It would be nice if this website offered an option anywhere to print the paper without annotations (or with them, but in a sane serialized / readable format). Since the source is a PDF available elsewhere, I was able to "save" it for offline reading from this link: http://sites.stat.psu.edu/~babu/nash/money.pdf
Nash tries to convince the audience that money is good despite popular opinions on money being the root of all evil. Those opinions aren't baseless, though. Money entitles you to a reward from society, no matter how you got the money. Even if some people know you did terrible things to get it, you only have to find one person willing to reward you. The store that sells things to that person is rewarding them for rewarding you for doing terrible things. We're all complicit in rewarding people for terrible things because our money makes us powerless.
We want the good part of money: it allows us to engage in economic games of transferable utility, so we don't have to barter. But it'd also be nice to prevent the bad parts as well. Our current solution is regulation, so the profitable strategy becomes innovating new ways to profit at the public's expense before regulations are in place.
We should just stop rewarding people for doing things that harm the public. If you make money by polluting, we should stop rewarding you. If you make money by tricking people into taking out loans they can't afford, we should stop rewarding you. We know who these people are, but as individuals, we have no way to stop rewarding them. We need a money that lets us do that.
Instead of today's currencies, let's just explicitly model our spending. When I buy a bottle of water from a store, let's create a database record where I assert that the store rewarded me with $1 of stuff. Let's also connect that to the justification for the reward: either I did some work for someone else, or the store is letting me owe them a dollar. Instead of using a traditional private database, let's put these records in a public, shared database on a blockchain.
This gives individuals the information to decide whose rewards they want to be complicit in. If you've done terrible things, I don't want to reward people for rewarding you. If you're impoverished and don't have a way to do valuable things for other people, I want to reward people who reward you anyway.
Creating an electronic currency capable of "coloring" money by its origin is much more interesting than anything the bitcoin camp can ever promise.
Though, it does become a giant money laundering problem. When Russian oligarchs who obtained their money through destroying their own country and killing their own people invest in YC, then YC funds startups, then startups pay employees, how "dirty" is the money when it reaches the employee?
Very. Money maintains its history from its creation to its destruction. Money is created when someone provides goods, services, or labor in exchange for debt. Money is destroyed when its creator accepts the debt as payment.
With that said, everyone's going to be better off if we only punish transgressions that occur after merit capitalism is in place. Our monetary system has driven people to do crazy things, but we should just fix that, forgive them, and move on.
First, ideal money has a neutral origin. Money isn't a physical thing at its core. It is a shared ledger. Gold is a shared ledger. Bitcoin and all crypto-currencies are a shared ledger. The currency of a country is a shared ledger (albeit with more infrastructure and less guarantee of the total). So 'coloring' is extending the idea that money is physical into a place where it doesn't work. The Russian oligarchs didn't create the money they have, they had it transferred to them by others. Maybe they forced citizens by violence, but then again, maybe they sold oil and natural gas to China. Who is 'guilty' now and of what?
The second fallacy plays in to the first. Money is not law. Building law into money has been an excessively dangerous idea throughout history that to no one's surprise favors those who create and enforce the laws. Often those people are the ones with the most money. It isn't a leap to see that this is a cycle that reinforces itself.
Nick Szabo is the person peoples most think programmed bitcoin. 20 years ago he developed smart contracts, which is basically programmable money that uses law as the analogue for its implementation. This is because this is essentially what is happening the mergence of software, programming, money, law, economics.
http://szabo.best.vwh.net/shell.htmlhttp://szabo.best.vwh.net/smart_contracts_idea.html
I am not sure what you are pointing to or if we disagree. I mean to say the relationship between money and law is that of the moon and its reflection. Not separable but in this way.
No one said anything about building law into money, nor about making digital money more like physical money. We're just adding information about who is being rewarded. That's it. Individuals can use that information to make decisions about who to reward, and that's what money is for.
But that's not all. If anyone does anything with the information then the money diverges from ideal money because it is no longer as fungible. The usability becomes crippled and more complex in the best case, while completely unusable in the worst case.
The end result is that people won't choose that money. The idea of what people 'should' use or 'the money that would be best for everyone' is shaky - people will use what serves their purposes the best.
For the first time people have real choice in the money they use, and they aren't going to choose something with regard to the greater good, it never works like that in a system of people with competing incentives except through violence.
The same idea coincides with inflation. People say 'a deflationary currency won't work'. The truth is, it will work at some point because it must - no one given a choice would choose an inflationary currency all else being equal. While all else is certainly not equal, people for the first time have that choice. The same applies to colored coins.
You're overestimating the loss of fungibility. When someone decides to stop rewarding a polluter, they'll broadcast that fact to the public. They can limit that to future rewards rather than past rewards. It would be rare for money you hold to suddenly become worthless. I agree that no one wants that, which is why I don't think large swathes of society would do something they don't want. It could happen, though.
This isn't about making a choice for the greater good. Choosing a currency that lets you decide who to reward gives you power. People like power. They will grab it.
You don't know this, because no one really does. Plenty of people are trying to predict the future of crypto-currencies like they know without a doubt what will happen.
Choosing who to reward is a power money already gives you.
Cross reference the companies you find to be the worst in the world with their stock prices to see if your theories hold up.
> The truth is, it will work at some point because it must - no one given a choice would choose an inflationary currency all else being equal.
That's exactly backwards, if one has to choose between the two, both being available, everyone chooses to spend inflationary currency; it should be obvious why and it's a well known truism even: bad money drives out good money.
Quite simply, money that retains or increases in value doesn't serve the purpose of money very well and will always lose to money that decreases in value. The purpose of money is to spend it, not save it, it's for trade, not storing as an asset, and money that decreases in value has a built in incentive to be spent and thus better serves its purpose.
What you are saying only holds up until about 40 years ago. The 2500 years before that contradicts what you are saying.
> bad money drives out good money
It does not. More ideal money drives out less ideal money. If you knew that one form of money would inflate and another would not, would you transfer to the non-inflationary money or would you spend every last cent of your current money?
You don't have to look far to see that what you are saying is ridiculous. Argentina, Venezuela, Zimbabwe etc. are recent examples of national currencies being less than ideal. The only thing preventing Argentina and Venezuela from using US dollars is violence. Zimbabwe eventually converted to US dollars.
At the same time, if you took a long view and were going to put away $100,000 in US dollars or $100,000 in gold and you would come back in 100 years to get it, which would you do?
> You don't have to look far to see that what you are saying is ridiculous. Argentina, Venezuela, Zimbabwe
You're confusing inflation with hyper inflation, a common mistake.
