The Denationalization of Money by Hayek

Beerwizzard

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Quote from: StarofBTC on January 04, 2019, 10:21:34 AM

Countries like Greece who have no idea how economy works and have governments that have no intention of fixing the issues will make euro worth less and less overtime, maybe not against other currencies but certainly within itself.

Euro was created as an improved version of Deutsche Mark. Accepting countries with weaker economics to eurozone slightly devaluates euro and boost german export. Countries like Grece play their role pretty well. In that case, inflation is a goal of creating currency.
Deflation currency is deadly for countries export and economy.

Michal_open_source

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Quote from: StarofBTC on January 04, 2019, 10:21:34 AM

Quote from: Michal_open_source on January 03, 2019, 11:20:28 AM

What do you think about Hayeks The Denationalization of Money ideas - do you find them too utopian?
Anyway, i was quoting his work in my Master thesis and one professor at my uni was very skeptical if Hayek would consider Cryptocurrencies as money and therfore i shouldn't apply it to my work. One of his main also arguments was that in Hayek's theory he considers money to be issued by some institution which has to keep the quality of currency because of free market forces.

This kind of argument doesn't work imo because in crypto we have the whole network of miners who also have an incentive for issuing quality improvements. What is your opinion on this and what arguments would you use in disscusion with old-school professor?

This is exactly my thought on money, euro has shown that it is doable even tough a huge challenge.
Even in a continent like Europe where bigger countries exists the euro currency have been going a rough time where Germany tries to make it more valuable while Greece is making it go down the hill.

Countries like Greece who have no idea how economy works and have governments that have no intention of fixing the issues will make euro worth less and less overtime, maybe not against other currencies but certainly within itself.

So if we make a currency that's worldwide, how could a great nation that makes profits all the time like China could control the value of their currency whereas nations like USA who have no control over money and constantly devalues dollar would be equals ? Hence, it would be insane for countries like UK and China to accept be in the same sentence as USA or Somalia.

You are right - in case of one worldwide currency the system would be very hard to maintain becaouse of many powerful stakeholders. Although in hayeks view there would be many currencies issued not only goverments but also private entities. He comes up with the notion of currency competition which is quite interesting concept when applied to crypotcurrency world.

StarofBTC

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Quote from: Michal_open_source on January 03, 2019, 11:20:28 AM

What do you think about Hayeks The Denationalization of Money ideas - do you find them too utopian?
Anyway, i was quoting his work in my Master thesis and one professor at my uni was very skeptical if Hayek would consider Cryptocurrencies as money and therfore i shouldn't apply it to my work. One of his main also arguments was that in Hayek's theory he considers money to be issued by some institution which has to keep the quality of currency because of free market forces.

This kind of argument doesn't work imo because in crypto we have the whole network of miners who also have an incentive for issuing quality improvements. What is your opinion on this and what arguments would you use in disscusion with old-school professor?

This is exactly my thought on money, euro has shown that it is doable even tough a huge challenge.
Even in a continent like Europe where bigger countries exists the euro currency have been going a rough time where Germany tries to make it more valuable while Greece is making it go down the hill.

Countries like Greece who have no idea how economy works and have governments that have no intention of fixing the issues will make euro worth less and less overtime, maybe not against other currencies but certainly within itself.

So if we make a currency that's worldwide, how could a great nation that makes profits all the time like China could control the value of their currency whereas nations like USA who have no control over money and constantly devalues dollar would be equals ? Hence, it would be insane for countries like UK and China to accept be in the same sentence as USA or Somalia.

altcoin-traders

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Quote from: BitHodler on January 04, 2019, 05:30:53 AM

Quote from: Crypdon on January 03, 2019, 03:00:36 PM

Denationalising money is already taking place - in crypto. Gold was a global currency but failed due to logistics, now bitcoin is taking over as the new gold. National money won't be needed if they all adopt bitcoin or create something like the petro

I don't think there is much appetite for something like one global currency. Governments like the idea of having their own currency they can shape the way they want, which isn't possible if they use Bitcoin.

Gold was somewhat of a global currency ages ago, but even at that point there were different forms of money locally. I am in favor of different forms of money because it gives you the option to choose the best one for you.

