Quote from: Cluster2k on June 29, 2011, 11:10:18 AM

Absolutely nothing will change. The debt limit is raised every few years with the party in power claiming cats and dogs and assorted ocelots will rain down if it's not lifted, while the party without power claims the other is totally reckless and irresponsible. A few years later the two parties swap positions and go at it again. No one is dumb enough on either side of the political divide to risk default over a few political sticking points.

Is that what is happening now? The news reports going around suggest they may not be able to agree on a deal. Here's one, but there are lots (just have a look on twitter if you want more): http://www.reuters.com/article/2011/07/07/us-usa-debt-exclusive-idUSTRE7660GE20110707

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If both political parties suffer from a bout of insanity and refuse to agree on the new debt limit, bitcoin's value will plummet. It's a pure speculative commodity (not currency) that has no impact upon 99.999% of the world's population. Ask a villager in India whether they would prefer a bitcoin or gram of gold. Ask a Chinese businessman the same question. I bet a Greek factory worker would give the very same answer.

General question to the thread: Is this true? Why would bitcoin's value plummet? Shouldn't it go "up"?

Firstly, if the USD starts crashing it's not like people already into bitcoin are going to suddenly sell all their BTC to get in on the death spiral action; probably more likely they will dump as many USD as they can get their hands on, right? It's true as you say, that BTC has no impact on most of the world's population, yet, but the primary reasons for this are that a) no-one's heard of it, and b) the software isn't ready for mainstream usability. The core technology is solid enough to have gained the trust of a lot of very smart people; it's just a matter of time before its "impact" is felt far and wide. So, I'm not sure I get what you're saying. Is it that you think US citizens will buy gold so they can use it to buy food (and from what I've been reading around the place, guns and ammo -- so glad I'm on the other side of the planet!) as the sky falls? That is probably true, but if I was there I'd certainly be buying a few extra BTCs as well to hedge my bets, or at least definitely not selling the ones I already have...

Secondly, well, I don't understand enough to know what will happen to the other world currencies if USA defaults, beyond the "serious global implications" suggested by lots of middle-aged men with very serious faces... but surely if USD's value falls, it will fall MORE than the other currencies? If this is true, let's say BTC is trading at around 11EUR/15.5USD, and the USD suddenly falls so that 11EUR = 20USD (yes I know that is extreme but it's just an example). Before there's any change in the BTC market, won't bitcoins which are still worth 11EUR suddenly be worth 20USD? (Not that you'd want the dollars even though there are more of them!)... And if the EUR falls too, well, BTC will go up in price even if it doesn't go up in value. But of course in that scenario it would quickly go up in ACTUAL value because people would see it sailing along quite happily as the other currencies come crashing down around it...

Surely the relevant question to ask an Indian villager etc would be whether they would prefer a bitcoin or some USD. Well if I was that villager, and if I knew and understood what a bitcoin is, and if the USA defaults on its debt (whether it's in 3 weeks or further down the road), I damn well know which one I'd pick!

Please tell me if and where and how I'm wrong

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tl;dr: Why would BTC plummet? Wouldn't it go up? Plz explain!