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(Caveat: I have not read the paywalled article. What follows is a response to the general sentiment of the comments in here.) I'm all for decentralized systems

• febeling 5y ago
  > To me, it seems to be a good for most people when a competent central bank in a well-functioning democracy can regulate money supply in order to keep inflation present and moderate. Why would we want to give that up? If money is supposed to work like everything else in the universe, it should expand and contract. Hardly any politician or government every had the heart to let contraction happen, so outsized balloons of financial instruments grow, and then burst in an outsized bust. I think that's the argument for a money without political control. The idea is that political control can only buy time, or is sort of an illusion anyway. Consider that convertability to bullion or the mathematical algorithms of cryptos are attempts to achieve this same goal, in a way. So it's not new. Many users of a currency want this propertiy, or maybe more specifically, the lenders. Borrowers have to accept these terms. Unless the borrower has a lot of power, like a government, and can consequently change the rules.
  • gspr 5y ago
    > If money is supposed to work like everything else in the universe, it should expand and contract. I don't understand this statement at all. There's plenty of things we don't demand this of. Are we upset that people work towards only expanding, not contracting, say innovation or productivity or intelligence or life expectancy? > Hardly any politician or government every had the heart to let contraction happen, so outsized balloons of financial instruments grow, and then burst in an outsized bust. I think that's the argument for a money without political control. Well, let's fix that then. The perhaps suboptimal wielding of a tool doesn't mean that the tool should go away. > The idea is that political control can only buy time, or is sort of an illusion anyway. ? > Consider that convertability to bullion or the mathematical algorithms of cryptos are attempts to achieve this same goal, in a way. Absolutely. And almost all economists agree that the gold standard is a bad idea. Bitcoin-like cryptocurrencies inherit all those problems. > So it's not new. Many users of a currency want this propertiy, or maybe more specifically, the lenders. Yeah. But most people are not lenders. This is why I'm doubly puzzled by the push for Bitcoin-like cryptocurrencies as some kind of empowerment of "the little man". Surely the elimination of moderate inflation benefits only the capital holders, not the little man?
    • febeling 5y ago
      Sure. I'm not going to get into an emotional argument with you here. These are complex questions, and we're not going to settle them here conclusively. These discussions have been raging for hundreds of years. I was just offering a perspective wrt one of your questions.
• seibelj 5y ago
  I (obviously) have heterodox views, but this is why I'm attracted to cryptocurrencies. But you asked, "Why would we want to give [central bank currency] up?" so I am explaining in good faith my honest opinions. I don't think inflation is a good thing in any capacity. Inflation is a redistribution of wealth away from savers to receivers of freshly printed money. Inflation also encourages mindless consumption as currency holders know that they have to buy something, anything in order to escape the destruction of their savings. This is much more common is countries like Brazil, but the same principle applies to every country. Furthermore, I don't like that essentially a few people (central bankers) ultimately decide where new money goes. Corruption in the US is less-obvious, but in countries like Lebanon, Turkey, Venezuela, Egypt, etc. the central bank is quite clearly redirecting new money to favored, politically-collected people and firms. This is straight up theft from their citizens. Many people say that even moderate inflation is fine, as savers can receive interest that cover the inflation. It's been years since that has been true, and in many countries they actually receive negative-interest for the "privilege" of saving money, which makes that argument untenable. Another argument is that savers can instead find yield to beat inflation by investing. I don't think forcing people to become mini-hedge fund managers, inflating asset bubbles, and encouraging malinvestment in firms because there are no other places to put money is a healthy thing. Inflation-oriented fiat currencies reward debtors. The smartest play is to have no savings and be in as much debt as you can, as inflation eats away at what you owe and you can typically own some sort of asset in return for that debt. Morally speaking I dislike the concept of a debtor-society like we have in all countries. Fiat regimes encourage every firm to become banks. Car dealerships aren't in the business of selling cars - they are in the business of making loans. Retailers aren't selling clothes - they are selling credit cards, and the clothes are the loss-leader to get people in front of the credit card seller. Ultimately the natural progression in the fiat system is to take whatever it is you are selling and convert into a loan shark so you can make interest above inflation. That is the highest-value service you can provide in the fiat monetary system. You said "horrors" of deflation. It is interesting that all computer equipment and services have fallen in price drastically, year after year, since the computer revolution began. There is no other way to describe this except "deflation" in prices of computers, yet this is not a horror and instead people love that prices continue to fall. People will always need food, shelter, and medical services. I believe they will continue to desire education, entertainment, and all manner of other goods and services and this will not stop in a deflationary monetary system. What I like about deflation is that firms are encouraged to constantly improve their offerings to convince people to part with their money, as savings are rewarded over consumption. It also makes salaries default-drop to match deflation, rather than default-increase which rarely happens in time to match the inflation rate and cost-of-living increases in the current system. I like a system where firms are forced to constantly improve their offerings rather than make them shittier as we do in the fiat system, i.e. shaving ounces out of the shampoo bottles, replacing high-quality ingredients with inferior ones, etc. in order to compete. In a hard-money deflationary world, equity would flourish and become as advanced as we currently are with loans and debt. As any loan would have to have very tiny interest (perhaps negative interest) to match deflation and entice borrowing, so equity would become much more common as a financing instrument and also align lenders far more closely with those they give money to. Finally, I dislike how the government's ability to print money enables them to fund programs I dislike, especially the foreign war machine, without making their citizens pay for it. In a hard-money system where governments actually had to raise all the funds from their citizens in order to pay for what the politicians want would IMO drastically reduce the size and scale of government. If citizens actually had to pay for foreign wars, they would not last anywhere near as long. This is a major benefit of a hard-money, "cannot print money out of thin air" system. I hope this gives you a brief explanation of my (obviously minority) perspective and why I dislike central banks and fiat currencies.