Re:Technical feasibility of regulating public Blockchain exp...
by DenisM on Friday December 22, 2017 @10:20AM
(#15988030)
The Federal Reserve acts algorithmically. New money is only created when new loans are requested by big commercial banks, and those loans are demanded on behalf of retail loans, which are initiated in proportion with economic activity by economic actors. The only discretion involved is the interest rates on those loans, which indirectly controls people’s willingness to take out loans.
Re:Technical feasibility of regulating public Blockchain exp...
by smokeyj on Friday December 22, 2017 @12:01PM
(#15988924)
> The Federal Reserve acts algorithmically .. only discretion involved is the interest rates
I built a self driving car. The only human discretion is the steering wheel.
Some countries, e.g. the Cayman Islands or Zimbabwe, peg (or have pegged) their currency to a foreign currency [1]. There has also been discussion of rule-based monetary policy [2], where central bankers' discretion is limited. A blockchain would be a stricter form of both, amplifying their benefits as well as downsides.
TL; DR We don't understand monetary policy well enough, broadly enough, to have a set of rules everyone agrees are good. Such strictures are better than an economy being left to incompetent central bankers, or in certain limited cases (e.g. Hong Kong or Bermuda's financial proximity to much-larger economies). For general cases, or in a permanent structure such as a blockchain, however, much more work needs to be done.
[1] https://en.wikipedia.org/wiki/Currency_board
[2] http://www.frbsf.org/education/publications/doctor-econ/2001...