Topic: Market Driven Money Supply.. (Read 3792 times)

thaaanos! ('Thanos Rising' by Jason Aaron was almost my favourite comic of last year..)

Thanks for your input.

I'm not quite sure I get your idea.. let me try..

There are old coins and new coins.

Old coins stop working after a while. new coins take their place.

If you have old coins does that mean they become useless after their expiration date ?

Then you can trade these coins on an exchange. Old for New. And the price on the exchange determines whether we print more or less money ?

Can you explain it in a little more detail ?

As I said in the OP, if you could take the Human element out of the equation, maybe some of this stuff is not soooo terrible..

There seem to people that believe that an appreciating currency is a good Idea
I would like to invite those people to come live and work in Greece, Over the past 4 years Euro is appreciating:
Wages down by 40% Consumer Prices up by 20%, Land value down by 60%. A Paradise.

Now that we have established what the problem, lets propose a solution that will solve many problems at the same time
while the parameters can be tweaked the basic idea is:

A. Block reward is maintained at a constant bonus
B. A rolling invalidation of blocks starting from the genesis block occures

So there is a Block Window of valid transactions. The size of the window determines the total number of Bitcoins in existence.


Now for the window part

C. The rate of invalitations and block creation is unrelated
C. A link between the economy growth/recesion and the block window size is somehow* created


*As I am opposed to create rules that act as forces of nature and rather trust individual and collective human judgement,
I would like to have that parameter not hardcoded but open to negotiation and discussion.

So why not making another coin you may ask?
Because if Bitcoin fails the whole experiment of p2p cryptocurencies will fail and all we will have left with will be Bankster issued virtual currencies

EDIT:
Maybe Invalidation threshold/rate can be decided by a de'facto concessus between the independent private Invalidation threshold/rate that miners choose.

? Err.. I have to disagree. Agreed that 'relative' prices stay the same, but what about Price Stability ?

1)Price stability makes it easier for people to recognise changes in relative prices since such changes are not obscured by fluctuations in the overall price level. This enables firms and consumers to make better-informed decisions on consumption and investment. This in turn allows the market to allocate resources more efficiently. By helping the market to guide resources to where they can be used most productively, price stability raises the productive potential of the economy.

2)If investors can be sure that prices will remain stable in the future, they will not demand an "inflation risk premium" to compensate them for the risks associated with holding nominal assets over the longer term. By reducing such risk premia in the real interest rate, monetary policy can contribute to the allocative efficiency of the capital market and thus increases the incentives to invest. This in turn fosters economic welfare.

3)The credible maintenance of price stability also makes it less likely that individuals and firms will divert resources from productive uses to hedge against inflation. For example, in a high inflation environment there is an incentive to stockpile real goods since they retain their value better than money or some financial assets in such circumstances. However, stockpiling goods is not an efficient investment decision, and therefore hinders economic growth.

4)Tax and welfare systems can create perverse incentives that distort economic behaviour. In most cases, these distortions are exacerbated by inflation or deflation. Price stability eliminates the real economic costs entailed when inflation exacerbates the distortionary impact of tax and social security systems.

5)An environment of stable prices helps to maintain social cohesion and stability, since price stability prevents the considerable and arbitrary redistribution of wealth and income that arises in both inflationary and deflationary environments. Several scenarios in the twentieth century have shown that high rates of inflation or deflation tend to create social and political instability.

6)Price stability also contributes to financial stability, because it eliminates market distortions and uncertainties arising from unstable prices. For example, price stability reduces risk premia vis-à-vis interest rates because there is less uncertainty about future inflation.

Or so they say..  

Problem is of course that if someone has the power to PRINT money, they'll PRINT IT! (Regardless of WHY they should be printing it..)

What we need is an equation.. A maths way of calculating how to affect the Money Supply.

And it seems some kind of Free Market, might be a way of ensuring 'Honest' discovery.

When they have too much cash, what will they do ? When they don't have enough what will they do ? Seems pretty clear they buy and sell the gold. But maybe i'm looking at this to clinically/physics engine-y.

Were working with a problem that to my knowledge has NEVER been dealt with before, even my own economic school of Gesell is completely silent on how to do what we want to do.  I'm flying purely on my own understanding but that understanding tells me you can't beat deflation with a deflationary commodity be it a metal or a cryptographic one.

So that, in the +5% inflation model, when economic growth is less than 5% the price of CryptoGold will go up. But when Economic growth is more than 5% the price of Cryptogold will go down. And when economic growth is 5%, the price of Cryptogold should be stable.

I again refer to this : http://www.macro-investing-strategy.com/gold-and-money-supply/

Market prices are by definition the 'fair' price or at least the only way to arrive at a consensus that we can call fair.

In your crypto-gold scenario the ability to convert to the crypto-cash means that a user can very easily convert and thus very easily spend both halves, and thus they lose any distinction.