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> Innovations in money are the lubricant that drives the economy Drives the economy toward what? Economic agents don't necessarily share interests, often one

> Innovations in money are the lubricant that drives the economy Drives the economy toward what? Economic agents don't necessarily share interests, often one succeeds at the expense of another. When the risk is spread too widely, it becomes difficult to determine whether you're helping somebody help you, or whether you're helping somebody harm you. It's not clear where to participate and where to interfere. This leads to an unfortunate situation where the the simplest conclusion for many is that the entire system is their enemy. There's a balance to be struck re: how widely you spread risk, and we've overshot it. The net risk of being insensitive to the agents' needs is higher overall, even if it's spread evenly. We've removed the steering wheel in favor of an additional engine, and the road won't remain a straightaway forever. If we keep this up, sooner or later we're going to be unable to avoid a fatal obstacle.

WalterBright 2y ago
> often one succeeds at the expense of another Transactions in a free market are mutually beneficial, otherwise people wouldn't agree to them.
- __MatrixMan__ 2y ago
  That's only true if all parties have the option to back out: If Bob doesn't like the terms of Alice's loan, he doesn't have to take it. But if Alice grants Bob a loan and then later sells the debt to Charlie, Bob didn't get the opportunity to consent to the transfer. Depending on Charlie's behavior, it may suddenly be in Bob's best interest to default on that loan. So it's not necessarily mutually beneficial, in fact it's frequently exploitative. But suppose Alice sells the debt to 1000 people in tiny slices, 200 of which are depended on by Bob in some way, 600 of which are independent parties that neither help nor harm Bob besides profiting on his debt, and 200 of which are working with Charlie in a mining endeavor which is poisoning Bob's water or whatever. It creates an information asymmetry where Bob may not be capable of determining who he is harming or helping if he defaults on the loan (Charlie and his 200 cronies, however, they have accountants on staff and know exactly what they're doing). That's the second problem: Bob can't make an informed choice regarding the real-world consequences of his behavior, so the system becomes blind to those consequences. Bob and the rest of us who live nearby--whose retirement portfolios may have been unwittingly contributing to the problem--still have to deal with the consequences. Had the consequence of holding Bob's debt been known to us, perhaps we'd prefer to take the hit to our portfolios than to deal with the fallout of Charlie's actions.
  - WalterBright 2y ago
    Selling a loan does not change the terms of the loan.
    - deleted 2y ago
      [deleted]
    - __MatrixMan__ 2y ago
      It doesn't. But plenty of loans go unpaid despite what the terms say--that's why they're risky, and why they're profitable. The system allegedly works because we have a choice about whether the creditor profits. And we'd be better off if that choice were more effective at keeping creditors accountable for the outcomes of the loans they grant, not merely their profitability, but for that to work the whose-loan-is-this question needs to have a simple answer.

WalterBright 2y ago

> often one succeeds at the expense of another Transactions in a free market are mutually beneficial, otherwise people wouldn't agree to them.

__MatrixMan__ 2y ago
That's only true if all parties have the option to back out: If Bob doesn't like the terms of Alice's loan, he doesn't have to take it. But if Alice grants Bob a loan and then later sells the debt to Charlie, Bob didn't get the opportunity to consent to the transfer. Depending on Charlie's behavior, it may suddenly be in Bob's best interest to default on that loan. So it's not necessarily mutually beneficial, in fact it's frequently exploitative. But suppose Alice sells the debt to 1000 people in tiny slices, 200 of which are depended on by Bob in some way, 600 of which are independent parties that neither help nor harm Bob besides profiting on his debt, and 200 of which are working with Charlie in a mining endeavor which is poisoning Bob's water or whatever. It creates an information asymmetry where Bob may not be capable of determining who he is harming or helping if he defaults on the loan (Charlie and his 200 cronies, however, they have accountants on staff and know exactly what they're doing). That's the second problem: Bob can't make an informed choice regarding the real-world consequences of his behavior, so the system becomes blind to those consequences. Bob and the rest of us who live nearby--whose retirement portfolios may have been unwittingly contributing to the problem--still have to deal with the consequences. Had the consequence of holding Bob's debt been known to us, perhaps we'd prefer to take the hit to our portfolios than to deal with the fallout of Charlie's actions.
- WalterBright 2y ago
  Selling a loan does not change the terms of the loan.
  - deleted 2y ago
    [deleted]
  - __MatrixMan__ 2y ago
    It doesn't. But plenty of loans go unpaid despite what the terms say--that's why they're risky, and why they're profitable. The system allegedly works because we have a choice about whether the creditor profits. And we'd be better off if that choice were more effective at keeping creditors accountable for the outcomes of the loans they grant, not merely their profitability, but for that to work the whose-loan-is-this question needs to have a simple answer.