The Introduction of a Conceptually Stable (over a very long period of time) Money as a Way to Move Beyond Debate and Into (Bohmian) Dialogue
What does it mean that a money might have stability of value over a very long period of time (stable in relation to what)? What is the importance of such a money?
Some argue this type of money cannot possible exist and is conceptual (ideal!) only.
Nonetheless can there be a thought experiment about it?
Gold goes down and bitcoin goes up in relation to the USD, but what is the USD stable in relation to?
Do we understand the importance of an ideal basket of commodities prices as a metric for such stability?
It can be be said that perfectly stable (ideal) money is comparable to such a theoretical notion of an optimally chosen aggregate of prices/costs....
Which money will gravitate towards this quality and is it even possible for bitcoin to have?
MORE importantly, in our dialogues, discussions, and our great debate, can we levate the concept of theoretically stable money in order that our own ideas might have a basis for objective comparison?
I'd venture that stability refers to utility in smoothing consumption over time and matching price calculation outcome to expectations.
In this sense, balancing the two concepts reveals a bias towards unexpected deflation (supply growth slower than output growth) since if the second principle is violated it is still a boon to the first one. Unexpected increases to inflation and reduction in purchasing power violate both principles.
Further, the unexpected deflation would be best to come from unexpected increases in production than from disjoint contractions in money supply.
I've read of this sort of view and I am still learning and struggling to perfectly understand the points being made. But I think you are suggesting the equivalent of there are different ways at bringing about stability of value and some of them could have negative or unintended/unwanted effects. It would be different though, than simply HAVING a objective measurement of value. Perhaps we can never evolve it into existence, but it seems useful to me to meditate on in dialogue.
yeah i don't really think there are time invariant objective measures of value, so parameterizing that into a currency might not be doable. IMO the most important part of currency management is stability of expectations. Whether the parameters are set to no supply growth, some growth, or contraction, as long as the values are known well in advance and changes only possible, if at all, via high hurdle process, then economic activities will just shape around/within the system. How to set those parameters is more of a social welfare issue than currency management, since it can cause changes in purchasing power.
Yes Nash is inline with your sentiment here. And so to a degree, depending on the underlying factors in the cost of production of bitcoin, bitcoin does fulfill what you suggest, does it not?
I think I will do another article about Nash on this specific aspect, but I can summarize to you that he says exactly what you say and then says he came up with something called "asymptotically" ideal money after noting you can control a money's value by controlling its supply.
It doesn't need to be ideal he says, just better than the alternatives like gold. And then the competition that it incites will ultimately result in ideal money.
He also notes that if a currency is good at say 2% then why should it not be better at 1% or 1/2%.
He also has a paragraph on social welfare that speaks to what you do but of course or society is fragmented and we want ideal money to bring it together so there is sort of a horse cart problem :)
Very good discussion, looking forward to your post on what Nash has to say about currency.
Great to see you back here.
I think stable money is easy to design with a blockchain and working ID system.
The " Relation to" is always the "people" since the purpose of money is to allow transfer of value and storage of value for people and a society.
As such money supply needs to be dynamic to each individual and likely also take velocity Into account.
Interested to hear your thought. Great to see you back here.
Perhaps you could write something up and reference the conceptual ideal here. I couldn't speak to your point until I understand it well enough :)
Try chronobank.io or the relative theory of money