On Sun, 4 Nov 2012 16:11:31 -0700 Zooko Wilcox-O'Hearn wrote: > That's interesting. Do you know of a succinct English summary of this > "Relative Theory of Money"?
No, and I asked the author, he doesn't either. Basically it just says that the only monetary system that respects everyone's freedom is the one that creates money on a regular basis at a fixed rate (temporal symmetry), and distributes it in equal shares to users (spatial symmetry). It also gives a way to calculate an "optimal" rate from the average life expectancy of people using the money. > So, Coase's Theorem is that it doesn't matter how the resource is > initially allocated if transaction costs are zero, but that it *does* > matter if transaction costs are non-zero… and transaction costs are > always non-zero! > > How does that theorem apply to this question? The transaction costs of > Bitcoin are probably significantly lower than any comparable system, > but of course it is never 0. Is the initial (more precisely the > "early) distribution of Bitcoin important or unimportant to the > ongoing function of the economy? Important relatively to which goal ? If the goal is freedom and equality, then it's important. > This, I don't really agree with. I know it is a common belief among > certain schools of economics, and I admit the theoretical soundness of > the Paradox of Thrift, but I'm not really convinced that it is a > sufficiently important problem in practice, nor that an inflationary > currency is a solution to the problem whose benefits outweigh its > costs. What costs ? > I mean: maybe! But maybe not. Who knows? How can one tell? All ex post > facto empirical observations are inextricably entangled with > confounders. In particular, I personally suspect that the > *predictability* of a monetary policy is at least as important as what > that policy actually is (today). Bitcoin (or perhaps some successor to > Bitcoin that fixes some flaws) could have a policy about the aggregate > monetary base that is predictable in a way that no other currency is. Can't really do more predictable than a fixed rate. > I don't like the word "hoarding", because it is an emotionally laden > word without, as far as I understand, a specific meaning different > from "saving". "Hoarding" is you saving money (or other resources) > when I think you shouldn't. "Saving" is you hoarding when I think you > should. English isn't my native tongue so I just looked up a translation and found "hoarding". I meant money that's neither spent on goods/services nor invested, money that doesn't change hands, which is bad if your axiom is that money is primarily a means of exchange. > Anyway I admit that you're basically right if you put it like this: a > currency can't be *optimal* for long-term savings and optimal for a > medium of exchange, but I'm not at all sure that this implies a single > currency can't be *good enough* for both. I also kind of think that: > > (a) It isn't just that any one currency can't be optimal for both, it > is that it is impossible to optimize both simultaneously in any way! > That is: it wouldn't matter if you had two currencies, or a million > currencies (hello, Ripple), or any other system, you still couldn't > simultaneously optimize both savings (and the associated > safety/robustness) and growth. > > (b) I'm skeptical of the idea that it is better to tune this trade-off > further toward the growth side and further away from the savings side > — by use of an inflationary currency — than to use the setting that > results from having a non-inflationary or deflationary currency. The > theoretical insight of the Paradox of Thrift is certainly a > fascinating and provocative observation (namely, that the aggregate > utility of everyone in the society is increased if they are somehow > coerced or tricked into spending more than their individual > self-interest would dictate), but it seems far too abstract and > speculative a guide to improving the fortunes of a real, complex and > dynamic, economy. I have a few remarks. Firstly, inflation doesn't trick people into spending any more than deflation tricks them into saving. Note that I include "investing" in "saving". Secondly, I wouldn't use the term "growth" because it implies "something more", like "manufacturing more goods", or "increasing the quantity of services". Those aren't goals for me. Lastly, I don't see the link between "savings" and "safety/robustness". > Thanks for the conversation! Likewise. _______________________________________________ p2p-hackers mailing list [email protected] http://lists.zooko.com/mailman/listinfo/p2p-hackers
