrowing and spending. Diving deeper into how it works: So the Fed can easily determine short-term rates by using the Federal funds rate this rate has a direct effect on the following: However this does not play a direct role in influencing the rate of long-term loans (what you might pay on a 30-year fixed mortgage). Instead, long-term rates are determined by investors who buy and sell bonds in the bond market, which changes daily. These bond yields fluctuate depending on the health of the economy and inflation. However, the Fed funds rate does play an indirect role in these rates. So now that we know a little more about what effects what rate, why does lower long-term rates in treasuries influence my 30yr fixed mortgage? Well when you are looking for a loan you are entering a market and competing against other people, by people I mean anyone looking for money (e.g: my grandmother, companies, or the US government). The bank that lends you money has to decide weather the deal you are offering them is better then another deal on the market. If the risk of lending to one person is the same as the risk of lending to another, the bank will make whichever loan yields the higher interest rate. The U.S. government is considered a very safe borrower, so much so that government bonds are considered almost “risk free”, but because of the lower risk the rate of return is lower. So now the bank has to factor in this risk and make its decision weather to lend you money, or the government. So, if the government were to go to the market and buy its own long-term bonds it is adding demand in the market causing the price of the bond to rise in effect lowering the interest rate (when price goes up, yield goes down). So when you go back and ask for a loan it has to re-evaluate and decide ""Is it worth giving this money to Joe McFreeBeer instead and collecting a higher yield?"" (After all, Joe McFreeBeer is a nice guy). Here's an example: Lets say the US has a rating of 10 out of 10 and its bonds pay a 2% yield. Now lets say for each lower mark in rating the bank will lend at a minimum of 1% higher and your rating is 8 of 10. So if you go to market, the lowest rate you can get will be 4%. Now lets say price rises on the US treasury and causes the rate to go down by 1%. In this scenario you will now be able to get a loan for 3% and someone with a rating of 7 of 10 would be able to get that 4% loan. Here's some more info and explinations: Why is the Government Buying Long-Term Bonds? What Is 'Operation Twist'? A Q&A on US Fed Program Federal Reserve for Beginners Federal Open Market Committee" I don't think this can be explained in too simple a manner, but I'll try to keep it simple, organized, and concise. We need to start with a basic understanding of inflation. Inflation is the devaluing of currency (in this context) over time. It is used to explain that a $1 today is worth more than a $1 tomorrow. Inflation is explained by straight forward Supply = Demand economics. The value of currency is set at the point where supply (M1 in currency speak) = demand (actual spending). Increasing the supply of currency without increasing the demand will create a surplus of currency and in turn weaken the currency as there is more than is needed (inflation). Now that we understand what inflation is we can understand how it is created. The US Central Bank has set a target of around 2% for inflation annually. Meaning they aim to introduce 2% of M1 into the economy per year. This is where the answer gets complicated. M1 (currency) has a far reaching effect on secondary M2+ (credit) currency that can increase or decrease inflation just as much as M1 can... For example, if you were given $100 (M1) in new money from the Fed you would then deposit that $100 in the bank. The bank would then store 10% (the reserve ratio) in the Fed and lend out $90 (M2) to me on via a personal loan. I would then take that loan and buy a new car. The car dealer will deposit the $90 from my car loan into the bank who would then deposit 10% with The Fed and his bank would lend out $81... And the cycle will repeat... Any change to the amount of liquid currency (be it M1 or M2+) can cause inflation to increase or decrease. So if a nation decides to reduce its US Dollar Reserves that can inject new currency into the market (although the currency has already been printed it wasn't in the market). The currency markets aim to profit on currency imbalances and in reality momentary inflation/deflation between currencies. Cutting the size/inefficiency of government is generally an unpopular topic on r/economy.   However the question I always wish to ask these folk is : If the size and scope of government has generally historically increased since WWII, at what stage do we say enough? There has to be a point where the inefficiency and burden of the state overwhelms the tax base it operates off. Jamie Dimon, calling bitcoin a fraud for price bubbling is hilarious considering JP Morgan literally got bailed out by US tax dollars for investing in trash mortgage loans. Ok.  Knocks aside, I'm just buying low. The problem with financial analysis on bitcoin is that inevitably, financiers don't know anything about computer science, and they aren't in the business of making applications. Bitcoin is an application of an interesting concept: the distributed ledger, and the ability to have a distributed ledger verify and lock the ledger. The problem with this analysis is that he doesn't have application knowledge to infer the positive externalities of having a distributed ledger, and most of those use cases for the applications are in their infancy, or haven't been though of yet. Blockchain is an idea that can later power other tools. It's like when the Microsoft CEO said Apps aren't useful on phones. He didn't see the big picture, because the use cases weren't defined yet, and the same thing is going on here. We haven't really fleshed out all the possible use cases of a distributed ledger with a decentralized oracle.  Does it work for payments? Yes, bitcoin is proof of that, and the fact that it's been bailed out a total of zero times by American taxpayers is so far a strong indicator that it works. Are there other applications that are being developed? Yes. Are there some applications out there that are absolute shit? Yes. Are there some applications out there that are absolute gold? Yes. "I'd suggest that Bitcoin is not ""just"" anything. If wealthy Chinese have found it useful, good for them. If enterprising Venezuelan manage to afford basic necessities with it, that's great too.    Both of those are just use cases in the end. There have been others, and there will be more.   It remains to be seen just how draconian capital controls need to be to really prevent Bitcoin from being used in those environments. But if anybody can do draconian, it's probably China, so this will be a great experiment of sort, if they still have the stomach for that kind of thing.  If you're arguing that the market value of bitcoin is only rising because of one use case, I invite you to [look at this historical bitcoin price chart](https://bitcoincharts.com/charts/bitstampUSD#rg2920ztgSzm1g10zm2g25zvzl), spot the period of activity for your given use case, and estimate how the price action was influenced over that period by this use case. Then contrast it with the part of the graph outside of your chosen period, and make sure your idea adequately explains both parts."