Topic: Blockchain = Powerful Tool for Keynesian Monetary Policy - page 9. (Read 11460 times)

There is no need for any entity to intervene in the economy. If people want to spend, they will spend. If they want to save then they will save.

Your "central bank" has no right to even exist. Its just a gang who think they can order people around and control them like livestock.

If a gang like that ever gains the power to do what you are suggesting, then users will abandon the currency and set up another one that isnt controlled by a gang of authoritarians.

I guess you are no longer using the USD then?

Monetary policy is irrelevant unless a currency serves as a unit of account. Once a currency is used as a unit of account, you cannot easily avoid using it. Just like you can't buy your groceries with gold.
Bitcoin cannot be both widely used and outside of direct central bank administration.

Gold could escape control (in theory) because there is no blockchain. Bitcoin cannot escape control.


Did you skip your meds?

Hmmm, yep, you're still an idiot. Your entire idea depends on your blockchain based currency being a monopoly. Forcing a fee on spending it will just make people not want to spend or receive your money, and instead will push them to something else. And a central bank capturing 51% will result in either attempt to take that 51% away from the bank, or a quick abandonment of the currency. Who will want to keep mining if the currency, and the main fundamentals that give it value, are under threat? The bank will eventually end up with 100% mining power of a currency that's been abandoned.

Recall that the purpose of money printing is to encourage or discourage spending. When the central bank wants to encourage spending, they print money leading to inflation. Inflation encourages people to turn cash into goods and physical assets. This increases spending in the short-run and stimulates the economy.

The blockchain makes it possible to execute more powerful monetary policy. Money printing is coarse because price increases occur with a time delay. The blockchain is precise and effective inflation can be achieved instantaneously.

Suppose the central bank controls 51% of hashing power and wants to achieve a stimulus equivalent to a 3% increase in inflation.

Simply demand a txn fee equal to 3% of coin-age (with age measured in years). This is just like instantaneously increasing the inflation rate by 3%. Take the fee proceeds and hand them out to banks. Voila. You have stimulated spending. Once the economy recovers, the txn fee can be lowered again. The inflation rate of every single block is completely at the bank's discretion. This is 100% impossible with the tools available today.

Now people might try and horde (the bank can't steal my coins... I'll just wait till they lower the fee and spend then). Ha, this would not work at all.
The bank has a historical record of its inflation policy and would bill these guys. The fact that you haven't paid yet won't help them. The seignorage will be deducted from their account whenever they finally decide to spend. [Could go through more details on calculating seignorage fee, but I think that is enough for now.]

It is pretty clear that the blockchain gives central banks unprecedented control over monetary policy. All they have to do is command 51% of hashing power. An absolutely negligible investment for such a well-capitalized institution.

I am kind of confused why we still operate with dollars. Central bankers should start issuing dollars and euros this way. Or they could just adopt bitcoin. It would make their lives so much simpler.