People's Bank Proposals

I reference the game as an analogy to the situation in the world where the rules are essentially “winner take all”. You assert this analogy doesn’t apply to the “real world”, and I say that you have not said anything about wealth concentration in the real world, and therefore you have not refuted anything about my point about the game.

You seem to want to make this a “communism” vs. “capitalism” debate, and I say that would be counter-productive. You mention “free markets” but do not address any points related to “market fundamentalism”.

I respectfully ask you to stop this back and forth, you have had your say. Your arrogance wrt to the whole community is the way you state without qualification is as if you think the whole community would agree. I doubt that, and again, why should I take your word for it. Your forum identity doesn’t suggest you have any knowledge to add. You are a cypher.

Let’s play then, if you are game.

  • Reading your edited above it seems you are not interested in going further, that’s fine. I was going to go on a little story we can follow along and you can act as a counterparty in fictional transaction to see where the fallacy lies - and no you should not believe anything I say, you should not believe anything someone says. You should understand it.

But if you want to go down the argument road, instead of me making a giant piece, let us hit it, one by one.

Let us start with an simple one:

What would happen if we burned everyone’s USD cash holdings proportionally in this world by 50%?Including cutting 50% of all USD denominated-debts or amount specific contracts of course.

What would the real world consequences of this be?

I am not out to get you, but money is a combination of like 20 concepts/mechanics and we need to find the gap and one we disagree on.

I think what you are talking about is something like a reverse split. It isn’t just debts, though, it is all sorts of contracts, and there probably is no practical way to do it.

Look, if you want to start your own thread, fine. I have no reason to prove to you what I know about money and currencies. You haven’t said anything that I even find interesting yet. Start your own topic, I will play there. This is all pretty much off-topic to this one.

Including contracts of course. Practicality does not matter. We assume it can happen with a sweep of a hand. There is a point with this from your monopoly statement.

I am dude with 100 USD in my account bank, I have no debts or contracts outstanding myself, now this takes place, what would the consequence be for me? Who gains and loses from this.

You’d also have an opportunity to expire and re-issue the cash itself, and that may be your point about my use of the word cash above. This distinction was not the point of the discussion and you should take this elsewhere. I have nothing to prove to you.

Let us water it down even more.

I am sitting on some ETC I do not need, so lets do something fun. I am offering a 100 USD bounty (in ETC) to You or anyone reading (except old ada_fan) for the first correct answer, if done within 24 hours of this post.

In this hypothetical US there are no such thing as credit/debts and legally binding amount specific contracts. You are a great thief. You manage to steal 90% proportionally of everyone’s dollar holdings. You get on a boat with the cash, take of to Europe. Unfortunately you run out of gas and get stuck on a Island. You survive, but You and your boat never get found again. The President Barles Bosskinson says he will in no way expire and reissue the cash., he says this is a free market issue and it will destroy the integrity of the the dollar, the people must find the perpetrator if they want their “money” and wealth back. This is also in the 1800s, so there are no centrally structured government that could even handle the logistics of doing such an event, no one can really organize anything and communication between parties is not easy, and in many cases impossible.

What will the consequences be in general, and of Barles decision?

This is still off-topic, though I am not uninterested in the general concepts about money supply. In general, if a chunk of the money goes away, you probably should expect for prices to adjust for the new, lower money supply. On the other hand, this is completely hypothetical and not a particularly credible thought experiment. If the change really doesn’t effect distribution of money and other assets, I would expect the 10% you have left to have the same buying power as the 100% before the event.

But please, return to the topic and create your own thread to talk monetary policy and more. I think CH’s comments in the livestream from Emurgo last month are right about this. Just having a treasury with its governance processes will change the conversation of token/coin speculators and that will be a good thing. Having good governance on the other hand is much more of a social issue than technical, so I think we’ll need to work on those ideas too.

We’d have to get a lot more clarity on terms to have a productive discussion about governance, which would be much more on-topic than monetary mechanics.

Yes, that’s the key point. If we assume that the distribution is the same, then I would say nothing happens, meaning the 10% will have the same buying power as @Gerry suggested 1st (as one effect would be is an increase in the velocity of money, and probably the unit would be changed either). Otherwise, a lot of innocent ppl would die.

Not my cup of tea as I do not have market theory and I do not want to win any ETH but here goes:

  • at first demand for goods would drop dramatically until the price of goods has adjusted to the money in circulation.
  • It would not find the same equilibrium at 90% less prices as the value of the money is more than what is in circulation it is the total amount of money available.
  • However due to psychological factors and the risk that the money COULD be found the equilibrium is more likely going to be more at a middle point or higher so maybe 30-40% less prices. Just imagine if someone found the 90% and then bought the now much cheaper goods / housings / lands etc. So the risk of this and the fact there is more money than in circulation will cause a different equilibrium than one where 90% where actually truly voided.
  • This will mean a great long term stagnation in the economy until the money was found or declared void.
  • More likely in a real scenario the great president Barles would have lost the next election as a sudden 30-50% cut in general buying power would cause massive riots and political upheaval.
  • A political solution would be to pass a law where any money found would be evenly distributed to everyone who have lost with a blockchain tech, oh and since we are in the 1800’s we will use a good old paper ledger and a public company in the capital that will distribute and keep the money for everyone that is found. This would slowly cause the equilibrium to reach 90% less prices for the 90% less money in circulation.

I think it’s wrong, as demands should be the same in the ideal case (or higher due to some psychological effect assumed that the necessities are the main goods) and their prices should be resistant to changes at first (but should decrease by time).
And keep in mind, that @jb455, described it as a closed system, in which he changed one of its constants that means it highly affects the variables (state changes).
But, this cannot really be solved as it would involve a lot of psychology (peer pressure etc.). I also assumed that the dollar was not backed by gold.

I gave the answer that I think was the point of his question. I think it is a bad question because it has no assumptions about psychology of the situation, and any competent economist knows that economics is much more social than science. The “economic man” is a myth of a very mistaken branch of economics.

I don’t know what would really happen, in part because the question doesn’t represent any real situation. The other part is because Eye is right in terms of basic approach to the question. Psychological effects will dominate as they always do in economic disruptions.