The basic macroeconomic reason not to have a fixed-supply asset simultaneously be an store-of-value, medium-of-exchange and unit-of-account is so that if a recession hits and the SoV becomes a safe haven asset you don't have the MoE and UoA getting screwed up as well.
Why should the MoE and the UoA be screwed (what does "screwed" mean here?) in case of a recession. I assume by recession you mean that the productivity goes down and everyone tries to get hold of the SoV (SoV as Dan described it). Do you mean that the deflation would change prices too much so that the SoV would not fulfill its function as a MoE and a UoA anymore?
If I interpreted that right I would argue that it comes down to how people perceive money and what they expect form it. Dan's position that a price stable currency is unsustainable long term is reasonable to me. Therefore price stable money with the UoA function as implied by you might not be something that people could want if there was no externalizing of costs by a state. I guess people want a price stable money (-> UoA as implicitly defined by you) because they are used to it but do not see the long term negative effect it has.
To me the all interesting question is how exactly debt based money and the structural necessity for the circumstance that "the rich (the lenders) are getting richer and the poor (the borrowers) are getting poorer to a degree where the poor can not pay back the debt" are connected. "The poor" in the statement above mostly equal the tax payers since the state is the biggest borrower.
If the state/the FED has the stated goal of price stability (let's assume 0% inflation; inflation here in the sense that the same money buys the same basket of goods) and the economy grows to some degree then there will be inflation in the sense of an increase in money supply at the rate the economy grows (given the fed can estimate eco. growth accurately). So everyone would be better of under these circumstances to invest the money into the growing economy instead of holding it.
Now there are two reasons why "the rich get richer and the poor get poorer": 1) The "rich" have more resources to invest better than the the investors they compete with (more education, time, connections/inside knowledge, the the ability to hold assets for a long time / no need to cash out to buy food/housing etc., scalability effects of capital (paying someone to invest for you is more efficient with more money)). 2) The inflation of the money supply equals debt of the government which is very likely to result in the self-reinforcing "the rich get richer effect" because any state where the people are uneducated about the trade off decisions of their government (including the impossibility to realize those trade offs for the voter / public due to the complexity of decisions) and/or where particularistic interests rule the state and/or where costs can be socialized is likely to increase the debt to a degree (this is now the case in US/EU/JP I strongly guess) where it is not possible anymore to pay back the debt because the the ratio of interest rates on government debt, the height of the debt and the economic growth (also compared to other developing markets that grow stronger and have better returns for the investor) has gotten out of balance (momentarily covered by issuance of new debt/money). And since the tax payers are the indirect borrowers of the government debt they suffer in the end.
The dramatic implication of debt based money - like with any case where the majority of wealth is debt although I can only imagine government issued debt based money to lead to such a system wide circulation of debt (can you think of other circumstances that produce that much debt aside from bailout protected bank issued money?) - is that it creates a system wide necessity to make profits at ANY costs for
humans and the environment to pay back the debt and it corrupts governments to favor economic growth even if it is at odds with protecting public goods which is one of the basic functions a state has.
Conclusion: Money issuance and monetary policy should not be a function of a state.
Here are two related quotes from the two articles that I find essential:
With debt based money price deflation often means the collateral behind the debt is falling in value and that the borrowers will have a harder time earning the money required to pay off the debt.
If you make the currency a “constant purchasing power” then the average man ends up having to make investment decisions he is not qualified to make.
https://blog.ethereum.org/2014/12/31/silos/I highly appreciate your vote for diversity and recognizing that diversity and friendly cooperation are not contradictory. I would go further and say that anyone with a mindset that does not allow for separation with respect to how different people perceive the world (especially within the own peer group (the world, crypto, bitshares/ethereum)) is advocating absolutism and despotism. The difference in how we perceive the world can become an evidence for that we are all the same in our core (we have the same basic needs).
Topic: Vitalik on stable currencies and POS (Read 28997 times)