> At the same time, if you took a long view and were going to put away $100,000 in US dollars or $100,000 in gold and you would come back in 100 years to get it, which would you do?
As I already told you the purpose of money is not to save it, I would not store 100k liquid as cash; cash does not exist to save, it exists to trade. Save assets, not money. Money is a tool, inflation only bothers those who don't understand how the tool works and try and use it inappropriately.
If you offer to sell me your assassination car, I'll ask you for your receipt for the car. You can drive the car all you want, sure. Using it as a money replacement is hard.
Banishing people to barter is an effective disincentive.
Which is why I still have the saying "privacy vs. progress of mankind - pick one". Privacy is not worth nearly enough to be used for rejecting everything out of hand.
I just looked at my ledger file (I use ledger-cli to track finances) and I don't see anything particularly embarrassing, so yeah, sure. It's incredibly boring though.
On my Dropbox. But since this information is still happily under my control - how much are you willing to pay me for it? :).
(The real reason I'm not sharing it is because after browsing I realized I would have to edit out the names of people I've payed back or that payed back me - they may not be willing to have their information revealed - and that seems like a lot of work to defend a point I honestly think I've already mostly lost.)
But no! You have neatly illustrated why its vital, to you, to have privacy. For moral reasons at the very least. Pretending loss of privacy its no big deal is easy, until you face it.
For me, that's an easy decision: privacy. Every time. And twice on Sunday.
And here's the thing. I have as much objective basis for my position as you have for yours. In both cases, that is pretty much "nil".
And that cuts to the bottom of pretty much all political / ideological debates if you dig deep enough. At some point you simply come to a conflict in fundamental values and principles... a situation for which there is no real resolution.
There are many solutions - to the problem, not to getting folks to agree. That's probably impossible, I agree.
We have little privacy, and have had less every generation. Its a matter of social mores, at least for public/social interaction. Say I can find out who you're staying with at the no-tell motel every Thursday. If its taboo to mention it, then you still have 'privacy'. Its the same as, no polite person mentions the sounds coming through the bathroom door - folks all know, but pretend they don't. Lots of things work this way, already.
I know, the govt knowing is different - that info will be used as leverage, every time, without mercy. Because the govt is an institution, and institutions have no morals.
I agree with your observation that a lot of privacy depends simply on social customs, and I think that in an advanced society this will always be primary way of keeping it.
I disagree with "and have had less [privacy] every generation". I think for the last hundred or so years we've been having unprecedented amounts of privacy thanks to urbanization and the anonymity that stems from it. In villages, where most people lived throughout history, there is no such thing as privacy.
In a way that makes sense - per-capita. But since villages were so tiny, the total number of people who knew your secrets was very small. Today, it numbers in the thousands/millions.
In this way we are sort of like a global village - gossip about you can and sometimes does travel around the entire globe. On the other hand, all those people "knowing" is almost as if they didn't knew anything at all - every one of those thousands/millions people have secrets of another thousands/millions to pick from.
I guess the primary place where our times are different is when it's you vs. a faceless Organization - a company or a government, where they can use your data against you while you have no target to retaliate against. In this way you may also say that we have less of that privacy with each generation, but that's because Organizations are quite recent things - your average villager of the past had neither need nor way to interact with their government the way we do today, and companies like we have now didn't even exist.
That last paragraph is probably the first time I thought that particular thought explicitly. At this point I'm not sure whether it's me conceding the point of continued loss of privacy in meaningful areas of life, or observing a strong correlation between diminishing privacy and progress of society, that may or may not turn out to be a causation of the "privacy vs. progress of mankind - pick one" form.
> At some point you simply come to a conflict in fundamental values and principles... a situation for which there is no real resolution.
I disagree - unless you actually treat privacy as irreducible, God-given value that needs to be protected; at that point there is no help. But I suspect you have practical reasons for your views, and those we can reduce and discuss based on facts and rational thinking until we figure out a common view.
Personally, I am not holding a political opinion on this topic, but a practical one. Dynamic, real-time optimization on the level of society, a city or a country requires the data privacy advocates fight to hide. To optimize traffic flow we need to track how and where everyone is driving. To optimize power distribution we need to know how much and when a person uses electricity. To simulate disease spread effectively we could use real-life movement patterns. Etc. Yes, you can do a lot of this using aggregate, anonymized datasets, but real-time non-anonymized stream would certainly be qualitatively better.
There are lots of things we should do to move forward as a society that go directly against privacy of individuals. Those things are not even discussed! Everyone is focusing on possibility of government abuse and the potential benefits offsetting those costs aren't usually mentioned.
And that's all still high-level problems. There's another, more low-level issue. New technology keeps reducing the amount of privacy available. 30 years ago it was very hard to keep someone under constant surveillance. Today, with technology in everyone's smartphone, it's trivial. So what are we supposed to do to protect our privacy? Halt all new technology development? Roll back the industrial evolution? Progress of technology is empowering individuals, that's the whole point - but it also means those individuals will be gaining abilities to reduce the privacy of otheres. Are we really willing to halt progress in order to accommodate privacy needs?
Have you ever considered flipping your idea on its head? Instead of tying the value of money to what happened in the past, tie it to what may happen in the future. If I have the choice today to spend a dollar with a polluter vs a non-polluter, instead of punishing the polluter in the far future, reward me for making a good choice.
How? Make money decay back to those that spend it through the accounts of those they spent it with so that they are rewarded more if they spend their money with 'good actors' that constantly increase the value they provide.
Information asymmetry. How do I know who will be a polluter, a murderer, an immoral person, or a criminal in the future. You're creating friction rather than reducing inefficiency.
I'm not going to do some pyschoanalytical research on the guy who is making my sandwich at subway as well as dig around for the company's (probably bad and definitely unavailable) track record of food wastage and then decide whether or not to pay him and the company for my sandwich.
Also, the current monetary system already has the idea of "decay" built in due to the Fed targeting a 2% rate of inflation every year.
Also, not being able to trade "prefs" strikes me as a silly idea; one that you can't enforce and that a black market would form around relatively quickly.
>Information asymmetry. How do I know who will be a polluter, a murderer, an immoral person, or a criminal in the future. You're creating friction rather than reducing inefficiency.
Exactly! You don't know. But you don't know now either. In the future the market will know. And why should the subway shop that the polluter bought a sandwich from be punished after the fact when we find out he is a polluter. Instead, throw the guy in jail and fold the blockchain over him so that the sandwich shop is connected to the original person that unknowingly paid the polluter. You can't know, but you can guess. It isn't even that hard. And while you are trying to guess all the sandwich shops are showing you why they are the most profitable and why they can deliver you the most value.
