Re:On anti-crypto toxicity
by imtringued on Wednesday April 20, 2022 @03:53PM
(#31102066)
"Sound money"
I actually don't know what that is supposed to mean. You know, I am tired of these word games. Democratic People's Republic of Korea sounds cool until you realize that this is the official name of North Korea which has absolutely no relationship with democracy.
In theory sound money would imply a money system that acknowledges the existence of the real world and human needs instead of deferring to theoretical models that are known to diverge from reality. Since money is capturing reality perfectly, it introduces no representational errors i.e. money that is in your bank account actually represents the capability to purchase a good or service immediately.
Gold does not do this, unless you want to exchange your gold certificates (gold standard) for gold. When people save gold by putting it under their mattress, they effectively shifted their production schedule ahead, i.e. they produced today and they shifted their consumption schedule back, i.e. they consume later. The problem with this approach is that they are not asking anyone, whether they are willing to switch roles. By that I mean, is there anyone who agrees to consume now and produce later?
If nobody made such an agreement then you will be surprised to hear that there is less produced than you planned to consume in the future, after all, you didn't tell anybody, nor did anyone approach you and explicitly gave you permission to consume in the future. There is increased demand and you get inflation. At some point people start working again and end up overproducing, there will be deflation. This mismatch in the consumption and production schedule is the cause of inflation or deflation over the short term with a gold standard. Sound money does not solve the problem. In fact, it is the root of speculation.
If Bitcoin is sound money then the world doesn't need sound money. It needs money that isn't divorced from reality. It needs money that rewards planning ahead. It needs money that signals both abundance and scarcity of capital. It also needs to account for capital depreciation of idle capital and the loss of time of the unemployed.
I actually don't know what that is supposed to mean. You know, I am tired of these word games. Democratic People's Republic of Korea sounds cool until you realize that this is the official name of North Korea which has absolutely no relationship with democracy.
In theory sound money would imply a money system that acknowledges the existence of the real world and human needs instead of deferring to theoretical models that are known to diverge from reality. Since money is capturing reality perfectly, it introduces no representational errors i.e. money that is in your bank account actually represents the capability to purchase a good or service immediately.
Gold does not do this, unless you want to exchange your gold certificates (gold standard) for gold. When people save gold by putting it under their mattress, they effectively shifted their production schedule ahead, i.e. they produced today and they shifted their consumption schedule back, i.e. they consume later. The problem with this approach is that they are not asking anyone, whether they are willing to switch roles. By that I mean, is there anyone who agrees to consume now and produce later?
If nobody made such an agreement then you will be surprised to hear that there is less produced than you planned to consume in the future, after all, you didn't tell anybody, nor did anyone approach you and explicitly gave you permission to consume in the future. There is increased demand and you get inflation. At some point people start working again and end up overproducing, there will be deflation. This mismatch in the consumption and production schedule is the cause of inflation or deflation over the short term with a gold standard. Sound money does not solve the problem. In fact, it is the root of speculation.
If Bitcoin is sound money then the world doesn't need sound money. It needs money that isn't divorced from reality. It needs money that rewards planning ahead. It needs money that signals both abundance and scarcity of capital. It also needs to account for capital depreciation of idle capital and the loss of time of the unemployed.