Hey everyone, thanks for the answers! Let’s review what is being said here. About the comments realtive to having a Phd in economics, I have myself a Ms in economics. I specialised in Microeconomics, but the cases we talk about are mainly relative to economics 101.
Via the governance system everyone can decide if it is better to have capped, constant inflation or variable inflation.
I did not found meaningful info about this governance system. However, if your voting rights are granted in PoS way, it means that the richest users will detain the power. The incitation then for these whales is to limit the supply of the money (in a HODL fashion), in order to make its value go up. However this will increase deflation and prevent a widespread use of the token. That’s why central banks are independent : to avoid capture of their power by private interests (state included).
An alternative allocation of voting rights could be to grant them to users depending on the volume of transactions done in the past: hence the monetary policy would be geared toward the users and not the hoarders.
GDP - compile it from Cardano - then I would know what GDP really is.
A simple way is to evaluate a use metric is to evaluate of goods and services exchanged using Cardano. If we kept a register of the companies accepting Cardano in exchange of tangible good and service (i.e not exchanges), we could monitor their transaction levels (either by automatic reporting on their part, or by analysing transaction data) and derivate an activity index. That’s what national statistics service do.
In other words, any economy where its participants can speculate and invest have the property of being implicitly deflationary.
This is called a liquidity trap, and this is one of the worst scenario you can imagine for your economy.
if you thought that the $20 dollars in your pocket might be worth $20.02 tomorrow you might go ahead and spend on stuff you need and save more.
US dollars used to be deflationary as well, as we’ve turned to inflation policies and low interest rates people are enticed to spend, and now everyone is in major debt.
Indeed, a very slow deflation isn’t a big deal usually. However, it is a major drag for the adoption of currencies, as we explained before. It’s like saying to a sick person that once he will be healed, he will be able to drink a glass of wine a day, so why not drinking a bottle now?
US dollars used to be deflationary as well, as we’ve turned to inflation policies and low interest rates people are enticed to spend, and now everyone is in major debt.
I see often this argument about debt. Well, americans, you’re not the world and many countries can manage a modern capitalist system while saving their money. (link)
ADA and ADA-CASH
Interesting idea addressing the technical problems that @Ikarus addresses later. Maybe we could expand it in another thread. The way I understant It is that you’d have your Ada-cash wallet representing the $ value of your Ada wallet. Just like those bitcoin credit card, but with a fluctuating account balance and a payment in Ada-cash. Is that is?
The most important social pain points are: (etc…)
Clearly the best analysis. Devs read this!
I remember time ago there was a coin controlled by stakers that minted on demand and bought on supply to keep it pegged to the dollar, unfortunately don’t remember its name/symbol. Also right now we have USDT Tether which besides being in the eye of the storm it has accomplished that goal to perfection.
Indeed Tether is backed by the belief that Bitfinex has 1$ for every Tether out there, which allows it to totally control the price of the currency. Modulating money emission is an effective way to control the currency price : that’s effectively what central banks usually do, in addition of having massive monetary and securities reserves for emergency.
First we should ask ourselfs what gives the dollar, eu etc. its value?
Inside the USA, you are legally binded to accept it as a mean of payment. Besides, you can only pay your taxes with $, so that creates a supply and a demand. Also, there’s a massive payment infrastructure that makes it the easiest way to transact.
Outside the USA, you need dollars to buy oil, which is the main ressource of every modern economy. Thus it creates an artificial demand for the currency. A lot of international lending is done in $, so you have as well to get dollars in order to reimburse it => extra demand. This explains why the USA has had a negative account balance for so many years without a collapse of its money : everyone needs dollars to transact.
Some may say that this right is enforced by military power and violence of the american army : all of the recent wars in the gulf have a link with oil and switch from $ to another trading currency.
Others may argue about the currency manipulation of some countries, such as China, who buy $ in order to devaluate the Yuan.
IMO, I prefer a currency that has greater purchasing power in the future vs a constant or inflationary one. I’m better-off if I can buy a meal for less money than I expected compared to going to the store and realizing my money that could purchase 3 full meals before can’t even buy a slice of bread.
Yeah good for you but then it will be like gold, and not be used for daily exchange. You could buy bitcoins, since the cardano improvements are not really useful in that case. Besides, unlike gold, your currency doesn’t have intrinsic value, so when the market crashes…
I dont think it will be deflationary forever.
Well if you have a limited supply and a growing use, it’s the case. Unless use is already at its peak and your economy experiences a recession. But then you may cry because you can’t pull the lever of monetary policy.
). It seems to me that what IOHK should do, in addition to hiring top academic and engineering talent, is to hire some top notch economists to explain to them why the gold standard was abandoned in the USA and pretty much everywhere in the world. If you’re really trying to integrate into the economy at scale, it behooves Charles, et al, to avoid reinventing the wheel and find out why we’re no longer on the gold standard but instead use fiat money and adjust the cost of borrowing money as a means of invigorating or slowing down the economy.