>Also, the current monetary system already has the idea of "decay" built in due to the Fed targeting a 2% rate of inflation every year.
Inflation is unpredictable and under less control than now appears. See 1970s. Predetermined decay is a carrying cost. Unexpected inflation is a theft.
>Also, not being able to trade "prefs" strikes me as a silly idea; one that you can't enforce and that a black market would form around relatively quickly.
This is just a technical issue that building on a blockchain solves. Post transaction data analysis can find collusions.
They never question him, they don't want to know what others said about him and how those around perceived him, and most importantly, they don't want to actually study his teachings, only as presented by vicars (those speaking on behalf of Keynes).
Because of course, just like the best antidote against a religion is its holy book, the best antidote against Keynesianism is reading Keynes.
Nash says something like "even post keyensians" are really just Keynesians, which is funny but also shows how radically and tangentially he is thinking. https://www.youtube.com/watch?v=Je22xKQekCk
Whats most significant and interesting here is that he came up with the concept of ideal money in the 60's when he was labelled paranoid delusional and fled to Europe.
there are 10+ lectures and papers on the subject. The very first lecture starts with:
>Money can be recognized as a technological development comparable to the wheel and of similar antiquity.
Nash proposes we can use science and reason to rationally evolve the circumstances and underlying tech that is money.
There is a specific paragraph in which he explains Keynesian banking is central banking.
He doesn't say he doesn't like printing money, he notes the relationship between supply and the quality. And that by controlling supply you can control quality.
There is no rigorous model for your eyes but if you know ANYTHING about this mans work you could be rest assured that he is thinking of something incredibly accurate and technological.
In Ideal Money Nash proposes that the advant of an electronic money in the form of a stably issued money supply will asymptotically take the power out of governments and central banks to print money.
I have a lot to say on this subject, and much of it disagrees with Nash. This is a tough thing to do because the man was a giant. Anyway, here it goes:
He makes a bad assumption at the very beginning by assuming that 'good money' holds its value. I'll argue that most of the inequality we experience in the world today is a result of money holding too much value! When money holds value, it is hoarded. When it is hoarded, it is unproductive.
Money can be used as a measure of potential utility, but you can't just open it like a bottle of water and drink it all at one time. Instead we should think of a unit of currency as a set of potential utility that is stretched across time from now to the time X in the future. When you think of money in this way, it become obvious that money should decay as time goes by. Good money losses value at a constant, manageable, predictable rate because the amount of utility that the human race can produce in the future is a significant chunk less at the end of a than it is at the beginning of that day.
If a dollar is held at the end of a day by the same person that held it at the beginning of the day, some utility was left on the table.
Good money maximizes utility in all futures, not just the future you choose while sitting on your pile of cash.
I've read this and follow the guy on facebook. It is a bit over-spiritual for my tastes but he points out some good points along the way. It has been a while, but ultimately I felt like he ignored some of the reality of 'very bad things can happen' and 'people are greedy.'
I just watched your video, from what I understood of it it's an interesting idea. I have a question: It seems that in the system you propose money would lose its value if you held onto it, which I can see some benefits to, but doesn't it also encourage spending on unnecessary items? I understand the idea that you effectively have stock in the company you buy from, but that doesn't seem to slow down spending, you may end up buying a lot of goods from a reputable company that you can sell on at a later date without being subject to currency depreciation. To give an example, what would be the disadvantage to stocking up on something like Tide, which as far as I know has a long shelf life and appears to be a fairly commonly purchased item?
I've rambled a bit so to summarise... instead of saving money, wouldn't people save with material goods instead?
Sure, and this provides the detergent maker more capital to create the next great detergent...which devalues the detergent you have...so only up to a point.
In general it would be better to loan out your cash at a 0% rate of interest then to hoard material goods. Especially since risk is vastly reduced due to blockchain folding bankrupt entities. Even if you are never paid back in the short term, you end up paid back in the long term. Of course it is much better for you if the person you loan $100 turns it into $1M.
1. How does this system affect those that want to use their money at a slower pace, such as minimalists and nomads? In other words, do they have any options to spend at a slower pace without losing out?
2. I can see your approach is based on the blockchain, which I believe could work, but I wonder about whether a blockchain-based system will be fast enough when the quantity of transactions reaches that of an established currency. I don't follow news about cryptocurrencies that much, so perhaps this is already being tackled. Have people been working on improving the speed of blockchain propagation? Links to discussions/blogs about this would be welcome.
1. One of the core concepts is 'Everyone is a bank'. The system has built in loan pooling complete with a marketplace. http://catallax.info/everyone-is-a-bank/ Instead of being paid interest, you receive a dividend over time based on how well the person who placed your loan does.
2. A trusted public ledger is necessary. A bunch of tech exists to build it on the blockchain right now, but you are right, it isn't a long term solution. As long as the ledger is public and verifiable you'd be ok.
> Good money losses value at a constant, manageable, predictable rate
Relative to what? Other currencies? Commodities? Gold? Money doesn't exist in a vacuum.
Good money is stable money is well-governed money. When supply and demand are tailored to suit time-specific economic needs, such as in periods of growth or contraction in order to avoid disasters such as hyperinflation.
> If a dollar is held at the end of a day by the same person that held it at the beginning of the day, some utility was left on the table.
In a growing economy undergoing inflation, yes. Thing is, nothing can grow forever. If you keep a dollar in your pocket during deflationary times, you are maximizing utility because you can buy more goods tomorrow with that dollar you've saved. So sometimes it makes sense to hoard and save.
yes but Nash's point relies on the observation that the process of picking suitable "goods" (or services, or utilities, or stable costs etc.) can be politically corruptible as well. So theoretically the ideal standard lies here, but you have to solve the problem of political power and corruption as well.
Nash's points this out, and then proceeds to propose a different view that alludes to a creative solution.
>He makes a bad assumption at the very beginning by assuming that 'good money' holds its value. I'll argue that most of the inequality we experience in the world today is a result of money holding too much value! When money holds value, it is hoarded. When it is hoarded, it is unproductive.
Whether inequality is morally/ethically good, bad, or neutral is a normative judgement; which is to say that envy is viewpoint-dependent, not an objective truth which must be minimized for any obvious reason. How can you criticize him for not agreeing with a particular normative judgement? This is not an intellectual or positive failure, it is a normative difference. Moreover, even if this criticism was valid, your assertion that "[w]hen money holds value, it is hoarded", is probably true (though you use the pejorative term hoard which puts your objectivity into question); however devaluing currencies forces people to 'hoard' real estate and other physical stores of value, which are actually productive (as opposed to paper or plastic specie which are not very useful).
