6 ms·

I do think that smart contract based finance on blockchain protocols is necessary to stabilize captialism as a whole / to have predictable cycles instead of lon

by domano 5y ago

I do think that smart contract based finance on blockchain protocols is necessary to stabilize captialism as a whole / to have predictable cycles instead of longer cycles with worse crashes. At least you cant change inflation on a whim there (aside from on chain governance votes, but at least those are transparent and done by holders)

te_chris 5y ago
I just can't even being to understand this argument. Just because you're internally stable doesn't mean others will deign to agree.
pjc50 5y ago
The "hardness" of money is unrelated to the boom/bust cycle, which is why the world went off the gold standard and Bretton Woods in the first place.
- Hermel 5y ago
  By having hard money, the system has one less moving part and is a little less complex and less erratic.
  - pjc50 5y ago
    A car with no suspension has one less moving part and is considerably less comfortable. (I'm slightly surprised that HN isn't amenable to the hydraulic control theory of the economy, and the relatively simple maths behind central bank control of rates which has been hugely successful at driving down inflation)
    - jonkho 5y ago
      A broken hydraulic if that. Interest rates have been pushed down and stayed down over the decades.
      - tonyedgecombe 5y ago
        Centuries: https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2020/eight-centuries-of-global-real-interest-rates-r-g-and-the-suprasecular-decline-1311-2018 https://www.bankofengland.co.uk/-/media/boe/files/working-pa...
      - imtringued 5y ago
        If you ask me it's the savers that are the weird ones. They aren't redeeming their deposits. How do you expect debts to be repaid if people insist on holding onto their deposits?
  - dragontamer 5y ago
    The number of boom / bust periods in the 1800s (gold standard) are more frequent and more disruptive than the modern fiat system Today's system is more complex but is way less 'erratic'.
    - tastyfreeze 5y ago
      Please provide examples tying the gold standard to boom bust cycle frequency. Boom and bust in the 1800s was largely isolated to locations undergoing new development for resource utilization. People moved in to take advantage of plentiful resources. When the resources were depleted the town went bust. Because of westward expansion there were many new resources to take advantage of. The frequency of boom bust in the 1800s had nothing to do with the gold standard. We had a boom period with fracking recently. People and businesses rushed to get a piece of the action. The majority of those people are going to leave and take their money with them causing a localized bust. Boom bust cycles are not related to a gold standard existing or not. However, with fiat currency, boom bust cycles can apply to the entire national economy, not just one location.
      - dragontamer 5y ago
        > Please provide examples tying the gold standard to boom bust cycle frequency. The Great Depression 1929 (Gold was so blamed for this depression, that Roosevelt made it illegal to hold more than a few ounces of gold to "solve" the depression). Moving further back: The Panic of 1873 (which eradicated the Silver standard). Panic of 1893 was also tied to a gold-panic. Black Friday (1869) was another gold-related panic, but luckily the US wasn't on the Gold Standard at that time.
        tastyfreeze 5y ago
        Thank you for the examples. But, none of those examples illustrate your point that boom bust cycles were more frequent with a gold standard or even related to a gold standard. All of those examples resulted from government meddling in the economy. Black Friday 1869 - This one is funny. A return to a gold standard to restore the economy and pay off Civil War debt combined with a conspiracy of a few individuals to corner the gold market. (https://en.wikipedia.org/wiki/Black_Friday_(1869)#History https://en.wikipedia.org/wiki/Black_Friday_(1869)#History) Panic of 1873 - result of government subsidizing railroad expansion that speculators jumped on to make a buck (https://en.wikipedia.org/wiki/Panic_of_1873#Factors https://en.wikipedia.org/wiki/Panic_of_1873#Factors) Panic of 1893 - The economic policies of President Benjamin Harrison have been characterized as a contributing factor to the depression. (https://en.wikipedia.org/wiki/Panic_of_1893#Causes https://en.wikipedia.org/wiki/Panic_of_1893#Causes) Great Depression 1929 - Many hypothesis of cause. One of which is the 1920s expansion of money supply and 1928 contraction of money supply. (https://en.wikipedia.org/wiki/Great_Depression#Causes https://en.wikipedia.org/wiki/Great_Depression#Causes) In all of these cases people were trying to get out of paper and into gold to protect their wealth. That is until Roosevelt used the 1929 Depression as an excuse to steal the wealth of Americans.
  - imtringued 5y ago
    By having hard money you get predictable decline. It honestly doesn't make sense to me. If people want to hold onto gold they can just buy it.
- jonkho 5y ago
  Which gold standard? Bretton woods wasn’t it (only state actors could redeem). Literally the history of boom and busts are from the excesses of money printing.
  - pjc50 5y ago
    You have your causality backwards, check the dates: https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102 The US went off the gold standard in 1933 because of the crash of 1929, which (obviously) happened under the gold standard. It was part of an extreme but ultimately successful project to re-mobilize the economy. Although the dramatic federally-directed transformation seems to have left a lot of scars on US politics.
    - jonkho 5y ago
      1929 was caused by excess credit issuance. True, that the gold standard was in place, but the spirit to keep credit in check was not. The federal reserve already existed, so this excess was made possible by their control of credit.
      - WanderPanda 5y ago
        Which makes me think that a gold standard has to always come with proper education about IoUs etc. Bubbles are only bad if people are deceived, because the proper way of riding a bust out by doing nothing (creative destruction) is too painful and may lead to political extremism.
        imtringued 5y ago
        With a reserve currency like the USD the bust only happens in the USA while the boom happens outside of it.
        spiralx 5y ago
DasIch 5y ago
> At least you cant change inflation on a whim there [...] You can't change inflation on a whim right now either or put another way a government can get rid of a blockchain based system just as easily.

by domano 5y ago

te_chris 5y ago

I just can't even being to understand this argument. Just because you're internally stable doesn't mean others will deign to agree.

pjc50 5y ago

The "hardness" of money is unrelated to the boom/bust cycle, which is why the world went off the gold standard and Bretton Woods in the first place.