The great thing about crypto is that we have so many alternatives, that in case one goes down for whatever reason, we have another one ready. More power to the people.

How would you use the McDonald's index if there was a global currency Wink

Would there be a way?

Regards,
Leslie

Michal_open_source

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Quote from: davis196 on January 04, 2019, 02:07:48 AM

Quote from: Michal_open_source on January 03, 2019, 11:20:28 AM

What do you think about Hayeks The Denationalization of Money ideas - do you find them too utopian?
Anyway, i was quoting his work in my Master thesis and one professor at my uni was very skeptical if Hayek would consider Cryptocurrencies as money and therfore i shouldn't apply it to my work. One of his main also arguments was that in Hayek's theory he considers money to be issued by some institution which has to keep the quality of currency because of free market forces.

This kind of argument doesn't work imo because in crypto we have the whole network of miners who also have an incentive for issuing quality improvements. What is your opinion on this and what arguments would you use in disscusion with old-school professor?

The Hayek's idea of denationalisation of money and create private currencies is in conflict with the Thomas Gresham law,which says that bad money drives out good ones.If two currencies compete,the lower value currency will beat the higher value currency.However,Gresham's law is mostly about gold and silver money.

Exactly, im not sure if Gershwin law applies here. It is correct for gold and silver coins as people in the past used to cut down the edges of coins to keep little part of it and if they got a coin that complete and not cutted they were hiding and not using it as it has higher value.

BitHodler

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Quote from: Crypdon on January 03, 2019, 03:00:36 PM

Denationalising money is already taking place - in crypto. Gold was a global currency but failed due to logistics, now bitcoin is taking over as the new gold. National money won't be needed if they all adopt bitcoin or create something like the petro

I don't think there is much appetite for something like one global currency. Governments like the idea of having their own currency they can shape the way they want, which isn't possible if they use Bitcoin.

Gold was somewhat of a global currency ages ago, but even at that point there were different forms of money locally. I am in favor of different forms of money because it gives you the option to choose the best one for you.

The great thing about crypto is that we have so many alternatives, that in case one goes down for whatever reason, we have another one ready. More power to the people.

davis196

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Quote from: Michal_open_source on January 03, 2019, 11:20:28 AM

What do you think about Hayeks The Denationalization of Money ideas - do you find them too utopian?
Anyway, i was quoting his work in my Master thesis and one professor at my uni was very skeptical if Hayek would consider Cryptocurrencies as money and therfore i shouldn't apply it to my work. One of his main also arguments was that in Hayek's theory he considers money to be issued by some institution which has to keep the quality of currency because of free market forces.

This kind of argument doesn't work imo because in crypto we have the whole network of miners who also have an incentive for issuing quality improvements. What is your opinion on this and what arguments would you use in disscusion with old-school professor?

The Hayek's idea of denationalisation of money and create private currencies is in conflict with the Thomas Gresham law,which says that bad money drives out good ones.If two currencies compete,the lower value currency will beat the higher value currency.However,Gresham's law is mostly about gold and silver money.

Snaic

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No, the idea of denationalizing money was and will be a utopia. As long as there are states, they will have their national money. Of course, possible unions of states and the formation of a single money on the principle of the European Union. However, in essence, this does not change anything. States with their own interests will continue to exist for a long time, and along with them there will always be national money. With the advent of cryptocurrency, we are not moving towards the denationalization of money, this statement is deceptive. Cryptocurrency is able to go only in parallel with the national money of the states and cannot replace them, which means that the cryptocurrency will always be secondary compared to the national money.

mu_enrico

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Global money is indeed utopia. Human effort to create a borderless society cannot work by nature. Just like evolution, living things tend to disperse, not to converge.

We have seen this collapse in globalization already. See how the US appointed the most racist president in history, EU collapse, and many more examples in human history. I agree with @aantonop here that money is like a language. I cannot imagine this world uses only one language.

cellard

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The way I say it is that a government has to evaluate the game theory surrounding the fact that by giving up on national control of the money properties, you lose something but may gain some other advantages.