>Money can be used as a measure of potential utility, but you can't just open it like a bottle of water and drink it all at one time.
Why not? Apart from this analogy making little sense, there is no reason to believe that one should not spend all one's money in a single 'binge' as opposed to rationing spending.
>Instead we should think of a unit of currency as a set of potential utility that is stretched across time from now to the time X in the future.
Again, there is no particular reason to believe this. You seem to be asserting things as true with no reasoning to support your beliefs.
>When you think of money in this way, it become obvious that money should decay as time goes by. Good money losses [sic] value at a constant, manageable, predictable rate because the amount of utility that the human race can produce in the future is a significant chunk less at the end of a than it is at the beginning of that day.
All the evidence I have ever seen indicates that human production, consumption and productivity are constantly increasing (though not monotonically), so you must provide a rationale for this assertion.
>If a dollar is held at the end of a day by the same person that held it at the beginning of the day, some utility was left on the table.
This doesn't make any sense at all. If you were to say that fields being left fallow, machines being unused, or books left on the shelf was a waste of potential utility, you would likely be correct, but small pieces of paper and metal are not of much use to anyone, and not spending them simply increases the value of the money that is trading hands.
>Whether inequality is morally/ethically good, bad, or neutral is a normative judgement; which is to say that envy is viewpoint-dependent, not an objective truth which must be minimized for any obvious reason. How can you criticize him for not agreeing with a particular normative judgement? This is not an intellectual or positive failure, it is a normative difference. Moreover, even if this criticism was valid, your assertion that "[w]hen money holds value, it is hoarded", is probably true (though you use the pejorative term hoard which puts your objectivity into question); however devaluing currencies forces people to 'hoard' real estate and other physical stores of value, which are actually productive (as opposed to paper or plastic specie which are not very useful).
Good points! I need to lay off the exaggerated vocab. I think that land is a special case. Most other things and actually most land these days, do require up keep. This upkeep is usually provided by the bottom level of society as those with enough resources to 'hoard' are usually not the ones cutting the grass. Most things have a built in decay. Gessell proposed a special system for land that isn't really in line with my views on property rights, but clearly something needs to be in place to avoid unproductive land accumulation. Property taxes work pretty well for this.
One's actual ability to predict the value of other 'physical stores of value' well enough to actually use them as stores of value over long periods of time is probably over estimated.
>Why not? Apart from this analogy making little sense, there is no reason to believe that one should not spend all one's money in a single 'binge' as opposed to rationing spending.
Of course you can spend it all at one time, but generally, the thing you are spending it on did not pop into being at that instant, in the condition of maximum value. I guess my point is that if we are going to use money as a metaphor for exchanging goods and services, it should be a good metaphor. Goods and services degrade over time. Money should too.
>Again, there is no particular reason to believe this. You seem to be asserting things as true with no reasoning to support your beliefs.
>All the evidence I have ever seen indicates that human production, consumption and productivity are constantly increasing (though not monotonically), so you must provide a rationale for this assertion.
I'm actually relying on this fact. Here is another way to think of things....If I produce a unit of work today...and I want to convert it to cash. How long into the future should that unit of work be good for? I don't know that there is a right answer. I think the line moves as society changes, but I think there is a line. If I stick that money in the bank, even at 0 interest, in an Ideal Money world with 0 inflation, and live off the state for the next 50 years, should I be able to take it out and buy the same amount of goods with it? Is that the society we want? We get to decide the society we want to live in...It is all about aligning incentives.
?This doesn't make any sense at all. If you were to say that fields being left fallow, machines being unused, or books left on the shelf was a waste of potential utility, you would likely be correct, but small pieces of paper and metal are not of much use to anyone, and not spending them simply increases the value of the money that is trading hands.
Tell that to the socially awkward scientist who has a risky, but ultimately valid cure for cancer in his head, but can't get financing ...
> Is that the society we want? We get to decide the society we want to live in...It is all about aligning incentives.
Why not? All thats happened so far is that you have produced and provided a free unit of work to the world and deferred consumption. Whether saving towards retirement or holding off for a big purchase I see nothing wrong with it. If that money is never spent, then that work provided was free forever.
> When money holds value, it is hoarded. When it is hoarded, it is unproductive.
Except it's not hoarded, it's reinvested. The consumption of created value is deferred while accruing interest at a market rate. This interest rate is an important signal to the greater economy weather to start long-term projects now or later. If interest rates are too high, big projects will be financed later while simultaneously incentivizing value producers to defer consumption. To me this is the best regulator for why you don't "drink the bottle of water all at one time".
> Good money losses value
Money is a naturally occurring phenomena amongst rational actors. Any highly marketable commodity that can be expected to be traded at a later date can act as a form of money - for example, cigarettes in prison. I can't imagine someone wanting their cigarettes to be prone to dissolving.
I personally wonder if we can trade without money at all. For example, trading digital certificates that represent real-world assets (stocks, commodities). Prices can be denominated in any asset, and payments go thru a clearing house that matches and settles trades in real time. This would let me go to Subway and buy a sandwhich denominated in Apple stock that I payed for with shares of crude oil stock.
> Except it's not hoarded, it's reinvested. The consumption of created value is deferred while accruing interest at a market rate. This interest rate is an important signal to the greater economy weather to start long-term projects now or later. If interest rates are too high, big projects will be financed later while simultaneously incentivizing value producers to defer consumption. To me this is the best regulator for why you don't "drink the bottle of water all at one time".
Re hoarding: Some is reinvested. Much is consumed along the way in management fees, reserve requirements, and financial institution profits. It is not optimal. The middle men will be eliminated eventually.
Re Interest Rate: The rate is an important signal for bank profits too. Essential to them in fact. There are other signals. And deferring a big project to later may be fine if you are building a high rise in downtown, but delay can be deadly if you're trying to reduce pollution, cure cancer, map a genome, ect.
> Money is a naturally occurring phenomena amongst rational actors. Any highly marketable commodity that can be expected to be traded at a later date can act as a form of money - for example, cigarettes in prison. I can't imagine someone wanting their cigarettes to be prone to dissolving.
Have you ever smoked a 5 year old cigarette? As for other examples, you can make a bet that oil will be $50 in 5 years, many do, and many lose their shirts(and some make a killing). Volatility rules.