Hermel 5y ago
By having hard money, the system has one less moving part and is a little less complex and less erratic.
- pjc50 5y ago
  A car with no suspension has one less moving part and is considerably less comfortable. (I'm slightly surprised that HN isn't amenable to the hydraulic control theory of the economy, and the relatively simple maths behind central bank control of rates which has been hugely successful at driving down inflation)
  - jonkho 5y ago
    A broken hydraulic if that. Interest rates have been pushed down and stayed down over the decades.
    - tonyedgecombe 5y ago
      Centuries: https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2020/eight-centuries-of-global-real-interest-rates-r-g-and-the-suprasecular-decline-1311-2018 https://www.bankofengland.co.uk/-/media/boe/files/working-pa...
    - imtringued 5y ago
      If you ask me it's the savers that are the weird ones. They aren't redeeming their deposits. How do you expect debts to be repaid if people insist on holding onto their deposits?
- dragontamer 5y ago
  The number of boom / bust periods in the 1800s (gold standard) are more frequent and more disruptive than the modern fiat system Today's system is more complex but is way less 'erratic'.
  - tastyfreeze 5y ago
    Please provide examples tying the gold standard to boom bust cycle frequency. Boom and bust in the 1800s was largely isolated to locations undergoing new development for resource utilization. People moved in to take advantage of plentiful resources. When the resources were depleted the town went bust. Because of westward expansion there were many new resources to take advantage of. The frequency of boom bust in the 1800s had nothing to do with the gold standard. We had a boom period with fracking recently. People and businesses rushed to get a piece of the action. The majority of those people are going to leave and take their money with them causing a localized bust. Boom bust cycles are not related to a gold standard existing or not. However, with fiat currency, boom bust cycles can apply to the entire national economy, not just one location.
    - dragontamer 5y ago
      > Please provide examples tying the gold standard to boom bust cycle frequency. The Great Depression 1929 (Gold was so blamed for this depression, that Roosevelt made it illegal to hold more than a few ounces of gold to "solve" the depression). Moving further back: The Panic of 1873 (which eradicated the Silver standard). Panic of 1893 was also tied to a gold-panic. Black Friday (1869) was another gold-related panic, but luckily the US wasn't on the Gold Standard at that time.
      - tastyfreeze 5y ago
        Thank you for the examples. But, none of those examples illustrate your point that boom bust cycles were more frequent with a gold standard or even related to a gold standard. All of those examples resulted from government meddling in the economy. Black Friday 1869 - This one is funny. A return to a gold standard to restore the economy and pay off Civil War debt combined with a conspiracy of a few individuals to corner the gold market. (https://en.wikipedia.org/wiki/Black_Friday_(1869)#History https://en.wikipedia.org/wiki/Black_Friday_(1869)#History) Panic of 1873 - result of government subsidizing railroad expansion that speculators jumped on to make a buck (https://en.wikipedia.org/wiki/Panic_of_1873#Factors https://en.wikipedia.org/wiki/Panic_of_1873#Factors) Panic of 1893 - The economic policies of President Benjamin Harrison have been characterized as a contributing factor to the depression. (https://en.wikipedia.org/wiki/Panic_of_1893#Causes https://en.wikipedia.org/wiki/Panic_of_1893#Causes) Great Depression 1929 - Many hypothesis of cause. One of which is the 1920s expansion of money supply and 1928 contraction of money supply. (https://en.wikipedia.org/wiki/Great_Depression#Causes https://en.wikipedia.org/wiki/Great_Depression#Causes) In all of these cases people were trying to get out of paper and into gold to protect their wealth. That is until Roosevelt used the 1929 Depression as an excuse to steal the wealth of Americans.
- imtringued 5y ago
  By having hard money you get predictable decline. It honestly doesn't make sense to me. If people want to hold onto gold they can just buy it.
jonkho 5y ago
Which gold standard? Bretton woods wasn’t it (only state actors could redeem). Literally the history of boom and busts are from the excesses of money printing.
- pjc50 5y ago
  You have your causality backwards, check the dates: https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102 The US went off the gold standard in 1933 because of the crash of 1929, which (obviously) happened under the gold standard. It was part of an extreme but ultimately successful project to re-mobilize the economy. Although the dramatic federally-directed transformation seems to have left a lot of scars on US politics.
  - jonkho 5y ago
    1929 was caused by excess credit issuance. True, that the gold standard was in place, but the spirit to keep credit in check was not. The federal reserve already existed, so this excess was made possible by their control of credit.
    - WanderPanda 5y ago
      Which makes me think that a gold standard has to always come with proper education about IoUs etc. Bubbles are only bad if people are deceived, because the proper way of riding a bust out by doing nothing (creative destruction) is too painful and may lead to political extremism.
      - imtringued 5y ago
        With a reserve currency like the USD the bust only happens in the USA while the boom happens outside of it.
        spiralx 5y ago

DasIch 5y ago

> At least you cant change inflation on a whim there [...] You can't change inflation on a whim right now either or put another way a government can get rid of a blockchain based system just as easily.