Example, all the countries that gave up on sovereign control of the monetary supply and other aspects in order to join the European Union, lost their own currency but got the advantages of using the Euro (easier commerce around the Euro area, SEPA transactions..) but lost a lot of the sovereign related characteristics, so some consider the debt is unfair and even think abandoning the Union and going back to their own currency.

If a country gave up on their own currency and joined a global neutral one, it would need to consider what they gain and lose.

At this stage is too early to tell, but most definitely the time to start amassing BTC the way countries amass gold is already starting if it didn't start a while ago OTC.

So we don't really need fiat to die to go to the moon. As in, governments just need to see the incentive in having BTC reserves, without necessarily replacing their fiats with BTC.

Incodium Coin

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Hypothetically, the denationalization of money, the subsequent competition between different privately owned currencies to see which one is better should improve the quality of money. That said, the assumption or the underlying statement here is that the issuing individual(s) will have a backing/guarantee for such currencies like gold and central banks back national currencies. While this is the case with some company issued crypto, it doesn't apply to the whole lot. This is an important distinction that certainly highlights the point your professor is making.

exstasie

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Quote from: Michal_open_source on January 03, 2019, 11:20:28 AM

What do you think about Hayeks The Denationalization of Money ideas - do you find them too utopian?
Anyway, i was quoting his work in my Master thesis and one professor at my uni was very skeptical if Hayek would consider Cryptocurrencies as money and therfore i shouldn't apply it to my work. One of his main also arguments was that in Hayek's theory he considers money to be issued by some institution which has to keep the quality of currency because of free market forces.

This kind of argument doesn't work imo because in crypto we have the whole network of miners who also have an incentive for issuing quality improvements. What is your opinion on this and what arguments would you use in disscusion with old-school professor?

It's been decades since I last read Hayek, but what your professor is saying resonates with me. Cryptocurrency transcends Hayek's theories about money. Hayek called for privately issued fiat currencies that would compete with one another, the logic being that free market competition encourages quality money. With cryptocurrency, we remove the private institutions and replace them with math-based protocols reliant on economic incentives.

Both monetary systems rely on market forces to improve the quality of money. However, cryptocurrency takes it a step further by removing trusted authorities (money issuers) altogether, since trusted authorities are the source of bad money.

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Bitcoin is not a legal tender and would not act as one. There is no institution to regulate the value, this puts it in the hands of the community, and forces of demand and supply.
This doesn't make it less ofba currency. It is still a means of making payments
And it is borderless and which makes it a global currency.

Crypdon

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Denationalising money is already taking place - in crypto. Gold was a global currency but failed due to logistics, now bitcoin is taking over as the new gold. National money won't be needed if they all adopt bitcoin or create something like the petro

masterzino

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Quote from: Michal_open_source on January 03, 2019, 11:20:28 AM

What do you think about Hayeks The Denationalization of Money ideas - do you find them too utopian?
Anyway, i was quoting his work in my Master thesis and one professor at my uni was very skeptical if Hayek would consider Cryptocurrencies as money and therfore i shouldn't apply it to my work. One of his main also arguments was that in Hayek's theory he considers money to be issued by some institution which has to keep the quality of currency because of free market forces.

This kind of argument doesn't work imo because in crypto we have the whole network of miners who also have an incentive for issuing quality improvements. What is your opinion on this and what arguments would you use in disscusion with old-school professor?

It was an utopia in 1976. But now... We are going there slowly but for sure. Every coin is kind of 'private issued moneys'.
And I like it. It's much better than FR to print me dollars day after day.

Michal_open_source

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What do you think about Hayeks The Denationalization of Money ideas - do you find them too utopian?
Anyway, i was quoting his work in my Master thesis and one professor at my uni was very skeptical if Hayek would consider Cryptocurrencies as money and therfore i shouldn't apply it to my work. One of his main also arguments was that in Hayek's theory he considers money to be issued by some institution which has to keep the quality of currency because of free market forces.

This kind of argument doesn't work imo because in crypto we have the whole network of miners who also have an incentive for issuing quality improvements. What is your opinion on this and what arguments would you use in disscusion with old-school professor?

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