>I personally wonder if we can trade without money at all. For example, trading digital certificates that represent real-world assets (stocks, commodities). Prices can be denominated in any asset, and payments go thru a clearing house that matches and settles trades in real time. This would let me go to Subway and buy a sandwhich denominated in Apple stock that I payed for with shares of crude oil stock.
It is certainly possible...but stock has its own issues. It is a form of hybrid capital and subject to all kinds of accounting shenanigans.
Prices can be denominated in any asset, and payments go thru a clearing house that matches and settles trades in real time.
This is what gave rise to money in the first place: "1/14th of my goat for one pound of bread." Before you knew it, different cultures far apart had to use a common denominator (salt, tobacco leaves, nails, iron, stamped metals, etc...) among themselves, and later with other cultures:
>There is a problem for the issuer of a currency, whether in coinage, paper, or electronic form, that if this currency (or money) is too good, then it could be exploited by all sorts of parties and interests that might simply wish to safely deposit a store of wealth or even to conservatively invest some assets for future good value.
>…under extreme conditions the currency issued by a state could be exploited by parties not of that state as a sort of “safe-deposit box” on which they would not need to pay any rental fees or fees like those paid to the managers of mutual funds for investment.
>If the value trend of a currency is such that a natural interest rate is not negative, then it is not an unattractive task for a central currency authority to mint or print the physical currency that would circulate. Then the issuer of currency would be partially in the position of a borrower not paying interest on borrowed money.
And so:
>But, simply to improve the conditions under which agreements regarding long-term lending and borrowing would be made, a money would be more or less equivalently good if it had a completely steady and constant rate of inflation. Then this inflation rate could be added to all lending an borrowing contracts. Hence, the problem of a money that would be too good is avoidable.
In regards to inflation targets he remarks:
>…the possible area for evolution is that if, say, an inflation rate of between 1% and 3% is now considered desirable and appropriate in Sweden, then, if it is really controllable, why shouldn’t a rate between 1/2 % and 3/2 % be even more desirable?
It is quite interesting to think of what asymptotically ideal money might be in regards to bitcoins inflation schedule which 1/2's every four years until ultimately there is no inflation in regards to money supply.
>So here is the possibility of “asymptotically ideal money”. Starting with the idea of value stabilization in relation to a domestic price index associated with the territory of one state, beyond that there is the natural and logical concept of internationally based value comparisons.
>The currencies being compared, like now the euro, the dollar, the yen, the pound, the swiss franc, the swedish kronor, etc. can be viewed with critical eyes by their users and by those who maybe have the option of whether or not or how to use one of them. This can lead to pressure for good quality and consequently for a lessened rate of inflationary deprecation in value.
62 comments
[ 3.0 ms ] story [ 112 ms ] threadWe want the good part of money: it allows us to engage in economic games of transferable utility, so we don't have to barter. But it'd also be nice to prevent the bad parts as well. Our current solution is regulation, so the profitable strategy becomes innovating new ways to profit at the public's expense before regulations are in place.
We should just stop rewarding people for doing things that harm the public. If you make money by polluting, we should stop rewarding you. If you make money by tricking people into taking out loans they can't afford, we should stop rewarding you. We know who these people are, but as individuals, we have no way to stop rewarding them. We need a money that lets us do that.
Instead of today's currencies, let's just explicitly model our spending. When I buy a bottle of water from a store, let's create a database record where I assert that the store rewarded me with $1 of stuff. Let's also connect that to the justification for the reward: either I did some work for someone else, or the store is letting me owe them a dollar. Instead of using a traditional private database, let's put these records in a public, shared database on a blockchain.
This gives individuals the information to decide whose rewards they want to be complicit in. If you've done terrible things, I don't want to reward people for rewarding you. If you're impoverished and don't have a way to do valuable things for other people, I want to reward people who reward you anyway.
This is merit capitalism.
http://meritcapitalism.com/
Though, it does become a giant money laundering problem. When Russian oligarchs who obtained their money through destroying their own country and killing their own people invest in YC, then YC funds startups, then startups pay employees, how "dirty" is the money when it reaches the employee?
With that said, everyone's going to be better off if we only punish transgressions that occur after merit capitalism is in place. Our monetary system has driven people to do crazy things, but we should just fix that, forgive them, and move on.
First, ideal money has a neutral origin. Money isn't a physical thing at its core. It is a shared ledger. Gold is a shared ledger. Bitcoin and all crypto-currencies are a shared ledger. The currency of a country is a shared ledger (albeit with more infrastructure and less guarantee of the total). So 'coloring' is extending the idea that money is physical into a place where it doesn't work. The Russian oligarchs didn't create the money they have, they had it transferred to them by others. Maybe they forced citizens by violence, but then again, maybe they sold oil and natural gas to China. Who is 'guilty' now and of what?
The second fallacy plays in to the first. Money is not law. Building law into money has been an excessively dangerous idea throughout history that to no one's surprise favors those who create and enforce the laws. Often those people are the ones with the most money. It isn't a leap to see that this is a cycle that reinforces itself.
The current leading implementation is "ethereum"
Smart contracts are further uses of the immutable shared ledger.
The mixing of law and money I was talking about is what we have now.
The end result is that people won't choose that money. The idea of what people 'should' use or 'the money that would be best for everyone' is shaky - people will use what serves their purposes the best.
For the first time people have real choice in the money they use, and they aren't going to choose something with regard to the greater good, it never works like that in a system of people with competing incentives except through violence.
The same idea coincides with inflation. People say 'a deflationary currency won't work'. The truth is, it will work at some point because it must - no one given a choice would choose an inflationary currency all else being equal. While all else is certainly not equal, people for the first time have that choice. The same applies to colored coins.
This isn't about making a choice for the greater good. Choosing a currency that lets you decide who to reward gives you power. People like power. They will grab it.
Choosing who to reward is a power money already gives you.
Cross reference the companies you find to be the worst in the world with their stock prices to see if your theories hold up.
That's exactly backwards, if one has to choose between the two, both being available, everyone chooses to spend inflationary currency; it should be obvious why and it's a well known truism even: bad money drives out good money.
Quite simply, money that retains or increases in value doesn't serve the purpose of money very well and will always lose to money that decreases in value. The purpose of money is to spend it, not save it, it's for trade, not storing as an asset, and money that decreases in value has a built in incentive to be spent and thus better serves its purpose.
> bad money drives out good money
It does not. More ideal money drives out less ideal money. If you knew that one form of money would inflate and another would not, would you transfer to the non-inflationary money or would you spend every last cent of your current money?
