Topic: Grand Unified Monetary Theory (Read 3554 times)

Sure. I guess I'm just hung up of "fractional base unit".

Well, you can divide a cent into still smaller units.
And in fact this has often happened in the past.
The only requirement is that it is sufficiently divisable to be usefull.
You should see the word 'divisable' from your own point of view. Is the currency divisable enough for you to use it in the current economy.
It is not nessesary that it is finely grained (like bitcoin).

It's probably more about the wording than the implementation. "Fractional base unit" seems to imply things that are irrelevant to the point. I get the idea, I just think it should be worded differently.

Let's say for a second that The Satoshi was the base unit and not the BTC and that the bitcoin protocol was immutable such that it could not be more finely divided. The Satoshi is still such a small unit (currently) that it would be a useful currency. Alternately, let's say the dollar deflated massively (lol) such that a dollar would buy you a mansion. There is still the fractional base unit of a cent but what could you use to buy a loaf of bread?

The requirement should probably be "Fine gradations of value" or something similar.

You keep forgetting that these rules are about practicality.
Bitcoin is far more finely dividable than any currency ever in existance.
There is no requirement for divisibility beyond usability.

This one makes no sense to me. You just define the base unit as the minimal fractional base unit (so the cent instead of the dollar etc). If your currency is infinitely sub-divisible then it's pretty much a null statement.

In short, your currency is either infinitely divisible or it's not.

ARISTOT-cratic MONEY

• Durability - metal or info store Value over time, data integretity over time
• Portability - REGISTRY transport, ONLINE transfer
• Divisibility - fractional base unit

• Protection against market failure -  there is nosuch thing, trust/faith/belief that market is True & Fair & Transparent
• Intrinsic Value - there is nosuch thing, value is set at market spot discovery
• Protection against loss- cross investments/hedge
• Protection against theft - crypto encoded
• Ease of exchange (liquidity) - market goods /money changers /security options

[/list]

Yes. It was my understanding that the posting of the picture of the stone coins was made as a counter to the portability requirement. The stones themselves were red-herrings (which actually would possibly be portable enough to be used as currency but would probably violate the previously undisclosed "must not smell of fish" requirement).

Well, if it was the knowledge of the possession that was the currency then that makes the currency super portable and thus practical.
So that would be exactly what he ment by portability. Stones would be impractical to use as a currency and would prevent it from being used widely in everyday life.

That depends.  Bubble or no bubble, Gold is internationally recognised as a safe haven when the economy tanks and its tanking right now as bad if not worse than the thirtys, so I dont think youll see a serious drop in the gold price (long term) for the next 5-10 years!!

Just because gold doesn't have much intrinsic value doesn't mean it doesn't have value as a fairly stable storage of wealth. Of course, if there's a bubble (and I believe there is) and it bursts pretty badly, all bets are off.

Golds value does not stem from how useful it is.  It comes from the confidence people have in it.  This is why in a crisis the value of Gold shoots up!

I can make jewelry from macaroni too.

IMO, these stones were not the currency, it was the knowledge of who owns them that is the currency. Not really much different than gold-backed notes (which do, indeed have their own issues).

Ah, that is much more clear then and I agree with you.


You do have to worry about them crashing the market and dissolving any idea of bitcoin actually being a store of wealth though. The end result is no different from cranking up the printing presses. And at least politicians are somewhat accountable for monetary problems--admittedly to a very small degree--but bitcoin users are accountable to no one.

I mean that it's a "cost" in the sense that you traditionally had to use something with intrinsic value (i.e. a commodity) in order to guarantee scarcity despite the fact that the commodity might lack other features that make for a good money. I'm not sure what you mean about "early adopters" creating counter-party risk.  If you accept fiat in exchange for goods and services, you have to worry about the issuer cranking up the printing presses (thereby siphoning value away from your money).  If you accept Bitcoins, you don't have to worry about "early adopters" just giving themselves more coins because they can't do that.

The intrinsic value of gold doesn't "cost" you anything to use it as currency, it's included in the value in trade. If you want to talk about the cost of mining it, you can hardly disassociate that from bitcoin. And if you imply government is a counter-party to every transaction with fiat, surely the "early adopters" are as well.

Intrinsic value in currencies has the benefit of preventing inflationary policies from destroying it for political purposes

I think you're quit right here.
I would like to add that in times where there was no global economy the intrinsic value of stuff like gold made it more universal.
You could always find people that valued gold and you could do that completely without regard of any face value the gold seems to carry.

I don't think that "intrinsic" value (i.e. a non-monetary use) is a requirement for a good currency.  It was probably important to the evolution of money, i.e. it's hard to imagine the first money not having "intrinsic" value.  And it was also important traditionally as a way to ensure scarcity (which is what really matters).  Paper notes have very little "intrinsic" value, but if they were backed by a scarce commodity like gold, that would (theoretically) operate as a constraint on the power of the issuer to debase the currency by printing ever-increasing quantities.   But you don't really care if money has a non-monetary use. In fact, having a non-monetary use almost seems inefficient, because when the commodity is being used as money it's less likely to be put to its other uses. Imagine how much cheaper gold would be for electronics applications and jewelry if there were no monetary demand driving up its price. I'm sort of making the same argument I made about whether good money should be tangible:


Having "intrinsic" value (which basically just implies that money is a commodity rather than fiat) was another one of the "prices" we had to pay to eliminate counter-party risk, but Bitcoin manages to eliminate it without paying that price. Gavin Andresen stated that Bitcoin was "almost the Platonic ideal of money." And I agree. Money is really just information. It's a way of keeping score of who has produced but not yet consumed and about the relative scarcity of particular resources, etc.  

So not only is Bitcoin "real money," it's the realest money yet.

Or you can wipe your a$$ for a couple of months, although not sure if they're that comfortable.

Anyways, I completely agree with Mageant definition of intrinsic value.

The interesting thing is that the intrinsic value is usually waaaay lower than the face value, therefore does it really matter? In case of a complete crash you could wipe your a$$ with your stash of $100 bills but compared with what they could have bought before the crash. Is it any comfort in having that "option"?

Same thing with Bitcoins ... they have 0 value if no more electricity or system crashed but even if I could get something out of them it, the intrinsic value would be insignificant compared to face value.

Intrinsic value? Meh, whatever ...