8 ms·

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 ma

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.

jchrisa 11y ago
If you want to dive deeper on the idea of demurrage this book is a great read http://sacred-economics.com/sacred-economics-introduction/ http://sacred-economics.com/sacred-economics-introduction/
- skilesare 11y ago
  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've tried to include those realities in some of my thinking on what money should be: https://vimeo.com/user17783424/review/123631462/ae47903c89#t=3m5s https://vimeo.com/user17783424/review/123631462/ae47903c89#t...
  - ZenoArrow 11y ago
    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?
    - skilesare 11y ago
      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.
      - ZenoArrow 11y ago
        Interesting, you could be onto something here. 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.
- pigeons 11y ago
  Also https://www.community-exchange.org/docs/Gesell/en/neo/ https://www.community-exchange.org/docs/Gesell/en/neo/
  - skilesare 11y ago
    Don't miss A story of Robinson Crusoe chapter. Great parable.
roymurdock 11y ago
> 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. It's all relative.
- drdeca 11y ago
  I assume relative to a market basket of goods?
  - jipsom 11y ago
    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.
nickff 11y ago
>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.
- skilesare 11y ago
smokeyj 11y ago
> 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.
- skilesare 11y ago
  > 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.
jipsom 11y ago
So for example if you were going to release a currency unto the world that you wish to be distributed and for the peoples to adopt there are relevant and necessary considerations (https://thewealthofchips.wordpress.com/2015/04/13/how-to-issue-a-currency-short-form/ https://thewealthofchips.wordpress.com/2015/04/13/how-to-iss...): >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 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.

jchrisa 11y ago

If you want to dive deeper on the idea of demurrage this book is a great read http://sacred-economics.com/sacred-economics-introduction/ http://sacred-economics.com/sacred-economics-introduction/

skilesare 11y ago
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've tried to include those realities in some of my thinking on what money should be: https://vimeo.com/user17783424/review/123631462/ae47903c89#t=3m5s https://vimeo.com/user17783424/review/123631462/ae47903c89#t...
- ZenoArrow 11y ago
  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?
  - skilesare 11y ago
    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.
    - ZenoArrow 11y ago
      Interesting, you could be onto something here. 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.
pigeons 11y ago
Also https://www.community-exchange.org/docs/Gesell/en/neo/ https://www.community-exchange.org/docs/Gesell/en/neo/
- skilesare 11y ago
  Don't miss A story of Robinson Crusoe chapter. Great parable.

roymurdock 11y ago

> 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. It's all relative.

drdeca 11y ago
I assume relative to a market basket of goods?
- jipsom 11y ago
  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.

nickff 11y ago

>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.

skilesare 11y ago

smokeyj 11y ago

> 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.

skilesare 11y ago
> 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.

jipsom 11y ago

So for example if you were going to release a currency unto the world that you wish to be distributed and for the peoples to adopt there are relevant and necessary considerations (https://thewealthofchips.wordpress.com/2015/04/13/how-to-issue-a-currency-short-form/ https://thewealthofchips.wordpress.com/2015/04/13/how-to-iss...): >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 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.