You don't have to look far to see that what you are saying is ridiculous. Argentina, Venezuela, Zimbabwe etc. are recent examples of national currencies being less than ideal. The only thing preventing Argentina and Venezuela from using US dollars is violence. Zimbabwe eventually converted to US dollars.
At the same time, if you took a long view and were going to put away $100,000 in US dollars or $100,000 in gold and you would come back in 100 years to get it, which would you do?
A tautology.
> It does not. More ideal money drives out less ideal money.
See https://en.wikipedia.org/wiki/Gresham%27s_law
> You don't have to look far to see that what you are saying is ridiculous. Argentina, Venezuela, Zimbabwe
You're confusing inflation with hyper inflation, a common mistake.
> At the same time, if you took a long view and were going to put away $100,000 in US dollars or $100,000 in gold and you would come back in 100 years to get it, which would you do?
As I already told you the purpose of money is not to save it, I would not store 100k liquid as cash; cash does not exist to save, it exists to trade. Save assets, not money. Money is a tool, inflation only bothers those who don't understand how the tool works and try and use it inappropriately.
Banishing people to barter is an effective disincentive.
;).
(The real reason I'm not sharing it is because after browsing I realized I would have to edit out the names of people I've payed back or that payed back me - they may not be willing to have their information revealed - and that seems like a lot of work to defend a point I honestly think I've already mostly lost.)
For me, that's an easy decision: privacy. Every time. And twice on Sunday.
And here's the thing. I have as much objective basis for my position as you have for yours. In both cases, that is pretty much "nil".
And that cuts to the bottom of pretty much all political / ideological debates if you dig deep enough. At some point you simply come to a conflict in fundamental values and principles... a situation for which there is no real resolution.
We have little privacy, and have had less every generation. Its a matter of social mores, at least for public/social interaction. Say I can find out who you're staying with at the no-tell motel every Thursday. If its taboo to mention it, then you still have 'privacy'. Its the same as, no polite person mentions the sounds coming through the bathroom door - folks all know, but pretend they don't. Lots of things work this way, already.
I know, the govt knowing is different - that info will be used as leverage, every time, without mercy. Because the govt is an institution, and institutions have no morals.
I disagree with "and have had less [privacy] every generation". I think for the last hundred or so years we've been having unprecedented amounts of privacy thanks to urbanization and the anonymity that stems from it. In villages, where most people lived throughout history, there is no such thing as privacy.
I guess the primary place where our times are different is when it's you vs. a faceless Organization - a company or a government, where they can use your data against you while you have no target to retaliate against. In this way you may also say that we have less of that privacy with each generation, but that's because Organizations are quite recent things - your average villager of the past had neither need nor way to interact with their government the way we do today, and companies like we have now didn't even exist.
That last paragraph is probably the first time I thought that particular thought explicitly. At this point I'm not sure whether it's me conceding the point of continued loss of privacy in meaningful areas of life, or observing a strong correlation between diminishing privacy and progress of society, that may or may not turn out to be a causation of the "privacy vs. progress of mankind - pick one" form.
I disagree - unless you actually treat privacy as irreducible, God-given value that needs to be protected; at that point there is no help. But I suspect you have practical reasons for your views, and those we can reduce and discuss based on facts and rational thinking until we figure out a common view.
Personally, I am not holding a political opinion on this topic, but a practical one. Dynamic, real-time optimization on the level of society, a city or a country requires the data privacy advocates fight to hide. To optimize traffic flow we need to track how and where everyone is driving. To optimize power distribution we need to know how much and when a person uses electricity. To simulate disease spread effectively we could use real-life movement patterns. Etc. Yes, you can do a lot of this using aggregate, anonymized datasets, but real-time non-anonymized stream would certainly be qualitatively better.
There are lots of things we should do to move forward as a society that go directly against privacy of individuals. Those things are not even discussed! Everyone is focusing on possibility of government abuse and the potential benefits offsetting those costs aren't usually mentioned.
And that's all still high-level problems. There's another, more low-level issue. New technology keeps reducing the amount of privacy available. 30 years ago it was very hard to keep someone under constant surveillance. Today, with technology in everyone's smartphone, it's trivial. So what are we supposed to do to protect our privacy? Halt all new technology development? Roll back the industrial evolution? Progress of technology is empowering individuals, that's the whole point - but it also means those individuals will be gaining abilities to reduce the privacy of otheres. Are we really willing to halt progress in order to accommodate privacy needs?
How? Make money decay back to those that spend it through the accounts of those they spent it with so that they are rewarded more if they spend their money with 'good actors' that constantly increase the value they provide.
Read more at http://catallax.info
I'm not going to do some pyschoanalytical research on the guy who is making my sandwich at subway as well as dig around for the company's (probably bad and definitely unavailable) track record of food wastage and then decide whether or not to pay him and the company for my sandwich.
Also, the current monetary system already has the idea of "decay" built in due to the Fed targeting a 2% rate of inflation every year.
Also, not being able to trade "prefs" strikes me as a silly idea; one that you can't enforce and that a black market would form around relatively quickly.
Exactly! You don't know. But you don't know now either. In the future the market will know. And why should the subway shop that the polluter bought a sandwich from be punished after the fact when we find out he is a polluter. Instead, throw the guy in jail and fold the blockchain over him so that the sandwich shop is connected to the original person that unknowingly paid the polluter. You can't know, but you can guess. It isn't even that hard. And while you are trying to guess all the sandwich shops are showing you why they are the most profitable and why they can deliver you the most value.
>Also, the current monetary system already has the idea of "decay" built in due to the Fed targeting a 2% rate of inflation every year.
Inflation is unpredictable and under less control than now appears. See 1970s. Predetermined decay is a carrying cost. Unexpected inflation is a theft.
>Also, not being able to trade "prefs" strikes me as a silly idea; one that you can't enforce and that a black market would form around relatively quickly.
This is just a technical issue that building on a blockchain solves. Post transaction data analysis can find collusions.
* Nash ignores the field of monetary economics and tries to re-invent the wheel.
* He justifies his ignorance of existing work because it is influenced by "Keynesians" who are bad, because, well just because.
* He apparently doesn't like "printing money", but he doesn't critique monetary policy at all.
* There is no rigorous model of anything.
* Worst of all he has shown no empirical evidence for anything.
The lecture is really a lot of handwaving. This is not his field. Read him on game theory please.
When cleverer people than me state something, I listen, and do my research.
They never question him, they don't want to know what others said about him and how those around perceived him, and most importantly, they don't want to actually study his teachings, only as presented by vicars (those speaking on behalf of Keynes).
