Topic: Next generation money - page 16. (Read 16642 times)

In fact, gold and silver served different purposes when they had been used as money at the same time (strictly speaking, as monies). I mean gold and silver specie...

You know that too, do you?

If the transaction capacity is increased in the future, more people will use the bitcoin, the price will be higher.

You are exactly referring to bitcoin, the law of supply and demand shall apply with bitcoin and since it is decentralized we can trust this system much to save our money and transact using bitcoin. This is surely the next generation of money but as to the volume of adoption I cannot estimate yet.

All I'm saying is that money should be decided by market supply and demand and not a centralized authority.  Physical gold and silver happen to have served the purpose well, fine.  Who knows what the future should or will bring.

Somehow missed that part, lol

You seem to have forgotten that it cuts both ways. That is, on the one hand, you argue that appointing humans to oversee the institution of money is a disaster. On the other hand, you unambiguously imply gold and silver to be good monies. But didn't the same (hypothetically) people empowered themselves to make gold and silver into monies? In other words, you essentially claim that humans choosing what to use as money are always wrong unless they opt to use gold or silver...

Definitely, with the rate that bitcoin is going there is no doubt that bitcoin will be the next generation of money but we cannot determine when will that happen yet, we need the full support of the people to adopt and the government to regulate.

Bitcoin easily can be next generation money. Progress cannot be stopped and I believe that  very soon, buy Earths sizes, paper money will go in history. Maybe it will not be exacted lay bitcoin, but it's gonna be one of crypto currencies.

This was your 'extension' to Gresham's Law, as you said so yourself.

That was not a statement in favor of a single money, and nor was it intended to be.  As I said before, the world has lived with both gold and silver for eons.  It was only intervention by a powerful empire that "demonetized" silver.  (And BTW since a huge amount of money was taken from the economy by this event, there was a huge amount of economic pain, all to serve a hidden agenda of the global financial elite.  There is  no reason why stable money, e.g. physical gold and silver, should narrow down to one, absent state intervention.)

Read my post again. I specifically addressed this issue even before you raised it (since it was evident that you would). This matter had been discussed in great detail a few years ago, when I had shown that Gresham's law (or rather its extension) still holds today in an all-fiat world...

If you are curious, you can start reading from here

Yes, you did (emphasis added)


But it pretty much doesn't matter if you openly admitted that there should remain only one money. If you have two competing agents aiming at fulfilling the same function, only one will succeed in the end. It happens everywhere in any aspect of life. For example, two words that mean the same (full synonyms, i.e. words characterized by semantic equivalence) will either part in meaning over time or one of them becomes obsolete and gets dropped from everyday use ("if ifs and ans were pots and pans")...

That's why such synonyms are extremely few and far in between

Gresham's Law exists only when the government dictates the exchange rate between two monies (e.g. under bimetallic standards, as existed in England in Newton's time -- 1 pound sterling was defined as x ounces of gold, or y ounces of silver, thus fixing the exchange rate between gold and silver as y/x.)  If the dictated exchange rate is a little off the market rate, say as determined by a larger circulation outside the country, one money becomes overvalued and the other becomes undervalued, and it makes sense for everyone to hoard the undervalued money and pay with the other.

Without government dictated exchange rates, say, when the supply of silver suddenly increases, the exchange rate between gold and silver (or any other two state-free monies) will simply fluctuate in the market.

What if people want gold to be both jewelry and money?  IMO as soon as you empower someone to be in charge of what money 'should' be, that power will breed bad incentives, as historically it has.

If there is such a thing as the ideal money, since appointing humans to oversee the institution would be a disaster, the 'ideal' is now meaningless.


Did I say only one money should or will remain?

And what is your take on the concept of money? That is, what did Bitcoin actually revolutionize? Digital money is nothing new since at least the introduction of electronic payments in the 1960s...

For example, the international SWIFT network started in 1973

Gold and silver never served peacefully side by side as money (and couldn't in principle). If you doubt this, learn about Gresham's law. And it is not only about the government diktat about two monies having similar face value since Gresham's law reveals just the tip of a giant iceberg hidden underwater. So whenever there are two or more monies in circulation (and still more so if they are commodities at that), there would always be a withering competition between them (whether you like it or not). Until (conditionally) bad money drives out good money from circulation, leading to a separation of functions between them, i.e. bad money (silver, in this case) is used for circulation while good money (gold) for storing value...

And this perfectly follows your argument about money as "just another commodity"

Nope. As I have explained earlier, money should only have transactional utility as its inherent value. If it does have value beyond that, for example, due to its being a valuable commodity by itself, that would only interfere in its successful operation as money. In fact, what you now say has little to do with what you have been saying before...

That is, about a knockout competition between wanna-be monies until only one money remains

If that was the case, why did they abandon (or loosen the gold peg) only when they were about to run out of gold, at the last minute, every time?

I can only say, please don't read too much into the justifications from the economics profession WRT the merit (or lack thereof) of this or that monetary system.  During the classical gold standard period the profession was overwhelmingly in favor of that system on economic grounds, and now it's overwhelmingly against.  Both times, it just happens to provide the narrative the elites want to broadcast.

I may have used a bad example (I was in a hurry,) but my whole point is that money should be treated as just another commodity whose value fluctuates according to supply and demand.  It may be a 'special' commodity in that its value depends on how much you perceive other people want it.  This does increase the uncertainty as to its value, but this is no different from any other financial assets, like stocks, bonds, and real estate.  It doesn't justify state control.

You may have hit upon what some say is money's 'natural monopoly' by your 'voluntarism' argument.  I beg to differ, since both gold and silver having good monetary properties have enabled them to serve peacefully side by side as money (until state intervention created a lot of instability and misery when Britain pushed all major countries to gold in the mid-to-late 19th century -- for the benefit of its own elites, really -- this was the root cause of WJ Bryan's cry of 'crucifying mankind on a cross of gold' during the 1896 election.)

There are tendencies to consolidate monies (the 'network effect' as mentioned above) and this creates uncertainty for some time.  But the best way to deal with this unfortunate side effect is for people to diversify carefully and not bet more than they can afford to lose.  The worst way is to have the elites take control -- that's how you crucify mankind on a cross.

Gold had been abandoned when it started to hamper the growth of quickly expanding economies. If you want me to put this way, well, gold had been dropped because the elites saw that it now started to be a hindrance in their pursuit of becoming even more rich and gathering even more wealth. But, as I said, ultimately, you can only be so much rich as the society you belong to...

The wealthiness today is no longer measured by the amount of gold you hide in your backyard or by the amount of cash you stash under the mattress

"You see, money doesn't exist in the 24th Century"

I saw this today, and now while I`m looking what is new on forum I see this thread. Many people talk about future, but what will really come is hard to predict. This is nice video and I think there is sense in this.

https://www.youtube.com/watch?v=TOcKGREiY30

"The acquisition of wealth is no longer the driving force in our lives. We work to better ourselves and the rest of humanity."