Quote from: stillfire on May 05, 2011, 08:25:46 PM

Quote from: robm on May 05, 2011, 06:58:47 PM

All other currencies affect each other. Print a lot and your currency falls versus the others. Control the supply relative to demand and it stays strong.

This is not so. There is no magical property of currencies that automagically change the value of other currencies. If I started printing bills of a new "robm dollar" currency right now I would not affect any other currency in the world, no matter how many or how few I printed.

If I could convince some people to accept robems for a good, a service or another currency I would open up for some amount of arbitrage. But the amount of such value exchange would be directly proportional to the amount of usefulness of the new currency. E.g. if I said I would sell 10 grams of gold for 1 robem, someone might pucharse 1 robem for an amount of USD lower than what 10 grams of gold costs. And that would technically have 'lowered' the value of the USD since one person wanted to get rid of a small amount.

But it was not the creation of the currency itself that lead to this. It was the creation of new economic opportunity. You can create new crypto currencies all day and it wouldn't make a difference unless you also convinced people to use it.

I was being deliberately simplistic here, as obviously there are lots of factors affecting currencies on a day to day basis. But over the long run, print more and your currency will get dumped as people switch into (and bid up) others.

Maybe I should have said "existing" or "fiat" currencies to be clear. One that are in use. Obviously if you create one that no one uses it won't affect others. But it there is wealth tied up in it, and that wealth moves away, the value of the currency will fall. Put another way, buyers will pay less to get it and sellers will demand less to sell it.

Think of money like water. It flows between different places. Where it flows determines prices.