Because of course, just like the best antidote against a religion is its holy book, the best antidote against Keynesianism is reading Keynes.
Whats most significant and interesting here is that he came up with the concept of ideal money in the 60's when he was labelled paranoid delusional and fled to Europe.
>Money can be recognized as a technological development comparable to the wheel and of similar antiquity.
Nash proposes we can use science and reason to rationally evolve the circumstances and underlying tech that is money.
There is a specific paragraph in which he explains Keynesian banking is central banking.
He doesn't say he doesn't like printing money, he notes the relationship between supply and the quality. And that by controlling supply you can control quality.
There is no rigorous model for your eyes but if you know ANYTHING about this mans work you could be rest assured that he is thinking of something incredibly accurate and technological.
Here is his basic concept for a network of computers designed as a future ai system that we haven't reached yet: http://web.math.princeton.edu/jfnj/texts_and_graphics/Main.C...
Nash designed that in the 50's
In Ideal Money Nash proposes that the advant of an electronic money in the form of a stably issued money supply will asymptotically take the power out of governments and central banks to print money.
You sir, are simply oblivious to reality.
Read it again!
Btw Nash's solutions and triumphs in game theory from 70 years ago are MASSIVE contributions to not only economics but nearly all sciences: http://www.eecs.harvard.edu/cs286r/courses/spring02/papers/n...
My understanding: https://thewealthofchips.wordpress.com/2015/07/09/the-totali...
A summary: https://thewealthofchips.wordpress.com/2015/07/12/a-general-...
I've put together the best and most relevant quotes I could in relation to emerging economics. But otherwise there is nothing put together.
Ideal Money the 8 page lecture is the real treasure but its very dense if you really go into the meaning of everything.
He makes a bad assumption at the very beginning by assuming that 'good money' holds its value. I'll argue that most of the inequality we experience in the world today is a result of money holding too much value! When money holds value, it is hoarded. When it is hoarded, it is unproductive.
Money can be used as a measure of potential utility, but you can't just open it like a bottle of water and drink it all at one time. Instead we should think of a unit of currency as a set of potential utility that is stretched across time from now to the time X in the future. When you think of money in this way, it become obvious that money should decay as time goes by. Good money losses value at a constant, manageable, predictable rate because the amount of utility that the human race can produce in the future is a significant chunk less at the end of a than it is at the beginning of that day.
If a dollar is held at the end of a day by the same person that held it at the beginning of the day, some utility was left on the table.
Good money maximizes utility in all futures, not just the future you choose while sitting on your pile of cash.
I've tried to include those realities in some of my thinking on what money should be: https://vimeo.com/user17783424/review/123631462/ae47903c89#t...
I've rambled a bit so to summarise... instead of saving money, wouldn't people save with material goods instead?
In general it would be better to loan out your cash at a 0% rate of interest then to hoard material goods. Especially since risk is vastly reduced due to blockchain folding bankrupt entities. Even if you are never paid back in the short term, you end up paid back in the long term. Of course it is much better for you if the person you loan $100 turns it into $1M.
Two more questions:
1. How does this system affect those that want to use their money at a slower pace, such as minimalists and nomads? In other words, do they have any options to spend at a slower pace without losing out?
2. I can see your approach is based on the blockchain, which I believe could work, but I wonder about whether a blockchain-based system will be fast enough when the quantity of transactions reaches that of an established currency. I don't follow news about cryptocurrencies that much, so perhaps this is already being tackled. Have people been working on improving the speed of blockchain propagation? Links to discussions/blogs about this would be welcome.
2. A trusted public ledger is necessary. A bunch of tech exists to build it on the blockchain right now, but you are right, it isn't a long term solution. As long as the ledger is public and verifiable you'd be ok.
Recent http://thenewstack.io/why-art-could-become-currency-in-a-cry... Older http://www.wired.com/2014/07/document-coin/
Relative to what? Other currencies? Commodities? Gold? Money doesn't exist in a vacuum.
Good money is stable money is well-governed money. When supply and demand are tailored to suit time-specific economic needs, such as in periods of growth or contraction in order to avoid disasters such as hyperinflation.
> If a dollar is held at the end of a day by the same person that held it at the beginning of the day, some utility was left on the table.
In a growing economy undergoing inflation, yes. Thing is, nothing can grow forever. If you keep a dollar in your pocket during deflationary times, you are maximizing utility because you can buy more goods tomorrow with that dollar you've saved. So sometimes it makes sense to hoard and save.
It's all relative.
Nash's points this out, and then proceeds to propose a different view that alludes to a creative solution.
Whether inequality is morally/ethically good, bad, or neutral is a normative judgement; which is to say that envy is viewpoint-dependent, not an objective truth which must be minimized for any obvious reason. How can you criticize him for not agreeing with a particular normative judgement? This is not an intellectual or positive failure, it is a normative difference. Moreover, even if this criticism was valid, your assertion that "[w]hen money holds value, it is hoarded", is probably true (though you use the pejorative term hoard which puts your objectivity into question); however devaluing currencies forces people to 'hoard' real estate and other physical stores of value, which are actually productive (as opposed to paper or plastic specie which are not very useful).
>Money can be used as a measure of potential utility, but you can't just open it like a bottle of water and drink it all at one time.
Why not? Apart from this analogy making little sense, there is no reason to believe that one should not spend all one's money in a single 'binge' as opposed to rationing spending.
>Instead we should think of a unit of currency as a set of potential utility that is stretched across time from now to the time X in the future.
Again, there is no particular reason to believe this. You seem to be asserting things as true with no reasoning to support your beliefs.
>When you think of money in this way, it become obvious that money should decay as time goes by. Good money losses [sic] value at a constant, manageable, predictable rate because the amount of utility that the human race can produce in the future is a significant chunk less at the end of a than it is at the beginning of that day.
All the evidence I have ever seen indicates that human production, consumption and productivity are constantly increasing (though not monotonically), so you must provide a rationale for this assertion.
>If a dollar is held at the end of a day by the same person that held it at the beginning of the day, some utility was left on the table.
This doesn't make any sense at all. If you were to say that fields being left fallow, machines being unused, or books left on the shelf was a waste of potential utility, you would likely be correct, but small pieces of paper and metal are not of much use to anyone, and not spending them simply increases the value of the money that is trading hands.
Good points! I need to lay off the exaggerated vocab. I think that land is a special case. Most other things and actually most land these days, do require up keep. This upkeep is usually provided by the bottom level of society as those with enough resources to 'hoard' are usually not the ones cutting the grass. Most things have a built in decay. Gessell proposed a special system for land that isn't really in line with my views on property rights, but clearly something needs to be in place to avoid unproductive land accumulation. Property taxes work pretty well for this.
One's actual ability to predict the value of other 'physical stores of value' well enough to actually use them as stores of value over long periods of time is probably over estimated.
>Why not? Apart from this analogy making little sense, there is no reason to believe that one should not spend all one's money in a single 'binge' as opposed to rationing spending.
Of course you can spend it all at one time, but generally, the thing you are spending it on did not pop into being at that instant, in the condition of maximum value. I guess my point is that if we are going to use money as a metaphor for exchanging goods and services, it should be a good metaphor. Goods and services degrade over time. Money should too.
>Again, there is no particular reason to believe this. You seem to be asserting things as true with no reasoning to support your beliefs.
Hey! I'm making the metaphors here. :) Yes, this is a though exercise. Play them out to their conclusions. Or better yet, run the model yourself: http://catallax.info/news/2015/4/19/a-published-model-of-hyp...
>All the evidence I have ever seen indicates that human production, consumption and productivity are constantly increasing (though not monotonically), so you must provide a rationale for this assertion.
I'm actually relying on this fact. Here is another way to think of things....If I produce a unit of work today...and I want to convert it to cash. How long into the future should that unit of work be good for? I don't know that there is a right answer. I think the line moves as society changes, but I think there is a line. If I stick that money in the bank, even at 0 interest, in an Ideal Money world with 0 inflation, and live off the state for the next 50 years, should I be able to take it out and buy the same amount of goods with it? Is that the society we want? We get to decide the society we want to live in...It is all about aligning incentives.
?This doesn't make any sense at all. If you were to say that fields being left fallow, machines being unused, or books left on the shelf was a waste of potential utility, you would likely be correct, but small pieces of paper and metal are not of much use to anyone, and not spending them simply increases the value of the money that is trading hands.
Tell that to the socially awkward scientist who has a risky, but ultimately valid cure for cancer in his head, but can't get financing ...
Why not? All thats happened so far is that you have produced and provided a free unit of work to the world and deferred consumption. Whether saving towards retirement or holding off for a big purchase I see nothing wrong with it. If that money is never spent, then that work provided was free forever.
Except it's not hoarded, it's reinvested. The consumption of created value is deferred while accruing interest at a market rate. This interest rate is an important signal to the greater economy weather to start long-term projects now or later. If interest rates are too high, big projects will be financed later while simultaneously incentivizing value producers to defer consumption. To me this is the best regulator for why you don't "drink the bottle of water all at one time".
> Good money losses value
Money is a naturally occurring phenomena amongst rational actors. Any highly marketable commodity that can be expected to be traded at a later date can act as a form of money - for example, cigarettes in prison. I can't imagine someone wanting their cigarettes to be prone to dissolving.
I personally wonder if we can trade without money at all. For example, trading digital certificates that represent real-world assets (stocks, commodities). Prices can be denominated in any asset, and payments go thru a clearing house that matches and settles trades in real time. This would let me go to Subway and buy a sandwhich denominated in Apple stock that I payed for with shares of crude oil stock.
Re hoarding: Some is reinvested. Much is consumed along the way in management fees, reserve requirements, and financial institution profits. It is not optimal. The middle men will be eliminated eventually.
Re Interest Rate: The rate is an important signal for bank profits too. Essential to them in fact. There are other signals. And deferring a big project to later may be fine if you are building a high rise in downtown, but delay can be deadly if you're trying to reduce pollution, cure cancer, map a genome, ect.
> Money is a naturally occurring phenomena amongst rational actors. Any highly marketable commodity that can be expected to be traded at a later date can act as a form of money - for example, cigarettes in prison. I can't imagine someone wanting their cigarettes to be prone to dissolving.
Have you ever smoked a 5 year old cigarette? As for other examples, you can make a bet that oil will be $50 in 5 years, many do, and many lose their shirts(and some make a killing). Volatility rules.
>I personally wonder if we can trade without money at all. For example, trading digital certificates that represent real-world assets (stocks, commodities). Prices can be denominated in any asset, and payments go thru a clearing house that matches and settles trades in real time. This would let me go to Subway and buy a sandwhich denominated in Apple stock that I payed for with shares of crude oil stock.
It is certainly possible...but stock has its own issues. It is a form of hybrid capital and subject to all kinds of accounting shenanigans.
This is what gave rise to money in the first place: "1/14th of my goat for one pound of bread." Before you knew it, different cultures far apart had to use a common denominator (salt, tobacco leaves, nails, iron, stamped metals, etc...) among themselves, and later with other cultures:
>There is a problem for the issuer of a currency, whether in coinage, paper, or electronic form, that if this currency (or money) is too good, then it could be exploited by all sorts of parties and interests that might simply wish to safely deposit a store of wealth or even to conservatively invest some assets for future good value.
>…under extreme conditions the currency issued by a state could be exploited by parties not of that state as a sort of “safe-deposit box” on which they would not need to pay any rental fees or fees like those paid to the managers of mutual funds for investment.
But there is this realization by Nash that is relevant (this version: http://www.jstor.org/stable/1061553) :
>If the value trend of a currency is such that a natural interest rate is not negative, then it is not an unattractive task for a central currency authority to mint or print the physical currency that would circulate. Then the issuer of currency would be partially in the position of a borrower not paying interest on borrowed money.
And so:
>But, simply to improve the conditions under which agreements regarding long-term lending and borrowing would be made, a money would be more or less equivalently good if it had a completely steady and constant rate of inflation. Then this inflation rate could be added to all lending an borrowing contracts. Hence, the problem of a money that would be too good is avoidable.
In regards to inflation targets he remarks:
>…the possible area for evolution is that if, say, an inflation rate of between 1% and 3% is now considered desirable and appropriate in Sweden, then, if it is really controllable, why shouldn’t a rate between 1/2 % and 3/2 % be even more desirable?
It is quite interesting to think of what asymptotically ideal money might be in regards to bitcoins inflation schedule which 1/2's every four years until ultimately there is no inflation in regards to money supply.
>So here is the possibility of “asymptotically ideal money”. Starting with the idea of value stabilization in relation to a domestic price index associated with the territory of one state, beyond that there is the natural and logical concept of internationally based value comparisons.
>The currencies being compared, like now the euro, the dollar, the yen, the pound, the swiss franc, the swedish kronor, etc. can be viewed with critical eyes by their users and by those who maybe have the option of whether or not or how to use one of them. This can lead to pressure for good quality and consequently for a lessened rate of inflationary deprecation in value.